Why Bernie's AI moratorium would hand China the win

Jason Calacanis 0:00 All right, everybody. Welcome back to your favorite podcast, the number one podcast, in fact, in the entire universe, the All-In Podcast with your besties. We're all here. It's the original quartet. Everybody loves when the core four are here, and we have a docket for you today.

Jason Calacanis 0:19 Guys, we gotta start out with Bernie Sanders. I know this is becoming a bit repetitive, but AI is the topic.

David Sacks 0:25 (laughs)

Jason Calacanis 0:26 We reached a new level of retardation this week that we cannot avoid. Bernie Sanders has a major decel pitch, a moratorium on new AI data centers. Here's his argument. Number one, the billionaires are pushing AI because they want more money and power. Number two-

David Sacks 0:44 (laughs)

Jason Calacanis 0:45 ... it's gonna be massive unemployment, and he cites Gates, Staria, Elon saying that AI- AI would replace most jobs. Number three, he, uh, has an interesting point actually. AI is harmful to kids because it decreases social interaction. Actually, we kind of agree with that one, I think, across the board. But here's his pitch, Sax. His pitch is-

David Sacks 1:05 Speak for yourself.

Jason Calacanis 1:07 (laughs) You want your kids using these chat bots? I don't think you do.

David Sacks 1:09 No, I've- I've talked to my kids about it and-

Jason Calacanis 1:11 Oh, okay. Well, we'll get into it, huh?

David Sacks 1:12 I mean, we can get into it, but I've talked to them about it.

Jason Calacanis 1:14 We'll get into it, huh?

David Sacks 1:14 Look, if you actually look at the data, if you look at what kids are doing, it's so much more interactive and engaging for them to talk to their friends on Snap or to watch videos on TikTok. Those things are super engaging-

Jason Calacanis 1:28 They're playing Roblox together.

David Sacks 1:28 ... whereas doing research on an AI chat bot is just, it's way less engaging. And you see this in the data. So I'm not saying there's not an issue there. You wanna pay attention to the way that these technologies are shaping the minds of young kids. But I think p- people get a little bit confused. What they're really talking about is social media, and then they attribute all the ills of social media over to these new AI chat apps, and they are a little different. You know, when I talk to-

Jason Calacanis 1:53 Yeah, I would-

David Sacks 1:53 When I ask my kids, like, "How much do you use these things? Are they addictive?" They said, "No, they're more just really useful." It's like Google. It's like-

Jason Calacanis 2:02 Yeah. There's two-

David Sacks 2:02 ... I couldn't-

Jason Calacanis 2:03 There's two-

David Sacks 2:03 I couldn't do school without it.

Jason Calacanis 2:05 Yeah, there's two pieces here. One, using AI to be smarter and to learn stuff and ask questions. Absolutely fantastic, phenomenal. I think we'll all agree on that. There is, and I don't know if this is actually what he was referencing, but there's Character.AI in a- in a long tail of spicy chats where people... We talked about getting one-shotted and these parasocial relationships. That's, I think, what he's referring to, but maybe I'm reading it wrong.

David Sacks 2:30 Yeah.

Jason Calacanis 2:30 But let's get into it here. His pitch is that we need to slow down so that, quote, "democracy can catch up" and that Congress should put a moratorium on new data centers. That's his solution. He got roasted, obviously, on social media for this. It's the most absurd, I think, solution to, you know, what are valid concerns. Friend of the pod, Ro Khanna, who represents Silicon Valley, he, I guess, supported it a bit, and then he replied to me and says his concerns are not as acute and that he just wants to make sure we use renewable energy, which I guess is, you know, a fine position to have. Polymarket put up a little, uh, market here. "AI data center moratorium passed before 2027." Yeah, we'll see if that comes true or not. But, uh, hey, Sax, you are our SGE. Sax, our SGE, this is your time to shine. (laughs) You have framed the AI debate as we can't lose to China. Bernie framed it as not letting the billionaire class get more power and money by eliminating American jobs. And last week on this very program, Tucker framed it as, what are Americans gonna get out of this, right? That- that was the framing, you know, as of December of 2025. So here's your chance, Sax. Why should Americans who have some concerns about losing their jobs care about beating China? Why should they care about that, Sax?

David Sacks 3:56 Why should they care about beating China? Because AI is a profound technology that's gonna have huge economic and national security implications. And the thing that Bernie gets wrong is that he can't stop the progress. I mean, he can't stop China from making progress. We can stop progress in the US, but it's not gonna stop China from advancing these technologies. A lot of this is just math, and just because we stop doesn't mean China's gonna stop. So this would be the biggest own goal ever if we took our leadership in the AI race and just handed it to China. But look, I appreciate Bernie's honesty in a way, because he is actually telling the truth about what he wants. And I remember just a week ago when President Trump signed an executive order to advance a national AI framework, a lot of critics and a lot of Democrats were saying this was a violation of states' rights and we need to support the states in regulating AI. And here Bernie is acknowledging that this is not about states' rights, because he's saying that there needs to be a moratorium on new data centers, even if the states want them. So he doesn't support states' rights either. He just wants all the progress to stop. And I think this is really the truth of the matter, is that all this talk about states' rights or affordability, it's all a red herring, and what's really going on is there's a large and growing contingent of people who just want all the progress to stop. But again, we can't stop China from making progress, so all they would be doing is ceding leadership of this AI race to China. What people like Bernie really want is they want the US to become like Europe. You know, Europe has half the share of global GDP that they had 30 years ago, and that's because of their hostility towards innovation and technological progress, and that's kind of where Bernie wants us to be, is he wants us to go down the- the path of Europe. And the reason, he says, is because God forbid someone gets rich. Well, look, capitalism sometimes results in the unequal distribution of wealth, but socialism always results in the equal distribution of poverty and misery. And if the US stops developing AI, if we hand this leadership to other countries, it'll make the United States poorer.It'll make the American people poorer, and it will cede our leadership globally. We will not be the preeminent power in the world anymore.

Jason Calacanis 6:14 Okay.

David Sacks 6:14 So I'll stop there.

Jason Calacanis 6:15 No, no, it's great. Thank you, SGE. David Sacks (laughs) over here. There seems to be a couple of conversations, unfortunately we weren't here last week, but we had a really nice, uh, visit from our pal, Tucker, and we talked about this. He seemed to think there was a bit of a communication problem with selling to the public the value of these technologies. Do you agree with that? And what do you think is going on here in terms of the cross-conversations? One group wants to de-sell, has some concerns, environmental, you know, job displacement, et cetera. And then there, is there an issue where the China, beating China doesn't resonate with the American populous? You've been harping on about the rise of socialism for four-plus years on this very podcast. So from where you sit, what's the actual disconnect in these multiple conversations that are going on concurrently, and- and seemingly coming to a head here at the end of 2025?

David Friedberg 7:08 Well, if you ask any of the politicians that are making these proclamations about the, quote, "tech barons" and try and actually talk to them about what is the AI technology delivering, what is it not delivering, you kinda typically hit a wall pretty quickly. It's very hard for folks to articulate what is actually happening. There's a tremendous amount of capital being put at risk against infrastructure to build out the capacity for many companies, the entire economy, the entire industry, to deliver AI tools. There isn't an aggregation at this stage of value creation, with the exception of NVIDIA, which has really got this $3 trillion market cap creation that's happened in the last couple years. Peter Thiel said this best. He's like, "Look at all the money that's going into AI. There's really only one company that's making any money, and that's NVIDIA." Like, at this point, the jury's still out. We don't even know what AI is. It's sort of like when the internet was happening, you know, everyone thought these fiber optic switch companies were gonna make all the money. Turns out that was wrong. It was the end applications that made all the money, and they competed in many different markets from Google to Amazon to Uber. You can go down the list of all the beneficiaries of the core infrastructure technology of the internet that was built out. So what is really going on? Well, AI is the new lightning rod for fear and for divisiveness that ultimately breeds compliance and control, which is where these politicians are trying to drive the- the populous and the voting conditions in the United States, and that's what's going on right now. There's a lot of fear about, "Oh, putting this data center in my town is gonna do X or Y or Z," with no real conversation about the truth of that matter. There's a lot of fear about wealth creation being aggregated in the hand of a few, when, as we saw with the internet, it benefited the many. And that fearmongering is a very similar tactic that we've seen in the prior generations, where policies were misstated, fear was used, and then voting control allowed folks to come to power that were looking for power. So I think it's just the lightning rod at the moment.

Jason Calacanis 9:07 Okay, Chamath, what's your take on this big picture of what's going on here?

Chamath Palihapitiya 9:11 I think it's important to understand that politicians have an incredible sense of self-preservation. So the question is, why would Bernie Sanders think he would not look totally foolish in putting that video out? And the reason it went viral is not because it sounded so crazy. It was that, to some faction and percentage of people, it sounded rational and reasonable, and the problem that highlights is that we have a huge perception issue in AI. We have a handful of companies. All the PR that you see from those handful of companies is a bunch of circular deal-making, a bunch of capital that flows from one to the other. It causes these stocks to go up, of which a small percentage of people benefit, and at the tail end of it, it's accompanied by a completely different set of articles that everybody also reads about the Sword of Damocles that's about to fall on their head, whether it's electricity prices, or whether it's their jobs, or whether it's the jobs of their children, or the quality of their education. So we have a big perception problem. So the question at hand is, how do we fix it? How do we get back to the place where a video talking about stopping all progress would seem as laughable as it should be? And I think you can go back to the Gilded Age, and you can ask the question, how did the industrialist leaders of that era respond through that 1880 to 1920 age of industrialization, when you had all of this technological upheaval accompanied by a handful of people with incredible success, right, Andrew Carnegie, John D. Rockefeller, Henry Ford? What did they do? And I think the lesson we can borrow from them is we now need to be on the forward foot as an industry. Enough of the stupid haircuts, dumb watches, ugly clothes, ostentatious displays of wealth. We've all done it. I've been a- guilty of it. It has to stop. Absolutely stop. And instead, we need to start to use a percentage of the balance sheets of these companies in order to benefit as many Americans as possible. That is the absolute minimum. Andrew Carnegie built 2,500 libraries. The idea was, as he built the railroads, you're going to scale GDP, you're going to scale education and knowledge. Those libraries are artifacts that allowed people to feel a dividend from that industrial revolution. John D. Rockefeller took all of his wealth and invested it in institutions and universities. Henry Ford specifically focused on wages. We need to selforganize better, and we need to be more on the forward foot. We need to start doing things that are practically measurable by tens of millions of American citizens, and it starts to beat back the perception problem that we have because, as Sacks pointed out last week, the data does not support...... the misperception. But the problem is, and Sacks and I were talking about this last week, the misperception is gaining steam. And so, I think we need to use these tools that we have to provide some more practical benefits that every man, woman, and child can feel. Otherwise, this thing is gonna build and you'll see crazier and crazier versions of this Bernie Sanders video.

Jason Calacanis 12:31 All right. I think it's well said. And, you know, um, as I said last week, I think beating China does not matter to the average American. It's below their line, Chamath, uh, I think, in many ways. What they care about is jobs, they care about their kids getting jobs. And yeah, they care about costs, they care about inflation, they care about energy costs going up. Our industry has done a terrible job of explaining how this benefits the average American, and they're seeing all these headlines about, as you mentioned, all the cross-deal booking and all these stocks going up. Half the country doesn't own stock, so they're not participating in it. And they're not blind to seeing self-driving cars or seeing their kids having a hard time getting a job, and they're hearing everybody talk about job displacement, and that's a valid concern. People are scared and our industry is scaring them, I think, by not meeting them where they are. And then beating China, respectfully, is important, Sacks, super important. I can intellectually agree with you on that. But if you lose your job-

Chamath Palihapitiya 13:33 I think it's ex- it's existential.

Jason Calacanis 13:33 ... and your kids can't get a job, that's, that's, that's existential. Yes. It's not, "My child needs a job next year, they're graduating from school with $100,000 in debt and my energy bill is going up and my grocery bills are going up and they haven't come down." That's what Americans are experiencing. And yeah, maybe giving, uh... y- y- I think you also made an interesting point there too about the libraries.

Chamath Palihapitiya 13:55 The war with China is existential because if we can keep it on the battlefield of AI and intellectual and economic prowess, we have a very good chance of winning. If it devolves and all of a sudden it becomes a different kind of battle, that's bad for everybody, especially our children and our children's children. So we need to win the current game on the field. But in order to do that, we need to change these misperceptions. We need to start showing tactical artifacts that show that this is a dividend that can benefit everybody, and we need to start now. I'm just putting it out there. We have so much cash on the balance sheets of these companies. Wall Street values it at zero. If you look at the enterprise value of any of these companies and you do the sum of the parts, nobody cares about that cash. So we need to start using that cash more effectively.

Jason Calacanis 14:43 What's the equivalent of the library metaphor here for you, Chamath? Do you have any ideas?

Chamath Palihapitiya 14:47 I'm not gonna front run what's being worked on except to say that the leaders of these companies have gotten the message. They are working on a whole host of solutions. And I, again, we're fighting misperception, which is a complicated battle, but it's winnable and I think you're gonna start to see stuff in the new year.

Jason Calacanis 15:07 Yeah. I would say education is at the top of that list. Sacks, your thoughts here as we wrap on this first topic.

David Sacks 15:13 I'm not sure whether to address the particular hoaxes or the fact that there are, there's a larger effort here to try and discredit AI and get AI development to stop entirely. Let's talk about some of these particular hoaxes. So on the job loss claim, I feel like I do this every week now, but there's a new study from Vanguard where they analyze job growth and wage growth in occupations that are highly exposed to AI automation versus all occupations, and they find that both job growth and wage growth is higher, not lower in the occupations that are exposed to AI. So if you look at job growth in occupations exposed to AI, it's 1.7% compared to 0.8% for other. For wage growth, it's 3.8% versus 0.7% for other. So what you see here is something, maybe it's counterintuitive, but it makes sense to me, which is as you make workers more productive, the value of their labor increases, not decreases, and they end up getting paid more and you wanna hire more of them. So this is a huge narrative violation. Again, this is coming from Vanguard, and it's showing that AI productivity is good for workers. This follows on the heels of that study from Yale Budget Lab, which I talked about in a previous show, that it said there's no discernible disruption to the job market based on 33 months of data after the launch of ChatGPT. Now, I understand that you can make predictions as to the future that this state is gonna change, that there will be AI job loss, but what I'm saying is that if you look at the data so far, there is no AI job loss. Quite the opposite, it's job growth and job gains. By the way, we have a 2% tailwind to GDP growth right now that's coming from this AI boom, this CapX boom that's happening. And so this is, I think, a very good thing for the US economy.

David Sacks 17:15 Now, why do people wanna sabotage it? There's a really interesting article on Semaphore recently that described how AI critics were funding journalism fellowships at major publications like NBC News, Bloomberg, Time, The Verge, LA Times which, by the way, I mean, I track these things, they're relentlessly negative about AI. These fellowships were funded by Future of Life Institute, which is a doomer group that thinks that AI is gonna become sentient and replace humans, and they were funded by a donation by Vitalik Buterin from Ethereum. It's an interesting story actually. He donated his Dogecoins to Future of Life, they ended up being worth $600 million.

Jason Calacanis 18:03 (laughs)

Chamath Palihapitiya 18:03 Dogecoins?

David Sacks 18:04 Doge and then remember how there was, like, those other dog coins?

Chamath Palihapitiya 18:09 Oh, Shiba Inu.

Jason Calacanis 18:09 Oh, Shiba Inu.

Chamath Palihapitiya 18:10 Shiba Inu. Yeah, yeah.

Jason Calacanis 18:10 Oh, Shiba Inu. Oh, he had a collection of dog coins. Got it. (laughs)

David Sacks 18:11 He had a collection of dog coins. Apparently, people, like, airdropped them to him as, like, a promotional thing.

Jason Calacanis 18:17 ... got it.

David Sacks 18:17 I don't think he wanted them, so he's like, "How do I get rid of them?" So he donates them to Future of Life, and they end up being worth $600 million. So by this-

Jason Calacanis 18:24 Oh, my God.

David Sacks 18:25 ... almost, like, this accident, this Doomer think tank ends up with a-

Jason Calacanis 18:29 (laughs)

David Sacks 18:29 ... $600 million war chest. And they've been funding these journalism fellowships. They've been funding grants for academics to study AI. Obviously, that's gonna end up being very negative. And they are funding a lot of these NIMBY organizations that are opposing data centers, because their goal is just to get it to stop. That's their goal. They just want the development to stop. And you can't, I don't think, underestimate how much of an impact this has had on the public discourse. But if you look at their actual claims, like for example, the water use claims, it's a total hoax. I mean, these-

Jason Calacanis 19:02 Total hoax.

David Sacks 19:02 ... AI data centers do not use a lot of-

Jason Calacanis 19:05 Yeah, that was one-

David Sacks 19:05 ... a lot of water.

Jason Calacanis 19:05 ... of the things I wanted to get into, because yeah, compared to a golf course, they're not using that much or-

David Sacks 19:10 I think, Jason-

Jason Calacanis 19:11 ... or maybe walnuts and, you know, uh-

David Sacks 19:13 No, because-

Jason Calacanis 19:13 ... almonds in Central California. So I think it is worth maybe just unpacking-

David Sacks 19:17 Jason, they're throwing a lot of spaghetti at the wall. Look, you have to remember, who was- who was Ida Tarbell? 'Cause it's quite interesting in the context of this. Ida Tarbell was this American writer, again, in the Gilded Age. She was part of the Muckrakers, which was a group of journalists that were doing investigative research around the abuses of the Industrial Revolution, labor abuses and the like, and she took on Standard Oil. Exactly. If you look at that example, I'm sure that the people in this current generation who have a Tarbell Fellowship, what they're living out is this desire to tell a story about exploitation and wrong and misdoing. The problem is that these things don't factually hold together, but unfortunately, it adds to the perception problem that we have, and that has been growing. As Sacks said, like so many of these things have been debunked, but it's playing whack-a-mole, Jason, because they'll throw the water thing out. It'll get debunked. Next week, we'll probably something about liquid cooling and all the PFAS and forever chemicals. We'll have to debunk that. Then we'll go to, like, air cooling and how that's a problem. Then we'll go to something else. Eventually, it'll be the upper land grouse-

Jason Calacanis 20:25 (laughs)

David Sacks 20:26 ... but they're not gonna stop.

Jason Calacanis 20:28 Sacks, how do you- do you have a plan to reframe this to the American public? You're explaining how these bad things are happening and all the evil forces at work behind the scene and debunking all that, but-

David Sacks 20:36 Well, look, it's not evil forces, but I don't think people understand the extent to which the discourse has been impacted by a few anti-AI tech billionaires.

Jason Calacanis 20:46 But you've brought it up-

David Sacks 20:46 I know, hold on. Well-

Jason Calacanis 20:47 You've brought it up every week, and on your text posting.

David Sacks 20:48 Hold on. I brought it up... Hold on. I brought it up on this show, and I tweeted about it way back in November.

Jason Calacanis 20:53 Yeah.

David Sacks 20:53 And I linked to a writer named Nerit Weisblatt, who has analyzed this whole Doomer industrial complex, and she has shown that there are hundreds of these front organizations, and they're all really just funded by a few-

Jason Calacanis 21:05 Yeah.

David Sacks 21:05 ... big tech billionaires, as Dustin Moskovitz, Jaan Tallinn, and Vitalik Buterin. Well, when I first described this, people thought that this sounds kind of crazy, like conspiracy theory, and then sure enough, Semafor comes out with the article explaining that all these journalism jobs are being funded by Future of Life, which was the big donation by Vitalik Buterin. So my point is just, you can't underestimate the extent to which a few billionaires who've donated over a billion dollars to this cause have distorted the public debate. And you really see this actually in the relative popularity of AI in the United States versus China. So there's recently a poll on, they call it AI Optimism, where they ask people, "Do you believe that the benefits of AI will outweigh the harms?" 83% of people in China believe the benefits will o- outweigh the harms. They're AI optimistic. In the US, it's only 39%. So again, the discourse has really been affected by a few of these-

Jason Calacanis 22:03 Okay. So-

David Sacks 22:03 ... institutions.

Jason Calacanis 22:04 ... let's say- let's say that's all true.

David Sacks 22:06 Yeah.

Jason Calacanis 22:07 My question to you is, what's your plan to turn this around and explain to the American people why they should be optimistic about this? What's your plan, David Sacks?

David Sacks 22:16 Well, look, I mean, you're right that we have to flip the narrative around, and I- I do think that the tech companies have done a really bad job explaining the benefits. We talked about this with Tucker. I think he brought up some really good points. And you're right, like the- the AI companies lean way too much into the whole job loss narrative as- as a way to explain their value prop, and I think it's just either what Chamath has said, which is this is about their next fundraising round, or it's a form of laziness, because it's easier to describe job loss or job replacement than it is productivity, right? Like, multifactor productivity is a difficult concept to explain. So I do think that they've played into this narrative, but I think that what we have to do here is just debunk these narratives. Again, no evidence of job loss yet, no evidence of the- the water problems. I think the electricity issues with data centers are addressable. You have to let the AI companies build their own power. They don't have to connect to the grid. In fact, that's what President Trump has called for for the last six months, is to let the AI companies build their own power, so they're not drawing on the grid. So that problem is easily addressed as well, talking about the affordability problem. But you're right, we have to get the message out how this technology will benefit Americans, and the bottom line is... Look, I've always said I'm a techno realist, not a techno accelerationist, because at the end of the day, we don't have a choice. I mean-

Jason Calacanis 23:31 Yeah.

David Sacks 23:32 ... China's gonna develop the technology if we don't.

Jason Calacanis 23:34 Okay.

David Sacks 23:34 So we don't really have a choice.

Jason Calacanis 23:36 Yeah. I, you know, I- as I said last week, I think the three most pressing issues, Chamath, education, housing, and healthcare. And our industry is in a unique position to use AI to impact all three of those. So why don't we, as an industry, collectively explain all the great things going on there? I gave a shout-out to Daniel Ek, Prenovo- Pronovo rather, all these great companies analyzing our blood. There's so much going on in healthcare that could massively lower the cost, make people's lives better. Obviously, in construction, you could have incredible advances, and certainly in education, but we haven't explained those three things.

David Sacks 24:10 Well-

Jason Calacanis 24:10 What's your point? Is there anything you can think of to add to that list?

David Sacks 24:13 We have to understand, the president and Sacks, they're responsible for shepherding the GDP of America.

Chamath Palihapitiya 24:20 ... and as Sachs said, half of American GDP over the next few years is forecasted to come from all of the capital that goes in to build out our capabilities in AI. We need this to happen. There's the existential reason why, but there's also a basic economic reason why. So Jason, the social license comes when, off to the side, the private companies start to take this perception problem more seriously. So to your point, are there things that they can do around housing? Yes. And again, not to front run, they're actively working on something that I think could be transformational. Separately, could they do something on healthcare? TBD, but we should look at it. Can you do something in education? TBD, but we should look at it. But the point is, if you can have the same companies that are on the forward foot building this revolution for us recognize that we need to bring some more folks along, take some of their balance sheet capital and invest it to create the social license to operate, we will flip this perception on its head.

Jason Calacanis 25:23 Yeah. I think it's well said and, you know, there was a really interesting... I don't know, you guys must remember this, the AT&T commercials, "You will?" Do you remember those?

Chamath Palihapitiya 25:31 By the way, sorry, that's another great example, Jason. AT&T, at the turn of the century, what did they do? They took their capital and they created Bell Labs.

Jason Calacanis 25:38 Yes.

Chamath Palihapitiya 25:38 What did Bell Labs do? Bell Labs drove all of modern information theory, it was the precursor to the internet. They did so much fundamental research. I wanna be clear, I don't think that this is a five-alarm fire. This is very fixable right now and the litmus test, quite honestly, is in three, four, five, six months, Jason, when you see the trickle of progress if we can get organized, does your perception change and does the language that you use and the tone that you've used over those last six months, has it changed?

Jason Calacanis 26:06 Oh, you're blaming me? (laughs)

Chamath Palihapitiya 26:07 No, no, no. I'm actually thinking that you've actually been quite a good early warning system for what a certain percentage of Americans think. And so, in that-

Jason Calacanis 26:15 Yes, I predicted it perfectly, yes, yeah. (laughs)

Chamath Palihapitiya 26:17 ... it's been extremely useful, but now we've got to act on it-

Jason Calacanis 26:20 (laughs)

Chamath Palihapitiya 26:20 ... and you have to change your mind.

Jason Calacanis 26:22 Oh, no, no. My, my mind has been very crystal clear. I won't let you, you know, tell me what my opinion is.

Chamath Palihapitiya 26:27 No, no, no. What I'm saying is, my opinion has been job displacement's coming- Jason, let me be clear, we have to earn you changing your mind publicly on this show. If we do that, we're back in a good place.

Jason Calacanis 26:36 Uh, yeah, no, I think that you're saying that in a very condescending way.

Chamath Palihapitiya 26:39 No, I'm not.

Jason Calacanis 26:39 I have brought up, I have brought up... Okay, you unintentionally-

Chamath Palihapitiya 26:42 No, no, here, let me try and say it again.

Jason Calacanis 26:43 I have brought up-

Chamath Palihapitiya 26:43 Sorry, let me try this again. W- we have-

Jason Calacanis 26:45 You're saying it as if I'm misguided.

Chamath Palihapitiya 26:46 No, no, no. You have a perception, which is, what do you think-

Jason Calacanis 26:50 How our job, my perception is? Different.

Chamath Palihapitiya 26:52 ... that on the balance, it's a coin flip about whether AI is going to be all good for all people or very good for a small subset of people. That's what, how I would roughly summarize-

Jason Calacanis 27:02 No, no, okay. I'd say that's, I would say that's accurate.

Chamath Palihapitiya 27:04 Okay.

Jason Calacanis 27:04 Job displacement is-

Chamath Palihapitiya 27:05 Okay. So let me finish, hold on.

Jason Calacanis 27:05 ... I have concerns about job displacement and the, and the ...

Chamath Palihapitiya 27:06 Okay. I understand. So let me finish. So if we can execute this plan, again, meaning marry all the stuff we're doing on the forward foot within, in investing-

Jason Calacanis 27:15 Yeah.

Chamath Palihapitiya 27:15 ... with some of the stuff that we also need to do to bring a broader swath of the American population along-

Jason Calacanis 27:22 Yeah.

Chamath Palihapitiya 27:23 ... you will have a different perception if we are successful. And what I'm saying is, you've had this one perception and our goal would be to shift you and people like you.

Jason Calacanis 27:32 Okay. I, I, I take it back-

Chamath Palihapitiya 27:34 Is that fair?

Jason Calacanis 27:34 I think it's completely fair, yeah. I've been trying to bring up that as an industry, we have not recognized people's valid concerns about job displacement. That's all I've brought up on this program. I'm not saying I think it's gonna be cataclysmic or we can't handle it, but I think if we constantly talk about, hey, winning the AI race in China, that's abstract for people, and if we deny the fact that robo-taxis and human robotics are coming, and intelligent people like Elon or other leaders are saying, "Yeah, we're, we're planning on replacing those jobs," we're doing a terrible job communicating this. And I do think part of this is communication and part of it is, hey, these are valid concerns, so I think great resolution. Yeah, sure. I'll be the litmus test.

David Sacks 28:17 Do you guys know what, um, the Motte-and-Bailey fallacy is?

Jason Calacanis 28:20 No, explain it to me. I mean, I think I've heard of it, but...

David Sacks 28:22 The Motte-and-Bailey Castle is an early medieval fortification where there's, like, a very protected area, the keep or the motte, and then the bailey is kind of this looser area that's hard to defend, right? So what happens is, if they need to retreat-

Jason Calacanis 28:38 Yes.

David Sacks 28:38 ... they'll go into the motte, okay.

Jason Calacanis 28:40 Yeah, Lord of the Rings, right.

David Sacks 28:41 Right. So this has become known as a debating trick or fallacy where people will make a really outrageous claim, which is they'll, they'll basically run to the bailey, and then when you prove that it's false, they'll run back into the motte and say something very unobjectionable. So in the context of, like, the AI job loss fallacy, the bailey is people will say, "This is causing massive job loss, massive disruption. It's already here, you can see it." And then when I point out, "Well, actually, if you look at the Yale Budget Lab study or you look now at the Vanguard study, there is no job loss," then they'll retreat into the motte and they'll say, "No, no, no, I'm talking about what's gonna happen in the future," which is a position that's fundamentally irrefutable. And then when I point that out, "Well, wait, you just totally changed what you were saying," they're like, "No, no, no. I was only talking about the future." And then as soon as we sort of seem to have agreement, then the people in the motte-

Jason Calacanis 29:38 Got it. All right.

David Sacks 29:38 ... will race out to the bailey and basically saying, "Well, look at what's happening with Uber drivers or what have you." So, there is this Motte-and-Bailey thing happening all the time on this job loss question.

Jason Calacanis 29:47 Okay.

David Sacks 29:47 And I just want people to be straight about it or honest about it, which is, look, if your claim is that this will cause job loss in the future, it's true, I can't refute that because none of us can prove what's gonna happen in the future. But be honest about what's happening today.

Jason Calacanis 30:03 Yeah, of course. Yeah.

David Sacks 30:03 And in the first three years after the launch of AI chatbots, there's been no discernible disruption to the labor market, and the early studies and data are showing wage increases and actually job increases, and there's definitely job increases in blue collars because of the construction boom.

Chamath Palihapitiya 30:20 This has been...

Jason Calacanis 30:21 Our first debate club corner.

David Sacks 30:23 (laughs)

Jason Calacanis 30:23 Every week, we're gonna teach you how to debate better here. No, it's... You know, it... I- I appreciate that. I- I have really tried to say here, like, I'm not a doomerist at all. You know, the statistics I look at-

David Sacks 30:34 (laughs)

Jason Calacanis 30:34 ... you know, I talk to Dara-

David Sacks 30:35 Have you? (laughs)

Jason Calacanis 30:36 I have, actually, sincerely.

David Sacks 30:36 That's... (laughs)

Jason Calacanis 30:37 That's why I don't use... I- I use displacement, you know?

David Sacks 30:39 But have you-

Jason Calacanis 30:39 I really use refined language.

David Sacks 30:41 But have you... Um-

Jason Calacanis 30:41 I do, I do.

David Sacks 30:42 (laughs)

Jason Calacanis 30:42 When I talked to Dara, he told me, in areas where robo-taxis, like Waymo, are occurring, what they did specifically to deal with this issue was they stopped trying to hire drivers in Cal- in Los Angeles and in San Francisco because there are so many Waymos, they don't want them to have a bad experience. So, you know, you- wh- wherever in the castle we're talking about this, I- I- I don't have a- a horse in this race. I'm not part of this cabal of, you know, Dustin Moskovitz's people. I just know from talking to Uber and Waymo and these other companies and, you know, other companies that are building software where they're trying to eliminate jobs. And so I'm just bringing that up as a- a really interesting example. Uber and Waymo, to Elon with Tesla, they are actually making plans right now to deal with this displacement of drivers, and they're coming up with new products and services for those drivers. So one of the things they're doing is data labeling at Uber. They- they bought a data labeling company and they're taking the drivers and saying, "Hey, you want to do some data labeling over here?" And actually creating AI jobs for them. So this is, you know, uh, something that the whole industry is working on.

David Sacks 31:51 Look, there's gonna be a spectrum, right? Some jobs are gonna change. Some jobs will be eliminated. The question is, with respect to job eliminations, will that be more than offset by the net new job creations? If you're looking at things like Uber drivers and we go to full self-driving, then obviously there's going to be some category of job loss there. So I'm not claiming that there's not going to be any elimination of certain types of jobs, but I believe that on the whole, what we're seeing is that when you improve the productivity of workers, their wages go up and there's more demand for their labor, not less. That's what the data is showing so far, and I just don't think you get that from the media right now because they are promoting this doomer narrative, and a lot of that is astroturfed by these enormously deep-pocketed organizations that have been funded by a few effective altruists.

Jason Calacanis 32:38 All right.

Jason Calacanis 32:39 Topic number two. Economic numbers are out. It's a mixed bag. Unemployment rate is up and government payrolls are down, inflation somewhere in between. Let's get into the numbers here. Fun with numbers. Unemployment rate rose to 4.6% from 4.4% in September, and 4% in January of 2025, when President Trump took over. US economy added 64,000 jobs in, uh, new jobs in November. October saw about 104,000 job losses, but 162,000 of those job losses came from the federal government. You remember the Doge buybacks that friend of the pod, Elon Musk, was involved in. Uh, those all took effect at the end of September, so there was a little bit of a balloon payment that occurred. An analyst for Moody's says, quote, "It's a frozen job market. There's not much hiring, there's not much firing happening." That tracks with what I'm seeing on the ground. Meanwhile, inflation came in better than expected at 2.7%, beating the 3.1% expectation, but still far away from the 2% target for the Fed. Trump gave an 18-minute, very loud, emphatic address to the nation last night, and it was not that we're invading Venezuela. (laughs) It was, uh, mostly him talking about his accomplishments in terms of, uh, prices and affordability, and, uh, a little bit of admonishing Biden. Here's a 20-second clip.

Bernie Sanders (clip) 34:09 The last administration and their allies in Congress looted our treasury for trillions of dollars, driving up prices and everything at levels never seen before. I am bringing those high prices down and bringing them down very fast.

Jason Calacanis 34:24 Sax, your thoughts on the economic data here in the fourth quarter?

David Sacks 34:27 Well, you're- you're painting it as- you're painting the economic data as mixed. I don't know how you have a economic report that's better than what we just had today. So first of all, we saw that CPI came in at 2.7%, like you said, but the expectations were 3.1%. That's why the market is rallying today in a big way. Core inflation is down to 2.6%. These are significant beats, and this puts core CPI inflation in the US at its lowest level since March of 2021. So since the whole COVID thing. And if you listen to Kevin Hassett, he said that over the past three months, core inflation has been running at 1.6%. So the trend line is going down even further. So it looks to me like inflation is rolling over, and that's just about a solved problem, which is really good news for what it implies for interest rates, because it implies that interest rates are coming down. And that's gonna bring down things like mortgage costs and the costs of financing a car payment and things like that. Now, you talk about unemployment. I think the unemployment news is very, very good. So if you look at the data from September to November, the overall employment is down 41,000. But why was that? Private employment was up 121,000, but government employment in the last two months has declined by 162,000. So this is what the media was focused on, is they're trying to claim that unemployment was up, but actually, it's just that the government jobs decreased. Why did the government jobs decrease? Well, you remember that when Doge went in and made their cuts at the beginning of the year, they offered people a buyout as of October 1st. Now, some people took the buyout right away, but a lot more waited until the last possible day, which was October 1st. And that's why you saw this big spike in October unemployment. But those are government jobs that are being cut. And moreover, there are people who voluntarily wanted to take the buyout and they took that deal. So again, I think the employment picture is looking actually quite good.And if you believe what we believe, you don't want an excessive number of government jobs. And President Trump has presided over, I think, the first decrease in the federal workforce in decades. We've seen a 10.7% decrease in federal workers in 2025. Basically, the number's gone from 2.4 million to 2.15 million. I know that'll make Freyberg very happy. But look, what we had during the Biden years is we had 9% inflation. We had a very weak economy. We did have a recession. It was that two-quarter shallow recession, and the media even tried to start redefining what a recession was to avoid those headlines. But what the Biden administration did in response to that is they went hog wild with government hiring, and what we're seeing now is inflation is now coming back down, and we're seeing the number of government workers come down to a more reasonable level, and the private economy is making up for it. We still have a relatively historically low unemployment rate. So, those numbers look good. Then you look at the deficit. We've reduced the deficit year over year by 600 billion. That will help bring interest rates down. And then on prices, you got the lowest gas prices in five years, below $3 nationally. And then finally, on wages, real wages are up by over $1,000 on average, and, um, it's $1,300 for factory workers, $1,800 for construction workers. And again, that's a big change from the Biden years, where you saw that in real terms, wages went down by about $3,000 on average per worker. So look, I mean, it seems to me like we're on the cusp of a golden age here. I don't see how the numbers could really be better. And then on top of it-

Jason Calacanis 38:07 Okay.

David Sacks 38:07 ... again, you've got this AI tailwind, which I think is a huge positive, not a negative, which is adding roughly 2% GDP growth every year because of huge CapEx investment, with so far no job loss associated with that. So, I would just say sit back and enjoy this. I think we're headed for a gangbusters 2026. Rates are coming down, inflation's coming down, and you're also getting tax cuts going into effect next year because of the Big Beautiful Bill. No tax on tips, no tax on overtime, no tax on Social Security, plus the standard deductions being beefed up. So, people haven't even felt the benefit of those tax cuts that's coming in in April. I don't see how things could be much better.

Jason Calacanis 38:48 Okay. Freyberg, any thoughts here on the data as it's come in? Or Chamath, I'll, I'll go to either one of you.

Chamath Palihapitiya 38:54 Directionally, I think it's really positive. You wanna see private sector jobs growing, and the shrinkage of government sector jobs has profound impacts, not just on the budget, but it starts to create obvious air pockets where you get a little bit more rational regulation. You can deregulate in the appropriate places. You can shift the burden and the responsibility to private industry. So, it's more than just what's in the numbers that I think is positive. I've told you this story before, Jason. To do some of the things that I've wanted to do... I'll give you an example. When we started a battery business five years ago, when we filed with the DOE, the Department of Energy, these are 700-page reports. You spend millions of dollars and you hire teams of 50 and 100 people, and what are we trying to do? We're trying to build a battery business in the United States so that we can de-lever from the Chinese. To the extent that we could do that a little bit simpler and a little bit easier because there's fewer folks, and so the burden goes to state and local regulators, which we all- already have to deal with. These are just generally good things for productivity. They're generally good things for GDP. It allows us to invest more aggressively in the things that help A- America, so it's trending in the right direction. By the way, Sax didn't mention this explicitly, but I'll say it. The other thing in '26 is you get a bunch of tax cuts that kick in. No tax on tips, no-

David Sacks 40:17 Yeah.

Chamath Palihapitiya 40:17 ... tax on overtime, the deductibility of the cost of interest for things like car loans. These are big stimulative actions for the-

David Sacks 40:28 Accelerated depreciation.

Chamath Palihapitiya 40:29 Accelerated depreciation. You have big stimulative actions for the United States economy.

Jason Calacanis 40:32 Yeah, I think what you guys are missing, respectfully-

David Sacks 40:35 (laughs)

Jason Calacanis 40:35 ... is that, uh, you know, uh, Trump-

Chamath Palihapitiya 40:38 Of course.

Jason Calacanis 40:39 ... promised something completely different. He said, "Starting on day one, we will end inflation and make America affordable again to bring down the prices of all goods." And when he was running for election, he promised the Americans that he would reduce prices. Now, what's happened is prices have not come down. They've gone up 2.5 to 3.1%. But what really matters, and I think you guys are doing a great job, you know, pro-administration, part of the administration, what you're missing is the American people don't believe you, and the American people are experiencing something different. And when you look at the, uh, approval rating, Trump's approval rating is at its historic lows, and specifically on inflation. Pull up the silver bullet and meta-analysis there. This is the disconnect, and this is why it seemed tone-deaf last night when Trump was telling everybody it's great, and when you say it's the golden age, Americans aren't experiencing that. That's just not what they experience. They are experiencing grocery prices that have continued to go up, and they are experiencing unemployment that's gone up 15%. Whether it's the federal employees, whether it's private sector and you debate the numbers or there's a golden age coming because of no tax on tips, these are all talking points. What the American people remember is the Trump administration said prices would go down. Prices have gone up. That jobs and manufacturing, there'd be all these incredible manufacturing things, obviously that's gonna take years. That has not happened yet. So I hope for the best. I hope inflation goes down to 2, and I hope they turn this around, but the American people don't believe the Trump administration, and it's a big difference between promising stuff in 2024 and delivering it. And here we are in the first year, and the delivery that's come in from the Trump administration on inflation and on the economy is not good if you're in the bottom half of society that doesn't own equities. Period, full stop.

David Sacks 42:27 So first of all, prices have come down. You look at gas prices are the lowest in five years, they're below $3 nationally. Now, I don't know how you want a new administration to come in and literally affect every single change on day one. How do you do that? What the pre-

Jason Calacanis 42:41 Oh, no, that's just what he said.

David Sacks 42:42 No, what the president said is they would start working on it.

Jason Calacanis 42:44 That's just what he said. Now, I'm not saying it's possible.

David Sacks 42:44 They would start working on it.

Jason Calacanis 42:45 Uh, hold on a sec. I'm not saying it's possible. That's what he said.

David Sacks 42:48 No, he said he'd start working on it on day one, and so he did, and look at the results. Inflation's now down to 2.7%, way below expectations. I don't know how you want a better report than this.

Jason Calacanis 43:00 Okay.

David Sacks 43:00 Unemployment is very low. The only reason-

David Friedberg 43:02 I do remember the, uh, the economic target was three, three, and three, 3% GDP growth, 3% deficit to GDP, and 3% inflation. They're below 3% inflation, they're above 3% GDP growth, and the deficit to GDP is not where it needs to be. So cutting is still ahead. But I looked at the budget for 2026 for a number of the departments in the Cabinet over the last couple days, and they do have big cuts that they're trying to implement across the federal government. We're gonna be interviewing Scott Bessent tomorrow morning. That'll come out shortly after this episode airs. But this is the catch-up conversation with Scott on how's the three, three, three plan going, but on two of the three metrics, J Cale, it does appear like things are good. I'm not trying to be a spokesperson for the Trump administration, but I'd say if you look at this just from the raw economic data and the, the goals of the administration, following that, there should be a flow through in terms of job growth, a flow through in terms of affordability, in terms of wage growth, all those other sort of economic indicators that actually affect people on Main Street every day. Uh, that's all still TBD, and the narrative is still to be written. But those high-level economic goals are still, you know, are starting to kind of fall within the, the framework of what they set out to do, which is generally good, right?

Jason Calacanis 44:15 Yeah, I'm just-

David Sacks 44:15 Yeah.

Jason Calacanis 44:15 ... pointing out the disconnect. Again, this is the disconnect-

David Sacks 44:18 Well, you're looking in the rearview mirror.

Jason Calacanis 44:18 ... with the American people.

David Sacks 44:19 I mean, you know-

Jason Calacanis 44:20 No, no, I'm looking at year one, just year one. We're, we're here at the end of year one.

David Sacks 44:23 Well, it takes time to implement an agenda.

Jason Calacanis 44:26 I totally agree. I'm just telling you the American people don't believe the Trump administration right now. There's more work to do. That's the disconnect.

David Sacks 44:34 Well, the data that came out today is looking awesome. By the way, that Vanguard report that I mentioned that also exposes the AI job loss hoax, it also has a new economic assessment for next year. It's projecting 3% growth for next year, which I think is conservative, and an improved labor market outlook for 2026, and it says the most robust improvement will come in the second half of the year. So, Vanguard is saying that 2026 is looking very good. And by the way, that's when the fight for Congress will unfold is next year. So, you know, the thing about polls is it's obviously just a snapshot in time and it doesn't tell you what things are gonna look like six months from now or a year from now. I think they're gonna look very good.

Jason Calacanis 45:16 Yeah, I mean, maybe he turns it around.

David Sacks 45:18 I think it's already been turned around. It just takes time to kick in.

Jason Calacanis 45:22 Yeah, I mean, the, the public's perception, it hasn't turned around, and inflation was supposed to go down, and it stayed high.

David Sacks 45:28 It has.

Jason Calacanis 45:28 No, it stayed at... It's, it's still way above the 2% target.

David Sacks 45:32 It's been 1.6% for the last three months.

Jason Calacanis 45:36 No, it has not. It just said-

David Sacks 45:37 That's what it says.

Jason Calacanis 45:37 ... 2.7.

David Sacks 45:38 No, that's the-

Jason Calacanis 45:39 It's 2.7.

David Sacks 45:39 ... that's the, that's the year-

Jason Calacanis 45:40 This is the problem, I think, with the administration, and you're part of it, like you guys cherry-pick numbers, and it's not matching the numbers on the field. So when you cherry-pick the gas number-

David Sacks 45:47 CPI is cherry-picking? This is CPI report.

Jason Calacanis 45:50 No, no, the, the, the number-

David Sacks 45:52 Open the cover of the Wall Street Journal-

Jason Calacanis 45:53 The prediction was 3.1.

David Sacks 45:54 ... 2.7 per s-... Hold on, 2.7% CPI.

Jason Calacanis 45:57 It's 2.7.

David Sacks 45:57 2.6% core, 1.6%-

Jason Calacanis 46:00 Okay.

David Sacks 46:00 ... for last three months.

Jason Calacanis 46:02 Okay.

David Sacks 46:02 What is hard to understand about this?

Jason Calacanis 46:04 The- No, no.

David Sacks 46:04 Obviously, the last three months are gonna tell you what the trajectory is.

Jason Calacanis 46:09 Yeah. O- okay, uh, it, the, the fact is-

David Sacks 46:11 You're looking for every excuse you can-

Jason Calacanis 46:13 No, no, no, no, no.

David Sacks 46:13 ... to basically downplay-

Jason Calacanis 46:15 No, no.

David Sacks 46:15 ... what is-

Jason Calacanis 46:16 By the way, uh-

David Sacks 46:16 ... an awesome report.

Jason Calacanis 46:17 ... I don't-

David Sacks 46:18 And just look at the stock market, which is ripping today, because this is way below expectations.

Jason Calacanis 46:22 Tha- that's the problem. No, no, you're, you're explaining the problem.

David Sacks 46:23 You're the only ones who are happy about this news, J Cale.

Jason Calacanis 46:24 No, no, no, I, the, the country is not happy about it. I, I'm not, I don't have a horse in this race. I'm doing fantastic. I own equities. I'm doing better than I ever have in my life. I'm talking about how the bottom half of America perceives it. This is the blind spot of the Trump administration. You've proved my point by not addressing it. Let's go to the next subject.

David Sacks 46:42 No, I haven't... What? What?

Jason Calacanis 46:44 Y- No, no, it's just you, the fact that you guys-

David Sacks 46:44 I guess your point is, your point is that-

Jason Calacanis 46:46 My point is the American people expected that inflation would go down and prices would go down. Prices have continued to go up. They expected-

David Sacks 46:54 The Fed has a 2% target. It's a little bit unrealistic to say that what you wanna-

Jason Calacanis 46:58 Okay, so you wanna-

David Sacks 46:58 Wait, you wanna have, you wanna have a negative inflation rate?

Jason Calacanis 47:03 Trump said prices would go down. They have not.

David Sacks 47:05 This is your argument?

Jason Calacanis 47:05 That's it. That's what the American people feel. Unemployment has gone up. They expect it to go down. So the, this idea that we're in the golden age is not tracking with the bottom half of Americans. That's just facts, David. It's just facts. You have work to do. Trump has work to do-

David Sacks 47:21 You're, you're saying that anything less than deflation-

Jason Calacanis 47:23 ... on the bottom half of America.

David Sacks 47:23 ... anything less than deflation in your view is, is not-

Jason Calacanis 47:25 Uh, n- I did not say that. You keep telling... I keep telling you what I'm reporting in terms of facts, then you tell me I said something different. I didn't say that. The American people are very disappointed in the Trump administration's first year when it comes to inflation and the economy.

David Sacks 47:40 I don't understand how the numbers could be any better.

Jason Calacanis 47:42 That's the fact.

David Sacks 47:42 We just blew past expectations here, 2.7%-

Jason Calacanis 47:44 Okay, the American people-

David Sacks 47:45 ... versus 3%.

Jason Calacanis 47:46 Yeah, the American people don't believe you.

David Sacks 47:47 I don't know whose expectations... I don't know whose pulse you think you have the finger of, but the, the economists-

Jason Calacanis 47:52 No, no, it's not-

David Sacks 47:52 ... who put together these expectations-

Jason Calacanis 47:56 Yeah.

David Sacks 47:56 ... were expecting 3%-

Jason Calacanis 47:57 Okay, we're at a circle here. I'm just, I'm... Pull up the chart here one more time for me.

David Sacks 48:00 ... and we blew it away.

Jason Calacanis 48:00 Just pull up the chart for me, uh, so I can just explain that this isn't bias on my part. I'm just-

David Sacks 48:05 Of course, it is.

Jason Calacanis 48:05 ... putting the fact on the field. No, it is not. This is. These are numbers that you can look at and see that trumps two worst categories right now are the economy and inflation. The American people thought he would do better.

David Sacks 48:18 These are s- these are snapshots in time, and they're gonna be completely different next year.

Jason Calacanis 48:21 Y- And the snapshot in time from February goes down. That's the snapshot in time, every month. You have 12 months there to look at.

David Sacks 48:27 Let me, let me explain-I, I don't know what's so hard about... Uh, this is a really partisan point that you're making. It, you're basically saying-

Jason Calacanis 48:33 I, I'm not-

David Sacks 48:34 Look-

Jason Calacanis 48:34 ... partisan. I'm an independent.

David Sacks 48:34 The US economy is like a giant supertanker. It takes-

Jason Calacanis 48:37 I'm an independent. I'm not partisan.

David Sacks 48:37 Can I finish my point?

Jason Calacanis 48:39 Sure, you can.

David Sacks 48:39 I mean, you must know this, and I think you're pretending not to, the US economy is like a giant supertanker. It takes time to turn around, it takes time to implement your economic agenda. It took the president the first six months of the administration to implement the Big Beautiful Bill, which is his economic program, but it doesn't even go into effect until January 1st.

Jason Calacanis 48:56 Okay.

David Sacks 48:56 So, the tax cuts have not gone into effect, the inflation reductions have happened. We've gone from 9% under Biden to now 2.6% core, 1.6% last three months. I don't know what more you could want. I- interest rates have come down. They're projected to come down even more because inflation's coming down. This is, again, a huge ship that's in the process of turning around, and I predict that by next year, the numbers are gonna be even better. Let me remind you of what happened in the early 1980s under Ronald Reagan. When Reagan took over, okay, the misery index was at like 20%. Reagan implemented his economic agenda, but it took a couple of years to actually implement it. By 1983, we actually had a very severe recession because Volcker had raised interest ra- rates so much to tame inflation. We're lucky we don't have that issue today. In any event, it took like three years for Reagan to implement his economic agenda, and his popularity was very low by 1983. But by 1984, the program had worked and it was Morning in America again, and he won the biggest landslide election, I think, in American history. So you gotta give it time for the president's agenda to play out and work, and it certainly looks like, after 10 months, that it's performing extremely well, and we h- are just beginning to see the impact of it.

Jason Calacanis 50:12 I think the core issue is Trump overpromised and underdelivered in year one, and it's not the golden age for the bottom half of Americans, and they don't feel it's the golden age. And I think just t- tackling that head on and saying, "Yeah, we have more work to do," and I actually think that's what the address last night was about. I suspect somebody, maybe Susie or the ch- chief of staff or somebody said, "Hey, we gotta start communicating better about the cost of living and, uh, our promises during the election, so that we turn this around." That's actually what I think is happening. But I, I don't have a horse in this race. I'm doing fabulous because I own equities. I'm happy. I'm concerned, sure, that the bottom half of society needs to do a little bit better. That's all. All right. But y- you know, listen, I, I'm never gonna win with you, Sachs, 'cause you're the captain of the debate club. You'll win every debate. You're, you're incredible.

David Sacks 51:02 Well, look, I mean, like the president-

Jason Calacanis 51:04 (laughs)

David Sacks 51:04 ... the president made the right point last night, which is he inherited a giant mess. Again, under the Biden years, we had a $3,000 reduction in, in real wages by American workers. That's already gone up by $1,000 under President Trump in the first year. But yeah, if you're a worker and you're just looking at your situation, you're underwater 2,000 relative to where you were five years ago. So obviously, you're gonna be salty about that. But that's the situation that, that President Trump inherited. I don't know how much more progress you could make in 10 months, but give it another year and then we'll really see.

Jason Calacanis 51:36 All right. I am rooting for you guys. I hope you turn it around in year two. Okay. Freiberg, we got an important story here we have to get

Jason Calacanis 51:44 to.

David Friedberg 51:44 Do you guys wanna hear a crazy personal story for two minutes as a palate cleanser?

Jason Calacanis 51:48 Oh.

David Sacks 51:48 Three, two, go.

David Friedberg 51:49 Oh, yes, as a palate cleanser.

Jason Calacanis 51:50 Love it.

Host (uncertain which bestie) 51:50 This is an amuse-bouche?

David Friedberg 51:51 Okay, this is an amuse-bouche.

Host (uncertain which bestie) 51:52 What is it, like a little sorbet?

Jason Calacanis 51:53 A little, a little pamplemousse sorbet?

David Friedberg 51:55 All right.

Jason Calacanis 51:56 Quince?

David Friedberg 51:56 This is the craziest story-

Host (uncertain which bestie) 51:57 Grapefruit?

David Friedberg 51:58 ... in my life right now.

Jason Calacanis 51:59 Okay.

David Friedberg 51:59 Pull up the photo, Nick, the first photo. You guys remember-

Jason Calacanis 52:02 Crazy story coming up.

David Friedberg 52:02 ... my dog, Monty?

Jason Calacanis 52:04 Yeah, this is the virtue signal dog.

David Friedberg 52:06 No.

Host (uncertain which bestie) 52:06 He's not the virtue signal dog.

David Friedberg 52:07 No, this is the best dog. This is... Oh, that's...

Jason Calacanis 52:09 Oh, Monty's the good one, yeah.

Host (uncertain which bestie) 52:10 This is the only one I love.

David Friedberg 52:10 So, Monty, Monty, Monty was my dog for 10 years. I got him 10 years ago in January. And he died suddenly in May. He, turns out he had a tumor on his heart, and his heart burst open in front of me and he died. It was the worst thing. He was with me every second of every day-

Jason Calacanis 52:26 Mm.

David Friedberg 52:26 ... that I wasn't at work. He slept on my bed, he was in my office all day. You guys have seen him a million times in the background-

Jason Calacanis 52:32 Yeah.

David Friedberg 52:32 ... during the All-In Pod. My best friend in the world, the greatest s- thing I've ever come across in my life. So, he died suddenly. It was very brutal, very hard. So I'm at my house the other day. My next-door neighbor walks in and he's got this dog on his leash. Pull up this photo. This is this dog. So my next-door neighbor finds this dog at Rocket Dog Rescue. It was pulled out of a kill shelter. The vet estimates this dog is like a decade old. Today, I live probably 40 miles away from where we got Monty. He was found wandering the streets of the Mission District in San Francisco. This random dog here was found at some random kill shelter somewhere in California, pulled out of a kill shelter a few days ago, put into Rocket Dog, and rescued by my next-door neighbor. Brings him over. He's walking him in the street. I'm like, "Oh my God, that dog looks just like my old dog, Monty." We ran a DNA test.

Jason Calacanis 53:25 (gasps)

David Friedberg 53:25 This dog is Monty's-

Jason Calacanis 53:26 What?

David Friedberg 53:26 ... brother.

Host (uncertain which bestie) 53:27 (laughs)

Jason Calacanis 53:28 What?

David Sacks 53:28 Oh my God.

David Friedberg 53:29 This dog is Monty's brother. It is the craziest (censored) . There's like a billion dogs on planet Earth, and of the billion dogs, some random dog from some random litter from some street pup in the Mission District from a decade ago found its way into a shelter, into another rescue center, into my next-door neighbor's arms, and brought back to my house months after Monty died. How crazy is that?

Host (uncertain which bestie) 53:50 What is his personality like?

David Friedberg 53:52 I'm gonna hang out with him this afternoon. I gotta go, see.

Jason Calacanis 53:54 Mm.

David Friedberg 53:55 But how crazy is this? Just, it's Monty's actual brother from the same litter.

David Sacks 53:59 He doesn't look like Monty, in fairness.

David Friedberg 54:00 Yes.

Host (uncertain which bestie) 54:01 He doesn't look like Monty. No.

David Friedberg 54:01 We... Uh, the angles are off, but-

Jason Calacanis 54:02 Stepbrother?

Host (uncertain which bestie) 54:03 Monty's more robust.

David Friedberg 54:04 Yeah, well Monty was well-fed. This dog lived in a fricking kill shelter, so...

Host (uncertain which bestie) 54:08 Monty was a cackler.

David Sacks 54:09 I mean...

David Friedberg 54:09 Take, take 10, take 12 pounds off Monty.

Jason Calacanis 54:11 But wait, where's the other... Where's the-

David Friedberg 54:13 DNA tests don't lie.

Jason Calacanis 54:14 Where's the, uh, dog that was being tortured by Revlon?

David Friedberg 54:18 That dog's gotten-

Jason Calacanis 54:18 Oh, he's still there.

David Friedberg 54:18 That dog's gotten robust too. Yeah.

Jason Calacanis 54:21 Was it Revlon-

Host (uncertain which bestie) 54:21 Okay.

Jason Calacanis 54:21 ... who was torturing your current dog?

David Friedberg 54:23 She, she, she, Daisy, has a thousand siblings, not just one.

Host (uncertain which bestie) 54:27 ... and, uh, they are-

Chamath Palihapitiya 54:29 Oh, no. Daisy, Daisy I'm fine with. It's Mitchi- it's Mitchell Freeburg I hate.

Host (uncertain which bestie) 54:32 Marshall, Marshall.

Chamath Palihapitiya 54:34 Marshall Freeburg. I hate Marshall Freeburg.

Host (uncertain which bestie) 54:34 (laughs)

Jason Calacanis 54:35 Marshall Freeburg.

Host (uncertain which bestie) 54:35 (laughs)

Jason Calacanis 54:36 I got to hang out with Okie and Joe.

Host (uncertain which bestie) 54:36 He, he ate the pistachios last Christmas, ruined our whole dinner.

Chamath Palihapitiya 54:38 Marshall's like a little eight-pound, eight-pound, um-

Host (uncertain which bestie) 54:40 Monty's father must have really gotten around San Francisco.

54:43 (laughs) Yeah. He had a great run on Church Street.

54:45 I mean, what are the odds of this? I mean-

54:47 Same mother, same father.

Jason Calacanis 54:48 (laughs)

Host (uncertain which bestie) 54:48 It's not a half-brother. This is the same father.

Chamath Palihapitiya 54:50 Wait, what?

Jason Calacanis 54:50 Are you saying Monty's dad was a pimp? (laughs)

Host (uncertain which bestie) 54:52 Same, same litter, same dog. Wow.

54:53 Same, same mother, same father.

Jason Calacanis 54:55 (laughs)

Host (uncertain which bestie) 54:55 Same litter on the streets of San Francisco a decade ago, and they all find their way in different parts of California and come to... And Monty's buried in my backyard, and this dog has brothers.

55:04 I think they mix up the samples.

Jason Calacanis 55:05 What a crazy... No way.

Chamath Palihapitiya 55:05 What is it, Summer of Love? Was it the summer of love?

Host (uncertain which bestie) 55:07 I mean, it looks the same.

55:08 Yeah. (laughs) You would say, you would say no way, but you gotta see better shots of it. I'll put more photos next time.

55:12 Can you put them side by side?

55:13 Yeah.

55:14 This doesn't make sense.

55:15 I know. It's the craziest (censored) ever. And by the way, like...

Chamath Palihapitiya 55:18 Yeah, it doesn't look-

Host (uncertain which bestie) 55:19 Yeah.

Chamath Palihapitiya 55:20 ... like they're related, I'll be honest with you.

Host (uncertain which bestie) 55:21 (laughs) Gotta find you a proper photo of Monty.

Jason Calacanis 55:23 What, what's going on, Shemok, with Okie and Joker? How old are, are these dogs now?

Chamath Palihapitiya 55:27 Oh my God. From your lips to God's ears, bro. Okie is 14 and a half. She turns 15 in July.

Jason Calacanis 55:33 She's so precious.

Chamath Palihapitiya 55:34 And Joker's eight or nine, so touch wood, they're, uh...

Jason Calacanis 55:38 Yeah.

Chamath Palihapitiya 55:38 Golden retrievers don't really live to 15, but my God, she's doing great.

Jason Calacanis 55:42 Yeah, you got a lot of good years. I was just on the f- I was on the floor last Thursday snuggling with her, and it was so precious.

Chamath Palihapitiya 55:47 Well, you know what we did?

Jason Calacanis 55:48 She's the best.

Chamath Palihapitiya 55:49 The- I think the best thing that we did was we got much more disciplined about diet for Okie-

Jason Calacanis 55:55 Mm-hmm.

Chamath Palihapitiya 55:55 ... when she turned about 13. Little bit calorie restricted. It's not nearly as much. She lost a few kilos, which has helped her a lot.

Jason Calacanis 56:03 Mm.

Chamath Palihapitiya 56:04 Walking. And she's a little deaf, unfortunately, but she can see.

Jason Calacanis 56:07 Aw.

Chamath Palihapitiya 56:08 Dogs are the best.

Jason Calacanis 56:09 My God, they're the best.

Host (uncertain which bestie) 56:10 Here's my- here's, here's my other photo of the dog that, uh, Shemok hates. Pull it up just so you can see what Shemok-

Chamath Palihapitiya 56:15 Oh, this is Marshall.

Host (uncertain which bestie) 56:16 This is- (laughs)

Chamath Palihapitiya 56:16 This is Mar- last, last Christmas at Nat's birthday dinner on the 26th, which is her birthday-

Host (uncertain which bestie) 56:21 (laughs)

Chamath Palihapitiya 56:21 ... Marshall Freeburg jumped on the table, started eating all of the pistachios and the nuts.

Host (uncertain which bestie) 56:26 There he is. Ruined them. Ruined the pistachios.

Chamath Palihapitiya 56:27 Ruined all of them, slobbered everywhere.

Jason Calacanis 56:29 Horrible dog.

Chamath Palihapitiya 56:30 All the... David Freeburg was like, "Aw, look at that." Alison Freeburg was like, "Marshall Freeburg!" They, they have no control over what's going on with Marshall.

Jason Calacanis 56:37 No control. Marshall's out of control.

Host (uncertain which bestie) 56:38 Here, pull this photo up, Nick. This is a medical issue Marshall Freeburg's been dealing with. He wakes up with irrecoverable erections-

Jason Calacanis 56:44 (laughs)

Host (uncertain which bestie) 56:44 ... so he can't walk. (laughs)

Chamath Palihapitiya 56:47 (laughs) Look at this.

Jason Calacanis 56:47 What?

Host (uncertain which bestie) 56:47 Pull this up. Pull this up.

Jason Calacanis 56:48 Irrecoverable?

Host (uncertain which bestie) 56:50 Oh my God.

56:50 He can't blurt... So Nick, you gotta blur this out. When you put it up- (laughs)

Jason Calacanis 56:54 Oh! Whoa! Dude's packing.

Host (uncertain which bestie) 56:56 (laughs)

Jason Calacanis 56:58 What? How do you get rid of that erection, Freeburg? (laughs)

Host (uncertain which bestie) 57:00 So this little guy, he weighs like eight pounds. He has these erections, and, well, the doctors say, like, "You just gotta wait, and if it ends up staying for too long, there's gonna be a surgery. But like, right now, he's okay." But he can't move when he gets them and he's stuck, and he'll sit there-

Jason Calacanis 57:11 This is... You know what?

Host (uncertain which bestie) 57:11 ... unable to move for, like, 20 minutes. Like, with his little erection.

Jason Calacanis 57:13 Same thing happened. I gave-

Host (uncertain which bestie) 57:14 Yeah.

Jason Calacanis 57:15 ... Shemok some of my Roe Sparks, and he had a similar thing happen. (laughs) He was frozen.

Host (uncertain which bestie) 57:19 Yeah.

Chamath Palihapitiya 57:19 That is a, that is a problem.

Host (uncertain which bestie) 57:20 There's a, there's a Rian Johnson joke in here, but...

Jason Calacanis 57:22 That is a problem.

Host (uncertain which bestie) 57:23 Yeah.

57:23 How's Moose doing, J-Cal?

Chamath Palihapitiya 57:27 Oh, there he is, Zach.

Jason Calacanis 57:28 He's a special guy.

Host (uncertain which bestie) 57:29 Oh, wow. Oh.

Chamath Palihapitiya 57:30 Zach.

Host (uncertain which bestie) 57:30 Is that your dog, Zach?

Chamath Palihapitiya 57:31 This is the Moose. The Moose is loose. (laughs) Oh, buddy. Oh, buddy.

Host (uncertain which bestie) 57:36 (laughs)

Chamath Palihapitiya 57:36 This is my buddy. Oh, such a good boy. What are you doing?

Host (uncertain which bestie) 57:40 (laughs)

Chamath Palihapitiya 57:40 What are you chewing on there?

Host (uncertain which bestie) 57:40 Yeah, what's he chewing on?

Chamath Palihapitiya 57:42 I think he's got a pop. Get that out of here, Mouse. Come on. Get that out of here, Mouse. He is such a little love buddy. Such a little love bug.

Host (uncertain which bestie) 57:51 (laughs)

Chamath Palihapitiya 57:53 Come on.

Jason Calacanis 57:53 (laughs)

Host (uncertain which bestie) 57:53 Like a gremlin.

Chamath Palihapitiya 57:54 He loves it. (laughs) It's your-

Jason Calacanis 57:57 It's great to see you so in control, Jason.

Chamath Palihapitiya 57:59 Don't eat the cones, Jason.

Jason Calacanis 58:01 (laughs)

Chamath Palihapitiya 58:01 You're such a natural dog guy, Jason. Disciplinarian. This dog loves food. And he loves to wrestle. It's unbelievably like a wrestling going on here at the ranch.

Jason Calacanis 58:11 You're like a modern, you're like a modern Caesar Milan. (laughs)

Host (uncertain which bestie) 58:14 Does he headbutt you?

Jason Calacanis 58:16 (laughs) The dog whisperer. Moose, take it easy, buddy. I know. He loves to wrestle, this dog.

Host (uncertain which bestie) 58:23 He's heavy, right? He's-

Jason Calacanis 58:24 Well, we- he added about four or five pounds 'cause he wasn't eating all that much when we got him.

Host (uncertain which bestie) 58:29 Yeah.

Jason Calacanis 58:29 And then we realized he needs a little bit of extra food, so we gave him a little more food and he became a little less, um, grumpy.

Host (uncertain which bestie) 58:36 Oh, interesting.

Jason Calacanis 58:36 And then he just... We take him for, like, maybe three one-mile walks a day on the ranch. Totally fine. If he misses a walk, dog's got way too much energy. So he's not... He's a ranch dog, not a city dog. This dog needs to run.

Host (uncertain which bestie) 58:49 Yeah, I know. I told you.

Jason Calacanis 58:50 Yeah, he needs to run. When he doesn't run, you got a problem. All right, let's keep going through the docket here. Uh, that's dog corner. That's canine corner.

Host (uncertain which bestie) 58:58 What'd you guys think? That's a good corner. It's a good catch up.

Jason Calacanis 59:01 Canine corner is the best corner.

Host (uncertain which bestie) 59:02 But how crazy is that? One, like, one in a billion's gotta be that this dog lands up next to me. That's just the craziest thing.

59:06 Absolutely.

59:06 Anyway.

Jason Calacanis 59:07 Yeah, and, uh, yeah, there's no cat corner here. Cats are horrible.

Host (uncertain which bestie) 59:10 No.

Jason Calacanis 59:10 Shout out to our friends at Waymo for eliminating the cat problem in San Francisco.

Host (uncertain which bestie) 59:14 (laughs)

59:16 (laughs)

Jason Calacanis 59:16 I mean, that's just, that was the greatest update to their software ever. If they can eliminate more cats...

Host (uncertain which bestie) 59:22 What's that, what's that paradox that the AI has, where it's like, do I hit the wrong-

Jason Calacanis 59:26 The trolley car problem. (laughs)

Host (uncertain which bestie) 59:26 The trolley car. It's like the cat problem.

Jason Calacanis 59:28 That's the trolley car problem.

Host (uncertain which bestie) 59:28 Go for the- go for the cat. Just go for the cat.

Jason Calacanis 59:30 Absolutely. You could get somebody there on time or you could get them there 30 seconds late and take out a cat, take out the cat. Less stray cats. Cats are horrible.

Host (uncertain which bestie) 59:41 (laughs)

Jason Calacanis 59:41 Shout out to our cat ladies listening to the pod. There's... I wonder how many cat ladies listen to this pod. I think there are a few.

Host (uncertain which bestie) 59:46 Zero.

59:46 Oh, there are a few.

Jason Calacanis 59:48 Are there a few? Yeah, they... (laughs) We hear from them on, they're on Blue Sky (laughs) talking about... Oh God, I had a joke. I'm not gonna do it.

Jason Calacanis 59:56 All right, according to a Reuters report, Freeburg, China has built a prototype of ASML's EUV machine. Hey, if this is true, this report, it's, uh, it could have, uh, profound impact on the AI race that we talked about. For those of you who don't know, ASML is the Dutch company worth $400 billion, 22nd largest market cap in the world. And, uh, they are the only company that makes EUV machines, uh, also called lithography. That stands for, uh, extreme ultraviolet. That's how you make H100s-Here's a photo of one of these giant machines. They cost $250 million to make and they take six months to make. Filled with all kinds of important parts, Carl Zeiss lenses, et cetera. Since 2018, these machines have been limited for sale by the Dutch. Why? Why can't China buy these machines? Well, in 2018, Trump's Secretary of State, Mike Pompeo, put pressure on the Dutch to impose export controls on China and, uh, later that same year, they did. So according to Reuters in this news story, Friedberg, China used former ASML engineers, allegedly, to reverse engineer the machines. Reuters has pointed out that the machine in China has not yet produced any working chips. It's a prototype. The CCP is targeting 2028, uh, for working chips. Some sources say maybe 2030 is more likely. You've been talking about China lithography on the show. We can play the Chariots of Fire music that Friedberg insists we play when he does his victory lap come up. Here's his victory lap, Episode 224.

David Friedberg 1:01:39 Last year, China announced and began a $37 billion investment in developing their own three nanometer, uh, chip technology. China, uh, made a claim that this investment they had made was starting to pay off and they had developed their own EUV system. And their big semiconductor company is called the Semiconductor Manufacturing International Corporation or SMIC in China. They launched a seven nanometer chip with Huawei in their Mate 60 Pro, which is sort of like their iPhone competitor in China. And so they're proclaiming that they've already got this EUV technology from what I understand, and Sacks would know better than I, it sounds like there was a lot of reverse engineering and workaround of existing technology in order to deliver that system.

Jason Calacanis 1:02:24 Got it. Who do you think has the best chance of challenging NVIDIA?

David Friedberg 1:02:28 My early prediction for 2026 is Huawei, where I think that there's lithography technology that exists in China that is not publicly discussed that is going to be deployed in Huawei and all these fabs that they're building in mainland China.

Jason Calacanis 1:02:42 So announcements 2026, impact '27?

David Friedberg 1:02:45 Probably fair.

Jason Calacanis 1:02:46 There you have it, first. First on All-In, Friedberg, congratulations on your weekly victory lap here on the show.

David Friedberg 1:02:53 Well, I don't, I don't, I don't... I honestly don't think that the Reuters story is necessarily news 'cause I think it's a little bit of a narrow scope in trying to describe what happened, which is that they, quote, "Stole ASML technology 'cause scientists are working on it." That's not really the full scope of what's been going on in China for a number of years and it really understates the technological progress that China's independently made in using other systems to try and achieve lithography parity. So if you go back a number of years, the current kind of investment vehicle is actually Chinese banks put capital into a fund that's roughly $48 billion, uh, US dollars, which is actually what's called the National Integrated Circuit Industry Investment Fund Phase 3. So there was Phase 1, which started in 2014, which focused on manufacturing, so developing fabs with groups like SMIC. Phase 2 was stood up in 2019, which focused primarily on design and materials. And then this Phase 3 fund was established in 2024 explicitly to pivot to what they called choke points or bottlenecks in the manufacturing process. And state media has confirmed the existence of this Phase 3 fund and the intentionality of the Phase 3 fund to try and replicate lithography technology. A couple of months ago, if you pull up the link, Nick, here's a publication on this paper. So this is the leading research group out of China that's been backing into lithography technology using AI-driven systems. They published this paper, which was a very good summary of where they are in July. Was this in Nature? No, it was in Light Science and Applications. And this paper is called Advancements and Challenges in Inverse Lithography Technology: A Review of Artificial Intelligence-Based Approaches. If you read into the paper and then you read the other publications from this particular research team at Tsinghua University, they have made a number of breakthroughs in using AI to try and reestablish alternative systems in the traditional Zeiss optics and other control systems that are used in the ASML platform. And the way that they've done it, I, I won't spend too much time on it, but there's a bunch of neural networks that they've used, trained, and have made discoveries from, including doing things like working with suboptimal optics, meaning you can have optics that have a degree of diffusion, and then how do you actually recreate three nanometer printing techniques or three nanometer masks by having shadowy effects accounted for in the AI. So you almost, like, assume that the shadowy effects are gonna come out and you print differently than you otherwise would. You don't need the degree of precision that you need and you don't necessarily need to go get the Zeiss optics. There was another paper that was published early this year by another Chinese research team that actually demonstrated how they did use AI to discover a novel method for doing optics. So there is a very broad and well-funded effort that's been underway for over a decade, but just in the last couple of years with artificial intelligence-based approaches, they've made a series of breakthroughs. It is very likely the case that Huawei already has a lithography system that they'll be putting into production and this is why I kind of talked about it-

Jason Calacanis 1:05:58 Mm-hmm.

David Friedberg 1:05:58 ... when we were in Vegas and pointed it out earlier this year. But I, again, I think Reuters just sort of maybe caught on to some narrow segment, but this is a bigger story and a bigger set of progress that's been made over quite some time.

Jason Calacanis 1:06:08 Ramification, Sacks? Here and, and what's your thinking? Obviously you've talked a bunch about, "Hey, let's sell our stack in there." And they're clearly working on their own stack. What, what, what's the, what's the ramification of this if it should go?

David Sacks 1:06:23 Well, I've never supported selling EUV lithography to China. It is probably-

Jason Calacanis 1:06:28 No, no, selling the stack of H100... Whatever the previous, uh, NVIDIA stack was. Yeah.

David Sacks 1:06:32 EUV lithography, these machines that are made by ASML, is probably our single biggest advantage in the AI race because they're the only machines that are capable of creating, say, two to three nanometer-... chips, semiconductors, and it's sort of the perfect export control because there's only one company that makes these machines. Like you showed, they're gigantic, they're expensive. So if you think about, like, trying to put an export control on a commodity, there'd be a lot of ways to circumvent it because there's a lot of sources for a commodity. But in this case, there's literally only one company that makes these machines. So it's been a tremendous advantage, I'd say, for the West that we have EUV lithography. I'm not surprised that China is trying to reverse engineer it. It's kind of the obvious thing to do. No advantage is forever. It does seem likely that at some point, they'd be able to figure out how to do it. So I think that this article is not altogether a surprise in that sense. I mean, I'm sure that China is trying really, really hard to reverse engineer this. In the meantime however, they've also made substantial progress with DUV lithography. So the previous generation of lithography before EUV was DUV, E is extreme, D is deep. In any event, DUV was supposed to sort of top out at, say, 14 nanometer chips and China was able to push the technology to get to 7 nanometer and now to 5. So they're able to get a lot further using DUV lithography than anyone thought possible, and that is why the Huawei chips, the Ascend chips are... They're not as good as our chips but they're serviceable and they've been able to use their prowess and networking to string more of them together. You have the CloudMatrix 384 technology where Huawei will string together 384 of their Huawei Ascend chips into a rack, and that will perform comparable to an NVIDIA rack but using a lot more power. So the bottom line is China's been able to create a lot of these workarounds to our restrictions but if they figured out how to reverse EUV, that would be, I'd say, a blow because it is a real advantage for us. But I'm not convinced that this Reuters story is the f- the full picture. I think it's just a data point.

Jason Calacanis 1:08:49 Mm-hmm. Chamath, any thoughts here?

Chamath Palihapitiya 1:08:51 If you want a very short summary of how the last generation of chips work, the best way to think about this is that the most profitable and valuable chips to date have taken a very compute-centric approach, that's why we've needed these ultra-advanced process nodes. But the reality is that in a world of infinite inference, let's say, the next generation of silicon will not take the same compute-heavy approach and will probably rely on a much more memory-centric architecture that uses a lot of SRAM. The value of that is that you can produce these things, as Sax said, at 14 nanometer, at 7, 5, all of these process nodes that are much less advanced, that I actually think is the future. So in a weird way, if they steal this, which I think we should assume they've already stole it, quite honestly, and they figured it out, the question is how bad is it? That's the really important question. And the thing about a more memory-centric approach for AI inference or these next generation forms of silicon, it demands a lot more of compilers, it demands a lot more of the software. I still think that's where we are lightyears ahead. So I don't think it's the end of the world and we're still in a very good place, but it is bad.

Jason Calacanis 1:10:07 Friedberg, weren't we supposed to, uh, start onshoring with the CHIPS Act and maybe get trending towards having this production ability in America? And obviously, that's been really hard to do in China and their relationship with Taiwan seems to be... and, and the possibility that they actually take over Taiwan in a military fashion has been this existential concern, or even short-term concern, maybe is a better way of saying it.

David Friedberg 1:10:36 Look, the- the- the- I think the biggest security implication to consider at this moment is that both the US and mainland China are onshoring, uh, manufacturing, and that makes Taiwan less of a strategic point of interest for the United States and for United States industry. Maybe one of the ways to think about the positive aspect of what is going on, which is maybe call it the Balkanization of generally manufacturing, but specifically semiconductor manufacturing in this case, is reduced security concerns. So there's no longer this flashpoint perhaps in Taiwan. If China did invade Taiwan and the US had fab manufacturing, we're less likely to wanna defend Taiwan. And frankly, if China has fabs on mainland, do they really need to invade Taiwan? What's the economic interest in doing so?

Jason Calacanis 1:11:18 Yeah, that's-

David Friedberg 1:11:18 So-

Jason Calacanis 1:11:19 ... kind of where I was going with it.

David Friedberg 1:11:20 So our-

Jason Calacanis 1:11:20 But if they also wanted to jumpstart, Friedberg, they could just go to Taiwan and take the machines. Like, is that actually the plan?

David Friedberg 1:11:27 That's a- a-

Jason Calacanis 1:11:27 Like-

David Friedberg 1:11:28 I- I don't know what the CCP's plan is. I think that's a-

Jason Calacanis 1:11:30 Yeah.

David Friedberg 1:11:30 ... pretty, um, simple statement to make. I think just going to Taiwan is probably a lot more complicated than-

Jason Calacanis 1:11:36 Of course it is.

David Friedberg 1:11:36 ... than it's stated, so-

Jason Calacanis 1:11:37 My point is, if this, if this was super existential to get those chips for China, and they go to Taiwan-

David Friedberg 1:11:42 Again, I- well, I- again if you-

Jason Calacanis 1:11:43 ... and they- they have them, then they've reverse engineered the machines by default.

David Friedberg 1:11:46 I will just say, we- we-

David Sacks 1:11:46 Mm-hmm.

David Friedberg 1:11:46 ... need to recognize, we keep using the term reverse engineering as if ASML is the only way to do this, and it is not. If you read their papers and you read what's coming out, there are alternative production manufacturing methods and systems that are being developed in China that not only maybe provide parody to ASML but get ahead of ASML. And I think this is really important to understand. China is not just in a catch-up race, they're in a primacy race, and they are trying to develop primacy in lithography technology which will give them primacy in manufacturing, which will give them primacy in AI, which will give them economic leverage over the planet, and that is very critical for us to understand. This is not about stealing data from ASML. Like, no one gives a (beep) if you're sitting in China, you're thinking about, "I've got the world's best scientists or some of the world's best scientists and I'm giving them the resources and I'm giving them the mandate to go solve this problem." The government, as I mentioned, last year put $40 billion against this problem and said, "Go figure it out." And these guys at Tsinghua are publishing some groundbreaking research on how to do it.

David Sacks 1:12:44 But it's easier to catch up or to copy than to innovate, right?

David Friedberg 1:12:48 Initially.

David Sacks 1:12:48 So if you're China...... the first thing you'd wanna do is just copy EUV and get that technology for yourself.

David Friedberg 1:12:54 Well, let me ask you this. What would you do? So you're the AI czar, you're sitting in the United States, and China's got this lithography technology. Is your goal to steal their technology or is your goal to get your best scientists and say, "Let's get ahead of their technology?"

David Sacks 1:13:05 If I'm China?

Chamath Palihapitiya 1:13:06 Neither.

David Friedberg 1:13:07 No, if you're- if you're the United States.

Chamath Palihapitiya 1:13:07 I think it would be to solve the... It's to solve the problem. What is the actual economic commercial problem we're solving?

David Friedberg 1:13:12 Right. And so if you can figure out a way to do manufacturing better, cheaper, faster than the way that- that China does it, you would obviously take that path. You're not trying to get to parody with China if you view yourself to be supreme to China.

Chamath Palihapitiya 1:13:23 China, but you have to understand. Even with these EUV machines-

David Friedberg 1:13:26 And the same is true in the other side.

Chamath Palihapitiya 1:13:27 ... at two or even sub-two nanometer scale, you have these incredible laws of physics that you are pushing to the boundaries of which cause these chips to have pretty low yield. You have a lot of systems that actually aren't that efficient and highly utilized as a result, so these systems are brittle. The second thing is that when you have these compute-centric architectures, you end up making design decisions like HBM. They'll have to go and steal all the HBM, which is the high-bandwidth memory business that SK hynix and Samsung have. But again, that's where NVIDIA and then Google have an effective monopoly. So-

David Friedberg 1:14:01 Let me ask you a question, Sax. I mean, what's your strategic response if China next year goes into manufacturing with a sub-two nanometer system that's got higher yields, is faster, is cheaper than anything that we're seeing anywhere else in the world?

David Sacks 1:14:13 Well, (laughs) I don't think that's gonna happen. Let's talk about that if it actually happens. I don't think it's going to. But what would I be focused on right now? I would say we wanna get more of the leading-edge manufacturing in the United States. TSMC has already opened a big fab in Arizona and they're planning on increasing the size of that, and that's really important. And we should get all these restrictions out of the way. They're facing all sorts of permitting restrictions. I mean, all the stuff that Bernie's talking about where he wants to slow down. I mean, he's talking about data centers but not chip manufacturing-

David Friedberg 1:14:49 So if you've got Bernie Sanders-

David Sacks 1:14:50 ... but the concepts are the same.

David Friedberg 1:14:50 Yeah. Ro Khanna, Elizabeth Warren, you've got an-

David Sacks 1:14:54 This is exactly wrong. I mean, we should be-

David Friedberg 1:14:56 ... anti-tech progress people saying, "Let's stop all this stuff." Meanwhile, China is not just racing to catch up but they're likely gonna get ahead of the United States. And if we're caught flat-footed because we've got a moratorium on development, a moratorium on production, it's gonna be extraordinarily damaging.

David Sacks 1:15:12 Right. Well, look, this is where I agree with you, is that if this Reuters report is accurate, it does speed up the timeline on China closing the chip gap from-

David Friedberg 1:15:21 It's not just Reuters, you can-

David Sacks 1:15:21 ... you know, a decade