All-In with Chamath, Jason, Sacks & Friedberg - Anthropic's Generational Run, OpenAI Panics, AI Moats, Meta Loses Lawsuits

Starting point is 00:00:00 All right, everybody, welcome back to the number one podcast in the world. Fantastic Four, the original. Oh, the cast is back. The cast is back. Our brothers in arms. Brothers in arms. Here we go, boys. We've got a big newsweek.

Starting point is 00:00:15 David Sachs, he's back. And he's in the great state of Texas. How's it been, Sacks? How's Texas been for you so far? It's been great. Although I just got back from D.C. I got like three hours sleep last night. But we had a lot of news this past week.

Starting point is 00:00:30 Yes, and we'll be talking about P-Cast and your role in the, and da-da-da-da-da-da, and your role going forward in the Trump administration. Big news that we'll be talking about today also relates to you, O Sultan of Science David Freiburg, with your background from the iconic film, for those not watching, looks like the iconic film in Louise. I wonder if that has something to do with the budget of California, which you've been outspoken about recently. Great rent. I retweeted it. I retweeted it to. Thank you, boys. I retweeted it too.

Starting point is 00:01:04 If only, if only you could be allowed the time and space to do those kinds of rants on this pod. Thank you very much. If you kept interrupting him sacks and just let him go. Here he is.

Starting point is 00:01:16 He's going again. He's going again. There it is. Dr. Doom. Dr. Doom, your mayor. Your new governor. Would you consider it, Freiburg after O'Hollah

Starting point is 00:01:24 running for governor? There is no after O'Holloh. Oh, please do it. Oh, please do it. Wow, that'd be so great. I'm tempted to buy a hollow for like five or six billion, so he just did it. It's a dirty game. California politics is dirty, man.

Starting point is 00:01:37 I don't even know what it does. I'll just have somebody else deal with it. Can you imagine the Apo Research on Freedberg? No, no, no, no. We'd get him elected. He would do an incredible job. He would save the fourth largest economy in the world. It would be incredible.

Starting point is 00:01:49 It would be amazing. I would love the role. Here's the Apo Resource Act. David Freiburg went to a rave in 1999 and stayed up until 10 a.m. We have witnesses. Once he got tilted at the poker game, stole a bunch of pistachios and lactate and ran home. He did.

Starting point is 00:02:27 Anthropic, on a crashing out a bit, boys. Let's chop it up here. Just looking at Anthropic, pretty major heater. year. January, they launched co-work for business users. You know what that does, cron jobs. You can connect to your Gmail, your notion, whatever it is. And then Opus 4.6, which consensus-wise, everybody thought, this is a major step function. Jensen, Michael Dell,

Starting point is 00:02:54 everybody's called it out. Jensen actually called it back in November, an inflection point, and the first agenetic model. And Opus 4.6 has basically, Dell said, hit a threshold, that we haven't seen before in terms of real productivity in Teams. February, they dropped a bunch of clog-code plugins that caused the SaaSpocalypse, not the SaaS software as a service. It was a Saxpocalypse too. Yeah, there was a little bit of that back and forth as well. No, I mean, as a SaaS investor, it was a SaaS-pocalypse. Yes, it was a bit of it. You were the tip of the spear there. We'll get into it. My exit comps were affected, that's all. Yes. It seems like you may have divested

Starting point is 00:03:38 exactly the right time. All right. Six billion dollars in annual run rate was added in February alone. Brad referenced a couple of weeks ago here on the pod. Earlier this week, they announced computer use a new agenic system for enterprise grade kind of open claw functionality. Now you can use the clawed app from your phone to control your desktop computer. Really slick feature. Here's the calendar release over the past two months. the team at Anthropic. Dario, come on the pot anytime. Sacks, you've had a couple of flare-ups, and obviously the administration and the Department of War had their kerfuffle. But just, you know, looking at it objectively, what's your take on the surging, anthropic generational run,

Starting point is 00:04:30 as I've described it here? Well, I've never been a critic of Anthropics products. I've always been an admirer of their products. I think last year I gave them credit for MCP. I agree that they seem to be performing very well now. The company made a big bet on coding as the kind of big breakout use case. Whether that was done for business reasons or ideological reasons, I'm not sure. Anthropic is sort of the most AGI pilled of all the frontier labs. And I think they made this bet on coding as their way to get to recursive self-improvement. As it turns out, it was a very good business move as well, because code is the gateway into enterprise and enterprise IT budgets. And so they're able to grow revenue pretty quickly as a result of getting into enterprise.

Starting point is 00:05:15 Also, coding seems to be the basis for these other product extensions. So like you said, they went from Claude Code to Claude Co-work. The idea being that, well, if you can generate code, you can also generate PowerPoints or spreadsheets. and you do that by generating the code to create that output. So that was the first extension. Now they are extending into agents. This computer use product is kind of like an open claw knockoff. So it looks like the generational run for Mac Mini is just about over.

Starting point is 00:05:48 Look, I think they're firing on all cylinders. My issues with them in the past were related to what I have called the regulatory capture strategy. They do want a permissioning regime in Washington for chips and. models, meaning you have to go to Washington to get permission to release new models or to sell GPUs anywhere in the world. I think that's excessively heavy handed. Their motives for doing that may be pure. It may not be regulatory capture. It may be ideologically motivated. Regardless, I do think it is a form of regulatory capture because it plays into the hands of the big companies and creates moats that new entrants will not be able to overcome. So I have, let's say,

Starting point is 00:06:28 philosophical objection to that part of it. But again, I'm not a detractor of their products by any means. With respect to what happened between them and the Pentagon, I'm not involved in that. I've stayed out of military procurement. In general, I don't get involved in what are called party matters. I just focus on policy matters, which affect the whole space. I saw Emil Michael making this point a couple of weeks ago on our podcast that if you as a company don't want your products to be used in war, don't sell to the Department of War. It's in the name. But if you do, If you do decide to sell to the Department of War, you should expect it to be used for all lawful uses. So I think that was a very pragmatic observation.

Starting point is 00:07:09 Again, I just have to underscore this again. I'm not involved in that dispute. It's the basis of a lawsuit right now. And I don't want someone trying to draw lines between dots that aren't there. So again, again, I'm saying out of that one. Objectively, they've been treated the same as any other large language model, even though they're not fans of the administration. they're not donators to the administration. They have specifically been critical of the administration as a company, perhaps cynically

Starting point is 00:07:34 Freiburg as a strategy to get, you know, it's one of the conspiracy theories here in Silicon Valley is Dario is taking the position of being anti this administration, anti-President Trump, in order to get all the PhDs, you know, there's like three or four thousand of these highly start off to PhDs, and it's a way to have them, you know, vote with their president, to come work in Anthropic. Your thoughts on that and then just generally, they're generational ones. I think he actually believes it,

Starting point is 00:08:03 and I think they've actually created and fostered a culture of that since the beginning. And I think that they're representing it as a branding exercise at this point. But I don't think it's made up. I think it's directly representation of the people that work there and what they believe. Yeah. And it's a strategic advantage

Starting point is 00:08:19 because probably of those 3,000 PhDs, 90% of them are left-leaning and wouldn't want to work. necessarily like like most things we see in the world today and economics today and markets today and business today everything seems to be politicized and you have a left and a right version of everything you have a left and a right version of media you have a left and a right version of what food to buy you have a left and a right version of what AI tool to use so you know this effectively may just be the natural manifestation in the AI market of what's going on elsewhere in society as we

Starting point is 00:08:53 all kind of fracture and hustle over to our side Chimov, before I go to Open AI, and their recent moves, any thoughts on Anthropic and Dario's positioning of the company? Look, I think both are incredible businesses. We're in the part of the cycle where we're trying to create drama where I don't think drama exists, because they're still fundamentally in very different go-to-market motions. Now, they may converge and compete over time, but I think it's important to separate where each of them are good from an enterprise lens, which is where I see most of the action, particularly through 8090, it's all anthropic all the time. And I agree with SACs.

Starting point is 00:09:34 My philosophical issues with the management aside around their ideology and sometimes how they use some of the capital for things other than tech and R&D, I have issues with those things. But in terms of the quality of that technical team and what they create, it's head and shoulders above anything else. it allows us to build a vibrant business. Now, do I have issues with how much it costs? Yes. Do I have issues with how fast we're consuming tokens? Also, yes. But I think those will get sorted out, and those are really tactical issues.

Starting point is 00:10:08 So the reason why I think we're all breathlessly trying to pit Open AI versus Anthropic is because we want some drama. But the reality is these are very different businesses. And Nick found this tweet, which I thought was really interesting. And because even at the absolute highest level, these things are sort of presented in an apples to Orange's way. And there's like these very basic issues of Revrek that are fundamentally different. And you may say, well, who cares about revenue recognition? While the people that are trying to write the headlines that say one is overtaking the other and this or that sort of miss the fact that they're in completely different businesses, which is guided how they even think about growth.

Starting point is 00:10:51 And so if you normalize these two businesses, what you would see is Open AI is still the overwhelming revenue generator in this space. And that over time, Anthropic is catching up. And so this is this little diagram that tries to explain this. Open AI is three quarters consumer subscriptions and a quarter API. And Propick is almost the exact opposite. Open AI is used by consumers overwhelmingly. And Propik is used either directly or through things.

Starting point is 00:11:21 things like GitHub and Cursor. Open AI, as a result, has a very conservative way of recognizing revenue. Anthropics, they sort of recognize gross tonnage as their revenue. And so when you start to hear these things about like, oh, this thing is at 20 billion and Open AI is at N billion, they're two totally different conversations. And I think right now it's more about the press cycle of trying to create clicks than it actually is about the underlying quality of each business. Both are incredible businesses as this demonstrates. And by the time it goes public, both of these two businesses will have a very clean and I suspect normalized way of telling a story so that you can actually compare. But what I would tell people right now is everybody is

Starting point is 00:12:07 running with numbers to try to create a narrative that I don't think makes sense or applies to either. Yeah. And there's been a lot of strategy change. Open AI, some people are saying, is crashing out in panic mode. Obviously, they own the consumer with chat GPT. They are the verb, like, you know, taking an Uber or Googling something. People, consumers always to say, hey, did you check chat GPT? But obviously other large language models are catching up. Here's the way, sorry. Let me say something to that, Jason, because like, look, you mentor tons of startups. Sacks has done it. Freepberg has done it. I do it. What is the one thing we tell folks? Focus, focus, focus, focus. 100% do one, maybe one and a half things, but do it incredibly, incredibly well.

Starting point is 00:12:54 And everything else, you start to bleed and smear, what was that Brad Garlinghouse term? Peanut butter. Peanut butter. Yeah, you smear the peanut butter too far out. And so this is a good moment, by the way, if either of these two companies are in the smearing phase to recalibrate and reset because you just can't do everything. Speaking of smears, I couldn't help but notice that Emil Michael was smeared by an article. Was it in Lever or something like that?

Starting point is 00:13:23 Accusing him of having a conflict in the Anthropic to smear. Did you guys see that? I didn't. Yes. I saw the art. There was an article that said that he was an investor in perplexity and therefore he's conflicted in his negotiation with Anthropic. That's what the article said pretty much.

Starting point is 00:13:43 Perplexity is LLM agnostic. That's a stupid claim. Right. Well, it's obviously written by people who don't understand anything about AI really. Perplexity is a wrapper. Like you're saying, it uses multiple AI models. And I don't think they sell to the Pentagon. They're not a competitor to Anthropic. And moreover, as I understand it, Emil's ownership of shares in that company was blessed by the Office of Government Ethics. Nonetheless, I think the timing of this is very suspicious. And it reminds me, of what happened to me when I started opposing Anthropic, and all of a sudden there was that hit piece in the New York Times accusing me of having conflicts. And I'll just say that Anthropic

Starting point is 00:14:23 May poses this company that's on the side of the angels, but they've hired a number of very seasoned brass knuckle political operatives in Washington. And members of the Biden administration, Laura Lumer actually just had a piece today on one of them. I'm not going to rehash that. But the bottom line is this is, I think, frankly, a political operations. that's willing to get down and dirty, and they're not always on the side of the angels. I think they can be quite ruthless. Sacks, remember, I told you you get one Biden mention a month in 2026,

Starting point is 00:14:54 so you just used it up. So I don't want any more Biden, Biden, Biden. He's retired. That was not a Biden mention. No, but the truth is, these dips, who ever wrote this story, the actual best feature or amongst the best features of perplexity, which is actually got a really great co-work competitor

Starting point is 00:15:12 called Computer I've been playing. with. I'm not a shareholder. To be clear, there's no book being pumped here. The model council is like the greatest feature that they have. And what is really brilliant about it is you ask it a question, sacks. It will go to all three different major models. You can pick which ones, including open source. Then it tells you where they differ. And it tries to figure out why they differ. This is like one of the great features of the product. I think perplexity is like, could be a really great company as well, even with. out a language model. But let's talk a little bit more about opening eye here and their market share

Starting point is 00:15:50 because I think you're correct, Chimov, but they are getting off their game. Here's what's going on. Quick look at the consumer market. And obviously they started with 100% market share, right? They created the category in 2023, drop down to 85% market share 2024, 75% market share 2025. But by how much has the market grown? precisely. So the market is still growing. So in terms of number of searches and queries, they're obviously growing tremendously. But they have major, major competitors and the market share is going down. I had my team over at this week, and I do a more thoughtful analysis of where this is going. And if you take a look at this, there's three players, and I'd like to get your guys' take on this,

Starting point is 00:16:36 who really haven't shown up yet. Apple, meta. and obviously Windows, all three of those underrepresented. If you give them credit for just getting, you know, a half point of market share here and starting to intercept, which I think those three players were here, will be here. They're going to be well under 50% market share. And I think Chetchipt is going to have some big challenges there on the consumer side. While they're doing this stuff in consumer, they are cutting back on all their side projects. So you probably heard about the SORA video app.

Starting point is 00:17:09 That's been shut down. This is kind of major news because Disney was going to put a billion dollars into opening as part of it, and they had done a licensing deal, and they were going to integrate SORA, this short video product, into Disney Plus. All of that's now been canceled. The billion is not going in. The billion's not going in, the licensing deal, all of that. And then in addition, there's supposedly at Open AI a newfound focus on chasing Anthropic down

Starting point is 00:17:40 the enterprise path. So getting off their game, getting a little discombobulated, perhaps, or maybe getting focused on what matters, which is enterprise, apparently in terms of revenue. Open AI also offered private equity investors a guaranteed minimum return of 17.5% as part of a joint venture that would help PE firms deploy AI and ease the high upfront cost of that. So lots of questions here, Chimov. I don't know if you've tracked this PE model, but obviously a lot of people are doing roll-ups in services, accounting, legal, Josh Kushner's got a big effort here, a bunch of private equity firms trying to essentially, I guess, and run the transition process, and arguably what you're doing with the software factory at 80-90. So your thoughts on Open AI and this

Starting point is 00:18:33 pivot and this private equity focus. I think it makes a lot of sense for Open. Open AI to focus on a few things and do them exceptionally well. I disagree slightly with your first part, which is I think that people like to make new decisions about new experiences. And I think that Open AI has incredible consumer mindshare. I just see like how my kids use it. They started there and it's very hard to get them to switch. Even when I say, hey, have you tried Gemini?

Starting point is 00:19:00 They use Gemini. And to your point, the reason is because they stumble into it more. Yeah. But if you give them a cold navigation experience, they rely on chat GPT. And it's the same, by the way, on the other side in the enterprise, if you give us a cold problem, my default reaction would be to use Anthropic. Now, I actually think that that's quite healthy because you're going to segregate the market. And I think, look, if you go into the way back machine when we first started talking about this thing,

Starting point is 00:19:28 this is sort of how we all postulated this would work, where even if Open AI just won the consumer business, it is a multi-trillion dollar company with enormous scale and value. And I think that that's okay. So I think that what they probably need to do is say, where are we the strongest? Where is there the most obvious traction? Can traction in another market like an enterprise bleed into consumer usage? If it's true, then you have to win the enterprise. I think winning the enterprise, though, is a very different game than winning consumer,

Starting point is 00:20:03 very different set of features, very different set of expectations. So I think people either have to decide you're going to compete everywhere or pick one thing and just nail it. And if I was OpenAI and you had to pick one thing, you would pick consumer because they're the juggernaut and they're the clear leader and they have an enormous brand. Freeberg, let me pull you into this because my base case here is that all consumer queries are going to be free. Apple's going to make them free.

Starting point is 00:20:32 They're already free for Google. I think meta's going to make them free and actually have a decent product soon and Microsoft same thing. ChatGPT has decided to push off advertising. They were going to put advertising in it. You remember they got mocked by Anthropic with their Super Bowl ads. So what do you think is going to happen on the consumer side? Consumers generally don't pay for services.

Starting point is 00:20:52 That's usually 5 to 20% of the market is paid services and everything else is free and ad supported. But it looks like Apple and Google. are going to just let it rip. So that could take the revenue oxygen away from chat chipt. So what is your thought here on who wins consumer? I don't think that it's going to be free. I think there's 290 million subscribers for Spotify.

Starting point is 00:21:19 They're paying, what are they paying, 20 bucks a month or something? Probably less on average because it's global number, but yeah. Netflix has 325 million paid subscribers and AI that can book your travel answer questions for you, track your calendar, do your email, et cetera, et cetera, et cetera, is likely going to be the most valuable, call it meta service that consumers have ever seen. And I think it's very likely that we're going to end up seeing many more consumers subscribe to a consumer AI service than we've seen even with cable television. I mean, think about your cell phone.

Starting point is 00:21:51 Everyone's paying 50, 60 bucks a month for a cell phone. Why not pay 80 bucks a month? More. More. You pay 100 bucks. You pay 100 bucks. And by the way, in the pandemic, remember what we saw. The two things that.

Starting point is 00:22:01 people refused to cancel was not your mortgage payment or any car payment, you were willing to go into arrears and into default. The two things that people would always keep was the cell phone number one and then electricity number two. Chat GPT will be there. So I think that's going to be the case with these consumer apps, J-Cal. I think that they're all going to be like ultra-valuble and they're going to layer in services on top of them. Like for example, do you want to watch video embedded in your consumer AI app. Do you want your consumer AI app to do your finances for you?

Starting point is 00:22:33 And it could be that the consumer AI app becomes the new platform, much like the iPhone was for the app economy, there could almost be, whether it's through kind of connectors or embedded tools, an incredible ecosystem that were traditionally advertisers

Starting point is 00:22:48 actually pay to be embedded and show up inside of the AI app and the consumer can either pay for it or the advertiser can pay for it. So I think there's going to be a very different economic model and still very early days. Sacks, the numbers right now would be more in my estimation. About 50 million people subscribe to chat GPT.

Starting point is 00:23:09 They got a billion users. They're trended to a billion. I think they probably hit it in the next month or two. Certainly they had 900 billion two or three months ago. So it's about 5%. Where do you think this winds up? Do you think it becomes, you know, 300, 400, 500, 500 million consumers are willing to pay 20 bucks a month for this?

Starting point is 00:23:26 Do you think it's more free and the data and the ad-supportedness of it? Go the meta and the Google route. I think it's possible that you could get a few hundred million subscribers for the premium tier. Look, I think most consumers will take the free service in exchange for advertising, right? Some ad-supported model, which, by the way, I think could be quite successful. When chat GPT started displacing Google for search, a lot of people were predicting the death of Google's model because who'd want to look at 10 Blue Link? I think that's true, but I think you can do something much more compelling in AI chat compared to just a list of links.

Starting point is 00:24:04 So in any of it, I think ad-supported models might make a comeback here in addition to premium models. All of that being said, though, as an investor, I always liked B2B businesses better than B2C because it is hard to monetize consumers. Their willingness to pay is not that high, and they tend to have high churn rates, whereas businesses tend to be very sticky and you can upsell them and you can get more than 100% net dollar retention year over year. So if you can make an enterprise business work, it's always been a model I've liked. But, you know, that being said, obviously some of the most valuable

Starting point is 00:24:41 companies of the world are consumer companies. Meta, Google, Apple, these are all consumer first companies. And look, I think ultimately both models can work. Obviously both can work. The question is, which one. I guess it really comes down to how motivated do we think Google and Facebook will be to build that bridge from their ad networks to their AI offerings. Obviously, Facebook is kind of MIA in all of this, but Google is not. And I think that will be the determinant. Here is... Well, Google is going to compete very vigorously for the consumer because it is existential to them. I mean, it's very clear that search and AI chat are kind of merging into one space. That means that ad links will kind of merge into being in-chat advertising.

Starting point is 00:25:28 So they have to adapt with that and compete for the consumer. I also think that Google is in an outstanding position to do the whole OpenClaw thing because they already have access to your calendar, your documents, your email. So the agent doesn't really have to earn your trust because you already trust Google with all of your stuff. So I'm kind of waiting for the Google version of OpenClaw because I don't really want to share all my documents with some new service. They're the only one that has so much free cash flow that they can almost view it as two separate companies, which it effectively is. You know, GCP over here runs the enterprise play, and then Google consumer over here runs the consumer chapop play, and they can keep them

Starting point is 00:26:10 segregated. That's so much harder for a startup to do, because on top of just keeping everybody organized, you have the financing problem of constantly having to raise more money because you don't yet have a profit engine that spits out cash. They're probably the only one. And you can see it in the valuations, actually, which I'm going to get to in a second, but people believe the durability of Google more than they believe the durability of anything else. And Sacks, I think you weren't on the pod last week or maybe two or three weeks ago, but Google has announced Google Workspace Studio to do AI automation. And it's, yeah, it's online and people are playing with it already. So they have joined the open clause.

Starting point is 00:26:51 party. By the way, Jayce Cal, you asked a different question earlier as well, which is around the PE story, and I think the PE story is a window into the rest of the broader market. The real open question is, what are these companies worth? There's like a very threshold question. It's sort of like a very important fork in the road right at the outset, which is, do you believe that we're on a path to superintelligence, where everything is incredible, where there's infinite abundance, where you can magically describe things and beautiful things appear, complex things appear, groundbreaking things appear, or do you believe that it's good next generational software? And the answer to that question is really important because we're

Starting point is 00:27:31 financing things like it's the former. And G.C. has a big move in this. Hamant was on the program in January when we did the interview show, and he's got G.C. buying up and rolling up accounting firms, et cetera, health care firms, hospitals, et cetera. This seems to be part of the future of venture capital is taking AI sacks and actually buying out, or I should say big VC, kind of starting to look like private equity, buying out hospitals, accounting firms, business processing firms in India, putting them all together, and then running them with AI. So any final thoughts on that, SACS, as a business strategy? Well, I think it's interesting.

Starting point is 00:28:13 They're kind of betting on the idea that they can own the change management around AI. And this is the thing is everyone just kind of assumes that you throw AI over a wall and a business just automatically knows how to use it and drive efficiency from it. And what we're seeing is it's pretty difficult. Chamath, you've seen that. There's McKinsey study showing that like 95% of enterprise pilots aren't successful. There's tremendous value, latent value in AI, but it's hard to know exactly how to deploy it at this point in time. So I guess what these private equity firms are saying is that we know how to drive value from this. And if we own the business and then own the change management, then we'll be able to, you know, create value that way.

Starting point is 00:28:55 Their business model makes solving this problem existential. And this is sort of along the lines of this essay that I wrote. Let me just give you the thought exercise and you guys react. Today, we live in a world where the whole market is trying to debate what is the PE ratio that you'd be willing to pay. So Facebook is incredibly durable. I'm willing to pay 30 times. invidia is really durable, I'm willing to pay 40 times. Tesla is incredibly asymmetric to the upside.

Starting point is 00:29:24 I'm willing to pay 200 times. And then Caterpillar or John Deere, I'm willing to pay 15 times. I'm just using these as an example. And what it's effectively signaling to you is how durable all of these cash flows are. And all we do in the public markets when we make an investment is we're just guessing, when do the cash flows run out? And we try to say, well, here's how much it's worth and here's how much I I'd be willing to pay for today.

Starting point is 00:29:50 But if you go back to this example and you say, well, what if there's this superintelligence on the horizon? I think it's fair to ask the question, what is anything worth? And what is anything worth in year 10 or year 15 or year 20? Because if you have infinite abundance and you have all this creativity, won't all companies be disrupted? And won't we be in this constant churn of everything getting disrupted all the time? and if you were faced with that problem in the public markets, how would you react?

Starting point is 00:30:23 And I think the canary in the coal mine are the SaaS stocks. Yes, we jokingly call it the SaaSpocalypse, but I think it's much more important. I think it's a big societal question. How do you view capital markets? How do you view the health of a company in a world where we've been told there's a superintelligence on the horizon that makes everything much more fragile than it was before? And the market reaction is to put all these companies on a spectrum, and they started here in software, and they're re-rating everything down.

Starting point is 00:30:54 And they're changing the way that things are being framed from price to equity to a multiple of the cash that you have on hand. And I think that has huge implications, mostly to Silicon Valley and largely to employees, because we all sell the dream. We start a company and we're like, okay, small sales. salary, big equity upside. But that's implicitly saying in 15 or 20 years, this thing is going to be worth some gigantic number. But if instead every business gets disrupted every five or six years, all you're going to end up with is just the cash. And so what should employees do? The rational reaction from employees will say, you know what, I don't want your equity. Give me more money.

Starting point is 00:31:34 And if all of a sudden you do that, the valuation multiples and the complexity changes again. So I had my team put this chart together. Okay, what is this? Took a handful of SaaS companies, and took the MAG6. And I just said, okay, if you take the market cap and you divide it by the annual free cash flow, what that tells you is how many years does it take to get back if you bought a share of stock? How many years does it take from the free cash flow to come back so that you've earned back the cost of one share?

Starting point is 00:32:04 Snowflake in 2023, it would have taken you almost a hundred years. And where is it now? It's been cut in half. service now. It's Lassian Workday, you see it. And I think what this speaks to is the beginning of this re-rationalization in the public markets of saying if superintelligence is coming, we have to be very careful about what we're willing to pay for these things. But if you look on the right-hand side and the Mag 7, what's so interesting is Apple, Microsoft, Meta, and Alphabet, the market is completely fripped the other way. And what they're saying is, we believe.

Starting point is 00:32:42 that these cash flows are essentially monopolistically durable forever. That's the only reason why you would walk them up like this, except in Vidiya, which is the most unbelievably accretive, well-run company, highest margins, you know, making $200 billion. And they're treating it like they're treating Service Now in Snowflin. I just think it's so interesting what's happening. I can't explain this, but here, this data sort of shows this reset that we're going through. a very complicated reset in the company. Freeberg, what's your take on this reset as Chimov describes it, do you think?

Starting point is 00:33:20 This is just a flight to the quality of the free cash flow of the Mag 6 and just how much cash they print. And then maybe the other ones are smaller footprints and they're just more disruptable. We had this discussion many years that Google and Apple, Microsoft, they would all be disrupted at some point, Facebook. And that just simply hasn't happened. They've gotten much more nimble at copying products.

Starting point is 00:33:42 or incorporating features and products into their core offering. So your thoughts? It's probably generally correct that there will be a decline, but there's also the selective opportunity. Did you guys see the LP slides that went on the internet from Toma Brava's LP conference? Yeah, those are great. Nick, maybe you could find that.

Starting point is 00:34:01 They kind of highlight that within the broad market scape, there are companies that are not just going to sit idly by and let AI kind of delete their business value. but they're integrating AI themselves and they've got high quality people to do so, and they're reinventing their product themselves. So they've already got a beachhead, they've already got customer access, they've already got enterprise users. And in fact, if they can integrate AI into their products and into their tools, there's almost this like selective dispersion that happens in the market. And so the winners are going to win, I think

Starting point is 00:34:33 truly in every market, not just in software, but across every market, including an industrial supply chains on who is going to implement and utilize AI tools and agents to do work. And it's going to expand the work productivity of that organization, not just create new features, which is what we focus on when we talk about software companies, but really imagine a complex business being able to do 10 times the output it can do today with the same capital equipment and the same labor force. Freeberg, what do you pay for in a world of superintelligence versus in a world of non-superintelligence in terms of the durability of the business. Yeah, it's hard to say, man.

Starting point is 00:35:11 I mean, we don't know, right? And that's why all the discount rates are going through the roof. And that's why the valuations are collapsing because we just don't know what multiple or what discount rate you apply or what terminal growth rate or which effectively implies. What are you doing your PA? Like, do you say? I don't think Disneyland is going anywhere.

Starting point is 00:35:28 You know, I think there's some stuff that you could say is the counter AI portfolio. And the counter AI portfolio, I think it's like physical experiences. Halo. They call it halo. high asset low obsolescence. Okay, that's a great. Yeah, I'm not a big investor, trader like you guys, but that makes a lot of sense. I mean, I think that's like intuitively to me, that seems to be an area where people are going to be spending a lot of time and they're going to have durability in those businesses.

Starting point is 00:35:52 I think businesses like NAC gas production, you know, I just bought LNG that Chenier company. Chenier. Yeah. I bought Chenier. Given all the craziness in the Middle East. And, you know, I visited there with Doug Bergam. So it was the first time I never been exposed to this business and I checked it out. That's a great business. It's a great business. So I think that's got durability.

Starting point is 00:36:12 Obviously, unless it gets blown up by some enemy, that would be a problem. So the Adams thesis that TK. Yeah. Adams, real life, mining is a great one. Obviously, I think the space industry is going to be a lot bigger than we recognize. I actually think there's probably a $15 to $30 trillion a year economic opportunity on the moon. That kind of a business, like you're going to see what SpaceX. as IPO is going to have an insane multiple.

Starting point is 00:36:39 So I think to your point, Chumot, there's a lot of stuff getting steamrolled here with crazy high discount rates where you just don't know. And there's a bunch of stuff where the pathway over the next 15 to 30 years is maybe independent or unlocked because of AI. And then there's a bunch of stuff that's just unaffected. And that starts to get a higher multiple because that's where capital starts to flow. There are probably three things that we would agree are great modes for businesses, brands, network effects, and the management team.

Starting point is 00:37:04 those come into play here as well, yeah? I don't know if I would consider a management team to be a moat. I mean, it's like Warren Buffett says that you want businesses that are so strong that they could be run by a bunch of monkeys because one day they probably will be. Well, I was thinking more like obviously Elon and Tesla is going to just relentlessly innovate. It's a great point, by the way, and it's true, especially in the age of agentic AI. Yeah, I mean, look, I think, though that just upleveling a bit, I think you are right that the key question is moats.

Starting point is 00:37:34 because I do think that there are still strong moats in a lot of different kinds of businesses. And a lot of them are very subtle. Like you said, some of our network effects. Some of them are the difficulty of producing physical world products, things like that. So there's a lot of different types of modes out there. And that is the key question as we enter a world of, let's call it, digital abundance. Yeah, the network effect of Apple's ecosystem and they have hardware, right? and they've been just on that path of making their own silicon.

Starting point is 00:38:04 That's incredibly defensive. And they have brand, right? So that is pretty strong for Apple. And then you'd take Tesla the same thing. You got Elon relentlessly innovating and it's hard hardware stuff. And then if you look at meta and Google, these are incredible brands with great management teams. My assumption. And constantly innovating.

Starting point is 00:38:21 If I had to bet, I'm going to bet that brands go to zero. Really? Yeah, because I think that when you can make things that are as good or better, and you can make them in a cheaper, faster, better way, people want that abundance more than they want an affiliation to a brand. Example? So the perfect example is actually what Tesla did to BMW. You know, or Tesla did to Mercedes, what Tesla did to Porsche,

Starting point is 00:38:47 what B-YD and Gile have done to the car manufacturing cycle in China. This is a fundamentally cheaper, faster, better product. Yes, it's got a great brand, but nobody's going to pay a premium for these products. The reason why Y has outsold everything else is because the Model Y is priced better and it's superior on every operational dimension of comparison. That's also true for the cars in China. So I think it's the opposite. I think that brands and the pricing power brands other than maybe premium luxury goods, but even that's eroding. Like look at the stock, like, I don't know, Nick, show the stock chart of LVMH or Ferrari. This is not a commentary

Starting point is 00:39:32 on the quality of the actual product, but what this shows an erosion of pricing power, all of these things are being eroded away. Yeah, this would be the value prop, most people in brands would just say value propositioning. So JetBlue is a value brand. A Tesla Model Y, perfect example of a value brand. And if you look at Apple's recent cohort, what did they focus on? the Apple MacBook Neo, which is a value laptop, 600 bucks, 700 bucks. So they're even going down market to try to capture that value. And to your point, maybe the right word is abundance, like the brands that bring abundance, that bring more to the table than their competitors, and they are able to bring more at the same unit cost or less, capture share. That's probably

Starting point is 00:40:18 true. You know what's interesting about that, Chama? As we open up the aperture of this, if you, one of the thesis, we talked about here a couple of years ago, say, hey, what happens with AI disruption, job disruption, etc. Costs coming down on cars with Model Y getting cheaper, cyber cab coming in, B-YD, obviously, if you go to any foreign country, BIDs are everywhere, and they cost 15 grand. Then you look at Apple making the Neo, that's a $600 laptop. Everything getting cheaper seems to be happening. I just think it's very hard to know which these companies are going to be disrupted. A year ago in this pod, we were saying, that Google was going to be toast, or some of us were saying it.

Starting point is 00:40:56 I took the opposite. Yeah. Okay, fine. But, you know, it looked to us like chat GPT was taking a massive share from Google search and the AdWords model was becoming obsolete. Now, because of the success of Gemini and the potential for personal digital assistance, personal agents, I think we're probably pretty bullish on that company. And look at their stock chart.

Starting point is 00:41:19 It reflects that. I mean, I think it's doubled in the last year. Now, you take something like Apple. on the other hand, and I'm not saying this is going to happen, but I'll just throw out a counterfactual, which is what if your personal digital assistant or a personal agent gets so good that you don't need to check your phone, you just tell it what to do, and you don't need the wall of apps anymore. I mean, the way that you call an Uber won't be to punch a few buttons. You'll just tell it what to do. So you could imagine the phone operating system getting disrupted if the agents are good enough.

Starting point is 00:41:49 You're onto something huge, because what you're saying is I can confirm this to you. 89, do we sell enterprise software? I'll tell you three conversations with huge enterprises, asked exactly what you just said. And we jokingly called it strangulation as a service, which is they all say the same thing, what you just said. Okay, look, get all this complicated UI out of the way.

Starting point is 00:42:09 Get all of these products out of the way. Find a way to create a shim where I can just write what I need, tell it what I needed to do. It deals with all this complexity in the background. I never want to see these things ever again. And that's what people want. To your point, they want to be able to say, okay, pay this with my Venmo or use my MX in this situation or get me that flight in some way and have all these wonderfully smart agents do all

Starting point is 00:42:34 the work behind the scenes. And that's actually tracks with exactly what I've seen with OpenClaw, perplexity computer, Claude Co-work. Instead of going to your notion, instead of going into your Gmail, instead of pulling up your calendar, you ask it, hey, what's on my schedule this week? It brings it to you. So you could have a dumb, you know, flat terminal, you know, chat interface on the $100 device and it would do just as good.

Starting point is 00:42:58 Just to make the counter argument against myself, I mean, even though I think that you'll just increasingly tell your agent what to do instead of be clicking around or, you know, touching the screen, you still need a dashboard or a user interface to like check on it and just see readouts of information. You still need to be able to visualize it. Where is the Uber that I've asked to be sent to me? How far away is it? I still want to see it on a map. So I could imagine that even if, let's say, you know, Siri Plus Plus becomes the dominant way

Starting point is 00:43:28 of interacting with your iPhone, you'll still want that Apple user interface. Hard to say. I mean, I see a lot of people out there tweeting that Apple is brilliant for kind of missing the whole AI wave and not spending a lot of money on data centers or CAPEX. And then there's other people who say, well, wait a second, they're missing. missing critical capabilities. Then there's a question of, will they be able to make deals for an AI-powered Siri? I don't know.

Starting point is 00:43:56 I think this is very hard to know at this point in time. All right. And we will be discussing all these hard topics at liquidity. May 31st through June 3rd, Chmoth. Some big announcements here from you. You have taken control. This is what happens in the Game of Thrones known as the All-in Corporation LLC. see the partnership if we can call it that chip the chaotic partnership no mids there it literally is

Starting point is 00:44:24 chaos wait wait wait why are we doing this in california i don't even think i can go back to the state this point in time you can come for 48 hours making a current you touch down for t-dosephs that fly in you don't have zero days in state at this point in time i love it i love you can do 48 hours and so well Gavin newsa might meet you at the airport you could get picked up at the airport the air by the way the airport is about 10 minutes from the venue you could fly in in and fly out same day and you don't have an overnight. No, that's true. Is that how it's counted as an overnight in California? Head on pillow, yeah. You can come in on Monday, then fly out to incline sleep at our friend's

Starting point is 00:45:00 house and then fly back in on Tuesday and then fly back out. You'll be fine. Or you could fly to Vegas do a blackjack run, overnight blackjack run, and then you come back in the morning we just freshen up. Just get your fresh shirt. Nice and rested. Let me announce the next two speakers. Oh my God. I'm so excited. But just for background. Chamoth comes into this thing. Liquidity was this little conference I did. It's now part of All In. And I start setting up all the speakers.

Starting point is 00:45:23 And then Shamath goes, not good enough. I'm not showing up unless I pick all speakers. And you know what Freerberg and I did? Well, finally, this melon farmer is going to actually do some work. Great. What did you call me? Melan Farmer. It's a when they play a Quentin Tarantino movie on, like, TV.

Starting point is 00:45:40 Instead of saying mother Fere, Samuel Jackson says, Melan Farmer. Oh, I see. So this melon farmer took unilateral control of the 10 speakers. Ten speaker slots, very coveted. Okay, so we've announced Dan Loeb. We've announced Sarah Friar. Incredible.

Starting point is 00:45:58 And I'm very, very, very honored and excited to announce that Bill Ackman and Andre Carpathy will also be speaking at liquidities. Four heavy hitters, six to go. Two more goats on the roster of goats. So goaded. And we have a handful of other. Yeah, there might be some surprise guests, unannounced guests show up. TBD, can't say TVD.

Starting point is 00:46:21 You know, TB? More announced soon, but we're making... Let's get Dario to show up. Dario, come to the show. Come to the show. Come hang out with the All-in boys. I'm really excited. You know what Andre's going to do? What Andre agreed to do is he's going to do like

Starting point is 00:46:33 five or ten minutes of slides on like the future of the world with AI and then we'll do a fireside. Love it. That's going to be tremendous. And, you know, he's been on a heater himself with his recursive GitHub. Oh, dude, auto research is incredible. And Bill Ackman has a ton of points of view on all of this stuff.

Starting point is 00:46:51 So we'll get a lot of his thoughts. I want to give a shout out to Freeburg because when we did the interview with Jensen, he's like, guys, I was like, I like had a glass of wine on a Sunday. I like coded a replacement to my HR. I had system. I asked all my team to do it. And I was like, oh my God, this is incredible. So I asked our folks, I'm like, hey, I don't like the website.

Starting point is 00:47:10 This is 8090. And the next day they're like, yeah, we vibe coded a new one. We'll have it up. And then I'm like, well, do you like the CTAs and how it's doing? They're like, no, no, no, no. We put it into auto research and we doubled the click-through rate. And I was like, to Freebrook's point, this was, this would have been many man months, tens of people. And instead, all these recipes, by the way, in these playbooks, you know, like the person that runs growth at Open AI publishes his recipes.

Starting point is 00:47:40 Yeah, you've been claw-pilled. That's it. You've been one-shotted. It's really incredible. This is why, like, I mean, you commented on my post-gestion. I wake up every day and my head spins. I'm like, what is going on in the world? It's crazy.

Starting point is 00:47:52 Like, every day feels like a new era right now. Yeah. And it's disoriented. Because I think what's really interesting is you pull what would have normally been something that's call it a period of timeout, like a year out or two years out. And you can pull it in and say, I can get that done in three days. And I don't need to hire people. All the sequencing and staging that would normally go into accomplishing

Starting point is 00:48:14 something has been reduced. And then the time rushes in. So all your ideas rush into you. And they're all like immediately accessible. And that's why it's like so every day is like, oh my God. It's disorientating. Yeah. That is I have, I bought the domain name annotated.com like 15 years ago for four grand. And I wanted to create a service like a bookmark service toymouth where you like highlight a paragraph from the New York Times and then you write your comments on it. It saves it. And you basically have the service. And I was talking to some developer by making it. and I literally vibe-coded it and the Chrome extension this past week.

Starting point is 00:48:47 And I was like, okay, I've been sitting on this domain and project for like 15 years and I did it in a weekend. Isn't it crazy? Weird. It's like very weird. It's really crazy.

Starting point is 00:48:58 This makes it feel like a simulation to me that everything can just manifest itself. It's the Star Trek version of the world. Like remember the replicator sacks? We just say Earl Grey T at this temperature. That's happening in business now. You're like, CRM system, build annotated.com, build this new website for 80-90.

Starting point is 00:49:16 Boop! And it's a replicator just gives it to you. It's very strange. I've only felt this feeling twice. Once I was on the outside looking in, I was a derivatives trader in Toronto. I was looking at the first dot-com wave, and I was like, I got to be a part of this.

Starting point is 00:49:36 How do I get to be a part of this? And I got a job, and I went amp and kind of the rest was history. Winham. The original iTunes. But I missed the wave financially. It didn't do anything for me, but I was in the right place. You got to the beach with a surfboard.

Starting point is 00:49:54 That's all that matters. Then the second wave, I crushed and the move to mobile and social. But this wave feels like a hundred times bigger than that. It's a tsunami by comparison. I had three of these. It's probably what it's like to be at Nazaree in Portugal. You guys ever see those clips of like that crazy place? Yes.

Starting point is 00:50:11 There's like a hundred foot waves or whatever, and you're just towed in and you're like, okay, let's just, here we go. This could end one of two ways. Let it go. Let it go. Let's do it. Goodbye. No, it was like literally when I first saw a PC, when I first got on the internet and then saw a mosaic, like those two moments in the early 90s and then seeing the iPhone. I think that, like those three moments.

Starting point is 00:50:33 It was very special. All right. Rough week for Zuck. Two verdicts went against meta in two days. they were first found liable for allowing child predators to access minors on Facebook and Instagram, New Mexico jury ordered META to pay $375 million in damages. The AG's office there ran an undercover investigation. They created fake child profiles, Facebook, Instagram, these accounts were contacted by predators.

Starting point is 00:50:58 People showed up, yada, yada, yada. A whistleblower and former meta engineer testified that his own 14-year-old daughter received sexual solicitations on Instagram. Then on Wednesday, an L.A. jury found meta and YouTube. to negligent for designing addictive platforms. That harmed a young user's mental health. Basically, the plaintiff, in this case, Sacks said they started using YouTube at age six and Instagram at age nine.

Starting point is 00:51:23 And she testified that features like notifications, algorithms, made the app so addictive that it caused depression and anxiety through that compulsive use. You have some thoughts on this. And we had Jonathan Haidt, right, didn't we do an interview together? Was that one of the first joint interviews? Freebird did? You and I did. Yeah. Incredible book.

Starting point is 00:51:44 These things are obviously addicted. He had a very important point, which is to try and keep kids off cell phones and social media until they're 16, and he was kind of cheerleading this verdict. But, you know, I'll take a little bit of a contrarian to the popular kind of sentiment on this. And I'll just talk broadly about this idea of tort litigation. Tort litigation, you know, costs our economy $900 billion a year in the United States. $900 billion a year. That's how much is spent on the litigation costs, the settlements, the judgments. It's 3% of GDP, and it's growing roughly 10% per year. And these civil penalties decided by juries, like they're going against big companies like meta and YouTube, but it's also

Starting point is 00:52:25 food companies, restaurants, everything. Anytime there's a window to sue someone and extract value from them, tort firms are all over them. You know, it's called the tort tax now in America. It's not just losses paid by the companies. Because fundamentally, when a big company pays out these tort taxes, they're going to invest less. There's less R&D, less product development, costs stay high. There's fewer new product launches and there's all these crazy restrictions on stuff. So, you know, look, I agree.

Starting point is 00:52:54 Social media causes immense harm, particularly causes harm for kids. Kids should not be on social media until they're 16. Absolutely agree. Maybe adults shouldn't either be on as adults. But fundamentally, I think there's an important question that we often ignore, which is who is fundamentally responsible for that harm. Should the sugar beet and sugar cane farmers be responsible for diabetes in America? Should the soda companies be responsible? The retailer selling the soda, the FDA for not stopping at all.

Starting point is 00:53:23 And fundamentally, I think we have to ask the question, what role does individual choice play, an individual responsibility play in this equation? If everything is a liability. What do you think? Because anything, I think we have to take personal responsibility. I think the parents that are absent taking care of their children are responsible for harm to their kids. You shouldn't let your kid play with a gun. You shouldn't let your kid go to some sketchy neighborhood after hours by themselves. You shouldn't let your kid play video games 100 hours a week.

Starting point is 00:53:52 You shouldn't let your kids eat nothing but soda and potato chips. You have responsibility as a parent. And I think parents should keep kids off screens and keep kids off social media. once the harms are known of excess use or the harms are known of exposure to the sort of thing, I think there's a responsibility that sits with the parents. What about things like tobacco or processed food or? Yeah, this is the key. Yeah, and I look, I mean, the same is true of alcohol.

Starting point is 00:54:16 I mean, dude, like, alcohol is terrible for you. There's nothing good about alcohol. But I think I should have a choice on whether or not I want to consume alcohol, whether or not I consume tobacco, whether or not I consume processed goods. And the recognition that it's bad for you should be publicized by the government, should be published by the company. Right. So if I have to summarize,

Starting point is 00:54:33 what you would say is product liability law makes no sense. There should be human liability and human responsibility expectations in a society. We never talk about responsibility. We always talk about

Starting point is 00:54:44 where the government failed us and where these companies f***ed us. And we never talk about what did we individually do wrong? How did I individually choose to eat 100 f***as a week? How did I individually choose

Starting point is 00:54:55 to get my kids addicted to social media? Where the fuck was I as a parent? Like, we don't talk about our responsibility. And by the way, this fundamentally addresses this point about human agency, which I think is more critical in this era than ever, because AI is going to flood us with everything all the time nonstop. What we choose to do in a world where we're already getting everything and how we choose to not take everything that's being offered to us, I think is a critical part of what's going to disdoing with human success from human failure. And it's going to become more apparent in the future. And not everything is about liability and not everything is about the government failing us. It's about people making choices.

Starting point is 00:55:29 And we don't talk about it. What I'll counter. I agree, personal choice. Super important. What you're probably leaving out here, which you're definitely leaving out here, is when these companies know they're doing something damaging, and they do it anyway,

Starting point is 00:55:46 that was the key to the RJR. With the whiskey company? What about a whiskey company selling whiskey to an alcoholic? So, what about a potato chip company selling potato chips to an obese person? I'll put those two aside because I don't think we've seen major cases about that, but I will say the auto industry knew for a long time about seatbelts. You remember that.

Starting point is 00:56:08 And they didn't deploy them. RJR. Nabisco, they knew that these were addictive and they designed the cigarettes to become more addictive. And they didn't tell people about the health risks. Asbestos, same thing. Lead paint, same thing. This has happened over and over again where corporations subvert the release of information to make additional profits. So the question here with Facebook is, did they know how addicted these were?

Starting point is 00:56:37 Did they know kids were being assaulted sexually and they could have done something about it or didn't then? And so agree that there's too much litigation. That's absolutely true. The kids being assaulted absolutely true. So yeah, we agree on that one. Not releasing information about the level of addiction if they had it. That's certainly bad. Should the product be legal, number one?

Starting point is 00:56:56 And if the product is legal, who's responsible for using it? you know, and where do we draw the line? And if we don't want people to make noise, that we shouldn't put it out there. But if you as a corporation know it's dangerous, and then you lean into that, if you know, as is the case with Facebook,

Starting point is 00:57:12 that this is super addicting, super damaging to young girls, and then you lean into making it more addictive and you don't put safeguards in place, and you can prove that like RJR, like asbestos, like many of these other comments. What safeguards does a whiskey company put?

Starting point is 00:57:27 Age? What safeguards does a casino put? Hold on. You asked the question. Age is one. It's not about age. Second, after age, which is what we're really talking about with kids, and Jonathan Haight would agree, that they shouldn't be using this until a 16. So I think that's a perfect analogy.

Starting point is 00:57:43 Age-gating and then labeling. And then if they know of something that's really damaging, releasing that. So there was a whole thing about alcohol and pregnancy, and they covered up in the alcohol industry or didn't disclose exactly how damaging it was. to drink alcohol on a fetus or a developing fetus. And then remember all those signs went up in bars in the 70s and 80s? That was directly because of that. So labeling, information, and agegating would be the logical things to do for social media.

Starting point is 00:58:11 And that's what's happened to the past. So that's the answer to your question. I don't know about agegating, but I think informing parents about the risks is fine. Like, that should be a responsibility. But, you know, the tort lawyers are one of the largest donors in political elections in the United States. they donate largely to Democrats in local elections and Republicans and national elections, and then they are the largest donor class to elections of judges. And it's a business.

Starting point is 00:58:34 And I think we don't talk enough about the business of court law, the business of litigation in this country. And we often ignore this question about choice. And I don't want to live in a world, J-Cal, where the government and companies are telling me what to do and what not to do, how to live my life, et cetera. Saxley, jump in here, personal freedom and personal responsibility versus, hey, corporations may be knowingly doing things. Parenthold responsibility, J. Cal. Prental responsibility in there as well. Yeah. What do you think is next? Well, look, there's no question that the trial lawyers want to turn meta into RJR and Nabisco and

Starting point is 00:59:09 the cigarette companies and try to fit their fact pattern around that. I just think that the activity is fundamentally different than smoking. I mean, smoking is manifestly harmful to you, regardless of what your age is. And the only reason we allow it is because of assumption of risk, it's a free country. I think in the case of social networking, it's much more unclear what the harms are and what the benefits are. And I think it's much more subjective and it's much more of a personal choice for adults and also for parents. Freeburg, one area where I disagree with you a little bit is you said the harms of this are immense and well known and understood. If that's the case, then let's just ban it for under 13 or under 16 or whatever it is. But I don't think that's the

Starting point is 00:59:50 case and because it's unclear, I think it's up to parents to decide what's appropriate for their families. And at the end of the day, I think the right way to deal with this is parental empowerment. You give parents the controls to set screen time limits or to decide what apps their kids install. Now, the debate has now moved over to AI apps. And there's a lot of parents groups that want to ban kids or teenagers from be able to use AI chat apps because there was a couple of cases of self-harm. Now, my reaction to that is, look, I've got a 10-year-old, and if he starts using chatypte to get answers to questions, I would consider that to be a good thing. I mean, I'll keep an eye on the usage, but I want him to be an AI native. I want him to be able to

Starting point is 01:00:37 do research, you know, I want him to be able to know how to use these tools. I want him to get the right skills to be successful in the 21st century. In China, they're incorporating AI into K-12 education. Are we going to ban it for our kids? and teenagers, I think that'd be a terrible mistake. So I think when it comes to AI and AI chat apps, it has to be up to the parents because there's too much manifest good that can come out of kids learning how to use these apps. Maybe social networking is in a different category, but I got to say, I do think that the harms have been exaggerated because the trial lawyers have an incentive.

Starting point is 01:01:11 And just to give you some facts about that LA case, so just so you understand, in this LA case, they were sued by a 20-year-old woman who claimed that she became depressed because of using social media. And she apparently suffered body image issues because of social media and she was able to win this judgment for millions of dollars. Look, I think there's big causation problems with that case. In the case of that plaintiff, the evidence showed that she came from an abusive home. Her father had abandoned her. Her own mother had body shamed her. So it was very unclear where her body image issues were coming from.

Starting point is 01:01:50 I think it's possible that social media contributed to them or it could just be that social media was a scapegoat. I also got to say that I do think it's a dangerous precedent. I mean, are we going to allow plaintiffs, lawyers to sue Spotify because you created a playlist of sad music and that music contributed to your emotional distress? I mean, that's kind of what we're saying. You got to remember, these are free services that. that people have a choice whether to use them or not.

Starting point is 01:02:19 And if social media is making you feel bad, if listening to the wrong playlist is making you feel bad, then stop doing it. But what's going on here, I think, is the trial lawyers are trying to create the next big tobacco, and their goal is to try and sue these companies into oblivion. And I don't think that's the right answer either. The consensus, Chimov, is kids who use this two or three hours a day.

Starting point is 01:02:41 This has been across many survey, many research studies is that it's massively correlated with depression and anxiety and eating disorders specifically in young girls. Like if you get to two or three hours a day of this. So that correlations, I think, pretty well established. You pretty famously said, hey, and you worked at Facebook, so you saw this coming. But I think at Stanford, 27, 2018 time frame, you actually had some comments on this. We could either play the clip or you could just describe it, I guess. said what was obvious to me then. I lost a lot of friends at Facebook when I said it, unfortunately, but essentially what I said was, I don't let my kids use it, and I don't think

Starting point is 01:03:24 that this is a constructive part of a developing child's diet. I do think that Sachs is right, that I view AI chat differently. There are different guardrails that are required so that if you go down some sort of, you know, dark corner, but that's possible to understand, and the product is architected in a way to create cul-de-sacs. So if you're thinking about self-harm or you're thinking about these other things, social media is very different. It's an incredibly fast-switch algorithm, and that's the optimization. And until the incentive for that optimization changes, these outcomes will continue to compound. I think the interesting thing is that the LA lawsuit was an individual lawsuit. The young woman, I think, was awarded three or six million dollars.

Starting point is 01:04:14 Yeah. The other one, though, that they lost this week was in New Mexico, and that was for $375 million. And that was more around, I think, child exploitation. Yeah. The thing that I'll note is that these trial lawyers, which I'm not a fan of either, have been trying, as Sack said, and as Freedberg said, to make these folks a target because there's so much money on the line. And they've been batted back pretty successfully. But this was the first time where they were able to navigate the Section 230 protections that Facebook and Google have typically used to protect themselves, because Google was a part of the LA lawsuit, and they were able to go down the pathway of product liability language.

Starting point is 01:04:57 Now, to Freiburg's point, I think he's generally right. I think it's my responsibility as a parent to take care of myself and my children. But to the extent we don't change these product liability laws that are on the books, I think the door has been opened and a map has been drawn, which is this is how you navigate around Section 230 and you can get a decisive lawsuit in your favor against these large companies with enormous cash flows. And so I expect that this will be a death by a thousand cuts kind of scenario where folks are just going to rally around this. I don't think it's right, but I think that that's the rational reaction to what just happened. I mean, look, $6 million to an individual

Starting point is 01:05:46 20-year-old girl or $375 million. These are huge numbers. And the reality is that I think we've opened the floodgates. I do think there should be a better response. And I do think that parents should take a lot more responsibility. But I do hope that these products allow us a kill switch for when our kids are under the ages of 16. Frankly, I would love a kill switch under the age of 18. And there has to be simpler ways to age validate. You know, we used to work around this thing called Kappa compliance. Kappa's bullshit. It's a nothing burger.

Starting point is 01:06:19 Like a six-year-old can vibe code their way around Kappa. So it doesn't do anything. And so age verification is completely broken. It's harder to get age-verified for a porn site than it is to get unage-verified for Facebook. Same work, Chimov. How did you get around it? Yeah. How do you know that?

Starting point is 01:06:35 How do you know that? That's just for uploading. You were uploading at the time, Shabat. This is not your only fans. Proof of age. We actually deal with this in our new AI framework that the administration released last week because the number one issue is around online child safety, which I think, again, is mostly about social networking, but it touches on AI, and so it's kind of gotten lumped together.

Starting point is 01:07:02 And I think we're, I mean, I'm referring now to the White House has said it's willing to support some form of age assurance technology and parental control. So look, I think there needs to be a conversation around how true it is that social networking is just a fountain of ills for young people. If that's true, then why wouldn't you just disallow it, right? But if it's unclear, and I think it's more on the side of unclear, this is me, then it's up to the parents. And what you want to do is, again, have the age assurance technology and the parental controls and let the parents decide. I don't think that social media is net bad, broadly speaking. but I will tell you that if my child uses it for two or three hours a day for multiple days

Starting point is 01:07:47 in a row, they become retarded. Yes, they act weird. And so I don't know what to tell you, except I would love a kill switch until these kids turn 18 on all these products. Well, you can, this has to do with dopamine, by the way. What I do instead is I use Apple's family sharing, but it's hard. And I'll tell you why it's hard. Our schools give our kids, Chromebooks, and say,

Starting point is 01:08:11 use these Chromebooks because that's the way you're going to access your LMS, your information, your content, your homework, and you know what's an integral part of that? YouTube. And then now it becomes a backdoor. So even when we take the devices, I take my devices, we lock them down, you can't bring them to your room, the whole thing. But if they need to do homework, and I catch them in a little break, I'm like, what are you doing on YouTube?

Starting point is 01:08:36 They're looking at shorts. Of course. That's what they do. Yes. And so it is a whack-a-mole problem for parents. I think I'll just give myself the final word here on behalf of the group. It's obviously addicting. It's obviously the industry has not policed itself, nor would they police themselves,

Starting point is 01:08:54 because they want to get people addicted now, so they're addicted when they're adults. The rest of the world has realized this. Australia now has 16 enforced, Malaysia 16. Other countries are right behind them, Spain, Germany, UK. And what should happen here in the United States is this should be done with the handset manufacturers. If Android and Apple showed leadership with Facebook and said, we're going to, by default, when you buy a phone, you're going to have to age verify kids under a certain age, which you kind of do already when you create a family plan like it did, we could solve this problem. And then parents would opt in to giving their kids access to this. No good comes out of kids under 16 using social media.

Starting point is 01:09:40 And Jonathan Hay, in our interview, said you should be putting phone lockers in and our school is doing that. Other schools are doing it. It is the greatest thing ever. Kids complain. And then they love it. I don't think it's that great. I'll tell you why. Our school does the phone condoms.

Starting point is 01:09:54 I don't know what they're called, but like you put them in the bags and you whatever. The real problem is that there's enormous social pressure when you're in high school to use these products. I'll give you a specific example. Our rule is you cannot get Instagram or TikTok until you're 16. I would love it to be 18, but we all agreed 16 and we're able to maintain that rule. But then high school comes around and I have two kids in high school now. Oh, we need Snapchat. No, you don't.

Starting point is 01:10:22 No, yes, we do. No, you don't. Okay, great. We'll have no friends. Thanks a lot. We'll just sit here in our room dark and there. And, you know, there's an enormous amount of social pressure. So when you talk to the other parents, it's like, hey, guys, can we all agree that we don't need Snapchat?

Starting point is 01:10:34 you just can't get uniform agreement across all parents because everybody views this problem differently. And so I had to change the rule. Now when you get to high school, you're allowed Snapchat, but not Instagram. And when you're 16, you get Instagram. And that's the best we could do and TikTok, all that stuff. But yeah, it's an impossible task for parent. I find it indispensable to be able to do I message with my kids. And also I like the location awareness. You can track location. you compare iMessage those features to snap is it really that different i don't think it's that different well the problem yes there is you get a bams you're going to ban snap no i can't my point is i had to give them snap but you're right i was like why can't you use i message they're like dad

Starting point is 01:11:18 don't be a loser yeah no i sign for a snap account just so i could i message them where they are where they're messaging i prefer if they were just on i message but anyway that's the reality so you can talk about banning all these things but again i think you're on a slip free slope. And I got to, I got to just point out. No, no, I'm saying me as a parent ban. No, I'm saying me as a parent. Yeah, you're setting guidelines. In my house, this is the rules. When you become a freshman, I'll give you snap. And when you're 16, I'll give you Instagram and TikTok. Otherwise, shut the fuck up, put your head down. By the way, I also have a tip for parents. You know this issue with like kids in headphones where they want to be listening to stuff all

Starting point is 01:11:55 the time and your kids walking around like zombies with headphones? I replaced their headphones with over the, these brand called shocks or something. It goes over your ear, but your ears open so you can listen to an audio book or music and still be able to talk. And so since we did that, it's like much less drama around the over-the-ear headphone issue. Man, managing teenagers are just brutal. Well, again, it sounds like you're exercising parental supervision.

Starting point is 01:12:22 Yes. Because it really makes sense that later when your kid turns 20, they could sue these companies for... Well, to your point, for emotional distress. That doesn't make sense. You're right, because to your point, that girl said she was using it from the age of like six and ten. Yeah, that's ridiculous.

Starting point is 01:12:40 One product, six, and yet, that's crazy. Crazy. I agree with you, Saks. That's crazy. Where were the parents? All right. We got time for, I think, one more topic. Be amazing.

Starting point is 01:12:53 President Donald Trump, 47th president of the United States, announced his counsel of advisors on science and technology. It's called P-CAS. SACS, you have now, am I correct in saying, moved from the czar of crypto and AI to now the leader of PCAS? Is that the correct way to frame this? Well, the president has appointed me to be a member of his council of advisors on science and technology and to co-chair it, along with Michael Kratzios, who's the director of OSTP. I'm still an AI advisor, but I do it on behalf. of PCAS now. So you remember last year I was in SGE, we got up to 130 days. I used that time up.

Starting point is 01:13:36 And the president appointed me to this new role. It allows me to continue being a technology advisor, in fact, on a wider range of issues. So before it was AI and crypto, now it's whatever Pcast wants to study or talk about or make recommendations. I think in addition to AI, other areas that are in sting are nuclear power, quantum computing, advanced semiconductors, all these different areas. I think we've got some biotech. Thank you, Freiburg. And we have some incredible people who are now on PCAS to kind of run with this. Yeah, I'm looking at it. Mark Andreessen, Sergey, Michael Dell, Larry Ellison, David Friedberg, Jensen, Lisa Sue, Mark Zuckerberg, and some other folks there that maybe not as recognizable by the audience. How were they selected? Sacks? The only criticism I've seen of

Starting point is 01:14:29 This is lots of business leaders great, lots of technology great, but maybe a little light on the scientists. Well, I don't know. We have people who've won a Nobel Prize for physics on there. We're talking about people who are experts in, like I mentioned, quantum computing, fusion, nuclear, biotech, pretty much everything across the board. I would say that one difference between this Pcast and previous ones is you have more doers, more builders, people who've actually created.

Starting point is 01:14:59 products or companies, we think that's a good thing. Why would it be a bad thing? I mean, is it a bad thing that Mark Andreessen invented the first internet browser or Jensen invented the GPU? If you're going to make recommendations about advanced semiconductors, don't you want to have someone who actually invented some of the key products in the space? The big question, of course, Sacks is, as we've seen here with Science Corner, is how do you plan on staying awake for these meetings if it's going to be like all science is usually when you take your your bio brain. Well, it's science and technology.

Starting point is 01:15:31 So I'm going to focus on the tech stuff. Got it. And then we got Freeberg to focus on the science stuff. Got it. So Freepard, this is incredible. You've joined President Trump's administration now. I will say I'm honored to be invited and appointed by the president, and I appreciate SACs and Michael Kratios. You look back at PCAST.

Starting point is 01:15:51 It's kind of rooted in FDR when he formed this council of advisors on science. when nuclear physics and quantum mechanics was starting to kind of reinvent what was possible in the world. We're sort of at a similar era today because arguably AI is reinventing what is possible in the world. And I think there's this kind of acute moment that we find ourselves in in this extraordinary race against China. I'll give you a statistic. Ten years ago, China published 50% of the number of scientific research papers and peer-reviewed journals as the United States. Last year, they published 50% more than the United States. This is a cross-examination. all disciplines and domains, including physics, material science, chemistry, biochemistry,

Starting point is 01:16:31 broad life sciences. There's this moment that we're in right now where both the world is being reinvented by AI, but there's this extraordinary race with China, not just in fundamental research and discovery, but in the industrialization of new discoveries and new technologies. You could feel it in D.C. this week. I was at the Hill and Valley Forum. But literally everyone in Silicon Valley, everyone in D.C. is like absolutely honed and focused in on what is going on in China. It used to be in biotechnology, for example, that

Starting point is 01:17:01 China was kind of a copycat and a Me Too, or they were really good, for example, in manufacturing. But it is now the case that in many subdomains, China is becoming the scientific leader in biotechnology and in life sciences. And that is a scary thought, because ultimately China could end up engulfing the entire pharmaceutical industry and basically becoming the leader in things like medicine, but most importantly, foundational things like AI. So I just want to defend and speak for a moment about the choice about putting what I would say are like industrial science and technology leaders on this commission, because this is a moment where there's an industrial race, not just a discovery race underway. That's why this moment is so critical. Anyway, I'm very appreciative

Starting point is 01:17:42 to have an opportunity to serve and thankful to David for his leadership. In related news, Chimov will be joining the president's advisory council. on bomb pots and wagering. We'll be joining that. And when I saw this, I saw PC and I was like, oh, is it podcasting? I'm in.

Starting point is 01:18:02 Finally, I've been invited to the President's Council on podcasting. So big news coming. I don't want to tip anybody's cards. We'll let you know when that happens. Yeah, absolutely. When the President's Council on Podcasting

Starting point is 01:18:13 emerges, me and Lex Friedman will make our way to Washington, D.C. I want to thank the president as well. And that's a great honor to be named to Co-chair this. It is, like Freiburg was saying, this is a fairly august body that goes back a long time. I think the modern incarnation was created in 1990 by George Herbert Walker Bush. This has been around for over 30 years.

Starting point is 01:18:35 In its current formulation, I think we have a slightly different take on it, which is we're going to have these builders and doers on there. Like Freeberg said, we got some catching up to do on our industrial policy. We have named 15 people. There's still nine more slots. We can have up to 24. So I think it's possible that at some point there'll be a second round. And for missing some expertise, they can be filled in. Obviously, that's up to the president. He can decide later. Who else might join this?

Starting point is 01:19:02 All right, everybody. That's another amazing episode, the number one podcast in the world, the All-in podcast. Bye-bye. Love you, boys. Bye-bye. We'll let your winners ride. Rain Man, David Sack. Open source it to the fans, and they've just gone crazy with it.

Starting point is 01:19:23 Love you, West. I'm the queen of kin-win. my wait-to-ex. I just have one big you, Georgie, because they're all just useless. It's like this, like, sexual tension, but they just need to release somehow. What? Your feet. We need to get merches are back.

Starting point is 01:19:57 I'm doing all in.

All-In with Chamath, Jason, Sacks & Friedberg - Anthropic's Generational Run, OpenAI Panics, AI Moats, Meta Loses Lawsuits

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