Jason: All right, everybody. Welcome back to the number one podcast in the world. Freeberg's out saving the world, creating new potatoes or I don't know, quinoa, maybe some Brussels sprouts. I'm not sure what he's working on at this point. In his place, his personal favorite bestie. He always says that when I'm not here, I want Brad Gerstner in the seat. Welcome back. We haven't seen you on the pod since your shout out at the State of the Union. Take us behind the scenes for a brief moment here, Brad, of what it's like to get a shout out from POTUS at the state of Did you know it was coming? Did you choreograph to this thing? Did you Did you choreograph that or was that more spontaneous?

Brad: I honestly had no idea it was coming. And in fact, I I found out after the fact that it wasn't in the speech and the president added it to the speech. So, I don't even think it was, you know, few days ago few days before going to happen. But we got an invite to the State of the Union and you know, listen, it's an institution. And this has happened every year for 250 years in the country. I've never been. I thought I did know he was going to talk about Trump accounts. So I figured if I'm ever going to go, that's the time to go. And I have to say, you know, I'm just a sucker for Democratic institutions and Democratic traditions. It it was an extraordinary night. Set aside, you know, the headlines about what Democrats did or Republicans did. Just the whether it's a Democrat president or Republican president that this happens every year. You have to go report on the State of the Union. So it was a it was a special night.

Brad: One final thing on it, Jason. You know, we're signing up over a 100,000 kids a day to these Trump accounts. Fantastic. We have millions of kids who've already claimed their account. We have nearly 30 million kids in America who are eligible for at least $250 if they just go claim their account. These things are going to go live on July 4th. And what it really showed, I think, the country, it accelerated after the State of the Union because the president, you know, really believes this is a way to get everybody main street America into the game of capitalism and get them all directly owning, you know, the great companies in America. So, it meant a lot to me in that regard that it highlights the importance of the program. So, I was deeply grateful to the president for not only making sure this happens, but the shout out is pretty cool.

Jason: All right, let's talk about the war in Iran. Obviously, there are much more important issues than financial ones. Life, death, the freedom of the people of Iran, but we're uniquely qualified, I think, to talk about the economic fallout, second order effects, first order effects. And there has been massive volatility over the last five trading days. Just talking about Brent crude oil and we'll we'll key the discussion off of that type of oil. It spiked to $84 on Friday. That was day seven of the war, 119 on Monday, day 10 dropped back down to 84. Jump backed up to 100 after three commercial ships were hit in the straight on Wednesday. Brent crude currently at 99 when we're taping this. But it's uh quite a spike. And here's a second chart. This shows you the spikes over time. I was old enough to remember the oil shock of 1978.

Jason: And breaking news today, Iran's new Supreme Leader Mojtaba says he's keeping the straight closed as a tool to pressure the enemy. Wall Street Journal on Thursday quoted a senior fellow at the Middle East Institute saying that reopening the strait will require ground troops. Poly market 27% chance that US forces enter Iran by the end of March and 57% by the end of the year. So the sharps over at poly market believe we will have boots on the ground. Let me stop there. Brad, your thoughts on what happens when oil hits this kind of number and we have this uncertainty.

Brad: Right. So first is obviously there are huge direct costs as oil prices go up right oil is a component of a lot of consumer you know and enterprise products and it also hurts consumer confidence enterprise confidence Goldman Sachs is out today with some analysis where they updated kind of the economic knock-on effects right so they raised their PCE inflation forecast from 2.1 to 2.9 right for the year. core PCE which excludes oil, okay, is they forecasted up uh from 2.2 to 2.4. They lowered their GDP forecast by 30 basis points for the year. And they also expect higher unemployment as a result of this for the year.

Brad: All of that is weighing on the sentiment of the market. But I think the market may be getting it a little bit wrong. Right? The Trump doctrine, I think the Trump doctrine is far more pragmatic than the neocon doctrine. Right? I think Trump has a very limited set of goals. He wants to destroy and degrade threats to America's national security interests. He doesn't want to spread democracy. So my suspicion is that these impacts are shorter duration, but right now the market's having a little bit of post-traumatic stress flashbacks to Afghanistan and Iraq and wondering if we might be wandering into a quagmire.

Chamath: I think the most important thing that I saw this week was I think President Trump was asked about the war and he said the war would be over very soon. What did the market do? The market literally took oil from 120 a barrel to 90 a barrel almost in you know a nancond. I think that that sort of tells you what everybody thinks. So the fact that there was this reflexive move, I think is a belief by a lot of the sharps that there is no path to a sustained conflict. my perspective is that was a trial balloon. I think it validated what everybody thought which is that this is going to be a shortrun thing.

Brad: I think as I explained last week I think this is about China China. And you have to remember at the end of this month he has a pivotal 3 days with Xi Jinping in China. This is going to be an absolutely historic convening of the two superpowers that run the world. And I would bet dollars to donuts that there is going to be an enormous incentive for Xi to negotiate a grand bargain in those three days and do something historic for himself. And I think that the president will use that if he thinks that it creates leverage.

Brad: So, at the end of the day, who is going to be hurting the most? It is China. And so if you play this game theory out, the reason he kept it is because now he needs a summit even more. So the fact that it's still on the books, if I was Xi, I'd be like, how do I negotiate and help find the off-ramp? All right, remember you have 25% unemployment of young men inside of China. 25% today. What do you think it goes to in five months with no oil?

Jason: But back to our zone of excellence, AI and tech, OpenAI and Anthropic are scaling revenue and costs faster than we've ever seen in the history of well business the world. Brad Anthropic hit a $14 billion run rate last month, February. That means they have grown revenue from 1 billion uh to 14 billion in 14 months. Openai ended 2025 at 20 billion annualized run rate. Brad, you're invested in these two companies. What is driving that? Is it token use? Is it clawed subscriptions?

Brad: We crossed a threshold with Opus 4.6, right? And we saw it again with chat GBT 5.4 before where the models and the agents on top of them they're no longer competing with IT budgets they're now augmenting labor they're competing with labor budgets you could not possibly have a $6 billion month it is impossible to do that by displacing IT budgets millions of other companies across America say oh my god let's spin up these agents and have them do things for us and we're willing to pay for it.

Chamath: The real question is the following. If you look at the companies that use that software, those companies generate enormous revenues and enormous margins and these products are in critical production workflows. That is just not true with AI today. Why are we experimenting? Because we know it's important, but we don't yet really know what to do. None of these things have transitioned from it's interesting, it's experimental to it's the core critical operational workflow.

Jason: Brad, does the industry have a PR problem? Obviously, comparing them to China where people see AI as abundance and like this incredible new technology they want to embrace. Here, people are scared. They don't seem to be communicating in any coordinated fashion and and they obviously are scaring the [ __ ] out of the public.

Sacks: Well look, I think the answer is clearly no. I think they are scaring the be Jesus out of the public. I think it's less about the reality of AI and more about our media environment and who influences it. I think others are actually doing it because they see a strategy there. You know, they're going for a regulatory capture.

Sacks: like they want to tap the stuff for fundraising, but also I think that some of it is to create a regulatory backlash that they can then control. You know, create a licensing scheme or permissioning scheme. And then you've kind of got these doomer groups who are just trying to stop AI however they can. They've been spreading a lot of the FUD around data centers. They've been spreading a lot of stories about water usage, which is just totally made up.

Jason: Washington's millionaire tax passed this week. People making more than $1 million a year will pay an extra 9.9% in tax starting in 2029. In a huge coincidence, on the same day the new tax was passed, Howard Schultz, the billionaire Starbucks founder, will be leaving Seattle after a 44 year run. Bezos obviously left back in November of 2023.

Chamath: I think that state politicians on the west coast are very ineffective and not very smart. The Hoover Institution just published something this morning and it's a complete indictment of of what the billionaire tax was trying to do. In 71% of those runs, it comes out with a negative NPV. The people that left pay, you know, $3 to 5 billion a year of taxes. It's going to create a $25 billion hole. You're going to have the middle class that's now going to have to foot this.

Sacks: Look, this is socialism. This is another way to get to the same end point, which is the government owns everything. There is a way out here from this socialist movement. It's a it's very simple if you think from first principles. AI is uniquely positioned to solve a lot of these problems. and entrepreneurs can come in and take these highly regulated industries if we're allowed to participate in them. Education, housing, healthcare.