E115: The AI Search Wars: Google vs. Microsoft, Nordstream report, State of the Union

Chamath Palihapitiya 0:00 I have this thing with my oldest son where I don't know if it's all kids, but he's 13. He doesn't know how to answer the phone. Not to save his life. "Hello? Hello?" He picks up the phone, "Hello?"

David Sacks 0:12 (laughs)

Chamath Palihapitiya 0:12 And so, and so I said, "Listen, from now on, when you call me, I expect a certain way that you pick up the phone and that's going to be practice for you how you interact with anybody else. And vice versa as well, if I call you, you have to pick up the phone and if you don't, I'm hanging up right away." So yesterday, he calls me and, and I'm like, "Jamaal speaking," you know, it's like, "Hello, Jamaal speaking."

David Sacks 0:35 Right.

Chamath Palihapitiya 0:35 "Dad." (beep) Hang on.

David Sacks 0:40 (laughs)

Chamath Palihapitiya 0:41 He calls back, "Hello, Jamaal speaking." "Dad." (beep) Hang up again. We did this three more fucking times and then finally I said, " (beep) when will you get it through your head? Can you please just answer like if I say, 'Hello, Jamaal speaking,' 'Hey Dad, it's your son,' or 'Hey Dad, it's (beep) .' And it's unbelievable and he's like, "Well, none of my friends pick up the phone like this." And I'm like, "Oh my God, like, don't they think they need to have verbal communication skills?"

David Sacks 1:08 (laughs)

Chamath Palihapitiya 1:09 It's like, it's unbelievable. And then when I call him, he picks up the phone, "Hello?" What? Not even hello. "Hello? Hello?"

David Sacks 1:17 (laughs)

Chamath Palihapitiya 1:19 What is that? It's like a grunt.

David Sacks 1:21 It's minimal efforts, like the minimum-

Chamath Palihapitiya 1:23 Oh my God.

David Sacks 1:23 ... minimum number of syllables.

Chamath Palihapitiya 1:25 It's, it's embarrassing. Are your kids like this? Or is it just my kid?

David Sacks 1:28 Actually, I don't think I've heard him pick up the phone. I need to test that.

Jason Calacanis 1:32 I'm going all in. Let your winners ride. Rainman, David Satterfield. I'm going all in. And I said. We opened source it to our fans and they've just gone crazy with it. Love USH. Queen of Kinloch. I'm going all

Jason Calacanis 1:49 in.

David Sacks 1:50 J Cal was on Twitter calling me out for not denouncing the Chinese balloon in strong enough language. Although I don't think he understood the language I was using.

Jason Calacanis 1:57 Um-

David Sacks 1:58 Did you understand what the word errant means? What did you think it meant?

Jason Calacanis 2:01 I, you know, I do understand the word errant.

David Sacks 2:03 Was that like a teaching moment for you?

Jason Calacanis 2:04 It tem- Yeah, it generally means straying off course. Yeah, and traveling in search of adventure, at least according to Merriam-Webster.

David Sacks 2:14 (laughs)

Jason Calacanis 2:14 So, I just thought maybe you're being a little... But I know you're a dove, so, but I was a little dovish thinking they were just off course. I think... Do you think they were off course or they were doing it deliberately? You buy that it was off course?

Chamath Palihapitiya 2:26 Genuflect. Go, genuflect. J Cal, go, go, go.

David Sacks 2:29 Yeah, please. So, I knew J Cal would have to join in this nationwide panic over this balloon.

Jason Calacanis 2:35 I didn't panic. I have no panic over it. What does the word errant means?

Chamath Palihapitiya 2:39 (laughs) It had a Minolta camera attached to it. (laughs)

David Sacks 2:43 J Cal, I got some really bad news for you. There are these things called spy satellites-

Jason Calacanis 2:48 No, we know about those.

David Sacks 2:48 ... and they can see everything.

Jason Calacanis 2:50 Oh, no, it's obvious people have been sending these balloons over here for a while. I just thought you were framing as it was errant, as in it like strayed off course.

David Sacks 2:58 Well, we don't know.

Jason Calacanis 2:58 Do you think it was e- I'm sincerely asking, do you think it was errant, it was an accident?

David Sacks 3:01 Well, here's the thing, it's such a harebrained scheme to send a balloon flying over American territory that the Occam's razor explanation here is that they somehow lost control over it.

Jason Calacanis 3:14 Okay.

David Sacks 3:15 And these things are not steerable, so like my guess is that it probably wasn't deliberate just because of how stupid a plan it would be and how like obvious it would be. But it could be, I don't really know.

Jason Calacanis 3:29 Okay.

David Sacks 3:29 What I do know is that the whole nation got in a lather and a tizzy and started hyperventilating about this balloon and it just shows how reflexively hawkish the media is. You know, it's like, hey, can we just wrap up this war in Ukraine before we start another war?

Jason Calacanis 3:44 That's one-

David Sacks 3:44 With an even more formidable superpower.

Jason Calacanis 3:46 Yeah, I think that's fair. The media-

Chamath Palihapitiya 3:47 The balloon, the balloon got more attention than us blowing up Nord Stream.

David Sacks 3:50 Exactly. (laughs)

Jason Calacanis 3:51 Okay, well, hold on. We've already jumped into it. No, what I would say about that is, uh, the media insight is the valid one. I was just responding to the errant and I was curious if you actually thought it was an accident. I don't think it's an accident. I don't think there are accidents.

David Sacks 4:01 Well, I think it clearly was off course and problematic, so you know-

Jason Calacanis 4:05 Okay.

David Sacks 4:05 ... I don't know about the intentionality of it. I-

Jason Calacanis 4:08 Okay.

David Sacks 4:08 I think, I think it very well could have been intentional, but I tend to think because it's such a stupid harebrained scheme, like I almost give them the benefit of the doubt, not because they're not capable of spying.

Jason Calacanis 4:18 Obviously, they are. Sure.

David Sacks 4:18 I'm sure they're spying on us.

Jason Calacanis 4:20 Yeah.

David Sacks 4:20 Obviously, they're spying on us just like we're spying on them, is what-

Jason Calacanis 4:23 Yeah.

David Sacks 4:23 ... we both do. But it seems like such a stupid way because you're gonna get caught.

Jason Calacanis 4:27 It's a made for TV moment. You have to understand the nature of live television and why the media overreacted to it. It's ongoing. So, because it, it's not final, it's like a live event occurring, like when kids are trapped in a mine. Those are the best stories for CNN because you can keep updating people and people keep turning the TV on to check on the status. So this one was just made for CNN because obviously we're going to shoot the thing down and obviously you can interpret into it if it's an accident or not, and it just gives them something to talk about on a slow Newsweek. But it is interesting. I think your point that is interesting is, is the Nord Stream story correct or not? Why is that not being covered? It's not being covered because there, it's not an ongoing story. So that just shows, you-

David Sacks 5:17 No, I don't think that's right. I think it's not being covered because the mainstream media already took a side on this.

Jason Calacanis 5:24 Mm-hmm. ............................

David Sacks 5:24 So remember when-

Jason Calacanis 5:25 Oh, so even more cynical. Yeah. Okay.

David Sacks 5:26 Well, it's not, it's not just cynical. So when, when Nord Stream got blown up, the administration came racing out with the line that the Russians did it, that they, this was self-sabotage. And by the way, the media repeated this endlessly. This was the media line. And it never really made sense to anyone who's paying attention because first of all, this was an economically vital asset to Russia. Second, it was their main source of leverage over Europe, was their control over the gas supply. So the idea that they would shoot themselves in the foot that way, just to somehow, what? Show how crazy they are? It never really made sense to anyone who was paying attention-... and the fact that the administration and the media s- so quickly raced to that conclusion suggested that it was maybe a cover story. Because if we had nothing to do with it, you would just be more neutral and say, "Yeah, we don't know what happened." But they had to, like, promote this line that, "Oh, the Russians did it," which just never made any sense. And now Sy Hersh has come out with this story s- it, it laying out in great detail how we did it. It's not just saying we did it. It's laying out who did it and how and the steps and all that kind of stuff. And just so you guys understand who this guy is, he's this legendary Pulitzer Prize winning journalist. He's like 86 years old or something like that now. But he broke, during Vietnam, he broke the story of the My Lai Massacre, which the military denied until he proved it. Uh, he broke the story during the Iraq War of the Abu Ghraib prison abuses, which again, the media, the, uh, military denied until it was undeniable.

Jason Calacanis 6:58 He's Pulitzer winning is all you really need to know.

David Sacks 7:00 Yeah, and here he is-

Jason Calacanis 7:01 He's a Pulitzer winning journalist.

David Sacks 7:02 ... breaking basically another covert military action. And look, we don't know for sure whether it's true or not, but it looks, it looks pretty bad.

Chamath Palihapitiya 7:11 Do you think that Europe knew? Do you think that the Europeans were told that the Americans were gonna go and blow this thing up?

Jason Calacanis 7:17 If that's true. By the way, the, the administration has said clearly this is a false story, so just so we're clear.

Chamath Palihapitiya 7:21 They said it was pure fiction. I think the, I think-

Jason Calacanis 7:22 Pure fiction, yeah, yeah.

Chamath Palihapitiya 7:23 ... the specific code was this is pure fiction.

Jason Calacanis 7:25 U- the Ukraine would be the most likely (laughs) uh, person to do this.

David Sacks 7:28 They don't have the capability. You, you gotta look for means, motive, and opportunity.

Jason Calacanis 7:31 They don't have the opportunity to go down there and-

David Sacks 7:32 According to the story-

Jason Calacanis 7:33 ... place a bomb?

David Sacks 7:33 ... I don't think, I don't think the Ukrainians have the capability to do an undersea mission like that.

Jason Calacanis 7:39 Oh, interesting.

David Sacks 7:39 The Norwegians do and the story maintained that we did it with them. The British do. The story didn't say whether they were involved or not. So no, my guess is that if this was a covert US activity, it was kept to a very small group, which is why it'll be hard to prove more definitively than this.

Jason Calacanis 7:58 The other side of the argument is this is such a provocation and the administration saying it's fiction. So, what, what is your response to that, Sax? Like, would the US do something so provocative or would they have somebody else do it? And would Norway do something so provocative? It seems an extremely, uh, uh, it seems like an extremely offensive technique as opposed to just backing the Ukraine to defend itself against Russia's invasion.

David Sacks 8:24 Here's the thing. Before the invasion, Biden at a press conference said that if the Russians invade, Nord Stream would be no more. And they asked him, "Well, how can you make sure of that? That's a deal between Germany and Russia. We're not involved." And he said, "We have ways. We have ways. Just trust me, it'll happen." Separately, Victoria Nuland who's our Deputy Secretary of Strait- State said something very similar about how we would stop Nord Stream if the Russians invaded. And then after Nord Stream got blown up, Blinken at a press conference said that this was a wonderful opportunity and was extolling all the benefits of this. And then Victoria Nuland at a Congressional hearing said that I'm sure we're all very glad that it's a hunk of metal at the bottom of the sea, again, extolling all the benefits. And we've discussed the benefits on this program of now we've shifted the European dependence on Russian gas to a dependence on American gas. So, the fact of the matter is the administration kinda telegraphed what they were gonna do. They had the capability to do it, and they had the motive to do it. So, it's certainly a plausible story. You're right that we can't know for sure. It's a single source story-

Jason Calacanis 9:28 You don't believe the-

David Sacks 9:29 Hold on.

Jason Calacanis 9:29 You don't believe the administration ............................

David Sacks 9:30 It's a single source story that depends on the credibility of Sy Hersh. But as it stands right now, whose story do I think makes more sense? Probably Sy Hersh's.

Jason Calacanis 9:40 You believe Sy Hersh or ver- the spokesperson for the CIA who wrote the claim is completely and utterly false, just to be clear?

David Sacks 9:46 Well, these, these same people denied Abu Ghraib.

Jason Calacanis 9:48 Okay.

David Sacks 9:49 They denied My Lai.

Jason Calacanis 9:50 But to be, to be clear, you, you believe that.

David Sacks 9:51 They, they deny everything.

Jason Calacanis 9:52 Okay. Yeah.

David Sacks 9:53 They deny that, um, NATO expansion had anything to do with the, you know-

Jason Calacanis 9:57 Okay.

David Sacks 9:57 ... breakout of this war.

Jason Calacanis 9:59 Yeah, I mean, this is one of these situations where we can't possibly know.

David Sacks 10:02 Yeah, you make a good point, J Cal, which is, this, if true... And look, I'm not saying I, I don't know if it's-

Jason Calacanis 10:08 You're leaning towards believing it.

David Sacks 10:10 I lean towards thinking-

Jason Calacanis 10:11 Yeah.

David Sacks 10:11 ... it's more plausible than not.

Jason Calacanis 10:12 Okay.

David Sacks 10:13 Uh, 'cause also, like, who else could have done it? And who, who, again, who had the motive, means, and opportunity? But you make a great point, which is, if we did it, it's an incredibly provocative act. It's basically perpetrating an act of war against a country that has thousands of nuclear weapons. Biden promised us at the beginning of this war that he would keep us out of being directly involved. So, this would directly contradict what he said at the beginning of this war. So, I think it's a very scary situation here.

Jason Calacanis 10:43 Yeah, no, you, you've-

David Sacks 10:44 And if the US-

Jason Calacanis 10:45 ... been pro deescalation.

David Sacks 10:46 If the US didn't do it-

Jason Calacanis 10:46 Yeah.

David Sacks 10:47 If the US didn't do it, like, why don't we find the real killer? Because-

Jason Calacanis 10:50 I actually have this, I have the theory. Here's my theory. The CIA knew how to do it. Biden, uh, wants to do it. The Republicans want to do it. Obviously, the, the people who are the most pro stopping Nord Stream have been the Republicans. They've led this charge, uh, even more than the Democrats. So, it's, it's a bipartisan issue. Stop Nord Stream, bipartisan issue, hands down. I think the CIA probably knew how to do it. And just like we equipped the Ukraine to do it, we might have facilitated the Ukraine and a collaborator, UK, Norway, some freelancers. You know, we have those freelancer former Navy SEALs that operate. Perhaps the CIA just said to the Ukraine, "Here's a, you know, black ops group. If you wanted to engage them, you could feel free to do so." Which would then split the difference between what Sy is saying or what the CIA is saying, which is typically where the truth lies, is probably between what this investigative journalist of note has said and what, uh, the CIA is denying. The CIA probably has plausible deniability. That's my prediction.

David Sacks 11:52 Well, if you could find a source for that story, J Cal, that lays out in the same level of detail that Hersh has laid out in terms of the meetings that occurred, what was approved when, how they did it, uh, the, the, you know, when they did it-

Jason Calacanis 12:06 Yeah.

David Sacks 12:06 ... uh, the explosives they used, the divers they used. It goes into a fair amount of detail.

Jason Calacanis 12:12 Incredible detail.Yeah. I mean, down to like-

David Sacks 12:14 So now that you're letting out a theory...

Jason Calacanis 12:15 Down to what explosives, right?

David Sacks 12:17 But you're trying to put what you just said, which is basically you inventing a story on the same level-

Jason Calacanis 12:22 A theory.

David Sacks 12:22 ... as Hersh's story?

Jason Calacanis 12:23 Yeah, a theory.

David Sacks 12:23 Yeah, I understand. But he actually has a lot of detail in his story.

Chamath Palihapitiya 12:27 Yeah. He had umpteen sources. There was a lot of people that were willing to tell the story.

Jason Calacanis 12:33 No, no, I don't think that's actually the case. I don't think he has umpteen sources and there's no... on the record sources. There's one source.

David Sacks 12:38 There's one main source. There's one main source.

Jason Calacanis 12:40 Yeah.

David Sacks 12:40 But who provided a ton of detail. I don't know exactly what he was able to directly corroborate with other sources. I don't know that. But-

Jason Calacanis 12:46 The other thing I wonder, Sachs, is he... with this one source story, he has a collaboration with The New Yorker and anybody would, if this was a really well-sourced and you could back it up kind of story, they would love to have the ratings for this story. This is a blockbuster story.

Chamath Palihapitiya 13:04 Or as happens a long time, which we learned was it through the Valerie Plame affair, which is that these major news publications will sometimes have a back channel, back to the national security apparatus when they have something like this and the message was, "You can't hit print on this."

Jason Calacanis 13:19 Yeah. That's a possibility too.

Chamath Palihapitiya 13:21 In which case, he goes and just self-publishes himself, which wasn't really even an option a few years ago.

Jason Calacanis 13:26 No, yeah. So, I mean, this is the Rorschach test of Rorschach tests. You have the media, you got the CIA.

Chamath Palihapitiya 13:32 It's fodder for a great movie.

David Sacks 13:34 When I go back to Jay Kalitz, I think you can lay out some theories about, let's say, you know, the Poles did it or maybe Ukrainians with the British or some... Yes, you could lay out those theories, but the media wasn't willing to entertain any of those theories when this news broke. What did they do? They blamed the Russians and that story made no sense, but they said it so definitively. They just reported it.

Jason Calacanis 13:56 I'm looking for the source on that. I'm looking for... Nick, if you could pull up the source of the administration blaming the Russians, I just want to make sure we're accurate with that.

David Sacks 14:02 Oh, Biden did it at a press conference.

Jason Calacanis 14:04 Yeah, I just wanted to make sure we actually have the-

David Sacks 14:05 He said it was an act of sabotage by the Russians. Now, they didn't push it that hard. What was interesting is the Biden administration said it, but they didn't keep coming back to it but the media really ran with it and when people on both the left and the right, like, people like Jeffrey Sachs on the left and Tucker Carlson on the right, basically started to question whether the US could have done it. They were accused of being conspiracy theorists and, you know, Putin stooges and all the rest of it.

Jason Calacanis 14:28 Yeah.

David Sacks 14:28 And now all of a sudden, here comes Seymour Hersh with a pretty detailed story lending credence to that point of view.

Jason Calacanis 14:36 Yeah.

David Sacks 14:37 It just may indicate we don't know everything that's going on with this war and, um, I think the longer this goes on, the more dangerous it is.

Jason Calacanis 14:46 Freeburg, do you have any thoughts on geopolitical issues and who might have blown up Nord Stream and what are your sources saying, Freeburg?

David Sacks 14:52 (laughs)

Jason Calacanis 14:53 (laughs) What are your sources at Science Quarter saying? (laughs)

David Friedberg 14:57 Speculation is best left to the future. I don't know about the whole speculating on what could have been done in the past by someone. Those are conspiracy theories. I mean, little dangerous.

David Sacks 15:07 No, they're not, they're not actually conspiracy theories.

Jason Calacanis 15:09 Two weeks ago, you were-

David Sacks 15:09 Because Nord Stream-

David Friedberg 15:10 No, I'm saying-

David Sacks 15:10 Nord Stream was blown up. You understand that, right?

David Friedberg 15:13 No, no, I'm saying Jay Kalitz's, Jay Kalitz's theory.

David Sacks 15:16 Oh, yeah. Jay Kalitz theory is just a story with no evidence.

David Friedberg 15:18 I think you got to bring, you got to bring data to the table to, to, to-

Jason Calacanis 15:20 Yeah, it's a pure theory. Pure speculation.

David Friedberg 15:22 You got to bring data to the table to make it, uh...

David Sacks 15:24 By the way, speaking of which, Radek Sikorski, who is a Polish diplomat, I think he was like their foreign minister. When Nord Stream blew up, he tweeted a photo of it saying, "Thank you, USA."

Jason Calacanis 15:37 Oh.

David Sacks 15:39 Which was one of the reasons why people thought that, okay, like, yeah, of course the US did it. You know, who has the capability to do it? Who has the motive to do it? Who said they were going to do it? And who benefits?

Jason Calacanis 15:50 Ukraine.

David Sacks 15:50 Cui bono? Who benefits?

Chamath Palihapitiya 15:53 Who was conducting NATO exercises in that region-

David Sacks 15:55 Right (laughs) .

Chamath Palihapitiya 15:56 ... three months before this thing blew up?

David Sacks 15:58 Right, exactly. Yeah, exactly. And Jeffrey Sachs pointed that out on, um, I think it was a CNBC interview before they basically stopped him because he's not allowed to talk about this on, you know, network TV apparently, but he basically pointed out they were like, "US radar signatures in the area."

Jason Calacanis 16:12 President Joe Biden declared that, this is from Bloomberg, that a massive leak from the Nord Stream gas pipeline system in the Baltic Sea was an intentional act and that the Russian statements about the incident shouldn't be trusted. It was a deliberate act of sabotage and now the Russians are pumping out disinformation lies, Biden told reporters Friday at the White House. So, he didn't exactly say the Russians did it, he just said it's an act of "Don't believe the Russians."

David Sacks 16:31 The media did that, Jay Kalitz.

Jason Calacanis 16:32 What's that?

David Sacks 16:32 The media did. You could do one of these montages where it was like-

Jason Calacanis 16:36 Sure.

David Sacks 16:36 ... Russian sabotage. In fact, go to ............................

Jason Calacanis 16:38 But he... Just to be clear, Biden didn't say it was sabotage. He said it was an active sabotage.

Chamath Palihapitiya 16:42 If you actually look at what Biden said, everything he said is absolutely true if the US also did it.

Jason Calacanis 16:48 Correct.

David Sacks 16:48 (laughs) Yeah, he may have wanted to be circumspect-

Chamath Palihapitiya 16:52 Every single sentence-

Jason Calacanis 16:53 That's...

Chamath Palihapitiya 16:53 Every single sentence-

Jason Calacanis 16:53 ... interesting.

Chamath Palihapitiya 16:53 ... that Joe Biden said-

Jason Calacanis 16:54 Yes.

Chamath Palihapitiya 16:54 ... is 100% true, whether we did it or whether Russia did it.

Jason Calacanis 16:58 It was a deliberate act of sabotage apparently by us (laughs) .

David Sacks 17:03 Think about it, if we did it, we know they didn't do it, and then we have to be, like, careful about suggesting they did it.

Jason Calacanis 17:10 Well, what do the Germans think? Because this is the German's pipeline. This... So, if we blew it up-

David Sacks 17:14 Yeah.

Jason Calacanis 17:14 ... that's also... And explain to me your thinking on the chessboard of our relationship with Germany if we blew it up. Would they not also see that as a hostile act?

Chamath Palihapitiya 17:23 This is why I asked if Europe knew because I think you have to tell Germany that it's going to happen, and I think the quid pro quo with Germany is some amount of guaranteed supply that the US directs into Europe so that they know that their long term LNG supply is intact so that they become ambivalent, right? There's a point of indifference where the Germans say, "Okay, we don't know when this thing is going to get turned back on and we don't know what the implications of it are. Here's what our demands are, meaning our energy supply, our energy needs are." And so as long as the United States can say, "Look, worst case we have stuff in the, you know, SPR that we can give you," there's probably a point of indifference where the Germans say, "Okay, we're just going to turn around and not say anything." And I'm curious, did the Germans say anything when this happened?

David Sacks 18:10 No, not that I know of.

Jason Calacanis 18:12 I'm looking for the Jer-... I was literally just typed to Nick, what was the German's position on this? Because...

Chamath Palihapitiya 18:16 That's interesting too. That's a tell.

Jason Calacanis 18:18 Well, yeah, if you're breaking this down like a poker hand, we're trying to figure out...

Chamath Palihapitiya 18:22 If you construct this hand, right, pre-flop-

Jason Calacanis 18:24 Yeah.

Chamath Palihapitiya 18:24 ... it's like you know where both of these folks are.

David Friedberg 18:26 ... right?

David Sacks 18:27 Okay, there was a really interesting video that a guy named, uh, Matt Orfalea, who puts together these really funny videos, and he pu- puts together these montages of media reactions to things. And what he shows is that, you know, you can have, like, 20 different media outlets and they all use the exact same words. And when he clips it together, you can see the reading from somebody's talking points and it's not really clear who. And in basically, if you look at his video here on who blew up Nord Stream pipeline, you see that there was, like, a party line from the mainstream media on this stuff.

Jason Calacanis 19:00 No longer a Nord Stream 2. We- we will bring an end to it.

Chamath Palihapitiya 19:03 W- what, what, how will you, how will you do that?

Jason Calacanis 19:07 I promise you, we'll be able to do it. (whistle blowing) (laughs)

David Friedberg 19:12 Someone blew up Russia's Nord Stream pipeline.

Jason Calacanis 19:13 I mean, we have to conclude-

David Friedberg 19:15 Wait, what does this say? 00:03:29 ] live?

Jason Calacanis 19:15 ... without the evidence that it's most likely-

David Sacks 19:17 Russia-

David Friedberg 19:18 Russian sabotage-

David Sacks 19:19 On its own infrastructure.

David Friedberg 19:21 I think the common sense matters.

Chamath Palihapitiya 19:22 I think it's Putin's way of sending a message. What Putin is saying to us by blowing up this pipeline is, "Look, I can blow up a pipeline." Everyone knows that Putin did this himself. Who are these talking heads-

David Sacks 19:32 ... a smoking gun without the direct proof.

David Friedberg 19:35 Yeah. I think logic and common sense will tell you that-

Chamath Palihapitiya 19:37 Without the evidence-

David Sacks 19:38 Russia was behind the incident.

Jason Calacanis 19:39 (laughs)

David Friedberg 19:39 You can say it for sure-

Jason Calacanis 19:41 Who sabotaged the Nord Stream 2 pipeline? All right, enough. This nonsense.

David Sacks 19:46 Come on, that's hysterical.

David Friedberg 19:47 This is, you know, it's these talking heads who have no first-hand experience- ... and they're more than willing to comment on this stuff.

David Sacks 19:51 That's hysterical.

David Friedberg 19:52 It's fantastic. It's fantastic. It's appreciated.

David Sacks 19:54 All his videos are like that, where, li- he has one of the Hunter Biden laptop as well, where again, he's got, like, 20 different talking heads and- and media jour- outlets all portraying it in exactly the same language. And it- it just makes you realize that there's a narrative around things.

David Friedberg 20:09 But that- isn't that how this works, Sax? Like, on the Sunday morning shows, you hear the same narrative from each side. How does that actually get coordinated? Each side builds those bullet points, emails their... what do they call them, um, surrogates? They email all the surrogates and say, "Just keep saying these things over and over again to codify..." It's a WhatsApp group and they're just like, "Say this over and over again." How does it work, Sax?

David Sacks 20:32 I think it's partly talking points memos that go out to chat groups. I think it's also just people looking on Twitter-

David Friedberg 20:38 Ah.

David Sacks 20:38 ... and then there's, like, certain key nodes that they follow and they know, okay, this is the party line because such and such key person is saying it, and they take their cues.

David Friedberg 20:47 It's that, uh, memenic, mememic effect that you guys always talk about. People copying each other-

David Sacks 20:53 Mimetic.

David Friedberg 20:53 Yeah, the memetic thing we were talking about.

David Sacks 20:54 Yeah. The thing to understand is that all the prestige outlets repeat the same party line and have the same perspective.

David Friedberg 21:00 Yeah. You gotta, you gotta do your own search for information.

David Sacks 21:03 This is the beauty of Substack, actually. This is why Substack is so important, is it actually gives you an alternative.

David Friedberg 21:07 It's disruptive. Yeah, it's very disruptive.

David Sacks 21:09 It gives you an alternative because, like, you've got 10 different mainstream media networks or newspapers or magazines, but they all have exactly the same talking points, except, you know, maybe Fox News is kind of the one exception. Although even Fox, on the whole Nord Stream thing, you saw that-

David Friedberg 21:23 Hmm.

David Sacks 21:24 Fox can be pretty militaristic and they had the same generals basically blaming the Russians for this on Fox.

David Friedberg 21:29 Yeah. Germany's position is just, "Hey, everybody, uh, this is sabotage." So that's it. But not who did the sabotage.

David Sacks 21:36 But yes, but, but, but I think you- you asked a really good question there about the German interest in this. Right now, the German economic interest and the German foreign policy interest are not aligned. What's clearly best for the German economy is to have cheap natural gas powering its industries, even if it comes from Russian pipelines. And they no longer have that anymore. In fact, they may never have that again. So they're going to pay a very high price economically, maybe forever. And remember, their- their whole economy is based on industry. They're a very industrial power. So if this war drags on for a long time, I think Scholz might be in some political trouble precisely because he's gone along with the Americans on this.

David Friedberg 22:17 Hmm.

David Sacks 22:18 And there is, there is a growing political opposition to this war inside of Germany.

David Friedberg 22:22 War fatigue is a real thing and, uh, this thing's got to wrap up at some point. Any, uh, final thoughts, Friedberg? I- I- you didn't get too involved in that conversation, but what is, uh, any, any game theory from you? No. Okay, there you have it folks. Sultan of Science checking in.

David Sacks 22:41 What's the problem? You don't want to criticize the establishment?

David Friedberg 22:44 Quoting me, Sax?

David Sacks 22:44 Well, no, I mean, you taught-

David Friedberg 22:46 It's always very personal with Sax. He's like-

David Sacks 22:48 ... you predicted-

David Friedberg 22:49 ... why don't you have my position on this? Is it because-

David Sacks 22:51 No, I'm just, I'm trying to understand 'cause-

David Friedberg 22:53 I don't think, I don't think anyone ha- I- I'm not, I'm not pro-establishment. I think you know that. I think I'm, I'm just analytical around the fact that I think there's a strong orientation towards conflict. And I think there still is. I don't think that there's much of an incentive or a motivation to back down 'cause this conflict creates a significant amount of debt bi- owed back to the US. It creates a potential future asset stream, creates a- a realignment of power. Everyone's looking externally as internal, you know, economic conflict and wealth disparity issues arise and economic growth is challenged and inflation is soaring. It's a great place to, you know, uh, address one's energy. So I think all of this stuff is detailed analytical shenanigans around who's saying what or who's doing what. I think the underlying thesis and the underlying river that's flowing is one that's like looking for external conflict. I think the same is true with the US and China. And I think that that's-

David Sacks 23:48 You talk about the military industrial complex is gonna benefit massively from this. The longer this drags out, the more the conflict in Taiwan heats up, the more we're going to invest in our military.

David Friedberg 24:00 You know, we often talk about these things as if they're, like, top down, like, master plan driven. And as we all know, like, they're more Ouija board driven. It's a bunch of guys-

David Sacks 24:10 Hmm.

David Friedberg 24:10 ... they got their hand on the Ouija board and they all just had a little too much caffeine. You know, and in this case, I think it's just more about, like, everyone's a little anxious (laughs) and the anxiety's leading to a desire for more conflict. We're not happy at home. If you're happy at home, you're not looking externally for conflict. That's true in nearly every developed nation on Earth today.That's it. I don't know. It's pretty simple.

Jason Calacanis 24:33 So you got... I like your position.

David Sacks 24:34 I think it's a great take. I think it's a great take, actually.

Jason Calacanis 24:36 Yeah, it's a great take. Good take, hot take. Yeah.

David Sacks 24:37 That, uh, I think there are a lot of interests who benefit from war and I think the foreign policy establishment is funded by those interests and that's kind of wired for war, at le- at least in terms of the reflex, right? Even something as relatively harmless as a balloon-

David Friedberg 24:52 I- I saw- I saw-

David Sacks 24:53 ... that becomes like a casus belli. It's like people are ready to go to war against China over that.

David Friedberg 24:58 I saw a couple of military leaders give a talk a few months ago, it was in a private thing, so it wasn't on public record.

Chamath Palihapitiya 25:06 With the establishment?

David Friedberg 25:07 No, yeah. I was at the establishment gathering-

Jason Calacanis 25:09 (laughs)

David Friedberg 25:09 ... where the establishment gets together-

Jason Calacanis 25:10 Oh, this is the Illuminati?

David Friedberg 25:10 (laughs)

Jason Calacanis 25:11 Did you genuflect twice going in? 'Cause that's their tradition. You do one genuflect on each knee, then they give you the bank of capitalism-

David Friedberg 25:17 (laughs) Did you guys-

Chamath Palihapitiya 25:17 Do you guys see my pin? My going outside pin on my lapel?

Jason Calacanis 25:17 ... with the Illuminati logo on the side for your fund. (laughs)

David Friedberg 25:20 Yeah. What was striking to me in this particular thing where these guys were being interviewed on stage at like a dinner thing, and they were so oriented around their next steps in escalation. And I think it speaks to the point, Sachs. Like, none of them were thinking about, like, "Where are we at today? How do we deescalate? When is this gonna get..." There was no conversation at all from anyone about resolution or deescalation. With every single one of them it was all about, like, "My orientation for getting bigger, going deeper, going harder, going stronger, making this thing bigger." And I think that was really scary to me because I didn't- I didn't hear anyone having a conversation around, like, "How do we... Should we even consider-"

Jason Calacanis 26:04 I like your Ouija board.

David Friedberg 26:04 "... whether or not this doesn't get bigger?" Everyone was thinking assumptively it was gonna get bigger.

Jason Calacanis 26:09 I like the Ouija board.

Chamath Palihapitiya 26:10 You have to follow the financial incentives. When the last time we looked at this, right? Leon Panetta and all these other guys who were screaming for war, they were getting paid by the military-industrial complex. I remember when Lloyd Austin was nominated as Defense Secretary, he had some conflict issues because he was just on the board of Northrup Grumman or one of these big military-industrial companies. And so, of course, these generals have to push for war because as long as they're girding for war, they're guaranteed to have, for them, a very lucrative job once they leave the military.

Jason Calacanis 26:42 The Ouija board though, Sachs, I'll- and I'll throw it to you, maybe you can keep this metaphor going, the media's got their hands on it, they want ratings. You have the energy industrial complex in this German conflict who seeks to benefit massively if people invest in renewables or you find other, you know, oil, you know, off Norway. Norway's oil (laughs) is one of the largest reserves that's untapped. So you have this Ouija board, media, energy, and the m- military-industrial complex all moving it at once. Maybe you can speak to that analogy.

David Friedberg 27:10 That's right. And everyone wants to move it to the side of the Ouija board that says escalate. There are very few people that are- that have the energy to move it to the other side that says deescalate. You get enough little hands-

Jason Calacanis 27:18 It's not profitable. Deescalation means less energy, more less investment. So yeah, we gotta go escalate.

David Sacks 27:24 You know who warned us about the military-industrial complex?

Jason Calacanis 27:27 Yes.

David Sacks 27:27 Dwight D. Eisenhower-

Jason Calacanis 27:28 Yep.

David Sacks 27:28 ... Supreme Allied Commander in World War II, wins the war, patriot, war hero, top general, becomes president, Republican president, and in his- his departing address warns us that, yes, we needed a defense industry but they become a vested interest in favor of foreign interventions of war. And where is the-

Jason Calacanis 27:47 It was 1961, he did this-

David Sacks 27:49 ... 60 was on the other side of it. Where's the-

Jason Calacanis 27:50 Yeah.

David Sacks 27:50 ... where's the interest on the other side of it? I can tell you this, the American people don't want to be in a war with Russia. I don't even think most of the American people wanna send 100 billion over there.

David Friedberg 28:00 Right.

David Sacks 28:00 They wanna send 100 billion to their cities to fix-

David Friedberg 28:04 Yeah.

David Sacks 28:04 ... crime and all the other problems.

Jason Calacanis 28:06 Homelessness, everything, yeah. If you've never seen that farewell address from 1961, it is well worth watching. You can find it on YouTube, just search for military-industrial complex Eisenhower and he... And this is a person who was part (laughs) of the military-industrial complex saying, "Watch out for this." It was a very prescient warning.

David Sacks 28:22 He knew of which he spoke.

Jason Calacanis 28:23 Yes, he was in the machine.

Chamath Palihapitiya 28:24 He helped build the machine.

Jason Calacanis 28:26 Welcome to The All In Podcast. With us again, David The Dove Sachs-

David Friedberg 28:29 (laughs)

Jason Calacanis 28:29 ... Chamath Palihapitiya, and The Sultan of Science, who is on his podcast. Oh my God, so many podcasts you're doing. The Sultan of Science is in hot demand. What are all these podcasts you're doing, Friedberg? All these science podcasts pulling you in.

David Friedberg 28:42 I did a podcast with Brian Keating last week who was really kind enough to reach out. He's had some awesome guests. He's a-

Jason Calacanis 28:48 Hmm.

David Friedberg 28:49 ... uh, cosmologist at UCSD, professor down there. And we were supposed to record that day and then we canceled I think last minute, right?

Jason Calacanis 28:57 Yeah, yeah.

David Friedberg 28:58 So I was only supposed to be on with him for an hour and I'm like, "Oh, well, my next thing just got freed up." So ended up doing like three hours. It was-

Jason Calacanis 29:04 Well done.

David Friedberg 29:04 ... I was so... I was, like, exhausted that day so I looked really hungover on the video and probably-

Jason Calacanis 29:09 It's par for the course.

David Friedberg 29:10 ... stumbled a lot. Yeah.

Jason Calacanis 29:11 But no Lex Fridman for you, so Chamath-

David Friedberg 29:13 (laughs)

Jason Calacanis 29:13 ... and I have done Fridman, Lex Fridman, but you have not. He's invited you yet, Lex? Has Lex invited you?

David Friedberg 29:18 He's not? No? No, he's not.

Jason Calacanis 29:19 You're uninvited.

David Sacks 29:20 Where's my invitation? Where's my invitation?

David Friedberg 29:21 It's 'cause there's-

Jason Calacanis 29:21 I don't know what's going on here. Collectible 4, Lex. What are you doing? All right, let's-

David Sacks 29:25 No- no Davos and no Lex Fridman.

Jason Calacanis 29:28 Wait, what's going on? You would never-

David Sacks 29:29 Am I too anti-establishment? What's going on?

David Friedberg 29:31 No, I'm too anti-establishment, Sachs. That's- it's characterized me-

Jason Calacanis 29:35 Nobody- nobody's inviting this quartet to anything. (laughs) Full- full stop. We're not doing All In live from Davos. (laughs) It's not happening, folks. Sorry.

David Sacks 29:45 (bleep) that.

Jason Calacanis 29:45 They don't want that heat.

David Friedberg 29:46 (laughs)

Jason Calacanis 29:46 I agree. (bleep) that.

David Sacks 29:47 I'm with Groucho Marx, I don't wanna be part of any club that would have me as a member.

Jason Calacanis 29:50 Absolutely.

David Sacks 29:51 I don't wanna go to any other establishment summit-

Jason Calacanis 29:51 And they also don't want you there anyway so-

David Sacks 29:53 Yeah, I'm over it.

Jason Calacanis 29:53 ... it- it works out for everybody. (laughs)

David Sacks 29:55 Th- it does fill me with, uh, like a rage where I actually-

Jason Calacanis 29:59 (laughs) A rage.

David Sacks 29:59 ... might agree to doing The All In summit again.

David Friedberg 30:02 Oh, hey!

Jason Calacanis 30:02 Nice.

David Friedberg 30:03 Oh, by the way, proposal coming your way this weekend.

Chamath Palihapitiya 30:05 If you wanna really, really, really thumb your nose at the establishment-

Jason Calacanis 30:08 Yes, let's do it.

Chamath Palihapitiya 30:09 ... set it during the exact same dates and times as an establishment conference.

David Friedberg 30:15 Hmm.

Jason Calacanis 30:15 Oh, the alt Davos?

Chamath Palihapitiya 30:16 And then invite all the best guests so that they are- they come to ours, just a suggestion for you guys.

Jason Calacanis 30:20 So choose alt TED?

David Friedberg 30:21 TED not relevant now.

Chamath Palihapitiya 30:22 Do you know how Vanity Fair does their-

Jason Calacanis 30:23 I guess more Davos.

Chamath Palihapitiya 30:23 ... new establishment conference? You could call it The Anti-Establishment conference.

Jason Calacanis 30:27 Ooh, that makes a tagline.

David Friedberg 30:28 Yeah.

Jason Calacanis 30:28 Let's come up with a tagline that just tweaks everybody and then we invite-

David Sacks 30:32 Well, we should create a list. We should create the anti list. You know, they have their-

Jason Calacanis 30:35 Yeah.

David Sacks 30:35 ... like, establishment list, we should have the anti list.

David Friedberg 30:37 That's a good point.

Jason Calacanis 30:38 That's a good point. I like the anti-establishment. Start with them.

Chamath Palihapitiya 30:42 I have a great Vanity Fair establishment thing story.

David Friedberg 30:46 Oh, good.

Jason Calacanis 30:46 Go ahead.

Chamath Palihapitiya 30:47 I snuck on that list. They put me on that list a decade ago.

David Friedberg 30:50 Oh.

Jason Calacanis 30:50 Let's pull it... Let me find the link. Go on, keep going.

Chamath Palihapitiya 30:52 And the most incredible thing about it is that when you go to the event, which was kind of a cool event, we all had photos taken by Annie Leibovitz.

David Friedberg 31:01 Oh!

Chamath Palihapitiya 31:01 And I have-

David Friedberg 31:03 Nice.

Chamath Palihapitiya 31:03 ... a montage of some of the people that took photos that day. That's pretty cool. Me, Aaron Levy-

David Friedberg 31:10 Wow.

Chamath Palihapitiya 31:10 ... Priscilla Chan, Bezos, bunch of people.

Jason Calacanis 31:13 But-

Chamath Palihapitiya 31:13 I look like a total dork in that picture.

Jason Calacanis 31:14 I was about to say, is this before you had... When... This when you had the dad bod and no fashion sense?

Chamath Palihapitiya 31:19 Yeah. It was like... Yeah.

Jason Calacanis 31:21 (laughs)

David Friedberg 31:21 Oh, look. He looks great. Here it is. I just-

Chamath Palihapitiya 31:22 I was a big goddess when she... Yes. (laughs)

Jason Calacanis 31:24 He's like, "Yeah." Basically, I had no stylist.

David Friedberg 31:26 (laughs)

Jason Calacanis 31:26 I had a bad haircut. I was wearing shitty-

Chamath Palihapitiya 31:28 It was really the... It was like-

Jason Calacanis 31:28 ... corny glasses.

Chamath Palihapitiya 31:29 It was like a year or two post-Facebook. It was not a good look for me. Not... Yeah, but that's not the... Yeah, yeah, yeah. But that's not the-

Jason Calacanis 31:34 That's not that bad.

Chamath Palihapitiya 31:35 I'll show you the picture.

Jason Calacanis 31:35 Is that Tom Ford? That was your Tom Ford phase?

Chamath Palihapitiya 31:38 It... Tom Ford. It was. That was my Tom Ford phase, yeah.

David Friedberg 31:38 That's definitely Tom Ford.

Jason Calacanis 31:39 But he's doing the jeans blazer thing, which is like a really tired look for a Silicon Valley VC.

David Friedberg 31:43 A little pocket square.

Jason Calacanis 31:43 Pre- skinny jeans, though. It's like a little loose. Pre-skinny jeans, yeah.

David Friedberg 31:46 I think it's pretty sharp looking.

Chamath Palihapitiya 31:47 That was it. That was in 2011.

Jason Calacanis 31:48 No, I give you nine out of 10. I'm like, yeah.

Chamath Palihapitiya 31:50 2012.

Jason Calacanis 31:50 Not bad. Not bad. Yeah.

Chamath Palihapitiya 31:51 That's not so bad.

Jason Calacanis 31:52 Just don't pull up the Chamath pictures when he's wearing like-

Chamath Palihapitiya 31:55 Oh, my God. Please don't do that.

Jason Calacanis 31:55 ... you know, his Macy's shirts. If you do the im- Google search, you put the images before 2011-

Chamath Palihapitiya 32:01 (laughs)

Jason Calacanis 32:01 ... you will find Chamath photos-

Chamath Palihapitiya 32:03 Dude, if Facebook, we were to say-

Jason Calacanis 32:05 ... that are regrettable.

Chamath Palihapitiya 32:05 I wore the same thing every day for four years, five years. It was brutal. (laughs)

David Friedberg 32:11 (laughs)

Jason Calacanis 32:11 Oh. Oh, my God.

Chamath Palihapitiya 32:12 It was like a-

Jason Calacanis 32:12 What is...

David Friedberg 32:13 That's also Tom Ford.

Jason Calacanis 32:13 Let's take a look. We gotta break this down.

Chamath Palihapitiya 32:15 Yeah.

Jason Calacanis 32:16 See, this is when the sweater game was not tight. This is like sweater 1.0 game.

Chamath Palihapitiya 32:19 Guys, I didn't know what I was doing back then. Stop. Put... Take these pictures off, please.

Jason Calacanis 32:23 Look. Oh, and he's also got the watch subtly peeking out. This is back when he was like, "Oh, I got a Rolex." Ooh.

Chamath Palihapitiya 32:29 That's a Patek.

Jason Calacanis 32:29 All right.

Chamath Palihapitiya 32:29 But anyways, yeah, keep going.

David Friedberg 32:31 (laughs)

Jason Calacanis 32:31 Keep going. That's like... (laughs)

David Friedberg 32:32 (laughs)

Chamath Palihapitiya 32:32 This is when the watches were always five figures.

David Friedberg 32:35 Add a zero. Add a zero, please.

Jason Calacanis 32:35 I don't know if that watch got to six figures.

David Friedberg 32:37 (laughs) Over, over two.

Chamath Palihapitiya 32:37 Or two. Or two, but yeah, same story. Same, same, J-Cal. Same, same.

Jason Calacanis 32:40 Same, same, same.

David Friedberg 32:41 (laughs)

Jason Calacanis 32:41 All right. Well, listen. All right, listen. I got an Apple Watch, and I'm gonna up-

Chamath Palihapitiya 32:45 Oh, geez.

Jason Calacanis 32:45 Oh, whoa.

Chamath Palihapitiya 32:46 That's the dad bod. There's the dad bod.

Jason Calacanis 32:48 The goatee, Chamath?

Chamath Palihapitiya 32:48 Yeah, yeah, yeah.

Jason Calacanis 32:48 Oh, he's gonna... There's the dad vibes. Wow.

Chamath Palihapitiya 32:51 That must have been from... Yeah, that was-

Jason Calacanis 32:53 Mayfield or-

Chamath Palihapitiya 32:54 ... 13, 14 years ago.

Jason Calacanis 32:56 Wow. God, you had no style.

Chamath Palihapitiya 32:58 I really didn't.

Jason Calacanis 32:59 It was rough.

Chamath Palihapitiya 33:01 I really didn't.

Jason Calacanis 33:01 It's rough. I mean, don't pull up pictures of me. I was fat.

Chamath Palihapitiya 33:03 Yeah, yeah, yeah.

Jason Calacanis 33:04 There's like pictures of me eating egg sandwiches all over the internet.

Chamath Palihapitiya 33:06 Oh, my God.

Jason Calacanis 33:07 Yeah, chubby J-Cal. Oh, man, look at that face.

David Friedberg 33:10 There he is.

Jason Calacanis 33:10 Ooh, that's plus 20 pounds.

David Friedberg 33:11 Oi.

Jason Calacanis 33:12 Let's keep this going.

Jason Calacanis 33:13 Search wars. Microsoft versus Google. Okay, it's been a rough couple days for Google. We've all seen it. Google and Microsoft both did live demos of their new generative AI, yada, yada, yada. You guys all know about ChatGPT. But now, Bing is integrating it into their search engine, getting there before Google. And Microsoft CEO Satya Nadella, he is going ham. He looks great. He's fit. He's wearing a tight T-shirt, and he is saying he's gonna make Google dance. Dance, Google, dance. He is getting up in their business and uh, listen, he is in a, a distant second place, so it makes sense. On the other hand, uh, Google's AI demo was, frankly, a bit of a disaster. Poorly received. Stock, they dropped 12% since this event. And their presentation did not include the chat bot Bard, because in search, because it wasn't working. It seems like there was an error in it when they said, "What new discoveries from the James Webb Space Telescope can I tell my nine-year-old?" And Bard answered that it took the first pictures of a planet outside our solar system, which is false, which, of course, we all know about ChatGPT. It's only right half the time, uh, and it's a little woke, uh, on the margins. So, um, anyway, there was a screenshot circulating today, which is probably false, but (laughs) it says the following: "Me and a bunch of coworkers were just laid off from Google for our AI demo going wrong. It was a team of 168 people who prepared the slides for the demo. All of us are out of jobs." I can't imagine that's real. Uh, but if it was, that would be a hardcore moment for Google, to fire a bunch of people for screwing it up. Listen, you worked in the belly of the beast, Freeberg. What are your thoughts on Bing poking the tiger and telling Google, "Dance." You know, "Sundar, dance."

David Friedberg 35:00 You know, what's interesting is Google's had like an incredible AI competency, uh, particularly since they bought DeepMind, and it's been predominantly oriented towards kind of, you know, internal problems. You know, their, they demonstrated last year that their AI improved data center energy efficiency by 40%. They've used it for ad optimization, ad copy optimization, uh, the YouTube follow, uh, video algorithm, so what video is suggested to you as your next video to watch, which massively increased YouTube hours watched, uh, per user, which massively increased YouTube revenue. You know, what's the right time and place to insert videos in YouTube or insert ads in vid- YouTube videos? So, you know, autofill in Gmail and Docs. So, so much of this competency has been oriented specifically to avoid this primary disruption in search. Obviously, now, things have come to a bit of a point, because, you know, this alternative for search has been revealed in ChatGPT. And you guys can kind of think about search and, you know, we've used this term in the past. Larry and Sergey, the textbook that they read, you know, one of the original textbooks that's used in, um, internet search engine technology is called information retrieval. Information retrieval. So, information retrieval is this idea that you, you know, how do you pull data from a static, uh, data set? Um, and it involves scanning that data set or crawling it, and then creating an index against it, and then a ranking model for how do you pull stuff out of the index to present the results from the data that's available, based on what it is you're querying for. You know, and doing that all in a 10th of a second. So, you know, if you think about the information retrieval problem, you type in the data or some rough estimation of the data you want to pull up, and then a list is presented to you.And over time, Google realized, hey, we could show that data in smarter, quicker ways. Like if we can identify that you're looking for a very specific answer, we can reveal that answer in the one box, which is the thing that sits above the search results. Like if you said, "What time is it?" You know, "What- when does this movie show at this theater?" So they can pull out the structured data and give you a very specific answer rather than a list from the- the- the database. And then over time, there were other kind of modalities for displaying data that it turns out were even better than the list, like maps or shopping, where you can kind of see a matrix of results, or YouTube where you can see a, you know, longer form version of content. And so these different kind of, um, you know, information retrieval, you know, media were presented to you and it really kind of changed the game and created much better user satisfaction in terms of getting what they were looking for. Th- th- the challenge with- with this new modality is it's not really fully encompassing. So if you can kind of think about the human computer interaction problem, you want to see flight times and airlines and the price of flights in a matrix. You don't necessarily want a- a- a text stream written to you, uh, to give you the, um, you know, the- the answer that you're looking for, or you want to see a visual display of, uh, shopping results, or- or you do want to see a bunch of different people's commentary 'cause you're looking for different points of view on a topic rather than just get an answer. But there are certainly a bunch of answer solutions for which ChatGPT, uh, type, you know, uh, natural language responsiveness becomes a fantastic and better mode to present answers to you than the matrix or the list or the ranking and so on. Now, the one thing that I think is worth noting, I did a back of the envelope analysis on the cost of doing this compared to ChatGPT. So- so Google makes about three bucks per click. You can back into what their revenue per search is a bunch of different ways. One way is three bucks per click, about a 3% click-through rate on ads. Some people estimate this is about right, about five cents to 10 cents revenue per search done on Google, or anywhere from one cent to 10 cent, let's say.

Jason Calacanis 38:54 Even if they don't click the ads because one out of 100 people click an ad and that's where-

David Friedberg 38:59 Yeah.

Jason Calacanis 38:59 ... the money comes from.

David Friedberg 38:59 So let's- let's just call it five cents, right? And you can assume a roughly 50% margin, uh, on that search, which means a 50% COGS or cost of goods or a cost to run that search and present those ads. So, you know, right now Google Search costs them about, you know, call it two and a half cents per search, uh, to present the results. A recent estimate on running the GPT-3 model for ChatGPT is that each, um, result takes about 30 cents of compute. So it's about an order of magnitude higher cost to run that search result than it is to- to do it through a traditional search query.

Jason Calacanis 39:39 Today.

David Friedberg 39:40 Which makes-

Jason Calacanis 39:40 Today.

David Friedberg 39:40 Today. That's right. And so- so that's the point. Like it has to come down by about an order of magnitude. Now, this is a ve- this then becomes a very deep technical discussion that I'm certainly not the expert, but there are a lot of great experts that... And there's great blogs and Substacks on this, on what's it going to take to get there to get a 10X reduction in cost on- on running these models. And there's, uh, a lot related to kind of optimization on how you run them on a compute platform, the- the type of compute hardware that's being used all the way down to the chips that are being used. So there's still quite a lot of work to go before this becomes truly economically competitive with Google. And that really matters because if you get to the scale of Google, you're talking about spending eight to $20 billion a quarter just to run search results and display them. And so for ChatGPT type solutions on Bing or elsewhere to scale and to use that as the modality, you're talking about something that today would cost $80 billion a quarter, uh, to run from a compute perspective, if you were to do this across all search queries. So it's certainly going to be a total game changer for a subset of search queries, but to make it economically, uh, work for- for these businesses, whether it's Bing or Google or others, there's a lot of work, uh, still to be done.

Jason Calacanis 40:54 The great part about this, Chamath, is that Bing gave 10 billion to, uh, our friends Sam and ChatGPT to invest in Azure, uh, which now has the infrastructure and will be providing the ChatGPT infrastructure to startups or corporations, big companies and small alike. So that $10 billion should do enough to grind it down between software optimization, data optimization, chip optimization, and cloud optimization. Yes, you would think so or no?

Chamath Palihapitiya 41:23 The ability to run this at scale is gonna happen because we're getting better and better at creating silicon that specializes in doing things in a massively parallelized way. And the cost of energy at the same time is getting cheaper and cheaper along with it. When you multiply these two things together, the effect of it is that you'll be able to run these models, the same output today will cost one, one-tenth as long as you ride the energy and compute curve for the next few years. So that's just gonna naturally happen. I have two interesting takeaways and one is maybe a little bit of a sidebar. So the- the sidebar is, if you guys were sitting on top of something that you thought was as foundational as Google Search back in 1999, would you have sold 49% of it for $10 billion?

Jason Calacanis 42:11 Hard no.

Chamath Palihapitiya 42:12 I think the answer is no. I think the answer is no.

Jason Calacanis 42:15 Not in an environment where you have unlimited ability to raise capital.

Chamath Palihapitiya 42:19 This is something that we've said before, which is that ChatGPT is an incredibly important innovation. But it's an element of a platform who will get quickly commoditized because everybody will compete over time. And so I think what Microsoft is doing is the natural thing for somebody on the outside looking in at an entity that has 93% share of a very valuable category, which is, how can I scorch the earth? And so Microsoft effectively for 10 billion bought almost 50% of a tool...... and now we'll make that tool as pervasive as possible so that consumer expectations are such that Google is forced to decay the quality of their business model in order to compete. So that, as Friedberg said, you have to invest in all kinds of compute resources that today are still somewhat expensive. And that will flow into the P&L, and what you will see is that the business quality degrades. And this is why when Google did the demo of Bard, the first thing that happened was the stock went off 500 basis points. We, they lopped off $100 billion of the market cap, mostly in reaction to, "Oh my God, this is not good for the long-term business." So the real question-

Jason Calacanis 43:28 Explain why it's not good for the long term business on a mechanical basis. When you get an answer, you don't have to click the links?

Chamath Palihapitiya 43:32 No. Right now, if you look at Google's business, they have the best business model ever invented on Earth, ever, for a for-profit company. It just rains money. This is a business that this year will do almost $100 billion of free cash flow. It's a business that has to find ways, and we kind of joke, but they have to find ways to spend money. Otherwise, they'd be showing probably 50 or 60% EBITDA margins, and people would wonder, "Hey, wait a minute. You can't let something like this go unattended." So they try to do a lot more things to make that core treasure look not as incredible as it is. They have 120 billion of cash. This is a business that's just an absolute juggernaut and-

Jason Calacanis 44:18 They have 10 times as many employees as they need to run the core business. That, that says enough, right?

Chamath Palihapitiya 44:22 Well, I don't, I don't know what that is, but my point is that it's an incredible business. So that business will get worse if Microsoft takes a few 100 basis points of share, if Meta takes a few 100 basis points of share, if Tencent does, if a few startups do. Quora, by the way, launched something called Po, which I was experimenting-

Jason Calacanis 44:39 Yep.

Chamath Palihapitiya 44:39 ... and playing around with last weekend. If you add it all up, what Satya said is true, which is even if all we do collectively as an industry is take 500 or 600 basis points of share away from Google, it doesn't create that much incremental cost for us, but it does create enormous headwinds and pressure for Google with respect to how they are valued and how they will have to get revalued. And that's what happened. So the last thing

Chamath Palihapitiya 45:06 I'll say is, the question that I've been thinking about is, what does Sundar do? Right?

Jason Calacanis 45:10 Hmm.

Chamath Palihapitiya 45:10 So what's the countermeasure?

Jason Calacanis 45:12 Yes. This is what I was gonna get to, yeah.

Chamath Palihapitiya 45:14 I think the countermeasure here, if I was him, is to go to the board and say, "Guys, we're going to double TAC," right? So TAC is the traffic acquisition cost that Google pays their publishers. It is effectively their way of guaranteeing an exclusivity on search traffic. So for example, if you guys have an iPhone, it's Google Search, that's the default search in the iPhone. Google pays Apple. This year, this renegotiation for that deal could mean that Apple gets paid $25 billion for giving away that right to Google. So if these, Google does all these kinds of deals. Last year they spent, I think, 45 billion or so. So about 21%.

Jason Calacanis 45:53 In a way, when you think about that, Chamath, Google basically paid Apple, which was working on sec- search technology, they were working on a search solution.

Chamath Palihapitiya 46:00 Yeah.

Jason Calacanis 46:00 They paid them to stay out of the business.

Chamath Palihapitiya 46:01 And they're, and they're paying everybody. So I think the question for Google is the following. If you think you're going to lose share, and let's say you go to 75% share, would you rather go there and actually still maintain your core stranglehold on search? Or do you actually want 75% share where now all of these other competitors have been ceded? Well, you can decay business model quality and still remain exclusive if you just double the TAC. And what you do is you put all these other guys on their heels, because as we talked about, if you're paying publishers two times more than what anybody else is paying them, you'll be able to get publishers to say, "Hey, you know what? Don't let those AI agents crawl your website because I'm paying you all this money. Remember that," right? So do not crawl in robots.txt equivalent for these AI agents. And I think that that'll put Microsoft and all these other folks on their heels. And then as, as you have to figure out all this derivative work stuff, all these lawsuits, Google will look pristine because they can say, "I'm paying these guys double because I acknowledge-"

Jason Calacanis 47:04 Absolutely.

Chamath Palihapitiya 47:05 "... that this is a core part of the service." So that's the game theory I think that has to get figured out, but if I was Sundar-

Jason Calacanis 47:09 I love the second part.

Chamath Palihapitiya 47:10 ... I'd double the TAC.

Jason Calacanis 47:11 I love the second part.

Chamath Palihapitiya 47:12 I think, I th-

Jason Calacanis 47:12 Because, hold on, let me get Sax about this.

Chamath Palihapitiya 47:14 Yeah.

Jason Calacanis 47:14 I love the second part, Chamath, because in this clip I'm about to show, Nilay Patel from The Verge did an awesome interview with Satya, and he basically would not answer this question, at least to my satisfaction, which is, "Hey, what do the publishers get out of this? You've ingested our information. How do we get paid?" Watch this clip. It's very telling.

Guest 47:36 ... in the answer or even in the chat session.

47:38 But if I ask the new Bing, "What are the 10 best gaming TVs?" And it just makes me a list, why should I, the user, then click on the, the link to The Verge, which has another list of the 10 best gaming TVs?

47:50 Well, I mean, that's a great question. But even there, you will sort of say, "Hey, where did these things come from?"

47:55 Mm-hmm.

47:56 And "Would you want to go dig in?" Like, that-

47:58 Yeah.

47:58 ... even search today has that. Like, we have answers. They may not be as high quality answers, they just are getting better. So I don't think of this as a complete departure, uh, from what is expected of a search engine today, which is supposed to e- really respond to your query while giving them the links that they can then click on, like ads. Uh, and search works that way.

Jason Calacanis 48:18 In my mind, there's a terrible answer. He needs to address how they get paid. He punted the answer-

David Sacks 48:22 Yeah.

Guest 48:22 Mm-hmm.

Jason Calacanis 48:22 ... and just said, "Hey, listen, search works this way." Sax, will the rights to the data, will s- will Google just say to Quora, "Hey, we'll give you a billion dollars a year for this dataset if you don't-"

Chamath Palihapitiya 48:32 They should.

Jason Calacanis 48:32 ... give it to anybody else."

Chamath Palihapitiya 48:33 They should.

David Sacks 48:34 Maybe.

Jason Calacanis 48:34 Sax the strategist. Let me hear your strategy here. You are now CEO of Google. What do you do?

David Sacks 48:39 I think there's maybe even a, a bigger problem before that, which is, I think the whole monetization model might change. So the reason why Google monetizes so well is it's perceived as having the best search.And then it gives you a list of links and a bunch of those links are paid, and then people click on them. Now, I think when you search in AI, you're looking for a very different kind of answer. You're not looking for a list of 10 or 20 links. You're just looking for the answer.

Jason Calacanis 49:07 Mm-hmm.

David Sacks 49:08 And so where is the opportunity to advertise against that? I mean, maybe you can charge like an affiliate commission if the answer contains a link in it or something like that. But then you have to ask the question, well, does that distort like best answer? Like are, am I really getting the best answer or am I getting the answer that someone's willing to pay for?

Jason Calacanis 49:27 This is your key insight. The fact is, if Google gives you an answer, you don't click on ads. Google has had a very finely tuned balance between, hey, these first two or three paid ads, these might, the paid links, might actually give you a better answer than the content below them. But in this case, if the ChatGPT s- tells you, "Hey, this is the top three televisions, these are the top three hotels, these are the top three ways to, you know, write a better essay," you don't need to click.

David Sacks 49:55 Right.

Jason Calacanis 49:55 You have now been given an answer and the model is gone.

David Friedberg 49:59 The paid link is still a subset in that case. So a- at Google, we used to have... A key metric was the bounce back rate. So when a user clicks on a-

Jason Calacanis 50:08 Explain what a bounce back is, yeah.

David Friedberg 50:10 So when a user clicks on a result on the search results page, we could see whether or not they came back and searched again. And so that tells you the quality of the result that they were given, because if they don't come back, it means they ended up getting what they were looking for. And so ads that, um, performed better than organic search results, whi- which means someone created the ad, paid for it, and the user clicked on it and didn't come back and came back with less frequency than if they clicked on an organic result, that meant that the ad quality was higher than organic quality. And so the ad got promoted to kind of sit at the top, and it became a really kind of important part of the equation for Google's business model, which is how do we source, how do we monetize more search results where we can get advertisers to pay for a better result than what organic search might otherwise kind of show? And so it's actually better for the user, in this case than say, just getting an answer. For example, I'm looking for a PlayStation 5. I don't want to just be told, "Hey, go to Best Buy and buy a PlayStation 5." I want to be taken to the checkout page to buy a PlayStation 5, and I am more likely to be happy if I click on a result and it immediately takes me to the checkout page and Best Buy is really happy to pay for you to get there, because they don't want you looking around the internet looking for other places. And a lot... And, and we can't convolute all search queries. Not all search queries are, "Hey, you know, what's the best dog to get to not pee on the floor?" Or whatever kind of arbitrary question you might have that you're doing research on. Many search queries are, um, commerce intention related. I want to buy a flight to go somewhere, I want to book a hotel to go somewhere, I want to buy a video game system, et cetera. That series of queries may have a very different kind of modality in terms of what's the right interface versus the ChatGPT interface, where, yeah, there's a lot of kind of organic results that people sift on the internet for today. And, and, and, and the question earlier can be resolved by Google doing a simple analytical exercise, which is, you know, what's it going to cost us and what's going to give the user the best result? And that's ultimately what will kind of resolve to the better business model. It's really measurable. I think on Chamath's point, you know, today Google pays Apple $15 billion a year to be the, the default, uh, search engine on iPhones on the, uh, Safari browser. That's only about a quarter of Google's overall tack. The majority of Google's traffic acquisition cost is actually not being paid for search. A good chunk of that is being paid to publishers to do AdSense display ads on their sites, um, and Google's revshare back to them for putting ads on their sites. So, you know, the tack number, I think maybe you kind of want to move the needle, but the majority of Google searches don't come through the default search engine that they pay Apple to be on it.

Chamath Palihapitiya 52:51 It might-

David Friedberg 52:51 It might move the needle a bit, but I don't think it really changes the, the equation for them.

Chamath Palihapitiya 52:55 My comment is more tack has to become a weapon on the forward foot, number one. So if you're going to spend 21% of your revenue on tack, you should be willing to spend 30 to 40% to maintain the 93% market share. I don't think what you want to see is your profit dollars decay because you lose share. It's rather better for you to spend the money and decay your business model than have someone decay it for you, in general.

David Friedberg 53:18 Well, Apple... At this point, Apple is really the only tack line item for search.

Chamath Palihapitiya 53:22 No, no, no, I, I understand.

David Friedberg 53:23 For search.

Chamath Palihapitiya 53:23 I'm not... I understand. I'm not talking about today.

David Friedberg 53:25 Yeah.

Chamath Palihapitiya 53:25 I'm saying take that idea. You have an entire sales team whose job it is right now to sell AdSense, right? You have an entire group of people who know how to account for tack and how to think about it as a cost. But if you're basically willing to say, "Out of the $100 billion of free cash flow, I'm willing to go to 80 or 70 billion of free cash flow combined with the 100 billion of short and long term investments I have, and I'm going to use it as a weapon. And I'm going to go and make sure that all of these publishers have a new kind of agreement that they signed up for, which is I'll do my best to help you monetize, you do your best by being exclusive to our AI agents." Right? So you deprive other models of your content on your pages, because that will get litigated and there is no way, just like, again, if you say, "Do not crawl," you're not allowed to crawl if you're Google or Microsoft or searches.

David Friedberg 54:19 Yeah.

Chamath Palihapitiya 54:19 So this is going to happen for these agents. It's unrealistic to expect that it won't. So my point is, Google should do this and define how it's done before it's defined for them. Because right now, people are in this nascent phase where everybody thinks everybody's going to be open and get along, and I just think that that's unrealistic.

David Friedberg 54:36 It's a really important kind of philosophical question. First off, like Google today, just so people know, on AdSense is typically paying out 70 cents on every dollar to the publisher. There's, you know, it's a, it's a, it's a pretty, you know, generous... And it's, it's the way they've kind of kept the competitive moat, you know, wide and kept folks out of beating them on third party ad network.... bids because they— they bid on everything, and they always win because they always share the most revenue back. So they, they, they, they own that market. With respect to acquiring content, you know, the, the internet is open. It's an open protocol. Anyone can go to any website by typing in the IP address and viewing the content that a publisher chooses to make available on that server to display to the internet. And there's a fair use policy.

Chamath Palihapitiya 55:14 That's not true.

David Friedberg 55:15 And there's... You, you can, you can type in-

Chamath Palihapitiya 55:17 What percent?

David Friedberg 55:17 ... any IP address.

Chamath Palihapitiya 55:18 I think 15 or 20 or 30% of the pages on the internet right now are apps that are closed. Facebook's closed, Instagram's closed-

David Friedberg 55:23 Oh. Well, yeah, the... I'm talking about, I'm talking about the open internet, right? So, like, the, the content on the open internet.

Chamath Palihapitiya 55:27 But you'll... But I'm saying the open internet matters less and less.

David Friedberg 55:30 Yeah, I, I don't know. I mean, look, you're right, maybe there's, there's the enhancement of the models. But my point being that if the internet is open and you and I spent, uh, a billion lifetimes reading the whole internet and getting smart, and then we were the chatbot and someone came and asked us a question and we could kind of answer their question, um, because we've now read the whole internet, do I owe licensing royalty revenues to the knowledge that I gained and then the synthesis that I did which ultimately meant excluding some things, including some things, combining certain things? And the problem with these LLMs, these, these large language models, is that you end up with 100 million, a billion plus parameters that are in these models that are really impossible to deconvolute. You don't know, we don't really understand deeply how the neural network is... The, the, the model is defined and run based on the data that it is constantly kind of aggregating and learning from. And so to go in and say, "Hey, it learned a little more from this website and a little less from that website-"

Chamath Palihapitiya 56:26 No, I'm not, I'm not saying that.

David Friedberg 56:26 "... is a practical impossibility."

Chamath Palihapitiya 56:28 I'm saying wh- when you look at transformer architecture today, every LLM that you write on the same corpus of underlying data for training will get to the same answer. So my point is, today, if you're a company, the most important thing that you can do, especially if you have a $1 trillion-plus market cap that could get competed away, is to figure out how to defend it. And so all I'm saying is, from the perspective of a shareholder of Google and also from the perspective of either the board of director or senior executive or the CEO, this should be the number one thing that I'm thinking about. And my s- my framing of how to answer that question is build a competitive moat around two things. One is at the end, which is how much money and what kind of relationship do I have with my customers, including the publishers, and can I give them more so that number two is I can affect who they decide to contribute their content to? So you're right. Let's assume that there are five of these infinite libraries in the world.

David Friedberg 57:34 You mean nonpublic content?

Chamath Palihapitiya 57:36 How important... And also public. How important is it if Quora says, "You know what, guys? I've done a deal where my billions of page views and all of that really rich content..." Quora has incredible content. "Google's paying me two billion a year, and so I've decided to only let Google's AI agents crawl it." And so maybe when there are questions that Quora is already doing a phenomenal job of answering, I think it does make a difference that Google now has access to Quora's content and others don't.

David Friedberg 58:06 Right. For a hot minute, they did have access to the Twitter fire hose, and that was the premise was we could get this corpus of data that we can have in a very limited, restricted way. They paid Twitter a lot of money. I don't think that those deals exist anymore at Twitter. I mean, you guys might know better than I do, but I don't think they exist anymore.

Jason Calacanis 58:21 Here's where, Chamath, I think you're right. Um, and maybe, Dave, I think you're being too forgiving. These models know where they got the data, and they can easily cite the sources, and they can easily pay for it. And if you want to see an example of something-

Chamath Palihapitiya 58:36 Sorry, can I just interject something?

Jason Calacanis 58:36 Hold... Go ahead.

Chamath Palihapitiya 58:38 You're, you're absolutely right. The video in the Wall Street Journal where Satya was interviewed showed a demo. And you're exactly right. They actually showed Jason in the search results-

Jason Calacanis 58:47 Yes.

Chamath Palihapitiya 58:47 ... the five or six-

Jason Calacanis 58:48 Sources.

Chamath Palihapitiya 58:48 But it made no sense because it's like how do you know that those are the five most cited places that resulted in this?

Jason Calacanis 58:54 Well, by PageRank technology or the authority of the website or the author. But let's pause for a second here. There is a company called niva.com. I'm not an investor. None of us are. Uh, it's a former Googler. They have 78 employees, I think, according to LinkedIn. I just typed in, "What are the best flat panel TVs?" Here's the result. And as you see, sentence by sentence, as it rewrites another person's content, it links with a citation, just like the Wikipedia does. And when you scroll to the bottom of it, it tells you, "Hey, this is from Rolling Stone. This is from Best Buy. This is from Ratings." And if that answer is good for you and you trust those sources, those people should get a commission. Every time there's a thousand searches and you come up, you should get a dollar every time your data was used.

Chamath Palihapitiya 59:36 The problem, the problem with this method-

Jason Calacanis 59:37 And if not, these sites should sue the daylights out of Google. And for Google-

David Friedberg 59:40 Fair enough.

Jason Calacanis 59:40 ... to say they can't do it is hogwash.

David Sacks 59:43 Why isn't it fair use?

Jason Calacanis 59:43 They contributed.

David Sacks 59:44 Why isn't it fair use?

Jason Calacanis 59:45 It's not fair use because in fair use, you have the ability to create derivative works on future platforms, uh, and you are taking this person, the original content owner's, ability to exploit that, and you are co-opting it, and you're doing it at scale, and that is against fair use. You're not allowed to interfere with my ability to make future products, David. You know this as an attorney.

Chamath Palihapitiya 1:00:05 The problem with that-

David Sacks 1:00:07 I'm not an IP lawyer. Sorry.

Chamath Palihapitiya 1:00:09 (laughs)

Jason Calacanis 1:00:09 All right. Well, I play one on TV in this podcast.

Chamath Palihapitiya 1:00:11 The problem with that idea, just from a product perspective for a second, is that if you limit how they can tokenize to just being all entire sentences, the product will not be that good. Like, the whole idea of these LLMs is that you're running, you know, so many iterations to literally figure out what is the next most best word that comes after this other word. And if you're all of a sudden stuck with blocks of sentences as inputs that can't be violated because of copyright, the product will not be as good. I don't... I just don't think it'll be as useful.

Jason Calacanis 1:00:42 Correct.

David Friedberg 1:00:43 These are also not deterministic models, and they're not deterministic outputs, meaning that it's not a discrete and specific answer that's gonna be repeated every time the model is run. These are statistical models, so they infer what the right answer could or should be based on a corpus of data and a synthesis of that data.... to generate a response to a query. That refer- that inference is gonna be, you know, assigned some probability score. And so the model will resolve to something that it thinks is high probability, but it could also kinda say, "Hey, there's a chance that this is the better answer, or this is the better answer," and so on. And so when you have, like you have in the internet, competing data, competing points of view, competing opinions, the model is synthesizing all these different opinions and doing what Google Search Engine historically has done well, which is trying to rank them and figure out which ones are better than others. And that's a very dynamic process. And so if as part of that ingest process, one is using some open- openly readable dataset, that doesn't necessarily mean that that dataset is improving the quality of the output or is necessarily the answer from the output.

Jason Calacanis 1:01:45 Correct. Let me just give everybody a quick four factor education on fair use. And here it is from Google's actual website, because they deal with this all the time. And when you look at the, the nature and purpose and character of the work, including whether such use is not profit or educational purposes. So that first test of fair use is, hey, if you're using it educationally and you wanna make a video that is criticism of Star Wars prequels or how to shoot a shot like this Quentin Tarantino, if it's educational, it's fine. "And courts typically focus..." I'm reading here from Google, "on whether the use is transformative, that is whether it adds new expression or meaning to the original or whether it merely copies the original." It's very obvious that this is not transformative. They're just rewriting it. The nature of the copyrighted-

David Sacks 1:02:30 Seems pretty transformative to me.

Jason Calacanis 1:02:32 I don't think so. Uh, not at all.

David Sacks 1:02:33 What are you talking about? They're cre- coming out with entirely new content.

Jason Calacanis 1:02:36 They're just rewriting it. Uh, they're not actually adding anything to it. Transformative would be-

David Sacks 1:02:40 If a human did it, it'd be fine.

Jason Calacanis 1:02:41 If a human does it, it's not... If a human's rewritten something-

David Friedberg 1:02:46 It's pretty transformative. Come on, J-Cal. It's pretty cool.

David Sacks 1:02:47 Listen, J-Cal, I think, I think, I think the rights issue-

Jason Calacanis 1:02:50 I think you guys are using transformative-

David Sacks 1:02:50 I think the rights issue is just like the cost issue, which is a problem today maybe, but it's gonna get sorted out.

Jason Calacanis 1:02:56 But, but here, let me finish. The nature-

David Sacks 1:02:57 New technology waves that are this powerful don't get stymied by either chip costs or legal rights issues.

Jason Calacanis 1:03:04 They do buy legal rights-

David Sacks 1:03:05 They're gonna get worked out.

Jason Calacanis 1:03:06 You're 100% wrong.

David Sacks 1:03:07 It's gonna get worked out.

Jason Calacanis 1:03:07 YouTube got stopped dead in their tracks, and the only way YouTube w- and Napster got stopped in the tracks. I predict this is gonna get stopped dead in its tracks with YouTube level-

David Sacks 1:03:16 Napster was pure piracy.

Jason Calacanis 1:03:16 ... near death experience lawsuits.

David Sacks 1:03:18 This is different.

Jason Calacanis 1:03:18 And Google was enabled piracy and then they had to build tools to fight against it.

David Friedberg 1:03:22 I deeply disagree with J-Cal. I deeply disagree with you.

David Sacks 1:03:25 I disagree with both you guys. You guys both think that all, that costs are gonna stay in the way.

David Friedberg 1:03:28 Hold on. Lemme read you number four.

David Sacks 1:03:29 Nothing's gonna stay in the way of the AI.

Jason Calacanis 1:03:31 We know, it's gonna stay in the way.

David Friedberg 1:03:32 I don't mean it's staying in the way. The AI-

Jason Calacanis 1:03:34 Big companies using AI to, to... In- Big-

David Sacks 1:03:37 The AI's already happening.

Jason Calacanis 1:03:38 AI is happening, like Fetch. Isn't that-

David Sacks 1:03:40 Let's move the conversation forward. Actually, I wanna tell you my AI experience.

Jason Calacanis 1:03:42 Hold on, I would like to make my point. I would like to make my point.

David Friedberg 1:03:44 (laughs)

David Sacks 1:03:44 We don't need your amateur lawyer opinions.

Jason Calacanis 1:03:46 I am gonna give my point.

David Friedberg 1:03:47 (laughs)

Jason Calacanis 1:03:47 I don't give a shit if you want it or not. The effect of the use upon-

David Sacks 1:03:50 Are you gonna bill us $500 an hour for pretending to be a lawyer on TV?

David Friedberg 1:03:54 He's 50 an hour. He's 50 an hour.

Jason Calacanis 1:03:54 The effect of the use. Let's look at this.

David Friedberg 1:03:56 He's better call Sol type lawyer.

David Sacks 1:03:56 I've heard this point of view before from you.

Jason Calacanis 1:03:59 Here it is. Okay, take it easy, Mr. Sub-

David Friedberg 1:04:01 Better call J-Cal.

Jason Calacanis 1:04:02 (laughs)

David Sacks 1:04:03 This is the third time you've done this.

Jason Calacanis 1:04:05 The effect... Listen to this, "The effect of the use upon the potential market for or value of the copyrighted work. Uses that harm the copyright..." Listen to this. Very important. "Uses that harm."

David Sacks 1:04:15 When the AI takes over the world, like Skynet, J-Cal's gonna be like, "I thought we'd stop this with rights."

David Friedberg 1:04:20 (laughs)

Jason Calacanis 1:04:21 Listen to this. AI is not gonna be stopped, but companies using AI to steal content will be.

David Friedberg 1:04:25 (laughs) With rights.

Jason Calacanis 1:04:26 "The effective use, uses that harm the original copyright owner's ability to profit from his or her original work by serving-"

David Friedberg 1:04:33 Cease and desist.

Jason Calacanis 1:04:33 "... as a replacement-"

David Sacks 1:04:34 J-Cal, they're gonna figure it out.

David Friedberg 1:04:35 Cease and desist.

Jason Calacanis 1:04:35 "... for that work are less likely to be fair uses."

David Friedberg 1:04:38 Cease and desist AI. (laughs)

David Sacks 1:04:38 They're gonna figure it out.

Jason Calacanis 1:04:39 This is the one.

David Sacks 1:04:40 Okay, great. Okay. You made your point.

Jason Calacanis 1:04:42 (laughs)

David Sacks 1:04:42 You made your point and you may be right, but I think-

Jason Calacanis 1:04:44 Okay, I'm sorry, do we need to get to Marjorie Taylor Greene for you to have a good show?

David Sacks 1:04:48 No. I wanna-

Jason Calacanis 1:04:48 Sure. Let's cue up Marjorie Taylor Greene.

David Sacks 1:04:50 No, no. Hold on, hold on. Um-

Jason Calacanis 1:04:51 How much did you raise for her?

David Sacks 1:04:53 ... no, I, uh, I have, I have something, I have another aspect of the AI thing I wanna talk about besides just this-

Jason Calacanis 1:04:57 Oh, really?

David Sacks 1:04:57 ... like interminable rights issue that you're, going on and on about.

David Friedberg 1:05:00 (laughs)

Jason Calacanis 1:05:00 Better call J-Cal. Go.

David Sacks 1:05:02 So I, I had an interesting, you know, AI experience this week. And I, I think we're all gonna start having these stories, where like literally we-

Jason Calacanis 1:05:08 Oh, you use the AI to make a script of how to talk to your kids, Cal.

David Sacks 1:05:10 No, every week there'll be some new-

Jason Calacanis 1:05:12 (laughs)

David Sacks 1:05:12 ... like use case that you see that you're kind of blown away by.

Jason Calacanis 1:05:15 Go ahead.

David Sacks 1:05:15 The use case that I saw this past week in a, in a product demo was they were showing me, like, an Excel spreadsheet. Like, a very complicated Excel spreadsheet modeling a financial asset. And they had a plugin to a ChatGPT type AI. And so they just asked it, they typed in, "What does this spreadsheet do?" And it spit out like a one paragraph explanation of what this spreadsheet did. And it was really good. I mean, 'cause me just eyeballing the spreadsheet, I could not have figured out, like, instantly what that thing did. It would've taken me, like, a while to figure it out. It told me, "Here are the key inputs, here are the key outputs." So that was number one. Then they, they did something I think even more interesting, which is they said, "Give me the formula that tells me when the yield is above 2% and this and that and that." And the ChatGPT spat out a formula that was like perfect Excel logic that was something that, you know, you or I could never figure out, right? You need, like, a super pro user of Excel to basically know how to do this stuff. So it spit it out and like boom, it worked instantly. They copy and paste into the spreadsheet and, uh, you could basically, like the spreadsheet was much more advanced now. So, what it got me thinking about is that we're gonna have these little assistants everywhere. You combine that power with say speech to text, right? Because we could have just talked to it and what, the speech to text would transcribe the instruction, spit it back out, and you're gonna have these like little personal digital assistants in applications. I think, you know, it's pretty obvious to see how AI could replace call centers with, you know, having the frontline call center operator be... Instead of being a human, it can be like an AI. But this is actually even before that. Like, you could actually, I think in every single application that we use-There's gonna be an AI interface and like a, and it's probably gonna be voice-based, where you can just say to it, "Hey, I'm trying to accomplish this. Like, how do I do it? Can you just make it happen?"

Chamath Palihapitiya 1:07:17 Totally.

David Sacks 1:07:17 And it's gonna be really powerful, actually.

Chamath Palihapitiya 1:07:19 I have an idea. I was hanging out with Andrej Karpathy, and I gave him this following challenge.

David Friedberg 1:07:24 So, there I was.

Jason Calacanis 1:07:26 So, there I was.

Chamath Palihapitiya 1:07:27 Um, I said, "If you had to build Stripe..." I said, "How many engineers do you think it would take you, and how long would it take you to build a competitor?" That was just, just a thought exercise. You know, it would take hundreds of millions of dollars and years. Now, imagine you could, you were feeling threatened by Stripe. Imagine you're a large company, Visa, Mastercard, just as an example. You can now actually get one or two really smart people, like him, to lead an effort where you would say, "Here's a couple hundred million dollars to compete with Stripe, but here are the boundary conditions. Number one is, you can only hire five or 10 engineers." And so what you would do is, is you would actually use tools like this to write the code for you.

Jason Calacanis 1:08:12 Hmm.

Chamath Palihapitiya 1:08:12 And the ability to write code is going to be the first thing that these guys-

Jason Calacanis 1:08:16 Totally.

Chamath Palihapitiya 1:08:17 ... that these things do incredibly well with absolute precision.

Jason Calacanis 1:08:19 Totally.

Chamath Palihapitiya 1:08:19 You can already do unit testing incredibly well, but it's gonna go from unit testing to basically end-to-end testing. And you'll be able to build a version of Stripe extremely quickly and in a very lean way. So, then the question is, well, what would you do with the two or three hundred million you raised? And my thought is, you use it, again, as tack. You go to-

David Friedberg 1:08:40 Acquire customers.

Chamath Palihapitiya 1:08:41 You go to customers and you're like, "Well, listen, if Braintree is gonna charge you one basis point over Visa, Mastercard, and..." Or, sorry, "100 basis points and Stripe will 50, you know what? I'll charge 10."

Jason Calacanis 1:08:53 Margin destruction.

Chamath Palihapitiya 1:08:54 Margin destruction.

David Friedberg 1:08:55 Right, totally.

Jason Calacanis 1:08:56 And, and this is gonna make everything-

Chamath Palihapitiya 1:08:57 That is-

Jason Calacanis 1:08:57 Yep.

Chamath Palihapitiya 1:08:57 That's what's so interesting. You can take any business that's a middleman business. I think this is the point. Any middleman business right now that doesn't have its own competitive mode can be competed against.

Jason Calacanis 1:09:08 Yep.

Chamath Palihapitiya 1:09:08 Because now you can take all of those input costs that go into human capital, you can defer that, have a much smaller human capital pool, and push all of that extra money-

Jason Calacanis 1:09:17 The-

Chamath Palihapitiya 1:09:17 ... into traffic acquisition and substitution.

Jason Calacanis 1:09:19 This goes to the movement in Silicon Valley-

Chamath Palihapitiya 1:09:21 The net, the net benefit-

Jason Calacanis 1:09:21 ... of being more efficient.

Chamath Palihapitiya 1:09:22 This is gonna lead to that efficiency.

David Friedberg 1:09:23 Well, the net, the net benefit of all of this is economic productivity because the end customer that's using that tool that you just mentioned, they now have a lower cost to run their business and their total net profits go up. And this is what happens with every technology cycle. It always yields greater economic productivity.

Chamath Palihapitiya 1:09:38 Yeah, and-

David Friedberg 1:09:38 And that's why the economy grows and that's why, I just wanna say-

Chamath Palihapitiya 1:09:41 You're absolutely right.

David Friedberg 1:09:41 ... this is so important.

Jason Calacanis 1:09:42 100%.

David Friedberg 1:09:42 That's why technology is so important to drive economic growth, not debt. We've historically used-

Jason Calacanis 1:09:47 Yes.

David Friedberg 1:09:48 ... financial engineering to drive economic growth, but technology-

Jason Calacanis 1:09:50 And this is why we need immigration.

David Friedberg 1:09:51 ... and, and technology and innovation drive this.

Chamath Palihapitiya 1:09:53 What about China?

David Friedberg 1:09:54 What about China?

David Sacks 1:09:55 Wait, what are you talking about? What we're describing here-

Jason Calacanis 1:09:57 We need immigration.

David Sacks 1:09:58 ... is, is AI making it harder and harder to make humans productive, so you wanna-

Jason Calacanis 1:10:04 No.

David Sacks 1:10:04 ... like, bring in millions of-

David Friedberg 1:10:05 It's more per-

Jason Calacanis 1:10:06 No, it's gonna augment human talent.

David Friedberg 1:10:06 It's more productivity per human, per human of labor. Yeah, human-

Jason Calacanis 1:10:09 It's gonna make superhumans.

David Friedberg 1:10:10 One, one human can do the coding that 20 humans would do before.

David Sacks 1:10:13 Assuming they're skilled enough to use the AI.

Chamath Palihapitiya 1:10:15 Guys, go back to, go back to-

Jason Calacanis 1:10:16 Chat-

Chamath Palihapitiya 1:10:16 ... like, traditional capitalism.

Jason Calacanis 1:10:17 Chat prompts are easier than programming.

Chamath Palihapitiya 1:10:20 Go back to traditional capitalism for a second. So-

Jason Calacanis 1:10:22 Please.

Chamath Palihapitiya 1:10:22 ... go back because the Stripe example is another good one. So, if you have this business model, right? How does the ecosystem get efficient, right? How do