All-In with Chamath, Jason, Sacks & Friedberg - Iran War, Oil Shock, Off Ramps, AI's Revenue Explosion and PR Nightmare

Starting point is 00:00:00 All right, everybody, welcome back to the number one podcast in the world. Freeberg's out saving the world, creating new potatoes, or, I don't know, Kinwa, maybe some Brussels Sprads. I'm not sure what he's working on at this point in his place. His personal favorite bestie, when I'm not here, I want Brad Gerstner in the seat. Welcome back. We haven't seen you on the pod since your shout out at the state of the union. Take us behind the scenes for a brief moment here, Brad, of what it's like to get a shout

Starting point is 00:00:28 out from POTUS at the state of, did you know it was coming? Did you choreographed to this thing? Did you, did you choreograph that? Or was that more spontaneous? I honestly had no idea it was coming. And in fact, I found out after the fact that it wasn't in the speech and the president added it to the speech. So I don't even think it was, you know, a few days before going to happen. But we got an invite to the state of the union. And, you know, listen, it's an institution. This has happened every year for 250 years in the country. I've never been. I thought, I did know he was going to talk about Trump accounts. So I figured if I'm ever going to go, that's the time to go. And I have to say, you know, I'm just a sucker for democratic institutions and democratic traditions. It was an

Starting point is 00:01:09 extraordinary night. Set aside, you know, the headlines about what Democrats did or Republicans did, just the, whether it's a Democrat president or Republican president, that this happens every year. You have to go report on the state of the union. So it was a special night, did dinner ahead of time, in the chamber. The chamber, as you all know, is very small. And so, you know, just to your right was the first family and Jared and Ivanka. And so, you know, we were there as to observe like everybody else. And wow, it was, it was quite a moment. And I want to just say, you did a great job, because when you sent your heart out to all of America, I took it. I took it. I took it. I took it. You sent it out. But you kept it at the right angle. Right.

Starting point is 00:01:54 Right. If you had just gone up a little bit extra and out and another five degrees, you'd be a Nazi. But it would have been no bueno. Those would be some super racist Trump accounts. Keep your protractor and your ruler out when you send your heart out. Okay. One final thing on it, Jason. You know, we're signing up over 100,000 kids a day to these Trump accounts.

Starting point is 00:02:15 Fantastic. We have millions of kids who've already claimed their account. We have nearly 30 million kids in America who are eligible for at least $250 if they just go claim their account. count. These things are going to go live on July 4th. And what it really showed, I think, the country, it accelerated after the state of the union because the president, you know, really believes this is a way to get everybody in Main Street America into the game of capitalism and get them all directly owning, you know, the great companies in America. So it meant a lot to me in that regard that it highlights the importance of the program. So I was deeply grateful to the president for not only

Starting point is 00:02:48 making sure this happens, but the shoutout was pretty cool. Good for you, bro. I have an interesting idea for you. I'm sure it's come up already, but with this whole discussion of UBI, somebody said to me, oh, you know, I really like these Trump accounts your friends did, the Invest America, because it's like the start of UBI. And I was like, well, that's not exactly the intention, but I get it. And with wealth disparity going on in the country that has a lot of people concerned, what if there was a giving pledge around equities? And people could opt into it. They don't have to. But if somebody like, I don't know, Larry and Sergei or Zuckerberg said, I want to pledge 5% of my shares to go into kids' accounts over the next 20 years. What an amazing, beautiful thing that could be. And it would

Starting point is 00:03:31 be incredibly material to get whatever it is, a 10th of a share, a hundredth of a share, a thousandth of a share of whatever company. Has that come up yet as an idea? I'm sure it's obvious, right? It's come up. Stay tuned. But yes, we're going to have some banger announcements as we had toward July 4th. All right, let's talk about the war in Iran. Obviously, there are much more important issues than financial ones, life, death, the freedom of the people of Iran. But we're uniquely qualified, I think, to talk about the economic fallout, second order effects, first order effects. And there has been massive volatility over the last five trading days. Just talking about Brent, crude oil,

Starting point is 00:04:11 and we'll key the discussion off of that type of oil. It spiked to $84 on Friday. That was day of the war, 119 on Monday, day 10, dropped back down to 84, jump back up to 100 after three commercial ships were hit in the street on Wednesday. Those ships, by the way, were not oil tankers. They were carrying cargo. They were flagged as Thai, Japanese and Marshall Islands. Brent crude, currently at 99 when we're taping this, it'll be at something different by the time you listen to the pot, I'm sure. But it's quite a spike. And here's a second chart. This shows you the spikes over time, I was old enough to remember the oil shock of 1978. We had to like get in line at the gas station based on your license plate number and you had to wait an hour or two to get gas.

Starting point is 00:04:56 Gulf War, obviously it hit $100 in 26. 2006. 2008, we hit kind of a peak moment, $216 in today's dollars. That was the peak oil discussion. Demand from China went off the charts. When Russia invaded Ukraine, we hit $115, which would be $133 in today's dollars. So, This is not new, but it is significant. And breaking news today, Iran's new supreme leader, Moshtaba says he's keeping the strait closed as a tool to pressure the enemy. Wall Street Journal on Thursday quoted a senior fellow at the Middle East Institute saying that reopening the strait will require ground troops, polymarket.

Starting point is 00:05:38 27% chance that U.S. forces enter Iran by the end of March and 57% by the end of the year. Sharps over a polymarket, believe we will have boots on the ground. Let me stop there. Brad, your thoughts on what happens when oil hits this kind of number and we have this uncertainty of, hey, this could last two more weeks or it could last six months. It could last a year. Nobody seems to know. And how it resolves, we just had a really interesting talk with Graham, Allison. How it resolves is also a major unknown. Your thoughts. So first is, obviously, there are huge direct costs as oil prices go up, right? Oil is a component of a lot of consumer, you know, and enterprise products.

Starting point is 00:06:24 And it also hurts consumer confidence, enterprise confidence. Goldman Sachs is out today with some analysis where they updated kind of the economic knock-on effects, right? So they raised their PCE inflation forecast from 2.1 to 2.9, right, for the year. So that's a huge jump, right, in terms of their expected, you know, PCE, inflation. Core PCE, which excludes oil, okay, is they forecast it up from 2.2 to 2.4. So they're saying, even if you excluded the direct price of oil, the knock-on effects is going to cause a little more inflation. They lowered their GDP forecast by 30 basis points for the year. And they also expect

Starting point is 00:07:02 higher unemployment as a result of this for the year. All of that is weighing on the sentiment in the market. Remember, just a few months ago, the S&P peaked at 24 times, now we're at 21 times. But I think the market may be getting it a little bit wrong, right? The Trump doctrine, you know, I tweeted about this last week, I think the Trump doctrine is far more pragmatic than the neocon doctrine, right? I think we, I think Trump has a very limited set of goals. He wants to destroy and degrade threats to America's national security interests. He doesn't want to spread democracy. So my suspicion is that these impacts are shorter duration, but right now the market's having a little bit of post-traumatic stress, flashbacks to Afghanistan and Iraq, and wondering if we might be wandering.

Starting point is 00:07:42 into a quagmire. All right. And just he may not, in terms of the doctrine, he has said he wants to see the people rise up there. So it might be splitting hairs, but I think he might actually be for regime change. He says he wants the regime to change. All that being equal, I don't think he minds if the people bring it to themselves. The question is whether the U.S. is going to, you know, put boots on the ground and try to spread Madisonian democracy like the Cheney doctrine was. And I think this is very different. Chmop, your take on the, economic impact and, you know, and any other things you'd like to add about the war in Iran. I think the most important thing that I saw this week was, I think President Trump was asked about

Starting point is 00:08:27 the war and he said the war would be over very soon. What did the market do? The market literally took oil from 120 a barrel to 90 a barrel, almost in, you know, a nanosecond. I think that that sort of tells you what everybody thinks. To the extent that the market really didn't believe it, oil would not have budged. And if anything, it would have faded those comments, and you probably would have seen oil stay at around 120 or even go slightly higher. So the fact that there was this reflexive move, I think is a belief by a lot of the sharps that there is no path to a sustained conflict.

Starting point is 00:09:10 There's going to be a lot of chest bumping from the Iranians, obviously, because they need to say face and they will want to set up whoever comes next to have the most successful chance of governing. So my perspective is that was a trial balloon. I think it validated what everybody thought, which is that this is going to be a short run thing. I agree with that. The downstream impact is, I think correct what Brad said, which is it could show up in some short-term price spikes. but then on March 11th, you saw what Chris Wright did, which is the president activated a whole bunch of member countries in the IEA. And I think Chris released 172 million barrels. I think there's a coordinated release of about 400 million barrels of petroleum. That's going to dampen the effect

Starting point is 00:09:57 of any price spike. On top of that, I think the estimate is there's probably another billion or so more barrels that one could release out of strategic stockpiles. So I think, think that both of these two things together kind of paint a picture that probably the worst is behind us. And I think now it's about finding the off-ramp. Sacks, your thoughts? Well, I agree that we should try to find the off-ramp. I mean, I agree with what Brad and Jemah said about that. Look, we've degraded Iranian capabilities massively. Their army, Navy, Air Force, all have been destroyed. This is a good time to declare victory and get out. And that is clearly what the markets would like to see. You are seeing, however, a faction of people, I'd say largely,

Starting point is 00:10:45 but not exclusively in the Republican Party, who want to escalate the war. And we're calling for things like ground troops or regime change or they simply want the pounding of Iran to just keep going on and on. I saw an op-ed in the Wall Street Journal to that effect that we shouldn't try and find it off-rent. We should just keep going with this. And I just want to lay out, I think, some of the risks of what an escalatory approach could entail. So first of all, we're all seeing that the straits or moves are closed right now. We don't want that to persist longer than it has to. But there are actually worse outcomes than that. So if the Iranians get hit, if their oil and gas infrastructure gets hit, they've already said they're going to engage in tit-for-tat

Starting point is 00:11:33 retaliation against the Gulf states. And we saw there was recently the Iranians blew up this giant oil depot in Oman. You saw some of those images. They could continue to target the oil and gas infrastructure across the Gulf states. And if that happens, it won't really matter if the straits get reopened because you won't be able to restart oil and gas production in the Middle East. So that would be, I think, a much worse outcome that could result from escalation. Furthermore, there's an even worse, I think, scenario from there, which is the region is very dependent on desalination plants. I think something like 70% of Riyadh gets their water from desalination. I think it's something like 100 million people on the Arabian Peninsula that get their water from desal.

Starting point is 00:12:19 I mean, it's basically a desert, right? And those desal plants are soft targets. You already saw there was, I think there was one desal plan in Iran that got hit, and then it caused Iran again, tit-for-tat to hit a desal plant. I think it was in Kuwait. I could be off about that. But in any event, if you see that type of destruction continue, you could literally render the Gulf almost uninhabitable. I mean, you're not going to have enough water for 100 million people. And human beings just cannot survive very long without water. So that would be a truly catastrophic scenario. And we're talking about destroying the Gulf states economically and then also from a humanitarian perspective. So I think we have to

Starting point is 00:12:59 take things like this into account when you hear people preaching for or advocating for escalation. You also have to, I think, consider the impacts on Israel. I mean, it's hard to know exactly how much damage Israel is taking right now. There's a social media blackout. But what you're starting to hear trickle out is that Israel is getting hit harder than they've ever been hit before in their history. And we're only two weeks into this. If this war continues for weeks or months, then Israel could just be destroyed. There are very large parts of it. Now, I think Israel is a harder target than the Gulf states. Their infrastructure is more hardened, also they're further away. The Gulf states are vulnerable to drones and short-range missiles, whereas Israel is mainly

Starting point is 00:13:42 vulnerable to long-range missiles. Nonetheless, at some point, their air defenses could become exhausted if it hasn't happened already, and Israel could get seriously destroyed. And then you have to worry about Israel escalating the war by contemplating using a nuclear weapon, which would truly be catastrophic. So there's a lot of scenarios here, a lot of really frightening scenarios about where escalation could lead. And even though the United States is a much more powerful country than Iran, they essentially have a dead man switch over the economic fate of the Gulf states and even potentially beyond that, you know, the habitability of some of these countries. So I do tend to think that this is a good time to declare victory.

Starting point is 00:14:29 I think, Brad, you're right, that the president has never said that democracy promotion is one of his objectives. Yes, J-Cal, obviously everyone would welcome if the people rose up and chose a new regime, but that's not something that we've said we have to accomplish. And this would be a really good time to take stock of where we are and try to. I think to seek an off-ramp. And look, if escalation doesn't lead anywhere good, then you have to think about, well, how do you de-escalate? And de-escalation, I think, involves reaching some sort of ceasefire agreement

Starting point is 00:15:01 or some sort of negotiated settlement with Iran. And we can get into more of what that looks like. But I think that's the big picture, is that if escalation could lead in all these horrifying directions, and I think that's not the right approach, you have to look at de-escalation. Jake, where are you on this? complicated. I have my personal feelings on regime change. And since we don't have the information, the Mossad and the CIA and Trump has, I do think Trump would only do this if he had a very high probability of success and an off ramp. However, it's not looking good with the off ramp right now.

Starting point is 00:15:36 And it could be quite chaotic. I think if the neocons get their way and the people on polymarket are correct, the sharps who say 57% chance will have boots on the ground, I think This is kind of the end of Trump's second term. And if you were to put together the series of mistakes that he's made and the administration's made, they're really at the heart of why people voted for him. You take starting a war like this, specifically with Iran, that's what we were told was the reason to vote for President Trump. He was not going to take us down this path. he was not going to risk World War III. He was not going to risk a nuclear possibility, as Sachs correctly points out. And now you have all the MAGA supporters from, you know, Tucker to

Starting point is 00:16:27 MTG, to Rogan, Matt Walsh, Megan Kelly. They are all up in arms about this is the end of MAGA, and this is, you know, a massive betrayal. There's the 1B betrayal where Trump wouldn't release the Epstein files. We'll put that aside because I don't think that's as important as starting World War III. And then obviously the insane, unnecessary cruelty we talked about many times on this podcast of ICE agents, which he has corrected by getting rid of Christie Nome. So you start putting these things together. If this continues for another six months, it's basically going to result in the Democrats doing a clean sweep in the midterms. Here's the chart that I think, you know, the Republicans really need to look at, at how misguided, you know, this all is. This is the chart that

Starting point is 00:17:18 should be absolutely terrifying. Nobody wanted this war or very few people wanted it besides the neocons and the people of Iran, probably, and the Israelis. But the chances of the Democrat sweeping now is up to 45%. This just happened. The Democrats are going to sweep. Then they're going to win in 28 and the entire agenda of MAGA and Trump's 2.0 will be gone. And then you look at just absolutely ignoring the working man. Inflation going up above 3%, as you pointed out, is a likelihood. Brad, unemployment ticking up. Still very low, but it's ticked up 10% worth keeping an eye on. These foreign affairs things are the least important to the American people. It's very, very low on the list of priorities. And people are looking at Trump and what they believe is the enriching

Starting point is 00:18:09 of his family and all these business deals. Man, you're really kitchen sinking it. It's literally what I was thinking. You're bringing everything. At one, two, three, four, number one, doing the war that everybody said he should not do, include, and that that was why we should vote for him. Number two, the Epstein files. Number three, the ice cruelty. And number four, not working for the American working man who doesn't own equities. Those are four. One, two, three, three, four. It's not a kitchen sink. This is not my personal feelings on this. This is my assessment of the situation. If he doesn't find an off ramp quickly, they're going to lose both houses in the midterms. That's, I think, the thing Trump needs to really consider it. And I think he will consider it. I think he's

Starting point is 00:18:49 going to find an off ramp. Right. That is the topic. The topic was, are we going to find an off ramp or not find an off ramp in Iran? And I think Sachs made the argument that there's danger that neocons and others are arguing that we expand, put boots on the ground. You're saying if he doesn't, it'll be a disaster. Chamath and I both say he will, right? And so the, that is, will wait, will what? He will find an off ramp over, you know, in the nearer term, because the Trump doctrine is not the neocon doctrine. As much as people want to talk about Iran, Iran, Iran, I think as I explained last week, I think this is about China, China, China. And you have to remember, at the end of this month, he has a pivotal three days with Xi Jinping in China. This is going to be an absolutely

Starting point is 00:19:35 historic convening of the two superpowers that run the world. One, which is us, we are the established, and one which is China who wants to be reascended. And I would bet dollars to donuts that there is going to be an enormous incentive for Xi to be. negotiate a grand bargain in those three days and do something historic for himself. And I think that the president will use that if he thinks that it creates leverage. I think it's a great insight. How does the Strait of Hormuz open? If this war is dragging on in Israel, which seems to be the driving force in this, if Israel keeps

Starting point is 00:20:21 it up with Iran, how do we ever get the straight open again? I think the off-ramp is that the United States, you know, declares victory, does what SACC says, and says, listen, we degraded and we destroyed. That's what we came here to do. We did not come here for some experiment in democracy. We wish the best to the Iranian people to do the things they need to do. And if Iran does not back down, if after that declaration, Iran continues to destroy cargo containers moving through the narrow straits, I think you're going to see Iran's neighbors and Israel and others get very involved as it pertains to Iran because it's in their interest. Listen, the United States produces 20 million

Starting point is 00:21:01 barrels of oil a day and we consume 20 million barrels of the day. This is a modest problem for the United States. This is a massive problem for China. This is a massive problem for Asia. This is a massive problem for all of our friends in the Gulf who are trying to dodge Iranian missiles right now. So there are a lot of people in the world who will take up arms to deal with the Iranians if the United States isn't there because we can take care of ourselves. Your position, Brad, just to confirm it, is we are going to leave the war in the next 30 days. And then if the straits are not open, then China, India, and all the Gulf countries that are impacted by it, they will protect it. They will fight Iran. I think they'll put a lot of pressure on Iran, not to continue firing missiles at their ships, right? At the end of the day, this is not just an American problem.

Starting point is 00:21:48 Right. And let's be clear, we're always involved in this part of the world. The only question is, are we going to have an active armada that's engaged, in active military activities against Iran and what I'm suggesting again. And listen, any time you try to clean up a mess like this, there is risk. This is not a risk-free, you know, initiative by the United States, nor was Venezuela. But let me steal man the alternative. Doing nothing and allowing Iran to procure, you know, the ingredients for a nuclear missile when they are set on the destruction of the United States and U.S. interests, doing nothing in Venezuela while the Monroe Doctrine is totally wrecked. and we let our adversaries take up, you know, positions in South America, those also have risks, right? Those carry a lot of risks. And so we're weighing these two risks. Again, for me,

Starting point is 00:22:38 I don't like the fact that we're engaged in military activities here, but I will tell you, I am very much on the side that if we're going to go protect American national security interests, you go in, you do the degrading of their capability, and you get out. And I think, you know, That's what I hear out of the president. Chimov, you got to follow it? All roads lead to China. I think that you're going to see Xi offer up a grand bargain. And I think it's up to the president to decide whether he wants to take it and see what he

Starting point is 00:23:06 wants to add to it to get something done. But I just don't see them meeting and coming out with nothing. I think I see them going in and coming out with something that's historic. And I think that all of this, Venezuela and Iran together, is all about China. Let me just say one thing as to that, Chamaath. I think because I think the point is absolutely spot on, right? Probably the single greatest takeaway for us from an investment perspective at the start of this war was that the Chinese, right, didn't take up arms on behalf of Iran, aren't defending Iran,

Starting point is 00:23:41 and they didn't cancel the summit with the president, right? The very fact that the summit- Because they need him. They need the oil. 20% of their entire domestic consumption is oil from Venezuela and Iran. 20%, but it's not 20%, because it's literally 100% of anything that's feedstock, anything that's transport, cars, buses, planes. They are in an enormous world of hurt. Now, they have a strategic petroleum reserve as well, and it's quite robust,

Starting point is 00:24:13 but it's not robust enough to sustain five or six months of this. It's not that robust. So at the end of the day, who is going to be hurting the most? It is China. And so if you play this game theory out, the reason he kept it is because now he needs to summit even more. Could you imagine if the president canceled? That would be a disaster for the Chinese.

Starting point is 00:24:35 So the fact that it's still on the books, if I was Xi, I'd be like, how do I negotiate and help find the off frame? How do I end up fixing this faster? All right. Remember, you have 25% unemployed. of young men inside of China. 25% today. What do you think it goes to in five months with no oil?

Starting point is 00:24:57 That's the unemployment rate you should be focused on, Jason. Oh, the China issue is a separate one. It's not separate. No, no. That was separate from my point is my point. I was bringing up a different point. Yeah, your kitchen sink didn't include the Chinese. I get that.

Starting point is 00:25:12 I'm just adding to your kitchen sink. I didn't have a kitchen sink. I have four very salient points. All right, Sacks. I'll give you the final. word here. Well, look, that was a bit of a broadside, J-Cal where you kind of did kitchen sink it. But look, here's the part I'll agree with you about, which is it doesn't take a political genius to understand that long wars are unpopular. It will hurt the Republicans in the midterms or 28 if this does

Starting point is 00:25:37 turn into a long war. Fortunately, I think the president understands that. His political instincts are impeccable. And he's always favored short, decisive, swift actions, military actions, whether it was Midnight Hammer, whether it was the Maduro raid. I think that is his inclination and preference. And I think we are pretty much at or close to a point where the president's going to have to decide on next steps. I think he's indicated that we have completed our objectives. And I think it's just important that we don't let this neocon wing of the party try to expand the objectives or aims of the war, because frankly, they've always been wrong about everything. I mean, these are people who never wanted to get out of Iraq and Afghanistan would still be there

Starting point is 00:26:23 after 20 years if they had their choice. So I think it's just important to not listen to those people, and look, it's not just one op-ed in the Wall Street Journal. The Wall Street Journal is kind of the tip of the spear representing that whole neocon. con establishment. And I think it's just important that this is the time to frankly ignore those voices and let the president do what I think his political instincts are telling him to do, which is to wrap this thing up. I'm in strong agreement, and it is my hope, too, that he wraps it up quickly and that we don't have any more loss of life. All right, we'll keep discussing this ongoing breaking new story in the coming weeks. But back to our zone of excellence,

Starting point is 00:27:03 AI and tech. Open AI and Anthropic are. scaling revenue and costs faster than we've ever seen in the history of, well, business, the world, revenue at these two companies growing, gosh, like unprecedented levels. Here are the reports, and I believe your investors in both these companies, Brad. Anthropic hit a $14 billion run rate last month, February. That means they have grown revenue from $1 billion to $14 billion in 14 months. They have 12x year over year. they're valued at a meager, $380 billion last month.

Starting point is 00:27:40 It feels like a bargain given the growth. OpenEI ended 2025 at $20 billion, annualized run rate. And they've grown revenue from $2 billion to $20 billion in 24 months. They're valued at $840 billion last month. And, man, it looks like Sam Altman has Dario in the review mirror. He could get lapped any moment. Lots of debate. Where did you find this?

Starting point is 00:28:04 What the hell is this? That one? I made that. This is Dario closing in. What is that? A velociraptor? What is it? It's the famous scene from Jurassic Park.

Starting point is 00:28:14 Oh, my God. But, I mean, I don't think anybody expected Dario to be coming around the bend this fast, but he's right behind, apparently. And they're winning, obviously, the business-to-business side of the business. The J-Curve on these companies is insane. 250, 500 billion. Who knows what gets invested before these companies reach, profitability, Brad, but you're invested in these two companies.

Starting point is 00:28:37 Unless you sold when Sam Wattman told you he would buy his shares back on the famous BG2 episode. I don't think you sold it on October. I bought a lot more since then, Jason. I bought a lot more since then. That's important information for us to have. Quick question for you. Number one, what's a better buy here?

Starting point is 00:28:54 Anthropica at 380, open AI at 840. And then I think people want to know if these companies are going to go public. If you think they should go public, what is the chance of that? happening? Take those questions however you like. Well, I mean, listen, you know, love your children equally. They're both incredible companies. Anthropic unquestionably has a lot of financial momentum, you know, and Open AIS seeing a lot of momentum themselves, right? But the single most important question this year, right, was would AI revenue show up? And just 60 days ago, 90 days ago, there was tremendous skepticism. No way all of these infrastructure investments were going to pay

Starting point is 00:29:31 off. There's no incremental revenue coming out of AI, including many of our friends. But in February, we had, in January and February, we really had kind of a nuclear moment, right? The splitting of the atom moment. I mean, we had a $6 billion month out of Anthropic in February, right? What widely reported, okay? Let that set in for a second, right? Six billion dollars in a month. It was only a 28-day month, okay? That's more revenue than the annual revenue of data bricks and snowflake that are two of the greatest software companies of all time after 12 years, right? They could do in the first four or five months of this year the total revenue of SpaceX this year. What is driving that? Just explain to the audience what's driving it? Is it token use? Is it clawed subscriptions?

Starting point is 00:30:17 We crossed a threshold with Opus 4.6, right? And we saw it again with chat GPT 5.4, where the models and the agents on top of them, whether it's ClaudeCode, Codex, chat GPT, they're no longer competing with IT budgets. They're now augmenting labor. They're competing with labor budgets. You could not possibly have a $6 billion month. It is impossible to do that by displacing IT budgets. Millions of other companies across America say, oh my God, let's spin up these agents and have them do things for us. And we're willing to pay for it because the product of that effort is worth the money to us. And the revenue and the usage momentum, I will tell you, in the month of March continues, and it only accelerates from here. As Kevin Weil has said, the models and the agents

Starting point is 00:31:04 are the dumbest today they will ever be. We're in the early innings of compute and algorithmic capability. And so, you know, like that to me is the observation of this moment. Should they go public? I've said, yes, they should go public for several reasons. There's tons of institutional demand. they need cheap access to money to continue to build out the compute they need to support. There is more compute constraint in these businesses this very day than they've had any time in the last three years, so they need access to the capital. And then finally, I think you have to have the retail investor in the game. These are two of the most important companies in the history of capitalism, in the history of America. It's destabilizing not to have them public.

Starting point is 00:31:46 You know, Jensen said last week that he expected the $40 billion he recently invested in these two companies would be his last money in because they were both going to go public. He thought they, he said they would both go public this year. I think that, you know, they're preparing and heading down that path, you know, and listen, I want to get some of these shares in the accounts of all these kids that were opening up because they're really, really important companies to the future of the American economy. Shemap, you had some insight into the quality, durability of this revenue. There's not a single good example that we can find of sustained, positive margin expansion and impact of AI inside of a true

Starting point is 00:32:30 corporate enterprise that is not right now a small test. There's not. So where does six billion come from? Because everybody has to show up to their board and have an AI checkbox. And everybody is thousands and thousands of companies. And when you have tens of thousands of companies, as customers paying $200 plus a month, it's not that hard to show up with that kind of revenue. The real question is the following. If you take, you use the Databricks and Snowflake example. If you look at the companies that use that software, those companies generate enormous revenues and enormous margins, and these products are in critical production workflows that underlie those revenues and profits. That is just not true with AI today. We have all kinds of claims,

Starting point is 00:33:24 but we are still experimenting. Why are we experimenting? Because we know it's important, but we don't yet really know what to do. You can't just slot this in to a critical workflow in healthcare and all of a sudden show up where if you make a misdiagnosis or if you make a mischaracterization of a procedure, you can get fined and go to jail. The companies that are in health care, don't do that. If you're in financial services and you make a mistake about somebody's portfolio or you make a misallocation and you point to a model, you will get sued and you will be in trouble. None of these things have transitioned from it's interesting, it's experimental, to it's the core critical operational workflow. There will be a transition in revenue quality

Starting point is 00:34:11 when that happens. A great example of this is Amazon. Why does Amazon issue a an edict that says you cannot use this stuff inside of AWS unless a human now reviews and approves it. Because what happened? They had three or four SEB1 faults from a bunch of code that was written by agents that brought down AWS. Now, look, I've told you, I love AWS for one reason because it's hyper-reliable. I hate AWS for the same reason that hyper-reliability comes at enormous cost. I pay it. But I pay it to never have a SEV-1. The reason they have 12-9s of is because it's humans and deterministic code that never fails. It doesn't mean that two companies can't get to 20, 30, 40 billion of revenue. What it means is we have to be honest. This is an industry

Starting point is 00:34:59 that's early. We are all figuring it out. There's a lot of test budgets that are going at it. It will slowly and methodically emerge into production, but let's not oversell what this moment is. Okay, Brad, I want to give you a well-constructed question here to respond, and then Sachs will go to you, if you have some input. Of the 20 billion, how much of it do you think is experimental? What percentage is experimental versus production? Well, you have to strip out the consumer spending for, because like, you know, that's half of it. Okay. So let's, I'll put aside the consumer, sure, great idea. We'll put the consumer subscriptions aside. They're obviously getting value or they wouldn't be subscribing, but it's like Netflix.

Starting point is 00:35:41 And by the way, for that, where it can be extremely faulty and there's no SLA that you're giving, It's a phenomenal, these are phenomenal products. Yes, for 20 bucks a month, well worth it. And consumers have decided it's worth it. So I think we're in agreement there. And also for the individual engineer, of which I suspect there's a few million, who get to pay $200 a month and have their company subsidize it, the company knows that these costs are being incurred.

Starting point is 00:36:07 But there is no tick and tying at the end of it where then you review the code in a different way because you're worried that there's hallucinations, as Amazon just demonstrated. Yeah, there's a story in the, there's a story in the, to you about Amazon having some blast radius from some computer generated AI and they're putting controls in place. We'll put that in the show notes. Brad, let's get to the specific question I asked. Of the tens of billions of dollars in revenue between the two companies, that's not consumer, what percentage do you think is production quality versus experimental to Chimot's point? Yeah, I mean, listen, and I've been, you know, I coined the phrase experimental run rate revenue,

Starting point is 00:36:43 right, versus annual recurring revenue, right? Like, I think it's, I think Chimass point is a really important one as an investor, I have to discern what's repeating, right? What's recurring and what's not. What I would suggest is, of course, there's a lot of experimentation because these things haven't been around that long. But I suspect, right, that Palantir, the U.S. government, the U.S. military, NVIDIA, and a lot of other major enterprises would argue they've gone full production. In fact, it's existential to the wartime effort going on. in Iran right now. That doesn't sound to me like experimental as much as it sounds like production capability. And I will tell you what will prove this one way or the other is in the month of

Starting point is 00:37:28 March, do revenues continue and go up? No, that's not true. Hold on. Hold on forever. That's not true. That's not true. Okay. Well, if the experimentation goes on forever, that sounds like recurring to me. We've scratched the surface of the number of companies that even know how to adopt AI. So these numbers will go to the stratosphere. I'm not debating that. Look, I'm on the same side of the bed as you are. I want these numbers to keep going to the moon. I'm just being much more circumspect and honest with myself to say, I see it on the ground. I sit on top of these models. I am paying these models millions of dollars a year. I am. And what I'm telling you is my revenues don't go up faster than their revenues. I'm consuming more tokens every single day.

Starting point is 00:38:09 Do I get more economic output? I am not. And I would say that my team is at the leading edge. And so I suspect a Fortune 1000 company is steps behind my team. And if I am spending triple every three months and not seeing my revenues tripling, I suspect these other companies are in a similar situation. I'd finalize it. But ask it on Friday when you're with Michael Dell, because I've had this conversation recently with Michael Dell. And Michael said a year ago, companies weren't seeing ROI today. They're seeing very big ROI in their AI investments. But I think that's the question on the table. What companies? Which companies?

Starting point is 00:38:44 Of course the tax. Of course, I'm property seeing an ROI. Sacks, we're agreeing that this is experimental in large part, and this is a new tool. So by definition, you have to experiment before you put it in production. What's your take on this grand debate? How much of this revenue is experimental versus real? Well, look, when you're talking about enterprise revenue, what you're really talking about is coding assistance.

Starting point is 00:39:10 That's been the breakout use case. It's really the first big break. Cal use case on the enterprise side. The consumer side's been more of like, you know, research and writing, that kind of stuff, the chatbots, but enterprise has all been about coding assistance. My sense is that the demand for code is very scalable. Software engineers has always been an area of the economy where companies have never been able to hire enough, even in Silicon Valley, which is the most attractive place for software engineers to work. We've never been able to recruit and attract enough of them. The rate limiting factor on the progress of every start

Starting point is 00:39:44 I've ever invested in is not having enough engineers to code up the product roadmap. And then you look at the rest of the economy, the Fortune 500 and so forth and so on. They have hardly been able to recruit software engineers at all because they've all gone to Silicon Valley. So I think you're dealing with a part of the economy where there's always been a massive supply shortage. And I don't know what the natural limit on that is, but my sense is that there's a tremendous latent demand for the ability to generate code. in large quantities, create new products. As the cost of code goes down, as the coding assistants get better, you can code up new types of products.

Starting point is 00:40:23 And then, of course, it's going to lead to agents, which is another way of basically using the code that gets generated. So my sense is that this could be very scalable. I don't know where it taps out exactly. Where I think Chamath is right is that I think there is a change management aspect to this in Fortune 500 companies, for example, and they haven't really wrapped their heads around how exactly they're going to use this. There's a McKinsey study that showed that a lot of these pilot projects in Fortune 400 companies

Starting point is 00:40:53 were experimental. A lot of them were proving not to be successful. So I do think like as you go beyond coding into company transformation, things like that, it becomes a little bit more speculative. That's not to say it won't happen. I think it will happen. I'm actually, I'm bullish. But I do think that we're still waiting to see what the breakout use can. cases beyond coding will be. Probably agents will be the next big one. But I think Brad's right that that's big enough to see, you know, this scale for a while. Because, you know, the thing about, the thing about code is you're paying for code on a metered basis right now. You're paying per token, which is kind of an amazing deal for companies, right? Because before they had to go through

Starting point is 00:41:33 this recruiting process to find engineers, source them, vet them, you know, keep them happy, give them all the perks, the kind bars, all, you know. And so to be able to buy code on a metered basis as the cost per token keeps going down, it's kind of an amazing deal. It was metered before. It was just metered on people. Now, to your point, it's metered. It's metered in a different way, but it's still metered.

Starting point is 00:41:58 Yeah. And let me just, you know, use this term labor displacement, right? That's like the one part where I might disagree with you is because there was such a shortage of software engineers. I think when people hear the word labor or term labor displacement, they might start to think that $6 billion of incremental revenue means $6 billion of layoffs. I don't think it does. And the way to thread that needle is the fact that we were artificially constrained

Starting point is 00:42:25 in the number of software engineers and how they could be used and how rapidly they could be acquired and all that kind of stuff. So to be able to now turn that on like electricity, I mean, that's kind of what we're talking about. Exactly. is just such a huge game changer and unlock for the whole economy. Yes. And that's what I think is really exciting about it.

Starting point is 00:42:45 It's augmenting human labor, right? We're not at a place yet where it's displacing. And this is the definition of productivity gains. I'm going to make just two quick points here. The place to look for this actually moving from experimental into production is not, not at big companies. Big companies are actively resisting this. Management and big companies will resist it because it means lowering headcount.

Starting point is 00:43:07 it means the person who implements it might actually implement themselves out of a job. So that is the natural resistance you'll see in big companies. That's not where to look for adoption of new tech. That's not why it's happening. That's not why it's basically now. And then you can you can counter it. Startups are the place to look at this. And that's where I am on the ground.

Starting point is 00:43:26 And what I'm seeing there is that startups are using this in production for their legal work, for their marketing, for SDRs, for their accounting, reviewing legal documents. This is all work that would normally, they would hire consultants for, outsource, or make hires for. And what I'm sitting on the ground is it's production ready in startups who are using it in those categories, HR as well, accounting, marketing, all of that, all that blocking and tackling, all those chores are being done currently with these LLMs, and they're doing it in production and they're doing it at scale. Just a quick second point here. Here's the J-curve. And this is the question I think we'll get to in our next

Starting point is 00:44:07 segment, when does this become a profitable business? If, and you ask this, Sam, in that famous clip on the BG2 podcast, RIP, BG2, here you go, the LLM industry, J-Korp. I just asked Claude to make this for me. If you have $500 billion, I think you would agree, it's probably going to be around that number, Brad, invested in all of this. More, a lot more. Okay, so $5 billion is an underestimate here.

Starting point is 00:44:32 And then when do we actually see these large language model companies hit profitability, in a calendar year. It took Tesla, Uber, Amazon, you know, decade plus in each of those cases to win back their investment. If you put it at 10 billion. This is a really good chart. Here's the precise math on this. So I am building a one gigawatt data center in Arizona. Okay. When I greenlit that project, I thought it was going to be a four or five billion dollar investment. I was like, okay, whatever. Then it went to 10. Then it went to 15. Then it went to 20. And now it's upwards of $50 billion for the powered shell, for all the land. for all the permits, then for all the infrastructure, all the people, all of it. Okay, Sarah Fryer said,

Starting point is 00:45:15 I think it was about a year ago, maybe less than a year ago, that for them, every gigawatt is about 10 billion of annual revenue. So if you think about that jaker of Jason, really the way to think about it is, look, energy equals intelligence. For every gigawatt that they're trying to spend, they have a five-year payback is roughly what it means, just to get to break even. And then year six, seven, and eight will be where the profit is. Now, how do you shrink the jaker? You have, have better silicon. We're going to see something from Jensen in a week or two that uses a bunch of the stuff that we partnered with him at Grockon. There'll be other people. There'll be open source. So all those things can shrink the depth and the surface area of that J-curve so that you can get

Starting point is 00:45:53 out of it faster. But right now that thing is roughly accurate, which is it's about 50 billion per gig a lot, and it's about a five to six year payback just to get into the money, and then it's about 10 billion a year. And the technology industry has to do something to make this better. Could I, though, take a step back and give you just a different framing of all of this? Please. I think the big thing that we're debating is actually something we've seen in every other technology trend when it started to get some really meaningful traction. So in the first generation of the internet, when you started to see e-commerce and all these other business

Starting point is 00:46:33 models. Then in the second big wave of the internet around the move to mobile and the move to social. And then now we're seeing this big wave around AI. And I think what happens is in step one, entrepreneurs are A-B testing what it takes to raise money. Okay, that's step one. And I think what has happened is that at least some parts of the AI ecosystem have decided, that this crazy, scary doomerism is the best way to raise money, where every now and then they come out and they say, all the jobs will be destroyed. Anthropic, you know, Dario says that. This thing is sentient. And investors are like, okay, here's 10 billion, here's 50 billion, here's 100 billion. But then the second step happens. They get the money. They start to do the

Starting point is 00:47:27 training. They start selling. And then the investors are like, hey, where's the revenue? and so then they start selling everywhere. And then if you see in the Department of War example, all of a sudden you flip-flop, you become sort of an unserious dilettante like partner to the American government. They're like, we're going to boot you out. That's billions of revenue gone.

Starting point is 00:47:46 And what happened? So same investors that gave billions of dollars are like, hey, hold on a second. That's absolutely not allowed. You need to conform and get back on track. And so what does Dario do? He flip-flops. And he's like, oh, I'm really sorry.

Starting point is 00:47:56 I didn't mean to. Let's sort of make good. All of that, to me, is an industry that's still in its very early phases and still figuring out what its place in society is. So what is the problem? The problem is the following two clips

Starting point is 00:48:11 and I'll just have Nick play these and I love your guys's reaction. The one thing though that I think even now is underestimated by all actors in industry and including in Silicon Valley is how disruptive these technologies are. If you are going to disrupt

Starting point is 00:48:28 the economic and therefore political power, significantly of one party's base, highly educated, often female voters who vote mostly Democrat, and military and working class people who do not feel supported. And you feel like that's, you believe that that's going to work out politically. You're in an insane asylum. Like, that you cannot have, this technology disrupts humanities trained, largely democratic voters and makes their economic power less. And increases. the power, economic power of vocationally trained, working class, often male voters. And so these disruptions are going to disrupt every aspect of our society.

Starting point is 00:49:13 And to make this work, we have to come to an agreement of what it is we're going to do with the technology. How are we going to explain to people who are likely going to have less good and less interesting jobs from their perspective? and how is it that we are going, and by the way, on the military thing, these technologies are dangerous societally. The only justification you could possibly have would be that if we don't do it, our adversaries and we'll do it and we will be subject to their rule of law.

Starting point is 00:49:46 So if you decouple this from the support of the military, you're going to have an enormous problem explaining to the American people why is it that we're absorbing the risk of disrupting the very fabric of our military, our society, including the most powerful parts of our society, if it's not because it's about maintaining our ability to be American in the near term and long term. Now watch Sam's reaction. Fundamentally, our business, and I think the business of every other model provider, is going to look like selling tokens.

Starting point is 00:50:20 But we see a future where intelligence is a utility like electricity or water. and people buy it from us on a meter and use it for whatever they want to use it for. So if you take those three messaging veins on a spectrum, one is we have a sentient super god, we're the only ones that can protect you from it, but you know, your days are numbered. That's Dario. Alex, which is, hey, hold on a second. You can't have it both ways. You can't both say it on the one hand and then try to run the fabric of society and flip it.

Starting point is 00:50:54 You need to be much more circumspect. And then Sam's, which is we want to sell tokens as a service. I think the point is that this industry right now, that revenue traction, if anything else, has distracted people from actually getting on the same page and being much more methodical and much more reliable and trustworthy in explaining all of this and managing the expansion of this. And so what I would say is all of this fundraising gobbledygook has actually created this breathlessness that is not useful and isn't helping. And I would say there needs to be a lot more seriousness by these folks to actually run this business thoughtfully.

Starting point is 00:51:32 You can't be a dilettante. You can't flip-flop. You can't pressure test, A-B-test, this kind of messaging in public. But I understand why you're doing it because the stakes are so high you're playing this enormous poker game. But I think we need to do a better job of explaining all this to people because right now my end of this is look at this chart. This is now the result of those three messages. Here is where AI is. It is slightly above the Democratic Party and an autocratic state.

Starting point is 00:52:00 That's where AI is. ICE is more popular than AI. Ice is not very popular. So to me, this is really the crux of this, where we are not really being honest. It would be much better if we said soberly. There's a lot of experimenting. This revenue is great, but we don't really know what's real. We're going to try to figure it out.

Starting point is 00:52:22 We're going to work methodically. There's a lot of regulated industries. We're going to work within those. We're not going to flout the law and the rules. Licensure will still mean something. That's a way better, thoughtful, mature message. And Brad, what do you think? And rant.

Starting point is 00:52:38 And rant. Great rant. Brad, does the industry have a PR problem? Obviously, these recent surveys and especially comparing them to China where people see AI as abundance and like this incredible new technology they want to embrace here, people are scared. People are scared. They're going to lose their job.

Starting point is 00:52:56 People are scared about wealth disparity. The rich get richer, the poor get poorer. There's a lot of fear here in the United States. What can our industry do to turn this around in terms of communication from the big companies? They don't seem to be communicating in any coordinated fashion. And they obviously are scaring the shit out of the public. Yeah, no, listen, I think it's a fair rant and a fair point. at the start of the Industrial Revolution, at the start, you know, in the late 1800s, we had

Starting point is 00:53:28 similar social responses to innovations that were occurring. We, in fact, had some violent clashes. We had demonstrations in the street. We had the entire robber barren movement. You know, so class warfare and worse is, you know, has come with other, you know, kind of industrial changes of this magnitude. So it doesn't surprise me that we have a lot of anxiety by people, that they may lose their job. And I think there are people out there who are kind of forecasting into the future in ways that are scary to, you know, the average person who's listening to this. And I don't think that's particularly helpful. So could we do a better job messaging, no doubt about it. But if I just rewind to kind of where we started, I actually think the industry

Starting point is 00:54:12 is, you know, this is going to be a pivotal year for the industry to demonstrate, right, how this is really beneficial for humanity. I think we're going to be able to demonstrate that it's very beneficial from a health care perspective, from a drug discovery perspective, from an education perspective, et cetera, but we need to have a coordinated effort because Chimas, right, is deeply unpopular in the country. I happen to be on the optimistic side of this. 70% of the jobs that exist in the United States today did not exist 40 years ago. Right, right? We've gone through the digital disruption that put, a lot of people out of work, but the abundance and the recreation of new jobs, right, expanded

Starting point is 00:54:55 the pie for largely everyone. I think that will be the case here. If you listen to Dario, he says the concern is that the disruption occurs at a faster and bigger rate. And so that we can't keep up with kind of that replacement. I think that's another fine point. But if we just go back to where we started the conversation, which was, are these good investments, right? That's not the conversation. No, of course they're good. investments. Of course you're going to make money. No, no, no, no. That's not what it's about. That's not it. He asked the question, you made the argument.

Starting point is 00:55:26 Jason asked the question, right? Are these companies simply selling tokens at a loss, right? And we moved into the system. No, no, no, they're selling at a profit. I'm buying them and losing money. Right. In the 1849 gold rush, anthropic and open AI and all of these model makers are selling the pick and shovel and the gold rush. I am buying it and I'm trying to pan for But as with the gold rush, most of these companies will go out of business. And all I'm saying is if we are really circumspectant, honest, there is still way more to figure out than has been figured out. This is not a solved problem. And I think it would behoove everybody to just tell the truth about this.

Starting point is 00:56:06 It would be way better to be honest. This is not figured out. I would say, I think the cards that are being turned on the table move me in the exact opposite direction. Okay. Let me get sacks involved and then I'll give my take. Sacks, you have any thoughts here? Well, I have some thoughts on the question you asked about is the industry doing a good job

Starting point is 00:56:24 with PR. I think the answer is clearly no. I think they are scaring the bejesas out of the public. And that's why the popularity is right down there with, I don't know, what was it, Iran? I mean, it's pretty, I think we're a little more popular than Iran. Iran's at 100 years to fuck it up. So we've only had two. Or 47, anyway.

Starting point is 00:56:45 Iran's had 47 years to fuck it up. We've only had two. But it is very much a U.S. specific problem. If you look at data, sentiment data across countries, what you'll see is that other countries are much more optimistic about AI than the U.S. I think Stanford did a study on AI optimism. They simply asked the question, do you think AI is going to be more beneficial than harmful?

Starting point is 00:57:08 Something like 80% of people in China said yes. In the U.S., it was in the 30s, and it might be even lower now. And it's not just China and the U.S. You see across Asian countries, they tend to be. pretty optimistic. And then the U.S. and Western Europe tend to be pretty pessimistic about it. I think that's less about the reality of AI and more about our media environment and who influences it. Obviously, you have the influence of Hollywood, has created a lot of dystopian films about AI. You've got the fact that, like we talked about these CEOs are doing a horrible job,

Starting point is 00:57:38 and they keep talking about putting everyone out of business. I mean, this is, I think, been not accidental. I would say some of these CEOs are speaking this way because they're not very good at comms. I think others are actually doing it because they see a strategy there. They're going for a regulatory capture agenda. Such a good

Starting point is 00:57:57 point. It's delusions of grandeur plus they're positioning their companies. It could be for financing reasons like you've mentioned Schmoth. It's like they want to tout this stuff for fundraising. But also I think that some of it is to create a regulatory backlash.

Starting point is 00:58:12 that they can then control, you know, create a licensing scheme or permissioning scheme. And that's a big part of it, too. And then I think you just have the fact that in our media environment, the scare stories are the ones that get a lot more attention than the heartwarming stories, you know, if it bleeds, it leads type things. So you can just see how unpopular it is for all of these reasons. You know, New York is about to outlaw medical and legal advice from AI chatbots, which, by the way, that's probably the most obviously.

Starting point is 00:58:42 valuable and highest ROI thing for a consumer. But it hurts poorest people the worst. Hurts poorest people the worst. But you understand, like, if you're, say, a professional association that sees it as your job to protect your industry from disruption, you might actually want to spread fud about AI in order to then seek those protections through your state legislature. Well, if you have companies that are fanning those flames and those companies are the ones in the industry, it's making your job even easier.

Starting point is 00:59:14 But just think about the poorest person. They can't afford a lawyer and they want to do their own research. And they research the legal stuff in order to fight an eviction. Or there are poor people who don't have a primary care doctor. They are not insured. And they find a way to deal with some medical issue they're happening. This is the greatest thing. It's the level it levels the playing field for poor people or people without resources.

Starting point is 00:59:39 So this is the craziest stupidest legislation ever. But New York City is a disgrace. I give them a scratchy out of the week. No, the problem is very specifically that these people that rely on these models to make a health care diagnosis or get a legal opinion to help improve their lives, the makers of those tools are telling everybody that they're about to bring death and destruction upon the economy and the world. So then the lawyers and the doctors are like, well, then maybe we should slow this down.

Starting point is 01:00:06 And they tell their lobbyists who then go to New York and then tell the New York, and then tell the New York legislators, hey, these guys are like trying to wreak havoc, and then they're like, oh, yeah, well, then maybe we should shut it down. That is the loop that's happened. That was the Bernie Sanders moment this week where he said, we ought to have a moratorium on all data centers being built in the United States because AI is dangerous.

Starting point is 01:00:29 That was his message, and that is what he's pushing. And actually, that brings me to another point, which is if you look closely at Bernie Sanders messaging, one of the talking points he used was literally verbatim from Future of Life Institute. I think it was something about how AI is less regulated than a sandwich shop, which is just not true. But Future of Life is one of these EA-funded Dumer think tanks.

Starting point is 01:00:49 And they've got something like a billion dollars. Vitalik Buetering donated $600 million of dog coins to the, anyway. Jesus. I mean, this is one really weird sort of quirk about our media environment is we have these EA-funded think tanks with literally billions of dollars. You know, it's guys like Dustin Mollinger. They're the D-Cels. They're the Democratic Socialists kind of arm. It's so weird that like New York is now taking the crown of most retarded state from California. I don't know how this happened, but they just seem to be making every mistake possible. But hold on. Let me just finish my point because you've got these, let's call them, Dumer Think tanks funded by these EA billionaires. They have literally billions of dollars. You can influence a lot of public discourse with that a lot. Sure. And they are behind a lot of the NIMBY stuff around data centers. They've been spreading a lot of the FUD around data.

Starting point is 01:01:39 centers increasing your electricity prices, which again, I think is a solved problem now because the users, the AI companies have agreed to pay for the incremental costs and stand up their own power generation. They've been spreading a lot of stories about water usage, which is just totally made up. I mean, the modern data centers recircle the water. Yeah, they're closed loose. So they don't use up water. But again, you've kind of got these dumer groups who are just trying to stop AI however they can. And they're extremely well funded and they're having a big impact. And I think actually this is one of the reasons why you're seeing in the U.S., again, that AI, I think is, it's basically the least popular thing they can poll for except for the Democratic Party in Iran. And by the way, FLI, the Future

Starting point is 01:02:18 Life Institute, they also fund journalism fellowships and endowments of publications. So. Who probably writes negatively about AI. Yeah, exactly. Here, Sachs, look at this chart. It goes back now a little bit earlier than 23, but I had the data accurately from 23, so we're going into the fourth year, about 40% of all protested data centers in America get canceled. And so in 2023, this was a non-issue. There were a few data centers that were protested, and a few of those, 40% of them, I think it was literally like one or two, got canceled. But then starting in 24, when you have this divergence of messaging or this chaotic slipshod messaging, and it was just a fever pitch to raise money, what you started to see was this fomenting,

Starting point is 01:03:04 of negative perspective by individual people on the ground. And so in 2024, about 40% of all protested data centers were canceled. Still a small number, you could ignore it. But last year was when the bottom fell out. We had about 25 data centers canceled, about five gigawatts that got canceled. If you use Sarah Fryer's number, that's $50 billion a year of revenue, which is off the table because of what happened in 25. Now, that has implications to everybody.

Starting point is 01:03:37 Look at the amount of taxes that that would actually raise for federal and local and state governments. All gone, vanished. In 26, just at the end of February, there are about 100 data centers being protested, which if you flow that through will mean about 40, we'll get canceled. And that number right now is about 7 gigawatts,

Starting point is 01:03:59 so another $70 billion a year of revenue. So just last year and this year, we've taken off the table $120 billion of QM revenue per year. This is a wake-up call that this messaging is wrong. These people are not doing what is right on behalf of a very nascent and critical industry for America. There's only so much that Sachs can do, the White House can do. All these other people are kind of at the periphery. But if the people that are on the ground don't get their shit together, this is a national disaster. Just to give people a sense of where this is happening, almost all of these cancellations are Virginia and Indiana,

Starting point is 01:04:37 according to some just cursory research here. And there have been zero cancellations due to local opposition here in the great state of Texas, where we have over 150 gigawatts of data capacity requests. So if you want to do this, come to Texas, talk to Abbott, talk to Ted Cruz. You just CC them on your tweet, and they'll have you to the poker game, and they will green light it. Brad, before we move on, want to get your opinion on open source and how powerful it is and how powerful Apple Silicon is getting. I'm not sure how you factor this in at Altimeter into your thinking, but this seems to me to be a massive headwind against the two big bets you have. All of these open source models, we started running them picking up about 85% of our tokens

Starting point is 01:05:23 right now. And every startup I know is saying we are standing up our local models and we only use the top models, the paid ones, when we have jobs we can't do. So I'm just curious your thoughts on that. And you can add to that, the auto research project from Carpathie that came out this weekend for people who don't know, we now have a group of tinkerers who are setting up their open claws and now setting up a large line of models and now trying to train them with his auto research tool. This seems like a parallel track that could be material. I'm just curious if you're monitoring it at all. I mean, first, I would say that I am. very enthusiastic for open source.

Starting point is 01:06:02 We see it in widespread use everywhere. But here's the interesting thing. For the advanced companies, they're doing some planning with the frontier labs and then they're kind of doing the execution, if you will, with the open source models. So they're running an ensemble of model strategy. But here's why I think's more impressive.

Starting point is 01:06:21 We have incredible open source models nearly on the frontier. And notwithstanding that, we're seeing companies like Anthropic at five or six billion dollars of revenue in a single month, which is extraordinary. We've never seen anything like it in technology. And that's in the face, Jason, of all this open source usage. So what does it tell me?

Starting point is 01:06:44 It tells me that the Tam is dramatically bigger than any of us think that it is. And that, you know, when we look back on this period, you know, that will be the big takeaway. It's a takeaway with Uber, the takeaway with Google, the takeaway with Amazon. The Tam was way bigger. We've crossed an important threshold. Open source will be a part of it. But clearly the frontier labs can do well, even in the face of it. All right, a little housekeeping.

Starting point is 01:07:10 The All In Summit is coming. And liquidity is, I think it's sold out. We're about to sell out. We might have a couple tickets left. You can find both events at allin.com slash events and all-in summit tickets. if you want to get there quickly before they sell out September 13, 14th, and 15th in Los Angeles again. And for all the all-in listeners, we're launching a survey today. This is super important to take the all-in survey if you made it to this point in the podcast.

Starting point is 01:07:37 If you are an early true believer in the pod, if you're one of the all-in stands, we need you to fill out this survey, all-in.com.com slash survey. All-in.com slash survey. All right. Let's wrap up with this final story that went viral. the millionaire tax has hit Washington State. Howard Shultz, CEO, a longtime CEO of Starbucks, has bailed and he's gone to Miami. Surfside. He's in Surfside. He bought a condo in surfside. He pulled a Jayco. He pulled a Jayco. I think you mean a Saxi Pooh? Yeah, I was never a Starbucks liberal before I left the state of California. Listen, I don't know how many times I have to make this correction. I am a moderate. I literally voted four elections in a row for Republicans. People have asked me for the receipts, Pataki, Giuliani,

Starting point is 01:08:26 and Bloomberg. I literally, for almost a decade, voted exclusively Republican. Washington's millionaire tax passed this week. Here's what the tax is. People making more than $1 million a year will pay an extra 9.9% in tax starting in 2029. The budget center estimates the tax will impact 30,000 households, bring in another four billy for the state's. For the state's general fund. The funds are supposed to go towards public schools, higher education and health care. In a huge coincidence, on the same day, the new tax was passed. Howard Shultz, the billionaire, Starbucks, founder. Huge goals. Did you say? Yeah. Just unrelated stories. An unrelated story. Yes. Unrelated news.

Starting point is 01:09:12 He will be leaving Seattle after a 44-year run because he found out about these incredible Cuban sandwiches in Miami. There was an opportunity. There was an opportunity to buy a a $44 million condo and surfside. He couldn't pass it up. It just happened to be on the same day that they passed a millionaire tax. He had the Cuban sandwich at Le Senguiche, and he fell in love. Schultz has been getting crushed after saying when he ran for president that he would be willing to pay more taxes.

Starting point is 01:09:40 Bezos obviously left back in November of 2023. And people speculated maybe the 7% capital gains tax would have influenced that. who knows. So I guess, Chimov, what is the end game here? Because for these local politicians, they must have learned the lesson that people of means can move. They have the ability to buy new homes,

Starting point is 01:10:10 put their old homes on the market. They're very mobile. And they could even leave the United States and go to Singapore or Dubai or other locations in the world. why are they still enacting these and will they continue to still enact these until we get to 60, 70% tax rates and we just lose all of the creators and this becomes Anandian? I think that state politicians on the West Coast are very ineffective and not very smart. Nick, there's a tweet that was published. I think maybe it was an infographic that showed net migration rates of every single state for 2025. Washington is a few months behind California in trying to enact these stupid taxes. And the reason they're stupid is these kinds of things don't work at the state level.

Starting point is 01:11:01 And we know what it's already done in California because the Hoover Institution just published something this morning. And it's a complete indictment of what the billionaire tax was trying to do. And by the way, this billionaire tax is only polling right now at 25% of the votes it needs. maybe it'll find a way to get on the ballot. And then even then, it'll have an uphill climb to get voted in. But look at the destruction that it has done in California by just announcing it. The Hoover institution basically ran this Monte Carlo simulation. They ran 100,000 runs. And in 71% of those runs, it comes out with a negative NPV. And if you expected value it out, it's about a $25 billion dollar whole. They also found that they overcounted the number of billionaires in California. So that

Starting point is 01:11:50 number was wrong. They undercounted the amount of revenue that they pay. So that was wrong. And they overcounted the estimate of how much money that they would make. So they're not good at math. They're not good at math. So when you add it all up, they thought they were going to make 100. They're actually going to make 40. The people that left pay, you know, three to five billion dollars a year of taxes. It's going to create a $25 billion hole. you're going to have the middle class that's now going to have to foot this because this is net revenue that's not going to come into the budget. That's about 2,500 per middle class household. There's about 10 million in California. So that's what's happened just by making the threat.

Starting point is 01:12:31 Washington had a 23-hour debate and passed the law. So I suspect when you look back on this in 18 or 24 months, it'll be as bad or worse than California. These things don't make sense. The reason they don't make sense is that you are putting good money after bad. We all know that money that goes to the state governments are wasted. We just don't know how much. And so when you keep asking more, eventually the smart people say, enough's enough, I'm out of here. We might find out how much. I think Bari Weiss is on the case.

Starting point is 01:13:03 I don't know if you saw her do her CBS report this week. She's going hard for fraud. And until you get fraud out of the system, I don't think you have the moral high ground to raise taxes. I think that should be the message that all Americans send to politicians. That should be your campaign promise when you run. Okay. Hi, I'm Jason Caliganis, and I will get rid of fraud and lower your taxes. Look, you may have seen an even more severe tax was proposed at the federal level where Bernie Sanders and I think Roe Conna came out with their version of a national wealth tax where it wasn't just 5% once like in California.

Starting point is 01:13:38 It was 5% per year. For year. So in other words, in roughly 20 years, the federal government's sense. it's going to take all of your money. I mean, that's it, look, this is socialism. This is another way to get to the same endpoint, which is the government owns everything. They seize. Well, I mean, the seizure part of it, I think, is the nuanced point we have to get across, which is if you earned it and paid your taxes already, it's yours. State can just decide, you know what, we didn't take enough 10 years ago. We need to go seize that. Hey, when you sold

Starting point is 01:14:06 Yammer, we need to take enough. We need to take it now. Raise your hand if you believe the things you own are better off being owned by Bernie Sanders and Roe Conna. Raise your hand if that's what you believe. I mean, you'd have to be an idiot to believe that. Roe gotta go. I'll tell you, the last time we saw these proposals of asset siegers was during the gilded age, you know, 1870 to 1920. You know, then it was Carnegie and Rockefeller. You know, what's interesting, I went back and looked at it, there were actually, like, it was actual warfare. We had hundreds of people killed in clashes, you know, during the Great railroad strike, the Pullman strike, et cetera. And it was all over this. And so I think shame on the

Starting point is 01:14:47 politicians that are fanning the flames of class warfare. We all need to bring the temperature down. There are fair debates on whether states have enough resources to fulfill their obligation to citizens. There are fair debates about fraud. All has to be taken on. But I think it's interesting in the state of California, right? I think the teachers union is against the billionaires tax because they know it's going to lead to less dollars for education for the state of California. Matt Mayhan is running for governor is against the tax, the current sitting governor, Democrat against the tax, right? They all need to step up and explain not just that they're against the tax, but you're either on the side of business and entrepreneurs and creativity

Starting point is 01:15:29 and moving the state forward and growing the economy or you're against it. And that's what's at stake here. And fortunately, the outcome of the battle, you know, during the gilded age was that America didn't abandon entrepreneurialism. We didn't abandon capitalism like Europe did. And now we leaned into it. Now we played it out. One point on that. So you mentioned that some of the unions in California are opposed to this asset seizure tax. That's only because they weren't cut in on it. Right. So there's already rumors that the California Teachers Association is working on their own version of a billionaire asset seizure for not this selection cycle, but for the next one. And next time they're going to have their ducks in a row and they're going to have all the

Starting point is 01:16:13 pigs at the trough and all the unions going to get together because the SEIU, UHW, they did this on their own. So again, they didn't allow all the other groups to wet their beak. So I think that, unfortunately, I think that's going to be corrected. If this one doesn't pass, they'll correct it for 28, and it's more likely to pass because they're all going to do it. And the other thing is that I think that by 28, this national wealth tax will just be a standard part of the Democratic platform. It's going to be table stakes. Yeah, it's stable stakes. I think that, you know, the Bernie Sanders-Rocana position will be the position of the Democratic Party. And you even see Gavin Newsom creating wiggle room for himself to embrace this position. If you look closely at his statements

Starting point is 01:16:55 formally opposing the BTA in California, what he says is that a state can't do this by themselves because they got 49 other states to compete with. So what he's saying is that, you know, look, California is operating in a comparative environment. One state can't do it. And then he's leaving the other part elliptical, which is, well, the federal government needs to do this. And I think that you can expect him to embrace that position by 2028. There is a way out here from the socialist movement. It's very simple. If you think from first principles, what does an American want? What is an American family want? What are mothers and fathers in this country want? They want to educate their kids. They want to be able to own a nice home. They want to have decent health care. They want to have healthy food. It's a very small subset of issues. And AI is uniquely positioned to solve a lot of these problems. And entrepreneurs can come in and take these highly regulated industries if we're allowed. Two, participate in them. Education. We have to break this accreditation, you know, cartel. And then housing, we have to break these regulations like the great state of Texas, Nevada, and Florida have.

Starting point is 01:18:06 And then, you know, when it comes to health care, this is where AI could have a tremendous impact. And entrepreneurs can have a tremendous impact in lowering the cost of health care and letting people solve for that with their own, you know, health care, you know, self-led health care. These are the problems. If you solve for these problems, people's homes, people's health, people's education of their kids, we're going to solve these problems, and we don't need to go to socialism and seize people's assets. That's what entrepreneurs should be doing. That's what entrepreneurs should be working on. And that's what the government can help. That's where Trump's uniquely qualified.

Starting point is 01:18:38 He is the regulatory breaker. He got nuclear back on the agenda. No other president had gotten nuclear back on the agenda for America. He can get housing back on the agenda. We have to break those things and not start foreign wars, my earlier point, and start creating houses for Americans. Another amazing episode of the All In podcast, gentlemen. So, I appreciate your time. You always give yourself the last word, Jekyll.

Starting point is 01:19:01 Well, I go last. If you'd like, you can moderate and I'll go first. But I always go less. But you can give me a round of applause or you can throw a tomato. Go ahead, Sacks. It doesn't matter. It's all good. It's all good. Go for it.

Starting point is 01:19:13 All right, everybody. Another amazing episode of the All-In Podcast. Thank you, Bestie. Brad for joining this. Thank you, Bestie Brad. Love you, boys. Bye-bye. Rain Man, David Sack.

Starting point is 01:19:28 Open source it to the fans, and they've just gone crazy with it. Love you, West. I'm just having one big huge origin because they're all just just like this sexual tension, but they just need to release them out. Benchies are back.

All-In with Chamath, Jason, Sacks & Friedberg - Iran War, Oil Shock, Off Ramps, AI's Revenue Explosion and PR Nightmare

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