Hey, everybody. Hey, everybody. Before we drop this week's amazing episode, just some quick information for you. Sax and Chamath both had the week off. So we had two amazing friends of the pod on Gavin Baker from Atreides and Joe Lonsdale from 8VC. What a treat to have them on the program.

But there is some big news, huh, Freeberg? Yeah, well, the news dropped after we recorded, so it's not going to be referenced. And the show might feel a little stale, but here we go. Our friend David Sacks is the White House A.I. and crypto czar of the United States of America.

Congratulations to our boy. Amazing. Super thrilled. That is a big reason why he wasn't able to join us for the show. He was in the middle of getting this news ramped up. Yes, it came out. We had already recorded. Yeah, take that into account as we go into the show.

Yes. And according to Trump's truth social post, Sacks will, quote, guide policy for the administration in artificial intelligence and cryptocurrency. He will also lead the presidential council of advisors for science and technology. How great is that, Freeberg? Wow. Science corner in the White House. Can't wait. It's going to be it's going to be amazing and pretty awesome.

I have no announcements. The rumors about me becoming press secretary are obviously premature. But if asked to serve, I will serve my country. OK, let's get to it. Don't worry, besties. All in isn't going anywhere. We'll be here every week for you, except maybe Thanksgiving or a holiday now and again.

All right. Let's start the show, huh, Freeberg? Great episode. Let's go. All right, everybody. Welcome to the all in podcast. I am your host, Jason Calacanis. How are you doing, Freeberg? I'm hanging in there. I'm waiting for the tsunami to hit. It's going to we're about 40 minutes away.

I'm a little anxious right now. More anxious than normal is what you're saying. Like on a scale of one to Freeberg, this is like as anxious as you get with the tsunami. I don't know what's going to happen. This current warning shows a five foot water rise for five meter.

I can't tell. God, I really hope we don't publish this episode. And there's like a total disaster that we're kind of making light of it. We're not going to make light of it. We get warnings once in a while. Just to give everybody a little perspective here. I'm at David Saxe's house.

I've taken over, as you can see, I got my Moncler hat on, Freeberg. I found Saxe's robe in the shirt. It was Saxe's robe, but I got a red sharpie and I just crossed it out and put J-Cal on it. And then I went down and I was talking to Chef.

Does Saxe know that you're staying at his house? He knows I'm staying here, but does he, though? He doesn't know that I found the actual caviar. We open source it to the fans and they've just gone crazy with it. Love you guys. I'm the queen of quinoa. With us today, Chamath couldn't make it this week.

And Chamath had surgery and now he looks like Gavin. OK, yes. And Saxe is taking a day off. He's he's he's got the day off today. I think he's just winning too much with us. Two substitutes jump in here for the team. Cackling. You can hear the cackling. Joe Lonsdale.

There's Joe Lonsdale. I'll take my Moncler hat off here. And J-Cal. I am also winning too much, but I'm happy to be here last minute as a sub for David J-Cal. Joe Lonsdale, for people who don't know, is to the right of David Saxe. He is a venture capitalist and he started a couple of companies.

You might have heard of them, Palantir. And what are the other greatest hits? Adipar. Adipar just crossed seven trillion dollars, reported on it this month. It's a real company, too. Yeah, the OpenGov sold this year. We started a bunch of grants. Yeah. Joe gets he's you're a little bit lower profile than all these accomplishments.

It's pretty incredible. Co-founded how many billion dollar companies have you co-founded now? I don't know, maybe six or so. Six or so. Also with us, Gavin Baker from Atreides. He is a hedge fund manager. He does private. He does Publix. One of the smartest guys I know. Great analyst.

Welcome to the program, Gavin, friend of the pod. Thank you, J-Cal. Happy to be here. Great to see everybody. Yeah, we are experiencing a huge Trump bump. The election is over. The cabinet is being assembled and we're seeing DOJ, the Department of Government Efficiency, as well as maybe regulations being pulled down.

And we'll we'll get to our first topic about our new SEC chair. But just generally speaking, Gavin, as a market participant for a living. What's your take on what we've seen over the last three weeks since the election results came in? So if they execute on stated plans and.

There are some of the world's greatest execution machines involved. You know, Elon generally does what he says he is going to do. Like this is going to be awesome for America, for markets, for the world. And the analogy I keep coming back to is Satya Nadella taking over as CEO of Microsoft.

Microsoft was a monopoly, incredibly advantaged. It had just been horribly mismanaged for years. All he had to do to start winning was stop doing really, really dumb things. And that's an incredible place to be. You know, America, like we're the greatest country. You know, we've got, you know, oceans on two sides, peaceful neighbors, incredible natural resources, you know, completely, you know, can produce our own food and energy, like in many ways, most privileged country on Earth.

But sometimes with great privilege comes great like stupidity. And California, to me, would be a leading example of that. Most in many ways, most privileged state in America and has printed it away with bad policies. And I do think one thing that everyone of all political stripes agrees on is there are too many regulations that result in far too many administrators, far too much complexity and an inability to build things in America.

So, you know, it was used very effectively and as it should have been against the Harris administration that they'd approve $42 billion for rural broadband, hadn't built anything, had approved $40 billion for EV chargers, whatever it was, hadn't done anything. And it's not that they didn't want to, you know, dig trenches and do broadband.

They didn't want to make EV chargers. Their own regulations prevented them. So I just think deregulation and simplifying regulations and the tax code is going to lead to an immense amount of growth, which is something that all Americans should be happy about. Joe, you want to maybe give us your take?

I know, obviously, you're very vocal. You're obviously a conservative run think tank and have strong feelings on all this. But there is consensus, I think, amongst all Americans that we don't like fraud, waste, abuse and those items. Those seem to be consensus building efficiency and paying lower taxes. All of that seems like something almost all Americans, most Americans can get behind.

So I guess maybe a little bit of your take on what we've seen in the markets and the plan. And then also, are you going to be involved in this at all? Well, listen, Jake, I think I do agree. I think almost all reasonable Americans can see that our growth is ridiculously constrained.

And I think Jeff Bezos was saying yesterday, like we need a growth oriented mindset if we're going to get out of our debt problems, our deficit problems. So it's nice to see everyone kind of coming on the team and saying, yeah, we need to fix these things. I think what people don't understand is like just how broken the government bureaucracy and regulations are, right?

It's not like they're kind of sort of bad. Like it's almost like they're companies that went bankrupt. Like think of the worst company, you know, in Silicon Valley. They went bankrupt like 30 years ago. And imagine if someone just like kept pumping money into that worst company, you know, over like 30 years to keep hiring people.

So like Yahoo or AOL, like some legacy company. It was failing to take the worst department there. And then like the worst department gets the most money. So it's like it's like it's like more, I guess you can use the word retarded now. It's more retarded than anything you've seen in a long time.

And I think one of the important things is America used to have these really hard tests for 100 years. You know, this in 1883, we said, you know what? We shouldn't just hire our friends. If someone's going to run something in government, let's have these tough tests, kind of like China did for thousands of years.

And for 100 years, we had really hard tests. When we went to the moon, when we fought the world wars, you know, we did the Manhattan Project, the people making those decisions in hiring people had to pass things that really only like five, 10 percent people could pass who took them.

And then in the late 70s, we said, not only are these tests racist, so we can't test people anymore of any background. We also can't fire people anymore because we're going to give them tons of protections. So and so the last 40 years, it just got dumber. And then 10 years ago, you started doing all the virtue signaling and and, you know, hiring based on your identity versus based on anything else.

So it's got even worse. And so now it's so broken that, yes, we're letting tens of billions of dollars on fire. And so there's really two things here. One, you've got to take a chainsaw. As Elon, like I said, you've got to get a chainsaw and just like cut a ton of broken stuff.

But then day two is you got to say, how do we make this not stupid in the future? And there's things like maybe you bring back tests, maybe you bring accountability. The thing I think I'm most passionate about is, you know, right now there's over a million rules to the federal level.

It's stuff that everyone disagrees on. You can be the most left person trying to build like solar or wind or whatever. And you're like, what? I have to do what study over how many years? This makes no sense. So we got it. We got to we got to take these regulations and not only cut them, but we got to make a data driven system that forces regulations to defend themselves.

And that way, instead of having a cancer that just grows forever out of control, you could actually have a process that like naturally trims things, naturally makes things fight for itself. And that way it doesn't get as dumb ever again. I would. Why not just make them automatically sunsetting after five years if they're not renewed?

Exactly. But make the process to renew them difficult and data driven. Exactly. So basically, yeah, yeah. So just if you the process of renewing them will take so much time that it will slow it down. I wonder where we got to the place. Friedberg, I will bring you in on this since really.

I think it was maybe two or three years ago you started to point out exactly the debt spiral we to get in. I want to give you your flowers here on the pod, because from this pod and in your obsession and you're harping on and on about this national debt problem, you saw it early.

You talked about it constantly. You brought a lot of consensus on board. And now we're seeing it as the issue of the transition is the debt. And we were sitting here for the past year or two saying, when are politicians going to even pay attention to this? And now they are paying attention to it.

So first, here's your virtual flowers. Second, how are you feeling about the transition today? Well, I mean, I think first of all, there's like three layers of the problem, which I've been trying to harp on for almost four years. Number one is the inefficiency and lack of accountability, which Joe and Gavin are obviously talking about.

And that leads to excessive spending. And that leads to the debt problem. And the debt problem creates this kind of arithmetic debt death spiral, which is something you don't want to find yourself in. So that's the inevitability that I've been kind of really worried about. And I think that, you know, look, there's the first derivative and second derivative can kind of get addressed.

And then hopefully you don't get to the absolute point where you have this breaking breaking point. I think right now everyone's banking number one on can we deregulate in a way that can unlock growth and by unlocking growth? Right. The the the kind of arithmetic argument is grow GDP because you're not going to be able to shrink debt super fast in order to grow GDP.

There needs to be some unleashing happening. And so if you can get GDP to grow four, five percent. And you can minimize the excess spending, meaning you can minimize the deficit, the federal deficit, and therefore minimize the increment in the debt level, the debt to GDP ratio becomes more manageable because ultimately you can only tax so much of GDP.

So, yeah, I feel like this is important in both senses. One is just cut the inefficient, wasteful spending, get rid of the regulations, and that'll unleash. The necessary growth, one of the proxies I look to, and I think that this is going to be kind of the critical motivating factor for the United States, whether it's this administration or the next or on a content of continuous basis, there's going to be this kind of moment where we're going to look across the water at what China has.

And you can see what China is getting, what China is making, what China is doing. I've talked about this a lot as well. And I do think this is the most critical metric that no one talks about as much as I think we should, which is the increment in electricity production capacity in China compared to the United States.

And so we are going from one terawatt to two terawatts. They're going from, I think, two to eight over the same time period. And why is that so important for the people who are listening, who think you're saying? I'll let you I'll let you answer that. Go ahead. Just unpack it for the audience.

I mean, I obviously understand why this is important, but I want you to. The number one thing I'd say is it's usually correlated to how well the working class is doing in your country, to per capita GDP, to cost of goods. I mean, obviously, I care about it because we want to scale AI for all the things we're doing and we want to be able to do it effectively.

But if you just look over time, it's really clear the relationship between how well is your average working middle class person doing and their quality of life, their cost of life and the cost of electricity and cost of power. And it's crazy. We're not just like ramping up and cutting more to do this.

More electricity means more automation, means more AI, means more things are being done for the for every person that are being done in factories or being done by machines. And that unlocks a new kind of level of living. And that's been kind of a continuous process for humans. There's this guy that writes these books that Bill Gates always talks about.

Vaclav Smith, Smiertz, no, no, no. He's got all these books on the history of the relationship between energy and kind of prosperity. There's definitely correlation there. And there's definitely causation there, Gavin. And there's even like really simple ones. I don't know if you've ever seen Lee Kuan Yew from, you know, the founder of Singapore essentially talk about just how air conditioning change the country's fate.

It raises average IQ by two or three points. It really matters. But look, I think at the end of the day, at the end of the day, my key point was we have to make sure that this administration and Joe can hear me on this. And I know he he believes this.

But for me, it has to be such a priority that we accelerate a nuclear energy rollout in the United States, because that's what China is doing. They have dozens of Gen four reactors that are going to get built out, each of which has a gigawatt of production capacity. And they're doing it at a cost that we can't compete with today.

But fundamentally, they can do it in the US. We can't even do it. And regulations, it goes back to Joe. Yeah. And so the regulatory structure prohibits our ability to actually expand energy capacity or electricity production capacity, which is a critical difference. And that ultimately leads to a situation where in 10 years we're going to be looking across the water at, you know, a competitive country that has three X, four X, the electricity production capacity of our country.

And everything is cheaper. Everything is faster. It gives them superiority in a lot of functions that we can't. This this is a security thing, too, because we need manufacturing here to be affordable and competitive in order for our national security. You know, David, when you when you texted me last minute to join this, I was actually in a meeting with our friend from Founders Fund who's building nuclear fuel again for the first time in the US.

That's actually gone away, too. And so so that needs to be approved. But, you know, I know Chris Wright, he's a nominee for the new energy secretary of energy. And he you know, he's super pro Liberty guy, but super pro cheap, cheap energy guy and pro nuclear. So I think we have some really great people who care about this.

We're going to be fighting hard for it. Gavin, what's your read on it? Yeah. What's your read on energy and the blockers? I mean, more nuclear, more better. Like, I mean, I agree with everything Joe said. And the only thing I would just add is it is the most environmentally friendly kind of energy source.

It's the most it's even more like I think it is highly likely that in my lifetime, the world just runs on solar. Like if you just, you know, we all know compound interest is the greatest force on Earth. But if you just look at the rate at which photovoltaic cell efficiency is compounding.

Battery efficiency is compounding, and people make these balance of system arguments, but it will it will never be as cheap as nuclear, but it will likely approach coal. And I think a lot of the world will run on solar. But that's going to take 50 years. Nuclear is arguably just as environmentally friendly, done right and carefully.

And it is here now. And so I just. Yeah, I mean, that's yeah, I don't I don't I don't it is unbelievable to watch. Not exactly Moore's law, but this precipitous drop in the cost of just solar panels. Solar solar is very solar is very impressive. But in some ways, to me, it's a little dystopian to think about all these forests just covered with this stuff.

And I think it's great. It's rate limiting. It's rate limiting. You have you have to have many, many acres rolled out. And with nuclear, you can have a building that can, you know, power the equivalent of many acres. So the answer is both. The answer is both. But it is like Ilana's tweeted many times about the tiny fraction of, you know, deserted desert areas of America that need to be covered with panels.

And then you put in batteries. There's still a space limiting. Like, let's just fast forward 100 years on planet Earth. And if you look at the past 100 years and 100 years before that, like energy demand, even on a on a per capita basis, has this nonlinear kind of scaling problem.

And that means that land consumption will scale nonlinearly. Now, we have it. If we're going to say 100 years, though, I mean, sorry to interrupt. If you're going to say 100 years, technology changes. It's very clear. You could probably do it from space if you really wanted to. I mean, this sounds crazy, but you probably could have like 10 of these in space.

I mean, 100 years is far. I mean, we have we have enough uranium in just the crust of the, you know, like northern hemisphere to, in other words, to power everything we are on the verge of unlimited energy for all time. Just to wrap this up and move us on.

If we can get out of our own way, get out of our own way with a bunch of midwits who have put so much regulation in place and who are working from home for four hours a week. If we can just get them out of the way, then maybe we could approve some nuclear reactors and a little more.

Did you just call did you just call government workers midwits? Just the ones who are blocking. If you're not blocking and you're working 50 hours a week. God bless a lot of people working hard in the government. That's exactly my point. But there's some number of them who are just obviously do not see the forest through the trees.

By the way, on that point, it is interesting. Texas is the number one solar producer in the country. And it's not because everybody there is more environmentally conscious. No, we're not that liberal here. It's just it's easy to build stuff in Texas. Yeah. Solar power plants. This is I mean, for the lives in cities who are so pro solar and anti natural gas or whatever.

Yeah, look at Texas. They're just build as much as you want. And we're Joe and I live in Austin. Home prices have gone down two years in a row. Rent has gone down two years in a row. They are building like lunatics because you don't need to beg and and bribe people to build stuff.

Joe, maybe some thoughts on what we've seen in regulation. Austin City Council is not perfect. Austin is called the blueberry in the tomato soup. So there may be a tiny bit of begging going on. But despite that, you're able to build there and everywhere else around your building like that.

So it works. There's there's there's plenty of supply. I agree. Speaking of regulation, Gary Gensler is out. Paul Atkins is in and Bitcoin just cracked 100. This is all obviously related. Atkins was previously S.E. Commissioner under Bush, too, in the early 2000s. In the 90s, he worked for both Bush one and Clinton at the SEC.

According to The New York Times, Atkins is admired among D.C. legal circles and regulators. He's pro crypto and he's been helping draft some best practices for the crypto trading platforms. As you know, Gary Gensler's approach to crypto was there's a rule set, follow the rule set. We're not here to change the rules.

We're here to enforce them. Good luck. And in some cases, I think maybe he was right with I.C. Hoes and a bunch of scams, but he also gave good actors no path to go forward. Anybody have strong feelings on this? I love Paul J. Kelly. I think he's I think he's going to, you know, be our guy.

Yeah, I've met him several times at conferences and groups, and he's a really smart guy, cares about the rules, cares about helping innovators. The thing that really pissed everyone off with Gary. I mean, I love you probably seen like I think I think I think both Coinbase with Brian and the Winklevoss twins have put something out.

They won't even hire anyone who worked with Gary on this stuff they were doing. And the reason they're that angry at them is they were purposely not defining the rules in certain cases and then going after people after not having to find it in order to kind of like play gotcha game.

It was very dishonorable. And Paul sees all that. There's no way he's going to allow that. Gavin, any thoughts here on how this might change regulations in our business? Also, the fund business, Joe, is a venture capitalist, a VC. You're in public markets and funds. I have I do precede.

So what do you think in terms of funds and regulations there? And then crypto and, you know, the SEC may be becoming innovative as opposed to punitive and, you know, what's the word for Friedberg? What's the word I'm looking for here? Adversarial? Well, they are a regulator. They are a regulator, but they don't also seem like they seem to have gone beyond just regulating.

They seem to have been the aggressively adversarial. Yeah, I mean, they're a regulatory enforcement agency. That's their job. So I don't know, like, you know, I mean, but not giving a path or not even meeting with people. I think that was the thing that I felt was kind of weird.

Well, they may leave you if you're a big donor to the left. They wouldn't meet with you otherwise. That was part of it, too. That was sketchy. That was why SBF got tons of meetings. But Brian got none. Right. I mean, it's nonsense like that. Oh, good. I do think I don't know.

Yeah, go ahead. At some level, fundamentally reduce the power of nation states. And that is something that is. Oft professed by the true believers, but it is true. And so if you are on the left and, you know, you are a devout believer in the power of the state to do good things, I get why you would not like crypto currencies.

You know, at the same time, we're very early in crypto. I do think I read with interest all of the posts that David Marcus and his peers at Libra made made about what happened to them. Libra was a Facebook project to embrace cryptocurrency at a very intrinsic level onto the sort of identity level of every one of their billions of users.

And I think you can argue it would have been really, really good for not just America, but the entire world. You know, there are a lot of immigrants in America and in America who send remissions back to their home countries at extremely high predatory rates, predatory rates. It would have made that free.

And that would have been amazing for a lot of really hardworking people all over the world. It would have, you know, Visa, MasterCard, they do charge big fees. I mean, Visa, MasterCard do not charge big fees, but the credit card complex and aggregate is a is a reasonably big fee.

I mean, everybody, oh, it's just, you know, two, two and a half percent to make it perfect and safe. I think Facebook had a sound argument that they could have done that cheaper. That would have been an efficiency game for America. And it really did bum me out, you know, to read some of the letters that they sent the way they killed Libra.

If anyone doesn't know, maybe you could pull up David Marcus's post. They just all these politicians sent letters to participants in financial markets saying, we don't know if they are doing anything wrong, but we think they probably are. And we're going to look at this very closely. And we want to discourage you from participating.

Well, it was worse. It was worse than that. It was like a mafia letter. It was like, if you are to support this and help with this, we are going to look into everything else you are doing and we may then find some issues. It was it was like a mafia threat.

We can't stop you legally, but watch out. Like it was really sketchy. It was Sherrod Brown, who who now is out of office, who led this, the senator from Ohio. But it was it was really bad. It was really bad what they were doing. It was really bad. I found it upsetting as an American.

And it's you kind of hinted at this, Gavin. The fear of governments is that they will lose control of money supply. And monetary policy, maybe unpack that a bit. And then, Friberg, we'll go to you on the same sort of thread. Yeah, I mean, look, it's a it is a rational fear.

I mean, controlling monetary supply, like at some level, the you know, the greatest, you know, powers we give the state are a monopoly on violence to keep us safe. And, you know, control over the money supply has, you know, a means of exchange, a unit of account. And those are great powers, particularly if you're American, you reserve currency.

The only thing I would just say to balance this out. And I do think people are very positive on Paul Atkins. I've never met him. But the reaction from people who know him like Joe. And who I respect has been very positive. It is important to remember we have the best capital markets in the world.

You know, the U.S. equity and fixed income markets are the most trusted places on Earth. And we can always make them better. But just it is very, you know, you you want to be very vigilant about keeping them fair and keeping out things like inside information, which makes people feel comfortable doing business here.

You know, making, you know, having investors have confidence in a company's financial statements. And those financial markets are one reason America is such a great country. And Gavin, to put this in context, this was during a time period, this David Marcus Libra process, when they felt certain people in government.

And I'm not saying I endorse this, but this is their position. Zuckerberg had too much power. Zuckerberg was censoring people. The right felt they were being censored. The left felt that Cambridge Analytica and people were using targeting diversely. The general vibe. And even J.D. Vance's kind of was in on this as well, was too much power, specifically at Metta, too much influence.

Now they've got this many people, this penetration and the algorithm. Plus, we're going to give them money and they're going to have power over people's wallet. And then what does the government have? They can't censor people. They can't control the message and they can't control the purse strings. That is the time period we're talking about here.

Oh, no, I understand 100% why they did it. Yeah, I just think as an American, at a minimum, the way that they did it. Yeah. Was to, you know, use one of Joe's phrases, dishonorable. You know, if you if you want to say that we're going to kill this, then just like let's have a debate as a nation.

Absolutely. Don't do it. Yes. Rule of law. Rule of law is also another reason America is a great country. Yes. Freeberg, your thoughts on Dave Marcus's comments. And this SEC pick and just generally a more I don't know, less regulation kind of situation. I think the SEC is like one of the most important agencies we have, and I think they're one of the best federal agencies.

So I've worked with them and I've worked with any other agencies and there's all these issues at the SEC, but they play a very important job. And if you've worked in and foreign markets and you've dealt with foreign securities regulators, you're going to be like, thank God for the SEC.

You can't wait to go back. This whole crypto thing, I there's there's a distinction, I think, between Bitcoin and crypto currencies as speculative kind of asset speculative trade. What do you see those differences as? Well, I definitely concur with Gavin. I think Bitcoin fundamentally is meant to be supposed to be ultimately will become a real threat to the US dollar.

And it's kind of ironic that Trump had this declaration this week. Yeah, that he's going to put 100 percent tariff on all these BRICS nations that try to participate in an alternative currency to the US dollar, the greatest currency on Earth, when he literally turns around and then says we're going to support Bitcoin.

It felt like the biggest irony of the week to me, because I do think Bitcoin is the big threat to the US dollar. And I do think that at some point, whether it's this administration or the next, they're going to wake up to that fact. And maybe the Bitcoin does, you know, the network state concept does emerge.

And that's where we end up. But I do think we want to have and are going to have a strong federal government in the United States for quite some time. That's going to play an important role in everyone's lives here. And I don't know if you can really just say, let the dollar, you know, be supplanted by Bitcoin.

Bitcoin seems to be a more of a safe haven asset. And that seems to be the trade that it's stored. It should be kind of sort of value and alternative. It's just going to take over gold. Well, you think the state has reasonable concerns about crypto competing with it?

And then maybe specifically, when you saw Trump talking about, hey, congratulations on your Bitcoin, I did this for you on 100K and taking credit for it at the state, which he should take credit for it. He did it. He did that last $40,000 per coin. And then you see him talking about the BRICS.

And then we have the US currency. So which is a bigger threat to American exceptionalism and supremacy on planet Earth? Bitcoin or BRICS? So one represents a move towards liberty and one represents a move towards authoritarianism, if BRICS were to become dominant, if China and Russia were able to control global currency together and other players, that is terrible.

It's bad for the US for so many reasons. Bad for US consumers for so many reasons. He's right to fight it. At the same time, having, you know, to channel biology, having this like pro-liberty network state, like forces in that direction. Like, for example, I think rather than just, you know, Hong Kong and Singapore, Hong Kong has been lost.

We should have like more Hong Kong and Singapore in the West. They compete with the US. That'd be good for all of us. We're on the pro-freedom side of the US and make the US wealthier. We show examples of new experiments that create great wealth. And that's kind of the side of Bitcoin is you want more experiments and competition from the liberty distributed side.

You don't want competition from the authoritarian side. So to me, it was very consistent. Yeah, well, I would just say Texas is the Singapore of America, you know, and it is putting pressure on the rest of America. And I don't say that just because I grew up in Texas.

It's just a fact. I do think long term Bitcoin. I do not think the BRICS will ever be able to replace the dollar. There's a rule of law, even if it has occasionally been corrupted in America, is very, very powerful. Yes. As opposed to rule by law. And but I do think Bitcoin.

Will at some point be a serious threat to the US dollar. And that just is what it is. And we will see how different administrations react. Would that it's a check on the check on the most aggressive mistakes. First of all, if the debt doesn't get under control for deficit is ridiculous.

Bitcoin is a wonderful check on that. You actually want healthy competition from something good because you want to check the excesses and the craziness you want. You need someone coming from the outside to say, no, don't do that. Let's just say at some point an AOC like person gets in charge.

It could happen in the next 20 years. You need some kind of check on the dollar. And it's much better to come from the liberty side than from the other side. I agree with all that. I will just say on AOC, I thought it was very interesting. I think if you're a Democrat, I think you're probably largely heartened by the kind of intellectual leaders of that party, their reaction to losing.

You know, it's focused around, hey, we do need to deregulate. It is too hard to build. Josh Shapiro has been tweeting every three days about how these make it easier, you know, to do business in Pennsylvania. It used to take 20 days to become get a hairdresser license. That takes an hour.

All that is good. But I actually thought AOC, who is a very talented politician. She's an extraordinary communicator, is extraordinary communicator. Her reaction was like she posted this on Instagram. If you voted for Trump. I want to hear why I want to hear the things you listen to that convinced you.

Like, I don't say this out of anything other than genuine curiosity. Basically, clearly, I am missing something. And I, you know, I want to listen. And I just thought that was a very interesting reaction. That is the proper reaction. Yeah, absolutely. Yeah. I want to point out one thing I did.

I was doing some research before the show, and I found this SEC speech. And this is a really fascinating. This is from 2007 from Paul. And he was kind of giving his State of the Union here. And he's talking about doing some self-reflection. And he's talking about accreditation rules in 2007 before the great financial crisis.

The concept of economic risk and return also affect a different proposal of the commission, the SEC. Relating to private investment funds, specifically part of the commission's proposal would add an additional requirement for any natural accredited person to have at least 2.5 million in investments before he or she could invest in private investment in a private investment fund like a hedge fund or private equity fund other than a venture capital fund.

The underlying premise for the commission's proposal is that these types of investments are too risky for individuals other than the very rich. Therefore, we would have to presume that the non-rich are either unsophisticated or lack access to sophistication. And it is simply not tolerable to have these types of people at risk of losing their money on a hedge fund.

Assuming that these premises are true, however, what evidence does the commission have to support the conclusion that private investment funds are the most risky? What makes a hedge fund or a private equity fund more risky than a venture capital fund? Great question. And how does the risk profile of a pooled investment compare with the risks of investing in securities of a single issuer for which this new 2.5 million standard is?

This is where it gets super interesting. Many public comment letters express indignation at the commission's proposal. One commentator wrote, "Stay out of my wallet. Stop trying to protect me from myself. Stop presuming to know more than I do about my own life, risk tolerance and financial sophistication." The commission's proposal may very well prevent the non-rich from losing their money in private investment funds, but it also certainly will prevent the non-rich from participating in any upside profits and gains on these funds.

Does this mean the rich get richer while the non-rich should be content to just hold their place on the economic ladder? This, to me, when I saw this, I was like, "You know what? I am feeling absolutely fantastic about Trump. If he stops these wars, or stops one out of two, and keeps us out of, you know, participating, even though we're not on the ground with any new ones, and he removes regulations, and we have people in power who understand that moving up the socioeconomic ladder is as important as protecting the downside risk, especially when we see wealth polarization, this is a great pick." Now, the other picks, there are some whack-pack picks in there.

I'll be totally honest. I don't know what the strategy is, Joe. I'll ask you that in a minute. But what do we think, Gavin, of this sort of approach here, which is really thinking thoughtfully about what is sophisticated, and what are we doing here? What is the outcome we're looking for?

- Yeah, no, I think it's great, and you could just... I mean, the reality is a hedge fund that runs with a lot of leverage probably is more risky. I don't know that it's more risky than a single security, but, like, at the end of the day, since he wrote that letter, it was an incredible 15-year run for private equity.

And, you know, now all the big private equity firms are making a huge effort now, when probably the business is more mature and maybe the return opportunities aren't what they were, to appeal to Main Street America. Like, it would have been cool if, you know, Blackstone or KKR or whoever in '07, '08, '09, 2010, you know, could have had their fund up on, like, the Fidelity marketplace for subscription.

That probably would have been good for America. So I think his comments are well taken. Imagine if Elon could raise for SpaceX, like, you know, from regular Americans. I'm sure he would have loved to do that if it wasn't crazy risky with the SEC, right? So there's all these people who are blocking us from letting the average person be part of it.

It does keep them from climbing the wealth ladder. I think it's crazy. - Yeah. Freeberg, any thoughts here? I mean, this has been my pet peeve for a long time, is letting people do what they want with their money. If you don't allow people to take risk with their money and move up from poor to middle class, from middle class to upper middle class, and maybe eventually becoming affluent.

- Jason, there's a lot of places people can invest their money. They can buy public stocks. There's $20 trillion of public stocks they can buy. I don't think that you're prohibiting people from transitioning their wealth like bands by not being able to buy private stocks. In fact, I think it's more likely than not that people are gonna go market bullshit securities in private markets and rip poor people off even worse.

And that's why there are these regulatory kind of barriers. And I don't think that it's necessary. Look, everyone says let's make it everything free and everything libertarian seems like a good idea. And so someone gets punched in the face, gets ripped off. Someone dies from a drug that's not properly tested.

And then we're all like, where are the regulators? Where are the agencies to protect the individuals? And I think that's the role that these agencies are kind of providing. And that's the reason these rules are in place. I don't think that this is like one of these things where, oh, liberty is being denied.

I think there's a careful line to walk. - Yeah, I believe you. - I'm generally pretty centrist in most things. So I agree with what a lot of David said. And I do think if you were to allow ordinary Americans to buy private companies that are held to a lower standard of disclosure and reporting than public companies, like something would have to change.

Like just, hey, if a private company wants to, public companies are held to certain standards for a reason. - Tweak the numbers and have non-gap financials and yeah. - And there is a lot of fraud in venture. There are unethical people, there are- - And smart, diligent people can't even find it all.

You know, that's, it's like the smartest, most diligent people are still getting ripped off. - Yeah, I mean, look at FTX. I mean- - I mean, FTX ripped off some very, very intelligent friends of ours. - Not that anyone did any diligence at FTX. - Yeah. - But yeah.

- Which is an important part of this. But I mean, if you had a sophistication, I mean, there's such an easy solution to this. You just do a sophistication test. People take a five hour course and they answer 50 questions at the end, like a driver's license. - Well, I do think it is a little, that's why I talked about private equity.

These are extremely sophisticated institutions who are always investing alongside their clients. - Yeah. - And they're buying established businesses. They're putting leverage on them. But like, I think private equity is kind of a middle ground and on a pooled basis, I think you could argue. And, you know, maybe those funds would need to change their reporting and their disclosures to deal with kind of the average American.

But by that, I mean, strengthen it. But I think private equity, his comments were well taken. That's what I would say. - Joe, what are your thoughts? - Yeah. I mean, I think the elephant in the room-- - Going around the horn here. - The elephant in the room that's really funny here is that you have the people on the left saying that only people with lots of money are smart enough to be allowed to do this, which I think is just a very funny position to take.

It's like, you have to have a few million dollars to be sophisticated enough to be allowed to do this. I like your idea, Jake, of a test. Like there should be some other way of accessing this if you really want to. I mean, I agree. Listen, I don't wanna live in a world where we're all constantly being spammed to the average person by like stupid financial stuff.

That's just like, we would be scammed all the time. There probably should be some rules. Like, I agree. I'm not like a total libertarian on this. I think it'd be really annoying. But yeah, but just to totally block people from participating, to me, that sounds crazy. - All right.

- I mean, that's finance college professor. You know, might, unless they had another job, might not, you know, be able to do this. - They would have to make $250,000. - Let's talk about a very important public market set of transactions. Gavin, I'd like your point of view on Michael Saylor's convertible note issuances being used by Bitcoin.

- Going over the top. - Which this morning Bloomberg reported is the hottest trade in hedge funds right now. Nick, if you could pull up the article. And then Jekyll, I know you've been an outspoken opinion setter on Michael Saylor's promotion of his securities actions. We'd love your point of view.

Gavin. - Just at some point, this does get too big. For a while, when it was smaller, you know, you could support the debt. - I'm sorry, could you explain it? Could you explain it to everyone, Gavin? - Yeah. So what he is doing is issuing debt and buying Bitcoin with the premise that Bitcoin is always going to go up.

And he, you know, has made eloquent arguments why that is the case. No trees grow to the sky. And I think the interest expense on his convertible notes is 75 million off the top of my head. And by the way, I could care less about micro strategy. Like I'm not close to it.

I'm not involved. - Yeah. - I don't know any hedge funds who own it. - No horse in the race. - Yeah, yeah. I think a lot of hedge funds are short micro strategy, but I have no horse in the race. But his, the underlying business that, you know, pays the interest expense on the debt only does $400 million a year in revenue.

And it's, you know, high gross margin revenue. But I just, unless debt investors have absolute confidence in Bitcoin has collateral. And I don't think that's where fixed income markets are yet. He, it will get to a point where it is too big for the size of his company. And then yeah, maybe he can over collateralize it and, you know, have $10 in Bitcoin for every dollar of debt.

But then like the magic money creation machine that, you know, I see discussed on X breaks down because that's like, you know, that's, that's very, very different than what is being discussed today. - Joe, do you have a point of view? 'Cause Joe's got to run by the way.

So Joe, do you want to close this out? - Most of the defense people down here in LA. Listen, I am very bullish Bitcoin. I love all the energy of our society around it. I agree with what you said, Dave, that there's like, there needs to be some barriers for the public taking crazy risks.

And I think the risks around how he's accessing this is actually very unusual and does scare me a bit. And people need to do their research and they shouldn't just like throw money without studying it. It does scare me a little bit how likely people are throwing money at this without knowing the kind of leverage he's taking, you know?

- Yeah. Joe, anything else you want to share that you're up to, that you're excited about before you head out? - Well, you know, this weekend is the annual defense forum at the Reagan library room on the board. It's the biggest defense event of the year. Everyone's coming in.

I guess I'm really excited that America has like woken up and assuming we can bring back more advanced manufacturing here, I think there's enough top companies now with Anduril, with Cerronic, we're going to be building thousands of these vessels for the Navy, with AI. With EPRIS, we're like turning things off, you know, 10 miles away, whatever, fairly far away with microwave radiation.

There's some really cool technology coming that actually is going to make us be able to deter enemies. So if you asked me six, seven years ago, I was panicked. We're going to like get way behind China. I'm feeling really good about it now. I think, and I think, you know, just the Pete Hegseth pick, you know, is actually someone I'm quite bullish on for everything I'm hearing.

So I think things are going the right direction. - Is there a wholesale upgrade happening in defense in the United States? Are all systems and all strategies being rethought right now using technology and innovation and kind of a performance-based product mindset leading kind of a reinvention of everything? Is that what's going to happen in the next four years?

- Warfare is fundamentally totally shifted. We're seeing some of this in Ukraine. There's all sorts of new ways you want to swarm things on the land, swarm things in the water, swarm things in the air. How do they coordinate and how do they work together? How do you manufacture enough of these things and how do you use electronic warfare in new ways to, you know, it's basically created by this.

And so it's just a whole new way of doing things. And we are going that direction. Too much of the money, David, like 95% of the money is still going towards like, frankly, like wasteful legacy, like mostly things we don't need. - Cost plus maintenance and gold systems, yeah.

- But enough is shifting and there's enough good people fighting. And as long as we keep just allowing open competition, allow it to say, okay, which is better and just let the best things win. As long as we keep doing that, I think it's going the right way. I'm feeling very good about it.

- Is the Chinese position shift in their technology strategy and their system strategy going to motivate a shift here, do you think? - It already has. - Is there a shift underway? - It already has. I mean, it definitely already has. - So we don't need big aircraft carriers.

We don't need F-35s, we need drones, we need lasers, we need weapons and stuff. - I think there's a role for carriers and force projection. I don't think we need like incrementally a ton more of them. I'm not like this crazy radical where you get rid of all this, but yeah, on the margin, I'd much rather have 10,000 more smart drones above and below the water than like an incremental carrier, right?

So there's, on a margin, there's all these things that are better uses of money and I think we're pushing that way. - And is there a huge tidal wave of venture money? I was at a dinner last night where there was this conversation about defense tech used to be off limits and a lot of LPAs, so you can't invest in defense companies.

That's now changed or is changing and everyone's kind of coming up with their own defense tech strategy, do you think? I mean, you were obviously early in this, Gavin. I don't know if you're an investor in this space, but are you guys seeing a big shift? Yeah. - I obviously, you know, listen, there's only been nine unicorns, I think, still at this point, and I started three of them and invested three of them in the first round, so I'm obviously pretty involved in the space.

And I think, listen, it helps me if there's more money for my companies, which is really great. - Right. - I think there's probably the right answer for the US. It's not going to be like 1,000 businesses or a hundred businesses. It's going to be like seven to 10 new primes.

One of them's obviously under roll. I think one is probably Ceronic and Epirus, we'll see. But like, there's going to be seven to 10 new primes, and that's what it's going to be. So there's going to be a lot of zeros and a lot of bad investments, but yes, these seven to 10 new primes are going to be huge.

And if you can get access to them, you're going to do really well. - Gavin, how do you look at that market? You agree? - I agree with everything Joe said. The only thing I would just add on China, what we are doing by restricting their access to advanced compute and advanced networking, if you have read or watched "The Three-Body Problem," America is unfolding a SOFON over China.

- Yeah, that's a great way to say it. - I have been really impressed with some of the Chinese models that have come out. And I think the risk to this strategy is necessity is the mother of invention. And despite this handicap, they're managing to stay just behind the leading edge of America, which is amazing.

But, you know, NVIDIA's Blackwell chip comes out next year. You're going to have new chips from AMD, new ASICs from Broadcom. And I think at that point, it is not going to be possible for them to keep up anymore. - So that's actually positive regulation and great, in your mind, foreign policy.

- It is very aggressive foreign policy. - Yeah, clearly. - You know, that could have lots of unforeseen consequences. - Yeah, what do you think about the rare earth trade restrictions coming to us? And is that going to actually affect the supply? - We have lots of rare earth here in America.

Like in America, we have everything in America. Like we, you know, and I think there's a project underway to restart rare earth production. If there were ever to be a conflict, all this stuff would go away. - It's a cost and it's allowing us to do the refining here.

So refining some of this stuff, like we desperately need gallium, gallium nitride for things that I'm doing, right? With like shooting the microwave radiation. The problem is refining is really messy. If you let it happen in the US, it will still be messy, but it will be cleaner. But we're not letting it happen.

So there's things like this. - So we're back to regulation. And obviously the cost here is different. We have a different cost structure. - Joe, you got to go meet 20 senators. So thank you. We appreciate it. - Thank you, guys. This was fun. - Stay tuned. - Good times.

- J-Cal, do you want to talk about AI with Gavin? - Yeah, I think that would be like a great next place to go would be to talk about the supercomputer being built by a friend of the pod, Elon. He's now got the world's largest supercomputer and he's got a 10 exit, according to reports.

- Yeah. And I would just say this is, I think, a very important moment for AI, you know, for this entire AI trade in the public and private markets. You know, everybody I'm sure who watches your podcast is very aware of scaling loss. And we have not had a scaling loss for training, where if you 10X the amount of compute you should train a model, you significantly improve the intelligence and capability of that model.

And often they're these, you know, kind of emergent properties that emerge alongside that higher IQ. No one thought it was possible to make more than 25,000, maybe 30,000, 32,000, pick a number, NVIDIA hoppers coherent. And what coherent means is in a training cluster that each GPU, to kind of simplify it, knows what every other GPU is thinking.

So every GPU in that 30,000 cluster knows what the other 29,999 are thinking. And you need a lot of networking to make that happen. - Enabled by InfiniBand, right? - InfiniBand, and I think even more importantly, NVLink. Although a lot of... Ethernet is, you know, never bet against the internet, never bet against Ethernet.

Like if you read the Lama 3.1 technical paper, you know, got a lot of people excited about SkinnyLink Ethernet. But... - Just to slow down for the audience here, Gavin, maybe explain why transporting information between the GPUs is important. And we're talking, we're in the weeds here a little bit.

Everybody's heard of Ethernet, but some of the other protocols and ways of moving stuff around, large amounts of data. That's what these H200s, H200s do particularly well. They'll move a couple of terabytes a second from one processor to the next processor. - Yeah. So... You know, picture a server, in the case of a GPU, it looks like maybe three pizza boxes stacked on top of each other, and it has eight GPUs together.

And those eight GPUs are connected today with something called NVLink. Probably, you can think of the speed of communication. On-chip is the fastest. Chip-to-memory, next fastest. You know, chip-to-chip within a server, next fastest. And so you take those units of servers, which are connected, the GPUs are connected on the server with a technology called NVSwitch, and you stitch them together with either InfiniBand or Ethernet into a giant cluster.

And each GPU has to be connected to every other GPU and know what they're thinking. They need to be coherent. They need to kind of share memory. For the compute to work, the GPUs need to work together for AI. And no one thought it was possible to connect more than 30,000 of these with today's technology.

From public reports, Elon, as he so often does, focused deeply on this, thought about it from first principles, how long it should take, the way it should be done. And he came up with a very, very different way of designing a data center. And he was able to make over 100,000 GPUs coherent.

No one thought it was possible. If I was a last minute ad for this, but I would have said there were all these articles that were being published in the summer saying that no one believed he was gonna be able to do it. It was hype. It was, you know, ridiculousness.

And that was coming. The reason the reporters felt comfortable writing those silly stories is because engineers at Meta and Google and other firms were saying, "We can't do it. There's no way he can do it." - Hmm. - He did it. And I think the world really only believed it when, you know, Jensen did that podcast, I think with, wasn't it with Gerstner?

- It might've been with Gerstner. - Yeah, I think it was with Gerstner, and said, "What Elon did was superhuman. No one else could have done it." And I actually think you can argue that Elon doing that, in a lot of ways, kind of saved NVIDIA from a tough six-month period when Blackwell was delayed, because everyone who was waiting for Blackwell and thought it was impossible to make 100,000 hoppers coherent, rushed out and bought a lot of hoppers to try and do it themselves.

Now, we will see if someone else is able to do it. It was really, really hard. No one else thought it was possible. And as a result of that, Gruk 3 is in trading now on this giant, colossus supercomputer, the biggest in the world, 100,000 GPUs. - In Memphis.

- In Memphis. - In Memphis. - At the old Electrolux factory, and they're putting a lot of energy in there, a lot of natural gas, a lot of- - Yeah, a dingy Electrolux factory. - Yeah. - With a lot of megapacks around it, and the city of Memphis is all in on supporting this.

- Yeah. - Which is obviously smart for them. But you have not had a real test of scaling laws for training, arguably since GPT-4. And this will be the first test. And if scaling laws for training hold, Gruk 3 should be a significant advance in the state of the art.

That is an immensely, from a Bayesian way to look at the world, that is an immensely important data point. But if that card doesn't work, and I think it is gonna work, I think Gruk 3 is gonna be really good, I should note that I am- - Well, with consumers, yeah, you're involved in XAI.

- My firm is an investor in XAI. - Got it. - Yeah, they've raised a tremendous amount of capital, a lot of it from the Middle East, and they're supposedly gonna build Colossus to a million GPUs. Is this data goal 10 times bigger than it is currently? There's been some debate back and forth, Freeburg, about, "Hey, are we hitting a wall here?" Maybe you could explain the wall, either of you, to the audience, yeah.

- David. - Well, I'll let Gavin speak to the wall. I mean, Gavin, I think one of the questions also is, you know, do we see an evolution if the kind of increment in performance relative to the investment in net kind of training, compute resources, declines, do we start to see a shift in how the architecture of the systems are run?

Meaning, like, do we start to build models of models, and that starts to resolve a higher-level architecture that unlocks new performative capabilities? So. - I would just say we're already building models of models. You know, almost every application startup I'm aware of is chaining models. You know, you start with a cheap model, you check the cheap model's work with a more expensive model.

You know, lots of very clever things are being done. You know, every AI application company has what's called a router, so they can, you know, swap out the underlying model if another one is better for the task at hand. As far as what the wall is, there's been a big debate that we were hitting a wall on these scaling laws, and that scaling laws were breaking down.

And I just thought that was deeply silly, 'cause no one had built a cluster bigger than, you know, 32,000 H100s. And nobody knew. It was a ridiculous debate. And there were, you know, really smart people on both sides, but there's no new data. GROK 3 is the first new data point to support whether or not scaling laws are breaking or holding.

Because no one else thought you could make 100,000 hoppers coherent. And I think based on public reports, they're going to 200,000 hoppers. And then the next tick is a million. It was reported they're gonna be first in line for Blackwell. But GROK 3 is a big card and will resolve this question of whether or not we're hitting a wall.

The other question you raised, David, is very interesting. And by the way, we should note, there is now a new axis of scaling. Some people call it test time compute. Some people call it inference scaling. And basically the way this works, you just think of these models as human.

The more you speak to one of these models, the way you'd speak to your like 17 year old going off to take the SAT, the better it will do for you. As a human, you know, if I asked you, David, what's two plus two, four flashes in your mind right away.

If I ask you to, you know, unify a grand unified theory of physics that accounts for both quantum mechanics and relativistic physics, you will think for a lot longer. - 147. - Yeah, nobody knows. We have been giving these models the same amount of time to think no matter how complicated the question was.

What we've now learned is if you let them think for longer about more complex questions, test time compute, you can dramatically improve their IQ. So we're just at the beginning of this new scaling law. But I think the question you raised on ROI is very good. And I'm happy to address it.

And there's a context window shift underway as well, which also creates a new kind of scaling access arguably in terms of the potential set of applications. So networks of models, think time, context window, there are multiple dimensions upon which these tools ultimately kind of resolve to better performance. - Oh yeah, even if scaling laws for training break, we have another decade of innovation ahead of us.

- Exactly, and as my understanding from speaking to folks, I'm certainly not as deep and well versed as you, but there's a lot of effort and research going on in re-engineering various parts of the stack to reduce energy, to reduce every resource that effectively drives model performance, to basically re-engineer architecture.

It was all like very brute force for a period of time. And it was like push, push, push. But now as we go back and we start to re-engineer and architect things in perhaps a more designed way, we get better performance and there's a lot of work to do there still.

- Absolutely. - This is one of the great things about capitalism and a functioning capital market is you've got people working just on the context window. For people who don't know what that is, is that's the number of tokens. A token is essentially a word you can think of it, a piece of information.

The number of tokens you can put into a conversation within a large language model. Some people have really large context windows, some people have smaller ones, but you can basically put an entire book in the context window and start asking questions against the model. And the speed of those is critically important as well, because if you put the book in there and it takes you 10 minutes to get an answer, that's not functional, right?

- Gavin, are you an investor in open AI? - Oh, absolutely not. - Yeah. Can you kind of theorize on what the build out that's being done with Colossus does to the advantage that open AI has today? How long till we kind of catch up there with XAI and how much is going to be disrupted and how quickly here?

- Well, if scaling laws hold, the best information I have is the largest cluster Microsoft has after panicking. It's still smaller than XAI's cluster in Memphis. If you didn't believe that it was possible, you weren't even working on it. Grok 3 should take the lead if scaling laws hold in January or February.

I do think a lot of talent has left open AI. I thought it was a really shocking statement from Mira Mirati that she resigned during a fundraise. That's the only way she can express disapproval of what is going on there and still probably get her money. - Right. - So I think there's a lot of reasons if scaling laws hold, to be optimistic about Grok 3.

But I think, and then by the way, on the power question, and they are 23 and 24, it was just a panic to get GPUs and get them plugged in. Now we're trying to make them efficient and thoughtful and to your point, re-architecting them. - And the H200s now are 50% less power and either 50% more or twice as much compute, depending on the task.

- They have a little more compute and a lot more memory, which really matters. So per kind of a unit of effective compute, they're a lot more power efficient. - Two or three times, you think, or? - No, the H200s, probably not 2X, but a good increment and the H100 was a great chip.

- So 50%, yeah. - Yeah, Blackwell's just around the corner and that's an entirely new architecture with an entirely new set of networking technologies. - What would consumers, if we had to sort of speculate here, what would consumers, how would consumers' experiences change in using forward-facing language models? And then maybe what are developers going to see on the back end, you know, in terms of what they're going to be able to build?

If this pans out in the next short term, two years. - Right now, you have like a friend in your pocket who has an IQ of 115, 110 maybe, but has all of the world's knowledge accessible to it. And that's what makes it amazing. I think this will be like, you have a friend in your pocket, but, and they sometimes make things up.

Again, they're very human. And a lot of humans, when they don't know the answer, they dissemble. These AIs do it too. So you will have a friend in your pocket with an IQ of maybe 130 that knows everything, has more up-to-date knowledge of the world, and is more grounded in factual accuracy.

And it is interesting, for any question involving real-time information, mostly sports and finance, you know, I always, you know, if there's a stock down 25%, ask every AI, "Why is the stock down 25%?" Generally, Grok is the one that knows. - Yeah, Grok actually-- - But I'm obviously biased.

- Yeah, no, no. - Grok knows. - Grok, because of the Twitter data set, - Exactly. - knows what is happening at the moment. - In the world today. - All right, and then, you know, as we sort of wrap up here on the AI, what about the ROI here that Deva was mentioning?

- Yeah, so I find these debates also very funny, you know. There have been articles written about multi-hundred-billion-dollar ROI questions. Those are very strange to me, because the biggest spenders on GPUs are public companies, and they report financial results every quarter. And you can calculate a metric called return on invested capital, - Yes.

- and ROIC, ROI, has gone vertical since they ramped their CapEx on GPUs, and actually just started to level out in this latest quarter. So the ROI on AI has been very positive thus far, just a fact. It's a really good question. Will it continue, particularly if, you know, it's gonna cost a hundred billion dollars to train a model in two or three years, which I think is a realistic estimate.

- I guess the counter to that isn't the counter to that, that maybe there's a little bit of hype, that, you know, maybe there are people are trying to determine the ROI and correlate it more precisely. And I guess that's the challenge, you know, meta doing AI across its entire enterprise, you might see, and Google, you might see it directly making ads more effective, as an example.

- 100%, yeah. - So that's happening. - Meta and Google have shown the best ROIs on AI. - Yeah, and I think that, you know, that's happening. - Google have shown the best ROIs on AI. - Yeah, but then for other folks, like, you know, is it actually happening, or is it a toy, I guess, is the criticism I hear.

I'm not saying that's my position, but that's the criticism I hear is like, are people actually getting money from the copilot, or maybe this is just product market fit discovery process, 'cause the AI laptops, AI intelligence on Apple, and let's say some general LLMs people feel maybe aren't worth the money, or copilot for Microsoft, maybe not worth the money.

- Yeah, I mean, I personally have not had good experiences with copilot, but I would say that, and I'm sure both of you have come across these, there are lots of companies that are just these thin wrappers over a foundation model, and they go from zero to 40 million instantaneously, and they're profitable, and for their customers, they're replacing labor budgets.

- Yes. - And I think, I'm sure you guys are noticing this too, but startups today at a given size are employing fewer people than they would have three years ago. And just like, you know, it's funny, people were very skeptical. - I would say 50% less. - Yeah, and that's the ROI on AI.

And like in, you know, I went to the first AWS re:Invent conference, and no big companies were using cloud computing. It was all startups. Startups always adopt technologies first. So outside of the ROI on AI that you're seeing in Google and Meta from, you know, using this across their businesses, you're seeing real ROI on AI from startups the same way they saw real ROI from cloud computing before anyone else.

- It's crazy. - But I don't think these companies are in a classic prisoner's dilemma. They all believe to varying degrees that whoever gets there first to artificial superintelligence is gonna create tens or hundreds of trillions of dollars of value, and I think they may be right if they get there, and they think that if they lose the race, their company is at mortal risk.

So as long as one person is spending, I think they will all spend, even if the ROI decelerates. It is a classic prisoner's dilemma. - Competition is amazing. It really is when you have a free market with competition. We were sitting here two years ago, three years ago on this pod, Gavin, just lamenting like, oh my God, what could happen?

And China could just roll over us. They've got everything dialed in. We're a disaster, and now here we are. China's a disaster. They've got all kinds of challenges, and the free market is, even with weapons systems, we're seeing capitalism applied and competition applied there. All right, I think we should just wrap up on this Brian Thompson story.

The CEO of UnitedHealthcare was shot and killed outside a Manhattan hotel on Wednesday morning. UnitedHealthcare is an insurance subsidiary of UnitedHealth Group, and they employ over 140,000 people. They provide coverage to millions. And this was, I don't know if you've seen them, I'm assuming you guys have seen the video on social media or go by on X.

There's been a big debate. Was this like a really well-trained killer, like an assassin, like a hired gun? Was it something personal maybe? And this person's a hack, and they're not really good at doing a hit like this, and most people are sort of coming somewhere in between. ABC has reported, and this is where this thing has taken like a crazy turn, that the words deny, defend, and depose were discovered on the bullet casings at the scene.

And those are the terms, two of the three are in a book about how health insurers reject many of the claims every year. They deny it, they defend it, and then they will depose people to harass them essentially. This is a crazy, crazy story, and it's breaking here. I don't know if anybody has any insights on it, but I thought I would bring it up here to just maybe intelligently speculate about what we've seen.

- I mean, it seems like the most likely case is someone's loved one died 'cause they were denied coverage. And whether this person was hired, or they're a victim, or related to a victim, I don't know if it matters. I think there's, the observation I'll make is a question, which is, should CEOs be personally responsible for corporate actions, generally speaking?

So there's a difference between a CEO committing fraud or being negligent. But if you don't get a good service, or a good quality of service, or the product you expect, even if it is something you depend on for healthcare, for example. Let's say you take a drug, and the drug causes a side effect that causes some permanent damage.

Should the CEO be individually held accountable? And if that were the case, would anyone wanna be a CEO of a company that sets out to provide services that are critical like this? It's a very, I think, challenging question to think about, because certainly you could feel like you wanna hold someone responsible because a loved one died, because that CEO's job was to make more money for their shareholders, and therefore deny claims.

And therefore, the way that they run that business is wrong. I think ultimately, we've gotta kind of have this distinction between negligence, fraud, and acting on the corporate behalf. There's a, for a period of time, all of these documentaries and this movement against the idea of the corporation, generally speaking.

You guys remember this was like a decade ago, or 15 years ago. - Anti-capitalism movements, yeah. - It is. Yeah, and it's like the corporation shields individuals, and the corporation creates a shield for individuals to do harm, is kind of the argument that's made. And so there's a lot of people in this camp that think that these old CEOs of companies that let people down are evil, should be killed, should be put in jail, whatever the awful kind of contextualization of that is.

And I do think it's really important to think about, well, if no one were to be the CEO because they faced that threat, and those companies can't make money as a business, then those services go away entirely. That's kind of the end state of where this goes. There's gonna be these difficult situations.

If a CEO does something negligent, fraudulent, wrong, there's a court and there's a system, and there should be kind of laws that protect people. I don't know, man, the whole thing is pretty depressing to think that a guy who's the CEO, he's, from what I heard-- - This guy's got a family, yeah, I mean-- - He's got a family, he's got a wife, people that have known him said he was like a nice guy and a good guy, and he runs a tough business.

Insurance is a very tough business. - Well, and to your point about this seems like it's very personalized with the casings, if that is in fact true, again, this is breaking news, so we're speculating here, hopefully informed. This chart has been the one that's been circulating on social media now.

This has now become, Gavin, like a Rorschach test about how you feel about corporate America, healthcare, et cetera. But UnitedHealthcare, at least according to these charts that are speculating, deny claims at a rate, at a multiple, two or three x other people in the industry and that they are the most hated.

Not that any of this obviously results in somebody deserving to die. I mean, I can't believe I'm even saying this, but Taylor Lorenz went viral with a series of tweets, not tweets, I think she's on whatever the blue thing is, Sky Blue, Blue Sky, where she wrote some quotes here, "And people wonder why we want these executives dead," Lorenz wrote on Blue Sky, a microblogging social media site alongside an article about how Blue Sky, Blue Cross Blue Shield no longer cover anesthesia for the following surgeries.

That's according to the New York Post. Gavin, your thoughts on this insanity and tragedy? - Yeah, well, first of all, it's a tragedy. And actually I'm in New York as we record this and it happened one block from where I am. And I mean, it is absolutely, it's a human tragedy.

Taylor Lorenz was not the only person on social media who reacted that way, which I thought was deeply troubling. - It was a large group of people who were writing very morbid comments. There was a lot of anger around this issue that I was unaware of. I was completely unaware of it.

- Well, I think we all probably are very privileged to have great healthcare and able to pay our premiums. So we're not affected by this at this stage in our lives. I was very affected by this 30 years ago. - Yeah, we're all very lucky on this podcast. - Yeah.

- And like, I can't imagine how I would feel if someone I loved had been denied medical care and died. And I felt like it was unnecessary and due to some corporation trying to make more money. But I just, I cannot believe, I'm sure I'd be outraged. I just can't believe I was deeply disturbed as a person by the number of people online celebrating this.

- It's really crazy. - Yeah, I thought it was awful. - And I guess the last thing I would just say about that chart is I think it is a little misleading. I think that is initial denial. You know, maybe the, you know, in other words, maybe the company that, you know, only denies 7%, that's a final deny.

You know, that's a company that-- - And who knows if the chart's even correct. I bring it up only that it is the trending item and people are, I find in these tragedies, they become like Rorschach tests, right? - Yeah, UnitedHealthcare's medical loss ratio is about 85%. So 85 cents-- - Explain what that means, yeah.

- So 85 cents of every dollar they collect in insurance premium, they're paying out in claims. If you guys wanna look at what the most egregious insurance industry in the world is, it's title insurance. And I'll give you the list of the rest. Travel insurance is pretty bad. They pay out like nothing.

- Right, you were in the insurance business for a bit there, yeah. - Yeah, like, I mean, you know, health insurance is the hardest, one of the hardest, besides auto insurance businesses to be in. You're paying out constantly and there is a very difficult kind of process of managing losses 'cause the number of claims that comes in, it's very easy to suddenly pay everything out and then your premium goes up and then people can't afford the health insurance.

So you're striking this balance of making health insurance affordable against the cost of medical claims. So it's a very kind of difficult business to be in. And I think it's very complicated to walk people through how they and their individual circumstances aren't necessarily motivated by some corporate, you know, malfeasance.

It's just the way the thing has to operate, unfortunately. Let me just say, I think that they're, much like we saw with Hamas and the attacks in Israel a year ago, there were people celebrating that behavior. And we've seen that several times since, and people have become very vocal about their celebration of what they view to be the death and harm done to those who they view to be oppressors.

In whatever context you wanna kind of fit this to and put that oppressor label on an individual. And that mindset seems to hold true through any social, financial, economic, political context. There is an oppressor group and there's an oppressed group. And if you're in the oppressor group, you deserve harm, you deserve death, you deserve jail.

And this is another manifestation of that mindset playing out. This is an individual with a family who ran a business, who worked very hard for many years and wasn't trying to hurt people. And for him to kind of have his life taken like this and for people to say, that person is an oppressor, I think really speaks to how deeply people's minds have been contorted by this concept that there's oppressors and oppressed.

- It's almost like a mind virus. - And I'm not gonna call it the woke mind virus, but 'cause I just think you immediately shut down and won't hear that 'cause it sounds cliche. But there is this concept of like, everyone is in one of two groups. You're either being oppressed or you're an oppressor.

And if you're an oppressor, there is no limit to what I should do or what should be done to you. - I think it's well said. - And it's a very stark and sad kind of commentary on what's going on right now. Sorry. - If you're oppressed, the corollary to that is, if you are considered oppressed, you can do no wrong.

- You can do no wrong. - Yeah. - And that is, obviously there are people who are oppressed on this planet, but they can still do wrong. They should still be held to a moral standard. - Yeah, and there is a moral standard and there is a standard in murder, obviously, and assassination like this is not acceptable.

And it's just tragic. I just feel so terrible for these kids. - Let's end on a happy note. So we'll see you on Saturday, big party. - Yeah. - Excited. - Hard turn here, but looking forward to seeing everybody on Saturday for the all-in holiday. - Zoom is sponsoring the-- - All-in holiday spectacular.

So if you want to go to allin.com, you can go sign up there, right, Freebird? - Yeah, and then you can sign up for the Zoom. Gavin, we expect you to sign up. - Yes, we have a caviar budget we have to replenish over here at Saxon. - We do appreciate Zoom helping us out for the event.

Zoom AI companion helped set up the live stream. So thanks to Zoom for doing that. It's gonna be awesome. - Look at that, AI everywhere. I have to say, you know what, one of the great, I have a couple of experience with AI that are really great. Notion has a phenomenal AI built into it, and so does Zoom with the AI summaries.

I love getting these AI summaries of calls. I ask people permission to turn it on and we get a summary and the bullet points. Really well done. - I went to, we did a hackathon in the office a couple of weeks ago, and we used, have you guys actually built applications with Cursor?

You guys ever done it? - I have not. Was it fun to build an app? - Well, it was great because we had so many people that have never built software applications in the hackathon, and they built tools from scratch, deployed them in production, and are now using them.

And I think it really showcases the kind of the impressive impact that AI is having on workplace productivity. You don't need to buy SaaS tools. You don't need to have service providers do stuff for you. Individuals, and by the way, it's only getting better, and you can kind of think through a point.

- I mean, the ability to just wake up in the morning and say, I want this app and have it built for you. - It is, and by the way, I'll just say, it's like 70, 80% there. You still have to debug. You still have to have someone come in and help kind of get things into production.

So there's still a little bit of work. - Well, it's just like web pages, right? - Going back to the architecture question, two months ago, and then go back to the architecture. - Two months ago, it was 60% there. Now it's 70 to 80. - And you fast forward 12 months, and now you've got the architecture where the AI can run its own QA testing and debugging, and the AI can run its own kind of UX.

- Sales and marketing. Customer support. - Its own UX of the application, and it can run everything. So you're basically going to say, I want this app to do this. It builds it. It tests it. It builds the UX. It tests the UX. It iterates the UX. It does everything streamlined for you, and then you show up a couple hours later, and you're using a new product that was built on the fly for you.

It is, and we're literally like climbing this ladder, Gavin, like very quickly, that it's going to totally change the entire software industry is like getting re-architected. - I could guess Freeberg's app at his company hackathon. - What do you think I made? - I made a vegan version of Yelp.

Only profiles all the vegan restaurants. - I actually tried to make a CRM tool so that I wouldn't have to pay for CRM licenses. - I tried nine months ago to make a multiplayer. - Shout out Mark Benioff, oh! Sorry, go ahead, Gavin. - I tried nine months ago to make a multiplayer app for Skyrim, which I was very excited with.

Skyrim's a big game. - That's cool. - But I do think I failed. Maybe I should give it another go, but the-- - You learned. You didn't fail. You learned. - I learned. I learned. I didn't fail. I learned. Yeah, I have a growth mindset. - We learned the limits.

We all tested the limits. - Yes, we stress tested the app. - But I think next year, human language will be the dominant programming language. - Totally. Totally. - It's awesome. - Totally. - You really made a great insight earlier, Gavin, with startups is where you see these innovations happen.

And I always say internally, resource constraints really do drive innovation. And when you only have a nickel, you gotta try to get a dollar out of it. And when you got a dollar and you got a lot of dollars, you're like, "Eh, it's okay if I get a nickel "out of a dollar.

"I got more dollars laying right over here." And Dylan always talked about this as well. They asked him, "Why did Blood on the Tracks? "Why did you do that? "It was incredible." This Rolling Stone interviewer was talking to Dylan about it. And he said, "This was my favorite album, "and this is incredible," whatever.

And they're like, "What was the inspiration? "Take me behind it." And he said, "Well, I owed Columbia Records an album "and they had given me an advance "and they were gonna sue me and I had to give the money back "and I had just gone through a divorce and I needed the money "and I couldn't do it, so I wrote the album." I was desperately, I was crushed that Dylan's, one of his best albums and pieces of art in his life was strictly a function of the pressure of being- - His destiny is the mother of both- - There it is!

- Technical and creative invention. Yeah. - Absolutely. All right, everybody, four. - Thanks, guys. - Gavin Baker. - Joe Lonsdale. - David Friedberg. And we miss you, Saxx, taking a victory day. And it's taking victory day today. And Chamath, both out of the office today. I am the world's greatest moderator, and we'll see you next time on the "All In" podcast.

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