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

1. 0:00 – 2:49

   Today's topics and bestie intros!

   1. JCJason Calacanis0:00

      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.

   2. DSDavid Sacks1:06

      I do give you credit for that, J Cal.

   3. JCJason Calacanis1:08

      Yeah, after you gave me hell for a year, okay.

   4. DSDavid Sacks1:10

      Great, great.

   5. JCJason Calacanis1:11

      That sounds like an apology, but okay, sure.

   6. DSDavid Sacks1:13

      I'm sorry. You're wonderful and I appreciate what you created.

   7. JCJason Calacanis1:15

      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.

   8. CPChamath Palihapitiya1:27

      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-

   9. JCJason Calacanis1:33

      (sighs)

   10. CPChamath Palihapitiya1:33

       ... increases your salesmanship and effectiveness?

   11. DSDavid Sacks1:36

       (laughs)

   12. JCJason Calacanis1:36

       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.

   13. CPChamath Palihapitiya1:42

       Yada, yada, yada.

   14. DSDavid Sacks1:43

       (laughs)

   15. JCJason Calacanis1:44

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

   16. CPChamath Palihapitiya1:47

       Well, why don't you do a modicum of work before you get on camera-

   17. JCJason Calacanis1:51

       (laughs)

   18. CPChamath Palihapitiya1:51

       ... and actually edit it?

   19. DSDavid Sacks1:52

       Here we go. (laughs) I get one compliment and then here it comes.

   20. DFDavid Friedberg1:54

       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."

   21. DSDavid Sacks2:05

       Elon Musk showed up in person. "Yada, yada, yada."

   22. DFDavid Friedberg2:07

       (laughs)

   23. JCJason Calacanis2:07

       There was an astronaut.

   24. DSDavid Sacks2:08

       (laughs)

   25. JCJason Calacanis2:08

       Friedberg lost his mind.

   26. CPChamath Palihapitiya2:09

       "Yada, yada, yada."

   27. JCJason Calacanis2:10

       "Yada, yada, yada."

   28. DSDavid Sacks2:11

       (laughs)

   29. JCJason Calacanis2:11

       But this year will be no different. We'll have incredible parties, blah, blah, blah.

   30. DSDavid Sacks2:16

       (laughs)
2. 2:49 – 38:15

   Bond market chaos, GOP abandons DOGE, Trump's big, beautiful bill passes the House

   1. JCJason Calacanis2:49

      All in.

   2. 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-

   3. CPChamath Palihapitiya3:58

      Okay.

   4. JCJason Calacanis3:58

      ... weak bond market, all of it?

   5. DSDavid Sacks4:00

      I just want to take a quick primer on-

   6. JCJason Calacanis4:02

      Sure.

   7. DSDavid Sacks4:03

      ... 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-

   8. JCJason Calacanis6:02

      Congressional Budget Office.

   9. DSDavid Sacks6:05

      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-

   10. JCJason Calacanis7:52

       Mm-hmm.

   11. DSDavid Sacks7:52

       ... 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.

   12. JCJason Calacanis7:58

       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?

   13. CPChamath Palihapitiya8:17

       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.

   14. JCJason Calacanis8:39

       Mm-hmm.

   15. CPChamath Palihapitiya8:39

       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.

   16. JCJason Calacanis12:24

       Hmm.

   17. CPChamath Palihapitiya12:24

       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.

   18. JCJason Calacanis13:08

       Oof.

   19. CPChamath Palihapitiya13:09

       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.

   20. JCJason Calacanis13:22

       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?

   21. DSDavid Sacks14:14

       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.

   22. CPChamath Palihapitiya17:11

       Here, let me-

   23. DSDavid Sacks17:12

       Yeah, go ahead.

   24. JCJason Calacanis17:12

       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-"

   25. CPChamath Palihapitiya17:27

       I think-

   26. JCJason Calacanis17:27

       "... 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.

   27. CPChamath Palihapitiya17:35

       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.

   28. JCJason Calacanis18:38

       Hmm.

   29. CPChamath Palihapitiya18:39

       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-

   30. JCJason Calacanis20:25

       Batteries.
3. 38:15 – 46:49

   Google's big week: AI in search, roadmap to diversifying revenue

   1. JCJason Calacanis38:15

      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-

   2. DFDavid Friedberg38:36

      Up again today.

   3. JCJason Calacanis38:37

      ... 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?

   4. DSDavid Sacks39:38

      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-

   5. JCJason Calacanis40:20

      Yes.

   6. DSDavid Sacks40:20

      ... 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-

   7. JCJason Calacanis40:59

      Subscriptions, you're saying.

   8. DSDavid Sacks41:00

      ... 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.

   9. JCJason Calacanis41:44

      Yeah, of course.

   10. DSDavid Sacks41:44

       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.

   11. JCJason Calacanis42:13

       And they discontinued Labs in 2011. They just brought it back last year.

   12. DSDavid Sacks42:15

       They just brought it back. Yeah.

   13. JCJason Calacanis42:17

       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."

   14. DSDavid Sacks42:52

       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.

   15. JCJason Calacanis43:49

       Yeah, and then up again today.

   16. DSDavid Sacks43:51

       Yeah.

   17. JCJason Calacanis43:51

       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.

   18. CPChamath Palihapitiya44:23

       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

4. 46:49 – 57:09

   OpenAI acquires Jony Ive's design startup for $6.5B

   1. CPChamath Palihapitiya46:49

      OpenAI.

   2. JCJason Calacanis46:49

      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-

   3. CPChamath Palihapitiya47:19

      I saw the video. The video is... (laughs)

   4. JCJason Calacanis47:20

      ... and ridiculous.

   5. CPChamath Palihapitiya47:21

      (laughs) .

   6. JCJason Calacanis47:21

      Let's play it.

   7. CPChamath Palihapitiya47:22

      It's great.

   8. JCJason Calacanis47:22

      Uh, here are two people having a meet- meet cute.

   9. CPChamath Palihapitiya47:25

      Dude, you're right. It's like a love story.

   10. JCJason Calacanis47:27

       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.

   11. CPChamath Palihapitiya47:38

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

   12. JCJason Calacanis47:41

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

   13. CPChamath Palihapitiya47:48

       He's a co-founder of IO.

   14. JCJason Calacanis47:50

       Yeah. OpenAI already owns 20% of it, yes.

   15. CPChamath Palihapitiya47:52

       Oh, no, no. 23%. 23%.

   16. JCJason Calacanis47:54

       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...

   17. CPChamath Palihapitiya48:12

       I'm surprised that you guys are such haters on this. I'm excited to see what this thing is.

   18. JCJason Calacanis48:16

       Why are we... What, what-

   19. CPChamath Palihapitiya48:16

       Oh, I am, but I just thought this-

   20. JCJason Calacanis48:17

       You guys are-

   21. CPChamath Palihapitiya48:18

       ... was like... You're falling for it.

   22. DSDavid Sacks48:20

       Honest-

   23. CPChamath Palihapitiya48:21

       I don't get what it is.

   24. JCJason Calacanis48:22

       Jony is the deepest thinker.

   25. DSDavid Sacks48:23

       This is two guys walking around.

   26. CPChamath Palihapitiya48:24

       I don't know why we're even, I don't know why we're even talking about this.

   27. JCJason Calacanis48:25

       It's two guys walking around.

   28. CPChamath Palihapitiya48:25

       I watched, I watched nine minutes though. I watched the nine-minute video. I wanted my nine minutes back. Nothing happened.

   29. JCJason Calacanis48:30

       Okay.

   30. CPChamath Palihapitiya48:30

       I want the device. They say they have a device.
5. 57:09 – 1:15:25

   AI Diplomacy: Sacks breaks down his trip to the Middle East and the datacenter deals

   1. DSDavid Sacks57:09

   2. JCJason Calacanis57:09

      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?

   3. DSDavid Sacks57:30

      I took my own plane.

   4. JCJason Calacanis57:31

      Hm.

   5. DSDavid Sacks57:31

      So I know that sounds a little bit like a flex, but... (laughs)

   6. JCJason Calacanis57:35

      Were you, were you in formation with Air Force One?

   7. DSDavid Sacks57:37

      (laughs)

   8. JCJason Calacanis57:37

      Were you, like, you know, just right behind it or on your own travel? You were on your own travel schedule?

   9. DSDavid Sacks57:43

      I was, I was doing my own, my own thing.

   10. JCJason Calacanis57:44

       But did you have the option to go on Air Force One?

   11. DSDavid Sacks57:47

       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.

   12. JCJason Calacanis57:55

       Oh, wow, so it was your first time in the region?

   13. DSDavid Sacks57:58

       Yeah.

   14. JCJason Calacanis57:58

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

   15. DSDavid Sacks58:04

       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-

   16. JCJason Calacanis58:31

       Oh, you went to Digital Garage in Riyadh, right? I've been there.

   17. DSDavid Sacks58:34

       Yeah. Oh, you've been there? Okay.

   18. JCJason Calacanis58:35

       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.

   19. DSDavid Sacks58:51

       Right.

   20. JCJason Calacanis58:52

       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.

   21. DSDavid Sacks59:03

       Yeah.

   22. JCJason Calacanis59:03

       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.

   23. DSDavid Sacks59:24

       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-

   24. JCJason Calacanis1:00:27

       Hostile? Standoffish?

   25. DSDavid Sacks1:00:29

       ... 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.

   26. JCJason Calacanis1:00:54

       Yeah.

   27. DSDavid Sacks1:00:54

       They're gonna be forced to buy the Chinese tech stack.

   28. JCJason Calacanis1:00:57

       They're gonna participate one way or the other.

   29. DSDavid Sacks1:00:59

       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-

   30. JCJason Calacanis1:01:23

       Hm.

Episode duration: 1:33:55