sex what essay were you writing last night till three in the morning oh I was blasting people on Twitter yesterday I was collecting scalps I keep these receipts of people who attack me on Ukraine and then like six months later you know they all write a tweet admitting they were wrong I'll rub it in their face you have a little Google Doc and you just go you have like your kill Bill list yeah you are so petty oh my God I love it I mean I love that about you someone would say that's a good defense mechanism right this way yeah they gotta know they're not gonna take any free shots because if they do and then you know invariably I I'm proven correct then uh you're gonna clap back I'm gonna smack him very Trumpian isn't it yeah it's a very hard burden for you to carry it just being right all the time I respect the way you do it with such grace and uh all right welcome back to the all-in pod really excited to have a guest with us today Jared Kushner I'm sure everyone knows who he is we obviously talked about Jared's interview with Lex Friedman on the pod a couple of weeks ago and what happened to Matthew DM Jared and started chatting and said hey would you be interested in coming to talk with us yeah about these matters very you know kindly agreed to do it so we're really excited to uh have Jared join us today Jared welcome thank you for having me so I don't think you need much of an introduction obviously you were a senior advisor to President Trump from 2017 to 2021 and you worked on the U.S Mexico relationship as well as led the Middle East peace efforts which I think is going to make up the bulk of what we're excited to talk about today just really briefly since leaving um office you've been investing running a firm called affinity partners is that right maybe you can share with us just a little bit about what you've been up to and then we'll you know kind of get into it here perfect affinity Partners is a private equity firm that I started when we left doing growth investing private equity investing globally we raised just over 3.1 billion doing a lot of investments trying to bring Gulf money into Israel into the U.S trying to figure out how through investments you could bring countries closer together people closer together looking at a lot of areas where there's structural transitions happening at large in the global economy whether it's near shoring from offline to online you know software a lot of different interesting areas a lot of the the Fintech space and Financial Services right now but you know enjoying it and the goal is really to bring the experience that we had from the previously being an investor and then the time in government and then thinking through how you could use those macro learnings and connections and relationships and navigational skills to the investing side right so we're going to try and talk later in the show uh about macro markets a bit talk a little bit about some of the activity in AI this week we think it's all pretty fresh in the world hopefully we can call dialogue about that I think it'd be helpful when you and I talk just to get ready for the show today you mentioned that you had a very liberal upbringing in the Upper East Side in New York and your perspective began to shift as you started to travel the country then you were in the Trump White House and have become very active since would love to hear a little bit about how your perspective shifted in the time you spent because you mentioned you started traveling the country and seeing things that you otherwise hadn't seen living in the Upper East Side would love to hear that part of your story and then we'll see you in the next episode.

story before we kind of get into things if you wouldn't mind sharing yeah sure so one thing about my life is that nothing has gone according to the plan I grew up in New Jersey a really nice place in Livingston my father was an entrepreneur in the real estate business banking insurance did a lot of different things really brought up me and my siblings to be focused on business and it really for us was a good experience growing up I actually went to Harvard and then after that chose to go to law school and business school where I was at NYU during that time my my father had a legal issue and I was forced to take over the business and so I got into the real estate business and then after that bought a media company in New York and that's really where I got exposure to a lot of what are called New York society my wife and I we met got married and through that experience I thought we had a very expanded world view at our house in the Upper East Side we have dinner parties we have heads of banks and hedge funds and technology companies and fashion and and um and then it was just you know really nice life and then her father announced he was running for office and that was a an interesting experience for us as Republican we didn't know too many Republicans um were you registered Democrat prior uh I was registered Democrat going up uh my father was a big Democrat donor we were we'd have in our house whether it be you know Chuck Schumer Hillary Clinton I think my father gave uh Cory Booker his first campaign donation so I know Cory since I'm 15 years old uh so really grew up around Democrat politics uh all of our life but over time I I think during the Obama years I I changed my registration to an independent I didn't feel uh like the Democrat party was fully representing my my viewpoints I felt more independent-minded and then um during the time with my father-in-law when he was running for office he invited me to go with him to a rally in Springfield Illinois we flew out there I got off the plane and um you know we we pull up to an arena and the guy comes up to Trump and says uh congratulations sir you just broke the record for the arena for independence uh then he says well who had the who had the record before and he says well it's Elton John 36 years earlier and he says Jared look I don't even have a guitar or piano this is impressive you know so you know he gets up on stage and and without really notes you know riffs for over an hour and it was interesting for me because I was watching you know CNN and the New York Times and all my friends the media basically were describing his rallies as almost like KKK conventions but I walked around the crowd nobody knew who I was then and what I saw was that these were just you know they were people were old young male female white minority and um and uh and it was just people who were hard-working Americans who who you know really felt like Trump was giving them a voice and what was interesting to me was a couple weeks earlier we'd been at the Robin Hood Foundation which is the big uh philanthropy in New York where a lot of the hedge fund managers uh support I remember the chairman of Robin Hood getting up and saying you know if we want to save you know the next generation we want to save the kids in the inner cities uh we have to uh we have to we have to support Common Core that's the way that we can save people and I remember Trump gets up there and he says uh you know if we want to save education we have to end Common Core and send it to the states I'm saying wait I thought I thought Common Core was this great thing and but why are all these people against it and so it really just kind of piqued my interest and made me realize that maybe my aperture was was way smaller um way more closed than I thought it was and it really led me to to seek out a lot of people who had differing points of view than the people I'd been around before I really opened my aperture explored a lot and over the years I really got the chance to meet with people from both sides so you know I have a lot of friends who are independent friends who are liberal friends who are very Republican and uh you know my personal view was I thought of myself more as a pragmatist fact-based and data-driven and based on that I tried to pursue uh the different policies that I thought made the most sense uh in as unemotional a way as possible how did you figure out that that moment in Springfield could translate all throughout the country like was there a process that you guys went through to validate like hold on is this just a moment in time or is this just a specific area or what is how did you guys get to the ground truth of what the scalable marketable candidate looked like because I'm sure that was part of the calculus in what you did because it I think the to your point maybe the media's perspective was hold on a second this this guy is riffing but it clearly went very quickly from riffing to a methodical plan and I don't think that that's ever really been talked about do you want to just tell us a little bit about that sure well I would say it was less planned and way more entrepreneurial and I say entrepreneurial in in two different senses you know one is the campaign was one was run incredibly entrepreneurially people were told that if you work for Trump you'll never get a job in Washington again which is why he really wasn't able to hire a lot of people initially and why a lot of the responsibility for the campaign fell to people like myself who really just cared about him personally and wanted to make sure that he was able to do a competent job with the operations of a campaign that led to us doing a lot of things in an untraditional way but we actually were able to make the dollars go a lot further whether it was building a data operation or how we targeted advertisers or how we you know did our events we were able to just do it in a much different way but from a viability of the candidate perspective I really give all the credit to him because what I saw with politicians is a lot of politicians will take polls and then moderate their perspectives this is somebody who without pollsters and without any political experience um really put forward a lot of points of view and keep in mind in a Republican primary a lot of his viewpoints on trade were very uh heterodoxical they were they were not what was conventionally thought of and what I saw with Trump was that he was able to move the polls to him and that was uh that was a talent and just a skill of persuasion uh and his willingness to kind of stick to the issues I mean at that point in time I remember seeing polls that illegal immigration was not like a top five issue when he started the campaign by you know the middle to end of the campaign people were really seeing uh the craziness that was happening at the southern border and why that was uh critical to our National Security and so um I think that for him he found a lot of his message and with him he was not a perfectly uh always on message candidate but what he did do was he was constantly evolving and learning and you know and would learn from the different things that happened and constantly evolving to uh find ways to to persist amazing like a startup finding a product Market fit yeah and what's he like as a father-in-law I'm curious uh as a father-in-law he's been great you know that obviously brought us a lot closer together you know until that time our time was mostly they're playing golf together or we'd be together at family events uh working together was uh was was a different element of our relationship but I think one of the benefits I had with him was that he knew I was always going to tell him the truth uh whether I agreed with him or not I also I think one of the things he liked about me was that I I was not obviously worked hard I gave him straight answers and I didn't opine on things where I didn't feel like I had an expertise so if you would ask me a question and I didn't feel like I knew the answer I would say well this is not my expertise these are the people who I would recommend I speak to to get perspective and let me bring you their their opinions and so I think he saw me as somebody who was who was competent obviously had his best interests at heart again I wasn't accepting money for any of these jobs so it wasn't doing it for for financial gain um and I just started to really believe in a lot of the policies that he was pushing and wanted to help him maybe translate it from a campaign speech to kind of technical policy and then see once he got the opportunity to help him implement it as well that's really cool why did you agree to do Lex and why are you doing the show today we were kind of surprised to see you on Lex and obviously like Lex said it was a very different conversation than I think any of us would have expected having the only exposure to you being through you know some sort of media channels what's motivating you to kind of do this today before we get into it so Lex um again him my wife are friends and I I'm not sure if you've heard of him but he's a great guy he's a great guy I I really follow and listen to what he does I I think in Society Today the the news uh it's kind of just one person's you know point of view and and they're they're they're picking and choosing and editing what they put into it one way or the other but the medium of the podcast is something that I my personal consumption uh was growing with and I felt like it was a place where you could have real conversations I think the people who are listening to podcasts are people who are looking to have a more nuanced uh perspective on something and really want to you know try to understand something deeper and and I respect Lex I all my private conversations with him I I really enjoyed um and I love that he was really trying to um find perspectives from people that maybe others didn't understand to try to bring greater understanding across and so I agreed to do it after a while I was really really glad I did and uh based on the the great feedback I got uh there uh my sense is is that the podcast format is is something that's um you could have a real conversation you can go back and forth you could argue you could disagree um I think that that's where people really want to get their information from so I I turned down a lot of you know cable news or different uh interview requests um because I find that you can't have as nuanced a discussion and you know I wish things were as simple as you know the black and white or the political slogans that people use but the reality is things are a lot more nuanced so when shemoth reached out I followed you guys and I've listened to you for for some time I was uh I was really happy to come do it awesome well thanks for doing it uh sex you want to kick us off on the Gaza conflict and framing up the present day sure based on what I've read it seems like Israel has now formed a perimeter around uh Gaza City they've sort of bisected Gaza between this north and uh South and they've been trying to bomb entry or exit points from the Hamas tunnel network and it seems like their strategy is to kind of gradually close in on that tunnel network and basically try and eliminate Hamas from from sort of this northern part of Gaza and then one assumes they'll move to the south and I guess one other element to add to it is that you know while Israel is doing that you're seeing protests both in the West and in the Arab or Muslim world you're starting to see statements condemning Israel by leaders of these other countries in the region I'd say the one by Turkey by Taiwan was notably harsh and threatening but you're starting to see again as Israel proceeds with this operation you're starting to see more and more condemnation from various parts of the international community so let's start with that is you know how do you assess what's happening on the ground what do you think the prospects for success are and how do you assess the risk that this sort of escalates horizontally in ways that are kind of hard to predict and could spiral out of control yeah so so there's a lot of different ways you can go with that but I'll start with kind of the first question which is um in the immediate aftermath of the attack my biggest concern was that Israel was clearly caught off guard from an intelligence and military perspective with the attack and the attacks were they shook a lot of people they were they were very very heinous beyond um really comprehension it's it's crazy the more and more stuff that comes out and we were seeing a lot of in a real time thanks to you know the fact that right now with X and what what Elon's done there's a lot of things that we're seeing in real time thanks to you know the fact that right now with X and what what Elon's done there's a lot of things that we're seeing in real time thanks to you know the fact that right now with X and what what Elon's done there's a lot of things that we're seeing in real time thanks to you know the fact that right now with X and what what Elon's done there's a lot of things that we're seeing in real time thanks to you know the fact that right now with X and what what Elon's done there to to not try to censor things in the way that was happening before so we were all getting a lot of information real time and it was really pulling at a lot of people's heartstrings my big fear initially was that Israel would react uh emotionally as opposed to uh to pragmatically and I think that the steps that they've taken since then have been uh very wise I think the fact that they took their time and have been very methodical about getting their supply lines ready about working how to Garner's much international support I mean you have to remember these weren't just Israeli citizens that were killed these were American citizens they were German citizens they were Thai citizens they were UK citizens and and the hostages as well are not just Israeli citizens so I think that Israel took its time to get the military operations set I've seen them go slowly methodically I mean Gaza is a very very complicated place I mean we studied it for four years we we we were very closely watching all the different incursions we managed Hamas and and their uh their malicious activities uh very very closely uh to avoid situations like this and uh the place is booby trapped like like crazy and so I do think the fact that the Israelis have taken their time and been very methodical and I've come up with a strategy has given me more hope every morning I wake up and I look to see you know praying there hasn't been more casualties um in Israel and um and the hope is that they continue to do it in the best way possible um so I think that the goal for them is really the elimination of Hamas I think that um you know the the big point that I really want to make in the Lex podcast which is why I went back uh to really do the point was that um the people who are protesting um in favor of the Palestinians a lot of the Israelis and Palestinians want the same thing which is uh they want security for Israel and a better life for the Palestinians and I think what people have failed to really grasp for a long time is that Hamas has been the root cause of a lot of the the the bad lives for the Palestinians if you think about Gaza uh before this recent before October 7th I mean over half the population lived under the poverty line um you know people were really trapped there and people would blame Israel for the blockade but what's also happened over the last 30 days is a lot of the worst fears that we had during the administration or things that Israel would be saying I have totally been proven true I mean you've seen now I'm going to some of these uh school houses where there's you know there's 500 or 50 different you know rocket launchers um you know in the school houses the hospitals all the terrorists that they've captured that they're interrogating are saying well that's where the military headquarters are you know now we're learning about this um this tunnel Network which they're saying is hundreds of miles of tunnels underground well that's why you know Israel wasn't allowing cement and a lot of these these materials in the cement that went in which was supposed to build houses for for the people of Gaza was then stolen by Hamas to to build these tunnels the uh the pipes that went in to to fix the water were then taken and turned into to rockets that the fuel was was was stolen and and not used for for for the hospitals or for people to have better lives it was stolen for them to operate their tunnel network and then then to fuel the rockets so um it's a situation that that really does have to be dealt with again Israel you guys are I know poker players so uh so Israel definitely has the stronger you know hand to play here so I think time is on the one hand in their in their favor uh but on the other hand obviously you know the international community has historically been very uh anti-israel and anti-semitic in the way that they've approached a lot of these uh these skirmishes uh to date but I will say I think there's been more international support for Israel this time than I've ever seen um and I do think that that's a very important thing so that that's maybe General if there were some of the specific questions that you wanted to get to in there I can what about the risk of horizontal escalation let's just talk about that for a second because you do hear I think a growing chorus of countries who are denouncing Israel they're saying that this is collective punishment that the bombing of Gaza is indiscriminate they want it to stop there's genocide genocide yeah I'm not saying I agree with that rhetoric but you you do hear it you know there's a effort at the UN to um to pass a ceasefire resolution so there's a lot of people who want the ceasefire and there's a lot of growing international pressure for that and then you've heard threats from you know again Erdogan in Turkey that if there's not a ceasefire at some point they're gonna have to get involved they're gonna have to act Iran has said similar kinds of things although I think it's pretty clear they don't want to get involved they don't want this to escalate in a into a wider regional war but they've sort of intimated that if the bombing continues that they might have to take action they might feel pressure to do that so I guess one question there is is time on Israel's side it does seem like again there's more pressure to stop the military operation over time as opposed to less yeah so so the answer is everyone's talking their book and that's what they should be doing they're talking to their populations the question is what people will actually do I would say that you know the hardest thing for us all is obviously you see civilians in Gaza who are being used as human shields and the last thing that anyone wants is for more civilian deaths to occur it's funny this morning I was speaking to a friend in Israel who was telling me that yesterday there was a a major evacuation of of civilians in Gaza and a lot of people were surprised that the Israeli defense forces were basically putting themselves in between the Hamas militants and the Gazan civilians to protect them and open up a corridor and again one thing that Israel has done I think a good job of is getting out a lot of the facts about how they've been warning the Gazan civilians to flee asked them to go and and what happened was Hamas was you know shooting them down with snipers and trying to prevent them from going because they wanted them to stay in place as human shields in in the schools and the hospitals where they were conducting their terror activities and so what was interesting to me was um well my friend was telling me is speaking to a friend of his who was a soldier was that uh was that um is that a lot of the civilians are really thanking them for liberating them from from Hamas and for risking their lives to help them out and you know I think that's that's a really important thing to think them get out of Gaza.

A lot of these people, again, they've been prisoners to Hamas more than anything else for a long time. They want to see themselves out of there so that they can perhaps have a better opportunity to live a better life. I think that the current region, I think the biggest immediate threat is from Hezbollah to the north.

I think Israel going to full ready alert was a really smart thing. I think the US moving the battle carriers there, I think was also good. I think the statements from the US administration were strong up front. Again, whether people believe that they'll back up those statements is another thing because they do have a little bit of a credibility deficit in the region based on what they've done over the last couple of years.

I think that's all been very helpful in pushing Iran back and sending a strong message to Hezbollah, which is if you want to attack Israel, don't do it when they're at full military readiness. Israel's a nuclear power. Aaron Ross Powell, Ph.D.: I think every- Aaron Ross Powell, Ph.D.: everyone is starting to realize that this has been Iran trying to manipulate things.

As long as they think there's a threat that you're not going to go after one of their proxies, but you may go after them, that's been the best way of keeping de-escalation. I think with Turkey and others, I've spent many hours with Erdogan personally talking about Gaza. I know that he has a big heart for the Palestinian people.

He hates to see their suffering. It's also good politics from him. He's also from a Muslim Brotherhood leading party. I think in a very religious heart, he does have to acknowledge that a lot of their plight is led to by bad governance. He may not want to admit it publicly, but the reality is the best way to improve the lives of the people of Gaza is to eliminate Hamas and put in place a structure where people can finally have the opportunity to live more freely and make better lives for themselves.

Aaron Ross Powell, Ph.D.: Jared, you said something that I think is really interesting. You said Erdogan has a soft spot for the Palestinians. Can I just take that concept and just can you explain the historical context of the situation? Can you explain the historical context of the situation? Jared Ranere: Sure.

I think it's really interesting to see the context of Arabs, the Arab world and their relationship with the Palestinians, because it's definitely had its ebbs and flows over the arc of history. How do people think about it, just broadly speaking, just in terms of the big historical arcs that have shaped this relationship between Arabs and Palestinians specifically?

Aaron Ross Powell, Ph.D.: Well, that's a question we could spend about three days talking about, but I'll try to give you a very quick version of it. I think that a lot of this goes back really, to people say it goes back to a lot of times, but I think that we have to probably go back to, and I'll try to do this very quick, is really in 1948, which was a complicated time.

It's post Holocaust, post World War II. Again, the Middle East really in the early 1900s was created by a lot of arbitrary lines drawn by foreigners. And you had a situation where Israel is, the UN puts forth the partition plan, Israel, they're willing to recognize Israel as a state for Jewish people and also give a state to the Palestinians.

The Arabs reject that and attack Israel and there's a whole war. During that war, it was flared up really by General Nasser from Egypt, who at the time was the leader of the Muslim world. During that war, Israel was able to defy the odds and win. And a lot of Palestinians were either forced from their homes or displaced from their homes.

There's versions where they say the Arabs said, "Leave your homes." And then when the war is over, you're going to come back and take everything. Some Arabs stayed in their homes and actually today they're Israeli citizens with full equal rights as other Israelis. So that happened. Then in 1967, that's when Egypt attacked again.

During that war again, Israel miraculously won. That was really the time where Israel was able to expand their territory. They took over the West Bank at the time, which didn't belong to the Palestinians as much as it belonged to Jordan. It was part of Transjordan at the time. Then they also gained control of the Gaza Strip, which also was a part of the Gaza Strip.

So that was a very important time for Israel. It was previously administered by Egypt, although when Egypt was administering it, they didn't take it as their territory. They never granted citizenship to the people who were there. So between 1948 and 1967, when the Six-Day War occurred, most of the leaders in the Arab world enjoyed leaving this issue out.

It was a great way to stoke nationalism. And two, it was a very easy political issue for them to have to say, "Well, we need to do this and to fight for the Palestinian people." So in a lot of ways, it was a way to deflect in their shortcomings at home and to justify certain actions they were taking because they were fighting for this group of people.

Then it gets really interesting after the Six-Day War. So this was the second time that the Arab countries had failed to destroy Israel, which is what they had promised they would do. So there's a young terrorist at the time named Yasser Arafat, and he was part of a party called Fatah.

And what he said is, "You know what? All these Arab leaders, they're lying to you. They're failing you. I'm going to be the one to start creating a liberation and opportunity for the Palestinian people." So he took over. And then he took over the Arab countries. And then he took over the Arab countries.

And then he took over the Arab countries. And then he took over the Arab countries. He took on this mantle, was able to use his Fatah group and some pretty thuggery ways to take over the Palestinian Liberation Organization, which was a way that he got some international acclaim. And at the time, he was doing that from Jordan.

So this is about 1968, 1969. They caused so much trouble in Jordan that King Hussein at the time, who was King Abdullah's father, who really was a very, very special diplomat and leader in the Middle East, got so fed up with Arafat. At the time, he was causing trouble.

He was going to be the leader of the Arab countries. And then he it was it was steering people away people wouldn't invest there uh they wouldn't it was hurting terrorism and then they took a little further and they tried to assassinate him which was probably uh the final straw so the jordanian leader said get these people the hell out of my country um it was a big clash between the plo uh and and fata uh terrorists and then the jordanian police and military uh and they were able to expel them and then the palestinians went to lebanon uh that's where yasir our front was so they were there for about 12 years again they went back to their old ways of of fermenting uh radicalism and finding ways to cause trouble uh when israel invaded lebanon in 1982 then yasir fat fled again this time to tunisia in tunisia they were living pretty well as a beachfront place they're in these beautiful villas on the beach and they kind of became a little bit disconnected from the palestinian people but there was a lot of resentment of the broader arab world because they felt like again the arab world didn't really they would say they were for the palestinian people but never really stood up for them in the way that they felt like they deserved so it was it took until about 1988 that finally uh this is 40 years after 1948 the war of independence where uh the plo was finally able to get the arab league to say and this is really because jordan was just like done with this issue to say okay we're going to acknowledge that this land here should become a palestinian state so the notion of a palestinian state really didn't emerge until about 1987 1988 uh which is the same time that hamas actually you know came about and they came about really from they were not shoot of the egyptian muslim brotherhood and their whole thing was basically we're gonna do full terrorism in order to prevent uh prevent any compromise or any deals with israel so then you go to 1991 which is a very very important time for the palestinians mostly because saddam hussein in iraq invades kuwait and that was very scary for a lot of the arab leaders right they didn't want they did fear saddam uh he was a he was seen as the radical arafat uh and the palestinian leadership backed saddam hussein mostly because they knew that he was seen as the revolutionary and popular with the more common man um and this pissed off every single gulf leader because they basically said wait this guy if he's going to take over kuwait he could come for saudi arabia he'd come for uae so they were all very against that and at the time there's about over 200 000 palestinians in kuwait what happened at that time though was that that made the palestinian leadership so weak because a lot of the arab countries cut off the funding it was just done with them and that's really what led to the oslo accords so the oslo accords happened not because our fought necessarily you know all of a sudden said after you know 37 or 27 years of trying you know terror and and pushing forward uh he basically ran out of other options and this was his only way to get some form of legitimacy so they dropped from their charter uh the whole notion of destroying israel and said let's try to create this area we can have governance and try this whole effort for a palestinian state so that's really kind of that's a long short version of kind of how we got to then and then in the last i'd say 30 years the big change that i would say between then and today is that you have a lot you have a new middle east for me and a lot of the work we did in the trump administration was really to help what i'd call the new middle east emerge where you have a lot of economic opportunities now happening in saudi arabia uae qatar there's been a massive mind shift where if you go kind of post arab spring a lot of these leaders are saying uh you know how do we create opportunity for our people when i got into my job in 2017 all the experts were saying to me the big divide in the middle east is between the sues the the sunnis and the shias and when i got there i said no no the divide is between leaders who want to give opportunity and betterment of life to their people and people who want to use religion or or whatever issue they want to hold on to from the past in order to deflect from their shortcomings and justify bad leadership so um i think that's a really important thing to think about um so i think what's happened today is you have a lot of the gulf countries really wanting to see this issue uh get resolved which is different than you had in in camp david and in in 2000 when bill clinton was uh getting close to a deal with yasser arafat i think the saudis and others at the time didn't want this issue to go away but now the issue is really no longer useful for the arabs the only people it's useful to quite frankly is iran and that's why they've been backing hamas and hezbollah and all these other functions factions in order to continue their project of instability so uh the way i kind of view this peri right now is that the middle east today is way stronger uh than it's been in the past and this is what i would say the last gasp of iran and those who have you know pushed for destabilization and kind of this whole um you know islamist jihadist project at the expense of kind of a collaborative uh middle east which which would then will create a lot of opportunity uh for the next generation to to really thrive jared isn't there like at this point then like is it hard or easy to create an objective target we we call individuals that israel wants to target hamas but there's no card carrying members of hamas you don't wear a jacket that says i'm a member of hamas and walk around with an id card and there are some folks who are sympathetic who believe that hamas represents a resistance movement there are some folks who obviously feel terrorized and ruled over and there are some folks who support the cause but don't pull the trigger there are some folks who pull the trigger but don't want to support the cause but are being forced to by some reports how easy and how hard is it to really direct a military operation at such a fluid population that it's very hard to id and target and as we've seen in years past there's always another group that seems to emerge you cut off one group you get rid of al-qaeda isis emerges and there's this almost like you know fluid transition of uh of this intention and particularly in this gaza community it's very difficult perhaps to distinguish between who's hamas and who's not hamas so how do you actually achieve the objective there and you know how does the military target yeah so so that's probably the most important question that i think people have to um really be thinking about as we kind of enter this phase right so it's both how do you do this in the short term and then the long term and so you can't kill your way out of an ideology but there obviously are some bad leaders at the top who are culpable who um who who are military targets and i imagine that it's really you know knowing the capabilities of israel and the masad it's just a matter of you know when and how as opposed to anything else but then you have a lot of mid-level and and younger members of this group and i do think that a lot of these people are you know they're not they're not they're not they're not they're not in this situation more circumstantially i think this is what they've been taught to believe i think this is uh really the place they were and this was the the system in gaza where if you wanted to advance and live a better life then you really had to succumb to this uh tiered system so how deep the ideology is um people will debate that in different ways if you go back to 2016 in the campaign when we were dealing with isis the talking point that everyone used was you have to defeat the territorial caliphate of isis and then you have to win the long-term battle against extremism uh one of the things that president trump did when he went to saudi arabia in 2017 uh the reason we went there was that the middle east was basically on fire i mean if you had isis had a caliphate the size of ohio they were ruling over eight million people they were beheading uh journalists and killing christians uh syria was in a civil war where 500 000 uh people were killed a lot of muslims and you didn't see the same protests on college campuses when that was happening as uh you know assad was gassing his own people uh libya was destabilized yemen was destabilized and iran was on a glide path to a nuclear weapon having just been given 150 billion dollars in cash through the disastrous jcpoa deal that uh that kerry and obama negotiated so it was a mess and so trump went there and um and basically was was pretty tough with what he said and he said this isn't our problem this isn't your problem to solve our problem and we need to to root this ideology get it out of your your homes get it out of your mosques get it out of this earth and uh the king of saudi arabia stood up at the time and said there's no glory in death and that was really important uh two of the things that we've talked about two of the big deals that came out of that people talk about the big investments did over 500 billion dollars of investments uh in arms sales with saudi arabia that created a lot of u.s jobs but the two agreements we made that didn't get a lot of coverage during that time was that we did a counter-terror finance center that we set up where we got all the gulf countries to really allow treasury to work closely with their banks to stop a lot of the funding to the terrorist organizations and then these kind of borderline organizations and the second one was in saudi arabia which is the custodian of the two holy sites in islam and the second one was in the islam mecca medina they started a counter-extremism center where basically they were combating online um radicalization that was occurring and if you remember in the us in 2016 we had the San Bernardino shooting we had the pulse nightclub shooting and a lot of people being radicalized online one of the things that I'm very proud of from the trump administration is the work that we did to really help saudi arabia change their trajectory and what I realized quickly was that in the us we just did not have the capabilities to win the long-term ideological battle ourselves so um we could be mad at you know saudi for some of the things that they've done in the past but they were the the most powerful partner we could have in order to uh try to uh combat uh the radicalization that was occurring both in terms of stopping the funding but also uh you know replacing the clerics who were doing the radicalization with the clerics who were uh restoring Islam to a more peaceful and more proper uh place so that was something that that's really current it's made a big difference I was just in saudi arabia a couple weeks ago at their economic investment conference and what was really exciting to me was I was meeting with a lot of the younger saudi entrepreneurs and I did a a conference in Bahrain to talk about the Palestinians in 2019 and one of the big challenges we had when we were putting that together is we were thinking about who are the role models for these young Palestinian kids and in the in the Muslim world the you know they had some sports stars they had some business leaders but it wasn't really people who were necessarily relatable to a lot of the younger generation in saudi I was at an event with all these young tech entrepreneurs there who are building uh amazing companies a lot of Unicorns there they're doing a lot of the you know the companies that are dominant in the US and in Asia and now they're building them for the Middle East there and it's very very exciting and these really are the next generation of role models for a lot of these kids so uh that's a long way of saying that you know obviously you have to do what you have to do from a military perspective and the hope obviously is that it could be as quick as possible and that as few civilians as possible uh are hurt by this um but the notion is that once that's once that's completed you need to then create a framework where people don't just have more despair because in an area where there's no hope and opportunity then obviously the radicalists and the jihadists that's really where they do their best recruiting and they flourish so uh so so once this occurs there needs to be a paradigm created where the next generation feels like it's better for them to get a job be part of the economy uh and where they can live a better life through capitalism uh than by going to to these jihadist groups but it's leadership targeting right now that's the objective effectively I mean that's what I'm hearing is I think it's leadership and then degrading of capabilities right so because again what you've seen as well you've seen this with cartels in in in South America and you've seen this with terror organizations you know you you kill the top guy and sometimes you cut the head off the snake and the snake dies and sometimes it just you know it scatters into a lot of little pieces and then you end up it ends up becoming more complicated not less but I think here obviously leadership but but significantly degrading uh the capabilities for for anything in Gaza to uh to to threaten Israel and then actively build a better way actively build a better solution that's the only way and by the way even today it's it's much more easy to visualize that than it was in 2019 when I was talking about this because you're seeing the economic project in Saudi Arabia you're seeing what they're doing in UAE I mean the fact that Saudi shifted so much in five years should give you hope that it's really really possible and they've been pushing the rest of the countries to try to emulate and compete with them which is uh also an amazing thing I'd love to get your reaction to the difference in tone and messaging from Western governments versus what you're seeing sometimes on the ground with some of these protests and just how almost diametrically opposed the language and the rhetoric and the point of view is how is it that and sort of this is why I kind of asked you just for a little bit of a history how is it that people aren't taking all of these views in how is it that there is this radicalization that may not be a happening in the same level in the Middle East but is maybe happening actually in the West whether it's in our universities or other ones yeah so that's something like my friends in the Middle East a lot of them are laughing at the West because they're basically saying you know we we got all these Islamist radical Muslim Brotherhood people the hell out of our countries you don't see the same protests uh in those places that you see in the West and um and I think that in in in the West what's occurred is is people I saw this a lot when I dealt with the Europeans where people's understanding of the issue uh is more with their heart than it is with their head and obviously nobody wants to see any suffering um of any human beings but the reality is is that you know the the solutions that they've proposed for the last 75 years have all been uh just nonsensical they've more often than not perpetuated the problem than they've been solutions to the problem and you know I faced tons of criticism when I was you know in my role working on this issue and mostly because I I kind of looked at all the things that have been done in the past and keep my being asked to work on you know the Middle East it's like uh it's almost like a joke right it's it's the hardest problem set you can get in the world and I think we almost made it look too easy getting the results that we did and we left it very quiet and I think now people are starting to appreciate that it wasn't that easy and it's not um it's not a simple problem set to deal with and uh but I think that a lot of people um were were were kind of looking at um at what they thought was wrong but looking at the wrong fruit causes for how it got there I have a question for you and Sax I'd love to get your guys opinion on this India dealt with a terrorist attack when manohan Singh was prime minister and basically it was an extremist Muslim group from Pakistan Lakshari taiba that came in and killed a lot of Indians but a lot of foreigners as well right attacked some of the major hotels in Bombay Etc and what happened was manohan Singh didn't do anything and in hindsight what was written is you know they debated what to do they debated do we go after this group do we show some proactive demonstration of force do we invade Pakistan ultimately they went on a more covert path to sort of dismantle that terror Network and there was just a lot of international support that came around it can we steal men whether it would have been possible for netanyahu to take that path or was it really not even reasonable just curious what you guys think about that do you want to go first uh no you should go for a chair okay so um look at anything's possible uh chamath and I think that there's different ways look I think the big fears initially were that going into Gaza uh number one you'd be walking into a big trap and number two is you would be inviting a major escalation in the region the the third fear was obviously the degradation of the Israeli economy when we did the Abraham Accords one of the big uh attractive uh things to a lot of these countries to be partners with Israel was their massively robust economy and what could happen if they go to war and it's a prolonged war is that economy can go off track I think GDP will take a big hit there in Q4 but obviously you know in Israel they do have a history of coming back right away but if if this is a prolonged uh war effort uh there could be big hits and then you also think about in the age of you know AI and software development losing you know a day of productivity is the equivalent of losing you know a week or a month and uh and they don't want to fall behind in what they're doing so there is an argument to be made for doing that but I do think that from Israel's perspective um I do think that they understand this threat I think that they want to eliminate this threat and I think their view is is uh we we can't live like this anymore uh we underestimated it before uh and and we will not let that happen again and I think also the psychology of really the Jewish people is you know it's funny once I was sitting with uh with uh Prime Minister Netanyahu and one of the generals and uh and BB was basically saying like you know if Iran gets too close this is what I'm going to do we're going to have to take matters into our hands and the general basically said to me said you know I get it you know you guys aren't going back to the ovens and I was just like wow you know so it was a real acknowledgement of like the way that Israel operates with kind of no margin for error and I would always say when I would negotiate with the Israelis that you know sometimes you do a contract and there's like you know there's there's two issues that are a 10 and like a couple issues that are five and like a whole bunch you know a whole bag of issues that are like twos and threes and when I would negotiate with the Israelis like they would treat every issue like it was like a 10.

you know what I mean in the sense that like they they just operate like there's no margin for error um and uh and I do think that obviously there was some complacency and and and the internal division you know led to them being caught off guard here but I think that uh they're going to do what they're going to do to make sure this this happens and I think there's also a way where Israel feels mentally like we have to show that we're strong or else people will will go after us and I think that that's what they've done and I will say you know the fact that Israel's gone from being completely divided to now uh fully United in this effort I mean even the people on the far left um in Israel who are all peace who are you know funding you know jobs with the Palestinians and you know housing them in their homes I mean they're basically saying they want to go to war so the mentality there is very much we need to do what we need to do now to keep ourselves safe people are very very uh heartbroken and they're heartbroken for those who are who are passed um they're they're praying very closely for the hostages um and uh but they've given a lot of latitude to their government to do what it needs to do to make sure this this is this is not uh this does not occur again and I will say too like Israel also recognizes that I think now they have the world more on their side uh than they have in in uh in past conflicts and I think their view is to um their view is to to do it while they have that situation sacks what do you think could Netanyahu have taken the the path of doing nothing no I don't think so I mean not given his domestic political situation I think the Israeli people demand a response and look one of the arguments that Israel would make is that if this happened to you the United States or you Russia or you China what would you do I mean I think we know we would turn Gaza into Fallujah or Mosul Russia would turn it into Grozny so I think Israel is taking the response that I think most countries would take and given their situation the thing I worry about is that Israel is not the United States I mean the United States because it's so powerful can act largely with impunity we don't have to worry as much about blowback and Israel does because at the end of the day they're a small country in a very hostile region and so I do worry about the potential for unintended consequences here one potential consequence is horizontal escalation does this war somehow spin out of control and it could lead to a much wider regional war that would not be in Israel's interest the other is diplomatic isolation because I do think that Israel is taking a big hit right now and the information war the war of Republic opinion and then finally you do have a lot of civilian casualties and and those civilians have brothers and sisters and cousins and so forth and that's going to lead to the next generation of terrorists and so even success in this operation against Hamas doesn't solve the long-term problem I mean it just kind of keeps it going going so I think all of those things are potential problems but at the end of the day if Israel can have a successful military operation here that significantly degrades or destroys Hamas without this thing spiraling out of control that buys them time to find a political solution then maybe it will be worthwhile I mean I think a lot depends here on what the outcome ultimately is I think it's like a very tough thing to judge without knowing what the outcome is going to be the the King of Jordan a couple of weeks ago gave a speech and in the speech he said there is no peace possible in the Middle East without the emergence of a Palestinian state with a two-state solution being the only path forward a Palestinian independent and sovereign state should be on June 4th 1967 lines with East Jerusalem as its capital and so that the cycles of killing whose ultimate victims are innocent civilians and is this the only path to stabilization Jared and is that where we're headed so that statement is is the same throwaway statement right that's the safest statement for anyone to say because that became the international consensus so you know one thing that was super interesting to me when I was working on this was um I kind of said to my team once I was like where does the Palestinian claim for East Jerusalem as the capital come from and I had a guy on my team who was a military guy who actually worked for John Kerry and I'd always have him in the room because he would represent the Palestinian perspective um because he had made a bunch of Orthodox Jews and you know we tried to be impartial but you know we did the best we could to have you know all perspectives represented and um and he came said I actually don't know and then what's interesting is you know when when the West Bank was actually governed by Jordan the capital at the time was Amman and so it really wasn't till the uh the the 1988 um uh uh launch of of this right for a Palestinian state that they self-declared that the capital should be East Jerusalem and so that was actually an interesting notion as well and I think that you know everyone knows that that's not going to be the case and I asked one of the leaders once why they say that and they said well it's a cliche and I said well maybe we need a new cliche and he says yeah that's a good idea let's come up with a new cliche so I think whatever solution is going to occur has to be pragmatic right you you the reality is is that if if we're going to learn from Gaza there's a couple of lessons to learn right number one is you know Israel withdrew from Gaza in 2005 or 2006.

uh they forcibly removed 50 000 Israeli settlers uh from Gaza um all those people they they left their their homes they left their businesses um thinking that would be peace they they transferred governance of Gaza to the Palestinians the Palestinians then had an election again it was uh you know the the PA at the time convinced the Bush administration to allow for Hamas even though their charter called for the destruction of Israel to participate in the election and they won in a democratic election since that time there's been no improvement in the economy uh it's become a a real security risk for Israel and so Israel withdrew and then let them govern themselves and now you have what's happened today be the case so I I think the reality is is that you know if you look at the historical um maps and the historical lines I mean there's really no uh making a claim there's no other example in history where somebody's lost three offensive wars and then has been able to maintain their claim over a territory uh that they had before but I do think that there is an international consensus and I do even think in Israel there's consensus to give the Palestinian people the ability to kind of have their own land and then also to govern themselves so the word state is is a very loaded term because it comes with a lot of definitions to different people but I think the constructs of what's achievable is um is in the West Bank or Gaza there can be no security threats threat to Israel this is something that that they were insistent on before and I was sympathetic this was even before October 7th and if you go back and look at the work we did and what we put out we had a security regime that we designed with U.S intelligence and military and Israeli intelligence and Israeli military that we thought actually gave a lot of autonomy from police force perspective to the Palestinians allowed them to build their capabilities and and they kind of like earned their way into more and more security control which I thought was the right way to do that because you don't want to take a ton of risk there the other part of it though in any state is you need a functioning economy otherwise obviously you have a big grievance party the biggest problem the Palestinians have faced over the last called 25 years since since Oslo I guess almost 30 years now since Oslo is is just bad governance so the problem with the PA is is they were elected I think in 2005 and they haven't another election since so I think president boss is in the 16th 17th 18th year of like a four-year term very not popular he's more popular in Washington and in you know the United States than he is you know in his own country um he's uh it's a very corrupt system again a lot of the money's gone for uh for the leadership their family for the top people but not to the it hasn't trickled down to the people and so there's not a lot of trust on it uh you know I held a conference in Bahrain where I brought all the top investors in the Middle East I brought uh Steve Schwartzman from Blackstone came we had uh Randall Stevenson came from from AT&T and everyone came and said you know what we actually would love to help the Palestinian people we'd love to invest here uh and then they looked at the magnitude of it I mean it's three million people which is like a small state in the West Bank and two million in Gaza again it's like a small state in the U.S um and obviously to build things it's much cheaper I mean the GDP per capita there is about 3 000 per person so uh you know it's it's it's cheaper labor it's it's it's people do it and it's connected right to Israel right which is like you know California not being connected to Silicon Valley so the prospects for prosperity spillover are massive uh being sandwiched between the rich Gulf and the growing Israel so but the thing that's missing in for the Palestinians is very basic things right there's no fair judiciary there's no rule of law the governance is terrible the institutions are incredibly opaque and what all these people were saying is we'd love to invest here but it's just not an investible place and so the thing that's been holding back the Palestinian people has not been Israel it's been their bad leadership and again you're seeing in other places in the Middle East that with the proper leadership investments can come and those investments will actually lead to people living a much better life how does that leadership change in your view so the way that I would think about this is that if you're waiting for a solution to come to you you're not going to find it right if you say okay let's go back to the UN well they have a perfect track record of failure let's go back to the PA well they have a perfect track record of failure you're definitely not going to go back to a mosque so you need to find something different so I think you either need to create something new or you need to um look at what's working and put it together so some places that could do it I mean the World Bank has a lot of good uh institutional knowledge they helped us work on the plan the World Bank and the IMF uh you know some of the other regional governments I mean Jordan their government is pretty pretty capable I mean they're they're better at military than economy but I think they're they're starting to focus more on economy as they realize that that's necessary if you look at the benefits of that area the Palestinian people are are like a 99 literacy rate again through the taxpayer US taxpayer dollars in international donations we've paid them to become very educated unfortunately I think we've poisoned uh their minds with a lot of what's been taught in their curriculums um they have a pretty good health care system there again I think it could be improved because it's been done very kind of piecemeal versus holistic and then in addition to that they obviously have a tremendous amount of tourism sites I mean you know Jewish Christian Muslim tourism sites so if they ever get their acts together I mean the boom in that area can be uh unbelievable and I think it could work very very well there was one time where the Palestinian economy was working I think it was about 2007 there was a guy named Salam Fayyad who was the first time somebody came in who was uh he was not corrupt things were happening uh you know wages were rising uh projects were moving the money was actually getting to the people and he became so popular because he was such a doing such a good job administering that uh that the president got rid of him that a boss got rid of him because he saw him as a threat to his power so you know what's happened is not different right you always have kind of a tyranny of the minority in some way uh with with with most forms of of government and so uh what happened was is as he was starting to gain popularity he became a threat to kind of the cronyism that occurred and so I think that the international community if they're going to put money into this again to either rebuild number one it has to be conditions based again we've put tens of billions of dollars into this situation right I mean this this refugee group has gotten more money over time than any refugee group in history by a factor of maybe a hundred right and then you know you you've none of it's been conditions based and it has to be in in a set where people are trying to create outcomes I think one of the problems is a lot of the people working on this don't have business backgrounds they understand you know human rights or they understand politics but they don't understand capitalism and they don't understand what kind of framework you need in order to allow a society to thrive has Treasury ever tried to trace these dollars or some other organization to just show where the theft happened and where these pools of money have gone to there's some intelligence on it that I can't go into but uh but I think most people don't want to know to be honest I mean you could just look at it in a couple of ways like you know you look at um you know we would meet with Prime Minister Netanyahu in Washington and he would take a commercial ll flight to come meet us and he runs a military superpower an economic superpower in the region uh President Abbas would come visit us in Washington and he uh obviously represents a refugee group and he would fly in a 60 million dollar Boeing business jet a private jet to Washington I mean I'd meet with him and we'd be sitting around and uh you know he'd put a cigarette in his mouth and then somebody would come over and they'd like the cigarette for him and I'd be like am I meeting with the head of a refugee group I'm meeting with like a thing you know it's just it was a different situation and um but I think people just but he's the reasonable one right the alternative is Hamas and those guys I mean those are billionaire hypocrites who live in Qatar at the four seasons right yeah but but my sense is is you're you're going to get a lot of money and you're going to get a lot of money and you're going to get a lot of money at what you demand right and I think that from the U.S's perspective right we give about four billion dollars a year in foreign aid to the PA to UNRWA to Jordan to Egypt and uh and we've we've tolerated you know status quo that's not acceptable and you know one of the difference again Trump had a lot of tension with the foreign policy you know establishment and it was over a lot of things right obviously he wanted to end the forever Wars uh he felt like we should get some return on the investments we were making he felt like USAID wasn't an entitlement um but I think the biggest difference was they wanted to all maintain the world they wanted just to manage it and he wanted to change it and you know what we did by the by the time again this was one of the disagreements I had with the incoming administration um is that when we turned over the Middle East to them again we I spoke earlier about what a mess uh you know we kind of inherited when we started but we had uh five peace deals between Israel and majority Muslim countries uh Iran was totally broke again under Obama uh when he left they were selling about 2.6 million barrels of oil a day under Trump when he left office they were selling a hundred thousand barrels of oil a day they were out of foreign currency reserves they were dead broke uh now they're back up to three million barrels a day of sales they've done over a hundred billion dollars uh of oil revenue uh since we left office the Palestinians you know one of the things we did uh after I think the first year is we cut the funding to under us very controversial we're saying oh this is for refugees we said it's not for refugees it's to build Terror tunnels and rockets and they're saying no it's for schools and hospitals and we were saying those are the military bases and they were saying you guys are crazy you're cruel and our whole thing and so when we left the PA was was basically broke um the Arabs had kind of lost interest in in that cause uh because they kind of saw that it was it was morally bankrupt and that uh every time we gave a boss the opportunity to do something better for his people he refused and and they kind of saw that you know we kind of we smoked him out a little bit and so we kind of took the issue and we shrunk it tremendously and the final deal we did was between Qatar Saudi Arabia UAE Egypt and Bahrain and that was a critical uh deal to do because that was what really made it possible for uh Saudi and Israel to then do the deal and that was really on the table right when we left but it took too much time they allowed Iran to get too strong they started allowing Iran to get money they started funding the Palestinians and and under again and uh and now you have a situation where it's just become you know a mess it could be fixed it definitely can be fixed if you're strong and if you're smart but if you're going to go back to kind of the old ideas you're going to get the results you need new ideas you need to create the ideas and force them you can't just wait for them to occur and then go back to the old institutions and the old people who have failed before who do you think should be Secretary of State in the next administration I think Jared should let me ask you about the two-state solution let's just double click on this I mean my view on this and I think by the standards of Israeli politics I'd be a liberal there is that the only solution the only way out of this is the two-state solution you know we can't have a situation of indefinite permanent occupation of the Palestinian people at some point they developed a national Consciousness and if you have conditions of permanent occupation they're going to resist and you're going to have outbursts of terrorism at the same time if Israel just outright annexes these territories or continues on a program of call it creeping annexation or keeps building settlements in the West Bank and you have a greater Israel that eventually Jews in Israel will not be the majority of the population I think if you look at kind of greater Israel there's about 7.3 million Jews there's about 7.3 million Palestinian Arabs so if if the plan is a single greater Israel it's either going to stop being a Jewish state because you know the Palestinians will vote for something different or it'll continue being the Jewish state but there's going to be some sort of two-tier system where a lot of Palestinians won't have the vote and so eventually a greater is will have to choose between whether it wants to be Democratic or whether it wants to be Jewish and that seems like a very bad choice it seems like we want both those things to be true so again that kind of brings you back to a two-state solution as the only option here and yet it seems to me that the two-state solution has never been further away it seems like it's never been further away in terms of Israeli domestic politics and it's never been further away in terms of having a negotiating partner to negotiate something like this with so that would be sort of my pessimistic Outlook I mean I know you're pretty optimistic about the situation do you see it differently than that is that framing wrong somehow how would you how would you see it okay so number one is I'm naturally optimistic and I I just find it's more fun to be optimistic than pessimistic but I'll say everything I'm saying in the context of the fact that this is a really really really really hard problem set right so um I'll try to say this um in the right order so number one is I I don't think there's any viability to a one state and I don't think that that's something that will ever occur um number two is um and I'll actually you know what's interesting one of the problems is a lot of the uh the Arabs and the Palestinians would actually prefer to be part of Israel than a Palestinian state so right before covid we released the Trump peace plan which uh which again you can you can still find online and uh I think the political part of it was about 54 pages the economic part and the political part is about 181 pages in detail um we at the time got the right wing and the left wing again it was they were in the third election and we had uh Prime Minister Netanyahu and Benny Gantz who's also an amazing um person came in and they all endorsed it and so what I would find what I tell you is that semantics you know state has to do a lot with semantics so you can definitely give them a state the question is is you know you have to give Israel certain overriding security controls so that uh so that the state cannot be a threat to them and then you can let them kind of earn their way out of that with good behavior and and showing that it's a true partnership but what I will just tell you is that whatever you call it you give them a flag you can give them whatever you want unless there's a system where people can live a better life then the grievance will overtake uh will overtake whatever Independence they have and it will just become a problem again and so um so I do think a two-state solution is is possible again what you do with Gaza is very much you know TBD um but I do think especially in the West Bank there's definitely a possibility to do it and I think that from Israel they'd like to see that happen where uh they'd like the Palestinians to be able to govern themselves but it's it's a couple big ifs if it's not a security threat and if they can have a viable economy that's going to happen one of the big things that's happening now that I'm hearing about is that I think the number was like 250 000 Palestinians who had worked visas from the West Bank to uh to go into Israel and now with the threat there's just such a great distrust that has that has occurred that those are now not being renewed so I think Israel is going to have to bring in workers from other parts of the world but that is an amazing thing right you had Muslims and Jews uh you know working together you had uh you know Palestinians whose lives were better off because they were working with Israel so the vast majority of the Palestinians maybe not the vast I don't know it's people have different perspectives on this but I I just believe that fundamentally human beings want to live a better life uh I don't think our natural state is is to hate each other or to be uh or to not be together again if you look at the Middle East for you know a thousand years before the Second World War I mean Jews and Muslims and Christians they lived very peacefully together so you know what I was seeing with the Abraham Accords and what I was hoping would occur would really be a reversion to the pre-World War II error where people were starting to live peacefully together but there's been a lot of hate that's been fermented and manipulated over over this time but the best way to start it is just you know take it one day at a time you know we used to say in government we get a hard problem you know used to say you know how do you eat an elephant you know one bite at a time and so you just have to kind of outline where you want to get to put in place the right system and then just start you know step after step and then you get to a place and maybe you're able to do something that becomes viable with time Jared did you see the um debates last night did you watch them uh no I did not sex did you watch them uh I didn't watch the whole thing I've seen clips on social media do you have any takeaways I mean was it even worth watching yeah I thought I thought the the clips did a pretty good job of actually showing some of the punchier moments but the crazy thing is that the the mainstream media has completely erased Vivek's candidacy I don't even think it exists in the eyes of the mainstream media but if you look on on X all the posts were like he clearly won and he was basically throwing fireballs everywhere but then if you go to you know CNN or Fox you don't even hear his name right so it's it's a real real difference the mainstream media coverage is what they want you to believe and social media is what actually happened it's what people actually believe and I think that if you look at social media what it shows is that Vivek dominated the debate and he was throwing fireballs and he was slamming the neocons on the stage and showing that there's been I think an irreparable break between the neocon establishment the Republican Party and the more Populist maga wing so I think that's that's kind of what social media is showing and then you know if you listen to mainstream media there they they said they talked about Vivek it said he had some sort of meltdown and he insulted Nikki Haley's daughter or whatever or something like that about her tick-tock usage yeah by the way all he said is that they he was being berated for why he created a tick-tock account and he's like I want to reach young people you know like your daughter who's on there and um yeah that's what he said and Nikki Haley called him scum for that well no but she also she also pulled like the Will Smith line like get your my daughter's name out your mouth did she slap him no she didn't I think it's a pretty good point there's like 75 million young Americans on TikTok if you want to reach them that's where you post your messages I have seen Vivek's stuff on there I've seen RFK Juniors videos on there like everyone uses TikTok now if you want to reach people that's just reality Nikki Haley doesn't I'm not sure I don't know that she has much of a social media following because I don't think her campaign inspires any real grassroots I think her campaign is supported and propped up by the GOP establishment wing I don't think there's any market for what she's selling among the grassroots so social media is kind of pointless for her but if you actually want to reach people especially young people use social media well it's pretty intense when Vivek said that the the head of the RNC should just be fired for all the losing and kind of went through every single election in the midterms and whatnot that they've lost since she became the head of the RNC and apparently on social media uh she mouthed something to the effect of this guy's an a-hole he's not gonna get a single cent from us yeah no it's Ronna McDaniel who I know I mean I like Ronna but I mean has she done a good job sex look I it's hard for me to speak to the job she's actually done because I don't know the activities are actually involved in being RNC chair so but I mean Vivek's point is look at the results so if we were on the board of a company that kept missing quarter after quarter and the CEO said no look at all the good things I'm doing we would probably still fire that CEO just because you're like how do things get worse right you just take the chance that you bring in a new CEO they're going to do better so the reality is our results in the Republican Party have been shitty lately now is that all Ronna's fault no it may not be much of her fault at all but how do you do worse I think a big reason for the crappy results have been the abortion issue we've now had this issue on the ballot in at least six states most of which were red states a couple of them were purple states it's lost every time the anti-abortion or pro-life side has lost decisively every time and I think there's a lot of reasons to vote Republican I think Republicans have the advantage on the economy on border on anything related to to woke on um Prime and homelessness these are all issues that should be big winners for Republicans but the public by I think probably a two-thirds majority does not want to ban abortion and as long as that issue is in the Forefront Republicans are going to lose and actually it was Ann Coulter who just said this Ann Coulter had a really good blog post about this saying that the pro-life yeah I retweeted it by the way she's very pro-life I mean she's a social conservative but she says that pro-lifer is going to wipe out the Republican Party they need to focus on non-political activities which is winning over hearts and minds they have to make the case to the country they have to persuade more people because they're not in a position they are not popular enough to actually win elections you concur Jared you think the Republican Party is going to change their position or need to change their position to win elections presidential election aside well ultimately if you don't win then you can't govern and you can't impact the changes you want to do so I do think that uh people are definitely paying attention you know the results are the results I will say that you know one thing with with Trump he won you know with his operation we were able to over perform our polling I think here in these last times there's been under performance of polling and so that's something that obviously you have to look at which is uh very troubling but I'll also say that with you know what I found again you know I'm not really um as somebody who was newer to the Republican Party what I found is that you know both parties are really I would say collections of of tribes right you have different tribes that kind of make up the party but what I found in the Republican Party was that there was a ton of infighting and finger pointing and purity tests and um you know instead of saying like you know you know I'm happy you agree with me on on 70 or 80 it was basically saying well if you don't agree with me on 100 then then you're a bad Republican and I think that uh that's a that's a culture that's going to lead to you having very strong opinions but having no ability to effectuate things I think that people have to you know say where do we agree on on different issues uh that uh where do we agree on issues how can we work together to do it but if you don't win then you're not gonna be able to effectuate the things you want and even worse the other side is going to be effectuating the things they want and you look at where the world is today because of that there's a lot of internet fighting in the Republican Party I think Trump's instincts on abortion actually have been very good I said this a couple of months ago there was kind of a brouhaha on the right when Trump gave an interview in which he said that that actually went to Santa's had done in Florida with the six-week ban was a mistake and that he sort of up leveled the issue and just said I'm going to find a compromise that makes everybody happy and this created a lot of upset people on the right because they thought that Trump was kind of selling them out on the abortion issue and I made this case on Megan Kelly a couple months ago that I thought that what Trump was doing was pretty smart because he doesn't want to get pinned down on an issue that's going to hurt him in the general and I think part of the reason why he was being a little bit cagey on that issue is because he knows it would hurt him in the general and he's starting to think about that and I think the results that we just had the other day are strong vindication of that and just let me say just more generally that whenever Trump has opposed Republican groups think on an issue I think he's invariably been proven correct if you go all the way back to 2016 you know think about all the heresies that he committed in the Republican Party he spoke out against the forever Wars against Bush's forever Wars I think he was right about that at the time the Republican Party either wasn't talking about immigration or didn't really seem to care he basically made the border a huge issue I think it's proven right about that the issue of China and China trade was not a issue in the Republican Party if anything it was sort of the issue of China and China trade was not a issue in the Republican Party if anything it was sort of if anything it was sort of this the sort of unreconstructed free trade total free trade issue Brian was pushing the TPP value right exactly so Trump defied the orthodoxy on that I think it's proven correct Paul Ryan also wanted to ratchet back entitlements like Social Security Medicare and Trump thought that was suicidal for the GOP so he opposed that I think on all these issues whenever he has defied the orthodoxy he's been proven correct and um you know I don't know if it's a conscious thing or it's just that he's got tremendous gut instincts as a politician be curious to get Jared's take on that like how much of this is sort of him working things out and how much it is just his gut but I think this is why he stole the candidate to beat for the Republican nomination is at the end of the day for all of Trump's issues he's actually the best politician in the Republican Party you know I would see the way that he would work on trade and again uh you know trade deals usually take five six years and and you know his attitude on on trade was that whenever there's a multilateral it's the the weaker countries all ganging up on the stronger party and so he says like I want to do them bilaterally so he withdrew from TPP uh which everyone went crazy and said it was a disaster well we ended up negotiating with Japan and Korea and everyone and we got basically 95 of the market access that was in TPP without giving up any of the things that would have absolutely decimated our auto industry we renegotiated the the nafta which you know everyone said Obama said they would Bush said he wanted to fix it uh meanwhile Trump came in in a year and a half we renegotiated nafta and got over 80 votes in the Senate it was a bipartisan uh win and it set the highest standards for labor protection it did a lot of great things uh that I think make America way more competitive and hopefully will reduce our trade deficits so these were all things that he took on that people weren't willing to and again he said you know look if I'm wrong you know putting tariffs on these different countries I remember people coming into him saying uh say if you put these tariffs on the whole world's going to explode the U.S economy is going to blow up and I remember sitting with him privately and he said to me you know Jared I literally we had a year of debate and we had some people who were more religious about this issue than anything else and he says you know Jared I've been saying this for 30 years I believe it uh I campaigned on it I won on it I have to see it like I have to see it through it you know what if it turns out it's a big disaster I can always take him off you know and so that was kind of like his way of thinking about it where he had his instinct he followed his instinct but he knew he could always back off and I think his flexibility and unpredictability were some of his greatest assets and I think also on on the border and immigration again it's an issue with somebody you know grew up you know in the United States and then was living on the Upper East Side that I didn't a lot of resonance for but now you're seeing my friends in New York now they're getting a taste of what it can do you know to the country they're they're becoming you know big immigration Hawks like Trump the thing that the Republicans need to realize right now is that if you pick these topics that go down a rabbit hole you're going to be in a really tough spot in the general because the economy is also going to be in reasonable shape now if we were going to go into a November election where there were we were going to be in a recession that's very bad for Biden but sort of the tea leaves for whatever it's worth all the predictions all the predictive markets show that we're going to be in a reasonable place and so the Republicans get need to get very very focused acts as you say on the real issues list here right because they're not going to have the benefit of the tailwind of a bad economy to say President Biden has done a bad job necessarily and so the message will need to be even more precise and focused and so I think that that's going to be an important thing I did a little tea leaf reading on macro if you guys want to I have some charts yeah just let me just give you a little rundown of because I I went and I you know look we used to talk about these things when I was when we were doing a lot of forecasting going into this cycle but so here's like a couple of really interesting observations so the first one is when you look at this M2 money supply look how much it's actually shrunk now why that's interesting to me is that you have these two forces that are opposing each other one is we have these huge deficits so we're technically still frankly issuing a lot of money right but then on the other side we have QT so when debt rolls off we're not reissuing it and the balance of that is still a really constructive thing where now you can see that you know M2 has materially started to shrink and I think that that's a really positive thing because now what that does it combats inflation in a good way unfortunately for all of us it hurts financial assets which is not so good I think we've all felt that pain but the reality is that that's been working so then Nick if you go to the second chart so what you see now is like we are in a really decent place with inflation and if you think about what's going to happen over the next six months it's mostly in the bag and meaning we talked about this before but there's a lag effect on a handful of components specifically rents which when you roll them into this inflation rate you're going to see it really really turn over very quickly right so we know that inflation is falling it's going to fall even more the second thing Nick the third chart here is you can see that now validated in these 10-year break events remember this was the chart we used to look at when we were like holy mackerel something's going to break in November of 21.

I think we probably should have just sold everything we had in November 21. we didn't do it but the point is now we know and what you see here is the 10-year break evens are also telling us okay guys we're going to be in a pretty decent place and so I think the setup is basically the following there's less money in the system that's a positive Nick if you show the last chart there's more money on the sidelines and this is just a picture of I mean look at the amount of money in money market funds six trillion and growing so that's a really positive sign which is that money will need to find a home once we have once well no even just now because you're gonna you're gonna be in a situation where and I'll get to this in a second but companies are now starting to perform because they've been able to re-baseline against very very lowered expectations right and and money managers have to do their job and deploy capital and that's something we mentioned I think last week but this is now the beginning of the new fiscal year for the entire mutual fund complex so that's trillions of dollars that have to get deployed because even though you pay them a very small fee per year you're not paying them to hold cash you're paying them to make decisions and own assets and then as you said freebird the last part of this is now you introduce rate cuts and that's a real accelerant now more than likely I think what that means is that markets are set up to do pretty well equity markets specifically and so I went and I looked at the data and I said well how can we see some data that proves that this is happening and what's amazing is if you look at the performance of what I would call the most risk adjusted seeking companies so those are tech businesses that have been absolutely hammered what you see in the last month is they have gone just nuclear adyen up 30 in a matter of a week doordash is up you know 25 30 percent in a matter of a week Datadog up 30 percent in the matter of a week these are the businesses that were just completely decimated so what is all of this saying I think what what it's kind of saying is inflation is very much in the rearview mirror rates are going to get cut by the middle part of the year the economy looks like it's going to be a soft landing that is actually very beneficial for the sitting president it's also good for equities it's good for us so it's really interesting actually I think we've had a fundamental kind of now change Jared do you think it could still have an effect on the election cycle I think it definitely could but I do think a lot of people are still very concerned I know the the the the inflation the the wages wage inflation is still about four percent I think that people are um are still just nervous about what could come I think there's been a lot of shocks and there's been a couple of times where it's felt that way and I think that you know election years traditionally bring a lot more volatility to the market because there's unpredictability about what the policy will be going forward so I think that of people who have kind of been a little uh whiplash from the the transition of over the last year to 18 months see that they're going into another cycle of uncertainty I do think that you know now you're actually getting paid to not do anything uh with your money in those money market accounts so there's less of a maybe less of a FOMO to kind of go out and do something uh there so so I think that a lot of people are still going to be very much in kind of wait and see mode and obviously look for for special opportunities which I think will only further exacerbate uh a potential decline as well Jared last week we talked about real estate you used to be in the real estate business what do you have any thoughts on commercial real estate and how good bad average things are so I still have a lot of exposure to commercial real estate through my family's company and uh we're mostly in the multi-family space I think the office space right now is in for a massive uh change in the industry I think you're going to see a lot of the older buildings get uh get transitioned a lot of them are trading now for below uh land price which is which is pretty remarkable I think you have um you also have a transition kind of what are the cities of growth right so you look at a place like San Francisco and there's a big debate over whether you know AI is going to save you know the office market there or whether it's kind of like the Detroit of this Industrial Revolution and it's just never going to come back and then you're seeing a lot of these San Francisco companies move to New York and the New York people are saying oh there's too much crime and homelessness and they're saying compared to San Francisco this looks like uh you know a super it's a beautiful place and so you know New York is still doing I think okay but you're seeing a lot of plays throughout the country that that are but the fundamental with real estate is it's correlated to interest rates and so you know if interest rates you know right now I think the 10 years like four and a half if it goes up to to six and you're just going to see it repricing and real estate assets if it settles at at four and a half five then you'll you'll probably see more stability and what that will be but ultimately uh real estate's become much more institutionalized over the last call it two decades and it's really a function of you know what are your your rent and expense growths and then what kind of what can you borrow at and can you create you a positive yield that's hopefully a good hedge against inflation so I I think net it will be a great asset class I mean it's probably one of the biggest asset classes in the world um I think right now though a lot of people are just holding back because they're not certain what the what the uh what the multiples or cap rates as they call them in real estate are going to be on a forward basis but they're really going to be a function of of what's the growth in the economy going to be and then also uh what the forward interest rates will be that's fair I think that the things challenged in real estate I mean the demand size challenge because you've had the whole work from home covet disruption and a lot of cities haven't fully come back I think New York's come back at this point but like San Francisco definitely hasn't I think New York is something like 95 of workers are back in the office I think in San Francisco it's only like 45 so you've got demand issues then you've got financing issues you know um refinancing is much more expensive because interest rates are higher and then you've got these cap rate issues where no one knows what the long-term valuations are going to be so everything's a mess and by the way that gets compounded by the fact that now banks that have office exposure are pulling back their lending so you have a combination of you know cost of borrowing being higher and then the availability availability of liquidity going lower and that could further compound a lot of these refinances but a lot of what the people I know in the industry are telling me is that they're able just to work with existing lenders and just do some kind of uh extension and and you know just kind of live to fight for another day to get through the cycle and I will say in New York that the the rental rates for residential I think are at a historic highs and and actually what my family seen in their portfolio is that their properties in Jersey City which is basically like the sixth borough of New York are just absolutely on fire because it's basically you know you go in New York now you go to a CVS everything's locked up you can't buy anything it doesn't feel necessarily like the safest City you go to Jersey City they actually have like you know law and order and rule of law and so um so you still take a train to New York and that's actually been a place that's done incredibly well so you always have micro markets and you have different Trends that that work and don't work but uh but I wouldn't bet against New York it's still an amazing City and one thing about New York is every time I'm there I always talk with some of the cops and I basically ask them I say if you had a mayor that said uh go be cops go be cops nobody's gonna you know hold you back you know get out of the car do what you do we got you back how long would it take you to clean this place up and the answer I get is usually anywhere from like three months to six months so like we could have this place fixed so clearly they just have to let us be cops again and um and so I am hopeful that you know eventually there will be the political will to just you know let New York be what is it has the potential to be it's such an amazing dynamic place it's such a good point I mean it really is is just a matter of political will yeah if you hire more cops and let them do their job that will stop the crime or certainly the incentive for crime right now people think they can get away with this stuff and they don't get prosecuted when they get caught the jails are like a revolving door yeah they have plenty of cops they just have to do their jobs and they need prosecutors who will who will do their jobs as well and I worked at Manhattan District Attorney's office when I was at NYU law for the summer I mean you have amazing people there and if they are allowed to kind of follow the procedures and just just do the job in the way it's been done before uh you could make that city very very safe very quickly we actually have a cop shortage in San Francisco as well it's not just a matter of not letting them do their job we actually have a massive shortage the city needs to hire a lot more they allowed a pretty great rate of attrition in the role I don't think there's a lot of people who want to be cops in San Francisco it's a pretty tough job and they'll get a lot of support so yeah we actually have a shortage here and that's a big problem yeah but it's very solvable as you say I mean just hire more train them let them do their jobs Jared how much do you think um federal deficits and the federal debt matters going into this election cycle is it going to be a top topic or is it not really going to matter and then more importantly how consequential is it in reality I think in reality it's it's massively consequential um I think in the election cycle I think both parties are going to probably try to avoid talking about it because I think that you know everyone knows you know what I find in politics is when some things are really big issue people try not to talk about it that much and um but the hope is they're going to have to get cut right the hope is is that you know um once you get through the election things can be done to to to have to deal with it but it's definitely an issue that needs to be dealt with what do you think that is raising revenue or cutting expenses or both growth growth is the answer everyone that's that's the political cop-out answers growth six percent economic GDP growth how about we free spending until until the denominator can grow big enough to reduce the I mean balance budget Amendment Etc but but speaking of GDP growth I mean do you guys want to cover tech stories and AI this week real quick before we mean it's really incredible can I just uh I got I can't resist getting Jared on the record about uh the Russia Ukraine war oh so I mean this is a war that I thought was very easily avoidable you have a one minute budget one minute budget that's all I need I'm starting the shot clock Chamath is gonna ring the gavel I'm gonna take a break go you got 60 seconds I think uh I think David's happy to have somebody on uh who agrees with him on on most of what he's been saying uh so yeah we we worked with uh with Ukraine and we worked well with Russia uh during our four years uh I I'd like to point out of people that uh when we were in kind of our worst moments in covid the the second country that sent us a plane load of supplies and ventilators when New York looked like it was you know on the verge of going under was Russia and that was because we were offering them the possibility of of working together we armed Ukraine but we also told Ukraine you know don't even think about raising NATO uh as a membership as a way to go I think what happened was is the Biden administration uh you know had conversations with Ukraine about joining NATO Russia basically pushed their their military to the front line to say we are never going to let this happen if you go through uh kind of the geography and the history you understand why it's going to happen why um you know Russia you know will never let that occur and I think it was right after you know the embarrassment of what happened with our withdrawal in Afghanistan where they thought that we had a weak America that was going to come and do much to it so I think it was all very very avoidable I think that you know from what I read and again I wasn't involved in these conversations it did feel like there were some off-ramps uh initially but I do think that from our perspective I think the number one interest has always been how do we avoid a nuclear war I don't think that that's uh that's something we want to see happen and I do think that um I do think that hopefully they'll be able to find some kind of resolution to uh to not have that be a problem and I will say too that that's impacting the Middle East I mean right now what's happening with uh with Israel and with uh with the Palestinians and Iran is basically a proxy war for Russia I mean if America decided tomorrow let's change and support the Palestinians that Russia would come and be for Israel I mean there's not a lot of ideology for them in that but I think Russia and China want to see the U.S stretched and distracted so that we're less focused on kind of the areas where we're more directly uh uh you know you know you know you know you know you know uh in um in in conflict with them and so I think that that's a very major thing and I will say too like I I think that you know I I don't believe that the countries have permanent allies or permanent enemies you know I during my time in government we deal with the Germans and the Japanese who were vicious in World War II and we'd be against the Chinese and we'd be against the Russians who were basically our allies in World War II and so um I don't think countries really have friends I think countries have interests and I think that with with most countries you have areas of interest and I think that you can find those even with countries where you're in opposition for so you know one of the the operating principles I I brought to all the different foreign policy problem sets I was given was don't condemn tomorrow to be like yesterday uh because you think it has to be and so I would always look at something I try to pull whatever optimism I could find and then say you know what's the best case scenario from a first principles perspective I'd start there and then I'd work through all the problems uh that you had to try to get there so um so so um so David I think you've been uh way more right on Ukraine than than others and uh and I do think there's been a tremendous amount that's been mismanaged by uh by the US and and by the world in that in that scenario and I think it's unfortunate too because I think a lot of people have been killed in that war and I I do think that obviously the invasion of Ukraine was was a terrible thing it should never have happened but I do think there's a lot of um acts by leaders that could have been done in order to either prevent it or or minimize it and and I still think that that's one of the leaders in the world is to try to do the hard things and try to do the things to to make the world a less volatile and dangerous place you think it's coming to an end it's definitely lost its prominence it does seem militarily um again I'm sitting here in Miami you know reading you know you know X and newspapers and talking to folks so I'm not going to opine like I'm a general on the front lines but um but it does seem like it's kind of reached the point where it's not much is going to change militarily and uh and and and uh I think that's that's what I think is the most important thing um you know again like every day that goes on there's just more life that's being lost and again I said the same thing with Israel that I'd say here I mean Russia and Ukraine both have you know unbelievably brilliant people if you take all these these young men and you take them off the battle lines and put it back into you know their jobs of of creating things I just think that that that's just a much better thing for the world so uh my hope is that you know the leaders involved try to find a way to get to a resolution uh again you know I think that you know both sides have maybe over promised their people what what Victory looks like but that's the job of negotiation right you need to you know you need to find an off-ramp for everyone and get them to a place where we can you know start focusing on how to make tomorrow better instead of litigating grievances from the past do you guys see that Sunny Sunny tweeted this thing he had dinner last night with Farhan Thawar who is the VP of engineering at Shopify did you see his tweet yeah can you find it he said that Shopify has written more than a million lines of code with copilot already oh wow I was like what yeah I mean I don't exactly know how much there's your GDP growth Jared well that's definitely growth I wonder whether it'll be it'll be GD I mean I think it will I think a lot of product productivity gains are going to drive the economy forward historically I was just talking with someone this past week about over the last couple of decades we've seen a massive shift on GDP growth being driven largely by labor the labor force growing and labor participation and increasingly in the last couple of years there's been this tremendous shift that all GDP growth is predominantly driven by productivity gains and productivity gains you know economically net their way through the uh the system and you see the the total GDP grow this is the whole argument for AI particularly at a moment like this that if you're having a declining population you're having declining labor participation people want to work fewer hours if you want to keep growing the economy in order to sustain the debt and the services that you provide through a government infrastructure you have to grow the economy and you have to increase productivity it's the only way forward it's I mean like you could have one it's not like you're going to fire Engineers you're just going to have one engineer do five times as much Dave you just solved the whole budget deficit and debt issue you found the answer it's productivity driven by by the AI Advancements which by the way there is a lot of tremendous productivity gains that will occur because of this I always give people the example of the tractor like when the tractor came around it's not like you know people were like hey we're going to make less food now or you know what happened was we were able to farm 10 times as much and you know total output increased and when total output increased there was an abundance of surplus of food of calories that fed people population grew the overall economy grew there's no point in history that we've had a productivity gain through technology that didn't ultimately grow the economy like it's never well ever gone the other way in 1900 I think about 50 of workers in America were somehow involved in agriculture yeah by more than that yeah by 2000 it was down to like two percent one so it's not like we had a 40 unemployment rate all these other figures figure it out a way to do new and productive things and that led to more wealth that being said it did cause a lot of social disruption and I think certain job classes went away it had to get replaced by others that had to be invented if you think about a world where there's a million little companies or 50 million companies or 500 million companies that exist because there are one and two person teams that can build stuff that seems pretty reasonable and logical as the outcome there's a lot of sort of like financial engineering that kind of goes away in that world right I think the job of the Venture capitalist change is really profound I think there's a reasonable case to make that it doesn't exist it's more of an automated system of capital against objectives right and that you want to be making many many many small hundred thousand five hundred thousand dollar bets and then you get to this much larger scale where then you once you get someplace you can go and get the 100 and 200 million dollar checks I don't I don't know how else all of this gets supported financially well so there were a couple big news stories this week one was Elon launched grok which is a chat GPT call it competitor it took them about under his xai business unit took him about eight months to train grok one which is the model and by many measures is as performative as GPT three and a half GPT four at the same no no rock zero it took three months to train grok zero he's still training grok one sorry three months to train grok zero yeah kaifu Lee you guys know kaifu yeah he was at Google he was at Microsoft yeah and he is um in China and built uh his business starting eight months ago and in those eight months uh he's now delivered a 34 billion parameter model that he's completely open source that he shows by again some performative metrics outperformed llama too and again doing it from China speaks I think really clearly and importantly to the point we talked about last week about if the U.S tries to overregulate AI model development there are alternatives out there particularly open source alternatives that will continue to proliferate and improve and again this was done in eight months and then it's almost like the timing was perfect because in the same week open AI responds with developer day they didn't necessarily respond but they had developer day on the books for a long time and at developer day open AI released a number of really powerful tools for developers that allow them to build really powerful applications and infrastructure on top of open AI's platform so they released APIs for dolly 3.

a four cents to generate an image using the dolly 3 API they launched a tool to create your own GPT which can actually leverage proprietary data so from within your own database you're in your your own data Lake you can build a GPT that you can then integrate into applications and GPT-4 Turbo with two versions that had you know pretty powerful pricing improvements all of this um being said it's a it's a big leap forward in what feels like a low-cost low friction multimodal developer-friendly set of tools from open AI that allows them to move away from having the quote best model to now having what feels like much more of a platform business that has more applications and more developers start to utilize open AI's toolkit and services a real ecosystem starts to develop and that creates a sustainable business mode rather than just the technical mode that open AI started with so I think the big point is that we're seeing the technical Gap narrow between the best and the average or the worst in the median in model development we're also now seeing that the evolution for a lot of these businesses is through open AI trying to you know applications on top of a platform and build a business mode and so there's a real shift underway but net net I think what the market's forcing everyone to do is really compete and build these incredible capabilities that are really going to launch a number of new business models new innovations I think the question is are we building apps for the iOS app store are we building web pages for the open internet and I think open AI's hope is that it's apps for the app store because it's proprietary and they own it they could take a share I think the reality is it's going to end up as the open web and again I think it's mostly because everybody else just can't afford to let one company run away with it and so you know whether it's llama or Mistral or even grok when Elon open source is it it's going to allow people to have access to these tools basically for free the problem that I think it creates is you know we had a you know when I first came to the United States my the the company that I worked at AOL they were the ones that believed in a fundamentally closed internet right and you had this service and you went into the walled Garden of AOL and then the pendulum swung over the last 20 years and we opened it up at Facebook and at other places and now we have this fundamentally open architecture the problem now is these models will not get better unless you have fine tuning that happens by yourself or these reinforcement learning loops that come from data that you control and you can see it with grog zero part of what makes grok really successful is that Elon and only Elon can give access to the x fire hose to grok now that's a ginormous repository of proprietary data that they're going to be able to train on so then the question is well obviously then Facebook will want to train their models on Instagram and their models on WhatsApp Google will want to train Gemini on Gmail none of those companies will want to make that available to any other model and so the unfortunate byproduct of a more of foundational models that are more pervasive is going to be that the internet gets a little bit more closed in the short term and we're going to have to really figure out what the implications of that are so I think what that means economically is there's just going to be a lot more small companies and a lot fewer of these ginormous outcomes and that's on balance probably better for you know innovation in the economy probably yeah data is the advantage not the model itself you have to you have to own some data asset that is unique so that you can train these models and then you have to close it off so nobody else can have access to it and that has to be an explicit business decision because it would be foolish for you to not do that did you take anything away from this week's announcements with kaifu Elon and openai's developer day grok is interesting as an AI because it has a sense of humor um that's what's kind of interesting about the user experience is it tries to be funny it has a sense of irony it's also willing to be more politically incorrect and I think one of the concerns about chat GPT early on was that it was programmed to be woke and that it wasn't giving people you know truthful answers about a lot of things that the censorship was being built in to the to the answers and there was a lot of examples very early on where it seemed like there was some sort of trust and safety layer that had been built on top of the AI and sometimes it would intervene and not give you the true answer that came from the AI would give you kind of some made up boiler plate and so having something like rock around will at a minimum keep open AI honest and keep you know keep chat GPT honest because if it's willing to give you truthful answers about things that you compare to the chat GPT answer then we're going to know when these like so-called trust and safety interventions are are happening so I think that's kind of interesting separately the open AI developer day shows that that company if you want to call it that I don't know if it's a company or Foundation or what but it's a complicated legal entity uh I mean those are details yeah those are details um I mean they are really um trucking along at full speed I mean it is pretty impressive what they're shipping yeah and even if the underlying language models get somewhat seem like they're building a very robust developer ecosystem so you could analogize it to something like stripe where credit card payments are pretty much a commodity but everyone uses a stripe because their dev tools are so good and then they're able to get to a bunch of scale network effects because again their developer platform is so good so I do think that that's the advantage of open AI may not be the model itself although I think I think their model is actually pretty good but it's is it that much better than llama 2 probably not but the developer platform is getting really good by the way that's a really interesting analogy because if you play that out and you say is AI like payments well what does the payments landscape look like in terms of companies that have real Enterprise value there are I guess three or four big ones and then there's a bunch of long tail ones in specific geographies because there are these random rules in a country and you build something to be very specific to it and you have value in that market or in that use case and uh maybe there's an analogy there and how this market develops in that sense there's four or five big foundational models and then there's a bunch of small vertical use applications that you use depending on what the task is well the time and the cost to build new foundational model seems to be shrinking had a pretty fast clip so and by the way all of this happened on H100s yeah and a bunch of these happened on a100 so we're still one generation of silicon behind so to your point this thing is going to be like people will be training models in weeks yeah so let's go ahead and track all the world's models and have a federal regulatory body overseeing all of this well I'm I have a guy from the UK on an H1B so I'm still filling out the TPS report because he I told him don't touch the model and he did yeah yeah definitely following high level from my perspective I I think it's it's great especially with what you mentioned about kaifuli it just confirms what we've thought what we've thought which is that America is definitely leading in this and I think that it's just important to to note that they're leading be really because of the private sector and the fact that the private sector has been allowed to do what they do and as we start to think about the regulatory frameworks I mean you could think of a open AI as a as a company or a foundation or even as a nation state with with kind of the amount of power that these things will have the ability to to harness once they're they're fully scaled and I I just think it's it's it's going to be very interesting to see I think the more uh competitive competition you have here I think the better uh it will be very very good but I do think you want the most powerful um models the most powerful platforms to be in the hands of people who are going to try to apply it for all the right uh all the right things for society so I think that there's a lot of positive applications there's a lot of negative applications that can come from this and my hope is that the regulatory frameworks that are developed won't stifle Innovation at the expense of allowing others to get ahead of us who will probably use them in in ways that we would not want to see them used right can I fly a couple of features that open AI announced that I think are interesting yeah yeah as long as you don't repeat what I said because you weren't paying attention but yeah no go for it well did you mention the well if I got this wrong with delete it but did you mention the 128k context window no I did not I did not no good job it's kind of a big deal what that means is you can have a prompt that has 300 pages of text in it yes I'll tell you like several months ago I was trying to figure out like is there a way where I could just put all of my blog posts in a prompt for chat GPT and have it turn into a book for example and I was kind of like a problem I just started working on it was actually very complicated to try and solve that yeah also like also vector DBs were a totally useless intermediate like that abstraction didn't need to exist that's all gone now too they're doing those guys are firing on all cylinders it's really it's really impressive to see yeah the other thing is multimodal I mean so they're really stressing the idea of combining text with photos I guess videos will eventually come later um text-to-speech but again having multiple kinds of inputs and outputs for the AI I think yeah and proprietary where you can plug in your own proprietary data sources I mean it's just a game changer for a lot of Enterprise customers I think those developers are going to go nuts I heard a lot of positive feedback from developer folks I know who attended and sounds like it was very positively received okay well this has been great Jared thank you so much for joining us today it was really great to spend time together this is the point in the show where you tell David Sachs that you love him and uh he says right back at you guys I want to say sticking 153 episodes but finally there's a person that I can say I'm now the second best looking guy on this pod so Jared thank you for coming on oh you guys are the best I'm gonna come back more often than if you'll have me I get treated better here than I do in my home so it's good so so do we that's yeah yeah together but thank you guys for having me on and and really thank you for all the different um you know important conversations you have and again I've met a lot of people who listen to you guys over the time and uh they all find that you guys give them a lot of good input into a lot of the issues that are impacting our daily lives so thank you for the opportunity to be with you thanks man thanks for being here thanks for being here thank you very much we'll let your winners ride brain man David Sachs and it said we open source it to the fans and they've just gone crazy with it love you guys I'm queen of kinwah we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension but we just need to release that now what you're about B what your B we need to get merch I'm doing all in I'm doing all in you