All-In PodcastDOGE kills its first bill, Zuck vs OpenAI, Google's AI comeback
EVERY SPOKEN WORD
150 min read · 30,164 words- 0:00 – 3:07
Bestie intros
- CPChamath Palihapitiya
J Cal, what just happened? Did yous have a moment, an emotional moment?
- JCJason Calacanis
I don't know. You know, I've been trying to get over Sax and, um, it's hard to get over your ex.
- CPChamath Palihapitiya
Even when they didn't treat you well?
- JCJason Calacanis
We were in a codependent relationship-
- CPChamath Palihapitiya
Yes, you were.
- JCJason Calacanis
... and we were working on it.
- CPChamath Palihapitiya
You have no one to fight with anymore. Who are you going to fight with, J Cal?
- JCJason Calacanis
I mean-
- CPChamath Palihapitiya
That's the emptiness you feel inside because you're a fighter, you're a street brawler, and you have no one to brawl with anymore. So you feel-
- JCJason Calacanis
Well, you're the first-
- CPChamath Palihapitiya
... a little s-
- JCJason Calacanis
... guy to jump under the table in a bar fight.
- DSDavid Sacks
(laughs) I mean, there you go. There you go. As I was saying, he just always wants to start a fight. (laughs)
- JCJason Calacanis
No, I feel like if the, if the (beep) goes down, I feel like Sax and I would have like, we would have thrown down.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
We're (beep) bulldogs. We would have fought like tooth and nail.
- DSDavid Sacks
(laughs) Okay, I have this-
- JCJason Calacanis
You'd be under the table crying.
- DSDavid Sacks
... I have this, I have this, I have this image. It's like we're in a bar. Okay? And all of a sudden-
- JCJason Calacanis
You talking to me?
- DSDavid Sacks
... a fight is about to break out. Four thought bubbles appear.
- CPChamath Palihapitiya
(laughs)
- DSDavid Sacks
Okay? J Cal's like, J Cal's like, "Let's go get him."
- JCJason Calacanis
"Let's roll."
- DSDavid Sacks
Sax is like, "This guy, this guy's a dip (beep) . Let's roll." I'm like, "Look at that chick. She's so good-looking."
- JCJason Calacanis
(laughs)
- DSDavid Sacks
And then Friedberg's like, "What will happen to my invite to (beep) duck?"
- JCJason Calacanis
Ah!
- CPChamath Palihapitiya
(laughs)
- DSDavid Sacks
(laughs) Friedberg's like, "Oh, how do I get out of this unscathed?" (beep)
- 3:07 – 5:40
The Besties welcome Box CEO Aaron Levie!
- JCJason Calacanis
a real business. Of course, with us now, our new fifth bestie, Aaron Levie. He is the CEO of the publicly traded company, Box, which means he's got the most to lose by coming here. So welcome back to the program.
- DSDavid Sacks
(laughs)
- DFDavid Friedberg
(laughs)
- DSDavid Sacks
Centrist Sax.
- DFDavid Friedberg
Based on what you guys were just talking about before this, uh, recording started, I have no idea what, what, uh, what we're in for.
- DSDavid Sacks
Yes.
- JCJason Calacanis
Listen, we're living in an age of meme stocks and people selling convertible notes to buy Bitcoin for their treasury and, and, and then becoming a NASDAQ 100. It's that simple. Aaron, when you see a company buy billions of dollars worth of Bitcoin and get added to the NASDAQ 100, what method of suicide do you think of taking your own life with?
- DFDavid Friedberg
(laughs)
- DSDavid Sacks
(laughs)
- DFDavid Friedberg
Uh, there was a, there was a brief week in, uh, in 2021 where, uh, where, where the thought kind of crossed my mind. So-
- JCJason Calacanis
Yes.
- DFDavid Friedberg
Um, uh-
- JCJason Calacanis
Seppuku, you're just gonna use the sword, the short blade?
- DFDavid Friedberg
We have a very, uh, sophisticated audit committee that, that prevented the action. So I, uh-
- JCJason Calacanis
Will you do this for me?
- DFDavid Friedberg
Yeah, yeah.
- JCJason Calacanis
Just do this for me.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Take how much cash does Box have on the books, ballpark?
- DFDavid Friedberg
Well, we just did a convert, so we're probably 6, 700, uh, 600 or 700 million.
- JCJason Calacanis
Okay, here's what I wanna do, a little experiment for next week.
- DFDavid Friedberg
Yeah.
- JCJason Calacanis
Just buy, put 5% of the treasury, 30 million in Bitcoin, and then you can... We'll invite you back in two weeks and we'll see what happens. Okay? Just put 5% of the treasury in Bitcoin. Hey, everybody. Here's another announcement, a little housekeeping. As you know, we successfully got the allin.com domain. That was a big victory for us. And, uh, we now have an email list. So four years into this meshuganah, uh, we now have the ability to take your email address and spam you with all kinds of great information, like a notification when the pod drops. Wow. So compelling.
- DSDavid Sacks
(laughs)
- DFDavid Friedberg
Um...
- DSDavid Sacks
(laughs)
- JCJason Calacanis
Insights from the besties who you've had enough of, and, uh, first dibs on, uh, overpriced event tickets to come hang out with us. Wow. Do you get... This is the compelling pitch we have for giving us your emails. So if you'd like to give us your email and get spammed, go to allin.com and let the spam begin. All right. That's out of the way. Sax is out again this week. I don't know what's going on. We've been trying to figure out where he is. He's MIA. If anybody knows-
- CPChamath Palihapitiya
No, he's in DC this week, yeah.
- JCJason Calacanis
Oh, is that what's going on? Oh, okay.
- CPChamath Palihapitiya
Did you see all the meetings?
- 5:40 – 18:42
Thoughts on Sacks's new role, what areas he can positively impact quickly in crypto and AI
- JCJason Calacanis
- CPChamath Palihapitiya
Aaron, what do you think of, what do you think of Sax in this role?
- DFDavid Friedberg
I think it's, uh, I, I think he's a strong pick.
- DSDavid Sacks
(laughs)
- DFDavid Friedberg
Um, s- so, a- so-
- JCJason Calacanis
Oh, let the genuflecting begin.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
Go ahead and say it more, Aaron.
- DFDavid Friedberg
So cr- crypto, I'm a little bit indifferent on. You know, I, I, I haven't, you know... s- sort of... we haven't sp- spent much time there or leaned in much b- there, but, but on AI...... I think is a very-very strong pick. And, um, uh, I think you want somebody that is, you know, has a ge-general sort of deregulation, anti-regulation bent at this stage in the evolution of the technology. I think there's risk of-of sort of slowing down too much progress right now. And I think that ... I think he'll provide, you know, some good kind of parameters and principles around, uh, around how to avoid that, so I-I think very strong. And then, you know, crypto, again, don't know- don't know too much about, and then we'll-we'll see the rest of the topics.
- CPChamath Palihapitiya
As a software CEO-
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
... of a public company, when the Biden administration was putting forward their proposals on how to regulate AI and have definitions on the size of a model and what the models could or shouldn't do and the regulatory authority they would have over the software that's written, what was your reaction? And you were supporting Harris at the time, I believe, or Biden at the time, right? But, like, how did you react to that when you saw those proposals?
- DFDavid Friedberg
And just to be clear, are you talking about the EO th-that went out?
- CPChamath Palihapitiya
Yeah. Tho- there was the EO-
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
... but then they were also drafting. They-they-
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
... published a lot of detailed drafting. And then, obviously, California had its bill, which you probably saw as well-
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
... which specified, like, the number of parameters in a model and the size of a model and-
- DFDavid Friedberg
Yeah, so, um-
- CPChamath Palihapitiya
... had all these kinda constraints.
- DFDavid Friedberg
... in reverse order, was-was, uh, against SB 1047. It- it- it felt like, you know, you had two big issues. One, you probably don't want state-by-state legislation on this topic. That- that's gonna be ... You're in a world for- of hurt if-if every state has a different approach to this. And then second- secondarily, if you just look at how it ev- evolved from the very first proposal to the final proposal, and unfortunately, the kinda underlying philosophy that was in the-the bill, it was- it was very clearly a sort of re- like, like, viewing, you know, basically AI progress as inherently risky right now. And so, it just ratcheted up the- the different, you know, levels of consequence for the AI model developers and- and the risk is-is-is sort of the second or third order effects of that, which is, like, does Zuck then wanna release the next version of LLaMA if you're taking on, you know, that much risk and-and, you know, even the incremental updates, um, the liability you have i-i-in terms of any of the model advancements. And so right now, we're benefiting from just an incredibly competitive market between five or six players, and you want them running as fast as possible, not having to have sort of this, you know, a whole council before every model gets released because they're-they're, you know, in fear of getting sued by, you know, the government for hundreds of millions of dollars if one person does something wrong with the model. So, that was the problem with SB 1047. That's been the problem with some of the-the proposals on national legislation. I felt like the first EO, it didn't have a lot of teeth in it, so-so it kinda was more like, "Let's watch, you know, this space and continue to study it." The actual current head of S- OSTP, uh, Arti, uh, Prabhakar, a lot of folks in Silicon Valley know her, she's actually very strong, very technical, you know, understands the Valley well, is not a sort of ... Does not lean into overregulation. So I actually think OSTP has had a-a pretty good steward, uh, even under Biden. But-but I think, you know, the- the efforts that- that Sachs would, you know, clearly be leading I think would-would lean even more toward AI progress and-and sort of not accidentally overregulating too early in, uh, i-i-in this journey.
- CPChamath Palihapitiya
So let me ask you a question then about crypto. You're not into crypto. Crypto is a little bit harder to regulate, so with Sachs being there, what do we think the one, two, or three things he could do to actually make crypto not a scam, not have consumers get left holding the bag? Obviously, sandboxing projects, maybe, uh, having people know your customer, you know, some basic regulation there. Uh, the sophisticated investor test comes to mind. Chamath, what do you think Sachs should do in terms of crypto regulation in the short term, in the near term?
- DSDavid Sacks
That's a really good question. I think that today, there are a lot of really valuable use cases that can sit on top of crypto rails. I think the most obvious one is how you can have real-time payments using stablecoins. I think the United States government is already using some of these stablecoins for a bunch of purposes. The number of companies that are beginning to adopt and use stablecoins is actually growing very- Quickly as well.
- CPChamath Palihapitiya
... take a second to, um, define stablecoins for the audience, just to catch people up.
- DSDavid Sacks
Let me define what a stablecoin is, which is that you put a dollar into a wallet somewhere, and in return, you get a digital token of that dollar. There are two big purveyors of stablecoins. There's Tether and then there's USDC, which is this company called Circle. I think the easiest way to-to disambiguate them is Tether is abroad, I think it's run out of somewhere in the Caribbean, and USDC is American, it's run by this company called Circle. The other difference is that there is some ambiguity around how these assets are secured. So what a stablecoin is supposed to do is when you give them a dollar, they're supposed to go and buy some short-term Treasury security so that that dollar is always guaranteed, right? Because if-if they ... If you had a billion dollars of stablecoins, but only $900 million of assets to back them up, there's an insolvency risk there, there's a run-on-the-bank risk, right? So theoretically, a billion dollars of stablecoins should have a billion dollars of cash in some short-term fungible security. What's incredible is, at the scale in which these stablecoins operate, that has turned out to be an enormous business. Why? When you give them a billion dollars and get a billion dollars of stablecoins in return, they just go and put it into the bank, and you know, when interest rates are 2, 3, 4, 5%, they're making billions and billions of dollars. They-
- CPChamath Palihapitiya
They get the float.
- DSDavid Sacks
They get the float. So these businesses have turned out to be incredible, but that's beyond the point. The point is that...... a lot of companies that you would never think. So for example, SpaceX uses these stable coins. How? How do you think they collect payments from all the Starlink customers? When they aggregate them in all of these long tail countries, they don't want to necessarily take the FX risk, the foreign exchange risk. They don't want to deal with sending wires, so what they do is they'll swap into stable coin, send it back to the United States, and then swap back to US dollars. So it's a very useful utility. So number one is I think we need to make those rails the standard rails in the United States. And what that does is it allows us to chip away at all of this decrepit infrastructure that the banks use to sort of slow down and tax a process that should never have been taxed. In- in-
- JCJason Calacanis
So this is good competition in a way, Chamath-
- 18:42 – 48:25
DOGE's first casualty and its paradigm-shifting potential
- JCJason Calacanis
All right, listen. DOGE is fully operational. Elon and Vivek have helped kill the last-minute omnibus spending bill. Wednesday night, the bill had been killed, and we were looking at the government shutting down starting Friday, December 20th, today, when you are listening to this. For some quick background, in September, Congress approved a bill that would keep the government funded through December 20th, the day this episode published. Keep that December date in mind for a second. This Tuesday, December (laughs) 17th, three days before the deadline, leaders in Congress unveiled what was presented as a bipartisan stopgap bill that would keep the government funded through March 14th. That kind of bill is called a continuing resolution. Basically, it give you more time for the incoming GOP majority to reach an agreement on the funding for the government. But there are two major problems with the bill. It's a rush job. It had to pass the House and the Senate by Friday night after being presented on Tuesday. It's absurdly long, 1,500 pages, with $340 billion in spending, including pay raises and better healthcare benefits for the members of Congress. My lord, read the room, gentlemen and ladies. Funding for a global engagement center for another year, that's the, uh, disinformation watchdog group that was wrapped up in the Twitter files. 130 billion to renew the farm bill for another year, $110 billion in hurricane disaster aid. Just money being thrown everywhere. A billion three to replace the Francis Scott Key Bridge in Baltimore. Vivek had some spicy comments on it. Congress has known about the deadline since they created it in late September. He said the urgency is 100% manufactured and designed to avoid serious public debate. (laughs) But serious public debate is exactly what's happening on Twitter. People are screenshotting and using ChatGPT and Claude and, and, uh, Gemini to work their way through these documents, and it looks like this is not gonna happen. Friedberg, your thoughts.
- CPChamath Palihapitiya
So the proposed bill made no real change to the current spending level of the federal government at roughly $6.2 trillion on an annualized basis.
- JCJason Calacanis
Oof.
- CPChamath Palihapitiya
Which, by the way, is roughly, call it 23% of GDP. Just to give you some context, in 1860, nearly 100 years after the founding of the United States government, federal spending to GDP was less than 1%. And it took off during the Civil War, uh, for a couple of years, but you know, we're at these kind of like unprecedented levels year after year now, really speaking to how the federal government has grown, as we talked about many times, so much in our life. And, you know, at some-
- DFDavid Friedberg
Our, our roads were really bad back then, though.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
For sure.
- CPChamath Palihapitiya
Yeah, our, our roads were, were really bad back then, but um-
- JCJason Calacanis
Lots of potholes, yeah.
- CPChamath Palihapitiya
But remember, the objective of the republic was to have the states make local decisions about how to take care of their infrastructure. The national highway effort obviously changed that in the, uh, the, the mid-20th century. But this was kind of the original intention of the republic. It wasn't to have the federal government come in and employ people, provide, uh, insurance to people, provide energy markets to people, own football stadiums, et cetera, et cetera, et cetera. As you go through the list of things in this bill, I think the $100 billion of natural da- disaster relief, everyone says, "That seems very reasonable. That's something the federal government should do. When we have a natural disaster, we need help. We need support. That's a great thing for the federal government to do." But think about the incentive it creates. It distorts markets. So we've talked about this in the past. In areas where you have a higher probability of natural disasters, and people have paid a lot of money for their homes, pay a lot of money for infrastructure, should the federal government come in and rebuild those homes and provide capital to those individuals and those businesses to help them rebuild those homes if there's a high probability of natural disaster events happening again in the future? It means that the cost of insurance doesn't matter, and the cost of real estate doesn't matter, because the federal government effectively can come in and support those prices. In the same way, the federal comes in, government comes in and supports the prices in agricultural products through the work in the farm bill and through the biofuels mandates, which were also proposed to be extended in this thing. So the federal government's playing both a market role and, you know, also kind of this role that I think fills the gap where people want to have a customer where there isn't a customer and an employer where there isn't one. So like, how did we get to this point? So from a first principles perspective, we've kind of, I think, lost the narrative on what the federal government was meant to do. If you think about the simple rubric, in a bill, like just go back some period of time and someone says, "Hey, I, I want something. I want to have this in this bill," and you're the representative that's supposed to vote on that bill and say yes or no, it's very hard to just say, "No, we are not going to spend that money." What's the incentive to say no? The alternative is you say, "Yes, but give me X as well." There is an incentive in that response, and the incentive there is to get something for your electorate, the people that voted you in as a representative of the House, which is how we ended up at this point where everyone says, "I want something if you're gonna get something," and eventually, the government, the federal government swells to spending roughly 24% of our GDP. Now, the biggest mistake I think the Founding Fathers made was that they didn't create constitutional limits on spending and enrichment, and this was because they had these deeply held philosophical beliefs that relied on the House of Representatives to provide a check by the people. If you read The Federalist Papers, and I went through a couple of these recently, and I used ChatGPT to help me kind of...... you know, bring out some of, I think, uh, the, the key points but in The Federalist Papers 10 and 51, James Madison emphasized that the structure of government was meant to ensure that both state and federal governments would limit each other's excesses, including their financial ones. And then in The Federalist Paper Number 58, he said, "The House of Representatives has control over the, quote, 'power of the purse,' which gives the people's representatives authority over taxation and spending." But they also warned, along with Alexander Hamilton, of the dangers of unchecked government power through burdensome taxation and excess spending which would ultimately erode individual freedoms. So they recognized that there were gonna be limits, but their expectation was that the House and the individuals that were electing people to the House, that were members of this republic, would come in and say, "We're gonna keep that from happening." And clearly something went wrong along the way that we got to this point where, again, spending is 24% of GDP. And I think that the biggest thing they got wrong was that they didn't create these constitutional limits on federal spending or taxation through either a balanced budget, um, structure, spending as a percent of GDP, no federal debt or term limits, or all of these other mechanisms that could've been introduced at the beginning that could have created some structural limits. Instead they assumed that there was this natural limit that would emerge as a function of the democratic process because of how they formed the government. But unfortunately, I think they failed to realize that the electorate (laughs) would eventually not want the freedoms of the people of the time. Back then in 1776, this was a pioneering country where everyone wanted to come here to have freedom to do anything they wanted everywhere they wanted, to build a business, to homestead, to be, uh, rugged individuals.
- DFDavid Friedberg
It was entrepreneurial, yeah.
- CPChamath Palihapitiya
It was. And over the last 250 years, we've gotten used to an increment in lifestyle every year and discovered that we have a mechanism to force the increment in lifestyle through the actions of government. And so the electorate has sta- stood up and said, "I want more each year, and I want the government to provide it for me if the free markets are not doing it."
- DFDavid Friedberg
Okay.
- CPChamath Palihapitiya
And that's really where we kinda got to this point where I think we elected people to the House who ultimately had this incentive that said, "If I give you this, I need to get this," and we ended up swelling this. So I, I don't know if it cracks with Doge. I really don't know if people step up and recognize the limits of, of government and what the limits should be of the federal government on an electorate basis. It's an amazing moment to see that Elon went on Twitter and said, "Hey, guys, this is nuts," and everyone said, "This is nuts. We're not gonna elect you if you do this." If that momentum and that transparency can keep up, I hope that people start to connect the dots that this isn't a free lunch, that the federal government's spending is not limitless and it's not unaccountable.
- DFDavid Friedberg
Aaron, I think we have enough people who are notable now speaking up about this excess spending and the out of control debt, that it's now in vogue to talk about austerity, to talk about inefficiency, and that really all comes back to Doge and, dare I say, you know, the conversations we've been having on this podcast for two years, that this is becoming acute. What are your thoughts on this vibe shift, this complete pivot-
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
... where we've gone from, my lord, everybody saying, "I gotta get mine. You got yours, I'm getting mine," to name and shame. They're naming and shaming now s- very specific pieces of pork in these bills, th- you know, including stadiums for N- the NFL, and people are like, "Why is the NFL getting this if they're worth 20, 30, $40 billion?" Two just quick thoughts. One, Patrick Carlson had a, had a tweet yesterday that basically said this sort of, this, th- this big misinformation kinda created by, by people that wanna be slow is that you, you ha- ha- you have to sort of choose two of fast, good, and cheap. And, and I think basically, you know, Elon's companies have sort of always effectively kinda proven the opposite, which is, which is actually if you just, like, start to ask the question, like, why does that thing have to cost as much, you know, if you're building a rocket or, or designing a car or developing batteries, like what, why, you know, if you just do ground up, why does it have to cost as much? And so, uh, so what's interesting is, is that, that probably if most people looked at what the government was spending on, they wouldn't even feel like, like, uh, you know, it's not even helping them in, like, the disaster relief sense of, of, you know, I think, like, that there are probably actually people that actually do experience the benefits of disaster relief. It's actually just all of the, uh, all of the overhead that we've created to getting anything done in the government that could actually make the government better serve the, all of, all of the constituents. I was talking to, you know, sort of a nameless in- individual in the government the other, uh, the other week where, by Congress, they have to hire contractors to do work, and the contractors, the contracting firms charge them two and a half times the, the, the sort of cost of, of an individual employee that they could otherwise hire. Mm-hmm.
- CPChamath Palihapitiya
And so, and so now, now they have to outsource the work and they don't have, um, any accountability mechanism for that contractor. And so I think there's not a single American that could look at that and say, and say this is, like, actually working well. Like-
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
... what, like, we are, we are spending more money to do less, and the ultimate outcome i- is actually lower quality. And so, so you have to at some point just kinda do a little bit of a reset moment, and that's obviously the, the upside of Doge is, like, it's like it breaks every rule of us thinking about how, how you would actually go and attack this problem. We thought you'd attack it through meetings and, and we would do it through, through congressional, you know, sort of processes and, and research. And it's actually just, it is, you know, obviously a much more sort of founder/startup-oriented way to approach this. There's gonna be lots of things that are broken glass around the edges. There's, there's no question. But I think what's interesting about this week's event is I think that, that there's been this underlying kinda notion of like, you know, E- Elon and, and, and whatnot et al, uh, you know, don't understand the, the government enough to be able to change it, and it might actually be the case that the government doesn't understand Elon in the sense of, of like he will just see this thing through.
- GUGuest
... and the tools at his disposal and Doge's disposal is, is sort of, you know, completely unprecedented in terms of the ability to put any- anybody in Congress on notice if, you know, if basically they are promoting things that, that are not making the, the country better. So, so the, the, the re- you know, the thing that we saw this week was actually that playing out. Everybody's been wondering, well, what are the actual, you know, what, what are the formal mechanisms Doge has to accomplish and enact change? And it's like, you just saw it. Like, they can just-
- JCJason Calacanis
Here we go.
- GUGuest
... they can just create enough visibility and spotlight on the problem that it, it causes a, a level of discomfort in, in supporting moving forward with, with whatever that thing is. And so I think it's interesting. I have no opinion on the actual elements of the bill other than from a, a, a process standpoint and a, and a new kind of case study of, of how this is gonna play out is I think we're seeing some early indication of what Doge will, will be able to do.
- CPChamath Palihapitiya
Aaron, how do you feel about this Doge effort as someone who is a public Harris supporter? So you, you've come out... I think you've, you've been public about this.
- GUGuest
Yeah.
- CPChamath Palihapitiya
But I want to understand, like, why people wouldn't be supportive of this effort, right? Like, like, what is, like, what is the motivation for people saying, "This isn't a good thing. We shouldn't be doing this." Like, 'cause there's a lot of folks that have gone on these shows. It's like they, they, they blast Elon, they blast Vivek. But, like, aren't these principles, like, shouldn't they just be universal that we should not be wasting money and stuff?
- GUGuest
Sure, of course. The... Now, I, I mean... So to give some credit, you know, you have Ro Khanna, uh, supporting it. You have-
- CPChamath Palihapitiya
Right.
- GUGuest
... uh, Fetterman supporting it, Bernie Sanders.
- CPChamath Palihapitiya
Right.
- 48:25 – 57:36
Conspiracy Corner: What are these drones over New Jersey!?
- JCJason Calacanis
There were drones over New Jersey Thursday morning. The FAA banned drones.This is breaking news in parts of New Jersey until January 17th, due to, quote/unquote, breaking news, special security reasons. They also warned that the government may respond with deadly force against drones posing a threat. This thing is getting crazier by the day. There have been thousands of reported drone sightings in New Jersey and bordering states over the last week. Here's some examples. Play the clip, yada yada. Until Thursday morning, White House officials have been dismissive, saying repeatedly that nothing significant is going on. One of the theories was that there was a dr- that the drones were looking for nuclear material, AKA, a dirty bomb, or lost radioactive material, or (laughs) the- the ultimate, a lost nuclear bomb from, like an actual nuclear warhead from Ukraine. On Tuesday morning, the mayor of Belleville, New Jersey suggested the drones could be looking for that radioactive material that went missing on December 2nd. That was radioactive material, uh, germanium-68. We'll get details on that from Friedberg in a moment. And then, of course, conspiracy theories are going wild. It's Iran, it's UFOs, and my favorite, Project Blue Beam, which is that NASA is using holograms and other technology to create a new world order and religion and projecting Jesus into the clouds. You can look that stuff up or we'll have Alex Jones on, uh, in Saxa's seat one week. Okay, Friedberg, you're the genius here. Tell us what's going on.
- CPChamath Palihapitiya
I think there are three likely explanations. The first is that the government's got some activities that can't be disclosed. So we don't know and they can't talk about it. No one can neither, you know, say yes or say no to it. So, you know, that's kind of one that- that's pretty possible. The second is these are just individuals with a bunch of drones messing around, having fun, trying to wreak havoc. Could be fun. Bunch of kids, I think we've all been there. The third is what I would call kind of a bit of a more nefarious, like this is my conspiracy theory. I think it- it could be considered a PSYOP. Okay, so right now, the US has a significant regulatory burden on- on drone utilization in a commercial setting, and it's very hard to use drones. You have to have line of sight to the operator. These things aren't supposed to go on their own. There's all these rules and restrictions and so on and so forth. Meanwhile, you've got countries like China rocketing ahead. So I don't know if you guys know the company Meituan in China, you know the food delivery company?
- GUGuest
Mm-hmm.
- CPChamath Palihapitiya
Have you guys... Did you know that they do a large amount of drone delivery of their food now?
- JCJason Calacanis
Was not aware of that, yeah. We're testing that here in the US, yeah.
- CPChamath Palihapitiya
The drone delivery business in China is already $30 billion a year and they're also launching a pretty significant fleet of what we would call kind of eVTOLS or flying cars. The expectation is that by 2030, there'll be 100,000 flying cars moving people around in China and these are huge efficiency gains. In fact, with Meituan, you can now order food while you are on the Great Wall at one of the ramparts and it'll bring, the drone will bring the food to you while you're walking the Great Wall as a tourist. And in the US, the reason that these things haven't taken off, and the reason we don't have a large kind of drone industry, which is clearly emerging and is gonna be a huge economic driver for China and others around the world, is simply the regulatory restrictions. And so if you were gonna try and mess with the US's ability to move forward with the drone economy, you would probably try and wreak some havoc, stoke some fear, and get people to say, "Hey, this doesn't seem cool. What's going on? I don't like that there's all these drones in the sky. I'm freaking out." And try and get the regulators to come in and say, "Hey, we're banning drones." And set up everyone, including the people in the government to say, "We should take a beat, we should think a little bit before we deregulate. We should not-"
- JCJason Calacanis
Who would do this?
- CPChamath Palihapitiya
Not-
- JCJason Calacanis
Who's the motivation? Uber Eats and Postmates?
- CPChamath Palihapitiya
Well, this... No, no, no, I'm saying-
- JCJason Calacanis
People driving?
- CPChamath Palihapitiya
No, no, no. It could be the- the, uh, other government. Uh, that's my PSYOP point. This could be a PSYOP-
- JCJason Calacanis
Oh, you're saying this could be China doing this to try to slow down our economy? Huh.
- CPChamath Palihapitiya
Think about it. If you're gonna pass a bill in Congress to make drones more freely roamable in the skies, you're gonna reference back this crazy story in New Jersey, everyone's freaking out about it, and you're gonna say, "Hey, wait, what about all that stuff that happened in New Jersey? Maybe this doesn't make as much sense. People are kind of scared about it. We shouldn't rush, we shouldn't rush, we shouldn't rush."
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
That would be my PSYOP theory. That's my, you know, kind of conspiracy theory tinfoil hat.
- JCJason Calacanis
All right. There it is.
- CPChamath Palihapitiya
I don't often do 'em, but that's what I would kind of think about. I think the first two are probably more likely.
- JCJason Calacanis
Yeah, I like it. Alex Jones would be pr- Alex Jones would be proud. Aaron, uh, th- why don't you jump the fence and tell us your best conspiracy theory of this?
- DFDavid Friedberg
No, no, no, uh-
- JCJason Calacanis
Jump the fence.
- DFDavid Friedberg
I, this is, that- that was all crazy pills what I just heard. Uh, there- there-
- JCJason Calacanis
(laughs) Yeah, take some. 10%.
- DFDavid Friedberg
I think there's like, there's like 10 higher PSYOPs you would do if you wanted to- to get us to, you know, have-
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
... a collapsing economy than going after drone deliveries, but, um, no, I- I-
- CPChamath Palihapitiya
What would they be? What would they be?
- DFDavid Friedberg
I mean (laughs) -
- JCJason Calacanis
Yeah, conspiracy corner.
- DFDavid Friedberg
Well, first of all, I think, I think you'd have AI like- like do a robot-
- 57:36 – 1:27:29
Zuck joins Team Elon against OpenAI, AI's competitive landscape, downstream impact on business software
- DSDavid Sacks
- JCJason Calacanis
All right, here's an update on closed AI flipping and, uh-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
... Sam Altman, super villain Sam Altman securing the bag.
- DSDavid Sacks
Sucks.
- JCJason Calacanis
Meta wrote a letter-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
... to California's Attorney General-
- DSDavid Sacks
That was your best open yet. (laughs) It was the best.
- JCJason Calacanis
... on OpenAI for-profit conversion. Two months ago-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
OpenAI announced a $6.6 billion funding round, $157 billion valuation. They're projecting 3.7 billion in revenue this year. Pretty great revenue growth. But there's a poison pill in the deal. OpenAI must convert to a for-profit within the next two years, or investors can ask for their money back. And right before they announced this round, you remember CTO Mira Murati and two other top researchers resigned. Many people saw this as a protest. Elon, who put the first 50 million in and co-founded OpenAI, is currently suing the company and seeking a court order that would stop the for-profit conversion. Now Zuck is joining team Elon. Elon and Zuck are in some weird pairing up. They're not in the ring, not in the octagon, no. Last week, Meta sent a letter asking California's attorney general to stop OpenAI's for-profit conversion. What do you think of this? We've got them now, not in the octagon, but they're in the political arena. Chamath, your thoughts.
- DSDavid Sacks
I think that this is so interesting. So, I was looking at all of these things. If you, if you put them all together, it paints a really interesting story. So you have Elon filing an injunction, which basically says, "You should not allow this conversion to happen until we sort out all of these details, because if you're allowed to convert and then I win, it'll be very messy to go backwards." I think that that's a pretty credible legal argument. Then you have Zuck basically say, "Hey, Elon's right, this company should not convert." But the more interesting thing that really got me thinking about this was a chart that Menlo Ventures put out. Nick, can you just show this? What this shows is just what's happened in the last year. And what do you notice? What you notice is the market share of OpenAI has changed pretty meaningfully from half to about a third. And what you see is Anthropic doubled, Meta roughly staying the same, Google picking up steam. And it started to make me think, this is very similar to a chart that I would have looked at when, you know, in 2006 and 2007 when we were building Facebook, because we had this huge competitor in MySpace that was the de facto winner. And we were this upstart. And it made me think, "Is there a replay of this same thing all over again, where you have this incumbent that pioneers an idea, and they start with 100% share, and then all of these upstarts come around from nowhere?" And then I thought, "Well, what is better-"... today if you are a company that's just starting, versus if you were the incumbent. And I think that there's a handful that are worth talking about. So the first is, when you look at what xAI has done with respect to NVIDIA GPUs, the fact that they were able to get 100,000 to work as, you know, in one contiguous system and are now rapidly scaling up to basically a million over the next year, I think what it does, Jason, it puts you to the front of the line for all hardware. So now all of a sudden, if you were third or fourth in line, xAI is now first and it pushes everybody else down. And in doing that, you either have to buy it yourself or work with your partner. And I think for the folks like Meta, that translates and explains why they're spending so much more. It's sort of like this arms race. "If you can't spend with my competitors, I'm just gonna prefer my competitor to you." So I, I think that that creates a capital war. In a capital war, I think the big companies like Google, Amazon, Microsoft, Meta, and brands like Elon will always be able to attract effectively infinite capital, and their cost of capital goes to zero, which means they'll be able to win this hardware war. Okay, so put a pin in that. Then the second thing is what happens on the actual data and experience side on the training side? If you listen to Ilya Sutskever or if you listen to Andrej Karpathy, what they effectively are saying is there's this terminal asymptote that we're seeing right now in model quality. So what happens? A lot of these folks are now experimenting on the things around the model, right? The user experience. How you use it. Can I keep things in memory? Can I cut and paste these things from here and there? Because what it says is, like, the data's kind of static and brittle, but it's actually not. That's what we said before. Because you have this corpus of data on X that's pretty unique. I suppose if Elon fed in all this kinetic data that he controls through Tesla, that's very unique. Does that all of a sudden create this additive pool of information? Possibly. And then the third thing is, when you look at that chart, what that chart says is, "Hold on a second, why are corporates moving around?" And what I can tell you, just through the 80/90 lens, is we are completely promiscuous in how we use models and the reason is because these models offer different cost/quality trade-offs at different points in time for different tasks. And so what we are seeing is a world where instead of having two or three models you rely on, you're gonna rely on 30 or 40 or 50, and you're gonna trade them off and you're gonna use, effectively, like, an LLM router to dis- you know, to-
- JCJason Calacanis
Load balance them, yeah, and to route them.
- DSDavid Sacks
Or just to-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
Or just to manage and route them, and then there's an intelligence-
- JCJason Calacanis
Yeah.
- DSDavid Sacks
... above that that's constantly tasking and figuring out prompt optimization across these models. So it's this thing where we were very reliant on OpenAI, now we're reliant across three or four. Ideally we'll be reliant on 30 or 40. And so I just see this world where it's all getting commoditized quite quickly, and so I'm just, like, sort of scratching my head, like, where is the market value here?
- JCJason Calacanis
Aaron, uh, your thoughts? I know you're very promiscuous-
- DSDavid Sacks
(laughs)
- JCJason Calacanis
... when it comes to LLMs as well.
- DFDavid Friedberg
(laughs) Uh, I, I mean, I, uh, we have a very similar model as what, which Mos said, which is w- we're agnostic so we work with multiple AI vendors, but the, um, uh, I, I think the... A, a, a friend deep in AI land couple years ago, right before ChatGPT said, "There's no secrets in AI." And I didn't totally understand kind of at the time. It, it hadn't registered what that meant, but very quickly it kinda became obvious, which is the research breakthroughs sort of propagate j- insanely quickly across the AI community. And so, back, back to this framework, if you just think about it as, as... If, if the research effectively becomes open at, at some point in time quickly enough because either the researchers move or people publish it or whatnot, then it really is a compute game and then maybe a data access game, and that means that there's four or five ad-scale players that can, that can fund this. And, and I think as we've seen in other areas where it's an infrastructure play, you eventually have the underlying service. With, with enough competition, you have the underlying service eventually trend toward the cost of the infrastructure. So, so what we should expect is that the price of a token in AI land, you know, basically will be whatever the price of running the, the computers are and maybe with like a, you know, plus 10, 20% margin.
- JCJason Calacanis
Did you see this same thing happen with storage? I remember in the early days-
- DFDavid Friedberg
Yes, 100%.
- JCJason Calacanis
... Box and Dropbox and YouTube, y'all had this major innovation with storage. And, and how-
- DFDavid Friedberg
Yes.
- JCJason Calacanis
... did that play out?
- DFDavid Friedberg
Let me give you a fun stat. We give our customers unlimited storage. We have 82% gross margin. So, so the, the, what, what happened was the price of the underlying storage has gone down by hundreds of times since we started the company, and then our, all our value is in the software layer on top of the storage. So we've benefited by this incredible just r- you know, ruthless competition between Western Digital, Seagate, other players that are just trying to pack more, more, more, you know, basically m- more, uh, storage density into these drives, and every couple years they have a new breakthrough. We're now, you know, upcoming, we're up, we're heading toward maybe a, a 50-terabyte hard drive. When we started the company they were kinda 80, uh, 80 gigabytes.
- JCJason Calacanis
How much of your time in the early days was spent-
Episode duration: 1:36:36
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