The Pomp Podcast - #1477 Anthony & Polina Pompliano | Should Trump Buy Bitcoin & Abolish Income Tax?!

Episode Date: January 28, 2025

Polina Pompliano, Author of ‘Hidden Genius’ and Founder of The Profile, and Anthony Pompliano, Author of ‘How To Live An Extraordinary Life’ and CEO of Professional Capital Management, discuss bitcoin, strategic national reserve, what Donald Trump is likely to do, idea of removing federal income tax, government spending, and the impact of DeepSeek on America.  ======================= Consensus is where the industry does business. Join global leaders, innovators, investors, founders and brands in Hong Kong from Feb. 18-20, 2025. Curated by CoinDesk, Consensus Hong Kong offers unparalleled networking opportunities, exclusive access to top decision-makers and the chance to secure deals that will shape the future of Web3 and digital assets. Take 15% off registration with the code POMP. Register now at coindeskpomp.com ======================= BitcoinIRA: Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Take 3 minutes to open your account & get connected to a team of IRA specialists that will guide you through every step of the process. Go to https://bitcoinira.com/pomp/ to earn up to $500 in rewards. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on, guys? Today, we've got a great conversation with Polina Pompliano. Polina is the founder and CEO of The Profile. And in this conversation, we talk about Bitcoin,

the Strategic National Reserve, what Donald Trump is likely to do. And then we get into why Donald Trump wants to remove federal income tax, how transformative this would be for the US, and how he plans to finance the government's spending if he's going to remove that federal income tax. Lastly, we talk about DeepSeek and why so many people on the internet got it wrong, and how U.S. companies have already figured out a solution to use the DeepSeek model to better enhance not only the economic productivity, but also the user experience for American users. This conversation has tons of unique thoughts. I hope it's valuable to you. Here's my latest conversation with Polina Pompliano.

Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by ConsenSys. Crypto's most influential event is coming to Asia. ConsenSys Hong Kong. It's happening on February 18th through the 20th of 2025. It's where the industry does business. From Bitcoin's expanding role in global finance to the latest innovations in web three, connect with global

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to upgrade their retirement. Bitcoinira.com slash pomp to upgrade today and you can earn up to $500 in rewards when you add funds to your account. All right, Flynn, what's the first topic? All right. Well, Bitcoin at the time of this recording is about to hit $103,000. Do we think the Bitcoin strategic reserve is anywhere close to getting done?

I think there's a lot of concern right now of people in the Bitcoin community who think that the Bitcoin strategic reserve has somehow morphed into the crypto strategic reserve. I don't think that's what's occurring. The number one thing I'm paying attention to is not what are the announcements that are coming out. It's who are the people who are actually evaluated in this. If we go back and we look at MicroStrategy, when they went and they bought Bitcoin with their balance sheet, they put 100% of the cash in only Bitcoin.

They didn't put it in a bunch of other coins. They just put it in Bitcoin. But what did they do before they bought Bitcoin? They conducted a study. So they came out in their public filing and they said, hey, we have a lot of cash, about $500 million or so. We're considering putting this into another asset other than cash. we are going to look at land real estate gold silver bitcoin and a bunch of other things and

then only after they had evaluated all their options did they go and they bought bitcoin and so they deemed that bitcoin was the superior asset and they put whatever it was 480 million dollars or whatever into bitcoin what the u.s government and trump have just announced is we're setting up a working group that working group is going to evaluate a digital asset strategic reserve or stock. Let me just let me just pause you. When people say a digital asset reserve or something like that, is that just the same as cryptocurrency? What other digital assets are there other than Bitcoin and other cryptocurrencies? Well, that's the thing that everyone is freaking out to. I know everyone's freaking out because they think that

the U.S. government is going to go and buy Bitcoin plus a whole plethora of other, you know, assets. And why is that bad? Well, Bitcoin is the only pristine collateral. It has very unique properties, is a decentralized network. It is created by somebody who we don't know who it is. It has a hard cap of 21 million. It is impossible for any one person or group to unilaterally change anything about Bitcoin. Even in the Bitcoin community, if all of the miners got together and said, we're going to go change that 21 million hard cap, they couldn't do it because have to get the developers and the node operators on top of to agree. And so it's a very unique strategy and structure. And so that separates Bitcoin. Bitcoin is something that is different.

Bitcoin is something that is unique. And Bitcoin ultimately is the only asset that we have seen that has continued to outperform over long periods of time against the other assets. So if you go and you look, you can pick time periods where Ethereum has outperformed Bitcoin or Solana has outperformed Bitcoin. But if you go and you actually take a look at denominated in Bitcoin terms, Bitcoin usually ends up being the winner. And so we've seen the Bitcoin ETH kind of relationship, for example, ETH is crashing against Bitcoin. And so I think that the strategic reserve or the stockpile, whatever you want to call it, the key to this whole thing is not how high can the price go? The key to it is what is the most resilient asset that we can

put on the balance sheet of the United States of America, that it will still be here in 20, 30, 50 years. If you think about gold, the reason why it is so attractive to put in these reserves is because one ounce of gold is equivalent to the price of one fine man's suit. It's been true for all of history, and it continues to keep pace with inflation and the currency debasement. Bitcoin is very similar. It is digital gold. And so I think that people are obviously worked up about this, but everyone take a deep breath. Calm down. Nothing has happened yet. The working group that got set up has been tasked with going to conduct a study. And what I believe is going to happen is that study will conclude that they should set up a strategic Bitcoin reserve.

Do you know, do we know who's part of the working group? There's some people like David Sachs, who is the crypto and AI czar that are part of this. Bo Hines is part of it. But then there's a bunch of roles that we don't know yet who's going to fill those roles. And so when you go and you take a look at this situation, if the conclusion of the working group study is, hey, the United States should buy Bitcoin and establish a strategic stockpile, then all of this kind of hoopla around this will drastically be a kind of wasted effort. And so it's important that people say, look, I think it should only be Bitcoin, but also don't jump to conclusions and think that it's going to end up being other stuff yet,

Because I just don't think the people involved are going to do that. I do not think that Donald Trump, his kids, other people in and around this are going to go and put some random meme coin or whatever into the strategic reserve. I think they're very focused on Bitcoin. And what if they do? Would there be an uprising of the Bitcoin folks? How do you say that word? The government does things all the time that are directionally correct, but the details are off. So I think that it's a very complex situation. If the U.S. government sets up a strategic crypto reserve, not Bitcoin, and Bitcoin is in it, on one hand, I think Bitcoiners will be happy that Bitcoin is in it, but they will be disappointed that there's other things in it. And so what really we're watching here is we're watching a separation. This is a perfect example. In my mind, this is my personal opinion, Bitcoin is something that is very different than the rest

of the crypto market. Bitcoin is a commodity. It's a true store of value. It is digital gold. You would never compare gold and Amazon stock, but the rest of the market is more akin to tech stocks, right? You're betting on projects. You're betting on various things where people are participating in order to create value. And so the US government is not ever putting tech stocks in their reserve. And so I think that's where you can look at crypto, you can say, crypto, they're all tokens, right? And they should all go together. Or if you really do the work and you understand Bitcoin is something very different than a plethora of these other assets, doesn't mean that the assets are bad, doesn't mean that those communities are wrong. It just means that

for the use case or the problem set of a strategic reserve, the US government doesn't put equities in there yeah what they put is they put things like gold and bitcoin is digital gold and so i think that's why it should be the only asset that's in that reserve yeah i do i do think i think you and i have talked about this before but it really does depend on who trump surrounds himself with and who um who's kind of in his year right like it it really depends well it matters but if you look at like scott besant uh is the treasury secretary that was just confirmed um last night And if you see kind of his viewpoint, he owns some Bitcoin, which I think is important. Like pretty much everyone around Trump owns some Bitcoin.

So if you look at Tulsi Gabbard, if you look at RFK Jr., if you look at a Tucker Carlson, if you look at a Scott Besant, if you look at Howard Lutnick, if you look at his kids, right? Like everyone around David Bailey, they all own Bitcoin. And so I think that Scott Besant's stepping in. Now, Scott Besant also doesn't think that the U.S. dollar is in danger of losing its global reserve status, right? He doesn't see a need to, I think Scott in particular doesn't necessarily see a need for strategic Bitcoin reserve. So it's kind of interesting where he holds it, but he's like, look, I don't know if I would go that far, right? But these are the things that people are talking through because maybe the president has the ability to unilaterally do this. And that sounds great, but there are trade-offs, there's opportunity costs, there's damage that you can do to relationships when you just come in and you do things unilaterally. And so a lot of politics is about consensus building. You want everyone bought into the plan. And part of building a plan and getting consensus is showing them we've done the work. We have the working group. We did the study. Okay, here's everything of the findings. Does everyone agree? What do you disagree? Let me hear you all, right? And then you go and you do it. Yeah. And there's a lot of things where that actually is just bureaucracy and you should get rid of that. But on this specific situation, I think that Trump is going to get this done.

I do think that it will be Bitcoin only. And I do think that he is going to be able to build some consensus. And if he's able to do that, it may actually, even though it takes longer, be a better plan. Because right now, if he unilaterally did it, probably what it would be hold the 200,000 Bitcoin on our balance sheet. Don't sell them. That's it. We're not going to buy more, but we're just going to hold the $200,000. But if you go through these processes, right, and you kind of go through that working group in the study, maybe at the end it is, let's hold the $200,000 and let's aggressively buy more Bitcoin. Yeah, yeah.

So we may actually get a better outcome at the end if we wait. Now, again, maybe not. Maybe actually the answer is we get basically an index of the top 100 coins put into a strategic reserve. I think Bitcoiners would feel very let down from that happening. But I think maybe I have a more optimistic lens and try to understand, hey, the process is playing out in a certain way, probably because there's consensus building and kind of politicking going on more so than Trump's done a 180. He's not going to fulfill a campaign promise to the Bitcoiners and he's going to go do something else. Do we know when the conclusions of this study will come about? I don't think I saw a date of, hey, where the study will be done by this date. But Trump did, I think, multiple times on the campaign trail, if I remember correctly, say, I want to get this done the first 100 days. And so, you know, he's one weekend, right? Technically one weekend, one day. And so, you know, that you already got almost 10% of that 100 days gone. So you better get on it. Yeah. Okay. He also, Trump also proposed to abolish income tax for U.S. citizens, aiming to boost disposable income for individuals and families. He described the move as a step toward restoring America to the system that made us richer. And he argued that the period from 1870 to 1913 was the wealthiest in U.S. history when a tariff-based economic system was in place and that the country generated enormous revenue through import tariffs during that era. He said, instead of taxing our citizens to enrich other countries, we should tariff and tax foreign countries to enrich our citizens.

What do you think? I've been saying this for how long now? How long have I been saying this? Since 1913. No, no. I've been saying this for weeks, that that was the whole idea of these tariffs. And if you think about this, if Donald Trump eliminates federal income tax. I mean, that's crazy.

He'll be the goat. He just literally, if Donald Trump eliminates federal income tax, you will have Republicans and Democrats come together and they'll say, put him on Mount Rushmore. But do you not think that would just break down society because we get so much revenue from income tax? It doesn't matter. We have a spending problem. It doesn't matter. And we can print the money, right? Like that's part of the calculation.

I don't think they should print the money, but that's part of the calculation. And so if you can replace it, look at what he did with Columbia. He just absolutely bullied them. So we're just putting a 25% tariff. Every single thing you put here, you're paying us money for.

If you want access to our citizens. And again, it goes back to, we used to do this. This isn't like a random idea. We used to do this. So if you look at the chart, tariff revenue has fallen off a cliff and personal income has exploded wait and can you explain to me why we've kind of eliminated tariff revenue well i think there's a lot of different things right one is there's been this like globalist movement uh and so what do you do is uh there's

a lot of people who came in as president and they started to lower that stuff so we could do more we could transact you lower tariffs right then you you transact more um also there was the revenue that was coming from the citizens so we had there was no federal income tax that wasn't a thing didn't exist yeah and then we need to pay for the war yeah okay let's introduce it one percent for for one percent of people now 47 of americans approximately still don't pay income tax they don't make enough money half the country is paying all of the income tax and then that one percent now has exploded. I don't know what the average income tax level is for Americans if you combine local, state and federal. But my guess is that it is probably somewhere in the range

of high 30s, low 40s. Right. But there are Americans that are paying more than 50 percent. And so you have some Americans that don't start working for themselves until July every year. Oh, this is interesting. This is IRS data from 2022, but the top 1% of earners in America paid 40.4% of all federal income taxes in 2022. So this gets at the pay your fair share. 1% of Americans are paying 40% of all income tax. Is that a fair share? Well. Well, if you ask them. Objectively, no. But subjectively, some people would make the argument of, I guess they can.

Well, I would argue that objectively, if you are paying, if you're only 1% of people, but you're paying 40% of all the taxes, now people will say it's all about how much money you make. Right. Rather than the number of people. Yeah. But again, it goes back to if 1% of people are paying 40% and 47% of people are paying zero, it's pretty lopsided, right? So again, it goes back to taxes are super complex. There's some way to figure all this stuff out.

And a lot of it goes down to not just the amount of money that's made, but how you make the money. Because obviously the tax treatment is very different for investing, right? Creating value rather than just getting paid income. And so wealthy people make a ton of money through non-W-2 income. And so there's different tax rates, all this stuff, right? So there's a lot of complexity. But imagine if we could just remove all that complexity and we say it doesn't matter how much money you make, you don't have to pay federal income tax.

That would be absolutely earth shattering. Now, let me ask you this, because people are watching and I know some people are like, hold on, Anthony, that sounds amazing. Sounds wonderful. I would love to not pay federal income tax and have all the revenue come from the tariffs. But by Trump being so aggressive with the tariffs, with these other countries, isn't there a risk in ostracizing them and pissing them off and these other leaders becoming more aggressive towards the U.S.? Isn't there a world where this actually backfires and there's more conflict and chaos and uncertainty because of it? No. Why?

He implemented a ton of tariffs on China and Biden didn't remove any of them. Right. That's true. Because Republicans and Democrats both realize that this is the right path. It just takes the courage to actually implement them. But what other folks like Biden, he didn't want to be the bad guy. Trump embraces being the bad guy. He didn't care. He's out there, you know, tweeting and post on through social and stuff in between golf swings. And so we need more money and we can make the money through the tariffs. Why is it that people who tariff us? That's the other thing people don't realize. We are not allowed to sell American products in many of these countries, but they can sell in our country. so there's certain countries like i remember howard letnick was explaining to me i forget

all the details is there's certain american car companies can't sell cars in like germany yeah yeah yeah or i think maybe but germany can sell cars here yeah so it goes back to what people don't realize is that there's america ends up subsidizing a lot of the world we spend money in other places but they don't contribute their fair share we can't sell our products in their country but they can sell it in our country right and so what do you do you put a guy in the white house who this is his entire life is negotiating and he says we're going to strike fair deals so guess what you're going to pay us money if you want the ability to sell your product in our country pay us money to do it and guess what countries will do it it's not like countries

are saying oh if you raise the tariffs like we don't want the tariffs but they're not saying we're not going to sell your products anymore. Imagine if all of a sudden, certain companies couldn't sell in the United States. It would significantly hurt their business. Of course, they're just going to pay the money. And so it comes back to this idea that do you want to continue to take money from your people? Right? If you think about the last four years, and really even longer than that, under Trump, Biden, Bush, Obama, Clinton, etc. You take money from the people and you send it outside of the country. How much money have we sent to Ukraine? That is American taxpayers money. What Trump is proposing is reverse that. Let's take

money from outside the United States and bring it to the U.S. to support the American people. Now, there's a lot of nuance here and a lot of potential potholes in the road. How do you train American workers? How do you reshore a lot of American manufacturing? How do you build the industrial base here in America? How do you ensure that we have various things like the port security, et cetera, to be able to actually export certain goods, right? There's all these things that we've got to be able to do that doesn't make this just like you sign a piece of paper and bam, all of a sudden the problem solved. But we now have a president sitting there saying, wait a second, let's go make sure we have fair deals with our trading partners let's make sure that we actually

have a balanced budget or try to get towards that let's stop taking money from our people let's take money from people outside who are benefiting from our people and let's put more money back in people's pocket and if you go and you look you know one of the things that just cracks me up is Kathy Hochul who's the governor of New York City or a governor of New York which she recently said is um hey food prices have been really high therefore sales tax revenue for the state of new york has exploded and we're making more money but i know food prices are really high and inflation is really high so i'm going to offer an inflation refund yeah i'm going to give 300 or 500 depending on couples and single people etc because i want you to have more money in your

pocket but think about how crazy that is we're going to take your money and then give you back $300. Instead, why don't you lower the damn taxes? That'll leave more money in people's pocket. Same thing with Trump. Get that tax rate down so people have more money in their pocket. People say, well, tariffs might increase the price of goods. You'll have more money in your pocket, and then you can choose what goods to actually buy. And you know what would be pretty crazy? Is if the price of the Chinese wood table that you want for your kitchen is too expensive, guess what happens? An American manufacturer will step in and they'll say, I can sell it to you for cheaper. And then you as a consumer have choice, but it's money in your pocket that you get to

choose how you want to spend it. But if I don't need a kitchen dinner table, I don't give a shit what the price of the Chinese kitchen dinner table is. And if I want to go buy a table and I say, you know what? It's really important to me that cost is the number one thing that I might go to an American manufacturer, but maybe I don't care what the cost is. Maybe I say I actually really care about quality. And so then I evaluate, is the American made one better? Is the Chinese one made better, et cetera. And then maybe I say, well, actually neither one of those two things, there's some third element that's really important to me. And so what you're doing is you're basically taking away this like nanny state, which has give us as much of your money as possible.

We will allocate it from a government perspective. And a lot of that money ends up not going to things in the United States. Instead, what you now are doing is you're returning saying the people are smart. Give the people as much of their own money as you possibly can while still allowing for the state to be funded and let them do what they want with their money. Let them choose what goods they want. Let them go after the things that they find most valuable. That is ultimately where I think that America is headed. And really, it is headed back towards where America started, which was we fought an entire war over taxes right just think about no taxes without representation how many people feel like they have a say over where their tax dollars are going right now

do we put elected officials in washington absolutely i would argue that a lot of americans feel like the representatives that they sent to Washington are not actually exhibiting their will. And how do I know that? Because there was a landslide in the election. And so rather than play a game of, well, you got to wait a couple of years, vote those people out, then try to get better people in there, see if that works, whatever. Instead, just leave the money in Americans' pockets and let them do what they want with their money. If people want to donate to certain causes around the world, let them do that. If people want to spend money as a consumer, let them do that. People want to invest in American companies, let them do that. People

want to invest in companies outside the US, let them do that. But people are not dumb. Give them their money. Stop taking up to 50 plus percent of their money to then go do all kinds of crazy stuff. And the internet has broken is wide open because now people realize where their money is going. And the number one thing that would stop all this nonsense is if when you paid your taxes every year, you got an itemized receipt, you paid 50 grand in taxes. Here's exactly to the dollar where your taxes went and your politician had to sign the receipt. You want accountability? Politicians would be scrutinizing every single line item, but we don't do stuff like that you pay your taxes hope it goes somewhere good just don't get me in trouble

so um the federal reserve is nearly certain to keep its key interest rate unchanged at its policy meeting this week um just a few days after trump said he would soon demand lower rates he said i'll demand that interest rates drop immediately and likewise they should be dropping all over the world. Interest rates should follow us all over. What do we think here? They're both right. What do you mean? The U.S. is addicted to cheap money. And right now we have higher than normal rates. Historically, it's not higher than normal, but it's higher than it has been for the last decade or so. And so Trump trying to get the interest rate down. Remember, Donald Trump is incredibly intelligent when it comes to interest rates. He's probably not the next

central banker. But as a real estate developer, a huge part of the inputs for his business is interest rates. So he really understands that market. And he's right. There's a ton. If you are optimizing for economic production, an explosion of innovation, if you're optimizing for the stock market to go up, for American citizens to have more money in their pocket, have kind of a better life, yeah, you want interest rates to come down. What the central bank is trying to do, though, is they're not necessarily optimizing for those things. They're ultimately optimizing for not allowing inflation to come rearing back. And so you have two different groups optimizing for two different things. And Trump is saying, you know,

hey, look, inflation is not going to be a problem, get the interest rate down, let people have a better life. And so that's why I say they're both right, is the central bank probably right now feels a little uneasy. Hey, you know, we cut the interest rate by 100 basis points. Did we go too fast and let's pause on this next one. Let's see kind of how the next couple of months of data comes in and then we'll decide what to do after that. Trump is looking at this over the next four years and he's saying, I need the interest rate down because I need cheap capital in the market so that asset prices are going up. People have more money in their pocket and are able to go and use it. And so the risk to Trump's plan in that scenario is that inflation comes back.

And so if you could say, hey, we're going to implement Trump's plan and inflation is not going to come back, then I think everyone would be like, yeah, great, do it. But the central bank is tasked with making sure that inflation doesn't come back. And inflation is at 3%. It's at 2.9% right now. So if it's at 2.9%, it's 50% higher than the Fed's target. So you could argue that actually inflation never got back to where they wanted it. And then you come and you put some of these inflationary policies in place, could be a problem. And so I actually think that Trump is right and what he's trying to optimize for. But the central bank is being prudent if they do pause and they say, hey, look, we're not going to cut, we're just going to wait. Because it allows them

to buy some time, get some more data, make sure that it's kind of, you know, a safe path forward before they cut again. All right, let's talk about markets. Markets were sent into a spiral on Monday after the emergence of Chinese AI deep seek, erasing $2 trillion worth of market cap in U.S. stocks. The AI model is claimed to have been developed with a low cost of $5.58 million and trained within a couple of months using NVIDIA's H800 chips. Stop it. You think that's not accurate, that it's only five? I actually don't even think it matters, but I don't believe that. But okay, put that aside

for a second. Here's one of the data points that's really important. So for people who don't understand how kind of open source technology and software models work, these LLMs or these artificial intelligence models. There's a lot of them now, right? So you see Anthropic's got one, OpenAI's got one, Perplexity's got one, et cetera. And sometimes these are literally built from scratch. Other times they kind of train things off of publicly available data or maybe other models, et cetera. But if you have a model that is proprietary, that means that other people can't do certain things with it. But if you look at Facebook, Facebook took their Lama model and they basically open sourced it. They said, Hey, we want to give this to you guys. And then you guys

all run with it and try to do all this different stuff. The deep seek model is open source. Now, why is that interesting? One, the danger to some of the American companies is that by open sourcing better technology, you immediately remove part of the moat that these companies thought they had. So if I go and I pay $200 to open AI per month to use a certain technology, and now all of a sudden, it's essentially free via open source. Well, that really puts pressure on open AI because, hey, I was paying you $200 a month. This one's free and it's better. Why would I go to the cheaper, better option, right? So that's kind of the first thing. But the second thing that's really important is you can take the model because it's open source and you can do certain things

with it. So two examples of what I've seen so far. Perplexity just incorporated DeepSeek into their kind of interface, where now you're able to actually access the deep seek model via perplexity, without having to worry about your data going to China, because they are running the open source software on American servers. So now all of a sudden, you start to play this game where think of this almost as like a building block or a Lego, right, that is able to be brought to the United States run here. And so you remove one of the risks. Another thing is, Eric Voorhees He's just announced something called Venice, Venice AI. And he's essentially trying to do a very similar thing.

He's trying to create a privacy enhanced AI type application. And so you're able to access the deep seek model, but there's kind of more privacy enhancements. There's stuff running on the servers, et cetera. And so those are just two examples. But I think that there will be many more where open source software actually provides builders the opportunity to take the best components of something. but to remove some of those risks. And so it doesn't matter how much money it costs. It doesn't matter how many people were used to do this.

It doesn't matter how many chips they used. It's a better model. And that better model, because it was produced to the world via open source, is now being used by American companies and they're actually improving themselves quickly and they're protecting American users by saying we're going to run this on American servers.

We're not going to let the data go to China. And this is how it should work, right? Open source, correct. Now, here's why that's really important because the entire sell-off yesterday is now stupid. All these people getting freaked out, all these people crying on the internet about all this stuff.

Most of them don't even understand how this stuff works. I saw very sophisticated investors crying on the internet about all your data's going to China. And by the end of the day, perplexity was like, you can use the model, but your data doesn't go to China. We have to, as a society, get out of the complaining and get back to competing. Whenever we see a problem,

rather than yell and scream about it, we have to try to figure out how do we solve the problem. And this is something that for me, I've tried really, really hard to get better at, right? But I saw home affordability. I was tweeting about it all the time. Home affordability sucks, home affordability sucks, et cetera. What do we do?

We started a company that is focused on covering that entire space and trying to identify solutions. And we said to ourselves, can we build a business here? can we be part of the solution? I don't have the skills or experience to go and build a large home manufacturing business, but can we contribute with our skills and our experience in a certain way to that solution, right? And you go through all these different problems in society and you say to yourself, if you are going to complain about them, if you're going to yell and scream, then you got to be part of the solution. And so this AI thing is a perfect example where if you have a model

that is coming from China and you want to complain about the fact that it's coming from China, what did the builders do? They said, okay, why don't we use the superior model and just not have the data go to China? And they built a solution.

It took them one day. One day. Do we think though that China will be dominant in the age of AI? China has a very good chance of being dominant. And I don't know if that means they're number one and everyone else is like not even close

or the US and China are both dominant and we're constantly locked in this battle. Um, they have over a billion people. So they're pulling from a beer pool of people. They're very, very education focused. They work harder than Americans. People get upset at this, but in China, there's something called nine, nine, six. They work from 9am to 9pm, six days a week.

That is the standard work environment for most tech companies. And frankly, they are nerdier than Americans. Americans have kind of, I think there's just a bigger emphasis on math science. Of course. And so America has, you know, this blended society. And frankly, I would argue from a quality of life standpoint, a cultural standpoint, etc. Americans love sports, fashion, you know, kind of consumerism, like all these other things. And they feel like that makes a fulfilled life. That's not a bad thing. We shouldn't attack that. But understand that there's tradeoffs. And so in China, there's a lot of young people who are growing up with digital skills that are focused and saying, I don't want a life outside of work. I'm just going to work. And so I do think that they have a lot of ingredients that will make them highly effective.

I still wouldn't count on Americans. I still wouldn't count out the American businesses. We have the greatest capital markets. We have entrepreneurial kind of DNA. Risk taking is at the core of what built this country. and we have the lessons learned and the talent of having built all of or many of the best companies in the world.

If you go and you look by country, where are all the best companies in the world? All the big ones are in the United States, right? Yes, is there Saudi Aramco? Is there, you know, you can pick one or two here or there, but 90 plus percent of the best companies in the world measured by market cap are in the United States. And so you say to yourself, okay,

we have everything we need. We have all the ingredients. Now we just need the chefs to go in the kitchen and come out with a five-star meal, right? And we have the ability to do that. Stop worrying about what China's doing. Just focus on what we can do. Model came out, bam, we built a solution, done.

When we recorded, if we had recorded this conversation 24 hours ago, we couldn't even talk about that because we were still complaining about the model. But that is the beauty of AI is that you now have highly technical people that are kind of entrepreneurial, have this builder DNA,

and they're saying to themselves, we will not lose. let the builders build, stop crying on the internet. The whole stock market sell-off was complete noise. And I tweeted on Monday morning, I said, today is one of those days where the market is going to test your emotional discipline. And there are some people who probably sold stock. Why do I know? Because the stock was going down. So there's more sellers than buyers. Guess what? There are going to be people who are going to regret that decision. Does that mean that it's going to be up into the right for all these stocks over time?

no it's going to be volatile there's going to be bumps there's going to be all the stuff whatever but why did the market sell off a new model was introduced if now 24 hours later with hindsight you can look you can say that news probably did not warrant the reaction of the market the market overreacted to the news let's see what happens but here's the crazy part american companies are going to benefit more from that chinese model than the chinese companies will because perplexity, open AI, et cetera, they've got more users, they've got more revenue, et cetera,

and now they're going to get better. And so that's the beauty of open source is that you are putting something out into the world and everyone can benefit from it. Marc Andreessen said this was a gift to the world. Pretty incredible because that's a very different storyline than what you're hearing in the mainstream media

where everyone's freaking out, acting like the world's going to end. Yeah. Great. don't complain compete is a great note to end on thanks for doing this