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Why Cursor chose xAI's compute over Anthropic and OpenAI

Competing foundation model vendors threatened Cursor's independence; SpaceX structured a $60B acquisition or $10B breakup fee to lock in xAI compute alignment.

Chamath PalihapitiyahostJason CalacanishostDavid Friedberghost
Apr 24, 20261h 30mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 4:55

    Bestie intros!

    1. CP

      Jason, you are the-

    2. JC

      Yes, ma'am

    3. CP

      ... unique person that is at the intersection of both the [censored] and the SPLC files.

    4. JC

      [laughs]

    5. CP

      Do you have a comment?

    6. JC

      No comment. [laughs]

    7. CP

      Do you have a comment, Jason?

    8. JC

      No, I'm not in the SPLC files.

    9. CP

      Yes, you are. Yes, you are. You're adjacent.

    10. JC

      I'm adjacent on the vice files.

    11. CP

      You're SPLC-adjacent, and you're [censored] . What does that mean? In the Venn diagram-

    12. JC

      I thank you, though, [laughs] for putting me in the crosshairs of all the lunatics.

    13. CP

      He's got, got a really good way to select. I mean, it's great.

    14. JC

      There's a reason why I'm carrying this, guys. Oh, my gosh. It's because [censored] people- What the [censored] is going on? [laughs] There's a reason why I carry a stiletto and a P-35. What the [censored] are you doing? [laughs] There's a reason. If you wanna jump the [censored] feds, feel free. [laughs] JCal is ready. [laughs]

    15. DS

      What's going on?

    16. DS

      Let your winners ride.

    17. JC

      Rain Man David Sacks.

    18. DS

      What's going on?

    19. JC

      And I said-

    20. DS

      We open-sourced it to the fans, and they've just gone crazy with it

    21. JC

      ... W. Westgate, Queen of Kinwah.

    22. DS

      What's going on?

    23. JC

      All right, everybody. Welcome back to the greatest podcast in the universe, episode 270 of The All-In Podcast, your podcaster's favorite podcast, with me again, your sultan of science, David Friedberg, the Dick Tater, Chamath Palihapitiya.

    24. CP

      [laughs]

    25. JC

      And yeah, the Rain Man is back. Yeah, it's definitely David, David Sacks. Um, he's definitely in DC with, uh, with POTUS. Yeah.

    26. CP

      [laughs]

    27. JC

      POTUS lets him drive in the driveway. Uh, Sacks, what's going on? You, you pushed back, you, uh, big-shotted the entire crew and pushed the show back an hour.

    28. CP

      [laughs] Simple text. He's like, "With POTUS. Start it-

    29. JC

      It's un- [censored] -believable

    30. CP

      ... start later." [laughs]

  2. 4:55 – 18:33

    SpaceX-Cursor deal, compute as leverage

    1. JC

      one, SpaceX has signed a huge deal with Cursor. You know Cursor. That's the AI coding startup. Really, the, the... They define the category. xAI and Cursor are building and collaborating on a new AI coding model that would, quote, "be the world's best coding and knowledge work AI." Here's the deal as it's been explained. SpaceX will either buy Cursor by the end of 2026 for $60 billion. That's $10 billion more than they were rumored to be raising at. Or they will pay Cursor $10 billion for their collaboration together. Bloomberg says you can think of that $10 billion essentially as a breakup fee, so I think it's fait accompli that this deal is gonna get done. Cursor's run rate, two billion at the end of February. This is a money-printing machine. They expect to end 2026 with a $6 billion run rate. They're gonna triple it. SpaceX projected revenue between 22 and 24 billion in 2026, so this is quite accretive to the revenue story at SpaceX, at the IPO of SpaceX, which is now targeting a valuation of two trillion.Which would be trading at roughly eighty times top-line revenue, which is a, you know, people would say is a high valuation, but also could measure it with the opportunity. Cursor's valuation would be thirty x, so this is a good deal, I think, for everybody at the end of the day. Cursor started, I think, built off of, uh, Anthropic's LLM. You could use any LLM previously on it. But in March, Cursor released the second version of their proprietary model, Composer Two. And, uh, here it is. It's, it's ranked pretty high right now. It's between, uh, GPT-4, five point four and Opus four point six, as you can see on the screen. The key part of the story here is that Elon has five hundred fifty thousand GPUs in Colossus. He's scaling up to one million, and then of course, he's gonna bring it to space. So if you believe that infrastructure matters, and it's pretty clear it does, this is incredible for Cursor, who has been compute-constrained. So this is peanut butter and chocolate if you put these two together. I predict that this is going to move SpaceX's xAI and Cursor to the front of the coding leaderboard within twelve months. That's my prediction. Chamath, shareholder in SpaceX via the acquisition of the Starlink company that you were a backer of. What are your thoughts?

    2. CP

      The acquisition was essentially negotiated, and the way that it's structured is so that the S-1 doesn't go stale. So I think the way that it was announced has more to do with the fact that they don't wanna slow down and have to rewrite parts of the S-1, have to redo the disclosures, um, have to redo the risks. And so I think what you're going to see is that this will get done. In fact, the deal is effectively done.

    3. JC

      Hmm.

    4. CP

      But what's so smart is that where is SpaceX today? Let's call it a trillion. Where could it be? Just for the purpose of this argument, let's say two trillion. So when the deal gets done on a stock-for-stock basis, it's going to be-- If, again, if it's sixty billion in tomorrow dollars, effectively Elon's gotten a fifty percent discount. And what has he bought? He can issue sixty billion dollars of stock at a two trillion dollar valuation and get a model and a service that I think is extremely compelling in coding, which is where we know all of the immediate and short-term revenue gains are. It's also patterns that are hard-fought and are really valuable in reinforcement learning. He gets all of that, and then he gets a very crack team, which, you know, we've known for a while that the Cursor team is absolutely excellent. If you look at the Grok usage, it shows why he had this excess capacity. There was a moment where Grok had a very steep and very aggressive discount on their output tokens, and in that moment, there was just a lot of experimentation and usage, and over time, that sort of went away. So there was a lot of capacity and a relatively low utilization, I think, inside of Colossus, that he was able to turn around, jujitsu move the whole thing [chuckles] , and basically acquire the most interesting and valuable third-party wrapper service in AI right now. So, uh, and the fact is that they got it effectively, I think, at this price for thirty billion. So I think it was a really good deal. Really smart deal.

    5. JC

      Okay. Sacks, your thoughts, if you wanna unpack it a bit. Uh, under the framing, I think it'd be interesting for you. If we were sitting here three years ago, the, uh, Biden administration didn't invite Elon to the EV summit, and the SEC and other organizations, uh, Delaware, they were explicitly involved in lawfare. They were trying to put Elon in prison, and here we are, the most important company in the history of, uh, the United States, SpaceX's xAI and Tesla now on the verge of just creating the greatest products in the history of humanity between SpaceX clusters in space and Optimus. Your thoughts.

    6. DS

      Well, you're right. I do remember a press conference where Biden said, "We gotta look at the sky." And so on the heels of that, the DOJ brought a, a lawsuit attacking the company for not hiring enough-

    7. CP

      No, SpaceX

    8. DS

      ... asylees. Remember that?

    9. JC

      Yeah, exactly. [laughs]

    10. DS

      [laughs]

    11. JC

      SpaceX, which they can't under ITAR. [laughs]

    12. DS

      They couldn't, exactly, under ITAR. Anyway, that's all ancient history.

    13. JC

      [laughs]

    14. DS

      So let's, let's put that behind us. Look, I, I agree with your guys' analysis on this. I think these two companies are, are very complementary. Cursor obviously is very strong in coding. That's what it brings to xAI. xAI brings compute, and they bring a foundation model. And the problem that Cursor had is that even though coding is kinda like the white hot area of AI right now, when it got started, it was really competing against generalists in the form of OpenAI and Anthropic, but now those generalists have decided to vertically integrate in this area of coding, right?

    15. JC

      Hmm.

    16. DS

      And so Cursor's now competing against Claude Code and OpenAI's Codex. And so they were dependent on foundation model companies that were getting in the business of competing with them, which was just not a good place to be, right? So now they have this new alliance with a different foundation model company, which also brings the compute. Just makes a lot of sense, and then they bring-- Cursor brings to xAI the training data, a lot of enterprise clients, and the experience in coding, and I think this will accelerate xAI in this area.

    17. CP

      Sacks, you think they're gonna dump Kimi K two point six? 'Cause I think Cursor Composer Two uses the Moonshot model. There's no reasonable way that Elon's gonna pay sixty billion dollars and not run on top of Grok. I gotta think.

    18. DS

      It seems like it.

    19. CP

      Yeah.

    20. DS

      Likely, but I don't know.

    21. DF

      I think it might be tough depending on the, the users. One of the things that makes Cursor so good is they've got-

    22. JC

      No, wait, wait. Say, say more on that. What do you mean?

    23. DF

      So I think that the d-different developers wanna have choice in that sense. There's a toggle. So one of the things that's really good about Cursor is they've got this very well built out IDE, this application layer that puts them probably from a UX perspective, meaning developers are using the toolAbove Codex, above Claude, above anything else. You can use a third-party IDE and integrate the models or integrate whatever other third-party service you're using. But I would imagine that the developers are gonna wanna continue to have at least some choice on what's actually writing the code for them. The thing that people are waking up to in the last 120 days is just how much of the value of AI is being realized by writing software, and we've kind of got this wrapper term, we call it agents, but agents are fundamentally just quickly spun up applications. But for all of them, as we're realizing very quickly, you end up making too many agents, they end up being super inefficient, they need to be engineered, and you still need to have a strong software engineering capability and competency to fix all the agents, to build all the harnesses, to make everything work well together, and that's why having a strong developer environment, a strong IDE, actually solves that biggest problem. So eventually all the enterprises that are getting hot and heavy on agents are gonna be like, "Whoa. Wait a second. We've actually gotta fix how this is all being done," as we saw this week in that story with Amazon, where there's like a million agents being spun up inside and everything's wasting resources, redundant data creation, redundant data stores, redundant API calls, et cetera, tons of money being wasted. So you have to centralize still, you have to have good software engineering talent that's making good infrastructure and good use of these agents, and that ultimately will require an integration of the AI tooling with a standard software engineering front end, which is the IDE that Cursor has. So I think that- that's probably w- where everyone's waking up to the fact that having the, uh, the software engineers may end up winning you the arms race here and seems pretty smart for Elon to buy Cursor.

    24. DS

      Well, another piece of it, you mentioned Kimi, uh, K 2.6.

    25. DF

      2.6, yeah.

    26. DS

      Yeah. I mean, so I think that one of the things that's gonna become a priority over the next several months is this idea of optimizing because enterprises' token bills are going through the roof right now. I mean, just month over month they're spending increasingly large amounts because their employees are just building more and more software, but I'm not sure that anyone's been incentivized yet to be efficient about it. And it really only makes sense to go to a frontier model for a frontier task, but more mundane things could be done using an open source model or a less-

    27. DF

      Totally

    28. DS

      ... expensive model. And I think, like you're saying, whether it's the IDE or something else, there needs to be some sort of middleware that determines which model you go to and how much you're willing to spend and what the most efficient way of getting the tokens is gonna be.

    29. JC

      I am deep in playing with, uh, xAI's suite of products, and I would predict we're gonna be sitting here in six to 12 months and they are gonna be dramatically, dramatically improved.

    30. DS

      Let me just flag one other area that I think is maybe the white hot center within this red hot area of coding, which is cyber. And I think Mythos has kind of woken everybody up to the potential of frontier models to be a weapon that can be used by either cyber offense or cyber defense. Now, the issue with Mythos is that it's very large and expensive. It's something like a 10 trillion parameter model, and there's a lot of reports that Anthropic just doesn't have enough compute to be able to serve it. I'm not sure it was ever built to be a commercial model, to be honest, because I just think it's so big and expensive. But I think what'll happen is these companies will start training dedicated cyber models.

  3. 18:33 – 46:20

    SaaS bloodbath, debt bomb incoming, buy the dip?

    1. JC

      two, is there a SaaS debt bomb in private equity? Thoma Bravo, we had Orlando Bravo at the fourth All-In Summit, uh, last year, is nearing a deal to hand its portfolio company, Medallia, over to its creditors. This is a SaaS for customer experience company. TB acquired them in twenty twenty-one for six point four billion, all cash, at the top of the market. As part of the deal, they incurred three billion in debt. And for background, in twenty twenty-one, this company had four hundred and seventy million in revenue, growing twenty percent a year. Earlier this month, Bloomberg reported that TB's debt servicing costs for Medallia were about to triple from a hundred million a year to three hundred million a year. Blackstone and other firms refused to extend, uh, a lifeline to the company, to the SaaS company. So it looks like Thoma Bravo just handed the keys back and wiped out five point one billion in equity. Chamath, your thoughts? We've been talking about the SaaS headwinds for a bit. You've been quite vocal about it.

    2. CP

      Well, first of all, I think Thoma Bravo is an unbelievably well-run organization. Their returns are bonkers, and Orlando's a really, really, really good investor. So what do I think happened? I suspect that they probably got enough of their equity, if not all of their equity. There's probably a decent chance that they did at least one or two dividend recaps in the last five years. And if I had to guess, I suspect that they are positive return. It may not be the return that they would want, and so turning the keys over becomes easier. 'Cause you have to remember, in private equity, the entire playbook is for transformations of assets that are at some point not working. Right? It's very rarely that they're buying the same kinds of businesses that the four of us would buy, which is just sort of this, you know, clean white sheet, de novo, grow at all costs kind of business. So they have operating partners and all of these other people waiting in the wings to un- [censored] situations. That's the whole playbook.

    3. JC

      Hmm.

    4. CP

      So to turn it over, I suspect means that there is a core rot that people couldn't fix, combined with the fact that they have probably gotten enough downside protection that it's not a huge thing for them. Now, this is an issue for the bond holders, and then that'll maybe flow through to the borrowing costs that Thoma Bravo has to pay maybe for a subsequent deal. I don't know, but I doubt that they would just walk away from a business. So I suspect they probably got most of their money out.

    5. DF

      I don't know if that's true. There was someone that published some internal data showing that the sales team was, like, eighteen percent of target at Medallia. Do you guys know what this company does, Medallia?

    6. JC

      Customer support, uh, is the general arena and customer experience.

    7. CP

      No, customer, customer experience management.

    8. DF

      Yeah, it's like surveys.

    9. CP

      I don't know what, I, I don't know what that means.

    10. DF

      Yeah, they'll basically send... Like, you go on Caribbean cruise ships, and you get a survey afterwards, and then they use that survey data to provide management insights and operational insights to the leadership team and the operating team on how to improve the quality of their product or their service. So it's sort of like this feedback surveying loop. So if I were to tell you guys, "Hey, you wanna build a feedback surveying loop to run your business better," are you gonna buy SaaS today, or are you gonna ask your AI to spin up an agent for you to do that? And I think that's a big part of what's happened, is all these sorts of companies where the alternative to buying a SaaS product is to spin something up internally, and it's much cheaper and easier to spin it up internally. You get a custom workflow.

    11. JC

      No, no, I agree with that.

    12. DF

      Yeah.

    13. JC

      I'm just saying-

    14. DF

      And so I think-

    15. JC

      ... in the last five years, you think they sat on their hands and didn't take a dollar out? They're not that dumb.

    16. DF

      Maybe they took cash out, maybe they didn't, but there was still a big debt overhang, and the debt's clearly, um, gotten impaired, which means that the equity-

    17. JC

      No, the, yeah, the, the debt holders-

    18. DF

      Yeah, the equity-

    19. JC

      The debt holders, the debt holders are clearly screwed here. [laughs]

    20. DF

      Yeah.

    21. JC

      The question is, is Thoma Bravo screwed? And I would say if you sat around for five years, they're, that's not their style. They generate too much money.

    22. CP

      Hmm.

    23. JC

      They're too good.

    24. DF

      So they may have taken cash out and covered some of their, their costs, but the equity got fully impaired, and then the debt is clearly impaired 'cause you can see how the debt and the, uh, CLOs are trading, which indicates that this business is just not doing well. And then someone else on Twitter posted some internal information from Medallia saying the sales team is just not hitting their targets. They're, like, way, way off their sales targets, which I think speaks to the underlying problem here.

    25. JC

      Yes.

    26. DF

      Which is that all of these-

    27. JC

      No, unpack that. Yeah, please.

    28. DF

      Yeah, so the underlying problem is that these businesses in the SaaS space, where you're driven by net new sales every year, how many new customers are you signing up, and then you're trying to manage retention, and you're trying to increase sell-through and retain customers, they're just having a really hard time sourcing new customers, and there's probably higher than modeled attrition.

    29. JC

      That's right.

    30. DF

      And when you have a very kind of typically historically predictable business where you can say, "Hey, I've got a net revenue retention of a hundred and eighteen percent," or what have you, meaning I'm, I'm selling into my install base by eighteen percent over what I'm making last year, and then I'm signing up new customers, you can lever that business, right? You can borrow money against those cash flows because it becomes predictable. And what's happened in the last year in particular is agents have become so good and so fast and so cheap that many enterprises can simply spin up an alternative to a vertical SaaS solution, and that's crushing the sales team's ability to sell in. That's who you're competing against. Now, I wanna make one point and just link this with something else that happened this week, and that's Kevin Warsh's hearing for Fed Reserve chair. Kevin Warsh went and talked a lot about the deflationary effect of AI. And I actually think we all talk about the SaaSpocalypse as if it's this sort of, like, isolated business phenomenon where these SaaS companies are getting blown up. I think another lens to look at what's going on is the incredible deflation of how much it costs to successfully run a business, and you don't have to pay a premium price for SaaS products anymore.Meaning that that piece of the business-

  4. 46:20 – 1:00:32

    New Apple CEO: John Ternus succeeds Tim Cook, what's next for Apple?

    1. JC

      listen, just rapid-fire here on the Tim Cook, uh, resignation and moving on. This guy, John Ternus, is a 25-year vet. He did lots of hardware, worked on iPad, AirPods, and he was the favorite on Polymarket since day one. He's a bold decision-maker according to reports, and unlike Tim Cook, Cook, Tim Cook did a great job of squeezing every last nickel out of Steve Jobs' product line, which lasted for a decade, iPhone, Apple TV, Watch. I don't need to repeat them. But here we are. We got a product person in the seat, which is what we all know they needed because hey, these tools are getting a little bit stale. Siri, disgraziad. AirPods, disgraziad. The whole, uh, system is not built on innovation anymore. It's built, Friedberg, I think you would agree, on just wringing more profits, more profits. W- what's your hope here? Because man, they missed so many great swings at bat. They didn't get the Oculus, you know, Ray-Bans that Meta did. They canceled their self-driving car. What would you hope that this new CEO of Apple focuses on, Friedberg, in terms of innovation? They don't have a problem selling phones still. They don't have a problem selling laptops and making a ton of money, but if you were in the seat, if you were on the board of Apple, which wouldn't be a bad idea for them if I'm being honest, what would you tell the new CEO to focus on, David Friedberg?

    2. DF

      I mean, I don't know. The software layer of the future is not the software layer of the past, so.

    3. JC

      Okay.

    4. DF

      It, it's pretty obvious. I don't know how much there is to talk about, but you just need the Siri equivalent that's ubiquitous in all of your devices, knows who you are, personalized to you, sees your email, sees your calendar entries, knows what kind of music you like, has connection to your home. Basically build that AI layer for your life and make it ubiquitous in all of your Apple devices that no matter what device you're using, it knows who you are. You can engage with it using kind of a natural language method, and it's, you know, it's, it's pretty obvious.

    5. JC

      Yeah. They should buy Whisperflow. Yeah, I mean, that would be-

    6. DF

      I, I don't know how they're, I don't know how they're running the business, but...

    7. JC

      Well, they're running it for profits, obviously, Sacks. Uh, I would say buy Whisperflow and just replace the Siri team with that because Siri's been just... The fact that Siri can't spell Polihapitiya or Calacanis after 20 years of us giving them $20,000 for iPhones is just disgraceful. Sacks, if you were on the board of Apple, again, not a bad idea, what would be your hope for the company? What would be your sage advice for the new CEO?

    8. DS

      Well, I mean, everybody is gonna be asking the same question, which is what are you gonna do about AI? I don't know that they needed to be on the bleeding edge of it, but they are gonna need an answer at some point, and Siri's gonna need to be AI-empowered.Probably the way it should work is that you get to choose your model. I mean, I don't know that they need to pick just one model provider. It could be a setting where you go in and you set up your account with whatever, ChatGPT or Grok or Claude or what have you, and you can choose your own model provider, and then you'll have more customization and more ability to control your, your storage. Let me just say, just on Tim Cook's retirement, he had an incredible run as CEO of, of Apple. I mean, he ran it very effectively for 15 years. The market cap of the company went up by over 10X. The revenue grew from roughly 100 billion a year to over 400 billion a year. He also improved the quality of revenue by moving the mix into services-

    9. JC

      Yeah, that's been a big win, yeah

    10. DS

      ... which is partly why it got, why it got a higher valuation. And, you know, people say that, "Well, they never did any innovation under Tim Cook," but, you know, I've seen people tweet lists of products that were released under him, and there were a lot of them. Now, it's true, nothing as big as the iPhone, but they did release a lot of products under Tim Cook. And then just finally, I mean, you, you look back over the last 15 years and there really weren't any public snafus or scandals or imbroglios with, with Apple. It's one of the few tech brands that is still, I think, beloved by the population. I think a, a major part of that was Tim Cook's dedication to privacy and keeping the company on the right side of that, which I think users do appreciate. And, you know, he even, Tim Cook even got praise from the president. I think it was just unsolicited, where the president talked about how Tim Cook didn't call him up that often, but when he did, it was something important, and therefore, the president tried to help them out. Seems like he nurtured a good relationship with the president over, over the last decade or so. So you just have to say that he navigated what could've been a turbulent period with a great deal of grace and aplomb.

    11. JC

      Clearly, uh, Chamath, he was a great steward of the brand, even though that list of products were all developed under Steve Jobs and they were just executed well, but he didn't bring in a lot of new products or services. Any final take there, Chamath?

    12. DS

      But actually, Jake, uh, can, let me ask you a question.

    13. JC

      Yeah, please.

    14. DS

      What do you think, other than AI, you know, AI-powered Siri, let's say, what do you think he missed?

    15. JC

      Yeah, clearly he-

    16. DS

      I mean, like, what should Apple have done that they didn't do?

    17. JC

      They would have out by now, uh, a pair of glasses that weren't 17 pounds like the Apple Vision Pro. They would have gotten glasses that pair perfectly with your phone, take videos for kids, and they're coming out with it. It's just on a really broken timeline. They would've had a killer Siri. They would've had a search engine-ish Perplexity-like product. They would've had a self-driving car. When you went to the Apple Store, you would've been buying two or three very important products. Glasses, a car, and probably a television set. If you look at actually what they did innovative under Tim Cook, I think they've, they have great taste and Apple TV produced a lot of great programming. I-- He was working on a television set, not Apple TV clunked onto the back. I think those three products would have been... Four products. Siri, glasses, car, television set. Those would've been extraordinary, and who knows what he would've come up with. When they lost Jony Ive, uh, and obviously Steve Jobs passed away, they lost the soul of the company. They lost the innovative, groundbreaking soul of the company, and they just went into profit and iteration mode. But no acquisitions of note. Nothing important was acquired, and nothing important was released. Vision Pro, you can give them, like, maybe that's, like, the sixth best product or something, but it obviously hasn't hit the mainstream. Chamath, any final thoughts from you?

    18. CP

      Yeah, I have, um, three specific things to say. The first is that he had honestly, like, an impossible job. It's sort of like you play basketball with Michael Jordan, and then you're asked to be Michael Jordan, and I think that that's an impossible task. And on that dimension, I think he has done just an incredible job. He has been an incredible steward of the business. Sax is right. No major snafus. I think he did a really smart thing around doubling down on privacy, and just as a practical matter of being a great CEO. Like, if you... I think you can categorize CEOs in two buckets. One is the innovator, the person that's pushing the envelope, and then the second is just a great steward. He's at the top of the top of that second category. Um, I sent you a couple of charts to, to show this, and he found a lane that allowed him to separate himself from Steve Jobs. So, you know, as an example, like, what does it mean to be a steward? Well, when you're a steward, you're allocating resources, and the two most important resources you control is capital and people. And I think on that dimension, what Tim did, if you just look at this, is he was able to invest appropriately in R&D. They completely divested their need of Intel. They spun their entire new line of silicon. That silicon, it turns out, and this will be important in the future, is very useful in AI with all of this open claw stuff, and, you know, some of you guys are completely addicted to it. And they've kept the acquisitions light, so he was very capital efficient. If you look at the, the next chart, what's so interesting is, like, it is the exact opposite of what Steve Jobs did. Look at the amount of money that Steve Jobs returned to shareholders [laughs] in his tenure at Apple.

    19. DS

      Yeah.

    20. CP

      It's easy to count. It was zero. He loved to, to keep that money on the balance sheet, and he probably or maybe, I'm guessing, would've directed that at some huge shot on goal. In the Tim Cook era, it was very different. He shrank the share count by almost 50%. I think it's, like, 44%. So he-

    21. JC

      That's insane. Is there any-

    22. CP

      He was, he was-

    23. JC

      ... corollary to that, Chamath?

    24. CP

      No. He's, he's been a prolificShareholder-friendly CEO, finding ways to give us money back, which I think everyone who's owned the stock has very deeply appreciated. The last thing I'll say, though, is what is the future for John Ternus, and I think it's in this final chart. We talked about the problematic nature of increasing per-unit pricing in SaaS. And what I would say is if you look at the iPhone, the unit price has gone up, and people would say yes, but the capabilities have gone up in turn, and I acknowledge that. But the problem with the per-unit pricing being as high as it is, is what Friedberg says is going to happen. AI rips open the canvas of the devices that we will use to interact with information and knowledge. We are going to live in a much more heterogeneous world in the future. It's not going to be two devices and two different operating systems that get you to knowledge. There's gonna be all kinds of stuff, pens, orbs, who knows, Jason, your glasses, whatever. And so the problem is if you get too addicted to a single thing that has an incredibly juicy profit margin and great stickiness and the ability to raise price, it's a hard drug to get off of. So I think really what John Ternus has to do is figure out how to move to this world where everybody will be launching umpteen devices via MCP or otherwise. All of these services will be open. It'll be agentically talking to everything. I think the moats decay, and I think if that happens, that's problematic if you're too reliant on a single thing to kinda keep it going.

    25. JC

      Yeah, and just expanding on what you said, like wearables is where they really, uh, made some good inroads in terms of getting people to use them, whether it's AirPods or the watch, and the next wearable, like this is a Plog pen that I use to record. You can put it here, put it on your wrist. That AI synchronicity of having your eyes, having your ears, having your watch, having your phone, your desktop all sync together with AI could be a huge product line. I'll also add a fifth, robotics. You know, the-- I think T- I, I think Steve Jobs, if he were alive today, would've been looking at Roomba, he would've been looking at Optimus, and he would've said, "Hmm, consumer robotics in addition to a consumer car?" Those are two things I think he would've absolutely, uh, executed on at a high level. Okay, let's keep moving here. Uh-

    26. DS

      Just can I make one last point on-

    27. JC

      And we'd love to have you on the pod, John, so just come on the pod when you're ready. Uh, we'll have you come sit in. Go ahead, Sacks. You get the final word.

    28. DS

      Just one last point on this is that I think the succession at Apple is reminiscent a little bit of the succession at Disney, and apparently Steve Jobs and Tim Cook had this conversation back when Steve was alive and, and Steve told Tim, "Don't do what Disney did," where basically after Walt Disney died, the company kinda languished because it felt so beholden to Walt's vision that they never really iterated. Now, when Walt died, his brother Roy took over, and Roy was already in the business. He was sorta like the business co-founder. He was a COO type, little bit like Tim Cook, and he kept the magic going for about five years, and then he himself died. I think it was around 1971, and then you had this string of CEOs who took over, kind of uninspired, and it wasn't until Eisner came in in 1984 that he sort of revitalized the business. And so as I understand it, Steve and Tim had this conversation, and Steve told him, "Don't be too beholden to my vision. You need to figure out your own and extend it." I think that, you know, you could argue that Tim, in a way, was like the Roy figure here, very effective business partner of Steve. He got a 15-year run. Roy only got five, and I think, again, he added a zero to the value of the company.

    29. JC

      Crazy.

    30. DS

      The market cap went up-

  5. 1:00:32 – 1:19:03

    SPLC indictment, out of control NGOs

    1. JC

      We're gonna talk about the Southern Poverty Law Center-

    2. CP

      Racism Corner. Let's go to race-

    3. JC

      [laughs]

    4. CP

      Fake, Fake Racism Corner. I wanna know how the SPLC managed to accumulate eight hundred and twenty-two million dollars in offshore bank accounts.

    5. JC

      Yeah. This is incredible. These are big numbers. Okay, SPLC-

    6. CP

      How is that possible? What is going on?

    7. JC

      All right, let me tee it up here for the team.

    8. DS

      This is like one of the biggest grifts of all time. Anyway, Jake, I'll let you-

    9. JC

      I mean, this is a big one. SPLC has been indicted, indicted, not found guilty yet, on 11 counts of wire fraud and money laundering. Keep that in the back of your head, wire fraud and money laundering. Here's the core allegation. Between 2014 and 2023, the Southern Poverty Law CenterUse hidden bank accounts to funnel 3 million in donor money to paid informants. Like, these are confidential informants, like the police or FBI might use. They use these as a non-profit NGO to infiltrate hate groups. And so the official mission of the SPLC is, quote, "To be a catalyst for racial justice in the South and beyond, working in partnership with communities to dismantle white supremacy, strengthen intersectional movements, and advance the human rights of all people." Okay, sounds great on paper. Examples of organizations they were trying to infiltrate: KKK, Aryan Nation, neo-Nazi groups, and the Unite the Right organizers. Proud Boys, labeled as a hate group by the SPLC. Oath Keepers, not listed as a hate group, but part of the militia movement. My friend Sam Harris, he [laughs] was not listed as a hate group, but he was also pinned by the SPLC as, like, uh, hate adjacent in their Hatewatch headlines. And this is something that I had a major problem with this organization on, which is they would just very loosely label people as hate speech and try to get them canceled. All of this kind of, uh, came to a head. The revenue before Charlottesville, you remember the incorrectly clipped, uh, Charlottesville hoax where they said Trump said both... good people on both sides, but they didn't give his full quote. Very unfair to President Trump, uh, we found out later, and that was the reason Biden of course ran. He said the Charlottesville both sides thing was his inspiration. 58 million in 2026, to your point, Chamath. Doubled and spiked to 136 million, more than double, and it's remained elevated ever since. Here are some s- you know, uh, images. For the indictment, and I'll wrap on this and then get everybody's, uh, feedback, they had F37 as one of their confidential informants. He was a member, and this is according to the indictment, quote, "Member of the online leadership chat group that planned the 2017 Unite the Right event in Charlottesville, Virginia, and attended the event at the direction of the SPLC. F37 made racist postings under the supervision of the SPLC and helped coordinate transportation to the event for several attendees. Between 2015 and 2023, the SPLC secretly paid F37 more than $270,000." That's the legal case here. Let me pause there.

    10. DS

      Can I add one thing?

    11. JC

      Sure, keep adding.

    12. DS

      So-

    13. JC

      There's a lot of detail to this case, yeah.

    14. DS

      Yeah. So you're right that the SPLC allegedly did fund $270,000 to help plan Charlottesville. In addition to that, they secretly funneled more than $3 million to a bunch of violent racist extremist groups, including the Ku Klux Klan, the American Nazi Party, Aryan Nation, United Klans of America, and it goes on from there. So I think d- don't forget about the 3 million bucks. So this group that was supposed to be fighting racism in fact was fomenting racism by paying these groups to basically organize protests that SPLC could then point to and say that America has a huge racism problem, donate to us. And that's basically what happened after Charlottesville. They increased the amount of money that they were able to fundraise by $81 million. So that $270,000 investment led to an $81 million return. Pretty good. But this is kind of the whole point of the story, is that these guys are basically running a grift. And one of the ways that you know this is a, a grift is because, according to the indictment, that they opened bank accounts under fictitious entities to conceal the payments that they were making from their own donors. Because if their donors knew that they were funding the KKK, [laughs] they wouldn't be getting all these contributions from Hollywood celebrities and all the rest of it. So it's really just this unbelievable story.

    15. JC

      Unbelievable.

    16. DS

      Uh, it really boggles the mind.

    17. JC

      And just to clean up a little bit there, these are allegations. They haven't made the jump from planning these events, and the SPLC claims they were not planning these things, they were monitoring, so that's gonna be their argument on the other side. I'm not saying I agree with that.

    18. DS

      I know, I know.

    19. JC

      I'm not taking that side.

    20. DS

      You're, you're, you're right that the-

    21. JC

      Yeah

    22. DS

      ... SPLC's cover story is that they were simply paying informants. That's what they've claimed, but there's two problems with that story. Number one is they were paying the actual leaders of these groups, not just sort of moles who were infiltrating the groups. And second, these leaders, they weren't paid to inform, they were paid to foment the activities. So I'm just saying that's the, the flaw. I understand they have this cover story that they were just paying informants. I'm just saying, in my view, that does not hold up. And again, if they were just paying informants, why the extraordinary efforts to conceal the payments from their own donors? If they were proud of these efforts to infiltrate these groups, they should have basically informed their donors what they were doing.

    23. JC

      Well-

    24. DS

      In fact, they hid it.

    25. JC

      And he... Well, here's the reason, uh, that it was hidden according to them. Again, I'm not taking the side. SPLC is not an organization I'm endorsing in any way. Their version of this is, "We didn't plan any of this. If we put SPLC bank accounts together for informants, that would be like the FBI sending a check to an informant from an FBI account." That's their explanation of it.

    26. DS

      They're not a law enforcement agency.

    27. JC

      Well, that's actually the question I had about all this, is like, what is a nonprofit doing hiring confidential informants, Chamath, to infiltrate these organizations? To what end? And then if you show me an incentive, you're gonna sh- you're gonna see an outcome, and the outcome here is, hey, we'll get more donations if there's more racism. Uh, your thoughts just generally speaking here, Chamath. Again, all of this is alleged.

    28. CP

      These NGOs have completely run amok. They're cosplaying as these overlords and power brokers in our lives, and it needs to get stopped. They should all be dismantled. The people that donated to the SPLC should sue them, rip open all of the documentation, get their money backBecause just so you guys know, if you are listening or watching and you have donated, there's $822 million of your money [laughs] sitting in an offshore bank account waiting for you to get it back. Okay? And then separately, if you are thinking of donating to any of these organizations in the future, unless there is a full transparent auditing of it, you actually may be doing the opposite of what you thought. If you are against racism, you may be supporting racism. If you are against discrimination for gays, th- this could be actually promoting discrimination for gays. If you are supportive of trans rights, this may be pushing back against trans rights, 'cause the playbook seems to be do the opposite to create the narrative, give it to your friends in the media who will look the other way and just amplify it, tell the lie, create the craziness, and then raise a bunch of money, make a bunch of stink, and try to curate power.

    29. JC

      Friedberg, do you think this is, uh, in your estimation or your gut tell you this is arsonist firefighters, they're lighting things on fire so that they can go put it out? Or do you think this is like, um, a lawfare as some people are claiming because there hasn't been, to Chamath's point, it's... They don't have donors taking this action. They're being accused of wire fraud on behalf of donors who haven't shown up yet to do, you know, a legal action. What's your take on all of this, Friedberg?

    30. DF

      The IRS definition of what a 501 [c] [3] nonprofit organization is meant to be doing is to engage in exempt activities. The definition of exempt activities is charitable, religious, educational, scientific, literacy, public safety, or fostering amateur sports competition, or preventing cruelty to children or animals. You tell me how the [beep] 90% of what we call nonprofits today fall under that definition. We have completely [beep] closed our eyes to the fact that organizations, regardless of political affiliation, social interest, have fundamental commercial and probably not aligned interests with the definition of a 501 [c] [3] , and we've allowed them all to get away with it for far too long. I don't think that this is a blue or red thing. I think that this is a thing where we let these organizations make it easy to get money, to hide the money, and to do whatever the hell they want with the money, and we need to stop it. And I think that it's an amazing opportunity right now for everyone to kind of reset the decks by cleaning all this [beep] up and getting all of these organizations flushed, and make sure that any organization that wants to do whatever [beep] nefarious things they wanna do, by all means, do it, but it's not a nonprofit, and you shouldn't get a charitable donation deduction, and the government should not be putting money into these sorts of things. This is an entirely different sort of activity in the social order. And as a libertarian, I'm all for it, but I don't think that they should be tax-exempt, and I don't think they should be getting government money, and I don't think that individuals should be benefiting from giving them money. And if we could fix all that shit up, I think a lot of these problems are gonna go away, and I think this is a major problem.

  6. 1:19:03 – 1:30:38

    Science Corner: Potential cause discovered for colon cancer spike in young people

    1. JC

      Friedberg wanted to do a surprise Science Corner. This is a first. We don't know what he's about to talk about, but David looks like he's been working really hard and he needs a nap, so Friedberg, you have the microphone. Let's go.

    2. DS

      This was not-

    3. JC

      Surprise Science Corner.

    4. DS

      Yeah. This is not necessarily a big surprise, but, uh, there was a really interesting paper published this week

    5. DF

      On trying to elucidate the underlying cause or predictor of colorectal cancer. So I don't know if you guys know any young friends, but colorectal cancer, Nick, if you could just pull up this first image, or colon cancer has become now the third leading cancer. Over the last twenty years or so, there's been a scary rise in the number of young people, people generally under fifty years old that are getting colon cancer. That number has climbed by over eighty percent in just the last two decades. Historically, it's been an age-related disease, so as you get older, over seventy years old, your probability of getting colon cancer shoots through the roof. But this rise in young people getting colon cancer has been pretty alarming, and there's been a real question mark on what is causing it, what's the underlying trigger? So this research team out of Barcelona in Spain did an amazing study where they looked at the difference in the epigenome or the gene expression in tumor cells of patients that are under fifty years old and those that are over seventy years old. This sort of data will show you what different environmental triggers are associated with those changes in gene expression. So whenever we're exposed to something in the environment, whether it's some food or some drink or whatever else it is, some chemical in the environment, the cells in our body that are exposed to that chemistry or exposed to that environmental trigger have genes that get switched on and off. And you can see which genes are on and off by looking at the RNA of those genes, which tells you that those genes are expressing RNA to make protein or not make protein. And you can look at that gene expression to determine what is changing when a cell is exposed to a particular environmental trigger. And so they were able to get these samples of colon adenocarcinomas from The Cancer Genome Atlas, which is funded by the federal government. And they were then able to take a look at these cancer cells from colon cancer in patients that are under fifty and patients that are over seventy, and look at the difference in the gene expression profile and what, um, environmental triggers are associated with that gene expression profile. So that will tell you, hey, these environmental triggers are more likely the cause or an underlying driver of the risk of getting this colon cancer. And one thing rose to the top. So they looked at a whole bunch of things. They look at lifestyle factors. They look at eating index, how much you ate, how overweight you were, alcohol, birth weight. They adjusted for gender. They adjusted for all these different things. And as you look down this list, you'll see this is the difference between people that got colon cancer that were over seventy, when you typically have a very high chance of getting it, and people that are under fifty when you don't, and what is going on with people under fifty. And you can see there's this one row here that's all orange. That row is a pesticide called picloram. Picloram is a pesticide that was developed by the Dow Chemical Company in nineteen sixty-three. This is the chemical formula for that pesticide. It's related to auxin, which are these hormones that plants make. And in the nineteen sixties, there was this big rush to try and make synthetic plant hormones that you would then apply to a plant. It would cause the plant to overgrow, and the plant would quickly die. And picloram became a very widely used herbicide in our environment. It's used to manage weeds in rangeland and pastureland where cattle graze. It's used to control weeds near roads and near railroads, on industrial sites to clear weeds away from highways and utility corridors. And the problem with picloram, one of the, the things that's been known about it, is it's very persistent. It doesn't biodegrade very well. Picloram sticks around for well over a year. It stays in the water, it moves into groundwater, and it's persistently in the environment after it's been used for some period of time. I went back and looked at the EPA data on this chemical. The last time there was an EPA safety study done was in nineteen ninety-five. And so this was before we had this capacity to do epigenomic studies like what was just done to elucidate that even though a chemical might not be causing cancer immediately, and you can't apply it to a cell and see it trigger a cancer, the long-term use or exposure to certain chemicals in our environment causes a change in the epigenome, which means that these genes are being turned on and off. And when certain genes are turned on or off in the wrong way, it can trigger cells in the tissue to start to g- malfunction and go haywire and ultimately lead to cancer. And I think that this paper shows a pretty strong effect of picloram in driving colon cancer in young people. It will very likely lead, and it should lead to an EPA review on whether this should be legally allowed, but it should also lead to a new mechanism by which we assess chemistry that we're using in our food supply, in our environment, in our industrial applications, because we can now look at all of this at sort of epigenomic data to try and figure out what are these chemicals doing to us before we see them cause the problem. So I thought this was, like, an amazing paper done by this team. They did a lot of work to try and make sure that the statistics were sound in the studies that they did. It really, uh, I think elucidated something pretty scary.

    6. CP

      Is this like a Monsanto thing where, like, one company makes it, or picloram is broadly available?

    7. DF

      It's off patent now, and so I'm pretty sure, m- my guess, I haven't looked into this, but my guess is most of this is made generically in China, and then it's probably packaged up with lots of different brands in the U.S. and all over the world. So it's one of these chemicals that's just become ubiquitous in our use that just shows up everywhere. But I think it really speaks to the fact that historically, think about nineteen ninety-five, you can look at what the immediate chemical application of something does to a, a rat or a, or a human cell, and you can say, like, "Oh, it didn't cause cancer. It's good to go. Let's go." You know, didn't, didn't cause, quote, "toxicity". But there's-

    8. CP

      Can I ask a question?

    9. DF

      Yeah.

    10. CP

      In that study

    11. CP

      Are you exposed to picloram based on where you live? Because like if you're-

    12. DF

      Oh, yeah, sorry. That's a, that's a great question, Chamath. So, uh, I was gonna talk about this. Thank you for asking that. They then took that, uh, picloram exposure, and then they looked at all the counties across the United States. They were able to gather data where there's enough data in California, Connecticut, Georgia, Iowa, New Mexico, Utah, Washington, and they were able to look at picloram use estimates from the Pesticide National Synthesis Project and try and deduce in places where picloram was highly used and not highly used. And once again, it elucidated signal, which is that when picloram was used in the environment in the counties more frequently, there was a much higher frequency of colon cancer in those counties.

    13. CP

      And that R squared is weak or it's strong?

    14. DF

      Reasonably strong. The odds ratio is like three X. It's very strong.

    15. JC

      This is accomplished, Friedberg, from a combination of big data and this, uh, science to study these-

    16. DF

      You know, I think it's important... Yeah, I think it's important. Yeah

    17. JC

      ... and then increased testing as well, right? So you have this confluence of increased testing, increased data, you know, knowing where these instances are occurring, and if you add a layer of AI onto this, Friedberg, this is like a really positive use going back and looking at all these compounds and figuring out which ones we need to eliminate. Yeah?

    18. DF

      Yeah, so I'll, I'll put my PCAST hat on. Thank you, David Sacks, for the role. And I think this speaks to one of the important roles that government has in doing fundamental science and fundamental research. So the, the National Cancer Institute and the federal government stood up this genome atlas with $100 million a couple years ago. They spend a f- only a few million dollars a year now to maintain it, to get cancer tissue samples, and then create the availability to scientists to use those cancer tissue samples to do this sort of epigenomic analysis and study supported by, you know, government grants, or in this case, supported by a foreign university getting funding to do it. And so there's, there's an important role that fundamental science still has in elucidating this that we would've otherwise not been able to see if we didn't have this resource available to us from the federal government and federal funding of scientific programs like this. And that leads to this discovery. You don't need fancy AI for this, to be frank, JCal. There's an incredible amount of da- data that's available or, or resources that are available. What's happened in the last couple years is what's called RNA sequencing, where you can actually look at which genes are on or off, not just what's the DNA, but in the DNA, remember we've talked a lot about the epigenome, what genes are on or off, and how that changes when you have different cancers or when you have different chemicals. And when you have a certain chemical like picloram, your colorectal cancer goes through the roof, and you can see that relationship in those tissues, and then you can put all the data together and say, "Oh my gosh, there's a lot of evidence here that points to this connection." Very powerful. I think it's important that it opens up the window that this shouldn't just be a one-off research project conducted by a team in Spain, but maybe should be a fundamental role that some of the government agencies play, which is to stop Americans and the world from getting frigging cancer. Let's figure out the things that we got wrong in industry and go back and delete them out of our food supply and out of our industrial supply, um, and I think this is a really good example of that.

    19. JC

      So, Sacks, uh, how does Friedberg's focus on Uranus, uh, im- you know, inform your co-leading of PCAST here? Are you gonna go deep into this colon research? How deep do you plan on going, and how will you get through eight of these presentations a day at PCAST? [laughs]

    20. CP

      [laughs]

    21. DS

      I... It's all good. This is why we hired Friedberg.

    22. JC

      Yes.

    23. DF

      By the way, did you guys-

    24. DS

      He's, he's gonna handle, uh, Mars, Neptune, and Uranus. [laughs]

    25. JC

      Absolutely. He's gonna go deep into Uranus and clean it up.

    26. CP

      That was good, actually.

    27. JC

      We need to clean up Uranus. Uh, great work, Friedberg.

    28. DF

      Anyway.

    29. JC

      Great, great work.

    30. DF

      Anyway, I think, I think this is important.

Episode duration: 1:30:41

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