All-In with Chamath, Jason, Sacks & Friedberg - E169: Elon sues OpenAI, Apple's decline, TikTok ban, Bitcoin $100K?, Science corner: Microplastics

Starting point is 00:00:00 Chama, who are you giggling with? Are you with your kids? What's going on here? You're making good night I got a message from no. No, no, is it how me? No, no, I got a message from that. She's so funny. So, you know, we're I was like Blah blah blah. She did a Uranus joke into I lost it It is like a freed bergoy says that your anus is right there at the edge of the universe. She's like, are you hungry? I could eat a Uranus. Oh no, we could go to a great restaurant, Uranus. They serve great meals there. They have a great chocolate lava cake. Let your winners ride. Rainman David Sartons. I'm going all in.

Starting point is 00:00:47 And it said we open source it to the fans and they've just gone crazy with it. Love you guys. Queen of Kinnwom. I'm going all in. All right, everybody, welcome back to your favorite podcast of all time. It's episode 169 of All In,

Starting point is 00:01:02 with me again, the chairman dictator, Chamath Palihapatea, David Freberg, your Sultan of Science, and the Rainman. Yeah. Definitely, David Sacks has his Montclair hat back again. I guess they're back in stock. How we doing boys? Welcome back to the show. Let's get to the docket here. Issue one, Elon has sued, opened AI, begun the meme wars have. After we finished the recording last week, the memes are incredible. After we finished recording last week, Elon sued Sam Waltman, Greg Brockman in the open AI organization.

Starting point is 00:01:36 He's suing for breach of contract, fiduciary duty, and unfair competition. And his argument is basically open AI started as an open source nonprofit. As you know, he gave them something like 50 or 75 million of both those numbers quoted. And then of course, everybody knows open AI turned into closed AI. They became a closed source for profit venture after the tech was deployed. This enabled them obviously to benefit from tax non-profit tax breaks while building the tech, but they now have two corporate entities. This is nonprofit called OpenAI.

Starting point is 00:02:09 There's a for-profit. It's called OpenAI Global LLC. That was created in 2019. And there's all this funky relationship between the two. We'll get into that because it's kind of interesting, actually. Elon said that if OpenAI is allowed to do this, then it should be the standard for every company going forward. That's an interesting point.

Starting point is 00:02:24 You could start by donating money to a nonprofit, then make a for-profit. Seems pretty capital efficient. So, what does Elon want to get out of this? According to the lawsuit, he wants OpenAI to open source their models. By the way, that's what Facebook and Apple are doing right now. So, that seems more than reasonable since that's how the company was formed. And he wants to make sure that shareholds receive no financial benefit from open AI. And we can get more into a bunch of the open AI nonprofit status and their structure. It's super convoluted. But I want to just get your initial reaction sacks.

Starting point is 00:02:58 I haven't read the legal filings, Jason. My knowledge of the case is just coming from following what's on Twitter. And the last time I commented on one of Elon's lawsuits on this pod, I ended up in six hours of deposition. Remember that was the whole Twitter lawsuit. At any event, my understanding of the case from the tweets that are flying back and forth is I think Elon is making two points. One is that when open AI was set up, it was set up to be a nonprofit and to promote AI as an open source technology that everyone could benefit from and no one large tech company

Starting point is 00:03:39 would control. In that case, Elon was primarily concerned about Google. I think now he's more concerned about Microsoft. Nonetheless, the idea was that this would be open source. So I think point number one is, Elon feels like the rug was pulled out from under him after he donated $40-something million to this. They completely changed what it was going to be. And I think he's used the word swindled before.

Starting point is 00:04:02 He feels like he was cheated. And I think usually when there's a lawsuit like this, it's usually because somebody does feel fundamentally cheated by what happened. So I think that's the first point. The second is that I think that Elon's making is, well, wait a second, if you can start a company as a nonprofit using pre-tax dollars and then all of a sudden convert to for-profit, then why wouldn't everybody do this in order to circumvent paying taxes? And I think that's another, I'd say, valid and interesting point that he's made.

Starting point is 00:04:33 Now, OpenAI has responded to this by publishing some of Elon's emails to them, and they think that they have a smoking gun here because apparently, Elon told them they need to raise far more money in order to have a chance of taking on Google slash DeepMind. I just don't know whether that's the smoking gun they claim it is, but that's basically what they're putting out there. And then to add fuel to the fire, you've got VCs coming over the top, debating different aspects of this. You've got sort of Vinod defending open AI. He was the first VC investor in it. He's been out there attacking Elon. Then I think Mark Andreessen is responding to Vinod. I don't know if he's exactly defending Elon. Anyway, it's turned into a whole

Starting point is 00:05:18 melstrom on X. Then everyone else is starting to put out a whole bunch of crazy memes. So I don't know who's going to win this case in court, but the memes are definitely lit. And maybe the funniest one is that Elon has said that if Open AI was simply changed their name to closed AI, he'll drop the lawsuit. I think he's serious about that. I think he is serious about it, but I think he's making his point, which is you ended up doing something different than what you told me when you got me to write this big donation and when we co-founded this thing together.

Starting point is 00:05:55 So I think that sort of sums up Elon's position on this. Jamal, a year from now, where do you think we'll be with this? Well, I think there's one more thing which is that they used his name pretty aggressively to get more money. And he was very instrumental in getting some of the early critical hires, particularly Ilia, which has been, I think, well-documented to scavenger, to leave Google. So that's probably Sacks where also some of this feeling that he was bamboozled comes from. But I think that all of those emotions matter less than the rule of law, which is his second point, which is the important point. Irrespective of whatever one email says or another email, it's not great for

Starting point is 00:06:46 the US tax system if all of a sudden a big gaping loophole is identified and taken advantage of. I think that there's a huge economic incentive for the state of California, every other state where these open AI employees lived and have gotten equity and now have gotten paid. There's an incentive for Treasury. There's an incentive for the IRS. It touches a lot of aspects of very complicated tax law. And so I think that's why there will be a resolution to this case. Because I think that that answer is very important. And I think it will, as he has correctly identified, motivate a lot of people's

Starting point is 00:07:26 actions going forward. So independent of what the emotional situation is amongst all the actors in this play, the reality is he's identified a loophole and that loophole needs to get fixed. I'll give you a different example of this. That's much more benign, but it dragged on for eight or nine years. At Facebook, there was a period where, and this was public, so I can tell you, we transferred a lot of our IP to Ireland at one moment, and there was a transfer payment and whatnot. And then a few years afterwards, when everybody realized, including us, and we had miscalculated, but when everybody realized the value of Facebook,

Starting point is 00:08:05 that transfer payment did not seem correct. And it was a huge tax arb that we had facilitated. Right? Because all of that IP sitting inside of Ireland gets taxed at a very different rate than that IP would have gotten taxed in the United States. And other companies had copied this. Long story short, the IRS sued.

Starting point is 00:08:24 You know, similar IRS sued, similar to you, David, I was in years of depositions and interviews and all of this stuff. So the point is that the government really cares about these kinds of things because so much money is on the line. And if open AI turns out to be this multi-hundred billion dollar behemoth, this will get figured out in court because there's just too much money at stake. Freeberg, any thoughts and maybe Steelman, if you feel like it, open eyes position?

Starting point is 00:08:54 I think we're all ignoring the documents that OpenAI put out yesterday showing emails and interactions with Elon, where Elon acknowledged and recognized the necessity of having a for-profit subsidiary that could pursue the interests of the foundation by raising billions of dollars of outside capital. I think it's a really interesting set of facts that provides a different light on the story, and it was really important that OpenAI released it. I'm going to share a... Hold on, Fieber. I didn't mention that. Fieber, I mentioned that too. My point is it doesn't allow you to break the law.

Starting point is 00:09:32 Yeah. So let me just tell you guys a little bit about another example. My sister works at a nonprofit called the Cystic Fibrosis Foundation. Cystic Fibrosis is an inherited disorder the Cystic Fibrosis Foundation. Cystic fibrosis is an inherited disorder, affects the lungs and digestive tract. It's debilitating, really affects children. There was a nonprofit called the Cystic Fibrosis Foundation established in 1955. They did tons of work on drug development research and it was a nonprofit for years until they realized that there needed to be a market-based system to create the necessary incentives to drive the capital needed to find a drug that could cure cystic fibrosis. And in the year 2000,

Starting point is 00:10:11 they invested out of their foundation endowment $40 million in a company called Aurora Biosciences. Subsequently, it was acquired by Vertex and they continued to invest another $60 million. So a total of $100 million in the lifetime of the development of a drug that could cure this disease. In 2005, a drug was discovered,

Starting point is 00:10:32 and in 2012, the FDA approved it. The nonprofit then sold their rights, their interest in this for-profit entity for $3.3 billion. It was an incredible return. It was the largest investment return by a non-profit in history. Who did they sell it to? Back to the company? I actually think they sold the rights to Royalty Pharma, who you and I know well. And that $3.3 billion continued,

Starting point is 00:10:59 opened up this ability for them to continue to make investments. They now fund biotech VCs, and they make direct investments and other things. But it really set the benchmark for this concept of what's called venture philanthropy, where a nonprofit parent company can make investments in for profits that can raise additional capital that's needed to pursue the broad difficult interests of the nonprofit. And I think that this argument really kind of ties into what happened with open AI. You can see it in the email exchanges with Elon, where he was so prescient that I give

Starting point is 00:11:29 Elon extraordinary credit for this, that he saw that this is going to take billions of dollars a year of investment to realize the pursuit that open AI was going after. And there was no way that Elon was going to be able to generate that cash himself or that read or others were going to just be able to pony up that money. They needed to have some sort of for-profit vehicle that would allow the market to work and allow capitalists to find their capital into this organization to make this investment interest. So, I think the real question with respect to is open AI and trouble as a foundation

Starting point is 00:11:59 is does the non-profit own a meaningful piece of the for-profit entity? And I don't know the answer to that. I don't know if you guys do. Sounds like it. I mean, yeah, it must, right? So if they do, then they have an investment interest. The second question is, does the nonprofit parent still do charitable stuff?

Starting point is 00:12:16 Because if it doesn't, then there's a real question on the nonprofit status. I think you have to have a certain amount of your assets deployed every year in order to qualify for 501c3 So I think the test in the courts will likely end up being look It's totally reasonable to have a for-profit entity to fund a for-profit entity other nonprofits have done it Particularly when you need to attract billions of dollars of outside capital to make it work The real question is does the nonprofit still do nonprofit stuff? That's an interesting question because

Starting point is 00:12:42 Freeber do you think that when they booted off the nonprofit experts from the board that they may have crossed a tripwire there? Yes. Yeah, I'm no lawyer. I'm no lawyer. That's a great question. I did a little journalism and I talked to a couple of people who are in and around two other of these scenarios. One of the key issues here is that the IP, in your example, Freberg, it wasn't like that Cystic Fibrosis Organization did the drug discovery, right? They didn't do it, correct? Well, they funded it. I think they handed over some research that was open to the public at the time,

Starting point is 00:13:20 and they made, but they funded an independent for-profit. And so what happened here was you had the IP and the employees of the nonprofit given, gifted, they were transferred over to the for profit organization. And they, when the Mozilla Foundation did this and another company called a Sama Source, and these both have two structures, a nonprofit and a for profit.

Starting point is 00:13:44 But in both of their cases, they set up separate boards and the two different boards, you know, answer to the for-profit concerns and the nonprofit concerns. They also didn't give huge chunks of equity to all of the employees, which then sold them in secondary. So what's happened here is all of the IP in all likelihood has been, and the wealth transfer has

Starting point is 00:14:06 gone to all these employees. They've now done a secondary and this actually triggers a lot of IRS investigations. The Mozilla Foundation, which was making the Netscape browser, which many of you probably have used over the years, they were making hundreds of millions of dollars a year, David, from advertising with Google. The IRS said, hey, wait a second, you look like a for-profit to us. So they made a for-profit entity, all of the, and Mitchell Baker and the team over there set this up so all the money went back into

Starting point is 00:14:36 the Mozilla Foundation and their nonprofit efforts. And they just paid above market salaries. But it was very important that these things be separated and that the employees not have equity and that all that money flowed back up. And I think this is where OpenAI is gonna get super tripped up. And I think the IRS is gonna have a field day here.

Starting point is 00:14:55 Here's the, Nick, can you please throw the image up? This is from the OpenAI website that explains their structure. So let's just speculate for a second because we're just guessing, but it has been reported that Microsoft owns 49 percent. That's the number of the for-profit. In this example, Microsoft, where it says minority economic interest,

Starting point is 00:15:18 that number there would be 49, and that's what they own of this open AI global LLC. The majority owner is this holding company. Okay, so that means 51% is there. But it says here that that 51% is owned by a combination of the nonprofit, employees, and investors. So the question is, back to Sax's question, we can know very precisely how much the nonprofit owns

Starting point is 00:15:44 by just Exing out the investors and employees and I'm gonna guess it's at least 30 or 40% I think that that's probably a pretty reasonable guess So it means that the open AI foundation probably Owns somewhere between five to 20% is that fairly reasonable guess? At the maximum that seems right. Yeah, and so I think that they're gonna have to show that Ownership structure and decompose all these entities and show the actual percentages If it's a lot less than that if it's say like a 1% thing then it's a little bit more sketch

Starting point is 00:16:24 I think but if it's really like 15 or 20 percent, they're still going to have to prove that all of this was done in a clean way because the big thing that these guys did was because by creating this LPGP structure and these cap profits, it's clear that they were trying to avoid something. And the question is in the discovery, will everybody learn what it is that they were trying to avoid? Because I've been through this, I think, Sax, you've been through it, Freberg, you were through it. When you set up these large vehicles and pooled amounts of money, folks come out of the woodwork with all kinds of convoluted structures, and the discipline is

Starting point is 00:17:01 always to tell these lawyers and accountants, no. And they'll be like, let's set up a master feeder and you'll go through Bermuda and this and that. And it's so easy to say yes because it's very seductive what they're selling you. But it's always about trying to avoid something. So the real question is why this convoluted structure, what was it trying to avoid? And where did this IP come from? Like all that IP sacks came from a nonprofit. All those employees worked for the nonprofit. Then they decided to go from an open source model to closed

Starting point is 00:17:32 and then by doing that, they capture all the value and then it's gifted to these employees and this investor base. That's where I think- But remember, I think it doesn't seem right. Well, it's important to remember the majority of the IP that exists at OpenAI today was generated after the for-profit was set up. The real question was,

Starting point is 00:17:51 was there a fair transfer at the time when it was set up of value into this for-profit entity? And my guess is that GP box that you just looked at, the compensation that they're earning through that GP box that the non-profit earns, is likely meant to be kind of a Fair amount relative to what was contributed at the time the real question for me still remains What other nonprofit and charitable work?

Starting point is 00:18:15 Does the open AI 501 C3 actually do and if there's the answer is nothing and it's just a shell Nonprofit and under it the only thing that it owns is a for-profit interest. Then I think there's a real question on what's the activity. And I don't mean to speak out of turn on all this stuff. I don't know enough. But I think that's the only sort of lens I would kind of look at this stuff through. Zach, you were going to say something. Well, a couple of points. One is, one of my intentions has been never innovate on structure. All you do is create legal problems. There's a tried and true way of creating a startup, which is a C-Corp.

Starting point is 00:18:50 When you try to innovate on legal instead of product, it almost always backfires. The second point here is, I think OpenAI is a little bit of a damned if you do, damned if you don't situation. To go back to FreeWorks' point about the non-profit sitting at the top there, remember what created all the problems when Sam briefly got fired as CEO and then came back is they had these directors from the non-profit world who didn't really seem to understand how startups worked. Either they fired Sam for no reason, which was kind of incompetent, or they had a really good reason but didn't communicate it properly, which was also incompetent. Either way, that

Starting point is 00:19:30 whole thing was a spectacle. It just showed that there was this culture clash going on between the for-profit company and the standard way of running a Silicon Valley startup to maximize the outcome, and then this nonprofit board that was sitting on top of the whole thing. I think that now they're in the situation where they've changed that nonprofit board, they've booted off the nonprofit people, and that may have been the right thing for the for-profit entity, but now it might get them in trouble because it lends credence to Elon's lawsuit

Starting point is 00:20:08 that they've completely changed the original mission of this organization. It was supposed to be open source. And it was supposed to be nonprofit, and now it's for-profit and closed source. Think about this, and again, we are speculating here, but if the mission was to be open source, and then you realize you've got something super valuable

Starting point is 00:20:31 and you close source it, create a for profit, and then take all the employees and all the IP and put it into the for profit, lock it down, break the original mission that, hey, this was gonna help humanity because we're gonna make it open source. So if you donate money here and we get the tax exemption, humanity benefits because everybody gets to look at that code at the same time and work on it and iterate.

Starting point is 00:20:53 Now they've just basically stolen all that in order to enrich themselves. And I think then you add to it, Sam may be doing some deal making, which seems to be one of the triggers according to reports and this open AI venture fund, et cetera. Maybe that deal making made the nonprofit people say, hey, listen, you're doing even more for-profit stuff with the open AI name. We're supposed to be a nonprofit here. What's the venture fund thing? He started a venture fund to invest in companies called the Open AI Ventures Fund, and he was

Starting point is 00:21:20 the sole owner of it, which they're saying now it's a clerical mistake or something, but he's invested in a bunch of startups that have unique access to the open AI, you know, I think. Sorry, I mean, sorry, he's the, he's the GP on behalf of open AI. Yes, the open AI.fund. No, but he said GP on behalf of himself or on behalf of open AI. The way the paperwork was done, it was on behalf of himself. They're now saying that that was done in ERA. So okay, fine. Maybe it was, maybe it wasn't. of himself. They're now saying that that was done in our, so okay, fine. Maybe it was, maybe it wasn't. Who knows? Wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, companies using open AI software. Okay. So, that's a different kind of issue. That's called a corporate opportunity issue where open AI is fund.

Starting point is 00:22:09 Self-dealing. Yeah, it's basically a conflict of interest where the economic opportunity of the open AI startup fund should belong to open AI. If Sam created a separate fund with separate LPs that he's the GP of and gets economics in that, then that's a potential usurpation of a corporate opportunity. I don't know the truth of that matter. I'm just saying that's a slightly different issue. To go back to the point you're-

Starting point is 00:22:34 And it uses the open AI name. Yeah. That's where the corporate opportunity becomes really explicit. To go back to the point you were making a minute ago about the employees. I just think, I mean, you use the word stealing. I think that's like a really strong word. I mean, I think we have to compliment the employees of this company, if it is a company, including Sam, including Greg, including Ilya for creating an amazing product, right? Something incredible. They've created something incredible. Sure, absolutely.

Starting point is 00:23:02 And they've created, I think, an an amazing ecosystem and there's a lot of developers building on top of this And I think no one is attacking their work And I and I think it's a little too harsh to say that anyone stealing anything because they have created all the value The question and I think you have to include Sam and that set say that he's done a great job Okay, CEO because they've built something amazing sacks to your point You're right. It's not stealing because very smart investors are putting in money eyes wide open. Yeah. I think that the criticism here is related to structure from my standpoint.

Starting point is 00:23:34 It's related to structure. And whether Elon was told something at the beginning that's different, it got changed. And clearly it got changed in a way that was not consistent with the terms under which he initially contributed all this money. Yeah. Mine is, I'm stating what is the most cynical interpretation of what happened here. There is the most benign and benevolent interpretation you could have as well, and maybe the truth is in between the two.

Starting point is 00:24:04 But the series of events that occurred does not look good when you have a mission to give this intellectual property to the world. So no one person benefits from it. All of humanity is supposed to benefit from it. That was the point of being open source. Right. Then you close it. Now, who gets the benefit if it's closed?

Starting point is 00:24:23 Right. That's a good point. The employees? Right. That's a good point. The employees. Right, that's a good point. And that's going to be the crux of this. The employees. And if you really want to close it. The investors.

Starting point is 00:24:31 The investors. But no cost. But that's how they were able to attract billions of dollars because you can't get billions of dollars to invest in something that's going to be open sourced and get out of no return. And then the employees sell two billion in secondary. So now if you really want to take the most cynical approach to this or interpretation, again, this is just one interpretation, they took an open source project, they closed it,

Starting point is 00:24:54 they raised money, and then within the next two years on this incredible innovation, they sold $2 billion and put that in their pockets. Now, those employees, if it was a for-profit, obviously no problem with that. But they took the stated mission of giving this to all of humanity and then took 3 or 4% of that gain and put it in their pockets. That's where I think this whole thing is going to get really crazy. And this is where the IRS also interpreted Mozilla, which was just $100 million, and none of the employees took any of it.

Starting point is 00:25:27 The 100 million that came out of Mozilla, they were just saying like, I think you should pay tax on that. Should you pay tax on that? And then they were investigated for years. So I think the IRS is gonna be on this like crazy based upon what happened to Mozilla, which was- Jason, do you think individual employee sellers are gonna get audited by the IRS because of this?

Starting point is 00:25:47 I don't I mean, I'm no we're in uncharted territory here when I did some tweets and said hey Can everybody contact me who has information on these structures? I was able to find the some soma source example and they did it very clean and there was no like IP transfer or employees enriching themselves or a god king like Sam doing all kinds of deals and enriching himself. It was a very clean structure. And then Mitchell Baker, who set up Mozilla, also did the same thing. Hey, let's pay the employees an extra 50K on their salaries and they'll be a little

Starting point is 00:26:19 overpaid in Silicon Valley, but they're not getting billions of dollars in equity. Which again, I have no problem with people getting billions of dollars in equity, which again, I have no problem with people getting billions of dollars in equity in a for-profit, but this was supposed to benefit humanity. It was supposed to be open. If this was open source and they took the two billion, I would actually not have much of a problem with it because we could all be looking at that mission

Starting point is 00:26:39 and then Saks and myself and Friedberg and anybody who wanted to use that code could go in there and adapt it. And you know what? there are for-profits, Apple and Meta, which are producing open source software. So if they're producing, Apple is pretty competent and Meta is super competent in this respect. They're able to do open source,

Starting point is 00:26:57 but Sam is claiming or OpenAI is claiming it's too dangerous to show us the open source code. I call bulls*** on that. Their code is not too dangerous for us to see. That's complete utter bulls***. You think that there was a motivation for profit, basically. What you're saying is essentially that this was highly motivated by profit. First thing, first thing.

Starting point is 00:27:17 Like some of the emails, the emails try to paint a picture of very industrious people on both sides who are trying to solve a very hard problem and dealing with a conundrum that's really around capital. We need to do all this training. It's going to be so expensive. But I think what you're saying, which is a deviation from that, is actually, come on, guys, these are all very smart people and those folks saw on opportunity to make a ton of money and they took it. I mean, that seems like what happened here to me. I mean, it's Hockham's razor kind of situation.

Starting point is 00:27:52 I think they, if you look at it, I think they probably regretted making this a nonprofit and then tried to figure out a way to reverse it. That's actually what I think is going on here. And I do think there's part of it, Chamath, you're right, that they needed servers and they needed capacity. But they could have done that without giving the employees tons of equity, without selling billions of dollars, keeping it opes and source, and then telling Microsoft, hey, if you want access to this open source or whatever, and you know, they could give it. Well, you're making a very, very good point. And the reason is that if it was open source, Microsoft could

Starting point is 00:28:27 have just taken it and done its own training and just paid for it. Yeah. Or make a donation to the foundation. This is interesting because... It's a very good point, Jay. Because OpenAI dropped a few of the emails that they had with Elon. Obviously, those are cherry-picked to help their case the most. What we don't know is what are the other emails show? Like, what were their alternatives

Starting point is 00:28:49 to this particular structure? Could they have raised the necessary funds in a way that was more consistent with the original mission of the company? Could they have remained open source, for example? Also, are there any emails where employees talk about the potential benefit to them of going private, going for profit, right? Those emails have already been leaked. There was this thing where

Starting point is 00:29:12 in the open AI emails that were leaked, they talked about being able to swap this phantom equity in open AI into either YC equity and then Elon said, oh, maybe SpaceX too, but I'll have to figure that out. Well, then also like Microsoft coming in and buying 49% and then it's close. This is the other piece that I would want to see in discovery as well. And again, I don't have any problem with any of the people. I love Sam Almanadek is great. I think all the people there are great. I think what they've done for humanity is great. I just think they should have kept this thing open source, which was the mission. But then they closed source at Chimoth and then give 49% of it all the weights, all the source code to Microsoft.

Starting point is 00:29:51 So that to me was like a really, like you want to talk about taking this nonprofit's IP and then some amount of that bag gets given to the employees for billions of dollars. And then Microsoft gets 49% of all that nonprofit's effort to then go commercialized. Microsoft has added $500 billion in market caps since this whole thing has been announced. So now, all that profit has been aggregated into Microsoft stock. I think this is where you've got to understand why Elon feels swindled is because not only are we going from nonprofit to for-profit and open source to closed source, he was specifically concerned about all the benefits of AI crewing to one powerful big tech company.

Starting point is 00:30:33 Now, at that time, he thought it was Google. Now, it's Microsoft. There's not really that much of a difference. He never wanted all the benefits of AI in the hands of one really powerful tech company. Right. And Microsoft is the most, it's now the what, the biggest company in the world by market cap. So this is like the opposite of what he intended. They gifted a trillion dollars to Microsoft probably.

Starting point is 00:30:54 There's an easy solution. If they are people of good faith and they're doing this for the right reasons, open source it. Just go back and open source it. Jason, but to your earlier point, that may solve the lawsuit and Elon may drop the lawsuit, but it's opened a can of worms with respect to tax and structuring that's much bigger than just open AI.

Starting point is 00:31:14 Yeah, I don't think it solves that. It's the entire non-profit industry, it's a tax problem for every new company, it's every other entrepreneur that studies this model and tries to replicate it for their own personal gain, even if that wasn't intentional here. So there's a whole set of issues that we've really cracked the egg here.

Starting point is 00:31:32 We gotta figure out how to unscrambles. There's the IRS issues, then there's what's morally right and then there's Elon's beef. And if it is a for-profit company and Elon put in 50 million when it was a seed round, what would he own, Saks? What would his ownership in this for-profit be was a seed round, what would he own, Saks?

Starting point is 00:31:45 What would his ownership in this for profit be? Oh my God, I mean, probably... 98%. Okay, and so... Yeah, we need to know the total size of that round. He put in the first $40 million. Do we know what other people put in? It was most of the money, right?

Starting point is 00:31:58 Yeah, it was most of the money. So, I mean, if you put... Let's just put a crazy valuation on it, $500 million. Okay, he owns whatever, $10%. No, no, that's just put a crazy valuation on it, 500 million. Okay, he owns whatever, 10%. At that point, AI was not what it is today. So you would have raised like, you would have raised 150 on 50 pre. Okay. I mean, that's the way that a very capex intensive deal in a space that wasn't thought to yield big outcomes, that's unfortunate. The only one that would half the company at least.

Starting point is 00:32:25 At least. All right, so give him 20% of the company, it's $20 billion, that's even half of what you're saying, Zach, right? We talked about on the show, when that whole fracas with these nonprofit directors went down, as we said, go back and restructure the whole thing to make it what it always should have been,

Starting point is 00:32:42 which is just a clean for profit entity, give Elon his equity, give Sam his equity, because it never made sense to send him back with him. Yeah, that's another way. Sam has no equity, but he's got a venture firm. It's all so convoluted. It's a weird form of compensation in which they're giving him corporate opportunities in effect as like a type of compensation, when really he should have compensation in the corporation,

Starting point is 00:33:05 and then the corporation should own all of its opportunities. Oh, that's okay. That's a really interesting thing you just said. So basically, yeah, it's like he famously has no equity, but then he has this retained optionality to monetize the ecosystem. So even though he's not monetizing the thing, he gets to monetize everything around. And it seems like the board, or at least the new board, is okay with that because he is being undercompensated with respect to the main thing. So then he gets the side things, but that's not really the way it should work either. You know, Bill Gates said to us famously when we were at, when I was at Facebook,

Starting point is 00:33:38 the value of an ecosystem is when the economic value generated by the ecosystem exceeds that of the platform. Now, in this case, you'd actually rather have 50 basis points of the ecosystem than 5% of OpenAI, if that's true. Because if this thing could be so revolutionary, you're talking $10, 20, $30 trillion. What a mess. Oh, yoy.

Starting point is 00:34:00 Sam should just be given a huge option grant at OpenAI. But then OpenAI should own its own venture fund. Yeah, and the SEC is looking into all this stuff. You know, they look into a lot of things in fairness, but they're looking into it. What a mess and we'll keep track of it. The other thing that's crazy, I don't know if you guys know this, but Nick, just as we close here, the most insane part of OpenAI is LP investment agreement, which is on their website, you can just search for OpenAI LP agreement, is this part. The partnership exists to advance OpenAI Inc's mission of ensuring that safe artificial general intentions is deployed and benefits all of humanity.

Starting point is 00:34:35 The general partner's duty to this mission and principles advance in OpenAI sync chartie, adi, adi, adi, take precedent over the obligation to generate a profit. The partnership may never make a profit and the general partner is under no obligation to do so. The general part is free to reinvest any and all of the operating entities cash flow into research and development activities and or related expenses without any obligation to the limited partners. And so they basically told everybody, Vinod and employees or whatever, we can just basically make, wipe your equity out and we can do whatever we want with the profits.

Starting point is 00:35:05 And you're probably going to lose your money. So this structure is weird. Do you guys think that when the investors came in, especially in this latest round, the 86 billion dollar round, do you think they underwrote the legal risk inherent in the structure or they just sort of hand waved over it and said, No. Typically what happens in these deals is you hire somebody like KPMG or Deloitte or Ernst & Young to do the full financial diligence packet. That typically tends to be how a lot of late-stage organizations document that they've done and manage their fiduciary responsibilities on behalf of their limited partners. So what happens is you will do a deal,

Starting point is 00:35:49 you'll sign a term sheet, you'll turn it over to Deloitte, you'll turn it over to KPMG and say, please go and run this down. And then what they do is they will furnish a report that says, yes, this meets all the customary expectations. I suspect that if these folks were doing a decent job of running late stage money, they probably sent it to those folks. And those folks probably produced something that said, this looks fine.

Starting point is 00:36:15 Now, if you read Buffett's letter this year, he has a really great commentary on Deloitte and KPMG and these sorts of letters, which is not exactly the most supportive. Is the best way to say it? You can find that mention. In his case, it's Deloitte and Touche. But typically, sacks, that's what they do. They go to a KPMG or a Deloitte or a nursing young and say, and by the way, 99% of the time, I mean, they do really good work, but it's a standard structure. And they just want to make sure that nothing nefarious is a muck. In this case, I doubt anything was a muck anyways. I doubt though that they looked at the structure and then also elevated the litigation risk of this getting unwound. I just don't see that that diligence report,

Starting point is 00:37:01 and I've seen enough of them, typically has that section in it. The other thing that's completely hypocritical here is, they said when they hit AGI and they're gonna be like a sentient artificial intelligent going on here, Friedberg, that they would wrap up shop and they're gonna no longer be a nonprofit, et cetera. But they haven't, but they're claiming they haven't hit that, but they closed the software. So it should be open source if they haven't hit AGI and you don't think they've

Starting point is 00:37:31 hit general intelligence, right? Freeberg for anything close to it. Maybe you could educate the audience on what that is and that claim that they have to shut off the for profit. Yeah, they haven't. But I think the, we keep repeating this concept of the models should be open source versus closed source. Making AI for the benefit of humanity can be interpreted in a lot of ways. There may have been some anecdotal conversation at some point with Elon or others about we're going to make the models open source. Uh, but there was a reason that that change was made along the way,

Starting point is 00:38:08 which was to attract dollars. And those dollars need to have some return of capital available to them because they're private investor dollars. And so I don't think that that was necessarily, and correct me if I'm wrong, I don't think that's in the mission, that the open AI software models will be open source. Making AI for the benefit of humanity could probably be interpreting a lot of different ways and we'll see.

Starting point is 00:38:33 But no, I don't think that anyone has achieved this holy grail of general intelligence. Yeah. I think one of the more interesting and kind of wacky things about open AI is that their mission is explicitly to create EGI, which most people would associate with some sort of sci-fi dystopian outcome. And I think this is like raise the fear factor around AI because they're explicitly trying to create the

Starting point is 00:39:07 sentence that's gonna replace humanity. Now, I think they define AGI in a different way. They say it's something that can replace 80% of the jobs, but I think we all kind of know what it really is. So I just wonder if- I don't know, I think that that's like, that assumes a steady state in the world. So if you end up with

Starting point is 00:39:27 a system and the system has all the capabilities of a bunch of really highly qualified knowledge workers, and I can sit in front of a computer terminal and I can say, let's design a mission to Mars. A mission to Mars could be a 20-year engineering project with hundreds of people involved to design the buildings, to design the flight path, to figure out the fuel needs, to figure out how you would then be able to terraform Mars. And what if one person could interact with a computer and design a plan to go and inhabit Mars? All of the technical detail docs could be produced.

Starting point is 00:40:01 All of the engineering specifications could be generated. All of the operating plans, all of the dates, the amount of labor needed, the amount of production needed, the amount of capital needed. What would otherwise take NASA or some international or well-funded private company many, many decades to do, a piece of software could do in a very short order? I think that's like a really, like for me, point-yant example of the potential of having these tools broadly available, that the potential of humanity

Starting point is 00:40:29 starts to become much broader. We could say, I wanna develop a city underneath the ocean because I wanna explore more of the earth. I think humans need to go solve cancer, figure out the biologic drugs and the combination of biologic drugs that would be needed to solve cancer based on this patient's genotype. The extensibility of highly knowledgeable or what other people

Starting point is 00:40:50 might call general intelligence type tooling is extraordinary, that one individual starts to have an entire cohort of knowledge workers available at their disposal to do things that we can't even imagine today. So I don't think that it is nefarious. It's nefarious because we assume a steady state of the world today that nothing changes, therefore a piece of software replaces all of us. But the potential of humanity starts to stretch into a new era that we're not really comfortable with because we don't really know it or understand it yet. I'm not saying it's nefarious to want to develop AI because I agree with you about all the extraordinary

Starting point is 00:41:25 potential of it. I'm saying there's something a little bit cultish and weird about explicitly devoting yourself to AGI, which I think in common parlance means Skynet. Yeah, it means something. I mean, when you talk about the Incis-Smarth and humans. Maybe that parlance is what needs to be addressed, which is AGI effectively enables equivalence to a human knowledge worker. And that, you know, that can kind of unleash a new kind of set of opportunities. So you think that's what it is? My definition for AGI is smarter than the smartest human being who ever lived.

Starting point is 00:41:58 Yeah, I was talking to somebody this week who's in a position who said the definition of AGI is very fuzzy, that there isn't a clear definition and therefore it allows every side to kind of anchor on their interpretation of what that term means and therefore kind of justifies their position. So you know, I don't really feel great about like just saying are we at AGI? What is it? We don't have a clear sense of what it means. I do think if you look at some of the work that was done by Anthropic and published in the cloud three model this week, did any of you guys see the demos that were done of the output

Starting point is 00:42:28 of that model? There was a guy who wrote a thesis in quantum physics on a very esoteric complicated problem set and he asked CLAWD3 to solve this problem set and it came up with his thesis. It was really like extraordinary. And this is something he's like, no one in the world knows this stuff. And he's like, I can't believe this model like came up with my thesis. And that's the sort of thing that very few people on earth even read or understand. And the cloud three model was able to kind of recreate the basis, the build up, and then the output of his thesis was really

Starting point is 00:42:58 extraordinary. It'd be like somebody writing a screenplay and then giving it the first two acts and say, guess the third act. And it's like, oh yeah, this is the third act. Here's what happens. Like it's pretty impressive. The reasoning ability. Yeah complicated. I'm gonna ask you, like deep down when these guys say they're gonna create AGI,

Starting point is 00:43:12 what do you think they really mean in their heart of hearts? Oh, they mean the Terminator. Yeah, they mean the sentient God. You guys are propagating some bad shit. You guys shouldn't be saying that. I think that's what they think. Remember what Larry Page said? Remember what Larry Page said to Elon, You guys are propagating some bad s***. You guys shouldn't be saying that. I think that's what they think.

Starting point is 00:43:25 Remember what Larry Page said, Elon, don't be speciest. Yeah. I think there's a meaningful number of people in the tech community who deliberately want to give rise to the superintelligence. There's another point of view of superintelligence, where superintelligence means that the software is now more intelligent than all humans. And as a result, the software may have its own motivations to figure out how to supersede humans on Earth. Now, the Larry Page statement, which I don't know firsthand, I read the same article you did, is one that a group of people might say,

Starting point is 00:44:01 evolution is evolution. You know, people would say, evolution is evolution. And, you know, more people than we do. Yeah, they would say that. That's right. And I know Elon's taking this point of view that like, you know, we need to maintain human supremacy, but... My favorite test is, you know, there's the Turing test,

Starting point is 00:44:18 which like, you can't tell if it's a human or if it's a robot, but Mustafa came up with the modern Turing test, which is an AI model is given $100,000 and has to obtain $1 million. Go. It's kind of interesting. That's a good idea. The other interesting one was Gary Marcus. He said the Ikea test, the flat pack furniture test. And AI views the parts and instructions of an Ikea flat pack product that controls

Starting point is 00:44:43 a robot to assemble the furniture correctly. Oh, look, what's up, Sonny? It's now time to do just a quick little congratulations to our dear friend, Sandeep Mandra. We call him Sonny. That's his nickname. And he's one of our poker buddies. He keeps building great companies. And in this case, Sandeep is the first person to collect all four besties.

Starting point is 00:45:04 We all invested in his company, Definitive. And Definitive was working in AI, but we got some great news this week and we thought we would give him his flowers. Sonny, you want to tell us what happened this week with our investment in your company, Definitive Intelligence at definitive.io, I believe is your demand. Yeah. Well, you know, with your guys' support, and we've been growing our company,

Starting point is 00:45:27 and we saw a really great opportunity to work together with Grock, and we've been working with them for a couple of months, and all the hype that you've seen has been built on the collaborations that we've done, building the cloud offering, the API offerings. And so, we've decided to merge with them, and we're super excited,

Starting point is 00:45:44 and all the besties are now not only shareholders in definitive previous sleep, but now shareholders in GROC. This is the first investment, I think, where we're all on the cap table, right? So we're all rooting in the same direction. What's happening in the developer side? How's the momentum going? Well, the momentum's incredible. You know, we have now 16,000- plus developers in our self-serve playground.

Starting point is 00:46:07 There's well over like a thousand apps that people have developed using the API and all kinds of new functionality. You know, the API allows people to get a higher rate of throughput on tokens and low latency. So there's all kinds of new applications from voice to real-time translation of web pages. We're collecting them on our Discord. We have 3,000 people in the Discord as well. It is a real community that's come together building around Grok. What I will say is sort of the same jump that developers saw when we went from dial-up internet

Starting point is 00:46:38 to broadband. They're seeing that now from using traditional APIs for LLMs to using, you know, the ones that we offer. You guys support the latest and propic models that they just launched that seem pretty kick-ass? No, we don't have those yet, but we're in just, you know, we're having discussions with everyone out there and we want to support their models. Right now, what we've done, given all the demand, is we've kind of limited it to Lama 270B and Mixtroll. And we actually have a bunch of other models that we make available in private mode for folks. We're pretty excited. But if there's anyone out there that wants to have us, give us a call and we'll get you going on our systems. Well, Sonny, congrats to you. You're an incredible entrepreneur. And it's always fun to kind of

Starting point is 00:47:21 be on the journey with you. This is my fourth business that I've done with Sunny Madra. That's amazing, Extreme Labs. Then there was the company in between. No, no, no, there was a company. You have to understand, Sunny and I met because Sunny went to school where I grew up. He went to the University of Ottawa. I grew up there.

Starting point is 00:47:38 And we met through a mutual friend and his first company was called Spongefish, which I backed, I think in 2006 maybe. I mean, I had no money. I may have written to $10,000. Yeah, would you give him $8,000? 10K maybe. Maybe less.

Starting point is 00:47:52 10K, chef. Maybe less, 5K. Yeah, I mean, whatever I had, I didn't have much. I like it, scrapped together. And it's our fourth business. Sonny's a variable rabbit's foot. You're a rabbit's foot, Sonny. He is, he's a luck box.

Starting point is 00:48:04 Luck prefers the prepared. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun.

Starting point is 00:48:12 He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun.

Starting point is 00:48:20 He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. He's a lot of fun. guy win as opposed to the three million people who I work with on this podcast keep winning. Sounds good. Now, finally, a good guy wins as opposed to the four of us. Well, I appreciate all your guys support.

Starting point is 00:48:30 This means a lot to us. You guys get in the developers and keep putting it out there and keep us honest as well. So if we're not doing something right, let us know. Really appreciate you guys all. Saks, you want to say something motivational to Sunny here? I know you always have a great motivational word for your friends, something you say that just gives people that thrill of being in the game. Go ahead, Saks. You always have something. Yeah, we're gonna ship 20 million

Starting point is 00:48:55 into your safe note. I know you closed it, but we're gonna pry it open and get some allocation. If you're primal, then it's safe. If there's a wedge, I know a guy with a podcast who's got 800,000 followers. Maybe I could slip in a quick five, honey. Is there possible? What do you think, Cindy? Let us know right now. I don't know. We did a really big announcement with the Saudis this week, so that price might be up.

Starting point is 00:49:18 Let us ship something into that safe note so we actually have some real skin in the game. David, text me. All right, we'll do. Well, no, but seriously, hey, so deep wait a second if he's 500 by that he means $500 so I think I got like a hundred That that Starbucks gift card

Starting point is 00:49:41 Yeah, so for 20 cents in the dollar and then ship it in. Yeah, let me zip it in. Let me zip it in. Maybe I can 100X it. No, seriously, 500K from your boy, J. Cal. All right, everybody. Thanks to Sunny for jumping on. Congratulations on the merger. Thanks, guys.

Starting point is 00:49:53 All right, issue two. Issue two, Apple is battling two major iOS developers and regulators are siding with the devs. You may know about the Apple versus Epic Games saga. We've talked about it here. Epic Games is planning to create a custom app store on iOS because Europe's DMA, the Digital Markets Act, has said that Apple now has to allow third-party app stores in the EU.

Starting point is 00:50:18 So Epic created a developer account based in Sweden, and Apple actually approved the account two weeks ago. Then on Wednesday, Apple flipped terminated Epic's EU developer account based in Sweden, and Apple actually approved the account two weeks ago. Then on Wednesday, Apple flipped, terminated Epic's EU developer account. And Apple said one of the reasons they terminated the account was because Epic's CEO publicly criticized their DMA compliance plan. Additionally, on Monday, Apple was fined $2 billion by the EU's antitrust regulators and was forced to remove its anti-steering rules from music apps like Spotify. Basically, Apple has been restricting music apps from informing users about pricing and

Starting point is 00:50:49 discounts and the European Commission considered this anti-competitive since Apple runs Apple Music. They want Spotify to pay 30 percent. Daniel Eck, a friend of the pod, basically did a whole video on this about how they can't charge 30 percent more, more yada yada. Sax, you've spoken about Apple's monopoly before. Your thoughts on what's happening in the EU and then we'll get into Apple's wider problems. I mean, did you just say that Apple booted Epic from their app store because they didn't

Starting point is 00:51:21 like what Epic said about them? I think that's what they're talking about... Well, like they're violating Epic's free speech because they don't like what Epic is saying. I mean, this is... According to Epic, yes. This is crazily heavy-handed by Apple. Apple heavy-handed with developers? Yeah.

Starting point is 00:51:38 Have they lost their minds? I mean, this is right out of power corrupts and absolute power corrupts, absolutely. Yeah. I mean, whatever dispute you have with Epic, you don't boot them out of your app store because you don't like their criticism of you. I mean, this is basically proving exactly what everyone's been saying about Apple, which is they're too powerful and heavy-handed. And Apple's coming along and saying, let me confirm it for you guys by acting tyrannically against Epic. I mean, talk about a backfire. This seems insane to me.

Starting point is 00:52:08 Yeah. It's super nuts. Chamats any thoughts on this before we get into Apple's other problems? I think it's the beginning of the decay of Apple peak Apple. Well, let's, let's get into that. Um, there's tons of headwinds facing Apple. You can add a bunch of other things to the list as well, Jason. Yeah. The thing is Apple for the last couple of years has been what is effectively

Starting point is 00:52:30 what we call a GDP plus growth company, which means that take GDP to three, four percent. Maybe they can grow by a couple of percentage points more than that, but they are effectively levered to GDP. Meaning when you look at a Facebook or an NVIDIA, they're growing at 50%, 200%, 2000%, whatever it is, that's not tied to GDP. They're just taking share. But Apple is a company now that grows as the economy of the world grows. So that's not super great for its future prospects unless it can expand the surface area of where they operate.

Starting point is 00:53:03 And then on that dimension, there are a few trillion dollar markets that they can really penetrate. And they just announced that they've killed the project in one of those areas, which is autos, project Titan, which was $10 billion turned out to be a failure. So all of these things, I think, mean to me that it is effectively becoming a cyclical rate sensitive stock. And then the Cuddegrah is Warren Buffett. And Nick and I were talking about it this week. And what was interesting about Buffett's letter is that you can tell when Buffett has gotten disengaged with a company based on the number of times he mentions it in his annual

Starting point is 00:53:45 letter. So in this example, this is the number of times Apple was mentioned. And just to be clear, what I mean by mentions is not when it's included in a chart or part of a disclosure. What I mean is when Warren actually explicitly mentions it in a positive or even negative way, or he doesn't mention it at all, which I think rings very loudly. He went from basically saying, Apple was the absolute end-all and be-all. And now what you can start to see is this shrinking, and it's gone from basically a

Starting point is 00:54:15 bunch of times to almost none. He did mention it once, but he mentioned it in the context of talking positively about Coca-Cola and Mx. And he was lauding these two positions, but just mentioning that they were not as large in comparison to Apple. That's the only mention in this year's annual letter. What's interesting about that is the last time that that happened was with drumroll. Wells Fargo. Over 15 and 20 years, Buffett built up a huge position. I think he was able to weather the vicissitudes of the market. So even when the markets would contract, he knew when to hold on to that company until he realized

Starting point is 00:54:53 that that company was not really one of his forever stocks. And he got out of it. And the number of times it basically was mentioned in his letter went to zero. So interestingly, I think this Buffett index is a really important one for Apple, which is it went from a forever holding that he said he would own forever to barely getting mentioned. And above him, above Apple on that list were all the Japanese trading companies

Starting point is 00:55:19 that Buffett owns, American Express, Coca-Cola. So that is a person that understands the economy, I think better than anybody else in the world. If you're basically taking a lever bet to the economy as a reason to own Apple, and the person that understands the economy the most has now started to pivot away, he started to sell in quarter four. Then you see all of these things, entry trust rules, killing projects in trillion dollar tams. Unfortunately, it speaks for a very bad next five to 10 years for this company unless they figure something out.

Starting point is 00:55:53 I think it's just such a great insight with the Warren Buffett mentions. And we should do that forward looking like, who is he talking about now? And let's the monitor when he stops talking about them. I have a theory about this. I think this is really just about peak iPhone. If you look at the majority of their revenue, it's obviously from the iPhone, which has become massively profitable over time. But the iPhone revenue has been flat for a couple of years now. They're starting to make their money from services. Everybody knows Apple One, iCloud Storage, Apple Arcade, Apple Music, Apple Plus TV. They've got a great collection of services and services revenue is growing, but I don't think that they are filling in this growth problem with the iPhone.

Starting point is 00:56:35 This happened to me for the first time, and I don't know if you gentlemen have had the same experience, but I was buying every Apple phone and then I would buy every medium upgrade, like when they would do a 12 and then a 12S or an 11, 11S. And when I got to iPhone 13, I was like, this thing's kind of peaked. And I just forgot to buy the 14, didn't need it. And then I bought the 15 and I'm sitting here

Starting point is 00:56:55 with my 15 and my 13, I really couldn't tell the difference between them. And so now I'm a technologist who would buy it every year, the latest one, and I don't feel the need to upgrade it. And I think that a lot of people, and I have family members who would take it every year, the latest one, and I don't feel the need to upgrade it. And I think that a lot of people, and I have family members who would take two generations off, now they take three or four generations off. So, you bought.

Starting point is 00:57:12 I don't even know what number I'm on, you know? I don't even know either. It all looks the same to me. Okay, so, I mean, that's the problem here. And then if you look at their roadmap, what is the device post the Steve Jobs era that they have launched? How do you know what device you have?

Starting point is 00:57:28 You go to general in your settings and about, I just checked it. I'm iPhone 13 Pro. What version of the on? What is 15 general? They're on 15 and I'm on 13 pro. I don't even know. Yeah. And you're not price sensitive. And these things have gotten absurdly expensive. So they're trying to really extract. What is the, what is the latest? 15. 15. I'm on a 14. I don't like the hassle of having to like reset everything when I get a new phone. Yes. And it's easy to do now. It's like all in the cloud. But even that going to the store buying it like who cares? It's not different. I have to re log in. Freeberg. What Android phone are you on? Are you you're a googler didn't the googlers all have android phones or are you and i your team iphone?

Starting point is 00:58:16 I got the macintosh original in 1984. I've only been on macintosh and apple products since then What iphone are you on be honest 15 pro, okay, have you ever tried a Pixel? Februg? I don't like it. But I just, I'm not used to the OS. What was the rule at Google? If you worked at Google, did where you kind of forced to have an Android phone or did you just keep your iPhone in your pocket

Starting point is 00:58:37 and not take out? There weren't a lot of androids on the market when I was at Google because we acquired the company when I was there. And we acquired Indie Rubens company in 04. And I think the first major devices started to roll out in 07. And so this was all post my era. I left at the end of 06. Wow, Freeberg, that's an amazing chart.

Starting point is 00:59:02 So pull up this chart. Now here's an amazing chart. Holy so pull up this chart now God is the global here's the global statistics the US market share is 57% for iOS But on a global basis iOS only has a 27% market share in mobile operating systems Android is 72% and all other is less than 1% but look at this. It's all the future GDP is on Android. Brazil, Nigeria, India, holy pappers. But I think this is one counter to your point,

Starting point is 00:59:31 Shumat, that the macro driver is as the economic position, the GDP per capita scales in these BRICS nations, they can start to afford to buy iPhones, which are generally some multiple of the Android devices in these markets that you see here. So while today Android is 72% of the market, if the emerging markets continue to grow GDP per capita and iOS continues to be the superior product, you'll see Apple able to steal into more share over time. But how do you do that when you have messaging groups on Android, when you have photos in Google Photos?

Starting point is 01:00:07 Does the switching cost stop that, do you think? I don't know the answer to that. It's a good question. They're down to $15 to $25 for these Android phones in India. There's a famous answer to that. That's the difference. Yeah. Right, so these Android devices.

Starting point is 01:00:21 I think Apple is levered to GDP, global GDP. So they need to figure out some way to grow superior to that. Like a company market. What could they do? Services. A company that generally has a bunch of cash flow being generated by some set of products today. And you will see them stasis. Over time, the market share for those products could be eaten away. You'll see the profits per year go down. And a company like that will trade anywhere from, you know, seven to 20 times. The technology value arises from the value of the brand that you can launch

Starting point is 01:00:53 new products, leverage your brand, leverage your distribution, leverage. The sale of new services and new products. I think to your point, Shumov, the challenge Apple is facing is that the pool of options, the portfolio of call facing is that the pool of options, the portfolio of call options that you would get a new product coming out of Apple is shrinking. With the car being taken out of that pool now, Apple Vision Pro, a lot of question marks on how much it can scale. As you guys know, I feel like there's going to be a market for that device, but it's a

Starting point is 01:01:23 high-end device today. It has to become more cheap to be more ubiquitous. The thing that a lot of these companies confront though, is that you can also grow inorganically, right? You don't necessarily have to incubate these projects. We can remember the moment Apple had a chance to buy Tesla, right? And then they didn't take it. Apple still has a chance to buy, pick your company that would take a sweet acquisition

Starting point is 01:01:48 off, or Rivian, Lucid, Polestar, whatever it is. I'm not saying that these companies are good or not good. I'm just saying that Apple has the one tool that they've never used in their toolbox is the large inorganic acquisition. And at this point, if they are proving that they can't execute internally, the market is going to demand that they prove they can use that balance sheet as a cudgel to go and execute it externally. Yeah, I think the challenge is that they're going to discount that cash to zero. The challenge is that there's a certain discipline and quality to the products and the businesses that Apple produces and runs.

Starting point is 01:02:25 And it's very hard to see that in other markets. I mean, why would they go buy a money-losing, low-margin, car-hardware company when they are proven to make high quality? It depends on the reasons Project Titan failed. Yeah. I think the article in Bloomberg basically said that the reason that they abandoned the project was in part that They did not know how to go from where they were To a full production vehicle that could be level five

Starting point is 01:02:53 And then when it was proposed that they stepped down and just launched a level three autonomous vehicle Everybody said no that it wasn't disruptive enough Well, if that's the case the thing that they made a decision about there was not going into a market because of regulation, not because of technical capability. And I don't think that that's necessarily a smart decision. They would have been better off going into the car market, launching a level three vehicle and just letting the market play out. They probably, just like they were able to do in music, have the influence to change the laws. Especially if they stepped in there with their rigor.

Starting point is 01:03:27 And they're not doing that. So it's a little bit of a headscratcher what's going on over there. They need some new products. I mean, maybe Apple Vision Pro someday becomes the platform of the future, but they've squeezed as much revenue as they can out of the iPhone. Services seems like the best place for them to make money,

Starting point is 01:03:41 but as we see, the app source under assault. Yeah. My idea was just that. They should launch a huge competitor to AWS, Azure, and GCP. So if you look, every developer that Apple has, theoretically could have been running on an Apple, not just on Apple's SDK and APIs, but they should be running in an Apple cloud.

Starting point is 01:04:00 You could have made that claim, and it would have made a ton of sense for app developers to have turnkey access to that, right? And they could have subsidized it. And by the way, to Sax's point, that would have been an incredible way to defend a 30% rev share. Okay, listen, I'm taking 30%,

Starting point is 01:04:14 but here's a bunch of subsidized access to hardware. And the market would have loved it. And in this AI shift, they can still do that, where now people are chipping away at the 30%, right? People are saying, well, I can just build around you. They need to do something. In services, Jason, the most valuable thing they could do would be to launch a big cloud, I think.

Starting point is 01:04:37 Yeah. I mean, they have all the app developers on TestFlight ready to go. They just email them and say, hey, here's your free storage. I mean, they could just slowly add features, right? And they're doing this open source. I think it's called Maggie or Magpie or something, but they're doing an image one. And well, look, if they could, if they could just make Siri work like the way it was supposed to using an LLM and have a beef like snappy,

Starting point is 01:05:01 that'd be a major upgrade to the iPhone. I don't think you need to buy a new iPhone for that because it'd just be a software upgrade, but just getting Siri to work would be a big win. I think that's where they're going with their silicon. And they just announced the M3 on the MacBook Airs, like they're making their own silicon and I think it's going to power LLMs locally on the devices. And that's so powerful. I was using iPhone this week and in Apple Photos,

Starting point is 01:05:27 there's now on certain images. If you swipe through them, you'll see the little AI icon. When you click it, it tells you things in the photo. Like that's a bulldog, that's pasta. And so they're already subtly adding these features. Now, that's a feature Google's had in Google Photos for five years.

Starting point is 01:05:44 But go ahead and open your phone right now and search for a dog or bulldog or whatever type of dog you got, you know, Labrador, and then watch Golden Retriever that it actually knows how to do it. They never announced it. It's just subtly being put in there. So, there's so many opportunities. If they required a hardware upgrade to get, like, actually good AI built into the software, then everyone's going to have to upgrade for that. That's a pretty big motivation to upgrade. They have it Tim Cook. Somebody sent this clip to Tim Cook. Put AI chips on your phone. But this isn't hard, right? I mean, all they got to do is just take the latest open source models

Starting point is 01:06:20 and figure out how to customize them for their own products. Yeah, and they're doing it. They're doing it right now. All right. Let's go to issue four, TikTok bipartisan ban. Will the CCP agree? A bipartisan group of a dozen plus lawmakers introduced a bill that would effectively ban TikTok. In the house this week, the bill is officially called the Protecting Americans from Foreign Adversary Controlled Applications Act. It gives ByteDance 165 days to divest from TikTok. That's the parent company, the Chinese company that owns TikTok, the app that's very popular in the West, especially here in America.

Starting point is 01:06:53 It would make it illegal for companies like Apple and Google to show TikTok in their app stores. As you know, TikTok, 170 million US users. And they claim that they're headquartered in Singapore. I know people who have worked at TikTok or do work at TikTok. And they said, that's nonsense to me. The company said, it has not and will not share user data with the CCP. In my mind, it's an obvious lie. In 2021, the CCP took a board seat on ByteDance Beijing-based subsidiary.

Starting point is 01:07:22 That's according to Reuters. And then in 2022, Bidance admitted that it accessed IP addresses and data by journalists covering TikTok to see if they'd been in the same places as Bidance employees, obviously to find leakers. And Bidance claims they fired the people involved, Yada Yada. Last year, a former head of engineering at Bidance US said CCP members had God mode access to user data in 2018. Saks, I can go explain more of this, but I just got to go to you here. If this, if bite dance is not spying on Americans and the CCP is on the board,

Starting point is 01:07:54 that would make no logical sense to me. And why are they fighting the divestiture? If it's just the financial reason, why would they take the CCP off their board? Do you think it's spyware? Do you think the US is crazy for allowing this product? Here in the United States, when we're not allowed to put Twitter, Facebook, Instagram, pick your social network, in China, we have zero rest of process here. Look, if it's true that TikTok is sharing data with the CCP, then I think the

Starting point is 01:08:22 United States as well within its rights to either ban it or cause it to be divested. And I personally like the divestiture option. I mean, that's what Trump was suggesting during his term, because we don't, I think, in the United States like to dist, essentially confiscate or destroy people's property, but I think we're within our rights to require it to be divested to an entity that we know is completely separate from and won't cooperate with the CCP. This bill is better than the last bill we talked about that was targeted at TikTok. I don't know if you remember that one, but it was weirdly prohibiting Americans from using VPNs and gave the government the right to go after Americans

Starting point is 01:09:06 who are using VPNs. So this one seems cleaner and better and more narrowly targeted at divestiture. Now, at the beginning of my response to you, I did say if. I know that everyone's just assuming that it's true that TikTok is sharing data with the CCP. But I just want to confirm that that is the case, because they are denying it. And I can understand why people think it and why it might even be likely. But since we do have a concept of due process in America, I do think some evidence should be provided that that actually is taking place. So we've had whistleblowers inside there, but Chimoth, if the CCP is spying on their own citizens,

Starting point is 01:09:48 what are the chances that they wouldn't take the opportunity to spy on government officials who have TikTok on their phone or their kids and get compromise on them possibly or no locations of people? What does your gut tell you? Is the CCP, is this too dangerous for us to have here in America under CCP control or this kind of influence being on their board? I think you're asking the exact right question.

Starting point is 01:10:13 I have two comments to make. One is, Nick, if you can bring up this article about the Google AI IP case, basically what happened was that the DOJ filed an indictment. Actually, I think I sent, I think I sent you guys the actual indictment. But essentially what happened is there was an engineer at Google. Yeah, this is crazy. That has been charged with stealing AI secrets for China. And I don't know if, whether he's back in China now or not. But the whole point is that if it's happened at Google, right, where there's a motivation for the Chinese intelligence apparatus, and frankly, every intelligence apparatus,

Starting point is 01:10:57 to infiltrate that organization and get access to all kinds of data, I think we should presume by default that all of these organizations are infiltrated. And I think that that's probably a more conservative and reasonable posture. So Facebook is infiltrated, Google is infiltrated, Apple is infiltrated, TikTok is infiltrated. So on that dimension, I think that it should be considered 100% certainty that this data is getting back to not just the Chinese, but multiple state-sponsored actors. So the question about TikTok then, I think, should be one of business. And I think Palmer Lucky did a very good job of simplifying this down to its essence, which is essentially

Starting point is 01:11:42 what he called the law of equivalent exchange. If you want to just play this, it's like just a few seconds. I was kind of frustrated that people made TikTok into a cultural issue. By the way, I'm totally on the culture war side of it. But I was saying, practically speaking, you should not make this a culture war issue. Don't talk about how it's ruining our youth's ideals. Just say strictly on a trade basis. We cannot allow them to sell this thing to us if we can't sell the same thing to them. That should be totally fair. That's reciprocity. That's reciprocity. Me and Palmer are lucky in sync. Right. So this is what he calls the law of equivalent exchange. And I think it just

Starting point is 01:12:18 makes a lot of sense. So on the face, what I would say is, Jake, out my response is, I think that the CCP, but also other intelligence organizations have infiltrated all of these big companies and all of our data is accessible by them. I'm not going to say on a whim, but I think it's accessible. I think you have to deal with TikTok as a business issue. And I agree with Palmer Lucky, which is they should not be able to sell to us, but we cannot sell to them. And I think that that's a fair principle that we can live on. The rest of the process is a very simple position. Friedberg, let me use your creativity, your love of cinema. If you were to use this tool, let's take the most cynical approach here

Starting point is 01:12:59 or interpretation. CCP has complete access to the algorithms algorithms and they want to do maximum damage, let's say during the election. Let's say in a conflict like the one going on in Ukraine with Russia or in Gaza. What could they do using the algorithm, using videos? What would be the doomsday scenario for America? As in the CCP comes in and influences the management of this company and tells them what to tweak and how and why. Yes. What would they do?

Starting point is 01:13:31 I think we saw this during after October 7th that there was a significant surge in pro-Hamas videos relative to Israel support video. That's the sort of thing where you could kind of see something that sets an opinion that may be disruptive to the social fabric, to the election cycle that starts to get shared more frequently and shows up in feeds more frequently. Unlike Facebook and other places where there's a linear feed

Starting point is 01:14:04 where you can scroll up and select what you wanna to watch, as you know, TikTok has already lined the videos up. So when you scroll up, they've, they automatically play the next thing for you. So the ranking really matters in terms of viewership on TikTok, unlike a lot of other kind of select to play social media type networks. Could it shift an election? Hearts and minds in a war? Well, I've always said this. I think it's the craziest thing in the world that someone can spend advertising dollars

Starting point is 01:14:32 and change someone's vote. Like, just think about that fact for a second. I mean, I've said this before and people have told me I'm an idiot for saying it, but think about the fact. Meaning that you can or that it does? That you, that both. That it does.

Starting point is 01:14:44 Oh, we can, it's not That both. That it does is like, but think about it, like people don't individually go and gather data and then make an informed opinion about who they're going to vote for. Their opinion changes based on seeing an ad. It is so crazy to me that that's the truth. I think the country knew that it does,

Starting point is 01:15:00 that's why they prevented it from happening until this is made it. Yeah, exactly. But I mean, I think that's what's so nuts is that there's no longer a forced discourse that kind of makes people go out and choose what content they want to consume, what they want to hear, debate stages, etc. That now it's about who spends the most money to get the most views in front of someone and that that actually influences someone's decision on who to vote for is what's so compelling to me about why all of these systems have such extraordinary power. It's just so amazing to me that the more frequently someone sees

Starting point is 01:15:34 an ad, the more likely they are to buy something or do something. Here's the bottom line. This thing could be incredible. So the more frequently you show someone a memetic on TikTok, the more likely they are to vote something differently. This thing is far too powerful for the CCP to have any kind of access to it, for the Chinese government to have any kind of access to it. It has to be divested.

Starting point is 01:15:52 If you look at what we went through in the last couple of election cycles, not being partisan in here at all, but we've said and we've talked about Hunter Biden's laptop as but one example. You know, that was suppressed, obviously on social networks. That could have been amplified in social networks

Starting point is 01:16:07 and it could have had the opposite effect. Hillary Clinton's emails, you know, Trump this, Hillary this, Biden that, you could really sway an election by putting in specific subtle information, let alone taking a hack and releasing it like they did with Hillary Clinton's email. So, you know, those things might not have swayed an election, but sacks if Putin had access to this like somebody who's super capable and he had access to

Starting point is 01:16:33 always where it goes. Slowly pulling the strings ever. Okay, look, if you ask people out there, do you think other people's votes are influenced by social media? They'll say, yeah, of course, people are brainwashed. If you say to them, is your own vote influenced by social media? Do you make up your own mind based on all the information you have? They'll say, yeah, of course, I'm not brainwashed.

Starting point is 01:17:01 Everybody else is. And I believe that people are closer to telling the truth when they're talking about themselves, because they understand their own situation better than they understand everyone else's situation. The fact of the matter is that all of us are constantly bombarded with information 24 hours a day, seven days a week, through all of the channels, both online and offline, where we get information. Some of those data points come from advertisements, but I don't think we take ads very seriously. We're trained to even just block out the ads. When I see banner ads or even ads in my stream, I just scroll past them.

Starting point is 01:17:38 They don't even factor in my consciousness. I am influenced by accounts that I follow, but there are accounts that I've chosen to follow because I think they have signal over noise. And the more noisy those accounts are, the more I disregard them and take them less seriously with advertisements being the most noisy and least useful channels. So, look, I think at the end of the day, this idea that we're all being brainwashed and secretly influenced by maligned foreign actors, I think, is at a minimum threat inflation and that entire narrative might just be completely bogus. Nonetheless, I do agree that for data collection reasons and reciprocity reasons, I think it's, like I said, we're within our rights to require the divestment of TikTok.

Starting point is 01:18:25 Yeah, I don't... You know, it's actually... But don't make this into more than it is. Again, I think this whole disinformation narrative, by the way, you want to know why they push it so hard is because our own intelligence community wants to be involved. And there are political actors in the US who want to regulate, quote, disinformation on our own social networks. And I'm not talking about TikTok. I'm talking about X. I'm talking about Facebook, Insta, and so on.

Starting point is 01:18:51 And we saw this in the Twitter files. We saw what a cozy relationship the intelligence community had with Twitter. They were all up in there trying to control what legacy Twitter was allowing and what they was a string. They blocked the New York Post URL. And you've said on this program that you believe that could have swung the election. Well, I think it was, I think that actually was genuine election interference. I actually said that I didn't know whether it could swing the election.

Starting point is 01:19:17 I think that... Well, do you think it could have? I think it was a story that deserved a public and distributed online so that the public could take that into account when they voted. And so if it had been widely received, do you think, I'm asking a question, not answering it? Okay. You're asking me a question that I personally think is irrelevant.

Starting point is 01:19:39 How would I know whether the suppression of that story swung the election. How can I know that? The point is that the American people were deprived of information that they ever... But most Republicans believe that that had come out and would have swung the election. Yeah. Well, I can't prove that it swung the election. What I'm saying is that it was a type of election interference. Why was that story suppressed? Because 51 former intelligence officials who still maintain close relations with the intelligence community published a bogus letter saying that it was Russian's information, which it wasn't. And then that caused our social media sites to suppress it.

Starting point is 01:20:19 That, to me, is as concerning, if not more concerning, than whatever it is that TikTok's accused of. I don't want social media companies being used by the intelligence communities of either China or the United States to swing or to influence our elections. We need to be equally concerned about that as we are about, suppose, a Chinese influence. Just to go back in time, you probably remember the Willie Horton ad. I mean, that kind of sunk to caucus if you remember that. I mean, media and these ads can really have a big impact. So people should just look historically.

Starting point is 01:20:52 There have been many moments where, whether it's Nixon sweating on TV or the Willie Horton ad, there have been many moments where video can do this. And I think they could be done even more subtly by the Chinese by just promoting certain videos. All right, let's move on to Bitcoin. Issue five, Bitcoin's back baby, it hits an all-time high. 69,000, interesting number on Tuesday. 69,000 before dropping, sitting around 68K. As we're taping, there'd be 75 by the time you hear this,

Starting point is 01:21:23 or 50. It's been ripping in 2024 of 70% since January 25th. There's two things going on here that you've probably heard about. The Bitcoin ETFs finally arrived in the US. They were approved by the SEC on January 10th. We'll get into them in a minute, Shumoth. Obviously, if it's an ETF, it's super easy to buy them and sell them. They've been a total hit.

Starting point is 01:21:45 BlackRock's Bitcoin ETF became the fastest ETF to ever reach 10 billion in assets. Also, as the technical crypto heads in the audience know, there is a halving happening in April. This happens about every four years at the current pace. Last one was May of 2020. When these halfings happen, the mining rewards are cut in half. This reduces the supply of new Bitcoins entering circulation and can cause some swings. Shematha, we released a clip, I think, just about your prediction. You nailed it. Again, you said this would be a big year for Bitcoin. So your thoughts on being right? I don't have much thoughts on that, but my two comments are that I talk to a lot of

Starting point is 01:22:31 Bitcoin traders and folks that seem to have a very good pulse and touch on this market. I don't say that I do because I don't really look at it every day. But they seem to think that this thing is on a death march to 100K. I'm not sure whether that price is realistic or not in the year, but I will say that. We're going to get to a tipping point where everybody really talks about this. I still don't think we're there yet. I think we're just at the beginning.

Starting point is 01:22:59 But when you see the inflows into these ETFs, check out, it's like a very big deal because it just allows every mom and pop individual to buy some to the extent that they want to own it or they want to speculate on it, whatever it is. So I think it's been a very big year and I think that psychologically it's proven a lot of folks wrong and it's a setup for something really constructive. The other thing I'll say is that it's not just Bitcoin, but as goes Bitcoin, there are a handful of other things. People are now speculating that there's going to be an Ethereum ETF that gets approved as well, because if you approve one, there's probably legitimate cause to approve a few others. So

Starting point is 01:23:48 these things are becoming part of the financial fabric. And I think that that should not be underestimated. And the SEC is still taking action against certain bad actors. And Crypto, there were a couple of those this week. But Bitcoin, Freiburg, is incredibly resilient, just on a technological basis. The fact that it hasn't broken down under stress, it hasn't had a denial of service type of attack, or a government hasn't been able to capture 51% of the mining or some great amount of it or just even be hacked in any way.

Starting point is 01:24:19 You have to be impressed by the fundamental technology here at FreeBrim. Maybe you'd speak to that level of success that this thing is so stable and trustworthy and reliable to date. It's got a great incentive model. As long as Bitcoin price remains high, the miners will still be there

Starting point is 01:24:35 and the system will keep running. If Bitcoin price drops, transaction fees will decline, the value of mining will decline. And it kind of goes the other way as well. I think the real question is, in the last couple of years, have we really seen a change in Bitcoin being used for transactions or for commerce in any meaningful way? I think the answer is still likely not. No, definitely not. And it's really a stored value system and it's become this kind of stored value asset. Freiburg, this microplastics thing, we talked about it on the show.

Starting point is 01:25:11 And since that time, I refused open plastic bottles. I'm doing all glass. I'm getting rid of all this goddamn plastic. I already did glass bottles on behalf because I'm cheap and I like to fill it from my water filter but we're uncovering more information and then I saw this headline this week that microplastics are in our blood streams in some cases and what the heck does that mean? It's worse than that. Team of scientists in Italy collected samples from patients that had plaque removed from the carotid artery. It's a kind of common cardiac procedure

Starting point is 01:25:48 where you get plaque that blocks up in your carotid, they go in, they remove the plaque. So a total of 304 patients agreed to have the plaque that was removed from their artery submitted for analysis. And then what this team did is they took that plaque and they studied it to see analysis. And then what this team did is they took that plaque and they studied it to see

Starting point is 01:26:13 how much plastic was found in that plaque. And they used a bunch of measurement techniques to do this, including electron microscopy and mass spec. So they, because it's really hard to find these molecules. And microplastics or nanoplastics, remember, are less than five millimeters in size with a mean level of 21 micrograms per milligram of plaque. Roughly one per 50 is the ratio of plastic to plaque that they found, which is really incredible because it shows that plastics, these little nano and microplastics are accumulating. Incredible good or incredible bad?

Starting point is 01:26:43 Incredible bad that these microplastics, these nanoplastics are accumulating in the human body. Now here's the scary part. They then did a follow-up 34 months later. The patients that had plastic in their blood had a four and a half times higher ratio or likelihood of having a heart attack, stroke, or death from any cause. So all of these major health effects were four and a half times elevated in patients that had plastic in their blood. This was published in the New England Journal of Medicine, if I didn't say it. It really indicates that there is this kind of cumulative problem and that the cumulative

Starting point is 01:27:19 problem is likely leading to really adverse health outcomes. And I'll just highlight one other paper from a team in Germany and Norway back in May of 2022. And this team tried to figure out how plastics are causing adverse health effects in the body. And they had a theory like let's put little microplastics or nanoplastics together with all the human cells that we know, shake it up and see what happens.

Starting point is 01:27:41 And what they found was that these little plastic fragments were binding to dendritic cells and monocytes, key cells in the immune system. And when those cells were bound by plastic, they released the cytokines and the pro-inflammatory signals go through the roof. It causes the immune system to go high wire, increases inflammation,

Starting point is 01:28:01 and the cascading effects of that obviously can ultimately lead to many of the events that we're mentioning were measured in this set of patients in Italy. So again, we're just starting to uncover these effects, this concept that microplastics and nanoplastics that are accumulating. And let me just say these plastics are mostly PET, which is what we use to make plastic bottles that we drink water and drinks out of, and PVC or polyvinyl chloride, which is what a lot of our plastic plumbing and piping is made from. And so as little tiny bits of these plastic materials either are exposed to sunlight and break off and end up in our water and food supply and we consume them, they are slowly

Starting point is 01:28:37 accumulating in bodies and they may be driving inflammatory response, they may be driving adverse health outcomes. We're really kind of tip of the iceberg and really studying this understanding and analyzing it. But here's another really interesting empirical data set that highlights that this really is a pretty significant half the patients had it. And of that half, they had a four and a half times higher chance of dying or having a heart attack or a stroke in the 34 months that followed. Yeah, the really scary data. Yeah.

Starting point is 01:29:05 The thing that that study said, which was nuts, is it looked like the nanoparticles, the nanoplastics and microplastics were effectively acting as scaffolding for plaque. So, in almost like it was a, it was a shim that allowed it to grow. The question is, would it have grown faster than it would have otherwise? That's even scarier. So I did not like reading that paper. That really freaked me out. Really, really freaked me out.

Starting point is 01:29:35 I was drinking water from plastic water bottles this week, and every time I drink water out of a plastic bottle now, I'm like, like, nervous every time I take a sip. You're not supposed to double your the risk of all-cause mortality by drinking a Fiji water. You know what I mean? 4.5x. 4.5x. It's crazy. In 34 months. Think about the cumulative effect over time. Over time.

Starting point is 01:29:55 Over time. It will longer appear. Yeah. Imagine drinking water out of a plastic bottle, thinking you're doing the right thing and then trotting over to the recycling bin, you know. Yeah. And you do that for 20 years, you may be killing yourself.

Starting point is 01:30:08 Well, there it is. So wait, what's the, if you, if the water... Glass bottles, you must use, you cannot use plastic. You just cannot. It's over. No plastic. No plastic. You can't.

Starting point is 01:30:23 You gotta stop. It's over. It's done. We're drinking. It's done. Glass, cans, good, plastic, cans are okay. Stainless steel. Stainless steel is fine. Just like I mentioned when we talked about this a few weeks ago, the carbon footprint, the environmental cost, the cash cost is much higher with all these alternatives to plastic. So there are big challenges with respect to having some big massive response to plastics used in our supply. But you know, living in the luxury world that we all get to live in, we get to have that choice and we'll make that choice.

Starting point is 01:30:49 But it's a real problem for humanity because plastics are so ubiquitous in so many things. And they've enabled affordability of consumer goods. This is such bullsh**t, honestly. Like all you have to do is have glass bottles or carry a water bottle with you. Like I have a Contigo one I like. I carry it with me, I empty it.

Starting point is 01:31:08 No, I put G-Cal. And I have a water filter in my house and we fill water bottles and put them in the fridge. No, but what if you like yogurt? Yogurt comes in a plastic container. There's all kinds of stuff. You can't avoid plastic. That's what's so scary.

Starting point is 01:31:21 We try to in our house. That's what's so scary. We do have a French yogurt that comes in glass bottles, but yes, it is hard. Ah, yes, we do the French yogurt in glass bottles. It's so sweet. It's so scary. We try to and that's what's so scary. We do have a French yogurt that comes in glass bottles, but yes, it is hard. Ah, yes, we do the French yogurt in glass bottles. It's so good. It's so good. It's so nice.

Starting point is 01:31:30 Wait, where do you get it? There's a French yogurt that comes in glass bottles. Oh, French yogurt. But I don't have any water. It's called like, Le Pen, or something? Le Pen, what? No, water.

Starting point is 01:31:39 Water, you just install a filter system, which you have at the mausoleum, and just fill huge glass bottles. Just have your staff fill the last bottles and put them in the fridge and don't throw them away. And give your kids like some of these thermoses or whatever but don't have the water bottles. Like you know it's so funny. It's been a disaster in the poker game in some ways. We got rid of it and there's been way more broken glass, people knock over the side tables. I get it, it's been a huge pain, but I will not go back.

Starting point is 01:32:08 No, it's the right thing to do. No, it's the right thing to do. Okay, well, if Tamoth is endorsing this, I guess I'm gonna take it seriously. I think you gotta do it. My opinion doesn't matter, Sax. I'm not saying you're wrong. I'm just saying that your threshold

Starting point is 01:32:22 for becoming concerned is lower. And then if it's Chamas threshold, which is higher, I'm going to take it more seriously. As your bestie, I would like you to stop using plastic for the rest of your life. Okay. You're in a position to do it. I would ask you to not do it. All right, everybody. Can all you f**kers come back to the barriers so we can see each other? Absolutely. I miss you guys.

Starting point is 01:32:44 All right. All right. Love you guys. other? Absolutely, I miss you guys. I heard of this. Alright. Love you guys. I miss you. I miss you guys too. For the Sultan of Science, the Chairman Dictator, and the Rain Man David Sacks, I am the world's greatest moderator. Okay, love you guys.

Starting point is 01:32:58 I gotta go. Love you. Love you. See you next time. Bye bye. What? We let your winners ride Rainman, David Sack And it said We open source it to the fans and they've just gone crazy with it Love you, West, I'm the queen of Kino Waves

Starting point is 01:33:15 I'm going all in I'm going all in What, what, your winners ride? I'm going all in Besties are gone I'm going all in That is my dog taking an odyssey to your driveway. Oh, man. Oh, man.

Starting point is 01:33:31 My avid natural meat, me, I'm blitzed. We should all just get a room and just have one big huge orgy, because they're all just useless. It's like this sexual tension that they just need to release somehow. What? Your feet. What? Your feet.

Starting point is 01:33:44 What? We need to get? Your B? What? Your B? We need to get merchies our back

All-In with Chamath, Jason, Sacks & Friedberg - E169: Elon sues OpenAI, Apple's decline, TikTok ban, Bitcoin $100K?, Science corner: Microplastics

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