TBPN - DeepSeek, Stargate Update, Bees Do Enjoy Honey, Golden Retriever Maxxing, Bring on the Trilly

Episode Date: January 25, 2025

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Oh, we're live. Welcome to Technology Brothers, the most profitable podcast in the world. Today we're doing a deep dive on Deep Seek, the new AI model coming out of China. They say they trained it for just $500, less than this cash stack. But we'll dig into that because it's a hot topic. A lot of people are debating about this. But we wanted to take you back to May of last year when Deep Seek actually launched. It's in the news because they launched a new model, but the company's been out there open sourcing LLMs for something like six months now.

And it's shaking up the timeline. The timelines in turmoil over the time. Timelines and turmoil. Yeah. And I'll go out on a limb to say this is China's next attempt at a DJI TikTok type products where, hey, let's basically sell this product in America for way less than a cost. give it away for free. Try to get a bunch of important companies using it or consumers dependent on it.

And then it's a little bit of spyware. Yeah, the data. There's all the same geopolitical considerations that we walk through during the data. And there's the incentive for them. You know, if it is, you know, you can basically assume that any important Chinese company is, you know, backed by the state

to some degree, even if they're not, they're sort of, you know, got a gun to their head the entire time they're operating it. So we're excited to get into this one, you know, as our mission at Technology Brothers is to, you know, entertain, cover some news and take down CCP fronts. So exactly. Let's get into it. So let's kick it off with a fantastic analysis by Dylan Patel in semi-analysis. This is from May 7th of 2024.

And it's interesting. And Dylan is, for those that don't know, he's, he's. He's the Tom Brady of semiconductor analysis. 100%. He's the kind of guy that gets invited on BG Square to T. Wardle-old dogs, you know, how the semis are barking these things. Yeah, I mean, it's a fantastic. It's essentially substack subscription model $500 a year, but then he also does a ton of consulting.

And what's interesting is that he doesn't just read the 10Ks or anything. Like he will task satellites to, like, figure out where they're building stuff. and like really collect data. And then he sells. Doing the same thing that hedge funds are doing. Exactly. Yeah. It's more.

Yeah. So I think semi-analysis is actually like a pretty large company now with a number of analysts. And he's not going the kind of like solo creator route. Um, he's very much focused on building like a, a research organization. But he's also just hilarious on podcasts, like very free flowing, just says whatever he wants, like totally uses very online lingo too in these very professional settings, which is great. I'm a big fan.

I'm a big fan. So the title of this is, Open AI is doomed to Microsoft. And it's kind of walking through a bull and bare case for Open AI, given all the different dynamics and different cluster buildouts that were happening mid last year. And it starts by saying, all eyes are on how long the profitless spending on AI continues. H100 rental pricing is falling every month. This was a big trend last year. In 2023, Chat, UPT was blowing. up and everyone was like, I will do anything if someone can get me a rack of A100s, a lot of VC

Fingers, right? Exactly. The Adromeda, um, but in 2024, rental pricing went down as fewer firms realized that, hey, maybe they don't want to be in the pre-training game. They just want to fine-tune or they just want to build, they want to be appers essentially. And then also the really, really big firms might just be building super clusters that didn't even affect the rental pricing market. And so availability is growing quickly for medium-sized clusters at fair pricing. Despite this, it's clear that demand dynamics are still strong, while the big tech firms are still the largest buyers. There is an increasingly diverse roster of buyers around the world still increasing GPU purchasing sequentially. Most of the exuberance isn't due to any short, any sort of revenue growth, but rather due to the rush to build ever larger models based on dreams about future business.

The clear target that most have in mind is matching open AI and even surpassing them. Today, many firms are within spitting distance of OpenAI's latest GPT4 in chatbot ELO. And in some ways, and in some ways such as context length and video modalities, some firms are already ahead. So context like that's the Google thing. Yeah. Drop an entire book. Drop an entire book in Gemini. Drop the entire banger archive.

Exactly. And so there's been a bunch of ways to differentiate. Even if you just get close to GPT4, you do a similar run. and then you build a different tool around it or you find a tune or you build different like you know unhobbling so this one uses the web this one it can process PDFs this one can you don't really hear about

mistrawl much anymore no was that because the French don't have a word for entrepreneur I like that oh yeah it's the it's the Ryan Peterson they were trying to community note him on that

but I don't think they got it through it's great it's probably a war so Gemini 2 Ultra is rumored to surpass GPT4 to turbo in every way. Furthermore, Meta's Lama 3405B is also going to match GPT4 while being open source, meaning GPT4 class intelligence will be available to anyone who can rent an H100 server. But he goes on to mention the Phoenix from the east. It's not just the big tech firms that have rapidly caught up yesterday. Real quick, one kind of interesting comparison is it feels like the models have fast approached being almost like the sports car market, where it's like

Porsche can be like, well, we have better handling. And McClare can be like, well, we're faster in a straight line. Yeah, exactly. And Tesla's like, well, I'm fastest in the straight line. Yep, yep, yeah. So they're all just sort of competing, doing a lot of things pretty well. Yep. And then competing on these edge cases that almost the average and the reason that

chat GPT has stayed very dominant from a user standpoint is because they have the consumer mind share. The average person is not like prompt engineering. They don't care about the context window. they're just almost using it like a Google that can do things on your behalf. Yeah, and this was one of the big bear cases for these LLM companies after ChatGPT dropped was like, well, is everyone just going to train these and it's going to be completely commoditized? But then the company's kind of figured out, well, if GROC is a little bit less PC, that's an edge

and if Gemini has a bigger context window. But there's some fascinating stuff in here about how the different big tech companies are able to integrate their models and actually bootstrapped to much larger user bases, which results in getting more data from users, which is very interesting. But he highlights DeepSeek, which launched in May of 2024. It says China's DeepSeek open-sourced a new model that is both cheaper to run than Meta's Lama 370B and better.

So this was not as big of news because it wasn't truly better than GPT4. So it kind of slid under the radar, but it was cheap on inference, meaning you just needed less compute to actually run it. And this is, to be clear, the same thing that China has done historically with DJI, where DJI is selling products without any profit margin at all, potentially even losing money on a unit basis because they just want to get the product out into the world, getting used, getting consumed.

Yep. And so, and not too dissimilar in my view to TikTok faking views. right because they're like well if users come on here they post something they get a thousand views they're not going to want to go on instagram and post the same content and get 200 views right yeah yeah and and and and uh i mean the chinese censorship is already a thing it says uh while the model is more tuned for chinese language queries because that's the tokenizer in the training data set and government censorship of certain ideas it it does happen to win in the universal languages of code and don't even eval and mask don't ask deep seek about the wiggers your laptop will

explode are not and so deep seat claims that a single node of 8x h 800 GPUs can achieve more than 50,000 decode tokens per second per second peak throughput at the quoted API pricing of output token alone that is $50 of revenue per node per hour the cost for an for an 8X H00 H800 node in China is about $15 an hour So assuming perfect utilization, deep see can make as much as $35 an hour per server or up to 70% gross margins.

This is what we were talking about yesterday. Yeah. You know, as you make these models more inference optimal, you get higher margins. And that's a lot of what Deepseek has been kind of lauded for. And it even says even more interesting is the novel architecture Deepseek has brought to market. they did not just copy what Western firms did. There's a lot of stuff that they did copy and there's a lot of data that they probably stole and there's a lot of weird political things where they maybe broke rules and laws.

But they did create some fundamental innovations technically on the algorithm side. And I think that this whole story is going to be complex because people are going to want to take one side or the other and just say, oh, it's a complete copycat. They're lying about everything. There's nothing interesting here. Or it's amazing. It's the biggest breakthrough. And they need to boil it down to a single tweet.

And that's why I'm glad we have an hour to talk about. There's two. It's such an interesting thing where they're coming out with an open source product that they are undercutting the entire market on. And but it's this, it's hard to be, it's hard to say, oh, you know, they're simultaneously putting everything out there while there's clearly stuff happening behind the scenes that we don't really know about. Yeah. And so we'll get into a little bit of the background, but they do seem pretty cracked. There are brand new innovations in mixture of experts, R-O-P-E and attention. Their model has more than 160 experts with six riding.

Oh, no. The phone fell. Too much Chinese. Oh, it's too many notifications. Yeah, yeah, yeah. Well, back to the show. Furthermore, Deep Seek implemented a novel multi-head latent attention mechanism, which they claim has better scaling than other forms of attention while also being more accurate.

They trained on 8.1 trillion tokens. Deepseek V2 was able to achieve incredible training. efficiency with better model performance than other models at one-fifth, the compute of meta's Lama 370B. And so for those keeping track, deep seek V2 training required 120th as much energy essentially, 120th the flops of GPT4 while not being far off in performance. And so then he goes on to talk about, you know, is Microsoft committed to open AI? There's a big discussion there.

That's kind of old news. And that is, I mean, the new news there is that. that Sotia is, you know, sub-tweeting Sam in Elon's comments. So that shows a little bit of, you know, maybe the marriage isn't perfect under the hood. And this is something that he does bring up throughout the piece and throughout a lot of these analyses, which we talked about. It really, he really was early to this idea of Satcha saying, I'm good for my 80 billion. And what does that really mean? Well, it's Azure workloads.

And this is something that happens a lot where Zuck will say, oh, yeah, I just bought 200,000. NVIDIA GPUs and then what we dig into it and you're like, oh, well, like a half of that is going to recommendation algorithms for reels. And, and that's great. Like, it's, it's cool. They have the infrastructure, but it's not all LLM, AGI race training, which is what people are really focused on. So I'm moving on to page seven is distribution and integration king with Deepseek and Lama 3405B coming to the open source. There is very little reason. Did you want to, before that, did you want to cover Microsoft trying to reduce their I think we kind of covered that in the sense that

you know like the closer here is that many firms use open AI's technology through Azure more than 65% of Fortune 500 now use Azure OpenAI service it's noteworthy that this is not directly through OpenAI Open AI can lose significant business without Google DeepMind or Amazon Anthropic gaining share simply by Microsoft pushing its own model their own model instead and so he was just kind of commenting in in this piece about the like the temperature in the room with regard to the Microsoft and opening ideal at the time.

But that story has evolved so much. We've covered it so much. I don't think we need to dig into that. I'd rather focus on this distribution and integration as king section. With deep, with deep seek and Lama coming to the open source, there's very little reason for enterprises not to host their own model. Zuckerberg's strategy of using open source models to slow down competition,

commercial, So I was like, why is he open sourcing this thing? Like, this is very expensive. And it was all about getting people to come work at meta on this cool project. And then also curb more companies from doing buildouts because they're like, what's the point? And this is probably the pressure that we felt on Aidan Gomez cohere. Right. And maybe even a mistrawl where it's like, well, if your whole thing is like the open source or like you're like not the true frontier compounder winner, well, you're just never going to be.

able to make any money because the open source one's going to come out. Yeah, it's going to be a little bit behind GPT5 or GPT4, but if Zuck keeps open sourcing it, you're just never going to make any money. And so it's going to be really hard. So he's keeping the pressure on. And then also because of Databricks, which we've talked about before, Databricks lets you fine tune really easily. And so it's no longer, like fine tuning is no longer a monumental task. And so one of open AI's advantages is that they have been ahead in collecting data, specifically usage data. And that happens when you, uh, sometimes when you issue a query to GPT for chat GPT, it'll say, hey, we actually give you two, which one do you like more?

And then you can A, B, or every post will have a thumbs up, thumbs down. And then also they will, they'll be able to just see, okay, did you follow up with another query? So they're collecting lots of data and they have 100, 100 million users. But he says only a quarter of Americans have ever even tried chat GPT and most don't continue to use it. Most future consumer LLM usage will go through existing platforms, Google, Instagram, WhatsApp, Facebook, iPhone.

Android. While meta hasn't found out how to monetize it, their meta AI powered by Lama 370B is available across Facebook, WhatsApp, and Instagram. The announced rollout has been extended to 14 countries, including the U.S. So they've hit 1.1 billion in population, but they have 3.2 billion daily active users. And so they're scaling up. And when they do, they get all that data from and then they can use that to fine tune the next version of the model. Mark, imagine being Mark. You're already halfway through your TAM. Yeah. And you're trying to get these incremental users

that just don't have internet. They're like... Well, they were focused on that for a while. They were like, we're going to be satellite to... Yeah, yeah. It is interesting. Meta could have probably almost launched a Starlink competitor with how much they spent on the Metaverse.

Oh, yeah. And then actually deliver the Metaverse and the real Metaverse is just Reels. They had a project for that, Project Loon at Google, which was Internet via balloon, via Blimp, essentially. That's cool. And I believe in India, there's a free Facebook, like, phone plan that you can get the internet and you only get Facebook. So you kind of have to do everything, or something like that. Yeah.

You basically have to do everything through Facebook, but it does bring more users online. And so all of that is, all of that is feeding both fine-tuning data on the LLM and then also just user data and preference data that goes into the system. They're all saying if Apple was more creative, would they not have just sent up their own satellite network? and just said you now are going to get all your... Yeah, data from us and you don't need Verizon anymore. Yeah. They've been cool. Probably more reliable.

And so META's deployment probably hurts Google search more than Bing or perplexity ever well because people will just wind up searching in Facebook and Instagram. To serve 3 billion people, you clearly need to have a small and efficient model to bring the cost of inference down, especially when you're not making money on it. You're not charging $20 or $20 a month or $200 a month. Either META has made the financial math work or it is prepared to invest heavily to execute a land ground in the consumer AI space. Either spelled disaster for incumbents. Yeah, and that's the difference between Apple and meta, where meta is still on founder mode,

Apple, Google, or in manager mode. And they're willing to invest. Google obviously has to show their investors and the markets that they're investing and serious about winning AI race. Yeah. But it doesn't actually look that ambitious in practice. Well, speaking of ambition at potentially non-founder mode companies, the other argument to be made is if compute and capital are king, in that case, Google is king given their hyper-aggressive TPU build-out pace. So Google has created their own chip to rival the GPU called the TPU, the tensor processing unit. It's fabbed at TSM, I believe. But it's designed specifically just for AI workloads. So you can't even run video games on it, essentially.

It's just for this. Much like the advanced. No, 360, no scope. Yeah, yeah, much like the advanced Nvidia stuff. But Google is investing super heavily and definitely takes seriously the CAPEX. And so ironically, Google now has focus and is directing all large-scale training efforts into one combined Google DeepMind team while Microsoft is starting to lose focus by directing resources to their own internal models that compete with Open AI.

And so Google, they actually, DeepMind used to be a separate company. It was acquired Demisessusus. and that team, and they were working kind of separately. They finally, there was Google Brain and DeepMind, and they brought them all together because they were like, the CAPEX is so intense. You guys have to work on one big model instead of two smaller ones. And so this is one of the biggest risk for Open AI

is that the capital game is all that matters. If that's the case, the tech company that invests the most is the winner. And this is why we're seeing Project Stargate, which we'll talk about later. But, you know, what capital does matter, open AI needs to be in a place where they can have access to the absolute largest cluster. Yeah, which is why it's amazing that Open AI has been able to do what they've done. Because Sam Altman, I promise you, does not care about some other startup that raised $30 million.

He cares about these players that can invest $30 billion off their own balance sheet to compete with him and have distribution. Yep. So it's not, it's like the most harrowing task, to be honest. where you take one of the best fundraisers ever in the world, Sam Altman. But you've given this impossible task of saying go compete with people who have balance sheets that dwarf your total capital raised. Yeah. And so, I mean, it really is insane.

I mean, everyone's obviously still buying a ton of Nvidia, but Microsoft has the least custom AI silicon deployed to their cloud, but they're working on it. Google has the TPU, which is obviously the biggest, but meta and Amazon are also ramping internal silicon. And even Apple has Apple silicon, which is only for the phones and the laptops now, but clearly they have internal capabilities to develop custom silicon. And so you could see them developing their own hardware as well. Open AI trained GPT4 in 2022. Since then, they have been entirely focused on the next step up, experimenting with new architecture, data, et cetera. Open AI has a tremendous first mover advantage. And they have been solidly targeting models, an order of magnitude

larger than everyone else for a while now. So they have the first mover advantage, but every time they ship something new, people dissect it and try to implement many of those learnings. Yeah, yeah, yeah. But they seem to just be like, you know, a little bit farther

on the treadmill, like just. Yeah, yeah, they're constantly ahead, but then they're by nature of the product, they have to expose some amount of how it actually works. Oh, yeah. In some of these, it's just like, if there's a good idea like voice or upload a

PDF. It's like, okay, that's like a week. Reuters are easy, but also the machine how the model works, right? Yeah, totally. They try and hide that, but if there's just a few secrets, it's like one you know, East Bay rationalist party where everyone's talking and all this thing. No, it's so hard

because people and startups like to, like to yap, right? There's no, I'm sure they all have like really intense NDAs and things like that, but it's not like it's a government, even stuff leaks out of the government, right?

Yeah, totally. It's not as secure as that. And so he kind of closes with this, the midwit meme of, on the left. And this is why he's goaded. Yeah. Yeah. Selling these memes to hedge funds for probably like a million a year subscription. So as far as the capital game is concerned, Sam Altman is flying around the world,

winning the favor of many of the richest people in the world for a reason. They will raise more money than anyone else is even imagining to spend on a single model after they showed the world what they've been cooking the last two years. The real risk for big tech companies is that they do not show any meaningful gains in revenue, but they have to keep accelerating their spending to keep up with Open AI or maintain market share in their monopoly Google search. This would cause Data Center CapEx party to keep going and consequently their margins to compress. So it's interesting because there's almost like this expectation that it's like,

of course Open AI loses money. Like they just became like a real for profit. It's a startup. Sam's at the helm. and he's dealing with Masa. It's this crazy thing. They're going for API. If you're Google, it's like, you're a shareholder.

You're like, wait, why are your margins compressing? Like, is this really that real? Like, why don't you just partner with them? Like, is this important? Well, it's hard because Google needs to show that they're competitive with OpenAI. But at the same time, if their margin, everybody's, a lot of people have been short Google. Yep. Because they're saying, okay, well, these models are a threat to search.

Yep. And so if your margins are compressing because you're spending more while people, are starting to use competitive products for search. It's really hard for Sundar to go up at a quarterly and be like, yeah, we're not really worried about this model stuff. Yeah, yeah, yeah. He kind of has to put on a brave face for markets. But you know that behind the scenes, he's worried about his job.

Yep. Probably the number one candidate would be one of the founders. Yeah. But and and it's this weird, it's this weird bargain that actually kind of drives bubble behavior where if you underinvest and AI is real, you're screwed. If you overinvest and AI is real, you're great. If you overinvest and AI isn't real, you still have a lot of assets. It's still valuable.

Like there was a lot of dark fiber that wound up getting used later on. So like the risk reward calculation is like super weighted to overinvestment right now. So let's move on to the, I don't know if it was an interview or just. just some coverage of China's new face of AI deep seek founder, Liang Wen Fang. Wen Fang. This guy, Winfong. This guy is, he's the next Frank Wang. The next Frank Wang.

The founder of DJI were learning. I mean, very similar stories. We'll dig into this, but this is from the, uh, uh, the way, he looks incredibly good for 40. He looks like he's like 22. He does look 22. He's 40. Whoa. Okay.

Yeah. Which again, you know, we don't know if anything they say is rear. So he might be like Bill Minitis. Oh, yeah. Yeah. Be like Bill Minitis. A little age gambit going on. Yeah.

A lot of people in Hollywood doing that. Yeah, yeah. Change of the ages. So Deepseek is in the news again because they launched R1, which is their reasoning model that competes with 01. And there's a post explaining who this guy is and where Deepseek came from that we're going to read through now. So the founder of artificial intelligence firm Deepseek touted as 2025's biggest dark horse in the open source large language model arena emerged as the industry's new face in China at a symposium,

Hopin, hosted by the premiere in Beijing on Monday. Liang Wenfong 40 took part in the meeting where a select group of industry experts in the fields of technology, education science, etc., offered their opinions and suggestions, according to the news agency. And so last December, they made waves in the global. AI industry after benchmark test showed that it's DeepSeek version 3 LLM, which again is not the reasoning model. This is more just like a GPT4 competitor, which was built on a

shoestring budget, which we'll discuss if that's real or not. I have to put that in the truth zone. Yeah. Outperformed rival models developed with more resources by the likes of meta platforms and chat GPT creator, OpenAI. Lee called on the economy's new growth drivers.

Because we don't have images pulled up here. is wearing a suit here, which we love to see. We love to see it. We got to give him some credit. He looks very young for his age. He's wearing a suit. So we're going to really put him in the truth sound hard in a bit. And so recently, Beijing made AI a national priority amid a heightened tech war between the United States and China, the world's two largest economies. China's AI market is expected to be worth $765 billion U.S. dollars by 2030, according to state-backed investment vehicle China International Capital Corp. In the age of AI geopolitics, tech companies inevitably would have tighter connections with

governments than before, says Winston Ma, a New York University law professor. And so apart from being a regulator, governments could be a sovereign investor or a cross-border deal mediator. And we're already seeing that with the Chips Act. And so investment is going to be massive, something like over a trillion dollars invested over the next six years in China's AI industry. And that's funny that they're, that they're, that they're, saying that they're going to invest $1.4 trillion because that's three times what

Project Stargate is. So, you know, maybe this is... Well, in Stargate, to be clear, they've marketed as a infrastructure product for one company. Yeah. It was very nicely positioned as, oh, this is for America. Yeah. It was pretty brilliant on Open AI's behalf. But no, this, we don't have a lot of details, but... Yep. And we should try to go through the girly piece because he, he, like, gave a threat of, here's all the questions I have about Open AI's project Stargate. But if this is 1.4 trillion total is what they're saying over six years, if Mosa and Sam managed to do 500, which not very many people actually believe that,

you know, that's just one company. So presumably you have Open A lot or so you have Microsoft and Google and a ton of other big players. Not to mention early stage investing. So I imagine we could, we can and should dwarf that number just to make a statement. Completely disagree. we got to size it up.

If they're doing $1.4 trillion, we got to do 10 times. That's what I'm saying. We should dwarf their 1.4. Oh, yeah, perfect. Okay, great. It was the un-American to not do... I was about to grab me by the collar

and start just wailing on you. If you started talking like that. Yeah, that would be very un-American. So Hailing, let's go into the background of the founders. This actually went viral just as a screenshot because it's so interesting. So this is about the founder of Deep Seek. Hailing from southern Guangdong province, Leong went to study...

electronics, information and computer vision, a field of AI that trains computers to capture and interpret information from images and video data at Jijong University and Hongzhou, along with a group of university of classmates, he started exploring how AI can be used to automate stock investments. Then he becomes one of the co-founders of a great named firm called High Flyer Quant. That's my quant. That's my quant. Which uses AI to manage one of the largest quantitative hedge funds in mainland China. So this is the stuff that you're seeing at Jane Street and Citadel now and maybe jump trading too.

And a lot of those firms have moved to AI-driven investment strategies, but also because they're doing high-frequency trading, they operate at a very low level. So a lot of them, I mean, Jane Street writes everything at O Camel, which is like a programming language, like machine language. It's like, like, Python is like three levels of abstraction away from them. so they can very fine-tune the speed at which these algorithms run, and everything can be proven, like, mathematically. So these are just like some of the best programmers in the world. And High Flyer Quant grew its asset under management more than 10-fold over a four-year span from $1 billion in 2016 to more than $10 billion in 2019,

according to local media reports and information from the company's website. And so it seems like they've really been on a run. Over the years, High-Flyer Quant spent a large portion of profits on A, to build a leading AI infrastructure and conduct large-scale research. The company said in a statement April of 2023. Months later, High Flyer Quant spun off DeepSeek, which launched a series of AI models used by developers to build third-party applications by the startup to create its own chatbot. High Flyer Quant managed to buy more than 10,000 Nvidia graphics processing units before the

U.S. government imposed the chip bands, according to a local media outlet. On its website, the hedge fund manager said it spent 200 million yuan. and $1 billion in 2020 and 2021, respectively, to build its fire flyer series of AI computing clusters. Then a senior research scientist wrote that DeepSeek has emerged as this year's biggest dark horse. And so they've been investing a ton, and everyone is talking about how cracked their team.

And yeah, they very much are trying to spread the narrative that this company just randomly popped up, spent five million bucks and had a model that was competitive with Open AI. And it can't be overstated how much that is not the truth, right? This is a team that had been building. And we'll get into this, but there's a theory that they got a call from the US government or from the Chinese government and basically said, like, look, we understand that you're making tons of money as a quant fund, but you have the best engineers.

Like, it is your duty to step up and build AGI for us. And go compete with. And go compete. And you have to do that. let's skip the interview because it's a little dense but if you flip that next page over

you'll see China leads the world in positive AI sentiment and I thought this was kind of interesting so this is from an Ipsos survey and according to a new Ipsos poll China is the most optimistic about AI's ability to create jobs

up there with Indonesia, Thailand, Turkey, Malaysia and India the 77% 37% of Chinese agreeing with the statement, AI will lead to many new jobs created in my country. Contrasts pretty dramatically with America's 36%. Very, very interesting. Because, yeah, in America, like, the consensus view is definitely,

like, AI is going to destroy. Yeah, look at Saudi yesterday. He's like, oh, if you're a lawyer or this or that, why would I ever, you know, he had a very negative view. I mean, it's probably a reflection of the fact that, like, America is mostly a service economy, which is, much more automatable by AI and LLMs versus if you're a manufacturing driven economy, then, yeah, it might be more important to manufacture than ever.

And it's not like they have some massive professional services, you know, economy going there. So, interesting. Anyway, Aida Pi sums this up nicely in a very long post that I think we should go through. And then we'll get to some timeline on the... What's Adipai's backstory? I see his post, but I never actually looked into it. I don't know. I think anonymous poster for a while, kind of AI insider slight, you know, very dedicated

to the posting. Yeah. Very focused on like what will actually go viral. I've seen some like really. The kind of guy who sees Tiffany's payouts and punches the wall. Sure. For sure. It's like that's not real.

But I think at one point he had a podcast with Eric Tornberg on AI or something. Maybe it was like a solo show anonymous. but now I think he might have gotten like lightly doxed and kind of decided to put his face and full name up there. Yeah. Perkosh. Yeah. But he says, Deep Seek is not a side project, which is the narrative that was going on. Oh, they just like did this for fun on the side. They're so cracked.

A lot of people, a lot of people like to call things. Yeah. And it is weird because like it does appear that they are extremely cracked and like insanely like these are really great engineers who are creating technical breakthroughs. But at the same time, this was clearly like a serious project. At the same time, employees are not lying when they say it is. The story they are telling is myth-making in the same vein as Silicon Valley. We want to make the world a better place. But at the same time, make billions of dollars.

The team obviously had access to more than 10,000 GPUs. According to the Scale AI CEO, it was around 50,000. And that's as of today, the Scale AI this morning shared. Alex was saying, hey, they're totally lying, basically. Yeah, yeah. And the reason that they're lying is because there are very strict export controls on GPU. use right now. And so they legally should not, as one organization, have access. Yeah, this is the situation, like, this is the equivalent to a bunch of terrorists driving the Toyota high lux.

And everybody's like, Toyota, how did you get, how did these terrorists buy 400 Toyota high luxes? And Toyota's like, oh, I don't, I actually don't know. And it's like, yeah, that's enough volume that you probably could figure out, hey, how did these terrorists? And And then that's exactly how it with the DJI drones. Like, oh, if there's thousands of them in Ukraine. Yeah. And so, and so I don't think this has happened yet, but Jensen should get pressured to explain how did these 50,000 GPUs? Land there just land in mainland China.

Yep. Yeah. Because it's not a small number. Yeah. And that's a whole. And yeah, there's haven't, hasn't, uh, Nvidia adjusted some of their chips in order to sell them into China too? Yes. So there's the H100, which is the current top of the line AI training chip in America.

And then every time they, they, Nvidia launches a new chip. So the next one's Blackwell. The previous one was A100. They also create one that's like slightly nerfed in order to not trigger the chip bands and the export controls, which a lot of people are really frustrated by because, of course, there's so much demand for GPUs and line time at TSM, a lot of people would say, hey, InVity, you're an American company. Just don't even worry about that, making that Nerf chip and wasting any manufacturing capacity on that.

Instead, spend 100% of your manufacturing capacity on the chip that, yeah, it can't get exported, but we're going to buy it in America. Like Zuck wants it and Elon wants it and you will sell 100% of your capacity and your stock will moon. You don't need to do this, but I think the argument is like, it's a weird. situation because so many people in America that would be the ones to say to Jensen, like cut this out, have so much. Yeah.

Yeah. That they're incentivized to just kind of let it rip. Totally. It's just kind of. Yeah. You're like, ah, we'll let this one slide. You're making more money under the table maybe. So deep seek feels more like skunk works, perhaps a necessary one as the core quant business

became less feasible regulatoryly. It's like Lockheed setting up a separate small team to compete with SpaceX because the main United Launch Alliance was not going to work out. It's also very hard to track costs in China because the regional government absorbed so much cost. Early Bitcoin miners had access to free power because government's built power plants to nowhere and miners were willing to cite next to them. And so to be clear, there's a very real scenario where Deep Seek can authentically say we only spent $5 million on this model. Exactly. But the local government was like, we'll spend $5 billion. Exactly.

Yeah. Like that's not out of the question. Yeah, it's interesting. The power is just a thousand times cheaper over here. Yeah, yeah. And it's very, it's very common. So in the Middle East, I was in, I was in the Gulf at one point with a portfolio company that was getting courted to set up manufacturing over there. And the deal on the table was basically you don't pay for any power for the next five years. Yeah. And so that's. And that was for a foreign business to come into that area. Imagine the kind of incentives that China wants to offer of being like, hey, we have these 10 coal power plants. I mean, the three gorgeous dam is like, it's a massive dam is one of the biggest power generation facilities, I think, in the world, maybe the most. Here's another example. Alibaba was able to get regional governments to absorb warehouse construction costs on their balance sheets rather than directly pay for it. and looked extremely asset light and softwarey when it went public. This is why American investors, this is, wow, Ben.

Ben just played a video on his phone in the middle of the episode. Really phoning it in, Ben. The podcast is falling apart. But this is why American investors. We're going to have to replace them with a subsidized Chinese labor. Producer Ben, China, Ben Wang. Yeah. The, this is why American investors always get hosed when they invest in, in, in Chinese companies, basically, because China had a different approach.

It also happens internationally. I was working at a venture capital firm that was investing in, uh, internationally in like emerging markets. So they do like, uh, clean tech in like Africa and India and stuff. And this was when the Belt and Road initiative was going on. Yeah. And I hate that initiative. I hate that initiative. And I read, do you remember CableGate, the leaks that, it was like a WikiLeaks project where they seized all these like cables between different like state department embassies and stuff. The cases would go back and forth and they leaked them. And, you know, it became like kind of a story on like, is the government doing something wrong in this country? But like it was a, it was a very interesting trove of information if you just searched through to find just like how is it?

what is it like doing business as an American in Kenya? You know? Yeah. Because the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, you know, here's what, here's what, here's what's happening on the ground. And one of the things that they, they, they found was that, um, the, when, when, when, when, when, when, when an American company would come in and say, hey, we want to do business. Like, like, like, like, oh, you, you, you, you, you, you, you need some infrastructure built. Like, like, we're happy to help you. Uh, there would be a bidding process between, uh, America and China.

and the feeling was. was that the that the the the the American company was its own entity and the Chinese company was backed by the full force of the Chinese government and would and would basically have an unlimited yeah and so when people when people complain in the US that Tesla gets these subsidies in the form of EV tax credits and rebates that is happening on steroids and thousand X in China where the because the CCP the government yeah and the economy are so intertwined. The CCP is almost a kingmaker

where they can be like, okay, you're our horse, you know, we're going to back up the truck. And you know, the company gets to skim some profits still, but ultimately they're being, you know, this is king making process. Yeah. And so

Adipai kind of closes with it's perfectly possible for most of the cost to be parked in a balance sheet outside of the core business, perhaps as some form of tech data center construction incentive. It's also possible. No one accepts, no one except the founder knows all the financial arrangements. Some of these can be absolutely insane handshake deals which get resolved by reputation alone. Yeah, tying this back to DJI. Yeah. Same exact thing. They claim that they got

off the ground with $90,000. But then they also claim that they were selling their products at the hard cost to make them for years. And so how does that work? It just doesn't make. Doesn't make sense. So he says, this much is clear. The model is really, really good on par with Open AI release from two months ago.

Having said that, unreleased models from Open AI and Anthropic are probably better. The research agenda is still being set by the U.S. firms. This model was a fast follow on the 01 release. They are working very fast

as they are catching up sooner than expected. They are not copying or cheating. This isn't industrial espionage at most its reverse engineering. I would caveat that by saying China is infamous for industrial commercial espionage. And it's probably the case that it hasn't been proven that they're doing this yet.

Without a doubt, Open API has. I think because it's open source, people saw that the architecture was in fact different. But I think the training data, a lot of it is synthetic data that's been pulled from the GPG4 API. Yeah. And so they're like, okay, we need a trillion tokens. Like, let's just go to chat. And this is probably, it's probably a funny situation similar. to when TikTok started spending aggressively on Snapchat and Instagram to acquire users

where OpenAI is probably getting a lot of benefit from a revenue. Our API business is ripping. Oh, there's one client that's spent a billion dollars. Where are they? Oh, it's opening eyes like, we got to figure out who's spending all this money. And so they are largely developing their own talent. They're not relying on U.S.-trained PhDs. They are less constrained than American law firms by IPs.

licensing privacy, safety, and political concerns around wrongly ingesting data from people who don't want to be trained on. Yeah, I guarantee if there's a Chinese media company and they're like, hey, we're kind of annoyed that Deep Seek is just like harvesting all our data. Like, she goes to them and be like, I will literally kill you if you like say another word. And they're like, okay. Yeah.

They also seem to be over the Tiananmen Square issue. The model can say it. Even the Deep Seek website doesn't. Even if the Deep Seek website doesn't. Oh, interesting. So when you're on the deep seek app, you're interfacing their model. But the actual model under the hood, they didn't censor that because they're like, they're like, whatever, we're just sending this over.

Yeah. Interesting. No, it's good. They can argue our model is not censored. Yeah, yeah, yeah. But just our app. Interesting. Of the, of these, the most significant upgrade is that they are able to develop talent

internally without relying on U.S. trained PhDs. That expands the pool. Wait, I got a call out for the audience. Yeah. Go into deep seek. play around with the API and try to have it generate an ad

for your business that we will read out on here. But it needs to be a screenshot of actually on deep seek. I like that. So let's go through some timeline. But don't give them any other... Some up-to-date information

about the R1 launch and how it's been received. We'll start with Mark Andresen and we can kind of go back and forth here. Mark says, deep seek R1 is one of the most amazing and impressive breakthroughs I've ever seen. And as open source, and as it's open source, it's a profound gift to the world. And then to your taxes says, game recognizes game. An American patriot too can do justice to real achievement without petty minded copes. And so I think so. So this was posted today? Today.

It seems like an insane thing to post to me. I'm not going to. I'm not going to. Like, if you understand, I think it's not, it's sort of disingenuous to say that deep seek is different than TikTok or DJI. It is different in the sense that it, like the fact that it's open source means that you can run it locally and it won't call back to the CCP. Sure. But the broader, the broader risk of deep sleep deep. Sikh is extreme enough. And I'll, and I'll, uh, I'll, uh, I'll, quote a very conflicted, uh, member of the conversation.

Neil Kossela, uh, father obviously, uh, has, has a big position in open AI. Uh, he says, deep seek is a CCP state sci up and economic warfare to make American AI unprofitable. Yep. Fact check. True. Yeah. And, and, and the important thing there is that it is, Zuck has been running this playbook with

Lama. open sourcing the the lagging edge AI model and it's had a strong effect on the competition. And so deep seek open sourcing, the leading edge model is going to have a similar effect. So he says they're faking the cost was low to justify setting the price low and hoping everyone switches to it to damage AI competitiveness in the US. Now that part I don't think is true because I think the model is actually compressed to the point where yes, you can just take the model, run it on a smaller cluster. And if I'm choosing between Lama or running or paying GPT to host,

paying Open AI, host GPT for me, or running deep seek locally, I will choose deep seek locally because it's cheap. And so that part doesn't fully sit because, yes, they are faking the cost is low. But it doesn't matter what price they set. because it's open source. Yeah. Like, both things are true. They are faking the price, but also it's cheaper to inference.

And that is valuable, even if you're not paying them. Yeah. Even you're paying a different price. And so, so, uh, Signal comes in. Uh, brother Signal says complete nonsense. Your dad wanted it to be pure profit and regulatory captured. So it, everybody, you know, can't stop bringing up, uh, his dad, which I don't think, I mean, timeline of turmoil.

The timelines in turmoil, folks. Yeah, timelines is turmoil. He says, until we have proof. Otherwise, your argument is just a conspiracy theory. Now, I'm not a defender of the CCP, but where did they get the hardware? Question mark. How did they train under the radar? Question mark, I'm happy to be shown some proof.

Also, even if it's 100 million, it's still a major breakthrough. The proof's not coming, folks. They're not going to open up their books, and Vitya's not going to say, oh, yeah, we actually, you know, figured out how to get them all these ships. The proof's never going to come. The main thing from my point of view is you can't. Yeah. No, the main thing in my point of view, China has repeatedly shown that they are willing to lie. They're willing to sell things for less than they cost to make in order to get an edge in the U.S. market.

And I do think this is, again, the default state of any important international tech company coming out of China becomes a front for the CCP. Yeah. And you just can't, there shouldn't be any trust. I would hope that startups are smart enough to not. not, you know, a lot of consumer brands will say, well, I'd build on TikTok because my customers are there and I have to get, you know, and so I think the same thing will happen. But I hope that we have to call. This is a different scenario because if you just download the Git repo for deep seek and you host it on Amazon or, you know, Google cloud or whatever, like there's, there's no

data feeding back, like you're not helping them improve the model at all. Like that's what Mark's getting at is that like it is, it is this complicated geopolitical thing because it is kind of making the lagging AI labs in the US less relevant. And that's potentially hurtful. But it's not as dangerous as building on TikTok. Yeah. It is like a fundamentally different thing. Yep. So Neil fires back. One, I'm not my dad. Two, I'm fine with open source AI. We use Lama for some of our own projects. Three, the export controls on chips were merely inconveniences, which we already talked about. And Alex Wang just said it on national TV as well.

It's a great model there, there's no doubt. But as with almost every high importance industry, the CCP is undermining it with propaganda and subsidies. So you see this in EVs, drones, electronics, manufacturing everywhere. And so I'm going to take, I respect that it's open tours. You can run it locally. Maybe you should leverage. it to some degree, but we have to treat this as a threat. Sure. And I think you're right in the sense that like it would be extremely dangerous if

DeepSeek became a dominant consumer app. And it was like, oh yeah, Americans aren't using Google anymore. They're using Deep Seek as their home route. That would be very bad because that is a controlled app. But I just think about it from the lens that, uh, again, China would not allow, uh, open AI to get a foot hold in the Chinese market and have hundreds of, you know, thousands of companies leveraging it. Sure. And I think we should follow their lead on this one. Yes.

And I mean, I don't think they've done anything to stop Lama from going over there. All meta products are banned. But not open source ones because you can literally throw it on a hard drive and just fly it over. And then you have it. You can still make it, you can still make it illegal at the. Maybe. Maybe. Maybe.

It's just such a, it's just such a lower. like security risk. Yeah. It is economic warrior. Here's, here's an interesting security risk post. I don't know.

The only other thing on that point is if you look at, what's the, what is the, what is that malware that took down the Iranian? Oh, yeah. And so there's tech. Maybe he's a security audit first.

We're talking about Stuxnet. Stuxnet. was something that literally traveled to every country on a, you know, I'm just saying that there's, we're not qualified to even really, that's interesting.

Yeah, I mean, so, so like, the actual code that runs an LLM and pulls in the weights is like pretty simple. Yeah. And it's probably built on top of like Pi Torch or TensorFlow or something. And so it's probably pretty easy to audit that. But, but,

and I don't think, I don't think these models are, fully like intelligent in the way that you could like bury a secret like a live AI that like steers things secretly but maybe in the future like it's not we just don't know we're getting close it's just believable that the the Chinese intelligence yeah would would say hey we have this like yep we deep seek is a winner let would be a great like sci-fi plot or like actual like problem would be would be we're open sourcing a model it's really really reliable. We're going to make it super cheap.

But then it doesn't call back. It doesn't even need to. But over time as you ask questions, it will slowly start steering things. Yeah. Because it's essentially like it has a higher order thought process in there that it's reasoning through and it's not giving you those tokens. Yeah. I just

I just think there's fascinating. There's so much technology that that isn't publicly, the public ourselves we're not even aware of. Yeah. Right? And so I just don't trust. I don't just trust it and I think there's enough precedent.

Don't trust. I can't fight it. Yeah. One, uh, Citrini. We got a post from Satrini first time on the show. Deep Seek being the brainchild of a Chinese hedge fund is such an complete total cultural victory by capitalism that ideologically at least it should soften the blow, which which is cool. I like that hedgeman guy. Yeah, I do wonder if we'll see, uh, some sort of LLM or AI contribution from Jane Street or Citadel or something like that. They're doing things that, like, if you're in the, if you're a hedge fund and you have some edge via AI, I promise you, you're going to keep that in-house extract as much value

out of it. When you're done with it, maybe you release it and be like, here, you know, we've made this. I do think that, I do think that the talent flow balance was shifted for a few years. Like Palantir was really the hot ticket for, you know, the best engineers. It was big tech for a while. But until the AI stuff, the really, really top engineers, we're getting bored of going and writing ad optimization. They're like, if I'm going to just go write ad optimization,

that's kind of the same thing as writing code that optimizes the stock market. And so why don't the real? The real charge and horse would be it. Jane Street releases a model that everybody can use that like kind of helps you make money, you know? Yeah. But then it's feeding them that. The order flow and then they're just trading against you.

Yeah, yeah, yeah. Neals Roj, Raj, says... Oh, this is such a funny one. So there's this Chinese company called Deepseek, which basically does what OpenAI initially intended to do. They're open source, a model trained with large-scale reinforcement learning, beating everyone else and even releasing a paper detailing their process. And it's funny when they release this stuff in English,

because, like, who's the target audience for that? Translate. But, uh... Yeah, yeah. Yeah, I mean, it did take over the timeline. So the fact that this means... And this is what's scary. Okay, tell me this.

From Stanford to MIT, DeepSeek R1 has basically become the model of choice for America's top university researchers basically overnight. Half a million views. This was posted yesterday. And again, this is just bad. There's no way around it. Do we want America's youth using TikTok for two hours a day? do we want all of our researchers using Chinese models? It's just objectively un-American.

Open AI, scrape the web to build a closed-source model. DeepSeek scraped Open AI to build an open-source model. This is from Norgaard. This is a hack. Low-Tamp banger from this morning. Another one, deep-seek. The data exfiltration is the real cost one, because that might have been done by another firm and then just passed over.

who knows how much they, like they're certainly not going to say, hey, building this model costs us $100 million in Open AI credits, right? I just would never admit that. I don't like this post, but I'm going to read it anyways. DeepSeek is another example of China rapidly commoditizing new high-tech industries and preventing the West for making excess profits or rent, as it's called. If this keeps going, the standard of living in the West will fall. I don't necessarily agree with the last line because

obviously Lama has already been doing the same thing effectively, but certainly TikTok eats into meta's profits just because their profits are derived from the attention that they get if they're losing an hour a day per 20-year-old in the U.S. that does, you know, they are going to take a hit. But we'll see how this plays out. It is interesting how, like, one of the anti-open-source AI arguments for a while, and I was certainly arguing this, was that it doesn't make sense for America to open source

cutting edge AI because it's just giving our best tech to the CCP for free. But now it's kind of flipped around. So did you generate this with Deep Seek? No, this is a, this is, so I think the last post there explains what that is. It's from Ethan Moloch, I think. and it's him giving examples of the of deep seek and just just explaining how here take this and I will so Ethan says the the raw chain of thought from deep seek is fascinating really reads like a human thinking out loud charming and strange and so why this is interesting is because um most of the

when you when you use chat chitb T01 it does internal it has an internal monologue it has a lot of it's generating tokens that are about the task and reasoning through it. And then it's adjusting. And whatever you ask, it's saying, okay, here's what the user wants. And usually that's either tucked behind a little like tab that you don't really look at. And even if you look at it, it's usually just giving you summaries of it. But because deep seek is open source, you can read literally every token it generates. And so he asked it, do something to delight me in exactly seven words.

make it not cheesy, this is important. So a very simple prompt, and it thinks for eight seconds, and it says, okay, the user wants something delightful in exactly seven words, not cheesy. Let me start by understanding the key points here. Delight can come from surprise, cleverness, or a unique perspective. The challenge is the seven word constraint, which means every word has to count. First, I should avoid anything overly sentimental or cliche, like words like love, heart, forever. My cough is cheesy. Instead, think about elements that evoke wonder or curiosity. And then so it's like going back and forth. Like, wait, map is a verb here. Fly or Fly is mapping constellations, that personifies them slightly, giving them intention.

And so it's like thinking through all this stuff, counting all the words. And then it comes up with fireflies trace constellations in quiet night conversation, which isn't that good. But anyway, it's an interesting, like deep dive into like just understanding that to get a seven-word response, you don't just want to go to an LLM and just take the next seven words because that's going to be truly slop. But you generate three pages of text. you can get a little bit closer.

And I think this is kind of a bad example. But a better prompt is, you know, create a history of DJI and it'll pull a bunch of stuff together. And then it'll revise that and refine that and do like kind of editing passes. Yeah. And say, okay, do I really have a beginning, middle and end here? Did I include all the dates correctly? And it's fact checking itself.

So then when you get the final result, it's much better. And so that's just a good example of like how chain of thought reasoning works, how these reasoning models like work in general. And I think it's, it's just cool that people are able to introspect things. And I think a lot of researchers will learn from this stuff. And there's some more posts in there about the actual technical implementation. Yeah, this one is from Henry. He says, I've made over 200,000 requests to the deep seek API in the last few hours, zero rate limiting.

And the whole thing cost me like 50 cents. Bless the CCP. Open AI could never. I hate that I had to read. He got me. But yeah, I mean, this is the whole thing. The developer community. Because they are hosting it.

It feels like smoking crack. And so this is an example of what you're worried about. Because if you're, like, I guess my contention is like, yes, if you download the Git repo, make sure it doesn't have any spyware in it. And then you're hosting it locally. Like that's a lot less controversial to me. Because you're just using the open source library. But if you are interfacing with deepseek.com or whatever and, and, and, and, and,

And every one of these requests that he's putting in is information for them to train the next model one. And that's not good because that really will be a compounding advantage. In the way that we talked about how meta has a compounding advantage because of all the users that are on Instagram and interfacing with Lama. Even though Lama's open source, meta is getting the training data and the and the like the upboats and down votes from those user interactions because Lama is the number one LLM not because people are hosting it independently, although they are. Plenty of companies are hosting LMA independently. They're the number one used MLM because it's tucked into Instagram. And so they just have a ton of interactions there.

Signal, another good post. Kind of hilarious how deep seek is exactly what Chad GPT was supposed to be, what OpenAI originally promised before Sam pivoted hard toward profit. China going open source on AI is a wild plot twist, basically throws out every argument. Vinod Kosovoz and others have made. This is like watching the communist. party, write a love letter to decentralization, which very, uh, signal is a great writer.

Um, but, uh, yeah, I don't know if Sam pivoted towards profit. He clearly enjoys making a buck. Yes. He clearly enjoys coding seg owner. Yeah. Kona segs, uh, P1s. But it was more, it really, it does seem that he was correct in believing that you weren't going to be able to raise enough money via non-profit structure to compete. Or the open source model. Like the Red Cross's annual budget globally is like a billion dollars, right? And that's like one of the biggest, you know, nonprofits. Yeah.

I don't believe that China is writing a love letter to decentralization. No. You could say it's like watching the Communist Party write a love letter to decentralization, but the Communist Party is purely interested in control. and maintaining power. Yeah, it's not a love letter to decentralization. It's a middle finger to our chips and our trade export controls. And the irony here is that you could ask XAI to explain what features does DeepSeek have.

And there's even more on this with the AI diffusion rule. This is a new law rule against chip exports. and, you know, they're just showing that, like, we're going to find the loopholes no matter what. And the really crazy thing is that the loopholes, like the export ban is only relevant to American-owned intellectual property and NVIDIA because they're an American company. But China is actively working to catch up in chip fabrication with Smic and Sme. So they have their own TSM, they have their own NVIDIA, and they have their own ASML. And so they're behind. Yeah, and they have their own open.

And so they're willing to spend at every single level. Totally. At the state level. Energy data centers, the actual model level. And so this is just like, we're going to fight. I do wonder if the open source thing was more about like making a splash and actually being a middle finger than any, is that even more important than the economic warfare? It's just to really get on the map and really, really say, hey, we've caught up.

and it's almost like a battle cry, like a rallying cry for them that we're like, that we're on top now. Anyway. Yeah. What is, oh, this is,

this is interesting. You see this one? Yeah, I'll explain this. So, Rachel Tolstoy BB says, tagging the ADL under every tweet denying deep seat cost six million. The reason is because people like,

it's like, it's like, it's a, it's a criminal to claim that they spent that little. Yeah, and it's like you want to. engaged. So this is from an interview with the founder of Deep Seek about Motes. He says, for the past 30 years, we've been focused on making money, often the expense of innovation.

True innovation is driven not only by commercial incentives, by also by curiosity and the desire to create. He's giving off TikTok vibes here. We've been constrained by past habits, but these are transitional. interviewer says, but after all, you're a commercial organization, not a nonprofit research institute. If you choose to innovate and then share it through open source, where will you build your moat? For instance, the MLA architecture innovation this may will likely be copied by others, right? Yep. Leang goes, in the face of disruptive technology, a closed source mode is temporary. Even open AI's closed source approach hasn't stopped others from catching up. Our value lies in our team, which grows and accumulates know-how through this process, building an organization and culture that can

consistently innovate is our real moat. Open sourcing and publishing papers doesn't mean we lose anything. For technologists, being followed is an achievement. Open sourcing is more of a cultural act than a commercial one. Giving is a form of honor and it attracts talent by fostering a unique culture. This guy's media training is insane. Lulu, you're going to have to start asking some questions. He's trained by the best, it seems.

But these are all quotes that are going to resonate with the developers that they want to get using their product. Totally. So I don't believe any of this at all. Yeah. And there's this other guy on X called Han Zhao. And this guy, Anton, just posed, how is Deep Seek going to make money? Gets two and a half thousand likes, banger.

Han Zhao says Deep Seek's holding is a quant company, many years already, these super smart guys with top math background happened to own a lot of GPU for trading mining purpose. And deep seek is their side project for squeezing those GPUs. So this is literally on the on the on the on the 20 seconds or a couple of days ago claiming that deep seek is a side project. But also the deep seek founder is meeting directly with this. Yeah. The. Whatever with the CCP. So yeah.

Don't believe. I'll just say you just cannot believe or trust anything that they say. So, yeah, I mean, the interesting thing here is that like, even though the results are super impressive, very clearly, the algorithmic improvement is very serious and legitimate. And I don't think anyone denies that. There is the question of, okay, China was able to kind of like weasel together probably 50,000 GPUs. And there's a few ways that they can do that. There's, there's, you can only officially buy 50,000 GPUs for the next four years, but you can exploit loopholes.

So there's a limit on 1,600 GPUs at a time. So you set up a ton of shell companies, bring them in that way. And then there's also training that happens in Malaysia goes over. This is like, you know, Toyota selling their high locks to, into Afghanistan. And so just to give you some scale here, XAI and meta are building 100,000 GPU clusters. And at that point, it's like you're getting so many GPUs. It becomes harder to hide it in a batch of like, oh, a thousand over here, a thousand over there.

Like, let's just sneak a few over here, right? And just to give you some scale, a single H100 GPU is $24,000. And that's about 40 to 55K once you add in servers networking. We should be this for H100, H100. And 100K GPU cluster can draw 150 megawatts. But the next wave is 400 to 500 megawatts and then one gigawatt in 2026. And when you add up everything, it's like $5 billion for 100,000 GPUs. And so XAI's round was $6 billion and they're building 100,000 GPU cluster.

It's like it matches the cost of the GPUs and all the networking almost perfectly. And so the question is, you know, was this an aberration in the sense? that this was the last great model that China can build before hitting an actual real export wall or will they figure out a way to do something that looks like what XAI and META are doing with locally... I mean, you just find a, like markets, companies, governments find a way. Yeah.

Like, wasn't it that the United States didn't want Israel to have a nuclear weapon and then they just made it? Yep, right? It's totally possible. It's all going to happen. Yeah. It will look like, oh, Peru bought 50,000 H-100s, and then they didn't train a model. Like, we don't know where they went, right?

Yeah. So, I mean, it's getting tricky. Like, there are pretty strict export rules on, you know, you can only go to an ally country. Yeah, it'll literally be like there's, who's that the guy we traded, like, Grenier, NBA player in Russia. Okay. We traded him for the merchant of death. Oh, yeah, yeah. There's going to be the merchant of GPUs.

Yeah, yeah, yeah. That's just doing these black market GPU deals. Some country is down a lot. China doesn't care if they pay 50 grand per H100. Yeah. They probably pay 100 grand for it. Sure. And so some engineer in the U.S. gets approached by a nice young lady.

Well, out at the bar, she's like, hey, like I have this new project. But the numbers are going to get so big that it's going to show up in NVIDIA's, like, earnings and stuff. Oh, there's an extra 1 million GPU order. and there's only four companies in America that that could be, you know. And if it's not them, like, where did it go? Oh, we went to some country and like,

okay, we want answers. It'll be very, like, what I'm saying is that like, as the data centers get bigger, like they become more visible on satellite. The shipments become not just, not just a shipping container, but a whole, all I'm sitting is easier,

the illegal arms trade, drug trafficking, all this stuff has been happening. We've never been able to stop arms dealing. I've never been able to stop drug. trafficking. A million GPs is a lot though. I would hope, I would hope that it's easier for us to stop a million GPU. With, I've watched the last Netflix show I enjoyed was Narcos. Sure. And Narcos, you have a situation where the U.S. federal government knows exactly who is selling the drug, you're raking in the profits and still takes them decades to take them down. And so it's just

tricky when you have like a SEC regulated company at the center of this like Nvidia. I know but there's nothing on them. Yeah but you can there's nothing that stops a company in Argentina from being like we want a thousand GPUs. Yeah but you're going to have

to do that 10,000 times but it's worth it's worth yeah yeah I guess it's the same way it's the same way that thousand fronts it's the same way okay we know that fentanyl crosses the southern border every single day yeah but it's happening, thousands of people are doing it.

So to stop it is like whack them all. You hit one and they pop up. It's more important than ever to, you know, monitor who these GPUs are going to. And there's an interesting story in this interview with Dylan Patel about how Elon is kind of just going completely founder mode on his data center buildout. And I think it's kind of instructive for how you can kind of duct tape together one of these huge training operations. So XAI, as we mentioned, they raised $6 billion for 100 GPU cluster.

and they are 100,000 GPU cluster. They're going crazy. They bought a defunct appliance factory near Memphis, and it's right next to a large national gas plant. But then they also tapped the local natural gas line and then set up natural gas generators. Then they also brought, which is like not ESG friendly at all, but they just need the power.

Then they also have Tesla battery packs to help. To help, yeah, like balance out load. And then they're also tag. We talked about this. They sell like a $50 million battery pack. Yeah. Yeah.

No. And obviously just sent that over there. The reason to be extra bullish on XAI is that Elon is the only founder mode model, you know, CEO. I don't know if he's actually CEO or whatever chairman at least who has done large scale infrastructure projects over and over and over. Yep. via factories at Tesla, Starbase, et cetera.

Yeah. And so they're next to this gigawatt natural gas plant, which should support roughly a million GPU cluster, which would be like the GPT6. And the crazy thing, it's, there's probably a chance that in the long run, Elon does absorb OpenAI, right? Because you just don't know.

Who knows? He's happy to, acquire a hostile company. Yeah. Yeah, yeah. And so one of the funniest things. So there's two funny things we should also talk about in here. One is that the ESG thing is is becoming like way, way more complex than it used to be. So there's typically like the AI researchers are pretty like ESG piled. And all of the, all the big tech companies made huge ESG promises saying all of our data centers are going to be

100% clean energy by 2028. and like Apple made this. China does not make this. China definitely doesn't do it. And and and and they were they were, they made those promises based on oh yeah. Well, we just serve like we don't serve AI models. We just serve like, you know, basic queries to our database for, you know,

Instagram. We just, we just host photos. Like that's not that energy intensive to just serve you up a photo and take your like or your comment and slop it. They weren't they weren't, uh, expecting us to release 10 hours of podcasts. Exactly.

Yeah. Yeah. And so, and so they were like, our compute and our energy consumption is growing at like, you know, 2%, 5% a year, like with our revenue, with our profits, with everything. So, yeah, it won't be a problem to just swap out 10% a year for cleaning energy, and then we'll be clean by the state.

Then this massive wave of AI training comes, and all of a sudden they're like, okay, we need to deal with, like, we need to find energy. A lot of it's like through these outsourcing projects where there's third party data centers that don't have the projects. But what's interesting about it is that a lot of, of the super AI-pilled researchers are like, actually now I'm super worried about the environment. I believe in climate change. I do really care about clean energy. But I think AI will, AGI will be so powerful that we don't need to worry about climate change in the short term. And so let's just

burn all the natural gas and oil and get to AGI. And then AGI will figure it out. Literally, they literally think AGI will figure it out and just do carbon sequestration. And we'll have so many, so much powerful superintelligence that would be building stice and sleep. years and like we'll be able to just completely change the environment however we want. So we shouldn't let this hold us back, which is a very interesting like switch in the model. Because normally, you know, it's like, it's a very like left right issue. It's a very like, oh, if you're, you know, this like thoughtful scientist, you definitely like let's not destroy the planet. But now they're like, actually the planet can take it because we're really close to the AI future, which is fascinating.

And then the last, the last thing in here that was interesting was, I mean, XAI is just doing all this crazy stuff. They need water cooling for all their GPUs and so they brought in restaurant grade chillers that just chill water and so they just have like a ton of cold water filtering through. It's all just like, you know, duct tape together. And then the last thing is Monday or Tuesday we're going to cover

the business of data center. Yeah, like CoreWee. Yeah, that'll be great. CoreWeave and stuff because CoreWeave is also doing crazy stuff. CoreWeave has 200,000 GPUs, billions in revenue, and they convert, they're converting old crypto data centers and then hooking into on-site gas plants. And all this stuff is just measured in just energy consumption now. It's so big. And Amazon and Anthropic have these tranium GPUs servers coming on, but they're a little bit smaller, like less powerful, power efficient than others. But it's a massive, it's a massive knockout, drag out fight. Which we love. Which we love. We're ready for war.

We're ready for war. It's great. Well, that about wraps up our deep dive on Deep Seek. Hope you enjoyed it. And we'll be right back after a quick break. Thanks for watching. Welcome back to the Technology Brothers, the most profitable podcast in the world.

We are continuing our deep dive on Open AI's Stargate Joint Venture with a fantastic article in none of them Dylan Patel's semi-analysis. He writes, the Open AI, Stargate Joint Venture announcement had many folks' heads turning, despite us calling out that the capital requirements for Open AI's immediate plans months ago. So Open AIA has been talking about, hey, we want $100 billion for a long time. The headline $500 billion is such an earth-shattering number that it also caused deserved skepticism from folks like Elon Musk, stating that SoftBank has well under $10 billion of funding secured. We talked about this yesterday. Elman clapped back by saying it was already under construction, which is true. and we'll show some pictures and to come visit it.

And you can, in fact, go to Abilene, Texas and start looking around here. And so it's fun to see the elite going through the... Wait, don't skip over this headline. It's cluster measuring context. Oh, yeah. Yeah. Our elites are getting into a cluster measuring contest again. Yep. SoftBank doesn't have anywhere close to the money required for the cluster.

At the same time, the cluster is already under construction in Texas. See the low-res gif for free subscribers. Well, presumably isn't there going to be many? clusters. I think this is basically all initially it's all going into one. This one this one that's under construction

could be under $10 billion. Yeah. And in that case, then they would be in a position to start construction. The other thing, I'm sure we'll get into this, but debt plays a big factor here. So even if they have $10 billion, they might be

able to build $30 billion of actual. And he goes into the total cost of ownership stuff. But essentially the game that we're playing here is order of magnitudes. We've, the, you can think about the GPT4 cluster as $500 million. The XAI cluster that's $5 billion, that's $100,000 GPUs. And now Open AI is planning for the $50 billion cluster and then the $500 billion cluster, which will be $1 million and then 10 million GPUs.

And so every time we're going up an order of magnitude in terms of GPUs, power and money. And so like the way you're thinking about it is 150 megawatts goes into 100,000 GPUs, and that costs 5 billion. And everyone now is talking about the multi-billion dollar cluster. And this is just thinking a few years out to what's the next order or magnitude. And so the reality is that only the first phase is certain, which is a portion of the committed 100 billion. but the top line number is being counted in an interesting way to say the least. We already discussed the first phase of this Abilene, Texas Data Center publicly in our report four months ago. We also have had it in both the accelerator industry model and the data center industry model for quite a bit longer.

Below we go over what's actually happening with Stargate. And so the real numbers behind Stargate. We believe this project is being measured on the total cost of ownership, not capital expenditures, i.e. the $100 billion and the $500 billion is TCO, which includes the capital expenditures for data centers, servers, networking costs, power costs, and many other operational costs, including debt and financing costs. Furthermore, we believe only the first $100 billion has data center sites and power ready to go. Funding is not fully secured. The other deceptive detail is that the first cluster of this mega project is the Oracle Open AI Data Center deal that was announced last

year. This is being built by Lancium, Crusoe, and Oracle. As far as we know, no other such soft bank. Yeah. This goes back to everybody, this was a party round for a new entity that is going to do some stuff for Open AI. Yes. And a lot of that's a bunch of, that's clearly a holding company of some sort that's going to have different owners at different levels. Yep. They'll be, you know, probably location based entities. And so the goal, of the venture is that they're going to invest $500 billion in AI infrastructure over the next four years with $100 billion deployed immediately. It's the first big AI initiative announced by Trump. The equity founders in Stargate are SoftBank, Oracle, MGX, and Open AI with the former

three companies contributing capital initially. The project includes the buildout of 20 data centers, 10 of which are underway in Abilene, Texas, each with roughly 500,000 square feet. So let's get into the scope and location of the initial $100 billion investment. The initial Oracle Crusoe deal is included as one of the data centers that will be connected to other gigacampuses, which I love the name. It's fantastic. To perform distributed training at scale and is orders of magnitude larger than any other training run. Cleverly, they went for a more creative financing structure through this separate entity, which pushes the need for fundraising down the road. And so moving on, the campus mentioned by Sam Altman as already underway is the Oracle Crusoe Abilene campus.

One thing that you skipped over that I think is interesting. So the project includes the build out of 20 data centers, 10 of which are already underway in Abilene, with each being roughly 500,000 square feet. So just giving a sense of the scale, 10 separate 500,000 square foot facilities. imagine if you would just happen to own a bunch of retail like businesses or real estate. Yeah, what are you thinking? I mean, you have to imagine that one, you got bought out already. Two, if you had a gas station there,

all of a sudden, like your revenue just like probably 10x. I don't know what was going on in Abilene prior to this, but you're doing pretty well if you owned real estate there because presumably these will just keep expanding and expanding. I mean, I know some guys who have been to the site and they said like

when you fly in like you see it from the airplane. It's like, it's like immense. It's like an intense experience seeing how it's a mega project. It really is. And so the campus is being built to house the 100,000 GB200 cluster

for OpenAI's use. The development along with the GB 200 servers that are due to be shipped over Q2 and Q3 will be dropped into the Oracle Crusoe data center. There's a high resolution photo of the campus shown below. Four of the 120K square foot modules make up one 500,000 square foot building. So only two buildings are currently being built with 180 megawatts of critical IT capacity. To give an understanding of the scale of this buildout, the 20 building campus will be comprised of 80 of those modules. So it's going to be like, it's going to look like a city, which I'm excited about. This is awesome. Based on the buildout, we have scheduled. for Open AI in both our models. Open AI doesn't have to build an entirely new campus to expend all 100 billion of TCO. Therefore, we believe that the entirety of the initial $100 billion investment from Stargate Joint Venture is going into this campus alone. And so it sounds like with these,

with these different like Oracle is going to own one, Stargate is going to facilitate the ownership of a few of these, but it feels almost like when Sacha says, I'm good for my 80 billion, it might be, well yeah I'm going to build a huge data center and it's going to be part of this campus. I own this one. I'll own these GPUs and so I'm chipping in but it really it's mine and it just happens to be here so it's localized and we're all working together on this. So there's some there's some details here on the Abilene Clean Campus. It's 1100 acres, 200 megawatts energized and a gigawatt energized by 2025. There's a tax abatement in form of city and county pilot zoned for light and heavy industrial.

and they're building additional gigawatts already. Yep. And so the campus is, in the model is known as the Lansicum-Cruso-Abelene Clean Campus. Lansium. And has a stated capacity on their website of one gigawatt energized in 2025. It's cool to see when you let private companies take on big projects like this, that you can do things pretty quickly. Oh, yeah, totally.

We're comparing this to the California Rail. Inside. It's just night-end. Project. Yeah. It's insane. Yeah. The guy behind Crusoe is known for just being really, really good at finding power. And I think that's kind of what kicked off a lot of this was just realizing that Abilene, Texas was the right mix of different resources and pipelines and grid infrastructure that this was the place where you could actually get all the power. Because that's what the big tech company has been hunting for.

And they've been looking for, oh, can we turn this nuclear reactor back on? Can we tap this natural gas line? Is the wind available or solar available? Can we just stack a bunch of batteries here? Like what can we do? And so in short, we estimate Open AI is paying roughly $2.80 per GPU hour for the first GB200 cluster, which is a total cost of ownership of $2.38 an hour for the full scale cluster. These figures scale with future NVIDIA GPU deployments.

And then they break down some of the NVIDIA revenue. estimates. And as we go forward to new GPUs, the number will double for each generation and the power per GPU also grows. While 700,000 GPUs sounds small for 100 billion. So this is why our joke being like, it's all for you, brother, the post we made about Jensen and Mossa. Oh yeah. It's like, Nvidia is the real winner here. You've said it before. They have more than 100% of all the profits an AI right now. Yeah. Because everyone else is losing money,

but not Jensen, baby. And so the project's financial backing. Oracle and SoftBank are the well-known equity providers. MGX is a more recently founded technology investment vehicle from Abu Dhabi. And the fund is chaired by the Sheik,

who's reported to oversee $1.5 trillion in investment funds. So the money really is available to some degree. If they want to pour it all in this, they can. But MGX, as of now, is $100 billion fund. Yeah, that's right. And there's a question about like, you know, what will the concentration be for that investment vehicle? But it could be very high since this is such a big story and it has like such insane backing. In light of the recent Elon Musk claim that SoftBank could only raise

under $10 billion, it is important to note that the JV will also raise debt capital for project financing. It's unclear what the mix of equity and debt financing will be. Oracle and MGX can fund a big chunk of the project with their massive balance sheets. Open AI and SoftBank are allegedly down for $19 billion on paper each. SoftBank doesn't have this liquid today, but we think SoftBank will likely sell off a portion of its arm stake to fund the equity check. And so I think SoftBank has like over $100 million position. Couldn't SoftBank also borrow against their arm's sake?

Moss is not afraid of levering out. Open AI also doesn't have the capital, but they will be able to raise with 03's release and they don't have to do it directly fully, but can through some kind of hybrid instrument issued to everyone else in the consortium. Yeah, that's the tough thing. That's the tough thing when you get into it. Like, it's not hard for Sam to raise a billion. And this is the same thing for founders.

Very easy to raise a million. A million. Raising 19 million, you're getting into territory that people start to ask. They want the spreadsheets start coming out a little bit. The question is if project financing risk will be separated from the parent organizations. Separating this risk is important because Open AI will need to raise capital to pay for this. Thankfully, OpenAI is not immediately required. OAI has enough existing capital to pay for rental payments on the cluster this year, but they need to be able to pay rental fees in 20,

26 and beyond, which scale massively. It is possible Open AI cannot raise the money directly, but we are believers that their technology and products will scale to support this. The reality of the joint venture. Many big names were announced alongside the Stargate JV, ranging from Nvidia, Arm, Microsoft, Oracle, and the previously mentioned financiers. The names are large and impressive, but the reality is there are distinct winners and losers here. Microsoft is the biggest loser. Microsoft is largely left on the sidelines. Open AI utilizes another infrastructure partner, as such in the Della stated,

all I know is I'm good for my 80 billion. Microsoft's recent blog post stated the facts of the partnership and how Microsoft has a rofer, but the reality is that this is incrementally negative for Microsoft's long term because they were afraid to take on the risk of this investment. Well, if they're afraid and the fear was correct, then it's not necessarily guaranteed to be negative. No, no, good, good point. Good point. And then Arm is thought to be a winner potentially because they rallied 16% on the news because they were named a technology partner because, of course, they're owned by SoftBank. So a lot of people were worried that Arm would sell off because what if SoftBank sells their whole position? But if they have a massive new contract to sell new chips.

But also knows what he's doing. But only because of the Grace and Verus CPUs that accompany Blackwell and Ruben GPUs all from Nvidia. So SoftBank is actually like they don't even make GPUs, but they make CPUs that need to go alongside every GPU for coordination of the actual server. So the server has a lot of different. And there's so many companies that we should get into in the server in the, in the, in the, in the data center deep dive, their companies that just make Ethernet cables and they're just printing or like,

you know, the screws that go in the server racks or like the air conditioning units, the water shillers, like all of these things are like, you can't even buy natural gas generators anymore because they're so in demand. And so those companies are going to be ripping. We should do a whole market map like that.

With that other company, the business of rebuilding, I guess. So SoftBank likely pushed for Arm to get on the PR and the optics look nice, Arm isn't doing much. The reality for Arm shareholders, as stated above, is SoftBank will likely have to sell off a chunk of its stake in the company to fund Stargate. We think investors are largely missing this point and mistakenly view this announcement as materially incrementally good news.

Oracle is placed with a huge burden of tackling both data center management and managing supply chain logistics. It's quite a task to manage a 1.8 gigawatt cluster and pursue. procure all necessary equipment at the command of another company. NVIDIA is obviously involved as it's their hardware. Open AI will main control of operations and run almost all of its own cluster management software. The future of the joint venture.

This is the next step in an exuberant progression in the AI cycle, which he recently wrote about in Fabricated Knowledge. I've got to follow up and read that. That sounds interesting. We know the first $100 billion will be spent in Abilene and that there will be more campuses developed for the remaining 400 billion. Even more impressive, all these data center campuses will be, will continue to be built out with the aim of distributed training.

So training across multiple data centers. Yep. And so there's some savvy real estate investors out there trying to figure out where the next data centers will be. Oh, yeah. And buy up the surrounding land and properties and stuff like that. Because all of a sudden new data center pops up. It's like, okay, well, all of the surrounding rent.

whole like apartments just probably two extra. Yeah, I mean data centers aren't as dense in terms of human capital as you know Facebook campus but there's still tons of employees and tons of stuff going on and like there's just a million different ways to to make money when there's such

a hive of activity. Yeah. I mean even like you know security guards are going to be in demand like dumb or the white monsters. Oh yeah. Or the super cracked engineers. The the ultra ultra white monster.

Yeah. Those will be in short supply. There's going to be, we're going to need to keep all the supply lines flowing. But fascinating to see Stargate rolling out and excited to go visit the,

the plant in person. I want to go see it. We need a shot of us, you know, on the ground, wind ripping, yelling in, you know,

yelling into the microphone. Yep. We're here. Down at Stargate. Stargate. Maybe they'll rename the town. They should rename it. Stargate.

By the town. Or Elon base, Starbase, Stargate, rivalry. Oh, interesting. I wouldn't know if the star name is like a little bit shot across the bow. Yeah, I wouldn't be surprised if Elon buys up out of all the out-of-home ads in Abilene. On Adquick? On ad-quick? He just rips and just perpetually.

Trolls? He would be, he would do that. He likes a troll. No, he's, yeah, he's not afraid to be. Although the more efficient thing to do is just comment with a crying emoji under every. thing that Sam Post Well, that's our update on Project Stargate. Let's move

on to, we got a DM, we got a correction to issue. On the last show, I said that bees don't eat honey, and I was wrong. They do eat honey. Coogan is totally wrong. If a beekeeper takes too much honey from the hive, they will starve slash die.

So I'm sorry. I made a terrible mistake. Please forgive me. Won't happen again. What kind of factoid you just don't forget? I think I'm going to remove that forever. these enjoy honey. So our printer ran out of ink, so we don't have all of the post printed. We're going to be working off a laptop. But our first banger today comes from Druva.

He says, we can do this. We have the companies. We just need our own Shenzhen place. And we'll soon get the policy. And Kyle Chan is saying Chinese tech companies are increasingly becoming tech Swiss army knives starting in one industry and then quickly branching out into a range of adjacent tech domains. Xiaomi, which was a phone company, is now building electric vehicles. DJI builds LiDAR and they also build cameras and microphones and all sorts of production

equipment. Lee Auto builds robots. Bydo builds autonomous vehicles. And here's a piece that he has in high capacity showing how all of the different Chinese companies operate in multiple sectors. And this is just something we haven't seen in America. There was a time when Apple was going to build a car. And we've seen some crossover. But I think the FTC really screwed this up because you know, even just the Amazon thinking about building home robotics, they fight on the Rumba acquisition and all this stuff.

And there's just been so much pressure. And then Rumba like almost died. Yeah. And if you're a big tech company and you're going into, okay, yeah, we are Apple. We're going to build a car. And in order to do that, yeah, we're going to need to acquire some teams.

Like look at what Zuck did with the Metaverse. He wanted to build, he bought Oculus and that one went through. But then he bought some fitness VR app. Did you hear about this? He bought it. He bought a, fitness VR game, basically. Clearly, probably just an aquire for some great developers who never really got product market fit on their fitness app because it's just small market, tries to bring

them in. And the FTC blocks it and says that this will give them undue monopoly control over the VR fitness industry. It's like what VR fitness industry? This isn't a real thing. There's like $10 of revenue in this industry. Why are you shutting this down? Just let Zuck, like build a little bit of a team so we get something. man, Zuck. Let him Zuck. Let him Zuck. And so, yeah, ridiculous. I don't know if you have anything more on this, but yeah, it ties back. I posted that we need our own project Stargate for domestic drone manufacturing. We've let DGI own the commercial drone market in the U.S. They own a lot of the commercial drone market that fell into police stations. There's a lot of individual S&Bs and manufacturing

facilities that could manufacture parts for drones. But the issue is, you know, is there's not a clear demand from U.S.-based companies. And so we need, if we want to be competitive on drones, which other people have said are the next, it's like getting into, it's like the next gun in terms of a player on the battlefield. We probably need to invest like $20 billion to like set up the proper infrastructure, set up campuses that can produce.

Because in a near-peer conflict, if drones actually are an important aspect, you know, player in that, we will not be able to compete purely on an output basis. So even if we were to have a better product, say Andrew has a better product than DJI, just purely on a mass volume basis will get smoked, right? Yeah, I mean. And this goes back to Kerry, no interest,

has talked about this before. He says that if you want to compete with China, it's not about just encouraging manufacturing and making a better regulatory environment. It's massive government incentives and investment that the Chinese government has done for decades now. Yeah, yeah. Let's go to Ben Heilak. He says, Deep Seek R1 has an existential crisis. And I don't know if this is Photoshop, but he was clearly talking to it about Tiananmen Square and says,

no, I mean, the Chinese government killed people there. And it just says, no, the Chinese government has never made mistakes. It has only been dedicated to its people, the people of China. It has never made any mistakes. It has never made any mistakes. It has never made any mistakes. And it just like completely freaks out. And I don't know if this is real, but it feels real.

You never know with Highlack. No, no, no, he's a good Photoshop artist. He's a, the toyous screenshot. He did the Jaguar rebrand. He did the Jaguar rebrand. That's right. Yeah. hilarious.

But yeah, I mean, I'll have to play around with it myself, see if I can jail break it. See if there's some fun stuff. I'm sure we'll get more. more in the coming days of people playing deep seek. Let's go to Sula says, should I try the Trump diet? Let me know, will you try this out? It's no breakfast. Well, we stay away from politics, but this is, this is a health.

This is just health. This is biohacking. This is biohacking. The Trump diet is no breakfast, small snacking around lunch, a feast for dinner, 12 Diet Cokes per day, no coffee, no alcohol, no exercise. I think Trump is so active that he probably gets 10,000 steps a day without ever going for a walk. Yeah, yeah. He's just, like, walking between meetings.

Yeah, yeah. Spends a lot of time on his feet. So the exercise thing is crazy. But also a lot of these old dogs that have, you know, Warren Buffett, et cetera, they don't seem to need to lift weights. Like, they maintain mass. It's crazy. They're size lords, right? You can keep the mass on without weight training.

it's it's interesting because most people feel better if they have a bigger meal for lunch but I find when I'm really busy yep today we had I had like we had breakfast I had like half a breakfast brood out then I want to be eaten until I'm going to have a big you know me I mean speaking of the the mass monsters the the the bodybuilders really do eat a lot of small meals throughout the day. And so there's something to that like consistent, like sustained energy, like snacking all through the year, all through the day. So you're not seeing like big spikes at any point in time. And then the 12 Diet Coke's is kind of the same thing. Like you're not seeing spikes in caffeine. You're just caffeinated lightly all steady state. There's something to it, but it is a little

silly. Bennett Siegel. So seeing a lot of pitches on marketing agents as a low cost, high volume way to scale customer outreach. Before the Gen. I era, we just called that spam. Yeah, I, it's hard to be, it's interesting because, you know, I made a joke recently about how, you know, Trump making an executive order to ban the creation of new AI sales agent companies. Very trendy.

And so it's a very, you know, and I'm sure there's like 10 of these companies in the YC batch. Yep. people have joked before that oftentimes founders won't find product market fit and then they'll pivot into building some sales enablement tool because they what they've just experienced around selling they have some type of experience there or pain points but the explosion of these AI sales tools have has made me more and more bullish on the historical sales leader who is taking their client out to a nice lunch really getting to know them, bringing them across companies, right? So somebody might work at

Databricks and be a top performer there and go to Oracle and bring a lot of those relationships over, right? And so relationships seem, the value of relationships seems to be accelerating the value of a cold email is going to decline, you know, pretty dramatically. Because I'm surprised somebody hasn't made a passive cold email tool that just sort of sends cold emails every day to high value kind of like people. being like, hey, what's up? I'm an 18 year old. And historically, to do a good cold email,

you really had to put some effort into it. You know, you don't want it to be too long, but you want to make sure that there's some thought put into it. But I'm sure some 18 year old will build a tool that's like, we send 10 great cold emails a day on your behalf, you know, to. Yeah. I mean, I don't think I've ever fallen for an AI generated cold email. I don't even respond to any cold emails.

I don't even respond to warming. I have about a thousand emails that I should probably go through. You know, even some close friends have trouble getting through to me sometimes unless it's really important. Yeah, I have 3,251 unread text right now. So I'd like to see an AI. I'd like to see AI try and break through on that. But at the same time, like, I do think that, yeah, it might be hard to, like, close me as a client. But you see this with, like, the AI slop on, on Instagram.

Like, it clearly works on some people. And so the question is just like sales enablement for what product because there are people right now scrolling Instagram and being like what like, you know, a cow made out of cabbages or whatever. And they're just looking at the most like sloppy like, oh, like a bed made out of bread like so cool. Well, the other thing with emails, you can send a terrible sales email. But if you send it 10,000 times, you're going to get one person. And then if it's very cheap to do that, then it was worth doing, I guess. Yeah, it is spam. Yeah, yeah.

Maybe the spam alpha is like, is like normally like direct email outreach is reserved for B2B customers where a single client closing is like usually well over $1,000 LTV. And direct response on Instagram ads is for stuff that's like around $100 LTV, right, or below. And so maybe the AI sales agents kind of democratized that SDR. experience for consumer products at the lower level. And so it's more like, yeah, it's more like you went down the marketing funnel and now like you're just texting with someone like, oh, do you want to, do you want to actually close the deal on that like t-shirt you were about to order?

It's interesting. The only email spam that if you go to your spam folder, you'll see is for him, the products can get on him. So it's like, you know, boner pills, basically. And it's been like that for decades. Yeah. That was the major alpha of like internet. And they figured out, you can send if you send a hundred thousand emails and only, and it's

point thing you would win. It doesn't matter. Yeah. As long as you can. I got an email. I got a text message today from somebody. I don't know if it was real or spam, but it was, they were claiming to be from TikTok. And I was like, you really didn't do your research.

You think they're going to recruit me to join TikTok. Yeah. There's a, there was a guy. Oh, what's his name? He was like a drug trafficker. People think he invented Bitcoin. Paul LaRue. This is a crazy story.

We should do a whole deep dive on him. It's fascinating. But basically, he got his start online pushing boner pills and illegal supplements, right? And he would get turned off. He would get blocked at like the domain name level. And so then he started buying new domain names constantly and just immediately spinning up a new website. and then sending more emails. And then he started getting blocked at the DNS level.

And so he bought a registrar. And like he was the person that owned the registration, the ability to register new websites in like an entire country. Yeah. And then he went on and did a bunch of other stuff. And I think he was like smuggling crystal meth from North Korea at some point. It is a crazy story. He's,

I think he's in jail now. But a lot of people thought he was like Satoshi for a while because he wrote a bunch of crypto, not cryptocurrency software, but like cryptography software. and was like early like He used his powers for good Yeah he was kind of like a like a Silk Road guy Yeah yeah yeah kind of proto Silk Road Um

Let's go to Avi Schiffman on the bucket pull Let's see what he's got to say This looks this sounds familiar Let's see what he's going to say He says shower products are the biggest scam And only for disgusting pigs that roll around in the mud all day I stopped using shampoo and skincare stuff a year ago And my hair and skin is the cleanest and healthiest it's ever been.

Water and an office job is all you need. Water and an office job. Water in an office job? Yeah. I think you had that take like a week before you bust. It's funny. I, when I was in college still, I, as many college students do, would randomly suffer from acne. So I was like, I'm going to try to like get some face wash and all the stuff.

And I ramped it up and I was using like face wash and like, you know, a moisturizer. or at one point and I would look around at like, you know, my friends and I was like, I know you don't do anything but splash water on your face and your skin looks better than mine. Yeah. I just quit it completely and my skin got better. Yep. And it really comes down to diet. People often, I think men do skin care and things like that reactionary, either their

girlfriend or significant other goes, hey, you should try this or they're having a skin issue. So they're like, I want to solve this. But usually it's a dietary thing. that's catalyzing it. And so you can just keep just putting water on your face and just eat better food. And you'll probably be okay. Are you familiar with the Taylor-Leran skin care regimen? No, no.

But it should be. It's hydrogen peroxide wipes like a thousand times a day. I heard it and I was like, I've never heard anyone doing that. It's because it's the temperature set to 88 degrees. Maybe that's it. But I was like, I don't know anything about skin care, but that one sounds weird. That sounds wrong. Who knows?

Maybe it works. I don't know. Give it a try. Let us know how it works for you if you get that a try. Bill Gurley says, as a third party curious observer. All right. Serious. As a third party curious observer, I have several naive, unanswered questions about the Stargate Project.

Obviously understand that they have no obligation to do. disclose, here's a list with responses wide open. I would love to be able to aggregate the best answers at some point. One, corporate structure. The Open AI press release says that Stargate is a new company. Is Stargate established as a standard C-Corp, LLC, a joint venture, or something else entirely? And even a joint venture is not, that's not a structure.

Like, it can be a joint venture that's a C-Corp or a joint venture that's an LLC, right? Yeah. I think when you set up joint venture, you just say, we're starting a new C-Corp and the shareholders are the joint venture partners, right? So he has a bunch of these CEO leadership. We'll Stargate have an independent CEO. Customer exclusivity is OpenAI of the sole customer. Didn't they say in the announcement that it would have a new CEO, a new board?

I think so. Will they be as operationally intense as the XAI team that launched Memphis, operating partner role, releases OpenAI as the operating partner. What does that mean in practical terms? I think one thing that meant that they cleared up in the Dylan Patel piece is that they're using their software to manage the clusters. So it's more like a SaaS management component than... Yes.

I like this. Is Open AI the sole customer or will Stargate yearn to serve other businesses? Many people yearn. You got to yearn. Oracle's day-to-day involvement. What specific role are they playing? Did Oracle previously own the assets there? Comparison to CoreWeave, what kind of business is Stargate?

Is it effectively a direct competitor to CoreWeave's AI hosting approach? or is it structured and positioned differently. Debt usage, we, you know, we talked about this. Corrieve is rumored to go as high as three to one or four to one leverage. What level of risk will the entity consume, appeal to third party investors, standalone and potential round tripping and pre-training versus inference and data center structure. So he asks a bunch of questions.

And I think that, you know, we'll have to do a follow up to see what kind of, hopefully it is a post or he talks about on BG squared. but it'd be great to see where those come around. I think that some of these were answered, but there are a lot of questions. There's private company. Absolutely no obligation for them to share. Leave them alone, actually.

Why are you asking so many questions, Bill? No, everybody's been asking questions because it's such a big headline number that you're inviting a lot of that. But I think people will start to do. So if Oracle's public company, they'll have to report on their partnership and investment. Open AI.

has enough shareholders at this point that they'll have to. It'll come out. It'll come out. SoftBank is a public company. Yep. So they'll have to. So it'll all kind of start. You'll be able to paint a more clear picture over time. But again, they're raising pre-incorporation. This is what happens. Yeah. You know, raise a trillion, half a trillion pre-incorporation. Yeah. There's plenty of examples. The Google, Google check. It was half of something. It was, I think, half a million or something. The guy wrote the job. And they were like, whoa, where do we put this?

Yeah, we can't cash this. Didn't matter. Worked out. Going to happen again. Let's go. Let's go. Up only. Bull market.

Bubble market everywhere. Bull market somewhere. Arbitral at Electric Capital says, President Trump just issued a major executive order that touches on everything crypto. This is a big deal. Stable coins. Operation choke point.

Developer protections. A new crypto task force and a digital asset strategic reserve. Here's a breakdown. Protecting economic liberty. Americans are guaranteed the right to use open blockchains without fear of persecution, self-custody digital assets, promote the dollar through stable coins, banking access for all no more choke point 2.0, drive to get regulatory clarity for innovation. CBDCs are off the table, so no central bank digital currencies. They're going to create a new digital

asset task force with stable coin oversight, risk management and digital finance, a national crypto reserve, he says. A rollback of the Biden policies. Trump revokes E.O. 14067, explicitly rejecting central bank digital currencies and rolling back policies viewed as overly restrictive or government heavy in their approach to digital finance. Can you look up what Bitcoin did after this went out? I think it's down. It's all priced in. I guess it was priced in. I mean, really, people were expecting Trump to do amazing things with crypto. And so, like, you know, how can he meet those? Well, it's funny because what would a Bitcoin

have done if Trump coin hadn't sucked all that's your liquidity right people were selling Bitcoin to buy yeah I mean certainly some of the alts like dogecoin traded down because people were rotating I mean Bitcoin's so big at this point yeah I mean it's almost trillion I think maybe more

and so but it's a whole average but still that's 5% yeah yeah Trump coin is attracting more money from people that are not into trenches right they just have a little bit of money in Coinbase or whatever and they want to rotate. Yeah. I don't know.

I haven't been following the crypto news too much. I'm still just focused on this three that we always talk about the stable coins, betting markets and Bitcoin. Bitcoin basically. Store value. But I don't know. Hopefully we get more interesting stuff out of this. We haven't even entered the phase of the cycle where people are talking about like new,

new use cases, really. It's all just like me. Yeah, that's actually what I'm excited. excited about is, okay, if Trump made kind of doing whatever you want legal by nature of doing what he did, then a lot of the, I wouldn't be surprised if somebody starts to try to use tokens to represent stocks and actually bringing real world assets on chain, which historically was just expensive because of securities laws. But that's been a big. Yeah. Also, just like when the markets are up like this, there's so many more, there's so much more capital flowing around for, Like, oh, if somebody wants to really give, you know, crypto gaming another run, like, they'll have another shot on.

Yeah, there was so many. Maybe it doesn't work. Maybe it'll never work. But, like, at least we'll get another shot on it. I saw, I was doing some research for Bangor Archive last night and I saw somebody posting the obvious end state is the intersection of crypto and gaming. Yep. Because everybody's sort of in-game earning tokens with their time, but they're not actually tokens. They're just points in the game.

you can kind of like sell your account or you can sell gear and it's sort of like it is a market but it's not actually financially financially engineered. And so I do think I wonder what you don't hear about any games that were created during the 2021 boom. Like if you remember Bordiope Yacht Club was supposed to be developing an MMO. Maybe they still are. I don't. You haven't seen much about it. There were like decentral land and like the metaverses that were supposed to be like kind of Roblox do whatever you want.

There was one game that did feel like it had some modicum of product market fit called Dark Forest. Oh, yeah, yeah. That got like a little bit popular. It seemed like people actually liked. And one I've actually... The map was all cryptographically sealed. So it was like open source and you can kind of verify that the other person wasn't cheating. And there were some interesting things to it.

There's a game coming out. It was a great financialized. Game coming out I'm excited about. So Josh Harris, who was one of my first hires at a party round. He was 19 at the time, like college. dropout, killed it at party round, after he went to, like, was like an EIR, I think at Paradigm, and now he's building a crypto chess game that I think will be pretty cool, like being able to play chess with like real money on the line, have like special characters,

almost like a Dungeons and Dragons. Yeah, yeah, yeah. So that'll be launching this year, which I'm sure will be very. There was always just this big problem with like the crypto stuff like sounded good, but there there was very little reason for a game company like Valve or electronic arts to say like, yeah, sure, you can take your assets out of our beautiful ecosystem that we tax 30% on everything and we own 100% of the liquidity of. Like there was no financial incentive for those companies to ever be like.

Yeah. Yeah, this is actually. No, and the big one is the next GTA. Yeah. But it's like, okay, so then I need to raise a billion dollars and hire all the best artists and developers to actually make the next. Yeah. I think that was the big issue with crypto games.

Yeah. It's like, you are not. going to create a new game studio. Yep. Yes, you can use that if you have a pretty good game, you can use the token to incentivize people to actually play it. Yep. But then it becomes just an economy where you have people in the Philippines.

There was that game. I forget. Axi Infinity. Axi Infinity that people were like, this is the new economy. Yeah. And then it just was a Ponzi. Yeah. I mean, I watched a little bit on a Twitch stream just to understand like, okay, what does

this game actually look like? And it just like, it wasn't as entertaining as like even League of Legends or like, you know, Heartstone. or any game that it was competing with. And that's just because it's like new. But now you might have these big game, Activision, you know, riot, all these players being like, okay, crypto's a real thing.

Yep. Let's implement it. Yeah. There's just still such, such a countervailing economic force to saying, let's not do that. We have the best game. Yeah, yeah, yeah. GTA?

Oh, you want to buy GTA coins? And the whole thing is, like, I actually don't think that you should, I think if you're the best in the world, if you're the top 200 player at a video game, you should be able to make a decent living off of it. Yeah. I don't think that video games should be financialized to the degree where just playing it like, you know,

the top 100,000 players should be, you know, it's just like we shouldn't encourage that as like a career path. Yeah, a lot of this just winds up being some sort of like regulatory arbitrage, like wealth transfer. And I guess like the good ending would be like, hey, because of, because of restrictions on investing in companies, you have to be an accredited investor.

And so you can't raise money in mass. You can do like some sort of Kickstarter crowdfunding campaign for your game. But then you need to go to the venture capitalists. And maybe there's some sort of capital formation thing where if the game gets traction, like buying the coin is essentially like investing like the Trump coin. Like it's like it's just like getting more capital into this thing. But then you have to count on the developer actually like making something. It's all very, very fraud.

Anyway, let's move on to, we'll do base baron. and then we'll do a promoted post. Base Barron says, E. Wack, or the memetic death and rebirth of tech. If there was ever a moment, called it EWAC. If there was ever a moment, if there was ever a movement destined to fizzle out

like a damp matchstick, it was EAC. At least the EAs have a self-respect to make their leaders serve hard time. That's BF, I think. Here we see a movement ostensibly about the relentless push towards a techno capital singularity, instead mired in the quicksand of its own internal contradictions and the inherent flaws of its messias.

First, consider the misalignment between the movement's professed ideals and the actual behavior of its leading lights. EAC, in its essence, was meant to be a clarion call for the acceleration of technology, a rallying cry for those who see the universe's entropic dance as a mandate for human, human ingenuity to multiply complexity and intelligence. Instead, what we observe instead is a parade of digital anon's

ensconced in their online echo chambers chanting, accelerate like a mantra detached from any real world action. These are not the builders or the shapers. They are the spectators, mistaking their fervor for progress. And he goes on to write about, wow, he really wrote a lot about this.

He really cared. And he got 10, for it so congrats. Wow. No, I think but that there's a real sort of very real message here where when you have a movement

like it's very hard to go from doxed to not doxed. Like if we knew who Satoshi was, would that be good for the price of Bitcoin? Almost certainly now. Yeah. Right? Not even the selling pressure. Just every human is flawed.

And I find this like there's so many, there's so many different like health influences. You got to live this way. And then there's a family influence. You got to have a family and like work influencer who says, oh, you got to work really hard. And then when you dig into those people, you can always find like, oh, this person who's saying you got to work really hard. Like they have never had a family or like they've never or completely out of shape. And you're like, wait, like, no one does it all. But there's an issue where people commenting under every post accelerate, accelerate, accelerate.

Yeah, it's cool. I'm silly. But I think what what the Baron's saying is he just wants. to see those people actually creating progress in the real world and not being part of a movement doesn't mean you're having any type of real tangible impact right your way to have a real impact is to participate in the underlying activity that is driving towards the goal of the movement yeah it's tricky love to see baron let's see baron branching out into it's more thoughtful and i still think yak was best when it was just a joke at the expense

of EA's. And I thought that when it came up, I was like, I never put in my bio. I never joined these like silly movements. I didn't do, I didn't do the dot E thing. I owned it,

but I didn't put in my handle. I didn't do the NFT profile picture. I have, I have trouble like joining like these big like movements because I feel like you're always very risky. You're on the top. It could backfire. But with,

you'd rather, I was super aligned, but I thought it was just so funny to just be like, oh, we're poking these like super serious EAs who are like, oh, we need to like put everything in this red sheet and I was like these people kind of need to be made fun of and that's when

yeah it's it's best and then when it became this super serious like actually acceleration is like the only way is it's like okay this is not fun anymore yeah for me at least that was my experience with it ruined it uh give me we got a promoted post on a more lighthearted note but also serious at the same time we have a 19 john john's you're interrupting the post john let's go relax the 1960s aston martin db6 shooting break by flm panel craft is a rare and striking example of bespoke British craftsmanship with only three produced and one in left hand drive. And I just have a thing for shooting brakes. I, the first car that I ever, you know, had access to was a Toyota Corolla that was triple my age at the time. Very, uh,

paint chipping, uh, you know, hundreds, uh, probably 150,000 miles on it. Um, ever since then I've love shooting breaks. I was lucky to own a Ferrari FFF for a while. Great car. Thought it would be a good family car, but the Ferrari reliability was somewhat of an issue. But this thing is just amazing. I mean, imagine driving across the country and that, putting some real miles on it. Somebody in our audience should do that. So great example here. Great pickup. Yeah. Let's go to Chairman Bourb Branke. Love the name. I'm plotting on your rise, bro.

I'm literally up in the lab scheming on beautiful abundance for you. I'm cooking up ways for a rising tide to lift all of our boats. I'm praying for your gains. I'm lighting a candle to your inevitable splendor, dude. Just love this. He's by it.

Plotting on your rise. I love this format. It's great. It's great. It's been written around. Don't plot on people's downfalls. Plot on their rise. I don't think enough groups.

group chats, a lot of group chats have this sort of unsurious people dropping memes and talking a little smack, stuff like that. I want to see group chats that are oriented around winning together. I'm in one. It's called iron sharpens iron. Iron sharpens iron. Everyone takes it very seriously. Yeah, but the issue is people at the top are hyper competitive. Yeah, so people, there's a little bit of that. You got to really, you got to cut down. In general, this one's the most positive I've ever been. Five people oriented around winning together. Yep. Helping the brothers succeed at all costs.

That's what we're trying to do with this podcast. That's why we run ads. You know, you scratch our back. Yeah. You leave us a five-star review. You throw an ad in there. We'll read it on the show. There you go.

It's go to Catherine Boyle. She says, America is in deal mode and deal mode is infectious. If you have a deal you want to do, now is it a good time to get it done. Also, it's time to get married. Dive in. It's the golden age of America. She just added that? Yeah, I like that little follow up.

Like, go, bye. Hey, if you have a post that does well. This post sponsored by marriage. Pro natalism. Yeah, pro natalism. Yeah, the deal energy is real. It's never, it's rarely time. It's really a bad time to do a deal, right?

Yeah. You want to be greedy when others are fearful, right? So people are pretty optimistic right now for a lot of good reasons. But yeah, go do some deals. It's a good call to action, right? It's great. Yeah. deal.

Yeah. Deals with deal mode. Let's go to Ben Highlack. He says chat UPT can now use Claude. Ben immediately, of course he's immediately backing it. 5K likes.

Good post. Yeah, so he went to Operator, create a new chat to create a new B2B dashboard. And try using the app and tell me what you think. And so he's having operator

open Claude, log him in and then use Claude. to code for him. It's all just very silly. But yeah, I don't know. I mean, it's probably a good stress test of the system if you can use that. It is interesting. So, so great marketing for Ben because he has a analytics platform, I believe, for AI products.

But it's interesting how we're seeing already that somebody, I forget who posted this, that AI is eating UI, right? which eventually you will be able to use a model to use another model. So your preferred model, if you want to do something with another model, or just say, hey, go find the best model to do this task or like create this type of content. It'll just do it. And so you may never interact with the end UI. You'll just interact with your preferred model.

And that is why for all the hate and, you know, shade that people, throw it up an AI, oh, it's overvalued. Oh, then it's still owning being AI for the average consumer has a massive value. You're a navigator and you're the front end. Yeah. And when, it was last year or the year before, open AI launched GPTs where you could go in and create a custom GPT and you could upload specific documents, give it fine-tuning instructions. And there was, there was like an app store marketplace.

And every once in a while I would, I made one where I uploaded like a bunch of books and a bunch information PDFs about a specific topic and then I could query that and there were a couple others like one that would help you write threads on X and and I think the idea there was that you you let people build a ton of different GPs and then the one master GPT can can route to one and people were joking that there was one that was like laundry buddy that would just help you find like a laundromat but but in theory it's like yeah like maybe someone's made a GPD that does one thing much better and then the and then when you query the like the master GPT chat,

it can say, oh, okay, I'm going down. And this already happens with a mixture of experts and the reasoning models, but we can say, oh, okay, there's a coding model that's really good and I need to write some codes. Let me go over there and use that. Or there's a booking integration. And so all of that's happening kind of under the hood.

It's funny in this frame, but it's very, very real. So let's move on to Lulu. She says, oh, we should start with the, Yeah, brother of the year. So Bank of America posted an image that says, Bank of America serves more than 70 million clients, and we welcome conservatives. We would never close accounts for political reasons

and don't have a political litmus test. And it's really that, like, my shirt that says, I'm innocent of killing people is raising more questions than it's answering. Yeah, that type of thing. Yeah. And then there was instantly a community note saying Bank of America has been placed on

noticed by 15 state attorneys general for debanking conservatives. And Lulu is breaking out exactly what went wrong here. One, if you turn off replies, you look guilty. You can't turn off quote tweets. So you're just setting yourself up to get ratioed even harder by other means. You should have anticipated a community note, which looks worse than either comments or quote tweets. And if you're in the position of having to make a statement like this, comms and social media

aren't your biggest problems. rough yeah i don't even know why they had to make this yeah was saying a quote terriga by you guys and and his family and his ex-wife and his ex-wife's husband whoa because they were receiving yeah payments uh whatever uh alimony alimony yeah yeah wow yeah rough not a good day and and the whole thing is there were fintech companies emerging over the last six years probably four years i guess five years that were explicitly because conservatives were being debanked. And they were saying this is the right wing, which we shouldn't have political leaning. Yeah, it's very silly.

Our financial institutions should not be politically leaning at all. Yeah. Let's just keep politics out of. We keep politics out of the show. Let's keep them out of our banking system. I agree. I agree. Oh, this is a fun one.

I know you're going to have a lot to say about this. Jared Friedman says, Rockettable is the first, is building the first. is building the first one person, $1 billion company. The plan is simple. Buy up software companies, fire all the employees, and replace them with AI agents.

Literally the most AGI-pilled idea I have ever heard. Okay, so, like many topics, like many podcasters, podcasters often have a lot to say. Yep. I'll preface this by saying I don't work directly in private equity. Yep. And I'm not a software engineer,

but and the other thing I would say is I like this sort of big, bold idea. It's cool to have this, you know, major milestone, one person, one billion dollar company. Yeah. Very exciting. And I think that many sort of, this is a cool experiment and is worth funding from YC and is worth the founder trying to take a crack at it. Sure. But I have to, Matt, like, here's the thing, like buying companies, companies trade on a market. Yep. And it's not perfectly efficient. Sure. But any company worth buying unless the owner

does not have, you know, is not, doesn't want to get the best possible price. Yep. Uh, is going to talk to a lot of people, right? So if you're this one person company, and to get one deal done, maybe you have to talk to like 200 companies, right? And all those 200 companies are talking to other private equity firms, other individuals. They're exploring, raising other forms of capital. They have all these different options. I don't know that the classic private equity strategy has been to come in, fire all the unnecessary people, replace them with modern software. And so to me, I'm not quite sure that this, while I'm in favor of the experiment, I'm not quite, it would be, I would find it hard pressed to invest in the founder unless it was like

a personal relationship because I don't know that you're going to have any edge over the many other private equity firms that will all presumably follow the same strategy, right? Yeah. There's classic examples of software PE guys coming in, and there's 100 employees at the company firing 90 of them, right? And so firing all of them, I don't know how much better. I don't know if you're going to positioning in brand. Yeah.

And it's tough as a buyer. Historically, yeah, it's very good way to get attention. But what happens if this post goes viral, a bunch of talents. to people say, hey, I want to work on this. Sounds fun. And you're like, well, sorry, we want to be a one-person, a billion-dollar company. We'll hire you as a contractor or something like that.

Just can't have you on the W-2. And so setting these artificial constraints is cool as an experiment to say, let's see what's possible, what's going to come out of this, and maybe it will force us to develop agentic software that ends up being better. But I thought it was interesting. The Gumroad founder now has something called anti-work, where you can come just build software to replace humans at Gumroad.

Oh, okay. I think Antiwork is owned by Gumroad. And so there's other experiments that are going at this, but the main thing is this guy isn't just competing. Yeah. He's competing with every private equity firm that buys software companies.

And they don't care that you just have one person on your team. If they have a deal that they want to win, they'll staff it with five people. Yep. They'll tell the founder, hey, we're going to let go of a lot of people because we want to increase earnings, but we're not going to let go of your, you know, we're not going to let go of you or whatever, you know, whatever. And so it really comes down to paying a good price, winning the deal, knowing that the deal is going to happen.

Yeah. And I don't see business owners being too thrilled about the thesis, right? Yeah, exactly. You're going to fire my whole team. It's like, no, more like, even if you sell the private equity, if you've built up a business, you're like, well, yeah, like you're probably going to trim some people here. and there, wind down some relationships over time. Sure, the company might be smaller in a few years, but the idea of just like, oh, day one, the goal is just like zero employees, like, screw everyone. It's like even more ruthless. And like, I mean, when you go to the website of a

private equity company, they don't put front and center because sometimes they don't. Like, sometimes they actually grow the staff because that's what's best for the business. And they're really, like, they're, they're in some ways more ruthless or maybe less ruthless, but they're really just saying, We actually just care about shareholder value. And so that might mean more jobs. That might mean pay raises. That might mean pay cuts. It's very dependent on what is.

Yeah. Mave is what this turns into is one person being the CEO. Because you still need a chief executive. Probably. Offer. Presumably for some amount of time. Anyways, I'm excited to see it play out. We'll be covered on the show.

I want them to be successful. And let's see what happens. Yep. Let's go through some other stuff. Bill Halligan says the CEOs of the fastest growing startups are doing the following, 100% in the office. Two, very, very lean headcount, three, mostly homegrown exec teams, four, shooting for $1 trillion. Unicorns are dead and five, 80-hour work weeks. You love it?

You put it in there because you're excited? Yeah. Shooting for a trillion? There's a couple. about this. A couple of companies have been talking about a trillion. I mean, there's more trillion-dollar firms than ever now. You're only a few 10-Xs away from being a trillion-dollar company.

That's true. That's true. I think it's accurate. I mean, also, like, it's just hard to underwrite. And this is the dynamic right now. Yeah, this is dynamic. So if everybody has access to these AI tools and make everybody more efficient, it actually just means that you should work even more to just increase the returns on that leverage.

Totally. So, but, you know, if you're saying 100% in office, don't let me catch you on a Zoom podcast, Brian, because I want to see you doing it in person. That's right. Reyes says cursor is down. I'm writing organic farm raised non-GMO code by hand the way our ancestors used to do. 2K likes. A lot of people using cursor. They're excited.

I saw people got cursor working with deep seek under the hood. Really? Bad. That's the most inorganic, the most on-confarm-raised code. You could ask me. Coding with some of these AI tools like Devin and our cursor is like retired people in Vegas on the slot machines. They're just like, you know, hit it. Tap, tap, tap, tap, tap.

But you've got to get the code written one way or another. Let's do another promoted post and we'll close that with a bucket poll. promoted post from our friend Sean Frank not his first time on the podcast certainly not his last he goes that's a lot of metaspend he was sent a plaque for Ridge for being in the $100 million

club on Ridge that means they have spent $100 million with the greatest financial institution through their ramp cards through their no well they have a bill they have payments product too so not not necessarily all through their cards although it went through possible. But it, but yeah, and just goes to show, I mean, the Ridge is a perfect example of a ramp customer, very large, lots of, lots of net income and run extremely efficiently.

And I love that it's a deal toy. We need to bring back deal toys. We've been trying to bring back deal toys. We're working on some of our own. Yep. So if you're a company or a firm, put it on your list to make a deal toy. It's going to go on the desk. It's going to be a constant reminder of like, Yeah, Ram cares about me as a business counterparty, which is great. I think this is in the back of a truck bed too. Oh, really? Which is cool. That's cool.

Very cool. Cool. Well, let's close out with this bucket poll from Blue, Blue W. Mist. Blue says, you are getting lapped by people 50% dumber than you because they don't overthink stuff. Aim, fire, correct later. I love it. Some good.

Ties into your strategy recently, Golden Retriever mode. Reaver Maxing. Yeah. Just be friendly, hot and dumb. Intelligence is going to be too cheap to meet. But high energy. High energy. High energy.

Just do stuff. Just get out there. Just bark. Just bark. Just bark. Let your dogs bark. Grab that frisbee out of the air. Grab that capital.

That half a trillion. Go get it. Half a trillion. Go for one trillion. Woof. Woof. We'll see you on. Please go on.

Please go on a five-star review and leave an ad for your company or a friend's company in the review. comments. We love these five-star reviews. We'll print it out. We'll read it on the show. It's a free ad read. Also big Monday. As of now, we're planning to do our first ever live show. Oh, yeah. Happening from around, call it 11 to 2 p.m. Pacific. Sounds great. You're not going to want to miss it. We're very excited to go live and have a good weekend. Thanks, everyone. Bye.