E111: Microsoft to invest $10B in OpenAI, generative AI hype, America's over-classification problem

1. 0:00 – 0:43

   Bestie intro!

   1. CPChamath Palihapitiya0:00

      Is anybody else seeing a half a second lag with J-Cal? Like a second lag?

   2. JCJason Calacanis0:04

      Test, test, test. One, two, one, two.

   3. CPChamath Palihapitiya0:05

      From like the way his mouth moves.

   4. DSDavid Sacks0:07

      Well, that always happens. (laughs)

   5. JCJason Calacanis0:09

      Oh, God, here it comes.

   6. DFDavid Friedberg0:10

      His mouth never stops moving. (laughs)

   7. NANarrator0:13

      Relax, Sax. Relax, Sax.

   8. DFDavid Friedberg0:15

      (laughs)

   9. DSDavid Sacks0:16

      (laughs) Are we going? Are we recording?

   10. DFDavid Friedberg0:17

       Oh, you're ready to go? Are you coated in hot sax?

   11. CPChamath Palihapitiya0:19

       For A plus material.

   12. JCJason Calacanis0:21

       Oh, my gosh.

   13. CPChamath Palihapitiya0:21

       Coated in hot sax? All right, let's go.

   14. DSDavid Sacks0:23

       This is Chappelle at the punchline. Let's go.

   15. JCJason Calacanis0:25

       Let's go. I'm ready to go.

   16. NANarrator0:27

       I'm going all in.

   17. DSDavid Sacks0:28

       Don't let your winners ride.

   18. JCJason Calacanis0:31

       Rain Man David Sachs.

   19. NANarrator0:32

       I'm going all in.

   20. DSDavid Sacks0:35

       And I said- We open sourced it to the fans and they've just gone crazy with it.

   21. JCJason Calacanis0:39

       Love you, best night.

   22. NANarrator0:40

       Queen of quinoa. I'm going all in.

2. 0:43 – 11:18

   Reacting to Slate's article on All-In

   1. NANarrator0:43

   2. JCJason Calacanis0:43

      All right, everybody. Welcome to episode 111 of the world's greatest podcast, according to-

   3. DFDavid Friedberg0:51

      (laughs)

   4. JCJason Calacanis0:52

      ... Slate, the podcast that shall not be mentioned by the press, apparently.

   5. DSDavid Sacks0:55

      What do you mean? They just did a profile on us.

   6. JCJason Calacanis0:57

      Well, they did. This is the conundrum. It's so much of a phenomenon that we're the number one business and the number one tech podcast in the world hands down that the press-

   7. DFDavid Friedberg1:08

      (laughs)

   8. JCJason Calacanis1:09

      ... has a hard time (laughs) giving us any oxygen because they want to hate us. They want to cover it.

   9. CPChamath Palihapitiya1:17

      You're saying they take the ideas but not the...

   10. JCJason Calacanis1:20

       They don't want to cite it.

   11. CPChamath Palihapitiya1:21

       They don't want to cite it.

   12. JCJason Calacanis1:22

       They don't want to cite it. But anyway, shout out to Slate.

   13. DFDavid Friedberg1:25

       Yeah, what I thought was interesting was the guy pointed out that we don't want to subject ourselves to independent journalists asking us independent questions, therefore we go direct and that that's kind of the, the thing nowadays. When everyone says they want to go direct, it's 'cause they don't want to be subject to independent journalists.

   14. JCJason Calacanis1:40

       W- One might ask themselves why subjects don't want to go direct.

   15. DSDavid Sacks1:45

       Yeah, exactly.

   16. DFDavid Friedberg1:46

       You mean w- don't want to go to journalists?

   17. JCJason Calacanis1:47

       Yeah, because i- i- there's a, there's a specific reason why principals, the subject of stories do not want to have the press interpret what they're saying is because they don't feel they're getting a fair shake. They feel like their words are being twisted.

   18. DFDavid Friedberg1:59

       Right, but the challenge, the challenge is that then we avoid independent scrutiny of our points of view and our decisions and-

   19. DSDavid Sacks2:03

       No, they don't. They're constantly writing hit pieces about us. The, the question is when we want to present our side of it, do we need to go through their filter or not?

   20. DFDavid Friedberg2:12

       Right.

   21. DSDavid Sacks2:12

       Why would you go through their filter when it's always gonna be a hit piece?

   22. DFDavid Friedberg2:17

       Right.

   23. JCJason Calacanis2:17

       Well, and also-

   24. DSDavid Sacks2:18

       They, they have a class hatred of basically of technology entrepreneurs and investors.

   25. JCJason Calacanis2:24

       I think it's just you, Sax. (laughs)

   26. DFDavid Friedberg2:26

       I, I think, I, no-

   27. DSDavid Sacks2:27

       No, no.

   28. JCJason Calacanis2:27

       It's just you, Sax. (laughs)

   29. DSDavid Sacks2:28

       You're right, J-Cal. They don't hate you because you genuflect to their political biases. You see, if-

   30. DFDavid Friedberg2:32

       (laughs)
3. 11:18 – 29:22

   SF business owner caught spraying homeless person on camera

   1. JCJason Calacanis11:18

      I don't know if you guys saw this really horrible dystopian video of an art gallery owner who's been dealing with owning a storefront in San Francisco, which is challenging, uh, and having to clean up feces and, you know, trash and whatever, uh, every day. And I guess the guy snapped and he's hosing down a homeless person who refuses to leave the front of his store. And you're just like- Oh, I saw that. I saw that. I'm just like, the humanity in this is just insane. Like, really, like, you're hosing a human being down- It's terrible. ... who is obviously not living a great life and is, you know, in dire straits-

   2. DSDavid Sacks11:58

      I can feel for both of them, J-Cal. I can feel for both of them. I agree that it's not good to hose a human being down. On the other hand, think about the sense of frustration that store owner has, because-He's watching his business go in the toilet-

   3. CPChamath Palihapitiya12:09

      Go in the toilet.

   4. DSDavid Sacks12:09

      ... because he's got homeless people living in front of him, so they're both, like, being mistreated. The homeless person is being mistreated-

   5. JCJason Calacanis12:17

      Yeah. Say more about the-

   6. DSDavid Sacks12:17

      The homeless person's being-

   7. JCJason Calacanis12:18

      Say more about the store owner.

   8. DSDavid Sacks12:19

      The homeless person's being mistreated. The store owner's being mistreated by the City of San Francisco.

   9. JCJason Calacanis12:23

      Yeah. Say more about the store owner.

   10. DSDavid Sacks12:25

       I mean, that, that person's not in a privileged position. That person-

   11. JCJason Calacanis12:28

       The store owner.

   12. DSDavid Sacks12:28

       ... probably... The store owner. The store owner, he's probably fighting to stay in business.

   13. JCJason Calacanis12:32

       Mm-hmm.

   14. DSDavid Sacks12:33

       I'm just saying. I'm not saying that's right, but-

   15. JCJason Calacanis12:35

       No, no, I'm just... (laughs) I'm laying the rope.

   16. DSDavid Sacks12:36

       No, try not... No.

   17. JCJason Calacanis12:38

       I'm just wa- (laughs) I wanna hear you expand upon-

   18. DSDavid Sacks12:39

       No, I mean, look, I'm just saying-

   19. JCJason Calacanis12:40

       ... how this person's justified in any way.

   20. DSDavid Sacks12:41

       Uh, you know, what you're trying to do, what you're trying to do is, "Oh my god. Look at this, this homeless person being horribly oppressed." No, that store owner is a victim too.

   21. JCJason Calacanis12:49

       Uh, yeah. There's no doubt it's horrible to run a business-

   22. DSDavid Sacks12:52

       I mean, I mean-

   23. JCJason Calacanis12:52

       ... in there.

   24. DSDavid Sacks12:52

       ... what is that person supposed to do?

   25. JCJason Calacanis12:54

       No, wait. This is, this is symbolic of the breaking down of basic society. Like, these... Both of these people are obviously, like... It's just a horrible moment to even witness. It's like, ugh. You, it's like something-

   26. CPChamath Palihapitiya13:08

       Jason, do you have equal empathy for the store owner and the homeless person or no?

   27. JCJason Calacanis13:13

       Under no circumstances should you hose a person down in the face who is homeless. Like, it's just horrific to watch. It's just inhumane. This is a human being. Now, but as a person who owns a store, yeah, my dad grew up in the local business. If people were abusing the store and you're trying to make a living and you gotta clean up, you know, whatever, excrement every day, which apparently is horrific.

   28. DSDavid Sacks13:33

       There's no way it's good.

   29. JCJason Calacanis13:33

       Yes. And this, this city is dystopian.

   30. DSDavid Sacks13:35

       It is that moment. Look, in that moment, the empathy is not equal. I think you have more empathy, obviously, for the person on the receiving end of that hose. Okay? But, in general, our society has tons of empathy for homeless people. We spend billions of dollars trying to solve that problem. You never hear a thing about the store owners who are going out of business.
4. 29:22 – 1:09:57

   Microsoft to invest $10B into OpenAI with unique terms, generative AI VC hype cycle

   1. JCJason Calacanis29:22

      All right, speaking of grifts, um, Microsoft is gonna put $10 billion or something into ChatGPT, degenerate AI, as I'm calling it now, is, uh, the hottest thing in Silicon Valley.

   2. CPChamath Palihapitiya29:33

      Why? The technology's incredible. I mean, you, you can question the business model maybe, but the technology is pretty cool.

   3. JCJason Calacanis29:39

      Well, I mean, yeah. So what I'd say is-

   4. CPChamath Palihapitiya29:41

      Important.

   5. JCJason Calacanis29:41

      ... $29 billion for a company that's losing a billion dollars in Azure credits a year, that's one way to look at it.

   6. CPChamath Palihapitiya29:47

      That's one way to look at it.

   7. JCJason Calacanis29:47

      I don't know.

   8. CPChamath Palihapitiya29:47

      But it's also a naive way to look at a lot of other businesses that ended up being worth a lot down the road. I mean-

   9. JCJason Calacanis29:53

      Sure.

   10. CPChamath Palihapitiya29:53

       ... you can model out the future of a business like this and create a lot of really compelling big outcomes, you know?

   11. JCJason Calacanis30:00

       Potentially, yeah. So Microsoft is close to investing 10 million in OpenAI in a very convoluted transaction that people are trying to understand. It turns out that they might wind up owning 59% of OpenAI, but get 75% of the cash and profits-

   12. CPChamath Palihapitiya30:16

       49, 49.

   13. JCJason Calacanis30:16

       ... back over time.

   14. CPChamath Palihapitiya30:18

       49%.

   15. JCJason Calacanis30:19

       49%, yeah, of OpenAI, but they would get paid back the $10 billion over some amount of time. And this obviously includes Azure credits, uh, and ChatGPT, as everybody knows, this, um, just incredible demonstration of what AI can do in terms of text-based creation of content and answering queries has taken the net by storm. People are really inspired by it. Uh, Sacks, do you think that this is a defensible, real technology or do you think this is like a, a crazy hype cycle?

   16. DSDavid Sacks30:55

       Well, it's definitely the next VC hype cycle. Everyone's kind of glomming onto this because VC really right now needs a savior. Just look at the public markets. Everything we're investing in is in the toilet, so we all really want to believe that this is going to be the next wave. And just because something is a VC hype cycle doesn't mean that it's not true. So as, I think one of our friends pointed out, you know, mobile turned out to be very real. I think-

   17. JCJason Calacanis31:21

       Mm-hmm.

   18. DSDavid Sacks31:21

       ... cloud turned out to be, I'd say very real.

   19. JCJason Calacanis31:25

       Yeah.

   20. DSDavid Sacks31:25

       Social was sort of real in the sense that it did lead to a few big winners. On the other hand, Web3 and crypto was a hype cycle, and it's turned into a big bust.

   21. JCJason Calacanis31:36

       VR falls into the hype cycle, but in real less.

   22. DSDavid Sacks31:38

       I think VR probably a hype cycle so far. No one can even explain what Web3 is. In terms of AI, I think that if I had to guess, I would say the hype is real in terms of its technological potential. However, I'm not sure about how much potential there is yet for VCs to participate because right now, it seems like this is something that's gonna be done by really big companies. So OpenAI is basically a... it looks like kind of a Microsoft proxy. You've got Google I'm sure will develop it through their DeepMind asset. You know, I'm sure Facebook-

   23. JCJason Calacanis32:16

       Facebook.

   24. DSDavid Sacks32:16

       ... is gonna do something huge in AI. So what I don't know is, is this really a platform that startups are gonna be able to benefit from? I will say that some of the companies we've invested in are starting to use these tools. So I guess, I guess where I am is I think the technology is actually exciting. I wouldn't go overboard on the valuations. I wouldn't buy into that level of the hype.

   25. JCJason Calacanis32:41

       But you think there could be hundreds of companies built around an API for something like ChatGPT, DALL-E-

   26. DSDavid Sacks32:48

       Maybe, yeah. I don't, I don't-

   27. JCJason Calacanis32:49

       ... or Spokes.

   28. DSDavid Sacks32:49

       ... think startups-

   29. JCJason Calacanis32:50

       Maybe.

   30. DSDavid Sacks32:50

       ... are gonna be able to create the AI themselves.
5. 1:09:57 – 1:27:16

   Biden's documents, America's over-classification problem

   1. DFDavid Friedberg1:09:57

   2. JCJason Calacanis1:09:57

      So how would we like to ruin the show now? Should we talk about Biden and, uh, the documents and ruin the show with political talk or should we talk about... Since it's been such a great episode so far, what do we wanna talk about next? I'll give you a couple choices.

   3. DSDavid Sacks1:10:13

      You know what you don't want to talk about.

   4. JCJason Calacanis1:10:14

      (laughs)

   5. CPChamath Palihapitiya1:10:15

      (laughs)

   6. JCJason Calacanis1:10:16

      Some people are talking about productivity

   7. DFDavid Friedberg1:10:19

      Give it to him. Give it to him. Give it to him.

   8. CPChamath Palihapitiya1:10:20

      He's being quiet.

   9. DSDavid Sacks1:10:21

      We all know-

   10. JCJason Calacanis1:10:22

       App, Apple (...) air glasses.

   11. DSDavid Sacks1:10:24

       Hold on a second. We all know Jay Kal that according to you, when a president-

   12. JCJason Calacanis1:10:28

       (laughs) Here we go.

   13. DSDavid Sacks1:10:29

       ... is in possession of classified documents in his home-

   14. JCJason Calacanis1:10:33

       Yes, yes.

   15. DSDavid Sacks1:10:33

       ... that apparently have been taken in an unauthorized manner, basically stolen-

   16. JCJason Calacanis1:10:37

       Yes.

   17. DSDavid Sacks1:10:38

       ... he should have his home raided by the FBI.

   18. JCJason Calacanis1:10:40

       Almost. Close.

   19. DSDavid Sacks1:10:41

       (laughs)

   20. JCJason Calacanis1:10:42

       Close. Uh, if... So anyway, the, Biden, uh, as of the taping of this has now said there's a third batch of classified documents. This group, I guess there was one at an office, one at a library. Now this third group is in his garage with his Corvette. Certainly not looking good, uh, and independent-

   21. DSDavid Sacks1:11:02

       Well they say, they say that in his defense, they say the garage was locked, meaning that, uh-

   22. JCJason Calacanis1:11:07

       It was closed.

   23. DSDavid Sacks1:11:07

       ... you could use a garage door opener to-

   24. JCJason Calacanis1:11:08

       Garage door open and close. (laughs)

   25. DSDavid Sacks1:11:10

       ... open or close it. That's what's... It was locked when it went closed.

   26. JCJason Calacanis1:11:12

       So pretty much as secure as the documents at Mar-a-Lago, same equivalency.

   27. DSDavid Sacks1:11:16

       No, no, no. I actually, I mean, just to be perfectly fair-

   28. JCJason Calacanis1:11:19

       Okay.

   29. DSDavid Sacks1:11:19

       ... the documents at Mar-a-Lago were locked in a basement. The FBI came, checked it out, said, "We'd like you to lock those up." They locked them up. So-

   30. JCJason Calacanis1:11:26

       Got it.

Episode duration: 1:31:58