TBPN Live - 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 DeepSeek, 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 DeepSeek 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 timeline's in turmoil over this.

Timeline's in turmoil. Yeah. up the timeline timelines and turmoil timelines and turmoil yeah uh and i'll go out on a limb to say this is china's next attempt at a dji tiktok type yep uh product where hey let's basically sell this product in america for way less than it costs uh give it away for free yep try to get a bunch of uh important you important companies using it or consumers dependent on it. And then it's a little bit of spyware everywhere. Yeah, extract the data.

Yeah. There's all the same geopolitical considerations that we walk through during the data story. And there's the incentive for them. 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 let's get into it.

So let's kick it off with a fantastic analysis by Dylan Patel and semi analysis. This is from May 7th of 2024. And it's interesting. Dylan is, for those that don't know, he's the Tom Brady of semiconductor analysis. 100%. He's the kind of guy that gets invited on bg square yep to he's been dogs you know how how the how the semis are barking these days yeah i mean it's a fantastic uh it's essentially sub stack subscription model 500 a year uh but then he also does a ton of consulting and what's interesting is that he doesn't just uh read the 10ks or anything like he will task satellites to like figure out where they're building stuff and really collect data. And then he sells a lot of hedge funds. Doing the same thing that hedge funds are doing.

It's more complicated. So I think Semi-Analysis is actually a pretty large company now with a number of analysts. And he's not going the kind of solo creator route. He's very much focused on building like a a research organization but uh 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 uh i'm a big fan let's see it so this is the title of this is open ai is doomed it to make microsoft and it's kind of uh walking through a bull and bear case for OpenAI, given all the different

dynamics and different cluster build outs 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, ChatGPT was blowing up and everyone was like, I will do anything if someone can 100 rental pricing is falling every month this was a big trend last year uh in 2023 chat gpt was blowing up and everyone was like i will do anything if someone can get me a rack of a 100s a lot of vc fans exactly a drama andromeda 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 size 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 OpenAI 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 where drop an entire book drop an entire book in uh in gemini and drop uh the entire banger archive exactly and so uh there's been a bunch of ways to differentiate even if you're you just get close to gpt4 you do a similar run and then you build a different tool around it or you find or you build different uh like you know unhobbling so this one uses the web this one it can process pdfs this one you don't really hear about mistrawl much anymore no uh is that because the you don't really hear about mistrawl much anymore. No. Is that because the French don't have a word for entrepreneur?

I like that. Oh yeah. It's the, it's the right. Ryan Zederson. They were trying to community note him on that, but I don't think they got it through. That's great.

It's probably a war. So Gemini two ultra is rumored to surpass GPT four to turbo in every way. Furthermore, Meta's Llama 3 405B is also going to match GPT-4 while being open source, meaning GPT-4 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

uh the models have fast approach being almost like the sports car market where it's like uh porsche can be like well we have better handling and mclaren 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 yeah you know so they're all just sort of competing doing a a lot of things pretty well, and then competing on these edge cases. And the reason that ChatGPT has stayed very dominant from a user standpoint is because they have the consumer mindshare. The average person is not prompt engineering. They don't care about the context window. They're just almost using it like a google that can do things yeah on your behalf yeah i mean

and this was one of the big like bear cases for these llm companies after chat gpt 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 grok 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 bootstrap 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 3 70B and better.

So this was not as big of news because it wasn't truly better than GPT-4. 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. And not too dissimilar, in my 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? So that's sort of. And, I mean, the Chinese censorship is already a thing.

It says, well, 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 does happen to win in the universal languages of code, and email, and math. Don't ask DeepSeek about the Uyghurs. Your laptop will explode. Yeah. Or not. And so DeepSeek claims that a single node of 8x H800 GPUs can achieve more than 50,000 decode tokens per second peak throughput. At the quoted API pricing of output tokens alone, that is $50 of revenue per node per hour. The cost for an 8x H800 node in China is about $15 an hour.

So assuming perfect utilization, DeepSeq can make as much as $35 an hour per server or up to 70% gross margins. This is what we were talking about yesterday. As you make these models more inference optimal, you get higher margins. And that's a lot of what Deep deep seek has been kind of lauded for and it even says uh even more interesting is the novel architecture deep seek 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, 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 there's two it really is there's 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 uh there are brand new innovations in mixture of experts rope and attention their model has more than 160 experts with six riding oh no the phone fell too much Oh, it's too many notifications. Yeah, yeah, yeah. Well, back to the show. Furthermore, DeepSeek 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, DeepSeq V2 training required one-twentieth as much energy, essentially, one-twentieth the flops of GPT-4 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. I mean, the new news there is that Satya 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. He really was early to this idea of Satya 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 uh 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 deep seek and llama 3405b coming to the open source there is very little reason did you want to enterprise before that did you want to cover microsoft trying to reduce their i i think you think it's kind of covered that in a sense that yeah uh you know that like the closer here is that many firms use open ai as technology through azure more than 65 percent of fortune 500 now use Azure OpenAI service. It's noteworthy that this is not directly through OpenAI. OpenAI 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 this piece about 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 is king section.

With DeepSeek 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 the competition's commercial adoption and attract more talent is working wonders so it 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 from doing build outs because they're like, what's the point? And this is probably the pressure that we felt on, um, Aiden 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, you're, 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 GPT five or GPT four, but if Zuck keeps open sourcing it, you're just never going to make any money because the open source one's going to come out. Yeah, it's going to be a little bit behind GPT-5 or GPT-4, 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 fine tuning is no longer a monumental task. And so one of OpenAI's advantages is that they have been ahead in collecting data,

specifically usage data, and that happens when you, sometimes when you issue a query to GPT4 or ChatGPT, 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'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 million users, but he says only a quarter of Americans have ever even tried ChatGPT, 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 L llama 370b is available across

facebook whatsapp and instagram they announced rollout 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 were focused on that for a while. They were like, we are going to bring satellite to Africa. 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. You basically have to do everything through Facebook, but it does bring more users online. And so 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 were 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 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 will, because people will just wind up searching in Facebook and Instagram. To serve 3 three 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 um either meta has made the financial math work or it is prepared to invest heavily to execute a land grab in the consumer ai space either spell disaster for incumbents yeah and that's uh the difference between Apple and Meta, where Meta is still in founder mode. Apple, Google are in manager mode.

And they're willing to invest. Google obviously has to show their investors and the markets that they're investing in serious about winning the AI race. 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 TSMC, 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 OpenAI. And so Google, they actually, DeepMind used to be a separate company. It was acquired, Demis Hasevis and that team, and they were working kind of separately. They finally, it 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 risks 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, OpenAI needs to be in a place where they can have access to the absolute largest cluster. Yeah, which is just which is why it's amazing that OpenAI 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. No.

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 with you. Take one of the best fundraisers ever in the most harrowing task, to be honest for you, take the bet. One of the best fundraisers ever in the world, Sam Altman. And then, but you give him 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 hardware as well um open ai trained gpt4 in 2022 since then they have been entirely focused on the next step up experimenting with new architecture data etc 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 mover advantage, but every time they ship something new, people dissect it and try to implement

many of those learnings. For sure, for sure. 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- Yeah, totally. How it actually works yeah i mean some of these it's just it's just like if there's a good idea like voice or upload a pdf it's like okay that's like a features are easy but also the 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, you know, no, it's so hard because, uh, people in startups like to, like to, yeah, right. There's no, I'm sure they all have like really intense, you know, NDAs and, and, and things like that, but

yeah, it's not like it's a government, even stuff leaks out of the government, right? Like totally, it's not as secure as, as, as, and so he kind of closes. And so he kind of closes with the midwit meme of on the left. And this is why he's goaded. 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 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 because they're saying, okay, well, these models are a threat to search. 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. 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. Probably the number one candidate would be one of the founders. gets but you know that behind the scenes he's worried about his job yep the probably the best 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 um where if you under invest and ai is real you're screwed if you over invest and ai is real you're great if you over invest and ai

isn't real you still, you still have, 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, the, the, the risk reward calculation is like super weighted to over investment right now. Um, so let's move on to, uh, the, I don't know if it was an interview or just a, some coverage of China's new face of AI, DeepSeek founder, Liang Wenfang. Wenfang. This guy, Wenfang, this guy

is, he's the next Frank Wang. The founder of DJI. We're learning, I mean, very similar stories. We'll dig into this, but this is from the By the way, he looks incredibly good for 40. He looks like he's like 22. We'll dig into this, but this is from the – By 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, we don't know if anything they say is real. He might be 20. So he might be like Bill Minitis. Oh, yeah, yeah. He might be like Bill Minitis.

Yeah, a little age gambit going on. Yeah. A lot of people in Hollywood doing that. Yeah, yeah. Changing the ages. So DeepSeek is in the news again because they launched R1, which is their reasoning model that competes with O1. 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 hosted by the premier in Beijing on

Monday. Liang Wenfang, 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 tests showed that it's DeepSeek version 3 LLM, which again is not the reasoning model. This is more just like a GPT-4 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 GBT creator OpenAI. Lee called on the economy's new growth drivers. Because we don't have images pulled up, he 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 true sound heart 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 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 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 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 that we don't have a lot of details but yep and we should try to go through the girly piece because he like gave a threat of here's all the questions i have about about open ai's uh project start yep but if if this is 1.4 trillion total is what they're saying over six years uh if if masa 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 ai or so you have have Microsoft and Google and a ton of other big players, not to mention early stage investing. So I imagine we can and should dwarf that number just to make a statement. I 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 trillion. Oh, yeah. Perfect. Okay, great. It trillion, we've got to do 10 times as much. That's what I'm saying. We should dwarf their $1.4 trillion. Oh, yeah. Perfect.

Okay, great. It would be un-American to not do. I was about to grab him 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 DeepSeek. Hailing from southern Guangdong province, Liang 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 Zhejiang University in Hangzhou. Along with a group of university 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 in OCaml, which is like a programming language, like machine language. It's almost like, it's like, like Python is like three levels of abstraction away from them. 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 uh and high fly high flyer quant grew its asset under management more than tenfold over a four-year span from 1 billion won 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 AI to build a leading AI infrastructure and conduct large-scale research, the company said in a statement in 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 bans, according to a local media outlet. On its website, the hedge fund manager said it spent 200 million yuan and 1 billion won in uh 2020 and 2021 respectively to build its fire fly fire flyer series of ai computing clusters um then a senior research scientist wrote the deep seek 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 is. And yeah, they very much are trying to spread the narrative that this company just randomly popped up,

spent 5 million bucks and had a model that was competitive with OpenAI. And it can't be overstated how much that is not the truth, right? This is a team that had been building. Yep. And we'll get into this, but there's a theory that they got a call 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 Oman. And go compete. And you have to do this.

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% of Chinese agreeing with the statement, AI will lead to many new jobs created in my country, contrast, 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 today. 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, you 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 yeah you know professional services uh you know economy going there so uh interesting um anyway uh adipy sums this up nicely in a very long post that i think we should go through uh and then we'll get to some timeline on the what's uh what's adapy's backstory i see his post but i never actually looked into it i i don't know uh i think anonymous poster for a while kind of ai insider slight you, 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. Which is 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 doxxed and kind of decided to put his face and full name up there yeah yeah um but he says uh 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. Yeah. And the reason that they're lying is because there are very strict export controls on GPUs right now. And so they legally should not, as one organization, have access. Yeah, this is a situation like, this is the equivalent to a bunch of terrorists driving the Toyota Hilux. And everybody's like, Toyota, how did you get,

how did these terrorists buy 400 Toyota Hiluxes? And Toyota's like, oh, I don't, I actually don't know. And Toyota's like, oh, 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 that's exactly how it would be. With the DJI drones, like, oh, if there's thousands of them in Ukraine.

Yeah, and so I don't think this has happened yet, but Jensen should get pressured to explain how did these 50,000 GPUs just land in mainland China. Yep. Yeah. Cause it's not a small number. Yeah. There's, and that's a whole,

and, and, 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, there's the H100, uh, which is the, the, the current top of the line AI training chip in America. Um, and then every time they, they, NVIDIA launches a new chip. So the next one's Blackwell. The previous one was A100. They, 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 TSMC. A lot of people would say, hey, NVIDIA, 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, cut this out, have so much Nvidia 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 regulatorily. 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 absorbs so much cost. Early Bitcoin miners had access to free power because governments built power plants to nowhere and miners were willing to site next to them. And so to be clear, there's a very real scenario where DeepSeek can authentically say, we only spent $5 million on this model, but the local government was like, we'll spend $5 billion. Exactly. 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 common. So in the Middle East, 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. 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 Gorges Dam is a massive dam. It's one of the biggest power generation facilities, think in the world maybe the most uh 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 um This is why American investors, this is, wow, Ben. Wow.

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 him with a subsidized Chinese laborer. Producer Ben in China, Ben Wang. Yeah. subsidize chinese labor uh producer ben china ben wang yeah um the uh this is why american investors always get hosed when they invest in in in chinese companies of course uh because

china has a different approach it also happens internationally i 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 in the belt and road initiative was going on yeah and i hate that initiative i hate that initiative um uh and i read do you remember cable gate the leaks that uh it was like a wiki leaks project where they seized all these like cables between different uh like state department embassies and stuff the kids would go back and forth and they leaked them and you know it became like a 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 kenyan embassy would write cables and explain like oh we you know here's what here's what's happening on the ground and one of the things that they they found was that what i found in these in these emails and these exchanges was that um the when when an american company would come in and say, hey, we want to do business, like, oh, you need some infrastructure built? Like, we're happy to help you.

There would be a bidding process between America and China. And the feeling was that 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 u.s that uh tesla gets these subsidies in the form of ev tax credits and rebates that is happening on steroids and thousand x in china where uh because the ccp the government 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 yeah and you know the the the company gets to skim some profits still but but ultimately they're being there you know this is king-making process. Yeah. And so, A2Pi 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 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, 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 sense. So he says, this much is clear. The model is really, really good on par with OpenAI release from two months ago.

Having said that, unreleased models from OpenAI and Anthropic are probably better. The research agenda is still being set by the US 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 it's reverse engineering i would i would caveat that by saying china is is uh infamous for industrial commercial espionage yes and it it's probably the case that it hasn't been proven that they're doing this yet. Yeah. But without a doubt, OpenAI 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 ChatGP. 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 standpoint. Our API business is ripping. Oh, there's one client that spent a billion dollars? Where are they?

Oh, it's... OpenAI is 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 US trained PhDs. They are less constrained than American law firms by IP licensing, privacy, safety,

and political concerns around wrongly ingesting data from people who don't want to be trained. 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 the tiananmen square issue the model can say it even the deep seek website doesn't even if DeepSeek website doesn't censor it. Even if the DeepSeek website doesn't. Oh, interesting.

So when you're on the DeepSeek app, you're interfacing with their model, but the actual model under the hood, they didn't censor that because 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. 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 us trained phds that expands the pool wait uh i got a call out for the audience yeah go into deep seek uh play around with the api and uh try to have it generate an ad for uh your business that we will read out on here so but it needs to be a screenshot of yeah of uh you know actually on deep seek so yeah i like that so let's go through some timeline but don't give them any other any other uh you some some some up-to-date information about the r1 launch and how it's been received we'll start with with Mark Andreessen and we can kind of go back and forth here. Mark says, DeepSeek 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 yeah this was posted today today it seems like an insane thing to post to me i'm not i'm not gonna like like if you understand i think it's uh not uh it's sort of disingenuous to say that DeepSeek is different than TikTok or DJI. It is different in the sense that 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 risk of DeepSe seek is extreme enough. And I'll quote a very conflicted member of the conversation, Neil Kosla.

Father obviously has a big position in OpenAI. He says, deep seek is a CCP state psyop and economic warfare to make american ai unprofitable fact check true yeah and and the important thing there is that it is zuck has been running this playbook with llama open sorting the the the lagging edge ai model and it's had a strong effect on the competition yeah 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 the model run it on a smaller cluster and if i'm choosing between llama or running or paying gpt to host or paying open ai host gpt for me or running deep seek locally i will choose deep seek locally because it's cheap and so so that part doesn't doesn't fully fully sit because yes they are faking the cost is low but but it doesn't matter what price they set because it's open source yeah like they're both things are true they 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 yeah 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 and turmoil the timelines and turmoil folks yeah 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? How did they train under the radar? 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 Vidya's not going to say, oh, yeah we we actually you know figured out how to how to get them all these chips 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. And you just can't, there shouldn't be any trust. I would hope that startups are smart enough to 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 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 um 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, it is, it is this complicated geopolitical thing because it is, uh, kind of making the lagging AI labs in the U S less relevant and that's potentially hurtful, but it's not as dangerous as building on TikTok. It is 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's no doubt. But as with almost every high importance industry, the CCP is undermining it with propaganda and subsidies. You see this in EVs,

drones, electronics manufacturing everywhere. And so I'm going to take, I respect that it's open source. 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 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 DeepSeek as their home. That would be very bad because that is a controlled app but i just but i just think about it from the lens that uh again china would not allow uh open ai to get a foothold in the chinese market and have hundreds of you know thousands of companies leveraging it sure uh and i think we should follow their lead on this one. Yes. I don't think they've done anything to stop Lama from going over there.

All Metaproducts are banned. But not open source ones because you can literally throw it on a hard drive and just fly it over there and then you have it. You can still make it illegal at the national level. Maybe. It's just such a it's such a lower uh like security risk yeah it is economic here's i just don't here's a here's a

here's an interesting a security risk post uh i don't know i the only other thing on that point is if you look at um what's the um what is the what's that uh malware that took down the iranian oh yeah and so so there's maybe he's a security audit first we there's they're talking about stuxnet stuxnet yeah was something that literally traveled to every country yes yes on a on a you know i'm just saying that there's we're not qualified to even really uh that's interesting yeah i mean so so like the actual code that runs in llm and pulls in the weights is like pretty simple yeah um and it's probably built on top of like pytorch 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 yeah it's not we just don't know a little sci-fi but we're getting close it's just believable that the the chinese intelligence would would say hey we have this like yep we deep seek is a winner let's be a great like sci-fi plot or like actual like problem would be would be it we're open sourcing a model it's really really reliable we're gonna make it super cheap but then it doesn't call back it doesn't even need to but over time over time as you ask questions it will slowly start steering things

yeah because it's essentially like it has a has like a higher order thought process in there that it's reasoning through and it's not giving you those tokens yeah i just i didn't think there's fascinating there's so much technology that that isn't yeah publicly the public ourselves we're not even aware of yeah right and Right. And so I just don't trust, I don't just trust it. And I think there's enough precedent. Uh, one,

one can't fight it. Yeah. Uh, one, uh, Citrini, we got a post from Citrini 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 ideal ideologically at least it should soften the blow which which is cool i like that hedge fund 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 they're doing things that that uh 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 made this but i do think that i do think that the the talent flow balance was shifted for a few years. Like Palantir was really the hot ticket

for the best engineers. It was big tech for a while, but until the AI stuff, the really, really top engineers were 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 the real the real alpha make more money the real charging horse would be jane street releases a model that everybody can use that like kind of helps you make money you know yeah but then but then it's feeding them that yeah yeah that's good the order flow and then they're just trading against you yeah yeah uh neil's rose raj says um 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-sourced, 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. Yeah, I mean, it did take over the timeline so the fact that this means and this is what this is what this is what's scary okay tell me this from stanford to mit deep seek r1 has basically become the model of choice for america's top university research researchers basically overnight half a million views this was posted yesterday and again this is just bad there's no way around it uh 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 um un-american uh open ai scraped the web to build a closed source model deep seek scraped open ai to build a closed source model. DeepSeek scraped OpenAI to build an open source model. This is from Norgard. This is a hack. Low temp banger from this morning. Another one, DeepSeek. The data exfiltration is the real cost one, because that might've 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 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 cost 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. Deep Seek is another example of China rapidly commoditizing new high tech industries and preventing the West from making excess profits or rent as it's called if this keeps going the standard of living in the west will fall uh i don't necessarily agree with the last line because obviously llama has already been yeah doing the same thing effectively but um certainly uh tiktok eats into uh 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 US. 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 cutting edge AI because it's just giving our best tech to the CCP. Yeah. For free. But now it's kind of flipped around. So did you generate this for 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 uh and it's him giving

examples of the uh of of deep seek and and just just explaining how here take this and i will so ethan says the the raw chain of thought from DeepSeek is fascinating, really reads like a human thinking out loud, charming and strange. And so why this is interesting is because most of the – when you use ChatGPT-01, 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 DeepSeek is open source, you can, 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 very simple prompt. And it thinks for eight seconds and 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 um and then so it's like going back and forth like wait map is a verb here fireflies 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 if you generate three pages of text you can get a little bit closer and i think this is kind of a bad example um but a better prompt is you know create a 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, 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 DeepSeek 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 Eric's words. He got me. But yeah, I mean, this is the whole thing uh the developer community because they are hosting it feels like smoking and so and and so this is an example of what you're worried about because if you're if you like i guess my

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, 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 every one of these requests that he's putting in is information for them to train the next model on. 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 Llama. Even though Llama is open source, Meta is getting the training data and the upvotes and downvotes from those user interactions because Llama is the number one LLM, not because people are hosting it independently although they are plenty of companies are hosting llama independently they're the number one used ml llm because it's tucked into instagram and so they just have a ton of interactions there yeah signal another good post kind of hilarious how deep seek is exactly what chat gpt was supposed

to be what open ai 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 Khosla and others have made. This is like watching the Communist Party write a love letter to decentralization, which very signals a great writer. But 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 even like uh the red cross's annual budget globally is like a billion dollars right and that's like one of the biggest you know non-profits yeah uh i don't believe that uh china is writing a love letter to decentralization no uh you you could say it's like watching the communist party write 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. There's even more on this with the AI diffusion rule. This is a new law and rule against chip exports. And they're just showing that we're going to find 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 uh smic and smi so they have their own tsmc 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 energy totally at the state level energy uh data data, 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 making a splash and actually being a middle finger. 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 what oh this is this this is interesting you see this one yeah i'll explain this so um rachel tolstoy bb says tagging the adl under every tweet denying DeepSeek costs 6 million. The reason is because people, like, it's like, it's a criminal to claim that they spent that little. Yeah, yeah, yeah. And it's like, you want to engage. So this is from an interview with the founder of DeepSeek about moats.

He says, for the past 30 years 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 non-profit research institute if you choose to innovate and then share it through open source where will you build your moat for instance the mla mla architecture innovation this may will likely be copied by others right yep liang 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 posts, how is DeepSeek going to make money?

Gets 2,500 likes. Banger. Han Zhao says, DeepSeek's holding is a quant company many years already super smart guys with top math background happen to own a lot of gpu for trading mining purpose and deepseek is their side project for squeezing those gpus so this this is literally on the on the on the 22nd so of days ago, claiming that DeepSeek is a side project. But also the DeepSeek founder is meeting directly with the CCP. So 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 algorithm the algorithmic improvement is very serious and and legitimate and i don't think anyone denies that um 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. 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. It goes over. This is like Toyota selling their Hilux 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

um and just to give you some scale a single h100 gpu is 24 000 and that's about 40 to 55 40 to 45k once you add in servers working we should get some h100 um 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 five billion dollars for a hundred thousand gpus and so uh xai's round was six 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 i mean you just you just find it like uh markets companies

governments find a way right yeah like uh wasn't it that the united states didn't want israel to have a nuclear weapon and then they just made it right yeah it's totally possible it's all gonna happen yeah it will look like oh peru bought 50 000 h100s and then they didn't train a model like it just we don't know where they went right yeah so so i mean it's getting it's getting tricky like there are pretty strict export rules on you know you can only go to an ally country. Yeah, so it'll literally be like, who's that guy we traded, that grenier NBA player in Russia? We traded him for the merchant of death. There's going to be the merchant of GPUs 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. They'd probably 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 gonna get so big that it's gonna show up in nvidia's like earnings and stuff oh there's an extra 1 million gpu order and there's only 4 companies in America that that could be you know and if it's not them like where did it go

oh it 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 a full the illegal arms trade

drug trafficking all this stuff you're right has been happening you we've never been able to stop arms dealing you've never been able to stop drug trafficking yep uh a million gpus is a lot though i i i would hope i would hope that it's easier for us to stop a million gpu i've watched the last Netflix show I enjoyed was Narcos. Sure. And, It's a great show.

Narcos, you have a situation where the US federal government knows exactly who is selling the drug and raking in the profits and still takes them decades to take them down.

Yeah. So, It's just tricky when you have like a, like an SEC regulated company at the center of this, like Nvidia, like you can put pressures directly 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 gonna have to do that 10,000 times. But it's worth it. It's worth. Yeah.

Yeah. Yeah. I guess it's the same way. It's the same way that a thousand fronts. It's worth. Yeah, yeah, yeah. I guess it's the same way. It's the same way that. A 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-a-mole. You hit one and they pop up. So 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 build out. 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 a hundred GPU cluster and they are just a thousand or a hundred thousand GPU cluster. They're going crazy. They bought, 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, but they, they just need the power. Then they also have which is like not esg friendly at all but but they they just need the power then they also have tesla battery packs to help uh to help yeah uh like balance out load and then they're also taxed so we talked about this they sell like a 50 million dollar battery pack yeah yeah no and i was literally just sent that over there the reason to be extra bullish on XAI is that Elon is the only founder mode model 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. Via factories at Tesla, Starbase, etc. And so they're next to this gigawatt natural gas plant which should support roughly a million GPU cluster which would be like the GPT-6. And the crazy thing there's probably a chance

that in the long run Elon does absorb OpenAI right? Because you just don't know. He's happy to acquire a hostile company. And so one of the funniest things, so there's two funny things we should also talk about in here. One is that, uh, the ESG thing is, is becoming, uh, like way, way more complex than it used to be. So typically, the AI researchers are pretty ESG-pilled. And 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 Apple made this. China does not make this. China definitely doesn't do it. And they made those promises based on, oh, yeah, well, like apple made china does not make this right china definitely doesn't do it um 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 two two percent five percent a year like with our revenue with our profits with everything so yeah it won't be a problem just swap out 10 a year for clean energy and then we'll be clean by this date. 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 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 literally, they literally think AGI will figure it out and just do carbon sequestration and we'll have so much powerful super intelligence that will be building Dyson spheres 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 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 the agi future which is fascinating uh and then the last the last thing in here that was interesting was i mean xai is just doing all this crazy stuff they they they needed water cooling for all their uh 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 um and then uh the uh the the last thing is uh monday monday or tuesday we're gonna cover the business of of data centers yeah like core we're excited yeah that'll be great core weave and stuff because coreave is also doing crazy stuff. CoreWeave has 200,000 GPUs, billions in revenue. And 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 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 DeepSeek. 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 OpenAI's Stargate joint venture with a fantastic article in none other than Dylan Patel's semi-analysis. He writes, the OpenAI Stargate

joint venture announcement had many folks' heads turning, despite us calling out the capital requirements for OpenAI's immediate plans months ago. So OpenAI 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. Altman 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. Wait, don't skip over this headline. It's cluster measuring content. Oh yeah. our best our elites are getting into a cluster

measuring contest again yep uh 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 uh well presumably isn't there going to be many clusters? I think this is basically all going into 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 but debt uh plays a big

factor here so even if if they have 10 billion dollars they might be able to build yeah 30 billion dollars of actual yeah so the uh and he goes into the total cost of ownership stuff but um essentially the the the game that we're playing here is order of magnitudes. We've the, you can think about the GPT-4 cluster as $500 million, the XAI cluster that's 5 billion, that's a hundred thousand GPUs. And now OpenAI 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 of 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 OpenAI 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. And 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. There'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 OpenAI, with the former three companies contributing capital initially. The project includes the build-out 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 giga campuses, which I love that 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. 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 had just happened 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 totally two if you had a gas station there all of a sudden like your revenue just like probably 10x totally i don't know what was going on in abilene yep prior

to this but um uh you're doing pretty well if you owned uh you own 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 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 GB200 servers that are due to be shipped over Q2 and Q3 will be dropped into the Oracle Crusoe data centers.

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 build out, the 20 building campus will be comprised of 80 of those modules. So it's going to look like a city, which I'm excited about. This is awesome. Based on the build out we have scheduled for OpenAI in both our models. OpenAI 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 different like oracle is going to own one stargate is going to facilitate the ownership of a few of these but it 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'll 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 Lansacom Crusoe Abilene Clean Campus. Lansium. Lansium. And has a stated capacity on

their website of one gigawatt energized in 2025. It's cool to see, uh, when you let private companies take on big projects like this, that you can do things pretty quickly. Oh yeah. Totally. Comparing this to the California rail. Insane. It's just night project. Yeah. Um, it's insane. Yeah. Uh, the, uh, the guy behind Crusoe, uh, 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 companies have 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 or solar available can we just stack a bunch of batteries here like what what can we do and so uh in short we estimate open ai is paying roughly 2.8 uh two dollars and 80 cents per gpu hour for the first gb200 cluster which is a total cost of ownership of two dollars and 38 cents an hour for the full scale cluster these figures scale with future nvidia gpu deployments um and then they break down some of the nvidia uh revenue estimates and as we go forward to new gpus uh the number will double for each generation and the power per gpu also grows while 700 000 gpu sounds small for 100 billion so this is why this is why our joke uh being like it's all for you brother the post we made about jensen

and masa 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 in ai right now yeah um because everyone else is losing money but not jensen baby and so the project's financial backing uh 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 degree1.5 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 a $100 billion fund.

Yeah, that's right. And there's a question about 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 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 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. OpenAI 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 billion position. Could SoftBank also borrow against their arm stake? Yeah, certainly. Moss is not afraid of levering out. OpenAI also doesn't have the capital, but they will be able to raise with O3'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, Musk is right. They don't have the money. That's the tough thing when you get into it. It's not hard for Sam to raise a billion, and this is the same thing for founders.

Very easy to raise a million. Raising 19 million, you're getting into territory that people start to ask. They want the spreadsheets to 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 OpenAI 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 2026 and beyond, which scale massively.

It is possible OpenAI 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 as OpenAI utilizes another infrastructure partner. As Sachin Nadella 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 yeah 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. Watson knows what he's doing. But only because of the Grace and Vera CPUs that accompany Blackwell and Rubin 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 data center deep dive. There are companies that just make Ethernet cables and they're just printing or like the screws that go in the server racks or like the air conditioning units, the water chillers,

like all of these things are like, you can't even buy natural gas generators anymore because they're so in demand yeah and so those companies are going to be ripping we should do a whole market map like totally um with that other company the the the business of uh rebuilding i guess um so softbank likely pushed for arm to get on the pr and the 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 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 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'm going 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 continue to be built out with the aim of distributed training. So training across multiple data centers. And so there's some savvy real estate investors out there trying to figure out where the next data centers will be 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 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 rental like apartments just probably yeah two extra yeah i mean data centers aren't as dense in terms of human capital as totally you know a 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 uh i mean even like you know security guards are going to be in demand like dumb white uh where there's the white monsters oh yeah or the super cracked the 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 the plant in person i want to go see this shot of us uh 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, Texas. Or Starbase. Starbase, Stargate.

Rivalry. Rivalry. Oh, interesting. I wonder 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 AdQuik? On AdQuik.

He just rips a billion into AdQuick. And he just rips Billy into AdQuick and just perpetually... Trolls? Trolls. He would do that. He likes a troll. 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 posts. 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 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 remember that forever. Bees enjoy honey. So our printer ran out of ink, so we don't have all of the posts 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. Li Auto builds robots. Baidu 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. Like there was a time when Apple was going to build a car and we've seen some some crossover but i think the ftc really screwed this up because you know even just the amazon thinking about building home robotics they fought a fight on the roomba acquisition and all this stuff and there's just been so much pressure like almost died yeah and if you're if you're a big tech company and

you're going into okay yeah we are apple 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 a fitness VR game basically. Clearly, probably just an acquirer for some great developers who never really got product market fit on their fitness app because it's a small market tries to bring them in and

the ftc blocks it and says that so that this will give them an undue monopoly control over the vr fitness industry it's like what vr fitness industry this isn't a real thing there's like ten dollars of revenue in this industry why are you shutting this down? Just let Zuck build a little bit of a team so we get something. Let the man Zuck. Let him Zuck. Let him Zuck. And so, yeah, ridiculous. I don't know if you have anything more on this.

Yeah, it ties back. I posted that we need our own Project Stargate for domestic drone manufacturing. We've let DGI own the commercial consumer drone market in the US. They own a lot of the commercial drone market. They fell into police stations. There's a lot of individual SMBs and manufacturing facilities that could manufacture parts for drones. But the issue is there's not a clear demand from US-based companies. And so we need, if we want to be competitive on drones, which, you know, other people have said are the next, it's like getting into, it's like the, it's the next gun in terms of a player on the battlefield. 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 it just purely on a mass volume basis will get smoked right so um yeah i mean and this goes back to to carry no interest has talked about this before he says that if you want to compete with china it's not about just encouraging manufacturing yeah and making a you know a better regulatory environment it's massive government incentives and investment that the Chinese government has done for decades now. Yeah. Let's go to Ben Heilack. He says, DeepSeek 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 completely freaks out. And I don't know if this is real, but it feels real. You never know with Hilac.

He's a good Photoshop artist. He's a notorious screenshot. He did the Jaguar rebrand. He did the Jaguar rebrand. That's right. Hilarious. But yeah, I i mean i'll have to play around with it myself see if i can jailbreak it see if there's some fun stuff i'm sure i'm sure we'll get more in the coming days of people playing deep seek um 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 health this is biohacking 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. He's just walking between meetings, spends a lot of time on his feet. So the exercise thing is crazy.

But also a lot of these old dogs that have Warren Buffett, et cetera, they don't seem to need to lift weights like they maintain mass you know they're size lords right you're a size lord you can keep the mass on yeah without without weight training uh it's it's interesting because most people feel better if they have a bigger meal for lunch but i I find when I'm really busy today, we had breakfast. I had like half a breakfast burrito that I won't have eaten until I'm going to have a big meal for dinner. Speaking of the mass monsters, 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 day and so there's something to that like consistent like sustained energy like snacking yeah 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 cokes 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 uh bennett siegel says seeing a lot of pitches on marketing agents as a low-cost high-volume way to scale customer outreach before the gen ai era we just called that spam yeah i it's it's hard to be it's interesting because you know i made a joke recently about how you know uh trump making an executive order to ban

the creation of new ai sales agent companies very trendy uh and so it's a very you know and i'm sure there's like 10 of these companies in the yc batch yep uh 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 the value of relationships seems to be accelerating the value of a cold email is going to decline pretty 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, you know, 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, to. Yeah. I mean, I, I don't think I've ever fallen for an AI generated cold email. I, I don't even respond to any cold emails. I don't even respond to any cold emails i don't even respond to warming else often i have about a thousand emails that i should probably go through uh you know even some close friends have trouble getting through to me sometimes unless it's really important yes no i have 3251 unread texts right now so i'd like to see an ai i try and break through on that but at the same

time like i do think that uh yeah it might be hard 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 email is you can send a terrible sales email,

but if you send it 10,000 times, you're going to get one person. And 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, normally direct email outreach is reserved for B2B customers where a single client closing is usually well over $1,000 LTV

and direct response on Instagram ads is for stuff that's like around a hundred dollar ltv right or below and so maybe the ai sales agents kind of democratize that sdr experience for consumer products at the lower level and so it's i gotta i gotta 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

that you can get on him. So it's like, you know, boner pills basically. Yep. And it's been like that for decades. Yeah. That was the major alpha of like internet spam. And they they figured out you can send if you send a hundred thousand emails and only and it's point figure out when you really don'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 was like, you really didn't do your research. You think they're going to recruit me to join TikTok? Yeah. There was a guy, 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 on 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 did a bunch of other stuff and i think he was like smuggling crystal meth from north korea at some point was like 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.

Cause he wrote a bunch of crypto, not cryptocurrency software, but like cryptography software. And it was like early, like kind of like the hours for good. Yeah. He was kind of like a, like a Silk Road guy. Yeah. Yeah. Yeah. Kind of proto Silk Road.

Let's go to Avi Schiffman on the bucket poll. Let's see what he's got to say. This looks, this the bucket poll let's see what he's got to say this look this sounds familiar let's see what he's gonna 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 it's good water and an office job yeah i think you had that take like a like a week before you but it's funny i i when i was in college still i as many college students do would randomly suffer from acne so i was like i'm gonna try to like get some face wash and all this stuff sure and i ramped it up and i was using like face wash and like you know a moisturizer you know at one point and i 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 um and it really comes down to diet. People often, I think men do skincare 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 lorenz skin care regimen no no i should be it's uh 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 her the temperature set to 88 degrees maybe that's it but i was like, I've never heard anyone doing that. It's because the temperature's set to 88 degrees. Maybe that's it. But I was like, I don't know anything about skincare, 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 and give 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 disclose here's a list with responses wide open uh i would love to be able to aggregate the best answers at some point. One, corporate structure. The OpenAI 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. It can be a joint venture that's a C-corp or a joint venture that's an LLC, right? I think when you set up a joint venture, you just say we're starting a new C-corp and the joint venture that's an LLC, right? 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. Will Stargate have an independent CEO? Customer exclusivity. Is OpenAI 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. Yes. I like this.

Is OpenAI 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 talked about this. CoreWeave 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 we'll have to do a follow-up to see what kind of, hopefully it is a post where he talks about it on BG squared, but it'd be great to see where those come around. I think that some of those were answered, but there are a lot of questions. There's a 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... Leave Birdie out. So if Oracle is a public company, they'll have to report on their partnership and investment. OpenAI has enough shareholders at this point that they'll have to. Stuff will 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. Raise a trillion, half a trillion pre-incorporation. Yeah.

You know? There's plenty of examples. The Google. check it was 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 gonna happen again let's go let's go up only bull market bubble behavior bull 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. Stablecoins, Operation Chokepoint, 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 EO 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

recently. It's all priced in. I guess it was priced in. I mean, really, people were expecting Trump to do amazing things with crypto. How can he meet those expectations? It's funny because what would a Bitcoin have done if if trump coin hadn't sucked all natural 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 trillion, I think, maybe more. But still, that's 5%. Yeah. Trump coin is attracting more money from people that are not in the 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 those three that we always talk about the stable coins

betting markets and bitcoin bitcoin basically store value um but i don't know hopefully we get more interesting stuff out of this we we haven't even entered this this the phase of the cycle where people are talking about like new new use cases really it's all just like yeah that's actually what i'm 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 give, 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 will never work, but like at least we'll get another shot on it. saw i was doing some research uh for banger archive last night and i saw somebody posting the obvious end state is the intersection of crypto and gaming

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 yeah 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 financial financially engineered yeah 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 board api club was supposed to be developing an mmo yep maybe they still are i don't haven't seen much about it went out there were like decentraland 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 they got

like a little bit popular and seemed like people actually liked and it was kind of one i've actually 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. Financialized.

Game coming out I'm excited about. So Josh Harris, who was one of my first hires at Party Round. He was 19 at the time, like college dropout, killed it at party round uh after he uh went to uh like was like an eir i think and at uh 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 yeah almost like a Dungeons & Dragons. That will be launching this year, which I'm sure will be very... There was always just this big problem with the crypto stuff sounded good, but there was very little reason for a game company like Valve or Electronic Arts to say, yeah, sure, you can take your assets out of our beautiful ecosystem that we tax 30% on everything and we own a hundred percent of the liquidity you have. Like there was no financial incentive for those companies to ever be like, yeah,

yeah, this is actually, and the big one is the next GTA. 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, yes, you can use 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 axiom infinity axiom infinity that people were like this is the new

economy yeah and then and then it just was a ponzi yeah i mean i i watched a little bit on a twitch stream just to understand like okay what does this game actually look like then it just was a ponzi yeah i mean i 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 hearthstone or any game that it was competing with and that's just because but you know you might have these big game activision yeah 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 and catch we have the best game and yeah yeah yeah gta oh you want to buy gta coins and the whole thing is like i 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 like 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 hundred thousand players should be yeah it's just a lot of yeah 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, 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 Baron says, EWAC or the mimetic death and rebirth of tech if there was ever a moment called it e whack uh if there was ever a moment if there was ever a movement destined to fizzle out like a damp matchstick it was eack at least the ea's have a self-respect to make their leader serve hard time that's'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 messiahs.

First, consider the misalignment between the movement's professed ideals and the actual behavior of its leading lights. IAC, 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 ingenuity to multiply complexity and intelligence. instead what we observe instead is a parade of digital anons uh uh 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 less words so congrats um wow uh no i think uh but i bet but that there's there's a real um

sort of very real message here where uh when you have a movement like uh 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. Oh, 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, this person who's saying you got to work really way. And then there's a family influencer. 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, this person who's saying you got to work really hard. Like they have never had a family or like they've never, or they're completely out of shape.

And you're like, yeah, wait, like no one does it. There's an issue where people commenting under every post, accelerate, accelerate, accelerate.

Yeah. It's cool. But I think what, what the Baron saying is he just wants to see those people actually creating progress in the real world. Totally. Being part of a movement doesn't mean you're having any type of real tangible impact, right? The way to have a real impact is to participate in the underlying activity that is driving towards the goal of the movement. Yeah, totally.

Yeah, it's tricky. Love to see Baron branching out into something more thoughtful. And I still think EAC was best when it was just a joke at the expense of EAs. And I thought that when it came up, I was like, I never put it in my bio. I never joined these silly movements. I didn't do the.e thing. I owned it, but I didn't put it in my handle. I didn't do, I didn't do the dot E thing. I owned it, but I didn't put it 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 they're always very risky or 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 a spreadsheet. Like these people kind of need to be made fun of and that's when yeah because it's best and then when it became the super serious like actually acceleration is like the only way is like okay this is not fun anymore yeah for me at least that was my experience with it ruined it it ruined it uh give me a we got a promoted post on a more light-hearted note

but also serious at the same time we have a 19th john's you're interrupting the post john let's go lax the 1966 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. Uh, very, uh, paint chipping, uh, you know, hundreds, uh, probably 150,000 miles on it. Um, ever, I've loved shooting brakes. I was lucky to own a Ferrari FF 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 in 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 Burb Bernanke. Love the name. He says, 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 set a basic. He's plotting on your rise. I love this format. It's great. It's been ripping around. Don't plot on people's downfalls. Plot on their rise. I don't think enough group chats,

a lot of group chats have this sort of serious 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 there's a little bit of that. You've got to cut it down. In general, this one's the most positive I've ever been in. Five people oriented around winning together, 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 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. Let'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 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. Pronatalism. Like, go buy it. Hey, if you have a post that does well. This post sponsored by me. Pronatalism. Yeah, pronatalism. Yeah, the deal energy is real. It's rarely a bad time to do a deal, right? 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 uh it's a good

call to action right it's great yeah simply are you deal yeah deal deals with deal mode let's go to ben hylac he says chat gpt can now use claude and so ben immediately of course he's immediately backing it 5k likes good post yeah so he went 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. And 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's interesting so so yeah great marketing for ben because he has a analytics platform i believe for ai products um but uh it's interesting how we're seeing already that uh somebody i forget who posted this, that AI is eating UI, right? Yeah. Which eventually you will be able to use a model to use another model. Yeah. So your preferred model, if you want to do something with another model, you say, hey, go find the best model to do this task or create this type of content, and 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 shade that people throw at OpenAI, oh, it's overvalued. It's still owning being AI for the average consumer has a massive value and you're the front end um yeah and when and it was last year the year before uh overnight i 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 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 of 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 um and i think the idea there was that you you let people build a ton of different gpts and then uh the master GPT 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 in theory, it's like, yeah, like maybe someone's made a GPT that does one thing much better. And then when you query 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 code, so 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 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, 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 notice by 15 state attorneys general for debanking conservatives. And Lulu is breaking down exactly what went wrong here. One, if you turn off replies, you, you look guilty. Yep. You can't turn off quote tweets. So you're just setting yourself up to get ratioed even harder by other means.

Uh, you should have anticipated the community note, which looks worse than either, uh, 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. Debanked by you guys. Like what? And, and his family and his ex wife and his ex wife's husband. Whoa.

Because they were receiving. Yeah. Payments. Whatever. Alimony. Alimony. Yeah. Wow. Yeah. Rough rough not a good day and the whole thing is there were fintech companies emerging over the last

six years probably four years i guess sure years that were explicitly because conservatives were being debanked yeah they were they were saying this is the the right wing which we shouldn't have political leaning yeah it's very silly our financial institutions should not be political yeah 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 uh oh this is this is a fun one i know you're gonna have a lot to say about this jared friedman says rocketable is the first is building the first one person one billion dollar 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 uh like many like, like many podcasters, podcasters often have a lot to say. Uh, I'll

preface this by saying I, I don't work in directly in private equity. Uh, and I'm not a software engineer, but, and, uh, the other thing I would say is I, I like this sort of big, bold idea. Uh, it's cool to have this, know major milestone one person one billion dollar company yeah very exciting and i think that many sort of uh this is a cool experiment uh and is worth funding from yc and is worth the founder trying to take a crack at it sure but i i i i have to imagine like here's the thing like buying buying companies, companies trade on a market and it's not perfectly efficient, but any company worth buying, unless the owner, uh, does not have, uh, you know, is not, doesn't want to get the best possible price, 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 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? There's classic examples of software PE guys coming in and there's a hundred 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- It's a weird positioning in brand. Yeah. And it's tough as a buyer. Historically, yeah, it's a very good don't know if you're gonna positioning in brand yeah and and it's and it's tough as a buyer it'll go viral historically yeah it's very good way to get attention but

what happens if this post goes viral a bunch of talented people say hey i want to work on this sounds fun and you're like well sorry we want to be a one billion dollar company we'll hire you as a contractor or something like that just can't have you on the w2 um and so why and 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 um the the gumroad founder now has something called anti-work okay where you can come just build software sure to replace humans at gumroad oh okay i think anti-work okay where you can come just build software sure to replace humans at gumroad oh okay i think anti-work is owned by gumroad sure 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. 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 you or whatever. And so it really comes down to paying a good price, winning the deal, knowing that the deal is going to happen. And I don't see business owners being too thrilled about the thesis right yeah exactly you're gonna 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 gonna 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, uh, 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 like 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 like it's very dependent on what is. Yeah. What this turns into is one person being the CEO because you still need a chief executive officer presumably for some amount of time. Anyways, I'm excited to see it play out. We'll cover it on the show. I want them to be successful and let's see what happens.

Let's go through some other stuff uh 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 one trillion dollars unicorns are dead in five 80 hour work weeks you love it you put it in there because you're excited? Yeah. Shooting for a trillion? We've been hearing 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 10x's away from being a trillion-dollar company. That's true. That's true. I think this is accurate. I mean, also, it's just hard to underwrite a lot of these things Yeah, this is 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 that make everybody more efficient,

it actually just means that you should work even more to just increase the returns on that leverage. Totally. 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. Uh, Ray 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, they're excited. I saw people got cursor working with, uh, with theSeek under the hood really? bad that's the most inorganic the most on our farm raised code

coding with some of these AI tools like Devin and Cursor is like retired people in Vegas on the slot machines tap tap tap but you gotta get the code written one way or another retired people in Vegas on the slot machines who are just like... Yep, yep, yep. Tap, tap, tap, tap, tap.

But you got to get the code written one way or another. Let's do another promoted post and we'll close it out 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 meta spend. He was sent a plaque for ridge

for being in the 100 million dollar club on ridge that means they have spent 100 million dollars uh with the greatest financial institution through their ramp cards through their no well they have a bill they have payments sure too so not not necessarily all through their cards although it went through possible uh but it um but but yeah and and just goes to show i mean the ridge is a perfect example of a ramp customer very large lots of uh lots of net income and uh 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 uh so if you're a company or a firm and it's put it on your list it's gonna go on the desk

it's gonna be a constant reminder of like yeah ramp cares about me as as a as a business uh counterparty which is great i think this is in the back of a truck bed too oh really it's cool it's cool um 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. Ties into your strategy recently, golden retriever mode. Golden retriever maxing.

Yeah. Just be friendly, hot, and dumb. Intelligence is going to be too cheap but high energy high energy high energy just do stuff just get out there just bark plays 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 bark bark let's go we'll see you watching everyone please go and that was 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 uh 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.