How Anthropic outran OpenAI by betting everything on coding

Jason Calacanis 0:00 All right, everybody. Welcome back to the number one podcast in the world, Fantastic Four, the original.

Speaker 0:06 Oh, the cast is back.

Jason Calacanis 0:08 The cast is back.

Speaker 0:09 Our brothers in arms.

Jason Calacanis 0:10 Brothers in arms. Here we go, good boys. We've got a big news week. David Sacks is back, and he's in the great state of Texas. How's it been, Sacks? How's Texas been for you so far?

David Sacks 0:23 It's been great, although I just got back from D.C. I got like three hours sleep last night, so-

Jason Calacanis 0:28 Christ

David Sacks 0:28 ... but we had a lot of news this past week.

Jason Calacanis 0:31 Hmm, yes, and we'll be talking about PCAST and your role-

Speaker 0:34 Yay

Jason Calacanis 0:35 ... in the, in da, da, da, da-da, and your role going forward in the Trump administration. Big news that we'll be talking about today also relates to you, oh, sultan of science, David Friedberg, with your background from the iconic film, for those not watching, looks like the iconic Thelma & Louise. I wonder if that has something to do with the budget of California, which you've been outspoken about recently.

Speaker 0:58 Great, great rant, which I retweeted.

Jason Calacanis 1:00 You were on a mega rant-

David Sacks 1:00 Great rant

Jason Calacanis 1:01 ... with models.

Speaker 1:01 Thank you, boys

David Sacks 1:02 ... I, I retweeted it too. If only-

Speaker 1:04 Thank you, boys

David Sacks 1:05 ... if only you could be allowed the time and space to do those kinds of rants on this pod.

Speaker 1:10 [laughs] Thank you very much.

Jason Calacanis 1:11 Yeah. If you, if you kept-

Speaker 1:12 Thank you very much

Jason Calacanis 1:12 ... interrupting him, Sacks-

Speaker 1:13 Right as I say thank you, JCal starts talking over me

Jason Calacanis 1:15 ... and just let him go.

Speaker 1:15 Here he is. He's going again. He's going again.

Jason Calacanis 1:17 There it is, Dr. Doom.

Speaker 1:19 There it is.

Jason Calacanis 1:19 Dr. Doom, your mayor, your new governor. Are you-- Would you consider it, Friedberg, after Oholo, running for governor?

Speaker 1:25 There is no after Oholo.

Jason Calacanis 1:27 Oh, please do it.

Speaker 1:27 There is no after Oholo. God.

Jason Calacanis 1:28 Oh, please do it.

Speaker 1:30 Wow, that'd be so great.

Jason Calacanis 1:31 I'm tempted to buy Oholo for, like, five or six billion so he just does it.

Speaker 1:34 [laughs] It's a dirty game, Paul. It's-- California politics is dirty, man.

Jason Calacanis 1:37 I don't even know what it does. I'll just have somebody else deal with it. [laughs]

Speaker 1:40 Could you imagine the oppo research-

Jason Calacanis 1:41 But the amount, the amount-

Speaker 1:42 ... you run on Friedberg? [laughs]

Jason Calacanis 1:43 No, no, no, no. We get him elected. He would do an incredible job. He would save the fourth-largest economy in the world. It would be incredible.

Speaker 1:49 It'd be amazing. I would love the, the role- Here's the oppo research, Sacks. [laughs] David Friedberg went to a rave in 1999 [laughs] and stayed up until 10:00 AM. [laughs] We have witnesses.

Jason Calacanis 2:01 Once he, he got tilted at the poker game, stole a bunch of pistachios and Lactaid and ran home.

Speaker 2:06 He did. [laughs]

Jason Calacanis 2:08 [laughs]

David Sacks 2:09 You gotta let your winners ride.

Jason Calacanis 2:12 Rainman David Sacks. And instead-

David Sacks 2:17 We open-sourced it to the fans, and they've just gone crazy with it.

Speaker 2:21 Love you guys.

Jason Calacanis 2:21 I think the queen of Ken Rob.

Jason Calacanis 2:25 Anthropic on a generational run, and OpenAI crashing out a bit, boys. Let's chop it up here. Just looking at Anthropic, pretty major heater this year. January, they launched Cowork for business users. You know what that does, cron jobs. You can connect to your Gmail, your Notion, whatever it is. And then Opus 4.6, which consensus-wise, everybody thought this is a major step function. Jensen, Michael Dell, everybody's called it out. Jensen actually called it back in November an inflection point and the first agentic model. And, uh, Opus 4.6 has basically, Dell said, hit a threshold that we haven't seen before in terms of real productivity in Teams. February, they dropped a bunch of Claude code plugins that caused the SaaSpocalypse. Not the Sacks-pocalypse, the SaaS, software as a service.

David Sacks 3:20 Oh, it was a Sacks-pocalypse too.

Jason Calacanis 3:22 Yeah, there was a little bit of that [laughs] back and forth as well.

David Sacks 3:25 No, I mean, a-as a SaaS investor, it was a SaaSpocalypse-

Jason Calacanis 3:28 Yes, it was a bit of a... [laughs] You, you, you were the tip of the spear there. We'll get into it.

David Sacks 3:32 My exit comps were affected, that's all.

Jason Calacanis 3:34 Yes. [laughs] It seems like you may have [laughs] divested at exactly the right time. All right, six billion dollars in annual run rate was added in February alone. Brad referenced a couple of weeks ago here on the pod. Earlier this week, they announced Computer Use, a new agentic system for enterprise-grade, kind of open claw functionality. Now you can use the Claude app from your phone to control your desktop computer. Really slick feature. Here's the calendar release over the past two months for the team at Anthropic. Dario, come on the pod anytime. Uh, Sacks, you've had a couple of flare-ups, uh, and obviously, the administration, uh, and the Department of War had their kerfuffle. But just, you know, looking at it objectively, what's your take on the, the surging Anthropic generational run, as I've described it here?

David Sacks 4:32 Well, I've never been a critic of Anthropic's products. I've always been an admirer of their products. I think last year I gave them credit for MCP. I agree that they seem to be performing very well now. The company made a big bet on coding as the kinda big breakout use case. Whether that was done for business reasons or ideological reasons, I'm not sure. Anthropic is sort of the most AGI-pilled of all the frontier labs, and I think they made this bet on coding as their way to get to recursive self-improvement. As it turns out, it was a very good business move as well because code is the gateway into enterprise and enterprise IT budgets. And so they've been able to grow revenue pretty quickly as a result of getting into enterprise. Also, coding seems to be the basis for these other product extensions. So like you said, they went from Claude Code to Claude Cowork, the idea being that, well, if you can generate code, you can also generate PowerPoints or spreadsheets, and you do that by generating the code to create that output. So that was the first extension. Now they are extending into agents. This computer use product is kind of like an OpenClaw knockoff, so it looks like the generational run for Mac Mini is just about over. Look, I think they're firing on all cylinders. My issues with them in the past were related to what I've have called the regulatory capture strategy. They do want a permissioning regime in Washington for chips and models, meaning you have to go to Washington to get permission to release new models or to sell GPUs anywhere in the world. I think that'sExcessively heavy-handed. Their motives for doing that may be pure. It may not be regulatory capture, it may be ideologically motivated. Regardless, I do think it is a form of regulatory capture because it plays into the hands of the big companies and creates moats that new entrants will not be able to overcome. So I have, let's say, philosophical objection to that part of it. But again, I'm not a detractor of their products by any means. With respect to what happened between them and the Pentagon, I'm not involved in that. I've stayed out of military procurement. In general, I don't get involved in what are called party matters. I just focus on-

Jason Calacanis 6:42 Yeah

David Sacks 6:42 ... policy matters which affect the whole space. I saw Emil Michael making this point a couple of weeks ago on our podcast, that if you as a company don't want your products to be used in war, don't sell to the Department of War. It's in the name.

Jason Calacanis 6:57 Yeah. [laughs]

David Sacks 6:57 But if you do, you know, if, if you do decide to sell to the Department of War, you should expect it to be used for all lawful uses.

Jason Calacanis 7:05 [laughs]

David Sacks 7:06 So I think that was a very pragmatic observation. Again, I just have to underscore this again, I'm not involved in that dispute. It's the base of a lawsuit right now, and I don't want someone trying to draw lines between dots that aren't there. So-

Jason Calacanis 7:19 Yeah

David Sacks 7:19 ... again-

Jason Calacanis 7:20 In fairness, like-

David Sacks 7:20 ... I'm staying out of that one

Jason Calacanis 7:21 ... objectively, they've been treated the same as any other large language model, even though they're not fans of the administration, they're not donators to the administration. They have specifically been critical of the administration as a company. Perhaps cynically, Friedberg, as a strategy to get, uh, you know, it's one of the conspiracy theories here in Silicon Valley is Dario's taking the position of being anti this administration, anti President Trump, in order to get all the PhDs, you know, there's like three or four thousand of these highly sought after PhDs, and it's a way to have them, you know, vote with their presence to come work in Anthropic. Y- your thoughts on that, and then just generally their generational lens.

David Friedberg 8:01 No, I think he actually believes it, and I think they've actually created and fostered a culture of that since the beginning, and I think that they're representing it as a branding e- exercise at this point. But I don't think it's made up. I think it's directly representation of the people that work there and what they believe.

Jason Calacanis 8:18 Yeah. And it's a strategic advantage because probably of those three thousand PhDs, ninety percent of them are left-leaning, uh, and wouldn't want to work necessarily-

David Friedberg 8:29 Look, I mean, like-

Jason Calacanis 8:29 ... with the Department of War

David Friedberg 8:30 ... like, like most things we see in the world today, in economics today, in markets today, in business today, everything seems to be politicized, and you have a left-

Jason Calacanis 8:39 Yep

David Friedberg 8:39 ... and a right version of everything. You have a left and a right version of media. You have a left and a right version of what food to buy. You have a left and a right version of what AI tool to use. So, you know, this effectively may just be the natural manifestation in the AI market of what's going on elsewhere in society as we all kinda fracture and hustle over to our side.

Jason Calacanis 8:57 Uh, Chamath, before I go to OpenAI and their recent moves, any thoughts on Anthropic and Dario's positioning of the company?

Chamath Palihapitiya 9:05 Look, I think both are incredible businesses. We're in the part of the cycle where we're trying to create drama where I don't think drama exists because they're still fundamentally in very different go-to-market motions. Now, they may converge and compete over time, but I think it's important to separate where each of them are good. From an enterprise lens, wh- which is where I see most of the action, particularly through 80/90, it's all Anthropic all the time, and I agree with Sacks. My philosophical issues with the management aside, around their ideology and sometimes how they use some of the capital for things other than tech and R&D, I have issues with those things. But in terms of the quality of that technical team and what they create, it's head and shoulders above anything else. It allows us to build a vibrant business. Now, do I have issues with how much it costs? Yes. Do I have issues with how fast we're consuming tokens? Also yes. But I think those will get sorted out, and those are really tactical issues. So the reason why I think we're all breathlessly trying to pit OpenAI versus Anthropic is because we want some drama. But the reality is these are very different businesses, and Nick found this tweet, which I thought was really interesting, and 'cause even at the absolute highest level, these things are sort of presented in an apples to oranges way. And there's, like, these very basic issues of rev rec that are fundamentally different. And you may say, "Well, who cares about revenue recognition?" Well, the people that are trying to write the headlines that say one is overtaking the other and this or that sort of miss the fact that they're in completely different businesses, which has guided how they even think about growth. And so if you normalize these two businesses, what you would see is OpenAI is still the overwhelming revenue generator in this space, and that over time, Anthropic is catching up. And so this is this little diagram that tries to explain this. OpenAI is three quarters consumer subscriptions and a quarter API. Anthropic is almost the exact opposite. OpenAI is used by consumers overwhelmingly. Anthropic is used either directly or through things like GitHub and Cursor. OpenAI, as a result, has a very conservative way of recognizing revenue. Anthropics, they sort of recognize gross tonnage as their revenue. And so when you start to hear these things about, like, "Oh, this thing is at twenty billion and OpenAI is at n billion," they're two totally different conversations, and I think right now it's more about the press cycle of trying to create clicks than it actually is about the underlying quality of each business. Both are incredible businesses, as this demonstrates, and by the time it goes public, both of these two businesses will have a very clean and, I suspect, normalized way of telling a story so that you can actually compare. But what I would tell people right now is everybody's running with numbers to try to create a narrative that I don't think makes sense or applies to either.

Jason Calacanis 12:12 Yeah. And there's been a lot of strategy change. OpenAI, some people are saying, is crashing out in panic mode.Obviously, they own the consumer with ChatGPT. They are the verb like, you know, taking an Uber or Googling something. People, consumers always just say, "Hey, did you check ChatGPT?" But obviously, other large language models are catching up. Here's a look at-

Chamath Palihapitiya 12:34 By the way, sorry, can we say something to that, Jason? 'Cause like-

Jason Calacanis 12:36 Sure

Chamath Palihapitiya 12:37 ... you mentor tons of startups.

Jason Calacanis 12:40 Yeah.

Chamath Palihapitiya 12:40 Sacks has done it. Friedberg has done it. I do it. What is the one thing we tell folks? Focus, focus, focus, [laughs] focus.

Jason Calacanis 12:47 Hundred percent.

Chamath Palihapitiya 12:49 Do one, maybe one and a half things, but do it incredibly, incredibly well. And everything else, you start to bleed and smear, what was that Brad Garlinghouse term?

Jason Calacanis 12:59 Yeah.

Chamath Palihapitiya 12:59 Peanut butter.

Jason Calacanis 13:00 The, the peanut butter. Yeah.

Chamath Palihapitiya 13:00 Yeah. You smear the peanut butter-

Jason Calacanis 13:03 Manifesto

Chamath Palihapitiya 13:03 ... too far out.

Jason Calacanis 13:04 Yeah.

Chamath Palihapitiya 13:04 And so this is a good moment, by the way, if either of these two companies are in the smearing phase to recalibrate and reset because-

Jason Calacanis 13:12 Yeah

Chamath Palihapitiya 13:12 ... you just can't do everything.

David Sacks 13:14 Speaking of smears, I couldn't help but notice that Emile Michael was smeared by an article, was it in Lever or something like that, accusing him of, of having a conflict in the Anthropic dispute.

Jason Calacanis 13:28 Smear his conflict?

David Sacks 13:29 Did you guys see that?

Jason Calacanis 13:30 I didn't, no.

Chamath Palihapitiya 13:31 Yes.

David Sacks 13:31 Oh, well-

Chamath Palihapitiya 13:31 I saw the art- there was an article that said that he was an investor in Perplexity, and therefore he's conflicted in his negotiation with Anthropic. That's what the article said pretty much, right?

Jason Calacanis 13:43 Perplexity is LLM agnostic. That's a stupid claim.

David Sacks 13:47 Right. Well, it's obviously written by people who don't understand anything about AI, really.

Jason Calacanis 13:51 Nice. Okay.

David Sacks 13:52 Perplexity is a wrapper. You're, like you're saying, it uses multiple AI models, and I don't think they sell to the Pentagon. They're not a competitor to Anthropic, and moreover, as I understand it, Emile's ownership of shares in that company was blessed by the Office of Government Ethics. Nonetheless, I think the timing of this is very suspicious, and it reminds me of what happened to me when I started opposing-

Jason Calacanis 14:15 Sure

David Sacks 14:16 ... Anthropic, and all of a sudden there was that hit piece in the New York Times accusing me of having conflicts. And I'll just say that Anthropic may pose as this company that's on the side of the angels, but they've hired a number of very seasoned brass knuckle political operatives in Washington and, you know, members of the Biden administration. Laura Loomer actually just had a piece today on one of them. I'm not gonna rehash that, but the bottom line is this is, I think, frankly, a political operation that's willing to get down and dirty, and they're not always on the side of the angels.

Jason Calacanis 14:48 All right, but-

David Sacks 14:48 I think they can be quite ruthless

Jason Calacanis 14:49 ... Sacks, remember, I told you, you get one Biden mention a month in twenty twenty-six.

Chamath Palihapitiya 14:54 [laughs]

Jason Calacanis 14:54 So you just used it up, so I don't want any more Biden, Biden, Biden. He's retired. [laughs]

David Sacks 14:58 That was, that was not a Biden mention.

Jason Calacanis 14:59 [laughs] No, but the truth is, these [beep] whoever wrote the story, the actual best feature or amongst the best features of Perplexity, which is actually got a really great cohort competitor called Computer I've been playing with. I'm not a shareholder to be clear. I'm... There's no book being pumped here. The Model Council is like the greatest feature-

Chamath Palihapitiya 15:21 Yeah

Jason Calacanis 15:21 ... that they have, and what is really brilliant about it is you ask it a question, Sacks, it will go to all three different major models, and you could pick which ones, including open source. Then it tells you where they differ, and it tries to figure out why they differ. This is like one of the great features of the product. I think Perplexity is like could be a, a really great company as well, even without a language model.

Jason Calacanis 15:45 But let's talk a little bit more about OpenAI here and their market share because I think you're correct, Chamath, but they are getting off their game. Here's what's going on. Quick look at the consumer market, and obviously they started with a hundred percent market share, right? They created the category in twenty twenty-three. Dropped down to eighty-fir- five percent market share in twenty twenty-four, seventy-five percent market share in twenty twenty-five.

Chamath Palihapitiya 16:10 But by how much has the market grown?

Jason Calacanis 16:13 Precisely. So, uh, the market is still growing, so on terms of number of searches and queries, they're obviously growing tremendously. But they have major, major competitors, and the market share is going down. I had my team over at This Week In AI do a more thoughtful analysis of where this is going. And if you take a look at this, um, there's three players, and I'd like to get your guys' take on this, who really haven't shown up yet: Apple, uh, Meta, and obviously Windows. All three of those underrepresented. If you give them credit for just getting, you know, a half point of market share here and starting to intercept, which I think those three players were here, will be here, they're gonna be well under fifty percent market share, and I think ChatGPT is gonna have some big challenges there on the consumer side. While they're doing this stuff in consumer, uh, they, uh, are cutting back on all their side projects. So, uh, you probably heard about the Sora video app. That's been shut down. This is kinda major news because Disney was gonna put a billion dollars into OpenAI as part of it, and they had done a licensing deal, and they were gonna integrate Sora, this, you know, short video product, into Disney Plus. All of that's now been canceled.

Chamath Palihapitiya 17:27 The billion is not going in?

Jason Calacanis 17:28 The billion's not going in, the licensing deal, all of that. And then in addition, there's supposedly at OpenAI a newfound focus on chasing Anthropic down the enterprise path. So getting off their game, getting a little discombobulated perhaps, or maybe getting focused on what matters, which is enterprise, uh, uh, apparently in terms of revenue. OpenAI also offered private equity investors a guaranteed minimum return of seventeen point five percent of, as part of a joint venture that would, uh, help PE firms deploy AI and ease the high upfront cost of that. So lots of questions here, Chamath. I don't know if you've tracked this PE, uh, model, but obviously a lot of people are doing roll-ups in services, uh, accounting, legal. Uh, Josh Kushner's got a big effort here. A bunch of private equity firms trying to essentially, I guess, end runThe transition process and, and arguably what you're doing with the Software Factory at eighty ninety. So your thoughts on OpenAI and this pivot and this private equity focus.

Chamath Palihapitiya 18:36 I think it makes a lot of sense for OpenAI to focus on a few things and do them exceptionally well. I disagree slightly with your first part, which is I think that people like to make new decisions about new experiences, and I think that OpenAI has incredible consumer mind share. I just see like how my kids use it. They started there, and it's very hard to get them to switch even when I say, "Hey, have you tried Gemini?" They use Gemini, and to your point, the reason is because they stumble into it more.

Jason Calacanis 19:05 Yeah.

Chamath Palihapitiya 19:05 But if you give them a cold navigation experience, they rely on ChatGPT. And it's the same, by the way, on the other side in the enterprise. If you give us a cold problem, my default reaction would be to use Anthropic. Now, I actually think that that's quite healthy because you're gonna segregate the market. And I think, look, if you go into the way back machine when we first started talking about this thing, this is sort of how we all postulated this would work, where even if OpenAI just won the consumer business, it is a multi-trillion dollar company with enormous scale and value, and I think that that's okay. So I think that what they probably need to do is say, "Where are we the strongest? Where is there the most obvious traction?" Can traction in another market like in enterprise bleed into consumer usage? If it's true, then you have to win the enterprise. I think winning the enterprise, though, is a very different game than winning consumer. Very different set of features, very different set of expectations. So I think people either have to decide you're gonna compete everywhere or pick one thing and just nail it. And if I was OpenAI and you had to pick one thing, you would pick consumer because they're the juggernaut, and they're the clear leader, and they have an enormous brand.

Jason Calacanis 20:23 Friedberg, let me pull you into this because my base case here is that all consumer queries are gonna be free. Apple's gonna make them free. They're already free for Google. I think Meta's gonna make them free and actually have a decent product soon, and Microsoft, same thing. ChatGPT has decided to push off advertising. They were gonna put advertising in it. You remember they got mocked by Anthropic with their Super Bowl ads. So what do you think's gonna happen on the consumer side? Consumers generally don't pay for services. That's usually five to twenty percent of the market is paid services, and everything else is free and ad-supported. But it looks like Apple and, and Google are going to just let it rip. So that could take the revenue oxygen away from, uh, ChatGPT. So what, what is your thought here on who wins consumer?

David Friedberg 21:11 I don't think that it's gonna be free. I think there's two hundred and ninety million subscribers for Spotify. They're paying... What are they paying? Twenty bucks a month or something.

Jason Calacanis 21:22 Probably less on average 'cause it's global number, but yeah.

David Friedberg 21:25 Netflix has three hundred and twenty-five million paid subscribers. And AI that can book your travel, answer questions for you, track your calendar, do your email, et cetera, et cetera, et cetera, et cetera, is likely gonna be the most valuable, call it meta service, that consumers have ever seen.

Jason Calacanis 21:42 Mm-hmm.

David Friedberg 21:42 And I think it's very likely that we're gonna end up seeing many more consumers subscribe to a consumer AI service than we've seen even with cable television. I mean, think about your cell phone. Everyone's paying fifty, sixty bucks a month for a cell phone. Why not pay eighty bucks a month-

Chamath Palihapitiya 21:56 No, more. More. More.

David Friedberg 21:56 Or a hundred bucks. Yeah.

Chamath Palihapitiya 21:57 You pay a hundred bucks, and by the way, in the pandemic, remember what we saw. The two things that people refused to cancel was not your mortgage payment or any car payment. You were willing to go into arrears and into default. The two things that people would, would always keep was the cell phone, number one, and then electricity, number two. ChatGPT will be there.

David Friedberg 22:17 So I think that's gonna be the case with these consumer apps, JK.

Chamath Palihapitiya 22:19 I agree.

David Friedberg 22:19 I think that they're all gonna be like ultra valuable, and they're gonna layer in s-services on top of them. Like for example, do you wanna watch video embedded in your consumer AI app? Do you want your consumer AI app to, you know, do your finances for you? And it could be that the consumer AI app becomes the new platform much like the iPhone was for the app economy. There could almost be, whether it's through kind of connectors or embedded tools, an incredible ecosystem that where traditionally advertisers actually pay to be embedded and show up inside of the AI app, and the consumer can either pay for it or the advertiser can pay for it. So I think there's gonna be, um, a very different economic model in still very early days.

Jason Calacanis 23:00 Sacks, the numbers right now would, uh, be more in my estimation about fifty million people subscribe to ChatGPT. They got a billion users, or they're, they're trended to a billion. I think they'll probably hit it in the next month or two. Certainly, they had nine hundred million two or three months ago. So it's about five percent. Where do, where do you think this winds up? Do you think it becomes, you know, three hundred, four hundred, five hundred million consumers are willing to pay twenty bucks a month for this, or do you think it's more free and the data and the ad supported-ness of it go the Meta and the Google route?

David Sacks 23:33 I think it's possible that you could get a few hundred million subscribers for the premium tier. Look, I think most consumers will take the free service in exchange for advertising, right? Some ad-supported model. Which by the way, I think could be quite successful. When ChatGPT started displacing Google for search, a lot of people were predicting the death of, of Google's model because who'd wanna look at ten blue links? I think that's true, but I think you can do something much more compelling in AI chat compared to just a list of links. So in any event, I think ad-supported models might make a comeback here in addition to premium models. All that being said, though, you know, as an investor, I always liked B2B businesses better than B2C because it is hard to monetize consumers. Their willingness to pay is not that high, and they tend to have high churn rates. Whereas businesses tend to be very sticky, and you can upsell them, and you can get more than a hundred percent

Jason Calacanis 24:31 Net dollar retention year over year. So if you can make an enterprise business work, it's always been a model I've, I've liked. But, you know, that being said, obviously some of the most valuable companies in the world are consumer companies. Meta, Google, Apple, these are all consumer-first companies. And look, I think ultimately both models can work.

Chamath Palihapitiya 24:51 Obviously, both can work. The question is which one? [chuckles] I guess it really comes down to how motivated do we think Google and Facebook will be to build that bridge from their ad networks to their AI offerings. Obviously, Facebook is kind of MIA in all of this, but Google is not, and I think that will be the determinant here is-

Jason Calacanis 25:11 Well, Google is gonna compete very vigorously for the consumer because it is existential to them. I mean, it's very clear that search and AI chat are kind of merging into one space. That means that ad links will kind of merge into being in-chat advertising. So they have to adapt with that and compete for the consumer. I also think that Google is in an outstanding position to do the whole OpenClaw thing.

Chamath Palihapitiya 25:36 Yes.

Jason Calacanis 25:36 Because they already have access to your calendar, your documents, your email, so the agent doesn't really have to earn your trust because you already trust Google with all of your stuff.

Chamath Palihapitiya 25:46 Right.

Jason Calacanis 25:46 So I'm kind of waiting for the Google version of OpenClaw 'cause I don't really wanna share all my documents with some new service.

Chamath Palihapitiya 25:54 They're the only one that has so much free cash flow that they can almost view it as two separate companies, which it effectively is. You know, GCP over here runs the enterprise play, and then Google Consumer over here runs the consumer chatbot play, and they can keep them segregated. That's so much harder for a startup to do because on top of just keeping everybody organized, you have the financing problem of constantly having to raise more money because you don't yet have a profit engine that spits out cash. They're probably the only one, and you can see it in the valuations actually, which I'm gonna get to in a second, but people believe the durability of Google more than they believe the durability of anything else.

Jason Calacanis 26:33 And, uh, Sacks, I think you weren't on the pod last week or maybe two or three weeks ago, but Google has announced Google Workpa-- Workspace Studio to do AI automation, and it's, uh, yeah, it's online, and people are playing with it already. So they have joined the OpenClaw party.

Chamath Palihapitiya 26:52 By the way, Jace Pal, you asked a different question earlier as well, which is around the PE story, and I think the PE story is a window into the rest of the broader market. The real open question is what are these companies worth? There's like a very threshold question. It's sort of a, like a very important fork in the road right at the outset, which is do you believe that we're on a path to super intelligence where everything is incredible, where there's infinite abundance, where you can magically describe things and beautiful things appear, complex things appear, groundbreaking things appear? Or do you believe that it's good next generational software? And the answer to that question is really important because we're financing things like it's the former.

Jason Calacanis 27:33 And, uh, GC has a big move in this. Hamont was on the program in January when we did the interview show, and he's got GC buying up and rolling up accounting firms, et cetera, healthcare firms, hospitals, et cetera. This seems to be part of the future of venture capital is taking AI sacks and actually buying out, or I should say big VC, kind of starting to look like private equity, buying out hospitals, accounting firms, business processing firms in India, putting them all together, and then running them with AI. So any, any final thoughts on that, Sacks, as a business strategy?

Chamath Palihapitiya 28:11 Well, I think it's interesting. They're kind of betting on the idea that they can own the change management around AI. And this is the thing is everyone just kind of assumes that you throw AI over a wall, and the business just automatically knows how to use it and drive-

Jason Calacanis 28:28 Not true

Chamath Palihapitiya 28:28 ... efficiency from it.

Jason Calacanis 28:29 Yeah.

Chamath Palihapitiya 28:29 And what we're seeing is it's pretty difficult. Chamath, you've seen that. There's McKinsey studies showing that like ninety-five percent of enterprise pilots aren't successful. There's tremendous value, latent value in AI, but it's hard to know exactly how to deploy it at this point in time. So I guess what these private equity firms are saying is that we know how to drive value from this, and if we own the business and then own the change management, then we'll be able to, you know, create value that way. Their business model makes solving this problem existential, and this is sort of along the lines of this essay that I wrote. Let me just give you the thought exercise and you guys react. Today, we live in a world where the whole market is trying to debate what is the PE ratio that you'd be willing to pay. So Facebook is incredibly durable. I'm willing to pay thirty times. Nvidia is really durable. I'm willing to pay forty times. Tesla is incredibly asymmetric to the upside. I'm willing to pay two hundred times. And then Caterpillar or John Deere, I'm willing to pay fifteen times. I'm just using these a- as an example. And what it's effectively signaling to you is how durable all of these cash flows are. And all we do in the public markets when we make an investment is we're just guessing. When do the cash flows run out? And we try to say, "Well, here's how much it's worth, and here's how much I'd be willing to pay for it today." But if you go back to this example and you say, "Well, what if there's this super intelligence on the horizon?" I think it's fair to ask the question, what is anything worth? And what is anything worth in year ten or year fifteen or year twenty? Because if you have infinite abundance and you have all this creativity, won't all companies be disrupted? And won't we be in this constant churn of everything getting disrupted all the time? And if you were faced with that problem in the public markets, how would you react? And I think the canary in the coal mine are the SaaS stocks. Yes, we jokingly call it the SaaSpocalypse, but I think it's much more important. I think it's a big societal question. How do you view capital markets? How do you view the health of a company?In a world where we've been told there's a superintelligence on the horizon that makes everything much more fragile than it was before, and the market reaction is to put all these companies on a spectrum, and they started here in software, and they're re-rating everything down, and they're changing the way that things are being framed from price to equity to a multiple of j- cash that you have on hand. And I think that has huge implications, mostly to Silicon Valley and largely to employees, because we all sell the dream. We start a company, and we're like, "Okay, small salary, big equity upside." But that's implicitly saying in fifteen or twenty years, this thing is gonna be worth some gigantic number. But if instead every business gets disrupted every five or six years, all you're gonna end up with is just the cash. And so what should employees do? The rational reaction from employees will say, "You know what? I don't want your equity. Give me more money."

Jason Calacanis 31:34 Mm.

Chamath Palihapitiya 31:34 And i- if all of a sudden you do that, the valuation multiples and the complexity changes again. So I had my team put this chart together. Okay, what is this? Took a handful of SaaS companies and took the Mag 6. And I just said, "Okay, if you take the market cap and you divide it by the annual free cash flow, what that tells you is how many years does it take to get back if you bought a share of stock? How many years does it take from the free cash flow to come back so that you've earned back the cost of one share?" Snowflake in 2023, it would've taken you almost 100 years. And where is it now? It's been cut in half. ServiceNow, Atlassian, Workday, you see it. And I think what this speaks to is the beginning of this re-rationalization in the public markets of saying, "If superintelligence is coming, we have to be very careful about what we're willing to pay for these things." But if you look on the right-hand side and the Mag 7, what's so interesting is Apple, Microsoft, Meta, and Alphabet, the market has completely flipped the other way, and what they're saying is, "We believe that these cash flows are essentially monopolistically durable forever." That's the only reason why you would walk them up like this, except NVIDIA, which is the most unbelievably accretive, well-run company, highest [laughs] margins, you know, making $200 billion, and they're treating it like they're treating ServiceNow and Snowflake. I just think it's so interesting what's happening. I can't explain this, but here, this data sort of shows this reset that we're going through, a very complicated reset in the capital markets.

Jason Calacanis 33:14 Friedberg, what's your take on this reset as Chamath describes it? Do you think this is just a flight to the quality of the free cash flow of the Mag 6 and just how much cash they print, and then maybe the other ones are smaller footprints and they're just more disruptable? W- we had this discussion many years that Google and Apple, Microsoft, they would all be disrupted at some point, Facebook, and that just simply hasn't happened. They've gotten much more nimble at copying products or incorporating, you know, features and products into their core offering. So your thoughts?

David Friedberg 33:48 It's probably generally correct that there will be a decline, but there's also the selective opportunity. Do you guys see the LP slides that went on the internet from Thoma Bravo's LP conference?

Chamath Palihapitiya 33:59 Yeah, those are great.

David Friedberg 34:00 Nick, maybe you could find that. They kind of highlight that within the broad market scape, there are companies that are not just gonna sit idly by and let AI kind of delete their business value, but they're integrating AI themselves and they've got high quality people to do so, and they're reinventing their product themselves. So they've already got a beachhead. They've already got customer access. They've already got enterprise users. And in fact, if they can integrate AI into their products and into their tools, there's almost this, like, selective dispersion that happens in the market. And so the winners are gonna win, I think truly in every market, not just in software, but across every market, including in industrial supply chains, on who is gonna implement and utilize AI tools and agents, uh, to do work, and it's gonna expand the work, uh, productivity of that organization, not just create new features, which is what we focus on when we talk about software companies. But really imagine a complex business being able to do 10 times the output it can do today with the same capital equipment and the same labor force.

Chamath Palihapitiya 35:01 Friedberg, what do you pay for in a world of superintelligence versus in a world of non-superintelligence in terms of the durability of the business?

David Friedberg 35:10 Yeah, it's hard to say, man. I mean, we, we don't know, right? And that's why all the discount rates are going through the roof, and that's why the valuations are collapsing because we just don't know what multiple or what discount rate you apply or what terminal growth rate or which, i- which effectively implies.

Chamath Palihapitiya 35:24 What do you do in your PA? Like, do you say-

David Friedberg 35:26 I don't think Disneyland is going anywhere, you know? I think there's some stuff that you could say is the counter AI portfolio. In the counter AI portfolio, I think it's, like, physical experiences.

Chamath Palihapitiya 35:35 HALO. They call it HALO, high asset, low obsolescence.

David Friedberg 35:39 Okay, that's a great ex- Yeah, I'm not a big investor trader like you guys, but that makes a lot of sense. I mean, I think that's, like, intuitively to me, that seems to be an area where people are gonna be spending a lot of time, and they're gonna, they're gonna have durability in those businesses. I, I think businesses like nat gas production. You know, I just bought, uh, LNG, that Cheniere company.

Chamath Palihapitiya 35:58 Cheniere? Yeah. [laughs]

David Friedberg 35:59 Cheniere. [laughs] Even-

Chamath Palihapitiya 36:01 You bought Cheniere. That's awesome

David Friedberg 36:02 ... I bought Cheniere given, um, all the craziness in the Middle East.

Chamath Palihapitiya 36:04 Yeah.

David Friedberg 36:04 And you know, I visited there with Doug Burgum, so it was the first time-

Chamath Palihapitiya 36:06 Yeah

David Friedberg 36:06 ... I'd ever been exposed to this business, and I checked it out.

Chamath Palihapitiya 36:08 That's a great business. That's a great business.

David Friedberg 36:09 And yeah, but-

Chamath Palihapitiya 36:10 Really well-run business, Cheniere

David Friedberg 36:10 ... so I think that's got durability, obviously, unless it gets blown up by some enemy. Uh, that would, that would be a problem. But I think-

Jason Calacanis 36:16 So the Adams thesis-

David Friedberg 36:17 Yeah

Jason Calacanis 36:17 ... that TK shared.

David Friedberg 36:19 Yeah. Adams, Real Life, mining is a great one. Obviously, I think the space industry's gonna be a lot bigger than we recognize. I actually think there's probably a $15 to $30 trillion a year economic opportunity on the moon. That kind of a business, like you're gonna see with SpaceX's IPO, is gonna have an insane multiple.

Chamath Palihapitiya 36:39 So I think to your point, Chamath, there's a lot of stuff getting steamrolled here with crazy high discount rates where you just don't know. And there's a bunch of stuff where the pathway over the next fifteen to thirty years is maybe independent or unlocked because of AI. And then there's a bunch of stuff that's just unaffected. That-- and that, that starts to get a higher multiple because that's where capital

Chamath Palihapitiya 36:56 starts to flow. So-

Jason Calacanis 36:56 Sacks, there are probably three things that we would agree are great moats for businesses: brands, network effects, and the management team. Those come into play here as well. Yeah?

David Sacks 37:07 I don't know if I would consider management team to be a moat. I mean, it's like Warren Buffett says, that you want businesses that are so strong that they could be run by a bunch of monkeys, because one day they probably will be.

Jason Calacanis 37:17 [laughs] Well, I was thinking more like obviously Elon and Tesla is gonna just-

David Sacks 37:22 Yeah

Jason Calacanis 37:22 ... relentlessly innovate.

Chamath Palihapitiya 37:23 It's a great point, by the way, and it's true, especially in the age of agentic AI.

David Sacks 37:27 Yeah. I mean, look, I think y- though that, just upleveling a bit, I think you are right that the key question is moats. Because I do think that there are still strong moats in a lot of different kinds of businesses, and a lot of them are very subtle. Like you said, some of them are network effects, some of them are the, the, the difficulty of producing physical products, things like that. So there's a lot of different types of moats out there, and that is the key question as we enter a world of, let's call it digital abundance.

Jason Calacanis 37:56 Yeah. The, the network effect of Apple's ecosystem, and they have hardware, right? And they've been just on that path of making their own silicon.

David Sacks 38:05 Well, look, on this show-

Jason Calacanis 38:05 That's incredibly defensive. And they have brand, right? So that, that is pretty strong for Apple. And then you take Tesla, the same thing. You got Elon relentlessly innovating, and it's hard hardware stuff. And then if you look at Meta and Google, these are incredible brands with great management teams-

Chamath Palihapitiya 38:19 My, my assumption-

Jason Calacanis 38:20 ... and constantly innovating

Chamath Palihapitiya 38:21 ... if I had to bet, I'm gonna bet that brands go to zero.

Jason Calacanis 38:25 Really?

Chamath Palihapitiya 38:25 Yeah, because I think that when you can make things that are as good or better, and you can make them in a cheaper, faster, better way, people want that abundance more than they want an affiliation to a brand.

Jason Calacanis 38:39 Example?

Chamath Palihapitiya 38:40 So the perfect example is actually what Tesla did to BMW. You know, what Tesla did to Mercedes, what Tesla did to Porsche, what BYD and Geely have done to the car manufacturing cycle in China. This is a fundamentally cheaper, faster, better product. Yes, it's got a great brand, but nobody's gonna pay a premium for these products. The reason why Y has outsold everything else is because the Model Y is priced better and it's superior on every operational dimension of comparison. That's also true for the cars in China. So I think it's the opposite. I think that brands and the pricing power brands, other than maybe premium luxury goods, but even that's eroding. Like, look at the stock, like, I don't know, Nick, show the stock chart of LVMH or Ferrari. This is not a commentary on the quality of the actual product, but what this shows an erosion of pricing power.

Jason Calacanis 39:37 Hmm.

Chamath Palihapitiya 39:38 All of these things are being eroded away.

Jason Calacanis 39:41 Yeah, this would be the value pro... Most people in brands would just say value propositioning. So JetBlue is a value brand. A Tesla Model Y, perfect example of a value brand. And if you look at Apple's recent cohort, what did they focus on? The Apple MacBook Neo, which is a value laptop, six hundred bucks, seven hundred bucks. So they're even going down market to try to capture that value.

Chamath Palihapitiya 40:03 And to your point, maybe the right word is abundance. Like, the brands that bring abundance, that bring more to the table than their competitors, and they're able to bring more at the same unit cost or less, capture share. That's probably true.

Jason Calacanis 40:19 You know what's interesting about that, Chamath? As we open up the aperture of this, if you-- the, one of the thesis we talked about here a couple years ago, say, "What happens with AI disruption, job disruption, et cetera?" Costs coming down on cars with Model Y getting cheaper, Cybercab coming in, BYD, obviously, if you go to any foreign country, BYDs are everywhere, and they cost fifteen grand.

Chamath Palihapitiya 40:42 Everywhere.

Jason Calacanis 40:42 Then you look at Apple making the Neo, that's a six hundred dollar laptop. Everything getting cheaper seems to be happening.

David Sacks 40:48 I just think it's very hard to know which of these companies is gonna be disrupted. A year ago on this pod, we were saying that Google was gonna be toast, or some of us were saying it because it looked like-

Jason Calacanis 40:57 I took the opposite. Yeah.

David Sacks 40:57 Okay, fine. But-

Jason Calacanis 40:58 Yeah

David Sacks 40:58 ... you know, it looked to us like ChatGPT was taking a massive share from Google search and the AdWords model was becoming obsolete. Now, because of the success of Gemini and the potential for personal digital assistants, personal agents, I think we're probably pretty bullish on that company, and look at their stock chart. It's reflects that. I mean, I think it's doubled in the last year. Now, you take something like Apple, on the other hand, and I'm not saying this is gonna happen, but I'll just throw out a counterfactual, which is what if your personal digital assistant or a personal agent gets so good that you don't need to check your phone, you just tell it what to do, and you don't need the wall of apps anymore. I mean, the way that you call an Uber won't be to punch a few buttons, you'll just tell it what to do. So you could imagine the phone operating system getting disrupted if the agents are good enough.

Chamath Palihapitiya 41:49 You're onto something huge, because what you're saying is, I can confirm this to you, '80, '90, we sell enterprise software. I'll tell you, three conversations with huge enterprises asked exactly what you just said, and we jokingly called it strangulation as a service, which is they all say the same thing, what you just said. "Okay, look, get all this complicated UI out of the way. Get all of these products out of the way. Find a way to create a shim where I can just write what I need, tell it what I need it to do. It deals with all this complexity in the background. I never wanna see these things ever again." And that's what people want, to your point.

Jason Calacanis 42:23 Oh, right.

Chamath Palihapitiya 42:24 They want, they wanna be able to, like, say, "Okay, pay this with my Venmo," or, "Use my Amex in this situation," or, "Get me that flight in some way and have all these wonderfully smart agents do all the work behind the scenes."

Jason Calacanis 42:35 And that's actually tracks with exactly what I've seen with OpenClawPerplexity Computer, Claude Cowork. Instead of going to your Notion, instead of going into your Gmail, instead of pulling up your calendar, you ask it, "Hey, what's on my schedule this week?" It brings it to you. So you could, you could have a dumb, you know, flat terminal, you know, chat interface on the hundred dollar device, and it would do just as good.

David Sacks 42:58 Just to make the counterargument against myself.

Jason Calacanis 43:01 I mean, yeah.

David Sacks 43:01 Even though I think that you'll just increasingly tell your agent what to do instead of be clicking around or, you know, touching the screen, you still need a, a dashboard or a user interface to, like, check on it and just see readouts of information. You still need to be able to visualize it. Where is the Uber that I've asked to be sent to me? How far away is it? Still wanna see it on a map. So I could imagine that even if, let's say, you know, Siri plus plus becomes the dominant way of interacting with your iPhone, you'll still want that Apple user interface. Hard to say. I mean, I see a lot of people out there tweeting that Apple is brilliant for kinda missing the whole AI wave and not spending a lot of money on data centers or CapEx. And then there's other people that say, "Well, wait a second. They're, they're missing critical capabilities." Then there's a question of will they be able to make deals for, you know, an AI-powered Siri? I don't know. It's... This is very hard to know at this point in time.

Jason Calacanis 43:58 All right. And we will be discussing all these hard topics at Liquidity, May 31st through June 3rd. Chamath. Some big announcements here from you.

Chamath Palihapitiya 44:09 [laughs]

Jason Calacanis 44:09 You have taken control. This is what happens in the game of thrones known as the All-In Corporation LLC.

Chamath Palihapitiya 44:17 The, the partnership.

Jason Calacanis 44:18 The partnership, if we can call it that.

Chamath Palihapitiya 44:19 Partnership. [laughs]

Jason Calacanis 44:20 The chaotic partnership.

Chamath Palihapitiya 44:22 No mids.

Jason Calacanis 44:23 There... It literally is chaos. So-

David Sacks 44:26 But wait, wait, wait. Why are we doing this in California? I don't even think it's, I can go back to the state at this point in time.

Jason Calacanis 44:30 You can come for 48 hours, make an appearance.

David Sacks 44:32 I don't know.

Jason Calacanis 44:33 Just there for two days.

Chamath Palihapitiya 44:33 By the way, there are some people, Sacks, that fly in.

David Sacks 44:34 You know I have zero days in state at this point in time.

Jason Calacanis 44:37 I love it. I love it. You can do 48 hours. It's okay.

David Sacks 44:39 Mm.

Jason Calacanis 44:39 Well, Gavin Newsom might meet you at the airport.

Chamath Palihapitiya 44:41 Fly in, fly out.

Jason Calacanis 44:42 You can get picked up at the airport.

Chamath Palihapitiya 44:43 The air- By the way, the airport is about 10 minutes from the venue. You could fly in and fly out same day-

Jason Calacanis 44:48 Ugh

Chamath Palihapitiya 44:48 ... and you don't have an overnight.

Jason Calacanis 44:49 No overnight.

Chamath Palihapitiya 44:49 No overnight.

David Sacks 44:49 Oh, is that how it's counted?

Chamath Palihapitiya 44:51 Yeah, that's how it go- It's counted as an overnight in California. You should-

Jason Calacanis 44:53 Head on pillow, yeah.

Chamath Palihapitiya 44:54 Yeah.

Jason Calacanis 44:54 You can come in on Monday, then fly out to-

Chamath Palihapitiya 44:58 Leave Monday night

Jason Calacanis 44:58 ... fly out to Incline, sleep at, you know, at our friend's house, and then fly back in on Tuesday, and then fly back out. You'll be fine.

Chamath Palihapitiya 45:03 Or-

Jason Calacanis 45:04 You could fly to Vegas-

Chamath Palihapitiya 45:04 ... a lot of people are doing that

Jason Calacanis 45:05 ... do a blackjack run, overnight blackjack run, and then you come back in the morning. We just freshen up.

Chamath Palihapitiya 45:10 No sleep.

Jason Calacanis 45:10 Just get your fresh shirt.

David Sacks 45:11 Nice and rested.

Chamath Palihapitiya 45:12 Let me announce the next two speakers.

Jason Calacanis 45:14 Oh my God, I'm so excited. But just for background, Chamath comes into this thing. Liquidity was this little conference I did. It's now part of All-In. And I start setting up all the speakers, and then Chamath goes, "Not good enough. I'm not showing up unless I pick all speakers." And you know what Friedberg and I did? "Well, finally this, this melon farmer's gonna actually do some work. Great."

Chamath Palihapitiya 45:32 [laughs] What did you call me? What did you call me?

Jason Calacanis 45:34 Melon farmer. It's a-

Chamath Palihapitiya 45:35 Melon farmer

Jason Calacanis 45:35 ... w- when, um, they play a Quentin Tarantino movie on, like, TV, instead of saying mother effer, Samuel L. Jackson says melon farmer.

Chamath Palihapitiya 45:47 Oh, I see.

Jason Calacanis 45:47 So this melon farmer took unilateral control of the 10 speakers. 10 speaker slots, very coveted.

Chamath Palihapitiya 45:54 Okay, so we've announced Dan Loeb.

Jason Calacanis 45:56 Oof.

Chamath Palihapitiya 45:56 We've announced Sarah Friar.

David Sacks 45:58 Incredible.

Chamath Palihapitiya 45:58 And I'm very, very, very honored and excited to announce that Bill Ackman-

Jason Calacanis 46:04 [gasps]

Chamath Palihapitiya 46:04 ... and Andrej Karpathy will also be-

Jason Calacanis 46:07 Wow

Chamath Palihapitiya 46:07 ... speaking at Liquidity.

Jason Calacanis 46:08 It's four heavy hitters, six to go.

Chamath Palihapitiya 46:10 Two more GOATs on the roster of GOATs.

Jason Calacanis 46:13 So GOATed.

Chamath Palihapitiya 46:14 And we have a handful of other big time-

Jason Calacanis 46:17 Yeah, there might be some surprise guests and unannounced guests show up. You never know.

Chamath Palihapitiya 46:20 TBD. Can't, can't say. TBD.

Jason Calacanis 46:21 You know, TB-

Chamath Palihapitiya 46:22 More announced soon, but we're making-

Jason Calacanis 46:24 Let's get Dario to show up

Chamath Palihapitiya 46:26 ... it's great.

Jason Calacanis 46:26 Dario, come to the show. Come hang out with the All-In boys.

Chamath Palihapitiya 46:29 I'm really excited.

Jason Calacanis 46:29 I have to get Dario there.

Chamath Palihapitiya 46:30 I think... You know what Andrej's gonna do? What Andrej agreed to do is he's gonna do, like, uh, five or 10 minutes of slides on, like, the future of the world with AI, and then we'll do a fireside.

Jason Calacanis 46:38 Love it. That's gonna be tremendous. And you know, he's, uh, he's been on a heater himself with his recursive, uh, GitHub project.

Chamath Palihapitiya 46:46 Oh, dude, Auto Research is incredible, and Bill Ackman has a ton of points of view on all of this stuff, so we'll get a lot of his thoughts. I wanna give a shout-out to Friedberg because when we did the interview with Jensen, he's like, "Guys, I was like... I, like, had a glass of wine on a Sunday. [laughs] I, like, coded a replacement to my HR IS system. I asked all my team to do it." And I was like, "Oh my God, this is incredible." So I asked our folks, I'm like, "Hey, I don't like the website. It's 80/90." And the next day they're like, "Yeah, we vibe coded a new one. We'll have it up." And then I'm like, "Well, do you like the CTAs and how it's doing?" They're like, "No, no, no, no. We put it into Auto Research, and we doubled the click-through rate." And I was like, to Friedberg's point, this was... This would've been many man months, tens of people, and instead, all these recipes, by the way, and these playbooks, you know, like, the person that runs growth at OpenAI r- publishes his recipes.

Jason Calacanis 47:40 Yeah, you've been claw pilled. That's it. You've been one-shotted.

Chamath Palihapitiya 47:43 It's really incredible. This is why, like, I w- I mean, y- you commented on my post yesterday. I wake up every day and my head spins. I'm like, "What is, what is going on in the world?"

David Sacks 47:51 It's crazy. Like, every day feels like a new era right now.

Chamath Palihapitiya 47:55 Yeah.

David Sacks 47:56 And-

Chamath Palihapitiya 47:56 It's har- it's disoriented.

David Sacks 47:58 Because, because-

Chamath Palihapitiya 47:59 It's disoriented

David Sacks 47:59 ... because I, I think-

Chamath Palihapitiya 48:00 Yeah

David Sacks 48:00 ... what's really interesting is you pull what would have normally been something that's, call it a period of time out, like a year out or two years out, and you can pull it in and say, "I can get that done in three days, and I don't need to hire people." All the sequencing and staging that would normally go into accomplishing something has been reduced, and then the time rushes in. So all your ideas rush into you, and they're all, like-

Jason Calacanis 48:20 [laughs]

David Sacks 48:20 ... immediately accessible.

Chamath Palihapitiya 48:21 Right.

David Sacks 48:21 And that's why it's like so... Every day is like, "Oh my God, like, this is so-"

Chamath Palihapitiya 48:24 It's disorientating.

David Sacks 48:25 Yeah. Yeah.

Jason Calacanis 48:25 Yeah. That is... I, I have... I bought the domain name annotated.com, like, 15 years ago for four grand, and I wanted to create a service, like a bookmark service, Chamath, where you, like, highlight a paragraph from the New York Times, and then you write your comments on it. It saves it, and you basically have this service.And I was talking to some developer about making it, and I literally vibe coded it and the Chrome extension this past week. And I was like, "Okay, I've been sitting on this domain and project for like fifteen years, and I did it in a weekend?"

Chamath Palihapitiya 48:55 Isn't it crazy?

Jason Calacanis 48:56 Weird. It's like very weird.

Chamath Palihapitiya 48:57 It's, it's really, it's really crazy.

Jason Calacanis 48:58 Just makes it seem like a simulation to me that everything can just manifest itself. It's the Star Trek version of the world. Like remember the replicator, Sacks, where you just say, "Earl Grey tea at this temperature"? That's happening in business now. You're like, "CRM system, build annotated.com, build this new website for eighty, ninety." Boop, and it's a replicator just gives it to you. It's very strange.

Chamath Palihapitiya 49:20 I've only felt this feeling twice. Once I was on the outside looking in. I was a derivatives trader in Toronto. I was looking at the first dot com wave, and I was like, "I gotta be a part of this. How do I get to be a part of this?" And I got a job in, at Winamp, and kind of the rest was history.

Jason Calacanis 49:44 Winamp [chuckles] , the original iTunes.

Chamath Palihapitiya 49:46 But I missed the wave. Financially, it didn't do anything for me. But I was in the right place.

Jason Calacanis 49:52 You got to the beach with a surfboard. That's all that matters.

Chamath Palihapitiya 49:55 Then the second wave, I crushed in the move to mobile and social. But this wave feels like a hundred times bigger than that.

Jason Calacanis 50:02 It's a tsunami by comparison. I, I, I had three of these.

Chamath Palihapitiya 50:05 It's probably what it's like to be at Nazaré in Portugal. You guys ever see those clips of like that crazy-

Jason Calacanis 50:11 Yes

Chamath Palihapitiya 50:11 ... place where like there's like a-

Jason Calacanis 50:12 Sixty-foot waves

Chamath Palihapitiya 50:12 ... hundred-foot waves or whatever, and you're just towed in, and you're like, "Okay, let's just-

Jason Calacanis 50:16 Here we go. This could end one of two ways.

Chamath Palihapitiya 50:18 Let it go.

Jason Calacanis 50:19 Glory-

Chamath Palihapitiya 50:19 Let's do it

Jason Calacanis 50:20 ... or goodbye.

Chamath Palihapitiya 50:21 [laughs]

Jason Calacanis 50:22 No, I, it was like literally when I first saw a PC, when I first got on the internet and then saw Mosaic, like those two moments in the early nineties, and then seeing the iPhone, I think that, like those three moments-

Chamath Palihapitiya 50:33 Oh, the iPhone was very special

Jason Calacanis 50:35 All right, rough week for Zuck. Two verdicts went against Meta in two days. They were first found liable for allowing child predators to access minors on Facebook and Instagram. New Mexico jury ordered Meta to pay three hundred seventy-five million in damages. The AG's office there ran an undercover investigation. They created fake child profiles, Facebook, Instagram. These accounts were contacted by predators. People showed up, yada, yada, yada. A whistleblower and former Meta engineer testified that his own fourteen-year-old daughter received sexual solicitations on Instagram. Then on Wednesday, an LA jury found Meta and YouTube negligent for designing addictive platforms that harmed a young user's mental health. Basically, the plaintiff in this case, Sacks, said they started using YouTube at age six and Instagram at age nine, and she testified that features like notifications, algorithms, made the app so addictive that it caused depression and anxiety through that compulsive use. You have some thoughts on this. And we, we had, um, Jonathan Haidt, right? Didn't we do an interview together? Was that one of the first joint interviews, Friedberg, we did?

David Friedberg 51:41 You and I did.

Jason Calacanis 51:42 Yeah.

David Friedberg 51:42 You and I did, yeah.

Jason Calacanis 51:43 Incredible book.

David Friedberg 51:44 Long time ago. Yeah.

Jason Calacanis 51:45 Uh, these things are obviously addictive.

David Friedberg 51:46 And he pointed, he, he had a very important point, which is to try and keep kids off cell phones and social media until they're 16, and he was kind of cheerleading this, this verdict. But, you know, I'll take a, a little bit of a contrarian to the popular kind of sentiment on this. A- and I'll just talk broadly about this idea of tort litigation. Tort litigation, you know, costs our economy nine hundred billion dollars a year in the United States. Nine hundred billion a year. That's how much is spent on the litigation costs, the settlements, the judgments. It's three percent of GDP, and it's growing roughly ten percent per year. And these civil penalties decided by juries, like they're, you know, going against big companies like Meta and YouTube, but it's also food companies, restaurants, everything. Anytime there's a window to sue someone and, and extract, uh, value from them, tort firms are all over 'em. You know, it's called the tort tax now in America, and it's not just losses paid by the companies, 'cause fundamentally, when a big company pays out these tort taxes, they're gonna invest less. There's less R&D, less product development, costs stay high. There's new, fewer new product launches, and there's all these crazy restrictions on stuff. So, you know, look, I, I agree, social media causes immense harm. It particularly causes harm for kids. Kids should not be on social media until they're 16. Absolutely agree. Maybe adults shouldn't either be on it, you know, as adults. But fundamentally, I think there's an important question that we often ignore, which is who is fundamentally responsible for that harm? You know, should the sugar beet and sugar cane farmers be responsible for diabetes in America? Should the soda companies be responsible, the retailers selling the soda, the FDA for not stopping it all? And fundamentally, I think we have to ask the question, what role does individual choice play and individual responsibility play in this equation? If everything is a liability-

Jason Calacanis 53:33 What do you think?

David Friedberg 53:33 'Cause anything, any... I, I think we have to take personal responsibility. I think the parents that are absent taking care of their children are responsible for harm to their kids. You shouldn't let your kid play with a gun. You shouldn't let your kid go to some sketchy neighborhood after hours by themselves. You shouldn't let your kid play video games a hundred hours a week. You shouldn't let your kids eat nothing but soda and potato chips. You have responsibility as a parent, and I think parents should keep kids off screens and keep kids off social media. Once the harms are known of excess use or the harms are known of exposure to this sort of thing, I think there's responsibility that sits with the parents.

Chamath Palihapitiya 54:09 What about things like tobacco or processed food or-

Jason Calacanis 54:13 Yeah, this is the key. It cannot be food

David Friedberg 54:14 Yeah, and I, look, I mean, the same, the same is true of alcohol. I mean, dude, like alcohol is terrible for you. There's nothing good about alcohol. But I think I should have a choice on whether or not I wanna consume alcohol, whether or not I consume tobacco, whether or not I consume processed goods, and the recognition that it's bad for you should be publicized by the government, should be publicized by the companies.

Chamath Palihapitiya 54:31 Right, so w- if I had to summarize-

David Friedberg 54:33 Yeah

Chamath Palihapitiya 54:33 ... what you would say is product liability law makes no sense. There should be human liability and human responsibility expectations in a society.

David Friedberg 54:41 We never talk about responsibility. We always talk about where the government failed us and where these companies [beep] us, and we never talk about what did we individually do wrong. How did I individually choose to eat a hundred [beep] sodas a week? How did I individually choose to get my kids addicted to social media? Where the [beep] was I as a parent?Like, we don't talk about our responsibility. And by the way, this fundamentally addresses this point about human agency, which I think is more critical in this era than ever, because AI is gonna flood us with [beep] everything all the time, nonstop. What we choose to do in a world where we're already getting everything, and how we choose to not take everything that's being offered to us, I think is a critical part of what's gonna distinguish human success from human failure, and it's gonna become more apparent in the future. And not everything is about liability, and not everything is about the government failing us. It's about people making choices, and we don't talk about it. That's my rant.

Jason Calacanis 55:32 What I'll counter... I, I, I agree-

David Friedberg 55:34 Yeah

Jason Calacanis 55:34 ... personal choice, super important. What you're probably leaving out here, uh, what you're definitely leaving out here, is when these companies know they're doing something damaging, and they do it anyway. That was the key to the RJR Nabisco case.

David Friedberg 55:49 The wi- the whiskey company. The... What about, what about a, a whiskey company selling whiskey to an alcoholic?

Jason Calacanis 55:55 Okay. So I, I, I don't have a-

David Friedberg 55:56 What about a potato chip company selling potato chips to an obese person?

Jason Calacanis 56:00 I'll put those two aside because I don't think we've seen major cases about that. But I will say the auto industry knew for a long time about seat belts, you remember that, and they didn't em- deploy them. RJR Nabisco, they knew that these were addictive, and they designed the cigarettes to become more addictive, and they didn't tell people about the health risks. Asbestos, same thing. Lead paint, same thing. This has happened over and over again where corporations subvert the release of information to make additional profit. So the question here with Facebook is, did they know how addictive these were? Did they know kids were being assaulted sexually and, and they could have done something about it, or didn't they? A- and so agree that there's tremendous litigation.

David Friedberg 56:45 Abso- that's, that's, that's absolutely true. The, the kids being assaulted, absolutely true.

Jason Calacanis 56:48 So yeah, we agree on that one.

David Friedberg 56:49 The, the not, not releasing information about the level of addiction if they had it-

Jason Calacanis 56:53 Yes

David Friedberg 56:53 ... that's certainly bad. Should the product be legal, number one? And if the product is legal, who's responsible for using it? You know, and, and where do we draw the line?

Jason Calacanis 57:01 Well, but if it's dangerous-

David Friedberg 57:01 And if we don't want, if we don't want people to make choices, then we shouldn't put it out there.

Jason Calacanis 57:04 But if you as a corporation know it's dangerous, and then you lean into that. If you know, uh, a- as the, as the case with Facebook, that this is super addicting, super damaging to young girls, and then you lean into making it more addictive, and you don't put safeguards in place, and you can prove that, like RJR, like asbestos, like many of these other products-

David Friedberg 57:24 What are the safeguards on whiskey? What's the, what safeguards does a whiskey company put?

Jason Calacanis 57:27 Age.

David Friedberg 57:28 What safeguard-

Jason Calacanis 57:29 Age

David Friedberg 57:29 ... what safeguards does a casino put?

Jason Calacanis 57:30 Hold on. You asked the question.

David Friedberg 57:31 Yeah, yeah.

Jason Calacanis 57:31 Age is one.

David Friedberg 57:32 No, no, but I'm not... It's not about age.

Jason Calacanis 57:33 That's one.

David Friedberg 57:33 Yeah.

Jason Calacanis 57:33 Second, i- after age, which is what we're really talking about with kids, and, and Jonathan Haidt would agree that they shouldn't be using this until they're 16, so I think that's a perfect analogy. Uh, age gating, and then labeling. And then if they know of something that's really damaging, releasing that. So there was a whole thing about alcohol and pregnancy, and they covered up in the alcohol industry, or didn't disclose exactly how damaging it was to drink alcohol on a, on a fetus or on a developing fetus. And then remember all those signs went up in bars in the '70s and '80s?

David Friedberg 58:05 Yeah, the sign. Yeah.

Jason Calacanis 58:05 That was directly because of that. So labeling information and age gating would be the logical things to do for social media, and that's what's happened in the past. So that, that's the answer to your question.

David Friedberg 58:14 I don't know about age gating, but I think informing parents about the risks is fine. Like, that should be a responsibility. But you know, the, the tort lawyers are one of the largest donors in political elections in the United States. They donate largely to Democrats in local elections and Republicans in national elections, and then they are the largest donor class to elections of judges. And it's, it's a business, and I think we don't talk enough about the business of tort law, um, the business of litigation in this country. And we often ignore this question about choice and I don't wanna live in a world, JCal, where the government and companies are telling me what to do and what not to do-

Jason Calacanis 58:48 No, of course not

David Friedberg 58:48 ... how to live my life, et cetera. You know?

Jason Calacanis 58:49 Sacks, will you jump in here? Personal freedom, uh, and personal, um, responsibility versus, hey, corporations maybe knowingly doing things-

David Friedberg 58:59 And pa- parental responsibility, JCal

Jason Calacanis 59:01 ... parental responsibility in there as well.

David Friedberg 59:02 Yeah.

Jason Calacanis 59:02 Yeah. What do you think, Sacks?

David Sacks 59:04 Well, look, there's no question that the trial lawyers wanna turn Meta into RJR Nabisco and the cigarette companies and try to fit their fact pattern around that. I just think that the activity is fundamentally different than smoking. I mean, smoking is manifestly harmful to you regardless of what your age is, and the only reason we allow it is because of assumption of risk. It's a free country. I think in the case of social networking, it's much more unclear what the harms are and what the benefits are, and I think it's much more subjective, and it's much more of a personal choice for adults and also for parents. Friedberg, I mean, one area where I disagree with you a little bit is you said the harms of this are immense and well-known and understood. If that's the case, then let's just ban it for under 13 or under 16 or whatever it is. But I don't think that's the case, and because it's unclear, I think it's up to parents to decide what's appropriate for their families. And at the end of the day, I think the right way to deal with this is parental empowerment. You give parents the controls to set screen time limits or to decide what apps their kids install. Now, the debate has now moved over to AI apps, and there's a lot of parents groups that wanna ban kids or teenagers from being able to use AI chat apps because there was a couple of cases of self-harm. Now, my reaction to that is, look, I've got a 10-year-old, and if he starts using ChatGPT to get answers to questions, I would consider that to be a good thing. I mean, I'll keep an eye on the usage, but I want him to be an AI native. I want him to be able to do research, you know? I want him to be able to know how to use these tools. I want him to get the right skills to be successful in the 21st century. In China, they're incorporating AI into K through 12 education. Are we gonna ban it for our kids and teenagers? I think that'd be a terrible mistake. So I think when it comes to AI and AI chat apps, it has to be up to the parents because there's too much manifest goodThat can come out of kids learning how to use these apps. Maybe social networking is in a different category, but I gotta say, I do think that the harms have been exaggerated because the trial lawyers have an incentive. And just to give you some facts about that LA case, so just so you understand, in this LA case, they were sued by a twenty-year-old woman who claimed that she became depressed because of using social media, and she apparently suffered body image issues because of social media, and she was able to win this judgment for millions of dollars. Look, I think there's big causation problems with that case. In, in the case of that plaintiff, the evidence showed that she came from an abusive home, her father had abandoned her, her own mother had body shamed her. So it was very unclear where her body image issues were coming from. I think it's possible that social media contributed to them, or it could just be that social media was a scapegoat. I also gotta say that I do think it's, it's a dangerous precedent. I mean, are we going to allow plaintiffs' lawyers to sue Spotify because you created a playlist-

Jason Calacanis 1:02:08 Right

David Sacks 1:02:08 ... of sad music-

Jason Calacanis 1:02:09 Right

David Sacks 1:02:09 ... and that music contributed to your emotional distress?

Jason Calacanis 1:02:12 Right.

David Sacks 1:02:12 I mean, that's kind of what we're saying. You gotta remember, these are free services that people have a choice whether to use them or not. And if social media is making you feel bad, if listening to the wrong playlist is making you feel bad, then stop doing it. But what's going on here, I think, is the trial lawyers are trying to create the next big tobacco, and their goal is to try and sue these companies into oblivion, and I don't think that's the right answer either.

Jason Calacanis 1:02:37 The consensus, Chamath, is kids who use this two or three hours a day, this has been across many, um, survey... uh, many research studies, is that it's massively correlated with depression and anxiety, um, and eating disorders specifically in young girls. Like, i- if you get to two or three hours a day of this. So that correlation's, I think, pretty well established. You pretty famously said, "Hey," [chuckles] and you worked at Facebook, so you saw this coming, but I think at Stanford '27, 2018 timeframe, you actually had some comments on this. We could either play the clip or you could just describe it, I guess.

Chamath Palihapitiya 1:03:15 I said what was obvious to me then. I lost a lot of friends at Facebook when I said it, unfortunately. But essentially what I said was, "I don't let my kids use it, and I don't think that this is a constructive part of a developing child's diet." I do think that Sacks is right that I view AI chat differently. There are different guardrails that are required so that if you go down some sort of, you know, dark corner. But that's possible to understand, and the product is architected in a way to create cul-de-sacs, so if like, if you're thinking about self-harm or you're thinking about these other things. Social media is very different. It's an incredibly fast twitch algorithm, and that's the optimization. And until the incentive for that optimization changes, these outcomes will continue to compound. I think the interesting thing is that the LA lawsuit was an individual lawsuit. The young woman, I think, was awarded three or six million dollars.

Jason Calacanis 1:04:14 Yeah.

Chamath Palihapitiya 1:04:15 The other one, though, that they lost this week was in New Mexico, and that was for three hundred and seventy-five million dollars. And that was more around, I think, child exploitation.

Jason Calacanis 1:04:24 Yeah.

Chamath Palihapitiya 1:04:24 The thing that I'll note is that these trial lawyers, which I'm not a fan of either, have been trying, as Sack said and as Friedberg said, to make these folks a target because there's so much money on the line. And they've been batted back pretty successfully. But this was the first time where they were able to navigate the Section 230 protections that Facebook and Google have typically used to protect themselves, because Google was a, a part of the LA lawsuit. And they were able to go down the pathway of product liability language. Now, to Friedberg's point, I think he's generally right. I think it's my responsibility as a parent to take care of myself and my children. But to the extent we don't change these product liability laws that are on the books, I think the door has been opened and a map has been drawn, which is this is how you navigate around Section 230, and you can get a decisive lawsuit in your favor against these large companies with enormous cash flows. And so I expect that this will be a death by a thousand cuts kind of scenario, where folks are just going to rally around this. I don't think it's right, but I do think that that's the rational reaction to what just happened. I mean, look, six million dollars to an individual 20-year-old girl, or three hundred and seventy-five million dollars. These are huge numbers, and the reality is that I think we've opened the floodgates. I do think there should be a better response, and I do think that parents should take a lot more responsibility, but I do hope that these products allow us a kill switch for when our kids are under the ages of 16. Frankly, I would love a kill switch under the age of 18, and there has to be simpler ways to age validate. You know, we used to work around this thing called COPPA compliance. COPPA's [beep] . It's a nothing burger. Like, a six-year-old can vibe code their way around COPPA. So it doesn't do anything. And so age verification is completely broken. It's harder to get age verified for a porn site than it is to get un-age verified for Facebook.

Jason Calacanis 1:06:32 Say more, Chamath. How'd you get around it? [laughs]

Chamath Palihapitiya 1:06:34 Yeah. [laughs]

Jason Calacanis 1:06:34 You know you know that. How do you know that? [laughs] Chamath, that's just for uploading.

Chamath Palihapitiya 1:06:37 Oh my God. Be honest.

Jason Calacanis 1:06:37 You were uploading at the time, Chamath.

Chamath Palihapitiya 1:06:39 Yeah. [laughs]

Jason Calacanis 1:06:39 This is not your OnlyFans.

Chamath Palihapitiya 1:06:41 Proof of, proof of age. [laughs]

Jason Calacanis 1:06:44 [laughs]

David Sacks 1:06:44 We actually deal with this in our new AI framework that the administration released last week, because the number one issue is around online child safety, which I think, again, is mostly about social networking, but it touches on AI, and so it's kinda gotten lumped togetherAnd I think we're, I mean, I'm referring now to the White House, has said it's willing to support some form of age assurance technology and parental controls. So look, I think there needs to be a conversation around how true it is that social networking is just a fountain of ills for young people. If that's true, then why wouldn't you just disallow it, right?

Chamath Palihapitiya 1:07:23 Yeah.

David Sacks 1:07:23 But if, if it's unclear, and I think it's more on the side of unclear, that's just me, uh, then it's up to the parents, and what you wanna do is, again, have the age assurance technology and the parental controls-

Chamath Palihapitiya 1:07:34 I don't think-

David Sacks 1:07:34 ... and let the parents decide.

Chamath Palihapitiya 1:07:35 I don't think that social media is net bad, broadly speaking. But I will tell you that if my child uses it for two or three hours a day for multiple days in a row, they become retarded.

Jason Calacanis 1:07:49 Yes. They act weird.

Chamath Palihapitiya 1:07:51 And so I don't know what to tell you-

Jason Calacanis 1:07:53 It's coral you

Chamath Palihapitiya 1:07:53 ... except I would love a kill switch until these kids turn 18 on all these products.

David Sacks 1:07:57 Well, you can-

Chamath Palihapitiya 1:07:58 All of them.

David Sacks 1:07:58 You sh- you w- so it w-

Chamath Palihapitiya 1:07:58 This has to do with dopamine, by the way. These... What I do instead is I use Apple's Family Sharing, but it's hard, and I'll tell you h- why it's hard. Our schools give our kids Chromebooks and say, "Use these Chromebooks because that's the way you're gonna access your LMS, your information, your content, your homework." And you know what's an integral part of that? YouTube. And then now it becomes a backdoor. So even when we take the devices, I take my devices, we lock them down, you can't bring them to your room, the whole thing. But if they need to do homework and I catch them, in a little break I'm like, "What are you doing on YouTube?"

Jason Calacanis 1:08:36 [laughs]

Chamath Palihapitiya 1:08:36 They're looking at Shorts.

Jason Calacanis 1:08:38 Of course.

Chamath Palihapitiya 1:08:38 That's what they do.

Jason Calacanis 1:08:39 Yes. Yeah.

Chamath Palihapitiya 1:08:40 And so it is a Whac-A-Mole problem for parents.

Jason Calacanis 1:08:44 I think, uh, I'll, I'll just give myself the final word here on behalf of the group. It's obviously addicting. It's obviously the industry has not policed itself, nor would they police themselves, because they wanna get people addicted now so they're addicted when they're adults. The rest of the world has realized this. Australia now has 16 enforced, Malaysia 16. Other countries are right behind them: Spain, Germany, UK. And what should happen here in the United States is this should be done with the handset manufacturers. If Android and Apple showed leadership with Facebook and said, "We're going to, by default when you buy a phone, you're gonna have to age verify, you know, kids under a certain age," which you kinda do already when you create a family plan like you did, we could solve this problem. And then parents would opt in to giving their kids access to this. No good comes out of kids under 16 using social media. And Jonathan Haidt-

Chamath Palihapitiya 1:09:41 By the way-

Jason Calacanis 1:09:41 ... in our interview said you should be putting phone lockers in, and our school is doing that.

Chamath Palihapitiya 1:09:46 Well, our-

Jason Calacanis 1:09:46 Other schools are doing it. It is the greatest thing ever. Kids complain-

Chamath Palihapitiya 1:09:49 Our school, no

Jason Calacanis 1:09:50 ... and then they love it.

Chamath Palihapitiya 1:09:51 I, I don't, I don't think it's that great. I'll tell you why. Our school does the phone condoms. I don't know what they're called, but, like, you put them in the-

Jason Calacanis 1:09:57 The bags

Chamath Palihapitiya 1:09:57 ... the bags, and you... Whatever. The real problem is that there's enormous social pressure when you're in high school to use these products. I'll give you a specific example. Our rule is you cannot get Instagram or TikTok until you're 16. I would love it to be 18, but we all agreed 16, and we're able to maintain that rule. But then high school comes around, and I have two kids in high school now. "Oh, we need Snapchat." "No, you don't."

Jason Calacanis 1:10:22 [laughs]

Chamath Palihapitiya 1:10:22 "No, yes, we do." "No, you don't." "Okay, great. We'll have no friends. Thanks a lot. We'll just sit here in our room, dark, and they're..." And, you know, there's an enormous amount of social pressure, so when you talk to the other parents it's like, "Hey, guys, can we all agree that we don't need Snapchat?" You just can't get uniform agreement across all parents because everybody views this problem differently. And so I had to change the rule. Now when you're, get to high school, you're allowed Snapchat, but not Instagram. And, you know, when you're 16, you get Instagram. And that's the best we could do. And TikTok and all that stuff. But-

Jason Calacanis 1:10:51 Yeah

Chamath Palihapitiya 1:10:52 ... it's an impossible task for a parent.

David Sacks 1:10:54 I find it indispensable to be able to do iMessage with my kids, and also I like the location awareness. You can track location. You compare iMessage, those features, to Snap, is it really that different? I don't think it's that different.

Chamath Palihapitiya 1:11:09 Well, the problem, yes, there is, there's-

David Sacks 1:11:09 So are you really gonna ban- you gonna ban S- you gonna ban S- Snap?

Chamath Palihapitiya 1:11:13 No, I can't. My point is I had to give them Snap. But you're right. I was like, "Why can't you use iMessage?" They're like, "Dad, don't be a loser."

Jason Calacanis 1:11:19 Yeah. [laughs]

David Sacks 1:11:21 No, I signed up for a Snap account just so I could iMessage them where they are, where they're messaging. I'd prefer if they were just on iMessage, but anyway, that's the reality.

Chamath Palihapitiya 1:11:29 Yeah, here we are.

David Sacks 1:11:30 So you can talk about banning all these things, but again, I think you're on a slippery slope. And I gotta, I gotta just point out that-

Chamath Palihapitiya 1:11:35 No, no, I'm saying me as a parent banning.

David Sacks 1:11:37 Yeah.

Chamath Palihapitiya 1:11:37 No, I'm saying me as a parent.

Jason Calacanis 1:11:38 Yeah, you're setting guidelines.

Chamath Palihapitiya 1:11:40 In my house, these are the rules. When you become a freshman, I'll give you Snap, and when you're 16 I'll give you Instagram and TikTok. Otherwise, shut the [beep] up, put your head down, and s-

Jason Calacanis 1:11:49 By the way, I also have a tip for parents. You know this issue with, like, kids and headphones where they wanna be listening to stuff all the time, and you have kids walking around like zombies with headphones? I replaced their headphones with over-the... these brand called Shokz or something. It goes over your ear, but your ear's open, so you can listen to an audiobook or music and still be able to talk. And so since we did that, it's, like, much less drama around the over-the-ear headphone issue.

Chamath Palihapitiya 1:12:17 Man, managing teenagers is brutal.

David Sacks 1:12:18 Well, again, it sounds like you're exercising parental supervision.

Jason Calacanis 1:12:22 Yes.

David Sacks 1:12:22 Does it really make sense that later when your kid turns 20, they could sue these companies for-

Chamath Palihapitiya 1:12:31 Well, to your point, that girl-

Jason Calacanis 1:12:32 I just think it has to be 16

David Sacks 1:12:33 ... for, for emotional distress? That doesn't make sense.

Chamath Palihapitiya 1:12:35 Yeah, no, to, you're right. Because to your point, that girl said she was using it from the age of, like, six and 10.

Jason Calacanis 1:12:40 Yeah, it's ridiculous.

Chamath Palihapitiya 1:12:40 That means one product six and the oth- That's crazy.

Jason Calacanis 1:12:43 Crazy. Yeah.

Chamath Palihapitiya 1:12:44 I agree with you, Sacks. That's crazy. Where were

Chamath Palihapitiya 1:12:46 the parents?

Jason Calacanis 1:12:46 All right. We got time for, I think, one more topic. The amazing President Donald Trump, 47th President of the United States, announced his Council of Advisors on Science and Technology. It's called PCASTSacks, you have now, am I correct in saying, moved from the czar of crypto and AI to now the leader of PCAST? Is that the correct way to frame this?

David Sacks 1:13:16 Well, the president has appointed me to be a member of his Council of Advisors on Science and Technology, and to co-chair it, uh, along with Michael Kratsios, who's the director of OSTP. I'm still a AI advisor, but I do it on behalf of PCAST now.

Jason Calacanis 1:13:31 Got it.

David Sacks 1:13:31 So you remember last year I was an SGE. We got up to 130 days. I used that time up, and the president appointed me to this new role. Allows me to continue being a technology advisor, in fact, on a wider range of issues. So before it was AI and crypto. Now it's whatever PCAST wants to study or talk about or make recommendations. I think in addition to AI, other areas that are interesting are nuclear power, quantum computing, advanced semiconductors, all of these different areas. I think we've got some-

Jason Calacanis 1:14:00 Biotech.

David Sacks 1:14:01 Biotech. Thank you, Friedberg. And we have some incredible people who are now on PCAST to kinda run with this.

Jason Calacanis 1:14:07 Yeah, I'm looking at it. Marc Andreessen, Sergey, Michael Dell, Larry Ellison, David Friedberg, Jensen-

David Friedberg 1:14:16 Ooh

Jason Calacanis 1:14:16 ... uh, Lisa Su, Mark Zuckerberg, and some other folks there that, uh, maybe not as, uh, recognizable by the audience. How were they selected, Sacks? The only criticism I've seen of this is lots of business leaders, great, lots of technology, great, but maybe a little light on the scientists.

David Sacks 1:14:37 Well, I don't know. We have people who've won a Nobel Prize for physics on there. We're talking about people who are experts in, like I mentioned, quantum computing, fusion, nuclear-

Jason Calacanis 1:14:48 Hmm

David Sacks 1:14:48 ... biotech, pretty much everything across the board. I would say that one difference between this PCAST and previous ones is you have more doers, more builders, people who've actually created products or companies. We think that's a good thing. Why would it be a bad thing?

Jason Calacanis 1:15:04 Hmm.

David Sacks 1:15:04 I mean, is it a bad thing that Marc Andreessen invented the first internet browser, or Jensen invented the GPU? If you're gonna make recommendations about advanced semiconductors, don't you want to have someone who actually invented some of the key products in the space?

Jason Calacanis 1:15:17 The big question, of course, Sacks, is, as we've seen here with Science Corner, is how do you plan on staying awake for these meetings if it's gonna be-

David Sacks 1:15:25 [laughs]

Jason Calacanis 1:15:25 ... like, well, science is usually when you take your, your bio break or a nap.

David Sacks 1:15:28 Well, it's, it's, it's science and technology, so we're-

Jason Calacanis 1:15:31 Got it. So you'll be able to at least have-

David Sacks 1:15:32 So I'm gonna focus on the tech stuff.

Jason Calacanis 1:15:34 Got it. Got it.

David Sacks 1:15:34 And then we got Friedberg to focus on the science stuff.

Jason Calacanis 1:15:36 Got it.

David Friedberg 1:15:36 Yeah. Uh-huh.

Jason Calacanis 1:15:36 So Sci- Friedberg, this is incredible. You've joined President Trump's administration now.

David Friedberg 1:15:43 I will say I'm honored to be invited and appointed by the president.

Jason Calacanis 1:15:47 Hmm.

David Friedberg 1:15:47 And I appreciate Sacks and Michael Kratsios. You look back at PCAST, it's kind of rooted in FDR when he formed this Council of Advisors on Science, when nuclear physics and quantum mechanics was starting to kinda reinvent what was possible in the world. We're sort of at a similar era today because arguably AI is reinventing what is possible in the world, and I think there's this kind of acute moment that we find ourselves in, in this extraordinary race against China. I, I'll give you a statistic. 10 years ago, China published 50% of the number of scientific research papers in peer-reviewed journals as the United States. Last year, they published 50% more than the United States. This is across all disciplines and domains, including physics, material science, chemistry, biochemistry, broad life sciences. There's this moment that we're in right now where both the world is being reinvented by AI, but there's this extraordinary race with China, not just in fundamental research and discovery, but in the industrialization of new discoveries and new technologies. You could feel it in DC this week. I was at the Hill & Valley Forum, but literally everyone in Silicon Valley, everyone in DC is, is, like, absolutely honed and focused in on what is going on in China. It used to be in biotechnology, for example, that China was kind of a copycat and a me-too, or they were really good, for example, in manufacturing. But it is now the case that in many sub-domains, China is becoming the scientific leader in biotechnology and in life sciences. And that is a scary thought because ultimately China could end up engulfing the entire pharmaceutical industry and basically becoming the leader in things like medicine, but most importantly, foundational things like AI.

Jason Calacanis 1:17:27 Hmm.

David Friedberg 1:17:27 So I just wanna defend and speak for a moment about the choice about putting what I would say are, like, industrial science and technology leaders on this commission, because this is a moment where there's an industrial race, not just a discovery race underway. And that's why this moment is so critical. Anyway, I'm very appreciative to, to have an, an opportunity to serve and thankful to David for his leadership.

Jason Calacanis 1:17:48 In related news-

David Friedberg 1:17:49 And support

Jason Calacanis 1:17:50 ... Chamath, uh, will be joining the President's Advisory Council on Bomb Pots and Wagering.

David Friedberg 1:17:55 [laughs] Bomb Pots.

Jason Calacanis 1:17:56 He'll be joining that. And when I saw this, Sacks, I saw P- PC, and I was like, "Oh, is it podcasting? I'm in." Finally, I've been invited to the President's Council on Podcasting. So big, big news coming. I don't wanna tip anybody's cards.

David Sacks 1:18:08 We'll let you know when that happens.

Jason Calacanis 1:18:09 Yeah, absolutely.

David Friedberg 1:18:10 [laughs]

Jason Calacanis 1:18:10 When the, when the President's Council on Podcasting emerges, [laughs] me and Lex Fridman will make our way to Washington, DC to serve.

David Sacks 1:18:18 No, but I wanna, I wanna thank the president as well, and it's a great honor to be named to co-chair this. It is, like Friedberg was saying, this is a fairly august body that's goes back a long time. I think the modern incarnation was created in 1990 by George Herbert Walker Bush, so this has been around for over 30 years. In its current formulation, I think we have a slightly different take on it, which is we're gonna have these, these builders and doers on there. Like Friedberg said, we got some catching up to do on our industrial policy. We have named 15 people. There's still nine more slots. We can have up to 24. So I think it's possible that at some point there'll be a second round, and if we're missing some expertise, they can be filled in. Obviously, that's up to the president. He can decide later who else might join this.

Jason Calacanis 1:19:02 All right, everybody. That's another amazing episode of the number one podcast in the world, The All-In Podcast. Bye-bye.

David Friedberg 1:19:09 Love you, boys. Bye-bye.

David Sacks 1:19:12 We'll let your winners ride.

Jason Calacanis 1:19:15 Rain man David Sacks.

David Sacks 1:19:19 And instead, we open sourced it to the fans, and they've just gone crazy with it.

David Friedberg 1:19:23 Love you, besties.

Jason Calacanis 1:19:24 Ice queen of Kin Law.

David Sacks 1:19:27 Let, let your winners ride. Let, let your winners ride. Let, let your winners ride.

Jason Calacanis 1:19:32 Besties are back.

David Friedberg 1:19:35 That was my, uh, dog taking a piss in your driveway, Sacks. [laughs]

Jason Calacanis 1:19:38 Wait a minute. [laughs]

David Sacks 1:19:40 Oh, man. Oh, man.

David Friedberg 1:19:41 My habitat. Sure, we'll meet me at Glenside.

Jason Calacanis 1:19:43 We should all just get a room and just have one big, huge orgy because they're all just-

David Friedberg 1:19:46 [laughs]

Jason Calacanis 1:19:46 ... it's just this, it's like this, like, sexual tension that they just need to release somehow.

David Friedberg 1:19:51 Wet your feet. Wet your feet.

David Sacks 1:19:53 Wet your feet.

David Friedberg 1:19:54 Feet. [laughs]

David Sacks 1:19:55 Wet your...

David Friedberg 1:19:56 We need to get merch.

Jason Calacanis 1:19:57 Besties are back.

David Sacks 1:19:57 What? [upbeat music]

Jason Calacanis 1:19:57 I'm going all in. I'm going all in.