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How Anthropic outran OpenAI by betting everything on coding

Coding pulled Anthropic into enterprise IT budgets. OpenAI shelves Sora and pivots; SaaS valuations deflate under what analysts call AI fragility risk.

Jason CalacanishostDavid FriedberghostChamath Palihapitiyahost
Mar 27, 20261h 20mWatch on YouTube ↗

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  1. 0:00 – 2:25

    Bestie intros!: Friedberg for Governor of California?

    1. JC

      All right, everybody. Welcome back to the number one podcast in the world, Fantastic Four, the original.

    2. SP

      Oh, the cast is back.

    3. JC

      The cast is back.

    4. SP

      Our brothers in arms.

    5. JC

      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?

    6. DS

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

    7. JC

      Christ

    8. DS

      ... but we had a lot of news this past week.

    9. JC

      Hmm, yes, and we'll be talking about PCAST and your role-

    10. SP

      Yay

    11. JC

      ... 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.

    12. SP

      Great, great rant, which I retweeted.

    13. JC

      You were on a mega rant-

    14. DS

      Great rant

    15. JC

      ... with models.

    16. SP

      Thank you, boys

    17. DS

      ... I, I retweeted it too. If only-

    18. SP

      Thank you, boys

    19. DS

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

    20. SP

      [laughs] Thank you very much.

    21. JC

      Yeah. If you, if you kept-

    22. SP

      Thank you very much

    23. JC

      ... interrupting him, Sacks-

    24. SP

      Right as I say thank you, JCal starts talking over me

    25. JC

      ... and just let him go.

    26. SP

      Here he is. He's going again. He's going again.

    27. JC

      There it is, Dr. Doom.

    28. SP

      There it is.

    29. JC

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

    30. SP

      There is no after Oholo.

  2. 2:25 – 15:45

    Anthropic's generational run

    1. JC

      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.

    2. DS

      Oh, it was a Sacks-pocalypse too.

    3. JC

      Yeah, there was a little bit of that [laughs] back and forth as well.

    4. DS

      No, I mean, a-as a SaaS investor, it was a SaaSpocalypse-

    5. JC

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

    6. DS

      My exit comps were affected, that's all.

    7. JC

      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?

    8. DS

      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-

    9. JC

      Yeah

    10. DS

      ... 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.

    11. JC

      Yeah. [laughs]

    12. DS

      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.

    13. JC

      [laughs]

    14. DS

      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-

    15. JC

      Yeah

    16. DS

      ... again-

    17. JC

      In fairness, like-

    18. DS

      ... I'm staying out of that one

    19. JC

      ... 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.

    20. DF

      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.

    21. JC

      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-

    22. DF

      Look, I mean, like-

    23. JC

      ... with the Department of War

    24. DF

      ... 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-

    25. JC

      Yep

    26. DF

      ... 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.

    27. JC

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

    28. CP

      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.

    29. JC

      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-

    30. CP

      By the way, sorry, can we say something to that, Jason? 'Cause like-

  3. 15:45 – 36:56

    OpenAI: getting focused or panic mode?

    1. JC

      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.

    2. CP

      But by how much has the market grown?

    3. JC

      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.

    4. CP

      The billion is not going in?

    5. JC

      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.

    6. CP

      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.

    7. JC

      Yeah.

    8. CP

      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.

    9. JC

      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?

    10. DF

      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.

    11. JC

      Probably less on average 'cause it's global number, but yeah.

    12. DF

      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.

    13. JC

      Mm-hmm.

    14. DF

      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-

    15. CP

      No, more. More. More.

    16. DF

      Or a hundred bucks. Yeah.

    17. CP

      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.

    18. DF

      So I think that's gonna be the case with these consumer apps, JK.

    19. CP

      I agree.

    20. DF

      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.

    21. JC

      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?

    22. DS

      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

    23. JC

      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.

    24. CP

      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-

    25. JC

      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.

    26. CP

      Yes.

    27. JC

      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.

    28. CP

      Right.

    29. JC

      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.

    30. CP

      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.

  4. 36:56 – 43:58

    AI valuation impacts, moats, and disruption

    1. CP

      starts to flow. So-

    2. JC

      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?

    3. DS

      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.

    4. JC

      [laughs] Well, I was thinking more like obviously Elon and Tesla is gonna just-

    5. DS

      Yeah

    6. JC

      ... relentlessly innovate.

    7. CP

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

    8. DS

      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.

    9. JC

      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.

    10. DS

      Well, look, on this show-

    11. JC

      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-

    12. CP

      My, my assumption-

    13. JC

      ... and constantly innovating

    14. CP

      ... if I had to bet, I'm gonna bet that brands go to zero.

    15. JC

      Really?

    16. CP

      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.

    17. JC

      Example?

    18. CP

      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.

    19. JC

      Hmm.

    20. CP

      All of these things are being eroded away.

    21. JC

      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.

    22. CP

      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.

    23. JC

      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.

    24. CP

      Everywhere.

    25. JC

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

    26. DS

      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-

    27. JC

      I took the opposite. Yeah.

    28. DS

      Okay, fine. But-

    29. JC

      Yeah

    30. DS

      ... 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.

  5. 43:58 – 50:35

    Liquidity speaker announcements, the 100x AI moment

    1. JC

      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.

    2. CP

      [laughs]

    3. JC

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

    4. CP

      The, the partnership.

    5. JC

      The partnership, if we can call it that.

    6. CP

      Partnership. [laughs]

    7. JC

      The chaotic partnership.

    8. CP

      No mids.

    9. JC

      There... It literally is chaos. So-

    10. DS

      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.

    11. JC

      You can come for 48 hours, make an appearance.

    12. DS

      I don't know.

    13. JC

      Just there for two days.

    14. CP

      By the way, there are some people, Sacks, that fly in.

    15. DS

      You know I have zero days in state at this point in time.

    16. JC

      I love it. I love it. You can do 48 hours. It's okay.

    17. DS

      Mm.

    18. JC

      Well, Gavin Newsom might meet you at the airport.

    19. CP

      Fly in, fly out.

    20. JC

      You can get picked up at the airport.

    21. CP

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

    22. JC

      Ugh

    23. CP

      ... and you don't have an overnight.

    24. JC

      No overnight.

    25. CP

      No overnight.

    26. DS

      Oh, is that how it's counted?

    27. CP

      Yeah, that's how it go- It's counted as an overnight in California. You should-

    28. JC

      Head on pillow, yeah.

    29. CP

      Yeah.

    30. JC

      You can come in on Monday, then fly out to-

  6. 50:35 – 1:12:46

    Two landmark social media verdicts against Meta

    1. JC

      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?

    2. DF

      You and I did.

    3. JC

      Yeah.

    4. DF

      You and I did, yeah.

    5. JC

      Incredible book.

    6. DF

      Long time ago. Yeah.

    7. JC

      Uh, these things are obviously addictive.

    8. DF

      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-

    9. JC

      What do you think?

    10. DF

      '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.

    11. CP

      What about things like tobacco or processed food or-

    12. JC

      Yeah, this is the key. It cannot be food

    13. DF

      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.

    14. CP

      Right, so w- if I had to summarize-

    15. DF

      Yeah

    16. CP

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

    17. DF

      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.

    18. JC

      What I'll counter... I, I, I agree-

    19. DF

      Yeah

    20. JC

      ... 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.

    21. DF

      The wi- the whiskey company. The... What about, what about a, a whiskey company selling whiskey to an alcoholic?

    22. JC

      Okay. So I, I, I don't have a-

    23. DF

      What about a potato chip company selling potato chips to an obese person?

    24. JC

      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.

    25. DF

      Abso- that's, that's, that's absolutely true. The, the kids being assaulted, absolutely true.

    26. JC

      So yeah, we agree on that one.

    27. DF

      The, the not, not releasing information about the level of addiction if they had it-

    28. JC

      Yes

    29. DF

      ... 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?

    30. JC

      Well, but if it's dangerous-

  7. 1:12:46 – 1:20:07

    Sacks and Friedberg join PCAST!

    1. CP

      the parents?

    2. JC

      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?

    3. DS

      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.

    4. JC

      Got it.

    5. DS

      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-

    6. JC

      Biotech.

    7. DS

      Biotech. Thank you, Friedberg. And we have some incredible people who are now on PCAST to kinda run with this.

    8. JC

      Yeah, I'm looking at it. Marc Andreessen, Sergey, Michael Dell, Larry Ellison, David Friedberg, Jensen-

    9. DF

      Ooh

    10. JC

      ... 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.

    11. DS

      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-

    12. JC

      Hmm

    13. DS

      ... 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?

    14. JC

      Hmm.

    15. DS

      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?

    16. JC

      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-

    17. DS

      [laughs]

    18. JC

      ... like, well, science is usually when you take your, your bio break or a nap.

    19. DS

      Well, it's, it's, it's science and technology, so we're-

    20. JC

      Got it. So you'll be able to at least have-

    21. DS

      So I'm gonna focus on the tech stuff.

    22. JC

      Got it. Got it.

    23. DS

      And then we got Friedberg to focus on the science stuff.

    24. JC

      Got it.

    25. DF

      Yeah. Uh-huh.

    26. JC

      So Sci- Friedberg, this is incredible. You've joined President Trump's administration now.

    27. DF

      I will say I'm honored to be invited and appointed by the president.

    28. JC

      Hmm.

    29. DF

      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.

    30. JC

      Hmm.

Episode duration: 1:20:10

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