Bond crisis looming? GOP abandons DOGE, Google disrupts Search with AI, OpenAI buys Jony Ive's IO

Jason Calacanis 0:00 All right, everybody. Welcome back to the number one podcast in the world, the All-In Podcast. Today, the original squad is back. No guests, just Full Contact Sax is back. We're going to break down a number of topics today including chaos in the bond market as Republicans seemingly have abandoned the Doge agenda. And we're going to debate the Big Beautiful Bill, which is going to add trillions to our national debt. And it's a new era for Google as they release an AI first search product. OpenAI has acquired Johnny Ives company, Ayo, to make some sort of gadget. They've paid over $6 billion. Is this the real deal or not? You're going to find out today. And is energy the solution to every problem we have? One bestie's got a very interesting take. All that and more on the number one podcast in the world. Stick with us. For the fourth year in a row, we're going to do the All-In Summit. If you guys remember, four years ago, I decided, "Hey, let's do a summit," and then these three besties were like, "No, we don't want to do a summit." Now, it's become a big thing and everybody loves it. September 7th to 9th in Los Angeles.

David Sacks 1:06 I do give you credit for that, J Cal.

Jason Calacanis 1:08 Yeah, after you gave me hell for a year, okay.

David Sacks 1:10 Great, great.

Jason Calacanis 1:11 That sounds like an apology, but okay, sure.

David Sacks 1:13 I'm sorry. You're wonderful and I appreciate what you created.

Jason Calacanis 1:15 Thank you very much. Wow, finally some credit. Okay. We all know the goal of the summit is to have the world's most important conversations and this year will be no different. Yada, yada, yada. Allin.com/summit if you would like to apply to come.

Chamath Palihapitiya 1:27 Why do you say the most important conversations and then say, "Yada, yada, yada," as a way to dismiss it? Do you think that that-

Jason Calacanis 1:33 (sighs)

Chamath Palihapitiya 1:33 ... increases your salesmanship and effectiveness?

David Sacks 1:36 (laughs)

Jason Calacanis 1:36 I don't want to make any grand pronouncements here, but these have been important conversations we've had and it's been pretty great, I have to say.

Chamath Palihapitiya 1:42 Yada, yada, yada.

David Sacks 1:43 (laughs)

Jason Calacanis 1:44 No, it's just like, they put like 18 things in the plugs now, and I don't want to do too many plugs.

Chamath Palihapitiya 1:47 Well, why don't you do a modicum of work before you get on camera-

Jason Calacanis 1:51 (laughs)

Chamath Palihapitiya 1:51 ... and actually edit it?

David Sacks 1:52 Here we go. (laughs) I get one compliment and then here it comes.

David Friedberg 1:54 That's exactly it. He doesn't do the homework, so he runs out of words. He's like, "We got the biggest names to come to our summit, the Vice President came." He said, "Yada, yada, yada."

David Sacks 2:05 Elon Musk showed up in person. "Yada, yada, yada."

David Friedberg 2:07 (laughs)

Jason Calacanis 2:07 There was an astronaut.

David Sacks 2:08 (laughs)

Jason Calacanis 2:08 Friedberg lost his mind.

Chamath Palihapitiya 2:09 "Yada, yada, yada."

Jason Calacanis 2:10 "Yada, yada, yada."

David Sacks 2:11 (laughs)

Jason Calacanis 2:11 But this year will be no different. We'll have incredible parties, blah, blah, blah.

David Sacks 2:16 (laughs)

Chamath Palihapitiya 2:16 And let's get to work. Okay.

David Friedberg 2:18 The president did a trip to the Middle East. "Yada, yada, yada."

David Sacks 2:21 Made more peace.

Jason Calacanis 2:22 A whole new framework for how we don't interfere.

David Sacks 2:25 America is going bankrupt. "Yada, yada, yada."

Chamath Palihapitiya 2:26 "Yada, yada, yada."

David Sacks 2:26 World's greatest moderator. "Yada, yada, yada."

Jason Calacanis 2:28 Blah, blah, blah. Executive producer for life. Deal with it. Friedberg, okay.

David Sacks 2:30 (laughs)

David Friedberg 2:31 (laughs)

David Sacks 2:31 Uh, what's on the contract?

Jason Calacanis 2:34 Let your winners ride.

2:37 Rain Man, David Sachs.

2:41 And I said we open source it to the fans and they've just gone crazy with it.

David Sacks 2:45 Love you, man. Nice.

Jason Calacanis 2:46 Queen of Quinoa.

Jason Calacanis 2:49 All in.

2:49 All right, let's get to work here. The bond market is the captain, apparently. Treasury Department sold $16 billion worth of newly issued 20 year bonds on Wednesday afternoon, and there was weak demand. This pushed yields higher across the board. The 10 year, which Best Interess said to focus on because it's the benchmark rate for most borrowing costs, you know, mortgages and stuff like that, it spiked, and here it is, and it actually hit a five handle at one point. A lot of people were hand wringing about this, and the S&P dropped 1.5% in about 30 minutes. Here's that chart as well. And the three major indices were all down between 1.5 and 2% on the day. Obviously, in related news, the House passed the Big Beautiful Bill at the 11th hour last night. Uh, this makes the TCJA tax cuts permanent, um, and it's estimated to increase long run GDP by 60 basis points. Uh, that's if all the cuts were implemented. It's also going to reduce tax revenue by four trillion over 10 years is the estimate, and it's going to add between three and five trillion to the national debt over 10 years. Friedberg, what's your take on the triple B and the bond-

Chamath Palihapitiya 3:58 Okay.

Jason Calacanis 3:58 ... weak bond market, all of it?

David Sacks 4:00 I just want to take a quick primer on-

Jason Calacanis 4:02 Sure.

David Sacks 4:03 ... how the government gets funded. I know we, we assume everyone understands it, but I think it's important for folks to really grok it. For the federal government to make payments to employees and contractors and buy stuff, they need to put money in their bank accounts, and the way they put money in their bank accounts is they issue bonds. These are Treasury bonds. So they'll sell Treasury bonds to the public, and individuals buy it, companies buy it, banks buy it, and foreign governments buy US Treasuries. And they transfer or wire cash into the federal government's bank accounts, which they can then use to pay for stuff. And then the Treasury Department needs to continuously sell Treasuries to raise cash to fund the government. When folks don't show up to buy Treasuries, that's a bad thing, and that means that the government needs to increase the interest rate that they're paying on those bonds. So, what we saw on Wednesday was a really weak demand signal for Treasuries on this, you know, modest Treasury auction. Selling $16 billion of bonds is not a lot. There's hundreds of billions being sold each quarter. And so this was not a big number, but there was no buyer. The market was really dry. And so everyone that participates in financial markets saw this and freaked out. And the big motivation, the big understanding of the relationship here is, to your point, that this big tax bill and spending bill is passing out of the House. And that bill, as we talked about last week, has a high deficit and that'll run up US debt over time, which makes it more difficult for the US government to pay its bills because it has to issue more debt, interest payments have to be paid every year, and so on. Now, if you just pull up this one slide, this is something I thought was really worth sharing. The CBO estimates, which is what you referenced, Jason, are estimates of what the cost is going to be over time, and this is from Jessica Rittel or Rittle, out of the Manhattan Institute, put this chart together. And what this chart-

Jason Calacanis 6:02 Congressional Budget Office.

David Sacks 6:05 Yeah, so the Congressional Budget Office, the CBO, creates a estimate of the budget, the spending, uh, the deficit, and ultimately, the incremental debt that the US government will need to issue to fund its obligations over time. This is, uh, a chart that was put together that the expectation on a baseline basis is that over the next 30 years or so, US debt to GDP will climb to 203%. But what a lot of people don't know and don't talk about is that in the CBO estimates, they assume in all of their models that interest rates are at 3.6%. And with the bond sell-off yesterday, what we are now seeing is 30-year Treasury interest rates at over 5%. It's 5.1% this morning. And for every incremental 1% above 3.6, you're spending an extra 350 billion a year in interest. 350 billion a year. So as we go up by 1.5% interest, over the next 10 years, we're spending another five trillion dollars just on interest payments, half a billion dollars, half a trillion dollars a year of incremental interest on the difference between 3.6 and 5.1. That's an incredible recursive problem. And I say recursive because the incremental interest that we now have to pay because interest rates just went up, because the market is demanding more payments from the government to fund this, means that the government has to issue more debt and it quickly gets away from you. There is a non-linear relationship between the deficit and interest rates which drives up the debt problem in a non-linear way and it gets away from you and you can't fix it. And that's what the market is telling us, is that the current bill that's being passed out of the House is showing such an extraordinarily high deficit-

Jason Calacanis 7:52 Mm-hmm.

David Sacks 7:52 ... that the market does not want to buy the debt from the government, rates are now climbing, and that creates a massive problem for the government.

Jason Calacanis 7:58 Okay, Chamath, uh, you've been tweeting about this. Whoo, uh, we thought we were gonna get, uh, a new administration and maybe, um, some focus from the government that we would be having more austerity measures, balance the budget. Now it looks like we're gonna pour gasoline on the fire. What are your thoughts?

Chamath Palihapitiya 8:17 I think we have to be careful here. So Jason, the political calculus will be for the president to decide how much credit he actually wants to take for this bill. Because even though it has his name on it, the contents of the bill are different in actual facts than what I think he intended.

Jason Calacanis 8:39 Mm-hmm.

Chamath Palihapitiya 8:39 And what I mean by that is when you look inside of what happened in the 11th hour last night, it's disappointing. This thing is like anti-DOGE. If DOGE was meant to be a reflection of the American voting population's desire for meaningful reform in government, cost controls, some form of austerity, and to get this debt spiral in check, this is the opposite of that. What happened was in the 11th hour, you had a handful of people abstain, you had one person that passed away in the last few days, you had one person that fell asleep on the floor of the House so he wasn't even woken up for the vote. And in the middle of all of that chaos, what happened was all kinds of things were added and attached and canceled at the last minute. Because what happens is you have to have these puts and takes, as Friedberg described. If you want to spend over here, you have to find a cut over there. But I think what happened was there was really not a lot of financial literacy used to decide what to actually put in and what to cut. And that lack of discipline is going to create, I think, a negative set of consequences. So what are those consequences? Today, the tenure is around four and a half percent. At the rate in which it's escalating since Liberation Day, by the end of this year, we're going to be past 5%. The 30-year is on a rate now to get past six and a quarter, maybe even reach six and a half percent. Those are way beyond what most people thought was a reasonable place to be for the United States economy. And so what will the implications be as rates go to those levels? You'll de-lever from the United States, you'll sell US debt, you'll own things like gold and Bitcoin. If you're curious about what's happening to gold and Bitcoin, they started to spike in the last few days. You'll have ratings organizations that add to this cascade by downgrading the United States. That happened on Friday. You'll have very smart people starting to signal that this is a much harder problem than they initially thought. That's how I personally interpreted Elon's comments over the last few days. So what was the House supposed to do? I think what they were supposed to do was implement some form of austerity. They were supposed to, by the will of the people, pass a rescission bill. They were given that rescission bill, it was just nine billion dollars. They couldn't even pass a nine-billion-dollar rescission, and instead they passed a four-trillion-dollar inflation to our debt. Now you hand this to the Senate. The Senate is in a very difficult place as well. Do they want to, quote-unquote, "claim victory" and say, "Here you go, President Trump, here's your bill"? But they'll further bastardize this thing and it will be even further away from what I think benefits MAGA and benefits Main Street. So who does it benefit? Current course and speed right now, this bill is about traditional Republicans and traditional Democrats circling the wagon.... and putting on a platter a set of things that I think will be hurtful to average Americans. You're going to see energy prices spike, you're gutting the number of electrons that will be available for things like AI, you're going to increase Medicare prices, and the math is wrong.

Jason Calacanis 12:24 Hmm.

Chamath Palihapitiya 12:24 So, when you sensitize this thing to a four and a half, or five, or five and a quarter rate, so meaning not what the CBO used, but the real conditions on the ground, this thing is an albatross. And I think unfortunately, for President Trump's agenda and for the MAGA movement, this is the worst of all conditions. The financial markets will punish us. And then the last thing I'll say is, now, to top it all off, I think that Jerome Powell will see the writing on the wall, many aspects of this thing are inflationary, and if they're not handled well by the Senate, he has a lot of room to actually increase interest rates.

Jason Calacanis 13:08 Oof.

Chamath Palihapitiya 13:09 So, I would just say that the Senate has an incredibly difficult job. I think the president has an even more difficult job about what to do right now, but the House did nobody favors. They did not do anybody a favor yesterday.

Jason Calacanis 13:22 Here's the, uh, prediction from Polymarket on what will happen to Fed rate cuts in 2025. It's across the board. It seems like nobody can tell if it's going to be zero, one, two, or three, 20, 22, 25, and 15%, respectfully, respectively, for those four options. Sachs, you don't speak for President Trump. You're the czar of AI, and crypto specifically, so let's put that out there, but I'm curious to your thoughts on what happened with Doge. Why are we continuing to spend ourselves into oblivion, and what will the downstream issues be here? Because this sounds like it's going to be inflationary. This sounds like it's going to be hard for people to buy homes. It's gonna create more austerity in the future. How bad is this, and do you feel it's as bad as Dave and Chamath are framing it?

David Sacks 14:14 Well, look, I mean, I wish we had 435 members of the House who thought like Freeburg about spending and deficits. Um, we don't. The Democrats all want a lot more spending and a lot more taxes. Remember, if it wasn't for Manchin and Sinema, we would have had that four and a half trillion dollar Build Back Better. And among the Republicans in the House, unfortunately, we have a bunch of Republicans who are pretty soft on spending. I mean, you can call them RINOs if you want, and we only have, what, like, a three-vote margin in the House, and the Democrats are not cooperating in any way, so you don't have that many votes to spare. So, what I'm saying here is, you can't make the perfect the enemy of the good. I think you have to be realistic about how much we can get done here, and I do think that this bill does contain a lot of good things in it. There are a lot of priorities for the administration in here. Do I wish it cut spending more? Yes. I mean, do I wish that it made all the Doge cuts permanent through rescissions? Yeah, absolutely. I think it's outrageous that there are enough House Republicans who didn't want to back up Doge that that wasn't enacted. But there are a lot of good things in the bill, and I should just highlight them for balance here. So, the number one thing here is that this bill will permanently extend the 2017 tax cuts, and if we don't pass this bill, let's just assume that we do nothing, okay? If we do nothing, you're gonna get the largest tax increase in decades, and it won't just affect the rich. This affects the middle class as well. The 2017 tax cuts increased the standard deduction, which is important for the middle class. It raised the child tax credit. So, again, if you do nothing, you get a huge tax increase as soon as the 2017 tax cuts, which Trump passed back in his first term, when they sunset. So, that's number one. In addition, there are promises here that were made during the campaign to eliminate taxes on tips and overtime that have been enacted, and the president promised to do those things and he is accomplishing those things. So, I think that's important. There's funding for the border wall here, 10,000 new ICE officers, more detention beds, and so on. On energy, it repeals the methane tax and unlocks new oil and gas on federal lands. There's a bunch of other things as well. So, there are a lot of good things in here. Now, to Chamath's point, will this bill be bad for the Republicans' prospects in the midterms? I guess what I would say to that is, I don't understand how you expect to do well in the midterms if Republicans preside over the largest tax increase in decades, a tax increase that Joe Biden tried to get during his administration. Biden tried to raise taxes and couldn't get the votes for it, but if we don't make those tax cuts permanent, if we allow the sunset to happen, then you will accomplish what Joe Biden could not, which is to raise taxes on the American people. So, look, no bill like this, that's passed by a one-vote margin, on straight party lines when you only have a three-vote margin in the entire House, is going to satisfy everyone.

Chamath Palihapitiya 17:11 Here, let me-

David Sacks 17:12 Yeah, go ahead.

Jason Calacanis 17:12 Well, Chamath, let me ask you a question there. Y- you have Trump at his peak power. You have all these threats of, "Hey, we're going to primary anybody if they don't do, like, what we're saying here." Why isn't Trump just coming in and using his power and just saying, "Hey, not-"

Chamath Palihapitiya 17:27 I think-

Jason Calacanis 17:27 "... enough. Get back to work. We need to cut spending." Period, full stop. And he's got that power. I don't hear him saying that.

Chamath Palihapitiya 17:35 I do think that there are ways to enact the tax cuts and make them permanent, and I think that that is a good part of what this bill did. The problem was what happened from 11:00 PM to 6:00 AM, and that's all of the nonsense where, I'll just be honest, I think the people in the House are not nearly as financially literate as they need to be, and I think what they wanted to do was pass something and throw it over the wall and say, "Mission accomplished."Now, it's up to the Senate and the good news is, look, the Senate has these six-year election cycles for a reason. It allows them to think strategically and see past what's right in front of them. So I still think that there's a chance for the President to have his cake and eat it too. But I just wanna highlight that as a supporter of his and a supporter of that MAGA agenda, which I think a lot of people voted for, I just wanna be honest and say this is not it.

Jason Calacanis 18:38 Hmm.

Chamath Palihapitiya 18:39 And there has to be some meaningful reforms in the Senate version of this thing that gets sent back to the House. So I'll give you an example of one. 81% of the incremental energy that's generated in the United States last year came from private enterprises that were investing in short-term forms of power that have a credit and a transfer market tied to it. This is just the financial machinery. This is how Blackstone and Goldman Sachs and Brookfield and all of these big players move tens and hundreds of billions of dollars around. They changed those rules at the eleventh hour. What is the impact of that? Elon foreshadowed it. Nick, maybe you can show the headline of the article. He said, "We could be running into a power capacity issue by mid next year." Now, if we knew that, why would we take the short-term incentive away to generate more electrons? All the great things that David has done, that the President has done on AI, I mean, we'll talk about what happened in the Middle East, but when the rubber meets the road and you actually have a shortage of electrons because these financial actors, they're not... You know, and in fairness to them, they're acting rationally. You take the financial incentive away and you can't underwrite this thing, what are they gonna do? They're just gonna stop doing it. So in the absence of electrons, what happens? Prices go up, it's inflationary, and now you'll have to allocate electrons. Do the electrons go to an AI data center or does it go to a home? In a different example, actually on the residential side, places like Florida, I think there was, like, an incentive for, like, batteries. So if you-

Jason Calacanis 20:25 Batteries.

Chamath Palihapitiya 20:26 ... were about to get hit by a hurricane, you can buy these big battery systems from Tesla, as an example, but there are other ones, Generac and whatever, Trane. That was cut out. And so in Texas, all of these impacts will have negative consequences. My point is, I think you have to really look at what happened in the eleventh hour and fix those things because the problem with these plans is you can't look at gains that are in years six through ten to justify pain in years one through five. You can't do that, because I understand how that mathematically makes sense. It doesn't make sense practically for the average American. That's just not how life works. You don't go into a J-curve. You know, we do that as investors, right?

Jason Calacanis 21:12 Yeah.

Chamath Palihapitiya 21:12 But you don't do that as a normal American, which is be on the wrong side of the economy for four or five years in the hopes that year six and seven are good. That's the point. That has to get fixed.

Jason Calacanis 21:22 Friedberg, I asked Chamath a question. Shouldn't Trump use his capital he's built up here and say, "Not good enough, make some cuts here." What would you say to President Trump if he was asking you for your advice, Friedberg?

David Sacks 21:37 I think the writing's on the wall that the system is winning and the rebels came in and they tried to fix the inefficiencies in government with Doge under Elon's leadership, and our friend Antonio's participation, and a great group of individuals who are true patriots who are spending time trying to help reassess how the government operates. And they, as I've said from day one, from my first visit to DC during inauguration weekend and every visit I've done since then, I always leave after meeting with members of Congress deeply worried that they won't actually do what they need to do to make the changes. And the last line of defense ultimately is the President with his veto authority and his ability to tell people to go back, rethink this, and cut spending. I feel like we're in a last-ditch effort, and I'll tell you why I say it's last ditch. I think that there's a relationship between what's going on in the United States and what's going on in Japan. Nick, if you'll pull up the Japanese government 40-year bond yield chart. So just so you guys can kind of observe, in the last couple of days, we've seen Japanese bond yields soar from two and a half percent to three and a half percent. Remember, Japan owns $1.1 trillion of US treasuries. I'll just read a quote from a guy, uh, who's the chief global strategist, named Albert Edwards at Societe Generale and he said, "Recent developments in Japan may signal the end of the favorable investment cycle that's been established since the 2008 global financial crisis, potentially reshaping global financial landscapes in the coming months."

Chamath Palihapitiya 23:09 Can I translate that? 'Cause that, it's, it's incredibly important what Friedberg said, but I'll translate that. What he is saying, so this is a guy from Soc Gen. Since 2007, 2008, every now and then the markets give you free money. One of the most obvious free money trades was the yen carry trade and in order to, to execute that trade, you're effectively leveraging treasuries against the Japanese bond market. What he is saying is that there is increasing risk that that trade unwinds. When that trade unwinds, what you're going to have are net sellers of up to, as Friedberg said, a trillion plus dollars of US treasuries. What will that do? It will further exacerbate the market's reluctance to own US treasuries, which means yields go even higher. Which means, I think-

David Sacks 23:59 Which means interest rates for businesses and individuals go higher.

Chamath Palihapitiya 24:03 Correct.

David Sacks 24:03 And the only way to keep those interest rates low will be for the Federal Reserve to try and step in and buy those bonds, which will devalue the dollar.And in his commentary, he went on to say that, uh, the 20-year Japanese bond auction that just took place, similar to the US Treasury auction that just took place, was the worst they've seen since 1987. That's how significant this event was in Japan over the past week. So the massive climb in bond yields in Japan indicates a massive sell-off in credit and, remember, if you look at the historical perspective, when the global reserve currency nation sees their debt sell off, it usually is part of a global sell-off that happens; it's not just the US that gets affected. And any one of these markets can cause a cataclysmic follow-on to the rest of the global financial markets. Like, if Japan sells off too much, we are going to start to see a lot of unraveling happening. That's the consequence, I think-

Chamath Palihapitiya 25:04 So...

David Sacks 25:04 ... of this particular bill because it sig- it signals a lack of a reluctance to actually address the, uh-

Chamath Palihapitiya 25:08 Let me, let me say something here.

David Sacks 25:10 Yeah.

Chamath Palihapitiya 25:10 I called Friedberg today on the way here. It's very rare that he and I agree about this kinda stuff because normally what I say is, "You're catastrophizing."

David Sacks 25:21 Sure.

Chamath Palihapitiya 25:22 "Calm down." But this is where I will say I'll put my money where my mouth is, and I'll put the chips on the table to say this is the moment. This is the moment where we either re-underwrite what we voted for, or we mistakenly pass this Christmas tree concoction. It does have President Trump's signature on the top of it. It does have some features that he asked for. But what I hope he sees and realizes is the details here matter and without some technical maneuvering in the Senate, this is a bad bill as constructed. And if it passes, forget what any of us think, the bond markets will act decisively and they're gonna go in one direction, and it's away from us. And I just hope that we figure this out. Seems like a classic diffusion of responsibility here, Sax. You have Congress, Senate, and POTUS not willing to step up and say, "Let's cut the spending." And if they don't, then...

David Sacks 26:25 Well, I don't, I don't think that's fair. I mean, look, the, the president backed up Elon and Doge. First of all, he created Doge. He gave it the US digital service. He backed it up in every cabinet meeting and every public pronouncement. There's a limit, though, to what he can do. Congress has the power over the purse, and we said on a previous episode that at the end of the day, for the Doge cuts to become permanent, Congress has to incorporate that into the budget. And the reality is there are still a number of these, like, old bull appropriators on the Republican side who just are not wired to make spending cuts. I mean, right? That is the reality.

26:57 But why aren't we hearing him vocally saying, "Stop this madness"? He is the most vocal guy in the world who mixes it up on-

27:04 Let's be realistic.

27:05 ... every topic on the planet. Why is he not?

Chamath Palihapitiya 27:07 Well, let's give him the benefit of the doubt. Let's give him the benefit of the doubt.

David Sacks 27:09 Okay.

Chamath Palihapitiya 27:09 He's probably working it all in the back channel. They are the things that he wants and he's in the midst of negotiating as well. But the... My, my point is just this: the level of financial illiteracy in this bill will come back to bite America in the ass.

David Sacks 27:23 Look, here, here's the problem is-

Chamath Palihapitiya 27:25 Period.

David Sacks 27:25 ... that what, what you guys wanna sell right now is austerity. And the reality is that the politicians in Washington just are not buying austerity right now. I mean, that's what you want is austerity.

27:36 That's right. Yep, you're right.

27:36 And the reality is the only way you get true austerity, so, like a painful set of changes, is when both parties link arms and jump off the cliff together-

27:46 Yep.

27:46 ... and, and make those changes. The Democrats right now have no willingness to do that. They're opposed to doing this. This is a straight-line, party reconciliation vote. I think you're trying to overload this vote with way too much stuff. You're trying to basically say that this vote has to fix America's fiscal problems, which is not gonna happen. I mean, I... Look, I agree with you that the fiscal situation needs to get fixed. This is just not the vote where it's gonna happen.

Chamath Palihapitiya 28:09 You cannot exacerbate it.

David Sacks 28:10 Well, I don't know. I mean, look, I understand that this doesn't have as much stuff as, as we want. I mean, like I said, I want to see the Doge cuts made permanent but the alternative to this bill... Let's say the alternative is just do nothing. That is actually meaningfully worse because you will get a massive tax increase, massive. I think President Trump inherited a Biden economy that was already feeling pretty shaky. I don't know what the argument is for a massive tax increase in an economy that's not doing great. I'd rather see the tax cuts made permanent. I'd rather see the no tax on tips and overtime implemented, important campaign promises. I'd rather see funding for the border wall. I mean, these are all important things that we need to have happen, and I just don't think that this bill is how you're gonna solve...

Chamath Palihapitiya 28:52 Of course those are good, but what I'm saying is-

David Sacks 28:53 Okay.

Chamath Palihapitiya 28:53 ... why do you pay for that with electron supply for homes and AI?

David Sacks 28:57 I don't know. I mean, you're talking about a pretty esoteric issue, Chamath. This is not the same as solving the US budget situation.

Chamath Palihapitiya 29:02 I'm just... Okay, why, why do it by doing Medicaid cuts? Why?

David Sacks 29:05 Well, let's talk about the Medicaid cuts. First of all, I mean, you're being a little bit schizophrenic about this. I mean, you guys are saying that you wanna see more cuts, but then you also believe that the Medicaid cuts are a bad idea. So you gotta kinda choose...

29:17 I, I'm not saying that. I think all cuts are great, all, all spending cuts are-

Chamath Palihapitiya 29:20 I think there should be cuts across the board. Yeah, cuts across the board, spread it out.

David Sacks 29:23 You gotta decide what you're opposed to. Are you opposed to cuts or you want more of them?

29:27 I want more cuts, and given the fiscal situation-

Chamath Palihapitiya 29:29 Much more.

David Sacks 29:29 ... I'm actually... If, if someone showed up and said, "Hey, we're gonna increase taxes," I'd say, "That's what we gotta do right now. Everyone's gotta take a hit on this," but, hey, I know I'm gonna be alone in that so I'm not gonna try and make that argument. I guess the question for you, Sax, is-

Chamath Palihapitiya 29:39 No, you're not alone in that. I agree with you. (laughs)

David Sacks 29:41 But let me ask a question, Sax.

29:43 Yeah.

29:43 What do you think is the moment when the two parties lock arms and do jump together? What is the conditions that need to be kind of prevalent for us to take, you know, draconian austerity measures?

29:55 Probably the bond market forces it on the politicians, force it on Washington.

Chamath Palihapitiya 29:59 Yeah. I think you're right.

David Sacks 30:00 You're an economist by background. Do you, do you see that happening right now? Like, do you see this, the sell-off that's happening, not just in the US but everyone that's linked to the US with Japan and so on, don't you think that the market's telling us that this might be the moment?

30:12 It could be the moment but, you know, I remember the first week of April when Larry Summers came on the pod and said that the markets were melting down and that was a different moment that he was trying to sell.

Jason Calacanis 30:21 Right.

David Sacks 30:21 ... in favor of his policy.

Jason Calacanis 30:23 Right.

David Sacks 30:23 So my point is just, there's market volatility and we won't know for a while whether this means anything. It could just be a blip.

Jason Calacanis 30:29 Right.

David Sacks 30:30 So look, you asked me, "What are the conditions for getting austerity?" I think that austerity will have to be imposed on Washington from the outside. Washington's not gonna find the will internally. We had a wonderful moment here where you have Elon come in with Doge, which the president made possible. Okay? No other president would have even have done this.

Jason Calacanis 30:50 Agreed.

Chamath Palihapitiya 30:51 Agreed. Big credit for that. Big credit.

David Sacks 30:52 Where you get a total outsider to come in and bring a team of, like, young big bald geniuses. And you (laughs) let them go through-

Chamath Palihapitiya 31:01 (laughs)

David Sacks 31:01 ... these departments line by line-

Chamath Palihapitiya 31:02 Literally.

David Sacks 31:02 ... and start deleting things. Okay? And they made, I think, great progress. I think they found out 160 billion a year of cuts that could be made administratively. Beyond that, they need Congress to approve it. And I will acknowledge that there are still a number of soft on spending rhino Republicans, and there's just not a majority for the types of austerity and cuts that you guys would like to see. I mean, that's the reality.

Jason Calacanis 31:29 Yeah.

David Sacks 31:29 But I still think that the question with this bill is just how pure you wanna be. My point is just, are you gonna make the perfect the enemy of the good? I don't think you're gonna get austerity out of Washington right now. It's just not in the cards.

Jason Calacanis 31:40 Yeah.

David Sacks 31:40 The question is whether this bill is basically better than the status quo, and I, and I think it is because of the tax cuts.

Chamath Palihapitiya 31:47 To your point, without opining on it, I think what's gonna happen is the bond market will sensitize this budget at real rates. They're not gonna use the 3.6 that Friedberg pointed to. They're just gonna re-underwrite this at five, five and a quarter, five and a half. That is a very different risk exposure, I think. And so to your point, they'll react. If it looks like it passes as is, then that's what they'll do. And to your point, David, we'll know in the next 60 to 90 days.

David Sacks 32:16 Let's say that this is just a blip in the market and it's not some larger, once-in-a-century-type event. The reality is, we don't know exactly what's gonna happen. Look, I don't like America's fiscal picture at all, but what if the AI and robotics revolution-

Chamath Palihapitiya 32:28 Right.

David Sacks 32:28 ... plays out in the most optimistic way over the next decade-

Chamath Palihapitiya 32:31 Right.

David Sacks 32:31 ... and it's massively deflationary and we get basically AI-powered robots expanding the economy-

Jason Calacanis 32:38 You need power.

David Sacks 32:38 ... massively.

Chamath Palihapitiya 32:38 You need power for that.

David Sacks 32:40 I get that, and we need to do power generation, for sure. But my point is just, what if the new technology provides an answer to the fiscal situation-

Chamath Palihapitiya 32:49 I think it can.

David Sacks 32:49 ... that's not currently on the table?

Chamath Palihapitiya 32:51 I think it can, but-

David Sacks 32:51 So this is my point is, is Washington's not gonna embrace-

Chamath Palihapitiya 32:54 I understand, but you're gonna have brown-outs and blackouts of average human homes to do that? No. You shouldn't have to make these decisions. Those are dumb trade-offs.

David Sacks 33:01 You're not gonna be able to solve the power generation problem in a reconciliation bill.

Jason Calacanis 33:04 And I wanna just add my two cents at the end here. Leadership starts at the top. This president acts unilaterally all the time, whether it's immigration, DEI. He has no problem, and this is what he is doing. He's endorsing this bill. He's saying it's big, it's beautiful. He is saying this is historic. I think this is bad leadership. I'll just say it straight out. He was elected to balance this budget and to have austerity. He's going to put more onto the debt, and we sat here on this very podcast, the four of us, and said this was the most important issue on the world. And Trump is putting gasoline on the fire. I think it's bad leadership. Let's continue on the docket.

David Sacks 33:48 I suggest you look at the Constitution because the power of the purse rests with Congress. And-

Jason Calacanis 33:51 He's endorsing this. He's endorsing its acts.

David Sacks 33:54 When it comes to im-

Jason Calacanis 33:54 He's not even putting up a fight.

David Sacks 33:56 When it comes to immigration and these other areas, the president has far more unilateral power and he's used that every chance he gets. But when it comes to spending, you have to get Congress on board. This is a bill that passed with a one-vote margin. I don't know where you think the opportunity is to s- squeeze out more concessions from Congress. I don't think it's there.

Jason Calacanis 34:14 He could speak up. He could speak up and say, "Do better." He's doing the opposite. He's doing the opposite.

David Sacks 34:19 This bill passed by a one-vote margin. It was hanging on by a thread. And if it failed, you get basically hundreds of billions of tax increases, which we don't need right now. And, and-

Jason Calacanis 34:29 He's not even trying.

David Sacks 34:29 ... you know, in terms of, in terms of... I think he's trying. In terms of Republican prospects, look, people vote for Republicans to do two things. Cut taxes and cut spending. I wish that this bill did two out of two. It does one out of two with some of the second one, like with the Medicaid stuff. If we didn't at least cut taxes, there'd be no reason to vote for Republicans. None.

Jason Calacanis 34:52 Y'all are much closer to him than I am. Y'all should be challenging him to not endorse this and to do the opposite. That would be the profile in courage.

David Sacks 34:59 Then we get the biggest-

Jason Calacanis 35:00 And leadership starts-

David Sacks 35:00 ... tax increase in decades.

Jason Calacanis 35:02 ... at the top.

David Sacks 35:02 Great. Well-

Jason Calacanis 35:02 No, he should just go to everybody and say, "Do better."

Chamath Palihapitiya 35:04 I don't agree with that tactic. I think the better tactic is to do what he did, but then work behind the scenes and help the Senate implement the technical guardrails that make the bill better than it as is. Look, nobody thinks that this bill is gonna pass as is. It's gonna go through its own set of changes in the Senate. Now, I think the opportunity is to understand these puts and takes with a little bit more detail and a little bit more mathematical precision and fix it. So I still hold out hope that we're gonna get to a better place, but he's gonna have much more influence, Jason, by actually taking the positive path than throwing everybody under the bus. The real question will be in 30 days or 45 days, what is the final version of this thing? And whatever gets passed and signed by him, there will have been enough time to understand it and you'll see the real-time reactions. All I'm trying to indicate is I think that this was a moment where people were very pensively optimistic that the approach of Doge would really be embraced and that we'd see some broad-scale attempts to at least... And s- you know, Friedberg said this, just to go back to 2019. Even if we don't do anything else, just go back to 2019, pretend COVID didn't happen.

Jason Calacanis 36:13 Yeah.

Chamath Palihapitiya 36:14 And we would be... By the way, if we did that, we would have a budget surplus and the bonds would be trading down to 2% yields again. I mean, we would be in such an incredible condition. We've got 2% inflation right now.

David Friedberg 36:25 Anyway, we don't need to beat the dead horse. Let's move on to Google. Yeah.

David Sacks 36:27 Look, I, I mean, I, I wish, I wish there were 218 members of the House who thought like you did.

David Friedberg 36:31 Look, I hear you. I hear you too. I hear you, yeah.

Jason Calacanis 36:32 Oh, gosh, he could... Listen. This guy is saying he's gonna primary anybody who, you know, doesn't or breaks right.

David Friedberg 36:36 Jason, I don't think it, I don't think you need to...

Jason Calacanis 36:38 He should be speaking up right now. You guys are...

David Sacks 36:40 I'll tell you what. Give him the line item veto and then let's talk.

David Friedberg 36:43 Right. Yeah.

Jason Calacanis 36:44 How about you say, "Guys, spend less money"? He doesn't have to throw him under the bus, Chamath. It could be something very subtle. And Trump-

Chamath Palihapitiya 36:49 But you make it that way. What you... The way that you position it is, like, you make it such a black and white thing, and it's, I feel like-

Jason Calacanis 36:55 Speak up is a b- is black and white?

David Friedberg 36:56 No, there's a lot going on. Yeah.

Jason Calacanis 36:57 He's saying this is a great bill.

Chamath Palihapitiya 36:58 No, but what I'm saying is he is pr- I'm guessing, I don't know, but I'm gonna assume-

David Friedberg 37:05 Okay.

Chamath Palihapitiya 37:05 ... working behind the scenes, and what you're saying is he should virtue signal and prognosticate in public.

David Friedberg 37:10 Nope.

Chamath Palihapitiya 37:10 And I'm saying that-

Jason Calacanis 37:11 I, I never said virtue signal.

Chamath Palihapitiya 37:12 ... will not ma- That's what you're asking him to do.

Jason Calacanis 37:15 No, I'm not. I'm asking him to say, "Reduce spending in the bill because that's good for America."

David Sacks 37:21 This bill cuts 880 billion for Medicaid over a decade, which is something that already is politically tough- Okay. ... and controversial and imposes work requirements for able-bodied adults. This is similar to what Bill Clinton did back in 1996 with welfare reform, basically saying that you can't be a layabout and get welfare. So, these are relatively tough things to do politically. It's like, do I wanna see even more cuts? Yeah, absolutely. But again, when you have a one-vote margin, whose vote are you gonna pick up by doing more cuts? I guess you get Thomas Massie maybe, but you probably have to go all the way to balance the budget to get his vote. I don't know what it takes to get a Thomas Massie vote. So, I don't know what votes you think you're gonna pick up by cutting even more, and we can't afford to lose even one vote.

Jason Calacanis 38:04 It's literally the art of the deal.

David Friedberg 38:05 Jason, we gotta move on.

Jason Calacanis 38:06 I, I will move on, but if you're gonna tell me it's I'm asking virtue signal and you're gonna lie about my position, I will correct it.

David Friedberg 38:10 It's been 40 minutes.

Jason Calacanis 38:11 So, my position is not to virtue signal. It's to go flip a couple people and say, "Do better."

Jason Calacanis 38:15 Okay. It was a huge week for AI, again. Google and the ghost of Steve Jobs took center stage. Let's start with Google here. They had their I/O conference on Tuesday. This is where they show a bunch of new stuff. They get developers to come together to embrace their products, and the stock ripped 5% on the day, which might be a turning point for Google, uh-

David Friedberg 38:36 Up again today.

Jason Calacanis 38:37 ... and up again today. Search was the big announcement, and we had a discussion with Sergey about that in Miami, and we had multiple discussions about it here over the last couple of months. They demoed something called AI Mode. No, not Founder Mode, AI Mode, and they compared it to regular search. Here it is on the screen if you're watching us on YouTube or Spotify, a very elegant app. And so here, you have somebody searching, and what you can see is in AI Mode, it looks like a nice comprehensive search instead of 10 blue links and tons of advertising. So, you can flip over and see all, or you can do a perplexity-like search. Here, we're showing you what this search would have looked like, the AI summary at the top, and then your 10 blue links. It's distinctly different. It is exactly, Chamath, what you talked about. Somebody has to have the courage to flip the switch here, and so that's was the big drop, and I think that in your interview, Dave, didn't Sundar say, "We're gonna integrate ads into that kind of result?" Yes? The comprehensive search result?

David Sacks 39:38 Yeah, I think, I think there were a couple of things that Sundar said in the interview that showed up in a really important way at I/O. The first was exactly this, which is to make AI Mode more ubiquitous in search and effectively, over time, replace search with this AI Mode experience, which they've been testing in a small group and now they've expanded very specifically to kind of, Chamath's point a couple weeks ago, they should try and flip the switch. Well, it appears they've done that. The key question and the challenge has always been, what's the revenue per query? How are you gonna make money? And I think one of the other kind of interesting announcements that we saw come out of I/O, which indicates the business model opportunity here, is not just AI Mode and search, but some of the other tools that they've launched-

Jason Calacanis 40:20 Yes.

David Sacks 40:20 ... bundling them together, and they have this product offering called AI Ultra for $250 a month that includes, you know, YouTube Premium. It includes 30 terabytes of storage on your Google account. It includes access to Flow, which is their movie creating AI model where you can use... They have v0.3, Gemini, and Imagen below it. Those are the three models that contribute to this movie creation, uh, studio tool. And they've launched a number of other kind of high value Gemini models as standalone research apps, and you can get access to all of these kind of high powered tools for $250. So, I do think this sets a new direction that Goo- that Google is likely testing as a business model, which is-

Jason Calacanis 40:59 Subscriptions, you're saying.

David Sacks 41:00 ... can we ma- Yeah, very high dollar volume subscription model for consumers that, over time, could create a very meaningful shift in the revenue mix for Google away from ads and more towards subscription revenue that we already see in some of the consumer services like YouTube and YouTube TV. This is, I think, a really important turning point. I would say if anyone were to identify the week that Google really pivoted into the AI business model, it might be this week. They launched over 15 products at this thing. And another important one I'll highlight, Sundar talked about this in the interview, uh, I did with him. In the early days of Google, from 2002 till about 2011, Google had this kind of playground of products called Google Labs where they would introduce new stuff. I don't know if you guys remember checking out new stuff.

Jason Calacanis 41:44 Yeah, of course.

David Sacks 41:44 So, they relaunched Google Labs, like, a year ago or so, and as Sundar said, they're putting a lot more stuff in Labs. So, Labs is now becoming the new test bed, and they launched a bunch of the announcements in Labs. So, that becomes the place where they'll say, "What's the business model? What's the use case? Do people like it? Do they love it?" If they do, it graduates out of Labs into full production, and I think that opens up the opportunity for some of the things like Chamath was talking about where they could experiment new ideas, new modalities, and then productize them if they work.

Jason Calacanis 42:13 And they discontinued Labs in 2011. They just brought it back last year.

David Sacks 42:15 They just brought it back. Yeah.

Jason Calacanis 42:17 Sax, you, I think, mentioned, hey, they have the I'm feeling lucky button. Here, they put the AI search up in the top bar. We have images, video, shopping, et cetera, news. We're all familiar with that.What do you think? Just swap out, "I'm feeling lucky" for "Delight me with AI" and, and may- or maybe just, if you were a product manager there, because you've done a lot of great product work in your career before you were in politics, would you just A/B test this and say, "Anybody who, let's say, doesn't click on ads, let's send them to the AI search and just see how they do? Because they don't click on ads anyway. And then just let the ad clickers keep going to the ad product."

David Sacks 42:52 Well, I think, you know, we were all calling on previous podcasts for Google to risk disrupting their dominance in search by moving to more of an AI-based model. And I think they've taken an important step in that direction. They've sort of threaded the needle here between keeping their old UI and product, and then also incorporating the, the new sort of AI UI. So this is a compromise. I mean, they're trying to have their cake and eat it too. It, it ultimately feels a little bit like a transitional move. I doubt that this will be the end point. But given their need to protect their search business while also developing their AI business, this feels like a pretty good compromise, I think. I mean, it certainly shows that they're in the game and they're not going to get caught totally flat-footed and let the whole world disrupt them while they're trying to figure out AI. I mean, they are responding now, and the market seemed to like it. I think they were up, like, 5% on this news.

Jason Calacanis 43:49 Yeah, and then up again today.

David Sacks 43:51 Yeah.

Jason Calacanis 43:51 Chamath, uh, we talked about having some, uh, design sense and maybe some bravery here. Looks like, uh, they're pretty much on the cusp of doing that. The search results, results in AI look elegant. They look, uh, dare I say, perplexity-like. When you look at them, I would say, I would like to have that as my default, I think, when I'm doing search. What do you think of the product? We're showing it here again. And what do you think the roadmap will be? I gave one possibility.

Chamath Palihapitiya 44:23 Sax is totally right. I think that this is not the destination, but they've taken a really important step, and now they have to follow through. We all know what has to happen. So I think we're all just going to debate when it happens, and I think what the market is betting is that it's going to happen in the next 18 months. So what is it exactly? It's when AI mode becomes the default for a large swath of existing Google users. How will we know that happens? They're probably running A/B tests right now. They're probably gauging behavioral patterns of which kinds of users, what the actual impacts to search are, and what impacts exist to CPCs, to cost-per-click, which is one of the inventory types that they sell. But I think this is the beginning of a process. I suspect it'll be done in less than a year. And for a large swath of users, they are going to put AI in the front door. I think that's a fait accompli. I think we're just now debating the mechanics of getting there, per how Sax alluded to it. That's a really powerful step. But here, Jason, I think I go back to what they also have to keep in mind. What you don't want to have when you are going through an innovator's dilemma is to have the competitor be onto the next lily pad while you are figuring out the current lily pad. And the reason I bring this up, and I'm sure we'll talk about this is, it's impressive what Sam Altman is doing right now at OpenAI. I don't know if it was a troll or not, but to buy IO, Jony Ive's firm at the end of Google IO. And I read an article that said OpenAI has been trying to do this for a couple years in a row. But what Sam alluded to in that video was some next gen whizbang device that they've been working on that was the industrial logic for the M&A. I think what you don't want to have happen if you're Google is to finally get the search thing right, and then now have to play catch-up on some device. So, I would encourage them to just run the A/B tests and shorten the window of measurement. I think we all know what has to happen, so it's probably better to just do it sooner than later, and then start to allocate the incremental resources to these new form factors and other things so that they shorten the distance between them and

Chamath Palihapitiya 46:49 OpenAI.

Jason Calacanis 46:49 Let me tee up exactly what happened. OpenAI, they're the makers of ChatGPT, bought Jony Ive's startup. The startup is called IO. They bought it for 6.5 billion in an all stock deal. If you remember, Jony Ive was Steve Jobs' collaborator and designer, iPhone, iPod, iPad, all that beautiful stuff. So OpenAI is buying IO. IO is not LoveFrom, if you've heard about that. That's his design agency. And so they did a, a really interesting rom-com video. I don't know if you guys saw this. It's incredibly corny-

Chamath Palihapitiya 47:19 I saw the video. The video is... (laughs)

Jason Calacanis 47:20 ... and ridiculous.

Chamath Palihapitiya 47:21 (laughs) .

Jason Calacanis 47:21 Let's play it.

Chamath Palihapitiya 47:22 It's great.

Jason Calacanis 47:22 Uh, here are two people having a meet- meet cute.

Chamath Palihapitiya 47:25 Dude, you're right. It's like a love story.

Jason Calacanis 47:27 It literally is like a meet cute. Here comes Sam. He's walking around San Francisco, and he's a genius according to this video. Here's what Ive said about Sam.

Chamath Palihapitiya 47:38 I like how Johnny I- Johnny Ive's like, "I've never met a man who's so brilliant and so humble."

Jason Calacanis 47:41 I mean, it's embarrassing, the language. The responsibility that Sam bears is actually, honestly beyond my comprehension.

Chamath Palihapitiya 47:48 He's a co-founder of IO.

Jason Calacanis 47:50 Yeah. OpenAI already owns 20% of it, yes.

Chamath Palihapitiya 47:52 Oh, no, no. 23%. 23%.

Jason Calacanis 47:54 Of all, a- as all Sam Altman deals, if you learned anything, they're conflicted. (laughs) But the, the copy here, I just want to get your general, the gentleman's comment on. "What I see you worrying about are other people, or about customers, about society, about culture." And to me, that tells me everything I want to know about something...

Chamath Palihapitiya 48:12 I'm surprised that you guys are such haters on this. I'm excited to see what this thing is.

Jason Calacanis 48:16 Why are we... What, what-

Chamath Palihapitiya 48:16 Oh, I am, but I just thought this-

Jason Calacanis 48:17 You guys are-

Chamath Palihapitiya 48:18 ... was like... You're falling for it.

David Sacks 48:20 Honest-

Chamath Palihapitiya 48:21 I don't get what it is.

Jason Calacanis 48:22 Jony is the deepest thinker.

David Sacks 48:23 This is two guys walking around.

Chamath Palihapitiya 48:24 I don't know why we're even, I don't know why we're even talking about this.

Jason Calacanis 48:25 It's two guys walking around.

Chamath Palihapitiya 48:25 I watched, I watched nine minutes though. I watched the nine-minute video. I wanted my nine minutes back. Nothing happened.

Jason Calacanis 48:30 Okay.

Chamath Palihapitiya 48:30 I want the device. They say they have a device.

Jason Calacanis 48:32 What device?

Chamath Palihapitiya 48:33 Okay, I'm giving them the benefit of the doubt.They've invented something that they say is world-changing.

David Friedberg 48:39 Okay.

Chamath Palihapitiya 48:40 But they, this is, again, I'm just using their words and he's sipping a, a macchiato there, so that's important.

David Friedberg 48:45 Oh my God, you are so falling for the espresso video.

Chamath Palihapitiya 48:48 Look at the da- bro.

David Friedberg 48:48 This is your problem. Jamal, just like-

Jason Calacanis 48:49 Bro, look at the glasses. I think the clue is in the video.

Chamath Palihapitiya 48:52 Can I tell you-

Jason Calacanis 48:52 Look at Jony Ive's glasses.

David Friedberg 48:53 The fact that we're even talking about this is such a problem.

Jason Calacanis 48:56 Those are AR glasses. They're AI glasses.

Chamath Palihapitiya 48:56 All right, let me, let me tell you my 2007, my 2007 Apple iPhone moment. Steve announced the iPhone. I got one of the, I don't know, first like few hundred, few thousand. I was going to Vegas, so I got it on a Friday and I had it in my hand. The way that people looked at me for those three days, I've never been looked li- at that ever or since. (laughs)

Jason Calacanis 49:20 They liked you. People like, what you were feeling was love and admiration.

Chamath Palihapitiya 49:24 All I had, all I had was music, there was no multiple screens, you couldn't download apps.

David Friedberg 49:27 There were no app stores, yeah.

Chamath Palihapitiya 49:29 But it was so mesmerizing and my point is, you're right, I may have fallen for it, which may seem crazy-

David Friedberg 49:36 You did.

Chamath Palihapitiya 49:36 But when I saw that video I thought, "Hey hold on, all I'm saying is if there is a next generation device that they or somebody else..." My, my only comment is, I think Google's so wonderful. I love the people there. I just want them to be on the forward foot and I just don't want them to be reacting for the next five years. That's all I'm saying.

Jason Calacanis 49:53 Here's what Sam said about Jony Ive; "Jony is the deepest thinker of anyone I've ever met." I mean this was a love story.

Chamath Palihapitiya 50:00 Okay, (laughs) okay, I'm not justifying what they said about each other.

David Friedberg 50:02 Okay.

Jason Calacanis 50:02 Uh, Sax, let's just, okay, let's handicap it here, I'll tell you exactly what's happening.

David Friedberg 50:05 Yeah, yeah.

Jason Calacanis 50:05 It's the glasses. He's wearing the glasses in there, they're making smart glasses. Sax, what are they making? What are these two guys up to? You know these guys, you've known both of them for 20 years. Come on now, you know what's going on, just spill the beans.

David Sacks 50:18 Let me-

Jason Calacanis 50:19 Spill it.

David Sacks 50:19 Let me express a, a hot take here.

Chamath Palihapitiya 50:21 Hm.

David Sacks 50:22 But let me express it in the form of a question 'cause I don't wanna, I don't wanna be too definitive.

Chamath Palihapitiya 50:26 Ooh, czar with the rhetoric.

Jason Calacanis 50:27 Which is, hm? Ooh.

David Sacks 50:27 (laughs)

Chamath Palihapitiya 50:27 Okay, go.

David Sacks 50:29 Which is, is Jony Ive just a media creation?

Jason Calacanis 50:32 (laughs)

David Sacks 50:34 I mean, no seriously, this-

Jason Calacanis 50:36 Did Steve Jobs manifest him?

David Sacks 50:38 Well, I know he did good work at Apple, okay, don't get me wrong.

Jason Calacanis 50:41 Okay.

David Sacks 50:41 But the software was done by someone else, right? So he did like the-

Jason Calacanis 50:46 Eddy Cue?

David Sacks 50:46 ... beautiful, Eddy Cue. So, you know, the whole-

Chamath Palihapitiya 50:49 And Scott Forstall.

David Sacks 50:50 ... GUI. Yeah, so-

Jason Calacanis 50:50 Industrial design?

David Sacks 50:52 Yes, the hardware looks beautiful with the beveled edge, it's just a pane of glass with a beveled edge. Okay, great.

Chamath Palihapitiya 50:57 (laughs) It's so

Jason Calacanis 50:58 (laughs)

David Sacks 50:58 He has this beautiful English accent which everyone associates with intelligence, right? So he could describe anything and it's gonna sound amazing.

Chamath Palihapitiya 51:06 And taste, and taste. 15% smarter.

David Sacks 51:09 Right. So, I don't know. I mean, maybe he's like parlayed this incredible reputation that he's built in the media into 2% of OpenAI.

Chamath Palihapitiya 51:20 OpenAI. It's incredible.

David Sacks 51:22 I mean, what a trade.

Chamath Palihapitiya 51:23 What a trade. Do you think it was done at that $300 billion price or do you think it was done at like a cheaper price?

David Sacks 51:28 Probably.

David Friedberg 51:28 Yes. Yes.

Jason Calacanis 51:31 Yeah, I mean, there is an argument, I'm gonna go in Sax's corner here, I'm gonna go into conspiracy corner here. I'm gonna say Dieter Rams designed the iPhone, not Jony Ive. Pull it up, Nick.

Chamath Palihapitiya 51:41 Well I'm gonna say Tony Fadell designed the iPhone.

Jason Calacanis 51:42 Okay.

Chamath Palihapitiya 51:43 And he came up with the three shot camera.

Jason Calacanis 51:43 But if you don't know who Dieter Rams is, J- I mean, if you look at the transistor radio he made, the iPod, if you pull up the, uh, Braun radio, here is the Power Mac. If you look at the iMac, basically, what did Steve Jobs-

Chamath Palihapitiya 51:57 Are you accusing Jony Ive of ripping off a German industrial designer? Is that what you're doing right now? (laughs)

Jason Calacanis 52:01 What I'm saying is immature artists copy and mature artists steal.

David Friedberg 52:04 Come on, stop.

Jason Calacanis 52:05 I am saying 90% of what Apple did was steal Dieter Rams' design. I will die on that hill. 90% stolen.

Chamath Palihapitiya 52:12 Jony Ive has been knighted. He's Sir Jony Ive.

Jason Calacanis 52:16 He took Dieter Rams' knighthood. That's what he did.

Chamath Palihapitiya 52:19 Sir John, Sir Jony.

David Sacks 52:21 I mean, um-

Jason Calacanis 52:21 Sir John.

David Sacks 52:22 ... he did put the handle on an iMac, right? I mean, so you got that.

Chamath Palihapitiya 52:26 (laughs) Stop.

Jason Calacanis 52:27 He did. You could move those iMacs around. (laughs) So slanderous. (laughs)

Chamath Palihapitiya 52:31 Stop, you guys, this is so brutal. (laughs)

David Sacks 52:32 (laughs)

Jason Calacanis 52:32 So great. Dude, look at this one. Pull this one up, Nick. Everybody knows the iconic iMac. I hate to break your hearts, folks. Totally ripped off from Dieter. It was all inspired by the Germans.

Chamath Palihapitiya 52:43 Sorry, so y- you're saying Dieter Braun is like the Keyser Söze of our entire physical world?

Jason Calacanis 52:48 Look, here's the speaker on the left, look at the iMac on the right. These guys took every design that Dieter did in the '60s and '70s, even the '50s and they photocopied it and they put an Apple logo on it. And I could've done it-

Chamath Palihapitiya 53:01 Stop, stop, stop, stop.

Jason Calacanis 53:03 Sax, am I wrong?

Chamath Palihapitiya 53:05 Stop.

David Sacks 53:06 I didn't know about the Dieter Braun angle.

Chamath Palihapitiya 53:08 (laughs)

David Sacks 53:09 (laughs)

Jason Calacanis 53:10 I mean, listen, it is what it is.

David Sacks 53:11 I mean look, everyone at Apple did amazing work, there's no question about it but-

David Friedberg 53:14 I don't understand this, yeah.

David Sacks 53:16 ... but I, but I'm just saying like, I don't quite get this like design god reputation that's been created a little bit.

David Friedberg 53:24 Totally, totally. Let's move on. Let's move on.

David Sacks 53:24 But, but I would say that it's certainly-

Jason Calacanis 53:26 It's making Free Bird uncomfortable.

David Sacks 53:27 ... a brilliant idea to parlay that into 2% of OpenAI.

Jason Calacanis 53:29 I don't know what there is to talk about.

Chamath Palihapitiya 53:30 By the way, is that, is that what San Francisco looks like? Like I didn't ever thought, every time I go to San Francisco it's so disgusting and it's cloudy and cold. But-

Jason Calacanis 53:37 Yes. (laughs)

Chamath Palihapitiya 53:37 Did they find the one day where like the sun was shining in that hellscape?

Jason Calacanis 53:41 Yeah. (laughs) There were no homeless people and there was no Fentanyl. I don't know what happened.

David Friedberg 53:45 Yuck.

David Sacks 53:46 On a serious note, what I would say is maybe what this deal indicates is, I mean obviously, is that OpenAI's gonna do something with hardware.

Jason Calacanis 53:53 Sure.

David Sacks 53:53 It could be a new kind of phone that is AI first as opposed to the wall of applications or maybe it's like some sort of like pendant thing that like tracks what's going on around you and feeds it into AI so it can give you more context, you know, maybe like in the movie Her. Who knows? But it seems like they'll do something with devices in the physical world.

Chamath Palihapitiya 54:15 Hm.

David Sacks 54:16 So that would be the play I guess.

Jason Calacanis 54:17 I, I guess the question you have to ask is will it make OpenAI 1% more valuable? If it's a $300 billion company-

David Sacks 54:25 2%.

Jason Calacanis 54:25 2% more valuable, yes, thank you. Will it make it more than 2% more valuable? If it makes it 1% more valuable it was worth the, the swing I guess, right? But-

Chamath Palihapitiya 54:35 I heard an interesting factoid yesterday.

Jason Calacanis 54:38 Okay.

Chamath Palihapitiya 54:38 Which is, by somebody who was looking at-... OpenAI equity. All of the rounds before the $300 billion round from SoftBank had essentially a feature where there was, like, a hard rate of return and the ability to-

Jason Calacanis 54:52 100X or something? Yeah.

Chamath Palihapitiya 54:52 ... no, but the ability to put the stock back if they weren't able to do the conversion to a for-profit company, et cetera, et cetera. And in the $300 billion round, apparently it's much cleaner and it's essentially like sub-new co that is owned. And I thought to myself, like, "Wow, at, at those valuations, I would have expected the terms to ratchet up." And instead it seems like the terms have ratcheted down, which is-

Jason Calacanis 55:20 Hmm.

Chamath Palihapitiya 55:21 ... I don't know, it's either, it's either a commentary on the negotiating prowess of OpenAI and their team and/or the risk management philosophy of SoftBank (laughs) and the lack thereof.

Jason Calacanis 55:33 I do think h- you know, he is a great designer and he will make it one or two percent better. Design matters, so if he makes it... I mean, there's a chance, right, Sax, that he could make the product five or ten percent better through design?

David Sacks 55:43 I don't think it's gonna be one or two percent better. I think it's gonna be either zero or a doubling of the company's value, something like that, right?

Jason Calacanis 55:49 Yeah.

David Sacks 55:49 Like either he develops an iPhone-like amazing hit product no one's seen for-

Jason Calacanis 55:54 Agreed.

David Sacks 55:54 ... some new consumer device that-

Jason Calacanis 55:57 Hmm.

David Sacks 55:57 ... you know, really could take the company to another level, or probably they do something that kinda doesn't work. So it's more of, like, a two percent option against a strike of doubling the value of the company. Something like that.

Chamath Palihapitiya 56:07 I'm surprised it hasn't leaked because in the, in Sam's update or whatever, he said that the, that the executive team was shown the device and that he has it.

Jason Calacanis 56:17 Ooh.

Chamath Palihapitiya 56:18 So what is it?

Jason Calacanis 56:19 It's, it's definitely gonna be a pendant or glasses. It's gotta be those two form factors.

Chamath Palihapitiya 56:24 Okay, if that's what you think-

Jason Calacanis 56:24 And he was the investor in Humane, remember? Wasn't that the pendant-

Chamath Palihapitiya 56:27 If that's what you think-

Jason Calacanis 56:27 ... from the Apple people? Yeah.

Chamath Palihapitiya 56:28 I will take the field against that. What are the odds and how much money do you wanna bet?

Jason Calacanis 56:32 Okay, here we go. So I think it's a, a pendant, like a wearable, we have to define that.

Chamath Palihapitiya 56:38 Okay.

Jason Calacanis 56:38 So like Humane.

Chamath Palihapitiya 56:39 I'll say it's not a pendant.

Jason Calacanis 56:40 Okay, glasses? I go... What are you gonna give me? You give me odds.

Chamath Palihapitiya 56:44 I'll give you...

Jason Calacanis 56:45 Give me odds.

Chamath Palihapitiya 56:45 Well, we'll just do even money. Let's do even money.

Jason Calacanis 56:47 Oh, even money. (laughs)

Chamath Palihapitiya 56:50 I don't know, whatever you want. Howev- however many thousands of dollars you wanna bet.

Jason Calacanis 56:54 Even money? How about you give me two to one, ten dimes? 'Cause you have every option.

Chamath Palihapitiya 56:59 Two to one?

Jason Calacanis 56:59 I have to pick them.

Chamath Palihapitiya 57:01 No, no. No bet.

Jason Calacanis 57:02 No? That's a pretty good bets.

David Sacks 57:04 This is my risk management.

Jason Calacanis 57:05 Sax, you wanna get in on the bet here? (laughs)

David Sacks 57:08 All right, let's move on.

Jason Calacanis 57:09 All right, we covered Trump's trip to the Middle East last week, but our bestie Sax was there as well. Um, and, uh, you did, uh, you got a couple photos to show and, uh, you met a lot of friends there. T- tell us about the experience of... Did you go... Oh, but first of all, did you go on Air Force One? That's what everybody wants to know. Or did you go on Air Sax?

David Sacks 57:30 I took my own plane.

Jason Calacanis 57:31 Hm.

David Sacks 57:31 So I know that sounds a little bit like a flex, but... (laughs)

Jason Calacanis 57:35 Were you, were you in formation with Air Force One?

David Sacks 57:37 (laughs)

Jason Calacanis 57:37 Were you, like, you know, just right behind it or on your own travel? You were on your own travel schedule?

David Sacks 57:43 I was, I was doing my own, my own thing.

Jason Calacanis 57:44 But did you have the option to go on Air Force One?

David Sacks 57:47 I probably could have if I wanted to, but I, I actually wanted to get to the region a little bit early 'cause I hadn't been before and I kinda checked it out. And so I was waiting there when the president arrived.

Jason Calacanis 57:55 Oh, wow, so it was your first time in the region?

David Sacks 57:58 Yeah.

Jason Calacanis 57:58 Well, tell us about your impressions generally and, uh, what were you trying to accomplish there as the czar?

David Sacks 58:04 Well, I call it AI diplomacy. First of all, these countries are... Obviously they're very resource-rich. They've got a lot of capital to deploy, and they're also very interested in diversifying their economies, they're very interested in high tech, and they, they wanna do things in AI. They've got very significant aspirations there. And so I was over there just to kinda listen and learn and see what they're interested in doing. And I also got to see some of their tech scenes and just under- understand better-

Jason Calacanis 58:31 Oh, you went to Digital Garage in Riyadh, right? I've been there.

David Sacks 58:34 Yeah. Oh, you've been there? Okay.

Jason Calacanis 58:35 Yeah, yeah. No, no, it's, um... They are really pushing entrepreneurship, trying to generate more ideas and teach people how to start companies and coworking spaces, all kinds of incentives in terms of visas to come to Riyadh, to come to UAE, you know, Dubai, Abu Dhabi specifically, so yeah.

David Sacks 58:51 Right.

Jason Calacanis 58:52 I'm curious your impression of the individuals who are leading a lot of these different groups. E- I was really taken back by how much time they had spent in the West.

David Sacks 59:03 Yeah.

Jason Calacanis 59:03 It seemed like every single person I had met had taken one of these scholarships to go to Oxford, to Harvard, to, you know, Cal Tech, whatever it was. They all had spent massive amounts of time in the West and then come back to either Saudi or UAE or Oman, et cetera. So maybe you could talk a little bit about the people and their knowledge base, motivation, et cetera.

David Sacks 59:24 I had the same observation. The elites of all these countries have all been educated in the West, usually in the United States, some in the UK. The leadership tends to be young, visionary, future-oriented, intensely interested in AI, like I was saying, and they wanna do big things in AI. The thing that, that's been in their way is that in October 2023, the Biden administration basically put a, a blanket on the whole region acquiring semiconductors, GPUs, and it, it required that every export of a GPU or a, a server that contains a GPU had to get a specific license from the Commerce Department. And it put a major damper on their efforts to do things like build data centers in the region or to have their own local AI efforts. So they've been kind of in this holding pattern where the Biden administration decided to kinda alienate them. And, you know, it, it wasn't just AI, there was other things too. Remember the fist bump? And the Biden administration was very, I'd say-

Jason Calacanis 1:00:27 Hostile? Standoffish?

David Sacks 1:00:29 ... cool to and even hostile towards these states in the region. And I think from a geopolitical standpoint, it was just stupid because we're in an intense competition, a high tech competition, a security competition, economic competition, with China.... and these states wanna be aligned with the US, and we are pushing them into China's arms. And if we don't give them the ability to buy the American tech stack, it's not like they're gonna sit on their hands and do nothing.

Jason Calacanis 1:00:54 Yeah.

David Sacks 1:00:54 They're gonna be forced to buy the Chinese tech stack.

Jason Calacanis 1:00:57 They're gonna participate one way or the other.

David Sacks 1:00:59 Right. And China still has some limitations on how many chips it can produce, but they clearly are building their own Chinese tech stack. It's a Huawei plus DeepSeek tech stack. There's actually a story in Malaysia just th- in the last couple of days where they were talking about building a local data center using the Huawei Ascend GPU plus DeepSeek, and then they walked back that story because-

Jason Calacanis 1:01:23 Hm.

David Sacks 1:01:23 ... I think they're afraid of getting in trouble with, with the US government. But the point is that if we drive these countries away, if we alienate them, they will end up partnering with China instead of the United States. I don't understand how that's in the United States' interest. Now, as part of this trip, we rolled out a new framework for an AI acceleration partnership with these countries, and there's a few very important terms that I think it's worth going into. So, so first of all, the, the purpose of the framework is to replace the Biden export control to the region with a framework that gives them the ability to buy GPUs and build data centers. Uh, but there's a few very important provisions. Number one is there's a matching investment provision. So, for every dollar of investment they make in terms of building out data centers in the region, they have to invest a dollar in the United States in building out our AI infrastructure. So it's a huge win for the United States in terms of accelerating our own infrastructure buildout. So that's point number one. Number two is, even with respect to the data centers they're gonna build in the region, at least 80% of the chips have to be owned and operated by American cloud service providers or American hyperscalers. So even with respect to the data centers they're building, the vast majority of the compute is gonna be run by American companies. And so, I mean, this to me is just a huge win.

Jason Calacanis 1:02:45 Was there critique? Were people critiquing it, like, uh, you know, this, uh, expansion? I guess Ro Khan has said like, "Hey, we should build more data centers here." That was sort of a light critique, maybe, or a misunderstanding.

David Sacks 1:02:55 Well, I mean, there's two types of critiques. One is the one that, that Ro was making. And Ro's a friend, but just-

Jason Calacanis 1:03:00 Yeah.

David Sacks 1:03:00 ... you know, I, I respond to him on, on X, which is, we are building our data centers in the US. We wanna do as much as we can.

Jason Calacanis 1:03:06 Mm-hmm.

David Sacks 1:03:07 It's the Trump administration's policy towards energy that's making that possible. We're making it easier to spin up new power generation, and we're making it easier to permit. Both, both those things were virtually impossible during the Biden administration. So we are building more here in the US. In addition to that, you've got these countries who are resource-rich, and they have their own AI dreams and aspirations, and we can either partner with them or drive them into the arms of China. And the deal we've made is to enable their aspirations while getting them to fund more AI infrastructure in the United States. And even the infrastructure they're building over there, first of all, it's gonna be on American tech stack, right? We want it to be NVIDIA and AMD and those types of companies. That improves our balance of trade. It also ensures that these data centers across the state are gonna be built on American technology. We want American technology to become the standard.

Jason Calacanis 1:03:57 Of course.

David Sacks 1:03:57 And if you allow those data centers to be built on Huawei plus DeepSeek, that will become the standard. So, I think this is something that people in Silicon Valley intuitively grasp, but-

Jason Calacanis 1:04:06 Mm-hmm.

David Sacks 1:04:06 ... people in Washington don't, which is, the way that you win these technology battles is you create the largest ecosystem, right? You wanna have the most partners. You wanna have the biggest app store. You wanna have the APIs-

Jason Calacanis 1:04:17 Most data.

David Sacks 1:04:17 ... everyone uses. The most data.

Jason Calacanis 1:04:18 Most power.

David Sacks 1:04:19 Exactly. So, the point is, we want to involve the whole world on our tech stack. I think export controls on China, that makes sense, but we don't want to reduce our market share in the rest of the world. We want them getting hooked on our platforms, making those platforms the standard, and getting lock-in before China can catch up to us.

Jason Calacanis 1:04:37 Sax, did Jensen just say that he thought export controls were kind of pointless? Did he just say that recently?

David Sacks 1:04:45 Yeah, he- he's against all export controls. And, you know, where I would split the baby here is that I think that most people in Washington believe that the export controls on China make sense, because we simply can't allow our most powerful semiconductors to be, to be used by China because of the dual use. Now, where I agree with Jensen is that I think we should not place undue restrictions on the rest of the world using the American tech stack, because we will simply concede the market share to China. And so I think he's right with respect to the Middle East. Now, the, the other concern that you heard a lot is around this, quote, "diversion." The idea that somehow the GPUs or somehow the IP, if we allow it to be used in data centers in the Middle East, will somehow find its way to China. And yeah, I mean, your- your expression on your face, J-Cal, shows that you-

Jason Calacanis 1:05:38 That makes no sense.

David Sacks 1:05:39 It makes no sense.

Jason Calacanis 1:05:39 Like, these- these guys have unlimited resources. They have unlimited ambition. That's just a naive point of view. Th- they want these for themselves. They understand the power of AI.

David Sacks 1:05:47 Right.

Jason Calacanis 1:05:47 They don't wanna give it to China. They want it for themselves.

David Sacks 1:05:50 They make trillions of dollars selling oil and gas. They don't need to smuggle our GPUs. It doesn't make any sense.

Jason Calacanis 1:05:54 Yeah.

David Sacks 1:05:54 The- the other thing is that, that people don't understand, you know, they- they're called chips, but really, these things are now the size of mainframes. The NVIDIA data center product, NVL72, is this giant server cabinet. It's eight feet tall. It weighs 3,600 pounds.

Jason Calacanis 1:06:08 Yeah.

David Sacks 1:06:08 It's not like diamonds you smuggle in a briefcase, right?

Jason Calacanis 1:06:10 No. (laughs)

David Sacks 1:06:11 All you have to do is send an inspector-

Jason Calacanis 1:06:13 You're not putting them up your butt and cutting them across the border. (laughs)

David Sacks 1:06:16 (laughs)

Jason Calacanis 1:06:16 That's definitely not happening. (laughs)

David Sacks 1:06:17 No, it's not happening. All you have to do is send an inspector to the data center to count the servers and s- you can see that they're there.

Jason Calacanis 1:06:24 They're ridiculous, yeah.

David Sacks 1:06:24 So this idea that somehow they're gonna get smuggled, it's like this totally fake concern that's been created. It's almost like a totally fake narrative. You know, then people say, "Well, if they won't physically smuggle the servers, but the IP will somehow be transferred to China." Look, there's nothing in a data center that China hasn't already seen. They have one of, at least one of everything. The issue is that they can't reverse the advanced semiconductors just from the chips, right?

Jason Calacanis 1:06:48 Mm-hmm.

David Sacks 1:06:48 Because it's about the process technology that it takes to create-... an advanced semiconductor. There's hundreds, even thousands of steps in that process-

Chamath Palihapitiya 1:06:56 Yeah.

David Sacks 1:06:56 ... and you can't figure out the recipe just by seeing the end product.

Chamath Palihapitiya 1:06:59 I would like to say that I'm very proud of my bestie. I got three calls.

David Sacks 1:07:04 Mm-hmm.

Chamath Palihapitiya 1:07:04 I do wanna tell you, Sax, you crushed it. I think you-

Jason Calacanis 1:07:08 Yeah, I was pretty impressive.

Chamath Palihapitiya 1:07:08 ... put your best foot forward and people were really impressed. But I got calls, I got three calls from the powers that be. They were very psyched to meet you and spend time with you, and they thought you were super impressive. So, it was awesome. Thank you for doing that.

David Sacks 1:07:24 Well, I appreciate that, yeah.

Jason Calacanis 1:07:25 It's an incredible region and I think you're doing, like, a really patriotic thing if you look at that region. Like you said, it could tip one way or the other. They could be involved with the West, they, we could be building businesses together, and if we build businesses together, that's better than them building businesses with China. Pretty obvious, I think. I mean...

David Sacks 1:07:45 Totally. And I, this is the thing is I just don't get the opposition in Washington to this, and I especially don't get how the opponents of this can call themselves China hawks. Because at the end of the day, this is a tech battle between the US and China, and we can have these countries be aligned with us and in our orbit, or we could push 'em into the arms of the Chinese. The choice is, do we want these countries to be the piggy bank for American AI or for Chinese AI? It's like, that's something-

Jason Calacanis 1:08:09 I was about to say, they, they have an investment level that they can do that dwarfs anybody else in the world, with the exception of Norway and the United States. I mean, they can put a lot of money to work, and here's the thing, they want to.

Chamath Palihapitiya 1:08:20 It just hit the wire that OpenAI is partnering on a five-gigawatt data center cluster in Abu Dhabi with G42.

David Sacks 1:08:26 Well, let's, well, hold on, let's just be clear about it. So the, the five-gigawatt cluster, or it's more of a, a campus that's gonna support many American hyperscalers and cloud service providers, and they're gonna be one of the tenants. So I think they're saying that they're gonna have one gigawatt, there's still four gigawatts to go that they plan on supporting.

Chamath Palihapitiya 1:08:45 Oh, well, the, the, the most interesting part of the deal it said was that as part of the deal, G42 plans to make a reciprocal dollar-for-dollar investment in AI infrastructure in the US. So, to your point, Sax, it's, like-

Jason Calacanis 1:08:56 Perfect.

Chamath Palihapitiya 1:08:57 ... cooperating like this I think just makes a ton of sense.

Jason Calacanis 1:09:00 Absolutely. And this is not dumb money, by the way. These are very smart (laughs) people who are investing very strategically with a very crisp, you know, group of individuals, like you said, who have been educated in the West. You know, when people explain to me, "Oh, yeah, just go to Abu Dhabi and come back with a, a, a suitcase full of money." No, these are folks who wanna be on the board of companies. They want a company build. They see themselves as owners in business, not just investors, and, and they wanna do it domestically and abroad. The amount of investment that they're gonna do in the next 30 years is going to dwarf what we see out of universities and retirement accounts.

David Sacks 1:09:35 Right.

Chamath Palihapitiya 1:09:35 I don't know if people understand the scale of what's happening.

David Sacks 1:09:37 This is why I just don't understand the point of the Biden policy of alienating these countries and making them feel uneasy about their place, uh... (laughs)

Chamath Palihapitiya 1:09:47 Because you d- you don't know who it was that made the decision. (laughs)

Jason Calacanis 1:09:50 Yeah, I mean, the guy, let's face it, that guy was...

Chamath Palihapitiya 1:09:52 That's why, that's why you're confused.

Jason Calacanis 1:09:53 ... Weekend at Bernie's.

David Sacks 1:09:55 I've actually have a pretty good idea at this point of who was controlling the auto-pen on AI. There was a group of, of very powerful staffers in the Biden administration, about half a dozen people who kinda controlled AI policy, and the interesting thing is none of them have ever worked in Silicon Valley. They're all basically lawyers, and they don't really have a good understanding of the idea of a platform or a technology ecosystem or a stack, and I don't think they realized that by alienating these very resource-rich countries, that they were creating a huge opportunity for China to come in and serve the region. And this is why I think this, you know, again, what I call AI diplomacy is so important is it boxes out China.

Chamath Palihapitiya 1:10:36 Absolutely.

David Sacks 1:10:36 It's good for America, it's good for our companies, it's good for our trade balance, it makes us the standard, and it boxes out China. What's not to like about this? I really don't get it.

Jason Calacanis 1:10:46 I, you know, I think they were living in a world where they put people into very rigid buckets. If you wanted to look at human rights as an issue, which I think is what some people were doing in that administration, I look at the progress that's being made, and if you go to these societies and you look at what's happening in that region, the pace at which human rights and individual freedoms is growing and the rate at which those societies are moving forward, it's going in the right direction. So, what do we wanna do? Do we wanna steer people towards collaboration and working together to build the future, or do you wanna have it devolve? I mean, it's such a stupid decision by the Biden administration, uh, it- it was perplexing.

David Sacks 1:11:24 Yeah, I, I really don't get it. I, I don't understand what the point of alienating these Gulf States was.

Jason Calacanis 1:11:30 Well, I like Trump's approach there when he said, "Listen, you're gonna make decisions in your own time." That's what they wanna hear. They want to be respected as they respect us. Hey, we're gonna make decisions in our own time, what's right for our people. That's a process that we'll decide. Now, if you-

David Sacks 1:11:45 Yeah.

Jason Calacanis 1:11:45 ... wanna collaborate on building a company, a data center, a technology platform, hey, we're here for that. But you can't tell us how to run our society, and just like we wouldn't want them to come here and tell us how to run our society, right?

David Sacks 1:11:56 So I agree with what you just said, J-Cal-

Jason Calacanis 1:11:58 Yeah.

David Sacks 1:11:58 ... and I thought the best part of the President's speech, which the whole thing was excellent, but the best part-

Jason Calacanis 1:12:02 Well done.

David Sacks 1:12:03 ... was when he talked about how the neocons and the interventionists had come into the region and lectured people, and come in with-

Jason Calacanis 1:12:09 Yes.

David Sacks 1:12:09 ... this very moralistic point of view and made all these interventions that basically wrecked countries, and it's, it wasn't the, the neocons or the interventionists who have led to so much progress in the Middle East and in the Arab world. It's been the countries themselves whose own leaders have set the, the path and have had the vision, and-

Chamath Palihapitiya 1:12:29 That was an incredible speech.

Jason Calacanis 1:12:30 Incredible.

David Sacks 1:12:30 It was incredible, and, uh...

Jason Calacanis 1:12:31 That was peak Trump for me. Yeah, he did a great job.

Chamath Palihapitiya 1:12:34 Incredible. Incredible speech.

Jason Calacanis 1:12:35 Credit where credit's due, like... And that's the message they've wanted to hear for a long time, and that's the message that moves society forward. All these other messages just sort of set it back, and, um, I think I'm, I'm super hopeful about the region. Okay, let's do science corner, you know, everybody...

David Sacks 1:12:47 Oh, by the way, I just, I was just checking, um, X here, and it looks like there is a, um-... announcement on what the OpenAI device is gonna be.

Jason Calacanis 1:12:58 Oh.

David Sacks 1:12:58 Are you gonna see this?

Jason Calacanis 1:12:59 Here we go.

David Sacks 1:13:00 Oh, the puck?

Jason Calacanis 1:13:00 What's it-

David Sacks 1:13:00 The little puck? I saw that puck, but it hasn't been confirmed yet.

Jason Calacanis 1:13:04 Oh, it's a puck you put on your desk and it does stuff?

David Sacks 1:13:06 Yeah, it's like a puck with a camera and a hole for a microphone.

Jason Calacanis 1:13:08 Oh, that's a pin. Yeah, that's a pendant. It's a pendant. I could have made 10 times straight up versus you.

David Sacks 1:13:12 It's not a pendant.

Jason Calacanis 1:13:13 That's a pendant.

David Sacks 1:13:14 It's not a pendant. That's a puck.

Jason Calacanis 1:13:15 It fits in the palm of your hand. It's too small to be a puck. A puck is like the size of your hand.

David Sacks 1:13:19 How big is that?

Jason Calacanis 1:13:20 It looks like your thumb. Okay, this is AI-generated. It's not actually the device. They haven't shown the device from Jony Ive yet. Somebody just took what's in The Wall Street Journal report, they mocked it up. This is their best guess as to what it might look like. Th- th- this is already out. And by the way, this is gonna get you punched in the face. You show up with a listening device to a party or a meeting, I'm gonna knock you out. This is ridiculous. And it's got a camera in it too. I don't want this surveillance device-

David Sacks 1:13:46 How do you, how-

Jason Calacanis 1:13:46 ... anywhere near me.

David Sacks 1:13:47 ... how are you gonna do it? Like this?

Jason Calacanis 1:13:48 Uh. (laughs) Mm, mm, yeah, that's-

David Sacks 1:13:53 (laughs) Get that puck away from me.

Jason Calacanis 1:13:54 Uh. (laughs)

David Sacks 1:13:55 (laughs)

Jason Calacanis 1:13:56 Okay. Anytime you're ready.

David Sacks 1:13:58 How dare you, how dare you record me and violate my privacy?

Jason Calacanis 1:14:00 Uh.

David Sacks 1:14:01 (laughs)

Jason Calacanis 1:14:01 I was literally at dinner the other day, I kid you not, and somebody came up with one of these things and it was clipped on his thing. I said, "Hey, uh, what's the thing on your, uh, lapel?" He said, "It's an AI recording device. It does, uh, it summarizes what we're doing."

David Sacks 1:14:13 And you were like

Jason Calacanis 1:14:13 I said, he goes, "Oh, do you, do you care?"

David Sacks 1:14:15 (laughs)

Jason Calacanis 1:14:15 I said, "Do you care if I punch you in the face for covertly recording me?" And he said, "Yes." I said, "Well then turn it, turn it off." I mean, literally.

David Sacks 1:14:23 Let's talk about Science Corner.

Jason Calacanis 1:14:24 Let's talk about Science.

David Sacks 1:14:25 I mean, well, you