AI Cyber Panic, Ken Griffin’s Bubble Warning, The Fall of France?

1. 0:00 – 0:11

   Bestie intros!

   1. JCJason Calacanis0:00

      All right, everybody. Welcome to the literal number one podcast in the world three weeks running. We got a lot to get to. Sacks is out this week. We've got a special guest coming up. Let's get to our first

2. 0:11 – 8:19

   Ken Griffin's AI bubble warning

   1. JCJason Calacanis0:11

      story. Ken Griffin says AI is almost certainly a bubble, and Chamath has responded. Chamath responding and moving markets almost every week here [laughs] on the pod. Look out, France. [laughs] The Citadel founder made the comments this week at the company's annual Future of Global markets conference. But he says, generally, "Hey, bubbles are normal. Any radical transformation of our economy is generally intertwined with a bubble." He said he's bullish on AI's long-term potential, uh, but his concern is that companies are struggling to turn AI spending into productivity, something we've talked about here, I guess, last year. Um, and so companies, uh, are, quote, "looking at their bills from Anthropic and OpenAI and asking where the productivity is." Uh, we, we had this discussion over and over again. On Thursday, uh, tech continued to get crushed on the data center and CapEx front. So people who are either making data centers, like CoreWeave down 10%, or having a huge AI [laughs] spend, Meta, which is an extraordinary one there, it's down 6% after earnings. AMD down 5%. SpaceX was down 5%. But these things have been swinging up and down a bit and generally trending up. Chamath, what's your take here on the market sentiment October 22nd, 2026? What are your thoughts here on how markets are viewing the AI, quote, unquote, "bubble"? And do you have concerns? 'Cause, uh, Jensen from NVIDIA thinks money is available, and money is gonna want this opportunity to finance it. And I think we all think companies are getting a ton of value out of, uh, AI technologies.

   2. CPChamath Palihapitiya1:51

      My Social Capital research team had a really great call with Ramp's chief economist, Ara Karazian. The first question that they had was because, like, I was doing my own math, and I tweeted this thing, Nick, maybe you can put it back up there, where I said, "Okay, my back-of-the-envelope math, knowing everything that I know and everything that I see, is about 1% of all of the companies represent 90% of all the revenue." And of that-

   3. JCJason Calacanis2:26

      Revenue for AI spend?

   4. CPChamath Palihapitiya2:28

      Yeah. So what I said was 1% of companies represent 90% of AI spending-

   5. JCJason Calacanis2:32

      Got it

   6. CPChamath Palihapitiya2:32

      ... so that's tokens. And of that 90%, 80% of them are from unprofitable VC-backed companies. So the cycle here, just to be very precise, is VCs raise from pension funds and LPs and foundations and family offices. They put money into a startup. That startup takes that money and invests in growth. Part of growing is by consuming other people's AIs. And so that company then starts to show revenue traction. Those folks then say, "Hey, look how well we're doing," raises a bunch of money from the same VCs, and it's just this circularity. Why that's important is what Ken is pointing out is that for AI to really scale as a predictable driver of long-term earnings, it has to diffuse out of the startup ecosystem. And so you can't be in a situation where, on the one hand, you're talking about breathtaking valuations, but where 75 cents of every dollar is actually just a startup sending it back and forth so that they can mark themselves up. That's, I think, a, a structural problem. Now, we've seen that structural problem in the past. That happened in the early days of cloud when AWS initially started to expose EC2 and S3. The consumers of an EC2 instance or an S3 bucket were startups, but the difference there is that AWS was abstracted from Amazon Retail, which was already then a roughly break-even profitable business, at least on a free cash flow basis. So what's different here is you have a bunch of money-losing entities just spinning a bunch of money around, and it has to diffuse more broadly. So I think that that's what Ken is observing.

   7. JCJason Calacanis4:15

      Yeah.

   8. CPChamath Palihapitiya4:15

      Now, when we brought that data to Ramp, the quote is incredible because this is what my researcher told me. "I prepared a list of factors to see if your thesis," this is him texting me, "around VC money being 80 to 90% of the top 1% of AI spend," but he said, "Chamath's actual estimate is pretty much correct." And then the second thing, though, that he said, he sent us, and Ramp hasn't published this chart, so thanks to Ramp and thanks to Ara, he said we could, we could be the first ones to publish this.

   9. JCJason Calacanis4:41

      And just to be clear for the audience, Ramp provides financial services, neobank credit cards, primarily to startups. So they know startup data. There's a free commercial. Yeah.

   10. CPChamath Palihapitiya4:50

       I think they know broad-based data from other data sources as well, and I think Ara-

   11. JCJason Calacanis4:53

       Sure

   12. CPChamath Palihapitiya4:53

       ... has access to all of it.

   13. JCJason Calacanis4:54

       But they're, but they're hot here, yeah.

   14. CPChamath Palihapitiya4:55

       But what he said is, now look at this chart. So what this shows is how are the top 1% of spenders in AI spending their money? And, uh, I think that Ramp is gonna publish this soon, as I said, so thanks to them for letting us preview this. What's amazing to me is the blue box in this histogram. What this shows is what percentage of money they are spending-

   15. JCJason Calacanis5:18

       Hmm

   16. CPChamath Palihapitiya5:18

       ... on GPU compute. Now, why does that matter? Well, the rose colored box is LLM traffic. That's the typical spend you're gonna spend on the big frontier labs, closed models effectively, either through things like Bedrock on AWS or what have you. What's really interesting is that the blue box is ticking up. The blue box is people buying their own GPUs because they're moving to open source. And so what I think is really interesting is you have this two-pronged thing that's happening. One is the diffusion that we need within AI is happening a little bit slower than we would, all would like. I see that at 8090 as well. I think the large companies that we work with, you can almost pinpoint it on a chart. Ever since Alex Karp's commentary on CNBC about data sovereignty- Buying patterns have changed, and I think people are being a lot more methodical. They are building out their own data centers, or at least moving into VPCs, virtual public clouds. My team yesterday was at the CIO event of, let's say, one of the largest banks in America. You know what they said? I'm not gonna say the name of the bank. It was the most incredible thing. They said, "We have decreased our spend on AWS and GCP. We now have six completely independent ground-up data centers that we've built from scratch for ourselves." And I was like, "What is going on here?"

   17. JCJason Calacanis6:39

       Wow, we're back to the future.

   18. CPChamath Palihapitiya6:41

       S-

   19. JCJason Calacanis6:41

       People standing up their own-

   20. CPChamath Palihapitiya6:42

       Back to the future

   21. JCJason Calacanis6:42

       ... data centers, yeah.

   22. CPChamath Palihapitiya6:43

       It's back to the future. So I think if you look at this, I didn't mean to have any commentary other than just observing what I think, but yeah, AI has a diffusion problem.

   23. JCJason Calacanis6:52

       I, I was out here in-

   24. CPChamath Palihapitiya6:53

       It is too concentrated and ripping around in a small little ecosystem. We need to diffuse out, but as it diffuses out, people are picking open source, is what I would tell you.

   25. JCJason Calacanis7:00

       Love it, and we, we, we were early on that discussion two years ago [laughs] here on the All-In Pod. I will say Ken Griffin, and I didn't hear the full, um, quotes here, uh, 'cause I wasn't in the room where it happened. However, um, based on the quote, I think he may, um, have something slightly wrong. When startups flood to a technology, that is a strong signal. Why? Startups, and I invest in 100 a year and we evaluate over 10,000 a year at my fund, they look for the cheapest, best, fastest edge they can get. What is the biggest edge they could get 20, 15, 20 years ago? It was cloud computing. They saved a lot of money. It was WeWork. They saved a lot of money. It was more efficient. And then it was Facebook ads. Facebook ads were mispriced. They were super cheap. They dumped all their VC money into Facebook ads. Then, n- and now it's become AI. For the last two years, yes, they've been dumping into it. So if you see startups rush to a technology or rush to a trend and start spending all their VC money on it, it means this little colony of two to 200-person companies have determined, and they're the most nimble, that this is the best solution. So that's a tell that things are going in the right direction. The big, slow, cumbersome enterprises, they're the slowest to the new technology, and that's why they buy startups all the time.

3. 8:19 – 14:24

   Palo Alto Networks CEO Nikesh Arora joins

   1. JCJason Calacanis8:19

      Speaking of buying startups all the time-

   2. CPChamath Palihapitiya8:21

      [laughs]

   3. JCJason Calacanis8:22

      My guy Nikesh is here from Palo Alto Networks to tell us if this is the end of days and all of our bank accounts and, uh, if Bitcoin is gonna [laughs] get hacked this weekend.

   4. CPChamath Palihapitiya8:35

      [laughs]

   5. JCJason Calacanis8:35

      And buy more guns and chickens and eggs and drill a well. Welcome back to the program, Nikesh Arora. How are you, sir?

   6. NANikesh Arora8:43

      I'm doing great. Thank you for having me, guys. And I do-

   7. JCJason Calacanis8:46

      And you had a nice event last week, didn't you? A little nice event in Napa.

   8. NANikesh Arora8:49

      I did. We had a bunch of CIOs, not just one bank CIO like Chamath said. But before we jump into the end of days, I, I do wanna say something to what you guys were talking about earlier.

   9. JCJason Calacanis8:58

      Yeah, please.

   10. NANikesh Arora8:59

       About the open source versus the, the sort of these hyperscalers providing inference. So, yeah, we had this peculiar problem. Uh, we'd like to embrace AI as quickly as many of the startups, and we've gone, gone through all the understanding, all the analysis, open source versus cloud models, and we preference open source, open weight, because it allows us to modify the weights and train them. And something which most people don't talk about is it allows us to interrogate the chain of thought. 'Cause over time, what's gonna happen is all of us enterprises are gonna need explainability, auditability, and verifiability.

   11. JCJason Calacanis9:33

       100%. 100%.

   12. NANikesh Arora9:34

       And if I can't validate, it's not gonna be okay to go to your boss and say, "I'm, don't know what happened, but the IT guys put an AI model in there. It did it." That's not explainable to the regulator in financial services and healthcare, so they want explainability, verifiability, and, and, you know, uh, auditability. And we can only get that with open source, open weight models. We can interrogate chain of thoughts. That's kinda one reason we're gravitating towards them, as opposed to getting caught into the closed, uh, race. The challenge, though, I think you guys talked about, and you, I saw Chamath's chart. The challenge we have is it's very hard to find a global, resilient, highly available inference provider outside of the hyperscaler community right now.

   13. CPChamath Palihapitiya10:14

       Right.

   14. NANikesh Arora10:14

       So if I'm a startup, great.

   15. CPChamath Palihapitiya10:15

       Right.

   16. NANikesh Arora10:16

       I can go rent 10 megawatts in one data center in one part of the US, and if it goes down for a few hours, I'm [censored] out of luck, but I'm a startup, so I'm okay.

   17. CPChamath Palihapitiya10:24

       Right.

   18. NANikesh Arora10:24

       But I'm providing resilient services at 99.9% reliability. It's very hard for me to find a global inference provider who does not wanna sell me their model at this point in time at the price it ju-

   19. CPChamath Palihapitiya10:38

       Mm

   20. NANikesh Arora10:38

       ... makes it economically useful to use open source.

   21. CPChamath Palihapitiya10:41

       Let me ask you a question, though. Do you think that there's a world where Palo Alto Networks says one of two things? One is you go to the hyperscalers and say, "Okay, listen, guys. You run it for me, but I want the bare metal. I want it totally air-gapped, and it's an AWS facility, but I'll just lease it from you. Otherwise, just get out of the way so that I can have everything inside of it." Or do you do what this one big GSiB bank does and say, "I'm gonna build my own inside the United States"?

   22. NANikesh Arora11:08

       Yeah, um-

   23. CPChamath Palihapitiya11:08

       Is there a world where do you think other companies s- go to that limit, or do you think that's an extreme case that's probably not representative of the norm?

   24. NANikesh Arora11:17

       So this is the interesting debate, Chamath. You know, six, eight years ago when I came to Palo Alto, I shut down all data centers. I said, "We cannot run a global data center sort of footprint at the scale, speed, and reliability as I could probably rent it from hyperscalers." And life was great, and suddenly what's happened is in the current sort of incarnation of where we are, compute is highly dear. It's very hard to find compute in the world, period. So I don't... I'm, I'm a, I'm a buyer. I, I'm a taker of terms, not a dictator of terms. So it's very hard to go and dictate terms anywhere because yeah, sure, you can make any plans you want, but those plans are... You know, you talk to Jensen, he can't give you chips till 2028. You talk to s- you know, where do you get land power and shells, you know, shell. So it's very hard to go say, "Yes, I can go build my own d- data centers," but it's kind of an empty threat. It's very hard to go build it, have it be resilient. And by the way, I don't run 50 data centers around the world where I'm running 10 to 20 megawatts of inference. So i- it's a, it's a good conceptual Sort of idea that I should go become independent, build my own inference. But most likely the answer is somewhere in the middle. I'm gonna have to get bare metal, yes. Most likely I'm gonna get from either a hyperscaler or a cousin of a hyperscaler, or somebody's gonna be stitching, you know, sleeves of compute from around the world to meet my needs in the hope that I'm gonna migrate to something more resilient and more robust over time.

   25. JCJason Calacanis12:33

       All right. So, Nikesh-

   26. CPChamath Palihapitiya12:34

       So you have, you have a hybrid solution down there. One second. I just want to complete the thought. You have a hybrid solution down there.

   27. JCJason Calacanis12:37

       I just want to get to the cyber stuff before we run out of time, just so you know. Yeah.

   28. NANikesh Arora12:40

       [laughs]

   29. CPChamath Palihapitiya12:41

       Then you go and you basically get a bunch of open source models so that you can interrogate chain of thought tokens. Is that a representative solution for most of the Fortune 500 or Global 2000?

   30. NANikesh Arora12:51

       I think we get there. I, I expect at some point in time we will start seeing hyperscalers giving bare metal and letting us run open source models. They already do to some extent. So that's probably what's gonna happen because, y- you know, it's a matter of the profit pool, right? It all depends on where you shift the profit pool. Today, they all live in Nvidia and, and the memory industry, and they're being shifted towards the hyperscalers, people who have large compute available because it's, it'll, at a point it'll become less about the chips. It'll become more about the availability of compute because I think demand is insatiable. There's enough demand. There's more demand than you and I can imagine. So yes-
4. 14:24 – 44:17

   AI Cyber panic: PHP exploits and the tumultuous year ahead

   1. JCJason Calacanis14:24

      days, AI found two major exploits that impact most of the internet. Here's what happened. PHP, which is an open source coding language, powers about 70% of all websites, think WordPress, W- Wikipedia, is at risk. In August, security researchers using AI found two, one, two, critical exploits nicknamed PHP ToShell. PHP's security team gave this a severity rating of 9.2 out of 10, basically Defcon 1 for these security teams. Since August, developers and companies have been working together on fixes. This is standard operating procedure, and the plan was to roll these out gracefully in one major patch on October 22nd, which is the day we're recording this very podcast. In the days leading up to the release, information about the exploits leaked. Nobody knows how it leaked. That's gonna be part of the postmortem of this cyber attack week. So PHP moved the release up just by a day to Wednesday, October 21st, and on Wednesday, all hell broke loose. AWS reported a jump in hacking activity while Cloudflare CEO, friend of the pod, said [laughs] they saw millions of hacking attempts as well. A bunch of precautionary shutdowns happened. Governments across sites in Europe, France, Germany, Netherlands, Denmark, Finland, et cetera, they started taking websites down. Wikipedia took down some of its systems just to get them patched. In the United States, the NSA and the FBI put out a bunch of warnings, and now everybody's started panicking. People are starting to think that Bitcoin's gonna get hacked, their website's gonna get hacked, their bank accounts are gonna get hacked. It's a bit of chaos. And then there's a second sub-issue around agents accessing banks that dropped at the same time. Now, you're in the security business. You've got lots of different products and services here. When did you first learn about this, and how severe is it? Is this an acute issue, or is this a harbinger of things to come? And is this gonna happen every 10 days [laughs] for the next year as these models have gotten incredibly powerful at what we call cyber, which really means cybersecurity, not just cyberpunk, but cybersecurity.

   2. NANikesh Arora16:28

      [laughs] Oh, Jason, I think 10 days is too long.

   3. JCJason Calacanis16:32

      Okay.

   4. NANikesh Arora16:33

      I think these things are gonna happen much faster than every 10 days. I think part of the challenge we're seeing is we've been talking about technology debt that we all have to go pay sooner than later, and what's happened is people have not paid attention to the idea that they have to go fix their stuff. An Azure customer, once they were, but, you know, I talked to the CIO this morning. They had a PHP problem. They have a bunch of websites. Some are running the most advanced piece of software, so they can put the patch. Some are running older versions which they can't patch, so they've got to bring them down and go build them up. But you know what? They never did anything about the fact they were running older versions because it wasn't important. So now they have got to go take those websites down. They're gonna go upgrade them, put the patch in, bring them back up. We found out about this a few days ago. Uh, we've scanned everything in our infrastructure to make sure that there were no issues. We made sure that our products had patches available for our customers who deploy them. So there's two ways to solve this problem, right? One, you can go in and patch the vulnerability. You can go in, find the code, patch what has been given to you by PHP, and make it work. The other is you can actually put it in a perimeter defense product like ours, or Cloudflare has one, or other firewalls have one. We put the patch there. It's a virtual patch, so any attacker trying to access that vulnerability gets stopped at the perimeter because we know what they're looking for. The two ways to solve it.

   5. JCJason Calacanis17:49

      Yeah. They're coming to a CDN, a content delivery network-

   6. NANikesh Arora17:51

      That's right. That's right

   7. JCJason Calacanis17:51

      ... first, and that acts-

   8. NANikesh Arora17:53

      Yeah

   9. JCJason Calacanis17:53

      ... as a first line of defense because they're not getting to the actual servers.

   10. NANikesh Arora17:55

       That's right.

   11. JCJason Calacanis17:55

       But if they do get to the actual servers, my understanding is they can run code on these servers, and-

   12. NANikesh Arora18:01

       Yes

   13. JCJason Calacanis18:01

       ... there were some security certificates that were incredibly brittle and-

   14. NANikesh Arora18:06

       Yes

   15. JCJason Calacanis18:06

       ... easy to hack.

   16. CPChamath Palihapitiya18:07

       The closed models have basically said, "Hey, these things are cyber risks, and so we need to be very thoughtful." I know Anthropic did that with Mythos, where-

   17. NANikesh Arora18:18

       Yes, yes

   18. CPChamath Palihapitiya18:18

       ... they brought you in and a bunch of other people and, like, 50 companies in and said, "Okay, now go harden your systems

   19. JCJason Calacanis18:24

       Were the closed models helpful here? Were they the ones that helped you find these CVEs? Bring us behind the curtain

   20. NANikesh Arora18:30

       The closed models are, can be helpful because both OpenAI and Anthropic, and most likely Google as well, have very powerful models now, which can go, if you give them enough compute, enough persistence, they're gonna go find vulnerabilities. They're gonna even chain vulnerabilities to find an attack path, right? If they can solve Neighbor as Stokes, they can chain four vulnerabilities, and if you give them enough immense compute, they will try every way possible to be able to do it. Actually, the PHP problem was solved by persistent compute. This problem was identified a few years ago, but nobody thought it could be solved because it required too much of coordination. So what happened was, if you throw compute at the problem, it persisted, and it found a way to crack that. Once it found a way to crack that and they published it, or it got reverse engineered, every hacker knows now how to go after it. Because the challenge you have with patches is hackers are smart. They look at a patch, they see what the patch is trying to do, they reverse engineer it from there and say, "Okay, if I follow the reverse engineering path, if somebody's not patched it, I can break in."

   21. SPSpeaker19:26

       It seems like a bunch of the hullabaloo today that's being drummed up, and this seems like it's gonna change every day, is all about these bank accounts getting accessed. Is that, do you think primarily through kind of the front end through a website using an agent that's logging in on a browser-based system on behalf of its user? Because it seems like a lot of this may be coming from Muse or some of these other sort of, like, personal agents that are logging into your bank account to get information about transactions and what you're doing, and the banks are seeing all this activity, and they're like, "Oh my gosh, is this authorized? Is it not authorized?" The traditional way that banks have provided access to account data has been through APIs using verified applications, where I as a user, as a consumer, would log into my, you know, mint.com account, and it had a, a legal access point to, uh, to Amex or to Bank of America to put-

   22. JCJason Calacanis20:18

       Plaid is the service there.

   23. SPSpeaker20:19

       It could-

   24. JCJason Calacanis20:19

       Yeah.

   25. SPSpeaker20:20

       Plaid is an intermediary.

   26. JCJason Calacanis20:21

       Yes.

   27. SPSpeaker20:22

       And so there's a bunch of these sort of intermediaries that then provide that capability to apps. Is that ultimately gonna lead to a world where the banks are all gonna just turn off website access and say, "No one can log into a website," because technically agents could do it, and they're not able to kind of manage that? Um, how do you think this is gonna evolve as it relates to consumer financial services? 'Cause I actually think this is gonna be a big part of the press cycle over the next week or two. If your banks are-

   28. NANikesh Arora20:47

       Two different things. Yeah, I think two different things, David. I think the reason banks have found, uh, uh, in, sort of unauthorized access to their accounts is possibly because of PHP problem. Because their websites are hackable, and they've been able to get through them and get the credentials. I don't think... Uh, there are two different problems. One is unauthorized access happening because people have not, uh, the- these sites have become hackable. I think the second problem you're mentioning is a personal agent problem. So far, most personal agents are using your credentials to log in. So it becomes hard for a bank to decide whether it's actually you logging in or is it your Muse agent who has your credentials logging on your behalf. They cannot distinguish between your traffic or agent traffic. They're both logging in from the website. They're basically logging in as you in your browser and trying to conduct the transaction. Now, as you know, there's this technology called CAPTCHA, which tries to see that it's not a tech- it's not, like, an agent that's sort of, or a, it's a sort of a bot or an agent accessing the account instead of you. Now today there are ways to, you know, validate CAPTCHA with AI, so you don't even actually have to have the human on the other end. So that's also-

   29. JCJason Calacanis21:53

       AI's pretty good at it. Yeah

   30. NANikesh Arora21:54

       It's pretty good at it. But it's, it's actually sometimes I have to squint to see what the hell does it want me to type.
5. 44:17 – 1:31:49

   France on the brink: Riots, immigration referendum, debt crisis

   1. JCJason Calacanis44:17

      All right. Next up on the docket, is this the fall of France, gentlemen? We covered this two weeks ago. Situation in France is, my God, well, the place is on fire. It's gotten worse. Over a half a million people have taken part in the protests. They've now spread to Italy, Spain, Albania, and a couple of other regions. Over the weekend, France saw its worst riots in decades, and they love to riot, so it's a high watermark.

   2. NANikesh Arora44:40

      [laughs]

   3. JCJason Calacanis44:41

      Numbers pretty striking. Uh, New York Times data. Vi-

   4. NANikesh Arora44:44

      [laughs]

   5. JCJason Calacanis44:45

      The French guy. They're good at it. [laughs] This is their wheelhouse. Over-

   6. NANikesh Arora44:49

      Pro, pro rioters? Pro rioters. [laughs]

   7. JCJason Calacanis44:50

      They're professional rioters, exactly. It's kind of their number one pastime. For us, it's like football. For them, it's rioting. Over 3,000 businesses, Chamath, have been damaged. You've seen the videos obviously trending all over the place, hundreds of millions in losses. Over 1,000 police officers injured, 2,500 people have now been arrested, 70% of them are adult men. Uh, you remember this was a [laughs] high school protest because high schools were dilapidated and underfunded, and that's what the origin of the protest was. Now it's just become complete civil unrest and looting. Multiple historic government buildings tragically have been burned down, notably 143-year-old city hall in a town 250 miles south of Paris, Limoges.

   8. CPChamath Palihapitiya45:37

      Limoges.

   9. JCJason Calacanis45:37

      Beautiful name. A beautiful building. Absolutely heartbreaking to watch it collapse. For what reason? So they could upgrade the schools in France? Uh, it seems like there's a lot more going on here. France has, uh, finally implemented, uh, some curfew, some curfews. [laughs] I don't know how you don't do that day one. New York Times, quote, "France, France's government has accused ultra-left militants and opportunist looters of causing the violence." President Trump and Vice President Vance have called this a third world immigration and welfare state issue. Here's what France's justice minister said. Rioters include, quote, "People from immigrant backgrounds, people who are foreigners, but there are also people who are fully integrated and who are French." Our partner Polymarket says 18% chance France declares a state of emergency by the end of the year. Same time, investors are dumping French debt, Friedberg. France's tenure has surpassed 5% this week, highest since 2002. On the other hand, and, uh, this is, uh, a- an ongoing issue here in the United States, 10-year dropped just under 5% for the first time in a month. Wall Street Journal says this might be because people are fleeing EU debt and buying the US debt. Polymarket, our longtime partner here at All-In, says 91% chance Moody's or S&P downgrades France by October 31st. So let's stop there. Chamath, when you see this, and you spend your time in Italy in the summers, obviously, we talk about that here on the pod. Uh, you see it happening in Italy, uh, and what's your, what's your takeaway here from what we're seeing?

   10. CPChamath Palihapitiya47:17

       It's heartbreaking to see what happens. Let's just be very clear. I think that these people are absolute criminals. They're all terrorists, and they should all be arrested. And I think that this shows sort of like what is at the end of all of this, quote unquote, "empathy" that all of these governments have been espousing. It's just a disguised way of promoting urban chaos. And, uh, I don't know how a police officer thinks it makes any sense for him to be deployed into this melee to do what effectively, like, protect a Christian Dior store in the septieme arrondissements of Paris. Like, it is so stupid. So these folks have created the tinderbox and the conditions for this to happen, and they've done it because they won't even acknowledge what this is. Even when Macron went on state television, he tried to talk about this in terms of the suffering that these people must have. When you look at these pictures, these are not people that are suffering. These are people that are, uh, enacting chaos and violence and terrorism, domestic terrorism, and I think you need to respond to these people with an incredibly heavy hand. And then you need to fix the much broader problem. And as you said, Jason, I think what's happening now is that France is gonna be in an incredibly difficult economic position. We've already talked about this before, that the f- that France is this critical country that's gonna set the tone for the rest of continental Europe in terms of how it finances its long-term debts. It's already proposed 50 billion euros of austerity. That's gonna have to go up. I don't understand how in an austerity scheme you actually invest in things like education in a way that would appease these people if that were the true thing that they were rioting and protesting about. The government is in a no-win situation. I think they are going to lose the upcoming presidential elections, and I think you're going to see a very complicated reset of the French bureaucracy and the French economy. And I think this is the, this is the harbinger of, of a lot of change to come because the average French citizen should not tolerate what's happening in their country right now.

   11. JCJason Calacanis49:34

       Friedberg, what's your take here when there might have been completely valid peaceful protests, high school students protesting, it's a beautiful thing. They, they, they have some gripe. They created, uh, a lot of the democratic system that we actually built America off of. They, they were great pioneers in democracy and protest. Completely valid form of protest, peaceful, taking to the streets, and then it tips over into something that's obviously at a minimum just incredible criminal, uh, and potentially, you know, in Chamath's interpretation, you know, terroristic. A- And the definition of terrorism, to terrif- [laughs] terrorize people for your political goals. Yep, seems like it fits the definition. So for you, what do you think this represents? Is this a harbinger of more to come and something we might see flare up here in the United States again? Remember, we had, uh, the BLM riots. We had the January 6 riots. We've had our own, uh, series of riots here, and they had a very similar pattern. You know, people who felt politically like maybe, or socially they weren't being represented properly, and then in some case it tips over to just criminal looting and incredible violence. What's your take here, Friedberg?

   12. SPSpeaker50:50

       I think it's a little conflating to add some of that other stuff to the mix here.

   13. JCJason Calacanis50:55

       How so?

   14. SPSpeaker50:57

       I think those have very kind of acute political or sociopolitical events tied to them. This one seems to be kind of much more broad-based. So if you watch some of the interviews that were done on the street, there's a very wide range of kind of complaints if you listen to the folks that are rioting. Everything from schools to free Palestine to the government's not doing enough for us with healthcare, with support, with jobs. We're underemployed. There's just so much discontent with the objective being to get the government to do more for the people. There's a lot of immigration that happened, and so all these immigrants that come in, they expect the government to provide to them. The, the promise was that the government would provide to them. And over time, the government providing things to the people, as we've talked about countless times, is never ever, ever, ever, ever a sustainable answer. The centralized government doesn't have accountability. Uh, there is no progress. There is no possibility for economic growth. There is no possibility for creating the right incentive structure. So the more the government tries to provide to the people, the more the people are let down. We've seen this in the United States, I would argue, with the three things that the government is trying to provide here, which is healthcare, housing, and education, and the more the government spends to try and provide more of those things, the worse those things get and the more unattainable they become. And the same has happened in France. So take a look at this chart. This chart is a measure of public spending as a percent of GDP. Rand group research published it, and you can see the comparison of France's public spending as a percent of GDP to the peak public spending as a percent of GDP of major communist nations. Soviet Union during 1989-

   15. CPChamath Palihapitiya52:48

       Oh, this is an incredible chart, Friedberg. Wow

   16. SPSpeaker52:50

       ... Communist Romania, Venezuela under Chávez, and then Communist China. And so-

   17. CPChamath Palihapitiya52:55

       That's unbelievable.

   18. SPSpeaker52:57

       Yeah.

   19. CPChamath Palihapitiya52:57

       So do you think France is a communist state?

   20. SPSpeaker52:59

       Well, this is, this is-

   21. CPChamath Palihapitiya53:00

       They spend like it.

   22. JCJason Calacanis53:01

       Well, it's certainly been a socialist state, right?

   23. SPSpeaker53:03

       This is my-

   24. CPChamath Palihapitiya53:03

       Is it working?

   25. SPSpeaker53:04

       You know, well, that, that's my point. The, and, and I think this is such a, a prescient lesson for the West to look at. We all think that there's some political problem with Macron or whoever it was. The more the government spends, the worse the conditions get for its people, not the opposite. And then the people riot and revolt and say that the government's not spending enough and the government needs to be doing more. Now take a guess. Pull that chart back up. Take a guess where the US is today.

   26. JCJason Calacanis53:30

       What percentage of our GDP is-

   27. CPChamath Palihapitiya53:32

       20, 20% I would guess.

   28. JCJason Calacanis53:33

       Yeah, I was gonna, I was gonna say 25. Yeah.

   29. SPSpeaker53:37

       Federal government spending is 7.4 trillion. State and local government spending is 4.6. You add those two together, it's $12 trillion out of a $33 trillion GDP. US public spending is roughly 36% of GDP.

   30. JCJason Calacanis53:50

       Okay. Yeah, we're right there.
6. 1:31:49 – 1:43:19

   Trump's second half strategy, Press Secretary J-Cal?

   1. JCJason Calacanis1:31:49

      this is where, I don't know if you guys saw my tweet this week about how Trump, President Trump, could save the second term, and a big part of it, I think, is he, he has to sp- talk about housing as much as he's talking about data centers. I think raising the minimum wage is a nice gesture since it only impacts 10, 15 million people, the federal minimum wage in this country. And there are things we can do to, um, make it apparent to the people in the bottom half of the country that we care about them and that the President is signing executive orders for them as well as for us. And us, I mean the tech industry and, and large businesses. And I think that's, that's the big problem of why the President is just so lowly, his, his ratings are so low, his approval's so low, and perhaps w- we'll see on, uh, on November 3rd what happens with this election. That's a big part of the, the discontent right now, is people are frustrated that th- they're not even... President Trump doesn't even talk about them anymore. He doesn't talk about minimum wage, doesn't talk about housing, doesn't talk about inflation. He just says, "It's all gonna be fine," uh, and we're, we're living in the Golden Age. But then he's more than willing to talk about our issues, data centers, crypto, et cetera. A- and the messaging in this country is really far off. It's really far off. And until we get somebody in that office who is willing to talk about the bottom half of the country and 50/50, you know, "Hey, we're gonna talk about big tech, we're gonna talk about, uh, lowering taxes, but we're also gonna talk about raising, uh, the minimum wage. We're gonna talk about a, a plan to build more affordable housing as opposed to just more data centers," that's the disconnect-

   2. CPChamath Palihapitiya1:33:20

      Well, hold on-

   3. JCJason Calacanis1:33:20

      ... that I'm just bringing up here

   4. CPChamath Palihapitiya1:33:21

      ... hold on, hold on.

   5. JCJason Calacanis1:33:22

      Yeah. You can break it apart any way you like.

   6. CPChamath Palihapitiya1:33:24

      If, if you, if you actually read what he tweets, I think he connects the dots on all of these things. I think that he has acted in a way that one should when you realize that the AI build-out is the disproportionate percentage of all GDP. It is basically all of it. And it doesn't just pull through stock performance for seven companies. There's been a bunch of data now. It pulls through massively increased wages for middle class and skilled labor. And then he's been telling people that if you're gonna build these data centers, do it in a way where you lower the electricity costs, do it fully behind the meter, invest in the local communities. That also has positive impact. So, you know, he's trying to make sure he lands the plane on the US economy. And right now-

   7. JCJason Calacanis1:34:11

      I agree he's doing that

   8. CPChamath Palihapitiya1:34:12

      ... whether you agree-

   9. JCJason Calacanis1:34:13

      No

   10. CPChamath Palihapitiya1:34:13

       ... with it or not, the US economy is entirely and completely levered to and correlated with the AI trade.

   11. JCJason Calacanis1:34:19

       Yeah.

   12. CPChamath Palihapitiya1:34:19

       Period.

   13. JCJason Calacanis1:34:20

       I, I, I agree that he is doing a great job i- in that, like, better than any president I've ever seen in my lifetime i- in terms of getting the economy rocking. The public [laughs] the overwhelming number of Americans now do not agree with what you just said. They believe that he is not, does not care about the issues they care about. That's why he's at his historic low in terms of approval rating. So there is a messaging problem here. So I, I'm not saying I should be the press secretary here-

   14. CPChamath Palihapitiya1:34:49

       Well, well-

   15. JCJason Calacanis1:34:49

       ... but somebody's gotta be a press secretary here-

   16. CPChamath Palihapitiya1:34:51

       Now, well, look-

   17. JCJason Calacanis1:34:52

       ... based on communications-

   18. CPChamath Palihapitiya1:34:53

       Now, first of all, first, first of all, I think-

   19. JCJason Calacanis1:34:53

       ... 'cause the communication sucks out of this administration

   20. CPChamath Palihapitiya1:34:57

       ... let me say something about the press secretary, I think just for one second, just one small deviation.

   21. JCJason Calacanis1:35:00

       [laughs] We're going into weird territory. [laughs]

   22. CPChamath Palihapitiya1:35:02

       We have not spent enough time actually acknowledging what more people should acknowledge more often, which is Karoline Leavitt is an absolute GOAT. She set the bar so high. She's so talented. She's, for being so young, it's unbelievably impressive, it almost an impossible job to follow her. Let me just say that because I don't think people say that enough. Second, I will actually go out on a limb and say this. I think that you are an incredibly dogged bulldog. I think that if you got to know the President, you would be besties with him. I, I really legitimately think you would, and I think you would be an incredible press secretary. Now, the problem is-

   23. JCJason Calacanis1:35:37

       I would be an asset, yeah

   24. CPChamath Palihapitiya1:35:38

       ... the problem is that you have stupid ideas.

   25. JCJason Calacanis1:35:41

       [laughs]

   26. CPChamath Palihapitiya1:35:41

       And as long as, and as long as you could avoid-

   27. JCJason Calacanis1:35:44

       [laughs]

   28. CPChamath Palihapitiya1:35:44

       ... representing your stupid ideas-

   29. JCJason Calacanis1:35:46

       Raising the minimum wage is a stupid idea? I don't think so.

   30. CPChamath Palihapitiya1:35:48

       No, no, no. No, no, no, no. You, you are-

Episode duration: 1:43:22