Jason Calacanis: All right, everybody. Welcome back to the world's greatest podcast. The number one podcast, your favorite podcast, the All-In podcast. I'm Jason Calakanis, the world's greatest moderator. With me, of course, Chimath Polyhapitive,

Chamath Palihapitiya: the great great great great great grandchild, Jason was of a hooker and you saw that from France and a purse snatcher.

David Sacks: This this comes from like a history of uh France. some history uh said they let you out of this was this was the deal in 1719 Sachs if you're a prisoner in a in Paris you were offered your freedom on the condition that you marry a prostitute and move to the great state of Louisiana what are you saying taking the deal

Chamath Palihapitiya: it explains a a certain of your proclivities Jake I I

Jason Calacanis: I thought you were asking me to see if they would extend the rule for you

Chamath Palihapitiya: no I'm saying that your great great great great great Grandma, I'm not a hooker. I'm Greek.

Jason Calacanis: That's what I'm saying very explicitly. She was We never We never spent time in a prison. Also, of course, David Freeberg is here. How you doing, brother?

David Friedberg: Living the dream.

Jason Calacanis: Good to be back. Missed you guys last week. How was Brad? How did he fill in?

Chamath Palihapitiya: It was great. Yeah. Yeah, he was.

David Sacks: Trump account victory lap.

Jason Calacanis: He had a little victory lap. We played Chariots of Fire. And uh how was your special time at blank and your time next week at blank?

David Friedberg: Thanks for h Thanks for having me on your show, Jel.

Jason Calacanis: All right, we got a full docket today. Uh lots of stories. Let's start with uh Deep Mind's Deis Habis just dropped an AI regulation proposal and it's um it's pretty popular with the boys. In an ex article, Demis called for a US-led international AI standards body proposal is modeled after FINRA, the Financial Industry Regulatory Authority. That's a self-regulatory body. And this would be federally overseen, but industry funded and run by independent technological experts. Frontier Labs would submit their models 30 days before release. Uh, and it would be voluntary initially, then mandatory. At some point, the models would be assessed on risk to cyber security, national security, biological threats, and other high-risisk domains. Benchmarks would be updated quarterly, and the body can coordinate a slowdown in development if the situation demands it. I guess that would be if uh there was a cyber risk, etc. Looks like uh on the positive side we have Elon who said it was thoughtful, Sam at OpenAI, Jack Clark at Anthropic, Sundar, Satia, Jack Dorsey from Block, the Carlson brothers. So Freeberg um uh Freeberg, your thoughts on

David Friedberg: Oh, wow. Way to really way to really uh put in the effort today. Go ahead, Jason. Good.

Jason Calacanis: Just pass it to me. I'll take care of it. Let me let me

David Friedberg: What do you want me to do? Oh my god, what an incredible topic.

Jason Calacanis: All right, here. Let me do it. You want me to do it, right? Three, two,

Chamath Palihapitiya: some of us actually care about this topic. Let's go.

Jason Calacanis: Okay. Yeah, you care about it. Okay, here we go. Three, two. Here's a clip of me calling it on the All-In podcast first. The whole industry is going to need to be regulated and I think the industry needs to regulate themselves. That's the key to this. We need to have a set of tests that Google, Microsoft, Amazon all agree to. Elon, hey, these are the things we should test and they should self-certify each model before asking the government which doesn't understand the models to certify them. The industry should have an industry certification like they do for countless other things. I've talked about the MPAA and the video game industry. We should just self-certify. It's the simplest thing in the world to do. And then we could release the models ourselves without the government getting involved.

Jason Calacanis: Brie, would you like to congratulate me on nailing it again?

Chamath Palihapitiya: Well, first of all, first of all, I thought that Demis' proposal was really smart and thoughtful. Now that I know that you may have shared the same thought, I think we should just do something different.

Jason Calacanis: I can't win, Zach. Even when I nail it, I hit a halfcourt shot. Truman's like, "Move the net. Move the net."

David Sacks: I think it's worth putting a little definition around this proposal, which is to form an SRO, self-regulatory organization, because they're not purely independent. SRO's like FINRA and the National Futures Association, they exist in the financial markets and they were created to allow the financial institutions to set their regulatory rules, how they check each other, how they make sure that everyone is being safe because they're obviously all trading risk with one another. So the industry doesn't want to have exposure and they certainly don't want to have things get slowed down because that would make the markets inefficient. So the analogy with AI is pretty appropriate here which is that there are many players in the industry. They are all trying to progress AI technology and no one wants to have a single regulatory body that comes in from the government or outside that says here are the tests you guys have to pass with your models in order for them to be appropriate. As we saw in California when California tried to pass AI legislation, I think it was about a year a year and a half ago, none of what they wrote even made sense at the time. But fast forward a year, none of those kind of rules and requirements actually map to the technology of the day. So the purpose of an SRO like FINR run NFA is they can adjust how tests are being run, who is actually running the test and make sure the right experts are involved in doing this, independent experts that is to do the testing with federal government oversight but not control. So in the case of FINRA NFA, they report up ultimately to Senate committee and House committee that gives those committees oversight of those governing bodies that are supposed to be doing the work to make sure that they're doing their frigin jobs. So the SRO concept would be that experts could be brought in from industry that know how to assess models for things like cyber risk, for things like biorisk, for things like weapons risk, social manipulation, etc., etc. that independent body can get voted on, can get changed over time, and because they actually have expertise in running software valves and running tests like this, they can operate at a faster pace than setting up a new government agency. So, it's it's kind of a very elegant solution. And I think it's why everyone, to your point, Jal, and I I'll say this is right, the industry recognizes that there needs to be some degree of oversight and checkpoints here. And I think that this could actually solve that problem. So that's why I think everyone's kind of climbing on board with it because it doesn't actually hand stuff over to the government. It says, "Hey, we're going to get the right people to to take a look at these things and the government is going to have oversight ultimately."

Jason Calacanis: Did Anthropic and OpenAI have a point of view?

David Sacks: They both signed up to it. I don't think Daario directly, but Dario's president gave his thumbs up and then I think Sam gave his thumbs up which means they're on board.

Jason Calacanis: Saxs, is this the best of the uh possibilities in your mind? uh is the industry regulating itself after they have now provoked governments around the world to be so concerned about this issue.

David Sacks: Yeah. And I, you know, I talked to Dennis about this and this may surprise people, but I told him that I could potentially get on board with this, speaking just for myself, not on behalf of anyone in the government because I thought that an SRO, again, a self-regulatory approach would be infinitely better than creating a new government agency that I think would rapidly become a DMV for AI. Dario calls it an FAA for AI. The government does not have the expertise to evaluate AI models. The criteria are changing too rapidly. you're going to very rapidly end up with a queue where all the models would be waiting to get tested and it would start with a month-long delay. It would end up being many months and we would just lose the AI race. So, I think an SRO approach would be infinitely better than that if it was done right. And I outlined for Demis criteria or conditions that I thought were really important to in order to make this work. And if I could, I'll just run through them

Speaker A: please.

Speaker B: All right. So number one, I think the SRO has to have broad representation from within the industry, the AI industry. It has to include startups and open source. It can't just be the three biggest labs, you know, can't just be...

Speaker A: the fix, right?

Speaker B: Yeah. Exactly. And that's precisely to avoid the problem of regulatory capture, right? If you have a diverse enough group of interests being represented, it's much harder for this to turn into red capture. So for example, I think if you had Jensen, Elon, Zuck, and maybe Mera because she just launched a very interesting...

Speaker A: open...

Speaker B: platform that's based on open mach capture problem to a large degree. So that's number one. Number two is I think that this body should only be reviewing frontier models, meaning the true frontier. The models that really represent an advance in the state-of-the-art of artificial intelligence and models below this level should not be held up from getting to market. And I do think that is a big risk under regulations is that the leaders of the market use this as a way to tie up lesser models. And there's no reason if a model is not at the frontier, why hold it up? Okay, so that's...

Speaker A: so they have to be in maybe the top 10 performers, top 20 performers on the benchmark test.

Speaker B: No, I think I think when they benchmark on key dimensions of intelligence, they have to represent an increase above where the current state-of-the-art is if it's not a step change, then how are you dealing with some new incremental risk, right? I mean, this is all about dealing with some sort of incremental catastrophic risk that could be introduced by some new step change in intelligence. And that brings me to number three, which is I think this body should be dealing with catastrophic risk only. And to my knowledge, those right now are cyber and CBRN, meaning it's, you know, chemical, biological, radiological, nuclear. So it should not be things, for example, like disinformation or microaggressions. This should not become a speech regulator, you know, or just, you know, things that seem kind of trivial. The only reason to have this is for truly catastrophic risk. So that's number three. Number four, and Demis mentioned this in his post, is that I think it should be voluntary first. This new organization should prove it works before it gets legally enshrined and becomes mandatory. And then number five is this should be a substitute for a new regulatory agency. If it's just additive, then it defeats the purpose and there's no real reason to support it. So again, I think this has to be a substitute, not an addition to a bunch of new regulatory structures. So I think if you did those five things, I think this becomes much more palatable. And Demis said, I mean, he didn't put all these points in his blog post, but he did say to me that he was bas. So I think if those notes were adopted, this is something that we could potentially get on board with. That doesn't mean I don't still have concerns. I'm quite concerned for example that you know I think Daario has expressed support for this however I think this is just an opening bid for anthropic meaning they'll take this thank you very much this is more regulation than we have today but that won't be the end of it right this will just be the stepping stone to get what Dario has now called for many times which is the FAA for AI and if I could let me just as as a final point I just want to explain what the FAA does because people need to understand you know FAA for AI sounds really nice, but actually it's a really extreme proposal. What the FAA does, among other things, is approve new airplane designs. Okay? And specifically, it requires what's called a type certification for any new aircraft design or major changes. And for an entirely new aircraft design, it takes 5 to 9 years

Speaker A: to get the certification.

Speaker B: And if you merely want to amend a certificate, I guess for you know major changes or I'm not even sure how major the changes need to be, it takes three to five years. So the Boeing 737 Max, for example, took about 5 years. So this is permissionbased regulation. There's no approval, no flying commercially. It's safety first. Look, that might make sense in the case of preventing plane crashes, but when you're talking about AI models, you're talking about replacing a system that is releasing new versions every couple of months with one that is potentially fully under the control of government, fully government approved. Everything has to be certified, and you could expect the timeline to go from months to years. Again, I think we'll just simply lose AI race if that happens because China is not going to abide by those rules. So just to sum up, if my choices are between FAA for AI or what I would call the DMV for AI, I would much rather go for Demis' SRO for AI, the self-regulatory approach. But we really have to keep it honest and pure because again otherwise it'll just be the opening bid in a coming new wave of regulation and it will be the vehicle for massive regulatory capture.

Speaker A: To your point, it can't restrict.

Speaker B: Yeah.

Speaker A: Can't restrict open source. I think that's so important because all of these other efforts require money that you have to spend which is always where regulatory capture happens and you have to enable startups and open source to compete effectively. Shimoth, any thoughts on this new self-governing body?

Chamath: I think it's really important and I hope it happens quickly. The thing we have to keep in mind is there's going to be a torrent of money that's going to try to influence both sides of the political aisle to regulate this in a way that creates some form of regulatory capture. We just don't know what. And so the faster we avoid that off-ramp by actually establishing a set of rules and superseding the need for federal oversight is a really important thing. Now, at the end of the day, you still have federal oversight in some ways because you still have commerce that plays a huge role in these standards. You still have the DOJ. So, it's not as if it's going to be a wild west. But what it prevents is a handful of actors using their balance sheets and their capital to essentially pull the ladder up. And I think if that happens, we're in a really bad place. So I think Demis' proposal makes a ton of sense and we should just get on with it.

Speaker A: All right.

Speaker B: Well, yes. But provided I mean again just provided that I think we we make sure that I mean look in my view there there are five conditions but I think we do have to make sure it's pure. Even in the FINRA example, that's the analogy that Demis used was that we should set this up in the same way that that FINRA is set up. FINRA does report in ultimately to the government. It reports into the SEC. And so, you know, if we are going to set this new SRO, where is it going to report to in the government? There's going to be a huge food fight over that and it will then be subject to political pressure. The software industry has never been regulated in that way. We do not have a dedicated regulator for software. We're right, but those issues are important. But my point is, h I'm just saying these things are never ideal. But if the choices are we kill open source and we lad pull the entire market, so there's a duopoly or there's this, I'd say this

Chamath: for sure. And and that's and that's that's the crux of my argument is it's definitely the lesser of two evils. I'm not sure those are the only two choices, but increasingly there's no question that the pressure is coming to regulate AI more and more. And frankly, this all goes back to anthropics government.

Speaker A: They poke the tiger. They poked the tiger.

Chamath: Yeah. Well, it's it's more than that.

Speaker A: They're funding the meat the tiger.

Chamath: Yeah. I want to give an update on that actually cuz

Speaker A: I would say poking the tiger of like the American public getting really freaked out and then the government stepping in. Yeah,

Chamath: totally. And there's a couple of data points on that actually. I just want to give a quick update. So in October of last year, I tweeted that Anthropic is running a sophisticated regulatory capture strategy based on fear-mongering and everyone kind of went crazy over this. This was again like a very hot take or spicy take at the

David Sachs: then people thought that I was beating up on a little startup. Now I think everyone can kind of see the truth which is look this is not a little startup. They already have a trillion dollar market cap valuation. Gavin Baker thinks it'll be at three trillion after they IPO. This is actually one of the biggest of the big tech companies and they are I think by pretty much every criteria including revenue the leading AI company. So I think people can see now that they have enormous resources and they're putting those resources behind an effort to like Jimoth you said pull up the ladder and it's classic regatory capture and there was an article in Politico just the other day. is called inside Anthropic state-by-state plan to ratchet up AI rules. And what it says is quote AI giant Anthropic is pursuing a strategy of oneupmanship that encourages states to impose increasingly tougher AI guard rails rather than a line around a single set of regulations. So the basic idea is that they get a set of regulations passed in one state like California's SB53 and that was then supposed to be the model at least for all the blue states. But then with each new state, they actually make the regulations more and more strict, more and more all-encompassing. So there's not actually a stable equilibrium. What they're trying to do is drive each incremental state to more and more regulations. And so this is actually an article explaining that they're doing the opposite of trying to create what we wanted, which was a single national framework. they actually want the patchwork because they're using again the pressure they're creating at the state level to impose more and more regulations. And again, what I said last year was that Anthropic was principally responsible for the state regulatory frenzy that is damaging the startup ecosystem. Again, everyone went crazy at the time. I think now there's plenty of evidence showing this is their agenda. And um

Jimoth: and by the way, they're going to win that because states have great sovereignty rights and like we're seeing with self-driving the states are going to decide. It's not going to be a federal mandate. The states get to decide just the nature of the US.

David Sachs: The reason why

Speaker A: they're going to they're going to win on that in a couple of states, right, Zach? Just realistically,

David Sachs: they've won in a bunch of states. They already won in California and Illinois and New York and I mean they're winning in all the blue states and maybe even some red states. But look ultimately the reason why anthropics arguments are finding purchase is because when you go to the government and say please regulate me you know you should have more power there there's hardly anyone in government who will ever say oh no no no we're not qualified like we don't want government

Moderator: yeah there are very few people who are principled that way and most people in the government will say thank you very much what else can we take and this is the mistake that I think a lot of people in the tech industry are making is they think that they can just buy off politicians or the political system by making concessions. No, that will just lead to a ratcheting up of the pressure. The government will be happy to take this and then come back for more and more and more until it's fully under government control. So, at some point, I think these companies are going to have to grow a spine and fight and decide where they're willing to draw a line. And if Demis' SRO is the line, if they're saying, "Okay, we think this is the right solution and we're going to fight here and this has to be it and in exchange for this we need preeemption and we need, you know, other things written into law that make sure this is where the line is, then I think it can work. But I think if you're just kind of offering it up for free and all these companies are just going to say, "Oh yeah, regulates, give us the SRO." That will not be the end of it. That will just be the opening bid and the government will come back to take more and more and more. Yeah. All right, let's keep moving through the docket here. Stripe, which is still a private company, much to the chagrin of many of the shareholders, I think. Uh, now as they go into the second day on this, yes, I mean, I'm in I'm in a couple of funds that have large positions like go public, boys. They are bidding bidding 53 billion for your alma mada, David Sachs, PayPal, which is a public company. Stripe and the private equity fund Advent are jointly offering to acquire PayPal for about 60 bucks a share, which is a small premium. Most people think it'll go for more like $70 a share. PayPal stock jumped on the news obviously. And

Speaker B: were you able to get to the bottom of this that was it just Stripe and Advent? Because then somebody else reported that it was also Block.

Moderator: Yes, Block is coming in as well.

Speaker B: It's so confusing. every other media source is like they're all over the place on this.

Moderator: Yeah. No, it's I think it's because it was a breaking story and maybe they were trying to keep it quiet.

Speaker B: It's a huge deal though if if Block is a part of it versus if they're not. I think

Moderator: Yes. And Block, formerly known as Square, is Jack Dorsey's uh payment company, one of the few entrepreneurs to ever create uh two decacorns in our industry. And uh they're contributing 17 billion in equity in the combined offer. how they um chop up what's inside of PayPal would be the big question. Obviously, they own, you know, a number of different brands including Venmo in addition to PayPal. That might go really well with the I'm just taking a guess here with the block assets. Stripe owns Bridge. That's their stable coin infrastructure company they acquired for a billion dollars in 2025. PayPal has SIUSD which is already in circulation. That's their stable coin. So, stable coins are part of this. But the biggest thing is PayPal is still a juggernaut. Sachs 439 million consumer accounts. You did something right there 25 years ago. It still the test of time.

David Sachs: It's kind of amazing. It really is.

Moderator: Isn't it amazing that it's still that strong? Yeah. It's weird when brands keep going for that long.

David Sachs: But the problem is that the product is getting very long in the tooth. I think it's only growing 7% a year which is a lot on the base that you know it's it's grown to it's a big base but the product has become somewhat obsolete and in a way it's a legacy product. I'd be curious to hear from the Stripe guys how they would fix that cuz I think that's a very hard problem to fix. Maybe they wouldn't maybe they would just run it more efficiently and kind of milk it

Speaker B: kind of do a private equity play. The different question

Moderator: the interesting question to ask is what is the only kind of baby that advent and stripe and block could have together and I think there's one which is you are creating a competitor to Visa and Mastercard

Moderator: because you now have upwards of 6 or 700 million accounts. You have massive stable coin infrastructure. You have all of the riskmanagement infrastructure that Stripe has built over the last 15 or 20 years. The big critique of Stripe's business model early on was they had to build so many value added services because everybody always thought the take that they could make as a middleman sitting on top of the traditional rails would effectively get competed away. Now to their credit, they've done such a good job that that hasn't happened. But I think what it means now is you can vertically integrate and go soup to nuts. That is probably the most obvious thing to make out of it. So that now Stripe gets access to an ultra- lowcost set of payment rails literally like to zero brings it everywhere all over the world. So does block advent can pour money into it. So it's quite powerful if it comes together. Rbert, what does this say about private market companies at scale and Stripe potentially never going public? I mean, how does a private equity firm get their return on this investment in 2, three, four years? Do they wind up selling more of it to Stripe? What are your thoughts here on the structure and capital market implications here?

Rbert: I think there's going to be more of these kinds of deals. If you look at Ryan Cohen's bid for eBay, I think

Speaker A: it's probably a second dot on a line that I think is emerging, which is folks that are call it AI native are looking at call it first generation digital native businesses that have become mature and old and stale and aren't run by the founders anymore and have not yet realized the opportunities with AI, have not yet realized their potential. or overspending in a lot of ways. And when you take a look at those businesses as a modernday AI operator, you're like, "What the hell? This thing is so under uh utilized. They're not using their network well. They're not operating well. They're overspending. They're not using AI well." And there's a set of opportunities that become quite obvious. And I think the capital markets as we've seen with like Josh Kushner's roll up of accounting firms and General Catalyst has a project like this where you can kind of use capital to go buy you know in those cases traditional services businesses and AIify them. I think this is part of a line of maybe looking at traditional digital businesses and AIifying them. And there's a long list of these. There's a couple dozen of them. So I think if you looked at the public markets and you said, "Hey, where are all these kind of software companies, network businesses that emerged in the early part of the internet or even in the more recent part of the internet, aren't run by their founders anymore, have stalled out, there's a massive opportunity. Now the question as a capital provider is who do you partner with to go and execute that operational revival of that business?" You're not going to go hire some Mckenzie consultant to do that work for you. It's got to be the best of the best. It's got to be the right players in the business. So, I think Ryan Cohen has proved his metal obviously with some of the things that he's done with Chewy and GameStop and that's obviously debatable. I spent some time interviewing him to understand his

Speaker B: This was on the Allin interview program. You can go to our channel and find it there. It's last month.

Speaker A: Thanks for the plug. And obviously, when it comes to payments, who better than Stripe and maybe Jack Dorsey plays a role here. And and by the way, I think because capital I mean, if you think about that $17 billion equity contribution, what that technically means is Stripe is selling and Block is selling $17 billion of equity to the cash investors. That cash is then going to buy a PayPal. Therefore, Stripe and Block end up owning a piece of PayPal. The private equity investors own a piece of Block and Stripe. And what is not clear in the deal docs that were published cuz I don't think it's relevant to the public markets is who's actually going to operate PayPal post close. And my bet would be that they're going to hand it over to the Stripe guys and say you guys

Speaker C: I think that's clear. Yeah. Because they're the most qualified and they will have the biggest stake in it. Uh you're

Speaker A: so I think I so I I will make a prediction. I think that eBay and PayPal are probably the beginning of a wave of mega deals of call it flaccid, you know, digital businesses that can be revived, okay, with the blue chew of capital and the right operator and I think that there's probably a big

Speaker C: a big wave of this to come.

Freeberg: The other thing is this is probably not the final clearing price. I think the price is probably another 10 to 15% higher from here. And and I will say that there is a certain individual that must look very closely at putting in a competitive bid. Oh, a certain individual who may may have his fingerprints on the original PayPal who might also have $4 or5 trillion in market cap to play with who also made a $60 billion acquisition recently. We don't have inside information here.

Speaker B: To your point, Freeberg,

Freeberg: correct?

JL: This is becoming a playbook. There's a company called Bending Spoons that just went public. They bought a bunch of non-founderled assets. AOL for 1.4 billion, Vimeo for 1.4 billion, We Transfer, Eventbrite, Bright Code with him.

Speaker D: I was just DMing with him.

JL: He's He's awesome. I've hung out with this guy. This guy is an absolute freaking operational killer. He he bought Evernote.

Speaker E: Yeah. In Milan.

JL: And yeah, he runs the whole thing from Milan. He bought Evernote and he just goes in and he diagnoses these businesses. He's like, "How are they being over where are you overspending? Where are you underpending? what are you doing wrong with the product and what are you doing wrong with marketing and he just faking fixes it and he's just a killer and he's taken all of these what were called web 2.0 I know businesses and he's revitalized them, rolled them up and printing cash out of them and leverage the cost to run them lower.

Speaker F: He's using young AI first executives from what I'm talking

Speaker G: totally. It's a great call out JL like bending spoons is the roll up of this sort of strategy but for these mega deals I think there's more of them to come. I will say uh you know the the high order bit here uh which we talked about for a couple years was venture capital was on the ropes for a couple of years under the wrath of Lena Khan and then once Trump got elected all the executives working in corporate development said hey looks like M&A's back on the menu and now we're seeing deal after deal after deal get consummated people are no longer scared of doing deals Uber just bought delivery hero today uh That's going to like jump their revenue by 20. Yeah. And that's going to jump their revenue by like they're getting diluted 10%. It's going to jump their revenue 24% or something crazy like that. And this is going to be I think the big story the next couple of years and all this liquidity. Talking to LPs and family offices, which I do on a regular basis, they're all like, "Hey, when's your next fund? Hey, when's the next deal?" Because now people are believing in venture because of the SpaceX distributions and all this M&A. And we have four or five companies that got bought since Donald Trump was elected president. Thank you my President Donald J. Trump for putting M&A back on the menu. Sachs M&A back on the menu. Why didn't you make a bid saxs for PayPal?

Sachs: Been there, done that.

Speaker G: Been there, done it. Okay.

Sachs: No, but look, you have to have synergies.

Speaker G: There was a moment, this was like 15 years ago where they asked Sachs to go back and be the CEO.

Sachs: That was right. I remember that at the poker game. Yeah. He and I immediately flew to Vegas and spent the weekend there to think about it.

Speaker H: Like, you know what?

Sachs: I wasn't No, they didn't ask me to uh but I was... Well, no, I I never got the offer, but it was down to like final two or something and it was between me and someone else. And actually, they ended up going with some, you know, like traditional like credit card executive. And to be honest, that's why PayPal has stagnated is that as soon as it was acquired back in 2002, they basically blew out like all the founders, all the founding DNA and it was just kind of run by, you know, consulting types. You got to remember at that time it was acquired by eBay and Meg Whitman had worked at Proctor and Gamble and Disney and she spent like eight years at Bane and it was like a very corporate mindset. I mean among all the internet companies of that era it was definitely the most corporatist and they saw the founders the founding generation at PayPal is just a problem just a bunch of like cowboys they couldn't control they made no effort to retain them and I think they were kind of relieved when they all left and then that's what created the PayPal mafia was that you know normally in an acquisition you'd lock up all the talent but in this case

Speaker I: they locked them out they're like these guys hard to manage change the keys

Sachs: I've said for a long time it's a misnomer to call it the PayPal mafia. It's really the PayPal diaspora.

Speaker I: Totally.

Sachs: Our homeland was taken over and they burned our temple and then kicked everybody out.

Speaker I: Yeah.

Sachs: And that's why the whole PayPal mafia got started with all those companies.

Speaker J: But as a result of that,

Speaker K: for for decades, I don't say anyone's a victim. That's

Speaker L: Look, when you when you acquire a company, you get to decide what to do with that asset.

Speaker A: Totally. So, I mean, that was just the reality. But it's not like, you know, I don't think anyone was bitter about it. They're all like, "Okay, this give us the capital to go. I'll do the next thing we want to do."

Speaker B: Well, the new CEO, by the way, Enrique, is really aces. Uh, I've met him before and they're doing a great job. Um, apparently, which is why they probably got these offers because they've been tightening that business up for the last couple years.

Speaker C: Well, no, the reason they got these offers is the market cap is down to, you know, was down in the what, like 30 something billion. I mean, this is a company that was worth 200 billion, wasn't it? Roughly

Speaker B: 322, I think, was the peak.

Speaker C: Mhm. And before this offer, it was down to what 30 to 40 billion. Yeah. So the reason why it's attracting offers is it's so beaten up. And so now the question is, can anyone else do something with it?

Speaker D: To your comment about you've got to have synergies. Doesn't it seem to be the case that in this era the the core synergy that any great operator can bring to the table in this sort of a scenario is AI? Like you can leverage whether it be in this business or others you can leverage tools that drive automation that drive product development that drive improvements and efficiencies across the organization that make the product actually better for the user etc etc that simply potentially obviously being well implemented.

Speaker A: Well, look, I think you have to have a product vision of how you would use AI to make the whole user experience better. And yes, you're right that you could just use AI to drive efficiencies and that'll improve your profitability and earnings. And so on a financial level, you could make the acquisition work. But it seems to me that the existential issue for PayPal is that you're dealing with a product that's 25 years old. I mean, it's the same thing that we created back, you know, like 27 years ago. I mean, it's changed a little bit, but not that much. And the problem is that that that interaction model is legacy. And so, unless you've got a a vision of how to resuscitate it and rejuvenate that that product, I think, yeah, it could be a good financial play. Maybe

Speaker B: I think they're buying the accounts.

Speaker E: Yeah. I mean, what you're saying, Jamoth, is Yeah. what you're saying is interesting because with Stripe, I mean, this is the advantage that Stripe has is that they have a ton of merchants, right? So, they've they've become the preferred mechanism for merchants to basically accept payments via APIs. And I think they're doing about two trillion a year of annual transaction volume. I think PayPal is doing 1.7. So, actually, Stripe is a little bigger than PayPal now. But the thing that PayPal has that Stripe doesn't really have is the consumer relationship. So, you know, over 400 million active consumer accounts. So, you're right, Jimoth, that if if somehow you could combine the merchant relationships with all those consumer accounts and then bypass the credit card networks cuz there'd be a lot in theory there could be a lot more on us transactions.

Chamath: Exactly. And that's where the value is. PayPal already owns Brainree. So, now you have Stripe and Brainree that effectively were competitors that won't be. And then what block gives you is an entire point of sale infrastructure and you get the cash app. So you put it all together and I think it's a it's a shot across the bow for Visa and Mastercard.

Speaker E: Brainree is the other one that I think you just mentioned there Chimath that's important because that is a very strong business that you don't even know that PayPal owns. Venmo is also that speaks to a lot of young people. So you're kind of getting two generations. You're getting Gen X and millennials. Uh a lot of bang for your buck there. Yeah,

Speaker C: what Zach said is true. They have enough of the things to go end to end on their own rails.

Speaker A: That is a very

Speaker E: Yeah, the question is whether you can package it all together in a way that the consumer will actually choose because it's one thing to say, well, we take the merchant relationships of Stripe and the consumer relationships of PayPal, we don't do that. But what if the consumer doesn't want that?

Speaker C: No, you don't do that. I think what you do is you go to places like all of the merchants that use Stripe and say, "We'll give you a 3 or four or 5% discount and they'll be like, "Okay." And so you'll see these prices that just, you know, fall everywhere. Like imagine if Shopify was like to all their merchants, okay, you have two choices, the old way or the new way. The new way, you put another two or three or 4% in your pocket. Of course, they're going to pick the new way.

Speaker E: Well, and this is the paradox of like modern M&A. You know, if you look at protecting the consumer, this will ultimately be great for the consumers. This is going to lower the prices on it. They're not buying this to

Speaker C: Okay, you're saying something really interesting. It is so good for consumers if this were to happen. This is the exact reason why if this had happened two years ago,

Speaker E: yeah,

Speaker C: this would have been the antitrust equivalent of a coloctyl exam. I mean, oh god, you would not even get one step close to doing this deal two years ago.

Chamath: Well, that's that's really interesting actually. I mean, the key question with antitrust is how do you define the market? And so, if you define the market as, you know, APIs for merchants, then JCAL, it would be Stripe versus Brainree. And then the government would say, well, that's you can't consolidate share.

Speaker C: However, if the real market is Visa and Mastercard, that's the ultimate duopoly. And if PayPal can add competition to that market, which is infinitely larger than APIs.

Chamath: Exactly.

Speaker C: Then it's actually pro competitive. So how you define the market determines whether it's anti-competitive or prompetitive. And those guys are smart enough and they've read enough books where they won't [ __ ] this one up.

Jason (JCal): All right, let's get to the next topic. Somebody else is suing Open AI. This time it's Apple. On July 10th, Apple filed a 41page lawsuit against OpenAI over alleged alleged stolen trade secrets. Apple says Open AI stole their IP to develop their consumer hardware device. Remember, we had um Sarah Frier at Liquidity and I uh probed her on this new device and she said it was very human and lovable. She gave us a little bit of the goods. Well, it turns out Apple is alleging that maybe this is partially their IP. Tang Tan, Apple's former VP of iPhone design, is OpenAI's chief hardware officer. He allegedly directed Apple job candidates interviewing at OpenAI to bring quote actual parts to interviews to quote show and tell in the interviews. Changu, former Apple senior technical engineer, sent this text message to a still employed Apple colleague. Quote, "lol, I found out I can access the network storage. So funny." During all of this, OpenAI has poached over 400 Apple employees over the last year or two. Big numbers of poaching. Apple and Tim Cook have seen enough chimoth. Tim Cook green lit this. As insane as this is, Sam Waltman has found a way found a way to screw yet another party. Screwed Elon, his first benefactor. Chimati, if you remember correctly, the default for iPhone AI was supposed to be chat GPT. So they took this relationship, Sam took this relationship where he got to be the default on the most important platform for AI, the iPhone, and now it's wound up in a massive lawsuit. What are your thoughts on this?

Chamath: I haven't really seen Apple very latigiously in 25 years in Silicon Valley. So that's obviously a concerning data point for OpenAI. They're very reactive more than they are proactive on these things. So, there must have been something that really really upset them.

Jason (JCal): Egregious. Yeah.

Chamath: So, I don't know. It's going to take a court to sort this out. I don't really want to gossip because like who knows what's actually going on and who said what and blah blah blah, but nobody should be stealing things from their former employer. Nobody.

Jason (JCal): Obvious.

Chamath: You're just not allowed. It's just obvious. These people are very, very smart and they're very successful. And you know that's why OpenAI probably wanted them and that's why they wanted them you know and you

Chamath: come to them with the collective wisdom of what you've accumulated and I think that's sufficient. You don't need to especially as a senior person do this. So I just hope that this stuff isn't true because I think I don't think that Sam or Sarah or anybody else there are trying to induce this to happen. I don't think so.

Moderator: Yeah, I doubt they induced it but I do believe that it's true or Apple wouldn't have brought it. Sachs when we look at this maybe you could open the um aperture here if you want or you can just go very detailed but the nature of we have a free market we don't have non-competes in California generally speaking you can just employment at will go where you want but we have had instances you know whimo famously uh you know brought some IP to Uber when they did Travis and the team said leave the building your job is rescinded you don't get to bring that information here. In this case, it seems maybe they didn't induce it, but it occurred for some period of time. So, take us through big picture what you think is going on here and what it means for the industry.

Sacks: Well, like Jamas said, I have no idea what's going on here. I mean, these this is a lawsuit. The facts are all alleged. We don't know. It's going to be adjudicated. So, I really don't want to opine on what happened here. But if people want to know a very simple rule of thumb for how to avoid these types of disputes is just when an employee leaves their previous company and joins the new company, just don't take anything with you.

Moderator: The only thing you can bring to your new job is what's in your head.

Sacks: Your memories.

Moderator: Your memories. That's fine. Whatever is in your head, you're allowed to take. But never leave with anything else.

Sacks: No thumb drives, no CD, no documents, no nothing.

Moderator: Just what's in your head is okay. Fraberg, any thoughts here on just the number of lawsuits that seem to be piling up over at Open AI? Bad luck.

Friedberg: Couple dots make a line, I guess.

Moderator: Okay, there you go. Very well said. Couple of dots make a line. Okay, SpaceX had a data leak this week. They launched Grock Build in public beta at the end of May. The newest coding model, Grock 4.5, powers Grock build. I've been playing with it. It's extraordinary. It's a coding tool that works inside of Kurser. Uh, SpaceX previously told users, Shimoth, nothing from your codebase is transmitted to XAI servers during a session. But what actually was happening is every time a developer or according to reports used Grock build the tool was sending their entire codebase to SpaceX cloud servers out without alerting the users not just the files that were needed to do that specific coding task just everything passwords API keys could have got pulled up there all the uh change logs etc. Uh the privacy setting was supposed to stop this but it didn't work. SpaceX quietly disabled the upload on July 13th by flipping a switch on their servers. Elon Musk, friend of the pod, promised on X that all previously uploaded data has been deleted, I guess. Uh, and in response, SpaceX open-source rock build. That's their harness. So, that's another opensource win or win for the open-source community and AI sovereignty. You got any kind of thoughts on this? Obviously, this was not intentional, but trust is important uh with these models as we've been talking about for the last couple of months here on the All-In podcast.

Chamath: I would actually connect this to my comments on CNBC earlier this week, which built on top of Alex Karp's comments the week before. Privacy in AI is very fragile and it's very brittle. And this is despite the best efforts of great businesses. Like, you know, you may not like Elon for personality quirks, but he is incredibly trustworthy. He's overly transparent. And so, to their credit, they shut it off immediately. But my takeaway is that there are all kinds of non-obvious data leak vectors lurking in AI. And so if you think that you're going to flip a ZDR switch, zero data retention, which is the magic term that the industry uses to tell you that everything's going to be okay. I think the answer and the message should be it's not going to be okay because you can't guarantee any of it. So the model companies when they give you these zero data retention policies are probably trying their best. But I think the reality is you are leaking information where you don't know it. and they despite their best efforts may still have trap doors that they don't even know about until it's figured out by somebody else like in this example. So all of this speaks to you have to have a stratified ecosystem. You have to have third parties. Now look that's very biased for me because it's in part what we do for large enterprises at 8090 when we implement our software factory. But the reason why it's working so well is this exact reason. You need an independent third party layer to interface to these models to manage this exposure because there are trap doors everywhere.

Moderator: And that's what Sachi just said in a really interesting blog post. Did you guys see that?

Friedberg: Yeah,

Chamath: I thought that was excellent.

Sacks: The reverse information paradox.

Friedberg: Yeah,

Chamath: that's exactly the the takeaway that he left with. He was building on Alex Karp's supposed crash out. You know the point that Kart made about how enterprises who have technical ability want control over their compute models, weights, data and alpha. But he he went further with that idea. I mean he started with Karp's idea but then he kind of provided a recipe a road map for how enterprises should operationalize that. And what he says is that enterprises they have to establish a real trust boundary with private eval proprietary learning loops inside the tenant decoupled orchestration and the explicit right to fine-tune their own outputs. So he kind of goes through a litany of fairly technical things that enterprises should do in order to achieve the operational control that Karp was saying that enterprises really want over their AI compute models and data their alpha. So it's really interesting. I think now there's you know a virtual almost like college dorm session going on between the leaders of these companies who are brainstorming some of these concepts and now extending them. Right.

Sacks: And what's happening is you're starting to see the formation of not really an alliance but like an ecosystem that is trying to create alternatives to you know a monolithic closed model stack which is where anthropic and to some extent open AAI want to go is they want you to be locked in to their to their stack right their models their harness they control the data all you know all of that and now you're starting to see all these different companies

Chamath: and you pay a huge premium for the privilege for them to do it, which is even more insane. So, I I saw this data and Nick, maybe you can find this companion clip. The companion clip I'd like you to find is Eric Glyman, who's the CEO of RAMP, was on Squawkbox, I think today, talking about a new feature where you can manage the token maxing of your employees through your ramp card. But the data that I saw was that a million tokens on Fable is about sachs 56 bucks. A million from soul is about 26 bucks which is the same as quad 48. A million input tokens from on Gro is about $1.50.

Moderator: Okay.

Chamath: Z is about a $150. Elon's about a dollar and the Chinese models are 50.

Chamath: Wow. So on top of the whole data sovereignty bleeding your alpha away, can you imagine that you're paying 56 bucks as well per million input tokens for that risk? That is insanity.

Moderator: I'm using perplexity computer and they started supporting Grock and they already support GLM52. So when you're like you're using Claude or OpenAI, you can only use their model. So I started effing with the different models and I gave it all the same basically PRD and I said I want to make a podcast player that deep link. So, like if we were talking about, I don't know, Mythos, it would play me all the miso methos clips across all the different tech and business podcasts, but make it into one stream. And I was like, this would be like really helpful for me for prepping for the show and just be interesting. I did it. It took a couple of hours. It cost $11 on the new Grock. It was hilarious how cheap it was.

Speaker A: And then adding to this, I don't know if you saw

Speaker B: Sorry. Did you try to do it on Fable to see how much more expensive it was?

Speaker A: I didn't. I didn't because I was out of Fable credits on my $200 account. So, you know, look at this clip here. Nick, play the clip from Eric Glenn. That's kind of interesting.

Eric Glenn: We're thrilled to be launching token spend management today. It's available to RAMP and non-RAMP customers.

Speaker A: And he's exactly right. Over the last year, I looked at the stats this morning, token spend among RAMP customers has grown by 21 times.

Speaker C: 21 times.

Speaker A: 21 times.

Speaker C: Not 21%, we're talking about 21 times.

Speaker A: That's exactly right. So being off by a few pennies as a CFO actually might be quite nice. At the rate it's going, it might be several dollars. And look, like I think that for many CFOs, they're often very surprised by the bill because what the AI companies have functionally set up is you have a tab. you can spend as much as you want. It's very hard for CFOs to see proactively what people are spending on and every time they're introducing new models, the rates often go up and so there's very misaligned incentives. So part of what we're trying to do is make it easy for CFOs to see the spend, understand the spend, and control it.

Speaker C: Thanks, Nick. He's saying something so important there because if your engineers are going off randomly in an unguided system and then just ripping through million tokens at 56 bucks, what he's talking about is the eventual downstream impact to earnings. And that eventually a bunch of these public market CFOs are going to show up to Wall Street and they will have missed earnings because they're upex at some point. If things are 21xing every few months, somebody's going to miss a quarter. I don't know who, but somebody. And it's not just going to be, you know, I was speculating it'll be a few pennies here or there, which they'll have to say is because of token spend. He's saying it could be as much as dollars at this rate, which also could be the case. I think the point that we're all trying to make is unless you get a control of this and you can directly say how much money you're making, this is a bridge to nowhere. It is a money burning furnace.

Jason: The good news is this is all creating a massive market opportunity. Sachs, Bit Tensor, Subnets, GLM52 hosting Grock 4.5. Now

Speaker A: in Inkling, Inklink mirror Marott's new model in everybody's now saying, "Hey, wait a second. I can give you a better deal. You're paying two bucks. I can get you one buck. This is

Jason: No. No. People are paying between 26 and 56 bucks. They should be paying 50 cents." Exactly.

Speaker A: Well, you know, and

Speaker D: the Inkling announcement was kind of interesting because I think the value prop there is she's explicitly saying that look, we're not frontier intelligence. We're just under that, but we're a platform for fine-tuning these open models which are much much cheaper and then you can achieve the result you want based on fine-tuning. And so that's really interesting.

Jason: Yeah. And uh but you know these open models won't be around for very long if Anthropic has its way.

Speaker D: There's a reason they want to stop it. It's just they have such a monopoly.

Jason: Of course you're selling most of the product for 50 cents per million tokens when they're selling theirs for 56 bucks. Of course you don't want that to happen. Of course you want them you want to try to stop it.

Speaker A: But that being said, they're still growing like crazy. Just to be clear, I mean, yes, you know, you are seeing this explosion of interesting things happening with open models like you said, you know, the latest rock build is open, thinking machines open and so forth and so on, but still

Jason: I mean, they're growing. They're still the industry leader in terms of revenue growth. So, these things are happening side by side. And

Speaker C: yeah, I would I think that the interesting thing is Eric would not have released this ramp product unless CFOs were like, I can't control the spend.

Jason: Yes. And then he's like, "Well, here, let me build it for you." And then if enough CFOs essentially turn that feature on and start to rate limit how it's spent because maybe they're not getting the ROI and the engineer doesn't care about ROI. The engineer is like, I want to use the latest greatest model.

Speaker C: Yeah. And maybe you don't need it. Maybe Mirror's right. And for 95% of the tasks, you should be at one level lower, especially when it costs 1/100th of the cost. But the engineer will never make that trade-off because they'll never want to think about it. You're right.

Jason: And also they're not tied to the money. The CFO is tied to the money and the engineer wants to go on an exploration on using the latest greatest thing.

Speaker C: Yeah. If you're booking your travel, you're like, you don't even see the price. You're like, "Yeah, just put me in business class. Put me in a nice hotel." And like the travel department handles that.

Jason: You're saying something really interesting. What percentage, if you had to guess, of fable five prompts are just average Michigan that should be running.

Speaker C: 98%. 98%. I was using it for stupid stuff that I could be using Quen for. Um I think this is my like micro prediction here. Mark German, who's like the most in then guy when it comes to Apple, he says, and you know, we got this new CEO coming in for um uh John Furnus.

Jason: Yeah.

Speaker C: And he is a hardware engineer. M7 Ultra uh because M we're on M5 chips now. you can get like, you know, 456, 512 gigs of RAM. He says M7 Ultra is going to support as much as 1.5 terabytes. That's double what they're already supporting. So, if you think about uh Frontier models, like the last generation, this is like an Opus level model running on your Mac Studio. You guys all use Mac Studios, you're rich venture capitalists, whatever. You're like, "Yeah, I'll take a four or $5,000 computer." This is going to change everything. you're gonna have employers go, "Oh, I can just run, you know, 90% of my workloads, 99% of the workloads on the local uh Mac Studio." I think Apple is a screaming buy right now. Uh and I this not financial advice, but my lord, that company could just run the table on AI if they get this right.

Jason: All right.

Speaker C: Apple.

Jason: Yes. Because I they're going to make such a fortune.

Speaker C: You got Let me explain. It's just like the iPhone. Everybody laughed at the iPhone. People overpaid. They did not. When the first iPhone came out, many people that was it.

Jason: That's true. Steve was the big one. You can I can still hear him laughing.

Speaker C: No, if you think about how they make money off of hardware, off of their devices, they will put so much downward pressure on Claude and Open AAI by just putting local models and supporting them with this memory architecture. It's going to be wild when people have unlimited tokens on their desktop. I'm telling you,

Speaker D: I don't know if you guys uh saw this, but um there's a very large solar company called Sunun. They just announced this week that they're making distributed data center blocks that you can put in your house. Another company that did it is company called SPAN that partnered with Nvidia. So to your point Jason, you're seeing this fragmentation and distribution of edge compute which I think is a theme. Definitely a theme.

Jason: Well, it's also chasing energy, right? Like if you've got some solar, if you've got excess battery power, hey, we power up your batteries at night cheaply.

Speaker D: I think I told you this last week, we are so massively short electrons. By 2050, the United States of America will be 2 and 12 California's worth of energy in deficit. 2.5 Californians, the fourth largest economy in the world. we will be short 2.5x of all of the energy consumed by California by 2050. This week there was an auction by this huge utility called PGM which serves Pennsylvania, New Jersey, Maryland, you know, 13 states. And that auction is where they publish a forward curve and say, "Hey, listen guys, here's my forecasted load and here's how much energy I need." And people signed up to essentially get paid a guaranteed rate every day so that they have to fork over the energy in the future. Kind of like a forward option. They needed like seven or eight gawatt.

Speaker A: They had 156 megawatts or something show up. Well, we are in such a bad place right now on electrons and electricity prices.

Speaker B: Did you see what our boy did this week?

Speaker C: We need So this is behind the meter, which is different. And he Elon needed to do this by the way just so you know because there's an issue in Memphis where he was very clever about how he was able to get Colossus off the ground that regulatory it's not

Speaker B: explain this

Speaker C: when you try to power a data center typically you have what's called grid power. So you go to the utility in the area and you say, "Hey, please run me a line off of that main transmission line." And that's how you power your data center. When that runs out or is so backlogged, you have to do what's called behind the meter, which means on your own property that you own, you build something for yourself. Now, there's a problem with that. You would think, well, that's smart. Yes, but like in everything in America, there's regulation on top of regulation on top of regulation. And one of the most complicated regulatory schemes that you have to overcome is clean air permitting. So even if you say you're going to do behind the meter, then you're like, well, what can I do? Solar you can do, but it takes too much space for most places. Batteries you can do, but you need to generate the electricity in the first place. So people use natural gas. So Elon cleverly bought a ton of 18-wheeler like engines basically. He bought the company that makes all this and provides mobile and then just you know pin them to the ground and then ran it and you know those are personal use essentially and so they came under the clean air permitting requirements but then when you act as a block you could make the claim that it doesn't. Now, there are new solutions like Bloom Energy, which allows you to have huge installations and still fall under the personal use clean air permit. And so for all of Elon's future capacity, he needed to have this in place so that he gets the clean air permits and he's able to have a clean run of sight to continue to build domestic data centers. Anyway,

Speaker A: speaking there's your little TED talk on energy, but uh we are in a bad place, guys, and it's only getting worse. Speaking of um data center sachs, everybody's favorite socialist governor Kathy Hochel in uh the great state of New York, my hometown,

Kathy Hochul (Quote): powered by fossil fuels, they drive up our carbon footprint. They occupy massive amounts of land, potentially displacing agricultural space and open spaces. The bottom line is progress shouldn't arise with a higher utility bill, depleted water supply, or noise pollution. So we have no choice but to address these challenges created by these massive facilities. That is why today I'll be signing the nation's first ever statewide moratorium on hyperscale data centers.

Speaker A: Everything she's saying there is a false accusation uh on the data center. So let's just go one by one. So she's saying that they eat up all of the power. Well, yeah. I mean, look, if you connect to the grid without producing more power and you force data centers to compete with, you know, residential ratepayers, then yeah, you could drive up utility prices. However, if you do what Chamas said and let them build behind the meter, then they bring their own power. And that's what the president has advocated for since the beginning of his administration is let the AI companies become power companies. So, that is the way to solve the energy problem or the utility problem. Then she's talking about, you know, eating up land. The reality is these data centers are a model of land use efficiency. We have a ton of land in this country. Obviously, you can find places where there is enough open land to build a data center. The economic impact and value of a data center relative to the land use again is one of the best ROIs there is. The supposed noise pollution that's largely made up that can be dealt with. You obviously don't want to put these things right next to a residential area, but create a little bit of distance and it's fine. The whole water consumption thing is largely a hoax.

Speaker D: The the modern data centers uh recirculate the water,

Speaker C: closed loop systems.

Speaker A: Yeah. And I think there was a study that showed that a typical data center uses the same amount of water as two and a half in-n-out burgers. So, in-n-out burger chains.

Speaker D: I mean, just go after the almonds if you're concerned about water, people, please.

Speaker A: There's there Yeah. Or golf courses. I mean there's many, you know, there's many uses of water that are way more wasteful. So when you compare economic impact to all these different things, data centers are like honestly one of the best things we could be building as a nation. But

Speaker C: and there's all these taxes and incremental revenues. Did you see the article where I think it was in North Dakota or something where like teachers were getting like 30 and $40,000 bonuses from all the tax revenue that was coming in? There's all these upsides.

Speaker A: That's right. They generate um a lot of tax revenue. They've created a blue-collar construction boom. It's not true that there's no jobs once they're built. That you do have ongoing jobs there. And then oh, one final thing just on the point that Hochel was making. She said it created a lot of pollution. Natural gas, which is how most of these data centers are powered, is one of the most clean burning sources of power that we have.

Speaker C: 100%.

Speaker A: These data centers have become the scapegoat for all the angst that people have about AI and it's kind of become this very clumsy way of trying to throw a wrench in the gears of innovation and just kind of slow the whole thing down.

Speaker D: All I have to say is welcome to Texas. We got plenty of land here. And what's so stupid about her proposal and her talk, aside from the thing she got completely factually incorrect, is New York State is like 80% underdeveloped. Drive upstate, folks. You're thinking of New York City. Yes, New York City is packed. You go upstate, it's literally 70 to 80% of the land in New York State is undeveloped. There's so much land. It's ridiculous. New York is giant. It's giant.

Speaker A: On this topic this week, I just want to give a shout out to Senator Dave McCormack. He had a defense and innovation summit in uh Carlisle, Pennsylvania at the Army War College which a bunch of us went to plus came gave a speech had a CEO round table a lot of defense company CEOs etc. But Chris Wright was there at Sachs and

Speaker B: my guy

Speaker A: he's great and Chris mentioned this insane story. He said you know there is a lot of common funding because Dina Powell asked this question on stage and he said there's a lot of common funding patterns of these people that are protesting um the data centers and he said you could actually trace it back to the same people that in a different era were protesting fracking. And so he was saying like it's these are all just hobby horses that they use to raise money, have a job. They're like professionally paid protesters. They kind of just show up out of nowhere. I didn't realize that there was such a commonality, but they're the same people.

Speaker B: The thing that I just can't understand for the life of me is why Anthropic is still funding these groups that want to put the kibosh on new data center construction. There's one called public first where Daario just gave his first seven figure contribution and then a bunch of other employees at anthropic gave it and you know all these groups are trying to slow down AI development with new regulations and making it harder to build new data centers and at a certain point you just have to wonder I mean is this regulatory capture or they just kind of lost the plot because the number one thing slowing down the growth of anthropics revenue it's not demand I think it's the availability of compute in data centers. And so you're just kind of wondering like what is the point of all of this?

Speaker A: It's so true.

Speaker B: I was talking to someone in politics about this and the theory that they had is well the Democrats aren't going to pause the data centers forever. They're going to pause them until they feel like they're in enough control that they can

Speaker A: dictate all the rules. And so in other words, they're calling this a moratorum. And I think it does mean that the data centers are going to stop but eventually they're going to be in a position to say okay here are our terms if you want to turn these things back on right you want to lift the moratorum and then that's when we get this you know big government democrat defined AI regime and you know that it's going to consist of a new regulatory agency and new speech controls the whole trust and safety agenda from social media will be ported over that's this was this One person I was talking to, this is what he was speculating is the real agenda is that eventually once Trump is no longer president or in some future Democratic administration, they will eventually lift the moratorum but on their terms. Now I think that's a really dangerous thing to do because you know Trump is president for another two years and then no one knows what's going to happen after that. And even if you lift the moratorum in say 2 and 1/2 or 3 years, it's going to take a couple of years for those projects to even ramp back up. So when you start talking about a moratorium on data centers, it's not like a a few month pause. It's probably a good 5 years at least before you know you can get another data center switched on in the state of New York. Just so you know how bad it's gotten, there's a curve that you can use to price data center assets. And I think you guys know this, but I have this portfolio of these assets that myself and my partner Nita have accumulated. And what's so interesting is when we talk to all of the hyperscalers about giving us a price because we're trying to figure out whether we should keep it or build it or just sell it, the most incredible thing is how extreme the price is at the front end of the curve. When you have verifiable energizable power today. And the reason is exactly everything that you're saying, Saxs, which is that when you look out into the future, you know, we've said this before, but it's about 40% of all these projects are getting mothballled and stopped. And so it's creating this massive deficit of available energy to actually drive the use of AI. So to the extent that you actually want, you know, drug discovery or you want cancer diagnosis or you want better healthcare or better legal advice, we may actually not be able to service it based on all of the demand that exists because the power isn't there. The energy isn't there. And the reason why that's not there is because folks are just kind of reflexively protesting something that they don't completely understand clearly. So I think it's a really it's a really big problem.

Speaker B: I mean, we're going to have GPUs chasing energy. like where's their energy and just drive the GPUs there is what's going to happen right

Speaker C: let me add one layer to it which is they're not only trying to stop data centers from being built in the US they're trying to stop data centers from being built internationally in our friends allies and partner countries and the way they're doing that is the same political forces that are stopping data centers are also behind all these new export controls on chips so they want to make it harder and harder to export chips to more and more countries including our friends and allies and so there's not going to data centers here. There's not going to be data centers in our allies. I mean, where are we going to put these things?

Speaker D: I mean, those allies have unlimited energy, Middle East. Like, if you want some data centers,

Speaker A: well, what's funny, Jason, is, you know, we did a bunch of Middle East data center stuff and then it's kind of stopped. Meaning, like there wasn't this growth that I thought would happen because it's a very conveniently placed geography. It's the Middle East for a reason. And so, you know, you can serve 4 billion people very quickly in under 200 milliseconds from there.

Speaker A: Instead, what happened was there was this explosion in Asia and specifically in Australia, which kind of surprised me because I would have thought that those folks are a little bit even further out on the DSA, you know, far left. I thought these things would not have happened, but they they were able to get big deals done. So, in this weird way, you have all of these other countries kind of running to try to embrace this stuff quickly. They've done a decent job. They're doing stuff to sort of like displace some of the energy that that is needed in the US. But the problem is we need to have enough surplus here because this is where most of the commerce is going to get created. That really that I think should

Speaker E: these are these are luxury regulations. Like you can afford if you're New York State or California to be like, you know what, we don't need this. This is a luxury for us to have an extra data center. If you're Australia, you might really need the money. If you're Texas, you might really want the money. So this is what's so crazy like virtue signaling only goes so far until your debt to GDP is high enough and or your productivity is low enough andor your foreign direct investment is low enough where you're like all right you know what screw all that we're just going to build a data center but the the other thing is if you saw what happened this week the UAE now is able to import the best-in-class leading chips and so to your point Jason I think it restarts the cycle where you have to look very carefully at the Middle East because it's a very attractive place to build these things

Speaker F: and by the way you saw the you even if you just if you think about fiber and the milliseconds as you're talking about yes you can get to the four billion people but I don't know if you saw the the giant Starlink versions now they make like a really big version I think you got like one of the enterprise versions but there's like an even bigger enterprise version and they can bundle them together and you're starting to get to like 10 gig 20 gig setups so that means you could start putting these things almost anywhere

Speaker B: which gets also like adds another

Speaker D: can we see your clip. The thing that you were mentioning before,

Speaker G: this is not to your point as prevalent in the Middle East where you have monarchies and governments that aren't ruled by democracy, but in democracies, we see this anti-data center movement taking hold. This chart is something that for me always kind of played a role in my understanding of where the incredible anti-GMO sentiment came about in the United States,

Speaker G: which is great. Russia Today, this Russian media outlet launched in the US in 2010. They were kicked out of the US by Biden in 2022. And you can see that prior to Russia today existing in the US, there was no anti-GMO sentiment. GMOs were around since 1996. That's when they first had their big commercial launch in the US and were pretty prevalent for, you know, 14 plus years before everyone started to think GMOs are bad. We got to get rid of GMOs. And you could ask people a hundred different ways very pointedly and specifically about the facts on the matter and the science of GMOs and all this sort of stuff, but everyone always had a reason why they didn't want them, similar to what we're hearing now with AI and data centers. And it turns out that if you track back all of the media that had all this anti-GMO sentiment that ultimately got picked up by the mom bloggers that ultimately got put into social media feeds that ultimately everyone just accepted as truth. A lot of it originated in this Russian media push that happened around this era. And you can actually see this on the Google trend data that shows GMO and it's kind of write up. And then as Russia Today started to get cut by different media outlets and people stopped retweeting them and stopped reflecting them and stopped writing articles that followed Russia Today the anti-GMO sentiment declined in the US and I think you can see this going back decades. You know there's this effort that the KGB kind of designed during the cold war called directed measures which was really meant to try and create an influence campaign through affecting media. So putting this kind of propaganda out through foreign media, particularly targeted western democracies. And you

Speaker A: you know, you could argue that maybe you could trace back what happened in Germany with nuclear energy as being kind of similarly originated. But there have been a series of these pushes that seem nonsensical if you're fairly rational and can have an actually objective debate about the scientific merit, the economic merit, the benefits of these technologies. But for some reason, what we call the activist community become heightened to them. Say that we've got to get rid of them. And everyone's got these different unfounded, scientifically unfounded reasons why they want to get rid of them. And you're like, wait a second, how did we end up in this place that we're literally handicapping ourselves. And I think we're seeing something similar happening with data centers in the US today. The funding of the NOS's as they're being called, the media that's supporting this, the retweeting of the media. And then you asked people, there was a poll that came out today, something north of 50% of Americans believe that data centers increase the cost of water and electricity. Even if the data center is fully recycling the water and they're producing their own electricity, there's still this kind of repugnant reaction to the data center. And so there has been this like deeply sewn psychological shift that's happened in the United States. and and and you know, people have these, well, I hate the rich, I hate tech, I hate AI, I don't want any of this stuff, I don't want any of this stuff,

Speaker B: but where does it all come from? I do worry that there's some degree of kind of call it foreign,

Speaker A: you know, influence

Speaker B: influence. I I don't love the word influence because everyone kind of everyone captures it up, but there is some degree of like

Speaker A: I would say there's there's foreign interest. Let's let's call it that.

Speaker C: No, I think it's more than that. So just one month ago, just one month ago,

Speaker A: OpenAI published a blog post called PRC linked influence operations are targeting AI debates in the US and Politico covered this and a lot of other sites covered this. Basically what they are saying and in fact many people are saying is that China is behind a lot of these influence campaigns to shape US attitudes on AI data centers.

Speaker B: It makes sense. It makes a lot of sense. and there's going to be a congressional investigation of this. It does make sense cuz it is in their interest, right? If they can stop us from building this necessary infrastructure,

Speaker A: then that's a way for China to win the AI race.

Speaker B: If they can the market, if they can incentivize anthropic to, you know, pull the ladder up, if they can kill open source in the United States and constrain demand or the optionality and choice of lower, cheaper models, think about that for a second. at $56 per million input tokens. I mean, versus 50 cents for the rest of the world. All of a sudden, it doesn't take a company that's much much worse than you to beat you when your cost is 50 to 100x more.

Speaker A: Right?

Speaker B: That's just the math. The math ain't mapping.

Speaker A: You know, it's Sasha made the point that these enterprises are not just paying for AI with money. They're paying again by feeding those frontier models their proprietary knowledge, right? And all their their alpha. So, it's like a double whammy.

Speaker B: It's like it's more expensive and you're potentially mortgaging your future.

Speaker C: Look, let's be honest. It is obvious where foreign governments have an enormous incentive to try to manipulate and influence the comingings and goings in America. I think we should just acknowledge that. The idea that that doesn't happen is very naive. Now the question is we have to be able to call it out and put our finger on it because otherwise what is clearly happening is that there's a lot of Americans that will just fall for this and they will not think from first principles.

Speaker A: We have a huge we have a huge moral panic going on with respect to AI. Look when you talk about catastrophes that could result from AI. What are we talking about? We're talking about things that might happen in the future. Nothing resembling this has happened yet. you know, even the cyber risk that everyone's been talking about,

Speaker B: job loss

Speaker A: or job loss, it's like none of it's turned out to be true. We haven't seen any of it so far. But we're on the threshold, I think, of destroying the crown jewel of our economy, which is the system of free market innovation that we have, this culture of rapid iteration of anyone with a good idea can go raise risk capital and start their idea, start their company. And we're on the verge, you know, now we're talking I think about how far the Overton window has moved where we're actually saying that creating a FINRA for our industry might be better than all the alternatives. FINRA is a bunch of stock brokers writing rules. And when's the last time there was ever any innovation in that sector? I mean, I guess Robin Hood made trading free. That was it.

Speaker B: That was a big one. Yeah. Flow.

Speaker A: Okay. But that's not real innovation. Okay. That's like an innovation with respect to a pricing model. And we're actually saying that that might be the least bad alternative is having the equivalent of a bunch of stock brokers creating new rules that all these AI companies are not going to have to abide by. It's crazy. We are going to we are going to throw away the lead that we have in this. And by the way, Kimmy K3 just came out and people are saying it's it's now right up there. It's very very close to the frontier. We may have months on China if that. and we're going to create all these crazy rules and new regulatory bodies for risks that have not manifested yet.

Speaker D: It's worth monitoring the situation, but it's not worth panicking. Like, you should monitor the situation with self-driving cars and job loss. China is certainly doing that. They just stopped giving out permits for self-driving cars as an example because it's going so well and they're losing jobs and and there are people who are getting there's a little civil unrest. So they just said we're going to make self-driving cars um licensed and so they're not giving out any more license moratorium on license for now. It's worth watching Mythos and if it could hack your system. Palo Alto Network's checking it out, other people checking out. It's all worth monitoring but yes it there's no disaster here today because of AI. nothing's jumping out of your chat GPT window. You know, the worst case scenario is you blow out some tokens, you know, okay, great. That that's that's the biggest

Speaker A: There's only a handful of companies that are even at the frontier and they all have safety testing and red teaming and all the rest of

Speaker D: doing a good job.

Speaker A: Yeah, I'm saying stop that. I'm just questioning whether we need some vast regulatory apparatus now to start doing all

Speaker B: certainly premature and we did this because of science fiction and Daario saying all jobs are going away. I mean that that that was the most ridiculous thing when he said like he's panicked that it's going to be 80 or 90% jobs in 2026. What was his claim? I Nick get the exact claim. I think he said 50% of

Speaker D: He said he said with it he said 50% of entry-level knowledge worker jobs are going away within 1 to 5 years. That was one year ago. So

Speaker B: it's a little ridiculous. Yeah. I mean it's but he's not even know how to use the tools yet.

Speaker A: He's been in a state of panic since GPT2.

Speaker B: Yes. Yes. I mean

Speaker A: remember they wanted they wanted to have uh regulatory approval for models that use 10 to the 25th flops. Right. And every single AI model is like well past that threshold now.

Speaker B: Yeah.

Speaker A: And we haven't seen any of the the harm. Look, they thought that 10 to the 25th flops would be enough compute to create, you know, the Terminator, you know, to create Skynet.

Speaker C: No offense, Freeberg, but one guy's panic attacks, one guy's anxiety condition might have shaped the whole course of history here like Dar does Daario have like I'm not making light of it, but does he have an anxiety issue where he's like overly concerned about this stuff or is it just delusions of grandeur? Come on the pod, Dario. Invite's open. Come hang out. I'm sure he'd love to come on the pod after you just accused him of having a panic attack, but

Speaker A: I mean, he seems

Speaker A: like he's in a perpetual one.

Speaker B: No, let me tell you, listen, I it could be psychological, but I actually think that there's a strategy that makes a lot of sense, and it's a very simple, straightforward strategy. Number one, brand yourself as a safe AI company. Number two, ban unsafe AI. Three, profit.

Speaker A: Yeah, there you go.

Speaker B: That's the strategy. Kind of brilliant. All right, everybody. Go to allin.com/events and sign up for the Allin Summit in September. Scholarships are open. Let's do a quick amazing deep robust science corner with our boy David Friedberg. Before we get into the science corner, I'm going to give a shout out to Ronnie Dog for adoption. I love family dog rescue in Sonoma. Check out his Instagram link. God, here he goes

Speaker C: in the description. This dog needs a home. He was fostered and he lost the foster home. Someone come and grab him. He's awesome. All right, let's get into this.

Speaker A: This is what we're doing. He's trying to

Speaker D: he's trying to get more Q points.

Speaker E: That dog looks delicious.

Speaker B: Gross.

Speaker C: You don't live in Sri Lanka anymore. Chamath.

Chamath: Yeah, seriously.

Speaker D: Sri Lanka taking a spray.

Speaker A: How do you marinate that dog in Sri Lanka?

Chamath: Do what you got to do in Sri Lanka. Salt and pepper free or do you like something else? You know, just a little salt and pepper.

Speaker D: 12 hour marinade. Do you use bolet?

Speaker A: Oh, do do you like do you like a little yogurt and garam masala? Maybe do a little spicy. Do you guys want to talk about reversing aging?

Chamath: Yes. So, I want to talk about but I got to drop. All right, guys. I got to go to the EIFFEL TOWER. PAUL, I'LL COVER IT. THE audience will stick around.

David Friedberg: Science corner. All right. So, Chamath, you can drop two if you want. I'll cover science corner solo. So in the past we've talked about Yamanaka factors which are these proteins that can go into cells and reverse the aging of the cell and the cell starts to act young again. Pretty amazing. And uh there's a lot of advancement happening on that front. But this paper that came out just this week that everyone's kind of going crazy about was put out uh jointly by Calico which is Google's kind of you know age reversal startup that's super secretive that they're not allowed to talk about in partnership with a group called Revel Pharma. And what they focused on was what's called the extracellular matrix. The parts outside of the cell that age. And and what does aging actually look like outside of the cell? Well, over time, sugars and fats bind to proteins in the area between our cells and they accumulate. They don't get cleaned off. And as they accumulate and they don't get cleaned off, they make it harder for your body to clean out that area, to maintain that area. It causes stickiness. It causes binding. And that reduces mobility. and ultimately leads to things like wrinkles in our skin, makes it harder for our joints to move.

Speaker B: Is that what visceral fat is?

David Friedberg: No, it's called glycation. And so it's the binding of sugar and fat to the proteins that sit in that extra cellular

Speaker B: in between the cells. Exactly.

David Friedberg: And so it's that whole gunky area in between the cells that when you're young works well, everything's smooth. The proteins get replaced if they break down. And as you get older, sugars and fats kind of stick to these proteins, block them up. And as they get blocked up, your body can't repair them. It can't clean them. And more importantly, it changes the structure and the shape of those proteins. So things like collagen that are far apart stick together. And that causes things like wrinkles and that causes immobility. And it also causes inflammation because then those proteins kind of look different than they're supposed to. And your body starts to attack them. And that activates inflammation. And that's why we get one of the reasons why we get more and more inflammation as we get older. And so one of the key what are called advanced glycation end products that's the term for these things is called CML. CML is kind of the predominant molecule that that gets formed in this extracellular matrix that's driving aging and nothing breaks it down. So these scientists set out to try and create an enzyme. An enzyme is a protein that breaks something down um that can break down CML. And remember, a protein is just a series of amino acids. And those amino acids are programmed by DNA. So you can put three letters of DNA to make an amino acid. So you can literally just print DNA and then put it in a bacteria to print proteins and then test those proteins to see what they do. That's the the modern kind of era of kind of protein synthesis and protein testing. And so these guys kind of went out and they took the target which is CML and tried to figure out okay how do we actually degrade CML clear that extracellular matrix and reverse aging. And they started with AlphaFold and they used Alphafold to find a protein that could bind to CML and activate an enzyatic or process that would break it down. And then they took that protein from AlphaFold that comes out of a bacteria. They produced it. They started to test it and then they started to find some of the binders or the parts of that protein that they could make better and they used you know DNA programming to change it and they made hundreds and then thousands of variants of it to measure activity which is how good is it at breaking down the CML and they did this recursively five different cycles and then eventually they tested it once they' kind of gotten it breaking down the CML really well in a test tube they started to test it on the proteins that we would find in our body, cassine, collagen, retinal proteins which are in your eye, hemoglobin, and they were able to get rid of 52 to 97% of the CML, just degraded away.

David Friedberg: And then they um they found several sites where they were able to degrade over 90%. And then they took actual human skin from elderly patients that had donated their skin and they put this enzyme onto that skin and they were able to eliminate 55% of the CML on the skin which basically reversed the skin's age down to the age of a 31y old. This is from greater than 70 year old patients just by putting this enzyme on the skin. And so it's kind of a groundbreaking demonstration of combination of alphafold what's called directed evolution where you change the order of the DNA that changes the structure of the protein to test different proteins do high throughput screening and ultimately make a novel protein that doesn't exist in nature today that can do something pretty profound for human health. And now the next set of questions is okay well great this enzyme is awesome. How are we going to get it into our bodies? How are we going to get it into that extracellular matrix? Is it going to be a cream? Is it going to be a shot, a supplement? Could we eventually take an RNA shot that makes the protein inside of our body and starts to do the degradation from within? A lot of questions kind of still to be answered, but it really, I think, lights a great path forward.

Speaker B: Amazing for these novel therapies that we're developing. It's [ __ ] awesome. I mean, dude, likeing, you know, all my I got all these joint pains in my hip and my shoulder now. Like everything you can feel yourself getting older.

David Friedberg: Well, that's I I will tell you this right now. That will not be the first market. The first market will be cosmetic and

Speaker B: cosmetic skin. Yeah.

David Friedberg: It will be a trillion dollar market. If if you can create a cream,

Speaker B: dude, if you could put this enzyme literally on your skin and have it absorb

David Friedberg: a cream.

Speaker B: Yeah.

David Friedberg: Game over. It's it's a that that alone is $2 trillion. But I mean, dude, AI, let's just talk about applications of AI, why it's actually awesome that everyone should be able to agree on and you can't be convinced by some foreign scop. This is [ __ ] awesome. I mean, this was alpha full used to discover this thing and evolve it and drive this outcome. Everyone can benefit from it. It's just so profound that we have this tool at our disposal in this day and age.

Speaker B: I think it's pretty awesome. Anyway, thanks for sticking around for Science Corner.

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Speaker A: ... the fans and they've just gone crazy with it.

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Speaker D: We should all just get a room and just have one big huge orgy cuz they're all just useless. It's like this like sexual tension that they just need to release.

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