All-In PodcastSpaceX’s $2T Case, Nvidia’s Shock Selloff, America Turns on AI, Trump Pulls AI Order, Bond Crisis?
EVERY SPOKEN WORD
95 min read · 18,896 words- 0:00 – 0:30
Gavin Baker joins the show!
- JCJason Calacanis
All right, everybody. Welcome back to the number one podcast in the world. It's the All-In podcast, episode two seventy-four. Sacks is out today, but we're very lucky to have Gavin Baker from Atreides Management joining us. The spicy takes must flow. Welcome back to the program, bestie Gavin.
- GBGavin Baker
Thanks for having me. Always love it.
- JCJason Calacanis
It's been a huge week in tech. We can start with the SpaceX and OpenAI IPOs. We've got Andrej Karpathy joining Anthropic, NVIDIA crushing
- 0:30 – 12:42
Andrej Karpathy joins Anthropic; hypergrowth and profitability
- JCJason Calacanis
it. So many different places to go, but I think we'll start with Andrej Karpathy joining Anthropic. Karpathy is only thirty-nine years old. He's already a legend in the tech industry, if you don't know him. I believe he's also coming to Liquidity. Yeah, Chamath?
- CPChamath Palihapitiya
He's gonna keynote on Monday morning.
- JCJason Calacanis
Oh, fantastic.
- CPChamath Palihapitiya
Uh, t- no, Tuesday, Tuesday, Tuesday. Day two, I think he's keynoting.
- JCJason Calacanis
Day two. Okay. As is Gavin. Gavin will be there. Founding member of-
- CPChamath Palihapitiya
Gavin anchoring day two as well.
- JCJason Calacanis
Excellent. Yeah, and this is Gavin's second appearance at, at Liquidity.
- CPChamath Palihapitiya
Look at those two bookmarks, Andrej Karpathy and Gavin Baker. Oh, yeah, you know.
- JCJason Calacanis
I mean, liquidity pulls in the stars.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
Obviously, Andrej was a founding member of OpenAI. He led the self-driving team.
- CPChamath Palihapitiya
Also, hold on.
- JCJason Calacanis
Oh.
- CPChamath Palihapitiya
Gavin is gonna help us judge the best ideas section as well.
- JCJason Calacanis
Excellent.
- CPChamath Palihapitiya
I don't know if you know that, Gavin, but you're a judge. You're, you're judging the-
- JCJason Calacanis
Yeah, he's a judge.
- GBGavin Baker
I'm up for anything, man. I'm easy.
- JCJason Calacanis
Yes. Karpathy also coined the term vibe coding. He recently built autoresearch. I think we talked about that here a bit. That's an open source training tool. It helps AI models improve themselves by running five-minute experiments. That got over eighty-two thousand stars on GitHub. He did that, like, as a weekend experiment, and all these civilians started building their own, uh, recursive LLMs. Really inspiring. And the Andrej Karpathy Skills is a tool based on his set of principles for Claude Code, and somebody just released that, and so that's just pretty crazy when you think about it. He's gonna be in charge of a new pre-training team at Anthropic, the focus obviously being recursive self-improvement. In other words, they're going to have Claude improve itself, and they've already talked a little bit about AI improving AI over at Anthropic. Chamath, what's your take on this? Is this, uh, super important in twenty twenty-six? Obviously, Karpathy is super well respected. He's obviously, uh, you know, one of the true talents in the space, but hey, we're in a, we're in a different inning than we were, say, ten years ago when he was at Tesla or five years ago when he co-founded OpenAI.
- CPChamath Palihapitiya
You know what's interesting? If you go back to, like, Google, the culture of Google, which they got right, was the singular technical talents there, they were singled out and they were called Google Fellows. I don't know if you guys remember this, like-
- JCJason Calacanis
Yes
- CPChamath Palihapitiya
... Amit Singhal, Shridhar Ramaswamy, Jeff Dean. These guys are stars. And what's interesting is if you track what folks, particularly Jeff Dean, I guess now, because the other two aren't there anymore, but what they did inside of Google, it's like wave upon wave. They were at the foot of those waves. What's interesting about Andrej is he's been at the wave upon wave of AI. He was probably the first person that really commercialized the Richard Sutton bitter lesson essay when he was leading FSD at Tesla, which was really about the brute force computation. And I remember him telling me this story, I don't know if he said this publicly or not, but where he spent a portion of his time, I want to say a quarter of his time, labeling data. Could you imagine, like, twenty sixteen, seventeen, like, hand-labeling video data from Teslas? So he did that, then he co-founder of OpenAI. He's a star, and he's an-
- JCJason Calacanis
Yeah
- CPChamath Palihapitiya
... exceptional human being, and he's super curious. And then what he's done as a kind of a free agent is also quite impressive. So I think that this is a really important deal. I think he's one of these really curious people that can be sent off, and they'll just go and invent new things. And I think this idea of recursive self-learning puts these models on a combination of overdrive and autopilot. And so if you put those two things together, I think that you start to... You can potentially live out this idea that there's an order of magnitude improvement on a yearly basis. So, like, this new form of Moore's Law. So then the model quality just goes absolutely parabolically, just like this, straight up. I think that the-
- JCJason Calacanis
Throw a bunch of compute at the problem, and these things learn really quick, I think is the high order bit there. Gavin, what are you-- what's your take on Anthropic's recent success and their massive hiring binge?
- GBGavin Baker
The success is extraordinary. It's undeniable. I think the fact that they are now-- they were EBIT positive, per The Wall Street Journal, in the most recent quarter, is a really important fact for kind of the whole AI narrative. Because now there's, you know, you could talk about circular funding, you could talk about ROI, and we could go look at the ROIC of the hyperscalers. But if OpenAI and Anthropic are at, call it, a hundred billion dollars of ARR now with eighty percent-ish gross margins on inference, like, the returns are there. And then if we add in, and they're growing really fast, if we add in Gemini, we add in Cursor, we add in xAI, we add in open source, you know, it's, it's not hard to see two hundred, three hundred, four hundred billion dollars of ARR at the end of this year at high margins.
- JCJason Calacanis
Across all of the-
- GBGavin Baker
Across all of the-
- JCJason Calacanis
... uh, language models. And you're talking specifically about the private language model companies, maybe not Google, which is obviously public.
- GBGavin Baker
No, I was including Google.
- 12:42 – 27:22
Why Americans have turned on AI, anti-human perception
- GBGavin Baker
is, I do think it's incumbent on all of us as Americans who are involved in the technology industry in one way or another, to be advocates for a, the positive, optimistic possibilities that AI introduces to, to everyone on this world, because it, it is starting to feel or seem like there may be a CCP-funded campaign against AI and data centers in America, and that's very logical for China, but it is n- not good for America. And so I just... I think it's, it-- we all have responsibility is what I would say.
- JCJason Calacanis
Yeah. Who do you think is doing a poor job at that and responsible for this? Is it Dario with his constant, "Hey, everybody's gonna lose their job"? Who's responsible for this? Is it the CEOs blaming AI for their layoffs? What, what's your take on this, Gavin?
- CPChamath Palihapitiya
Look it, hold on a second. Everybody is trading their own book. It makes enormous sense for Dario to try to create the boundary conditions for a regulatory moat because he will be inside of the tent pissing out. He's big enough now. And if you notice that a lot of the breathlessness has ramped up, and Jason, we've talked about this, you can annotate successive rounds of fundraising and successive scale with the volume. So I think that it's a reasonable business strategy, and I think that he's quite clever. And I think that, look, if you actually, and I, and I do this, if you actually just have an Ash bot, an Ash agent inside of Claude, and you ask it what it would do, it would come up with this strategy. And meanwhile, there are other versions of other counter strategies and counter exploitative strategies. The point is that each CEO has a clear incentive. They're operating at such a level of scale that they're, they're just reading their own book.
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
So it's, it's up to us to take a step back and actually see the forest from the trees. I think, Nick, can you find this? There was a clip of Shyam Sankar, friend of the pod, fabulous guy, the CTO of Palantir, and he was... I think he was on Fox News, and he said, "Stop breathlessly asking these model makers what they think. Go to the end user and ask the person in the factory that's using the model, and ask him what he or she thinks. Ask what the doctor thinks, ask what the scientists think, and start to tell those stories." That's what we should be talking about.
- JCJason Calacanis
Yeah. And Gavin, you were-- I was sort of asking you your opinion on w- what's, what's... who's causing this, and then what's the solution? Like, do you, do you have folks you think in the industry who are representing it particularly well? We can point out, hey, Yuan has said we're gonna move to a world of incredible abundance and working will be optional. I think that's, on the margin, a little scary for people to hear because they hear no job. But he does say, "Hey, universal basic income is probably gonna have to come into, you know, place," and he said that multiple times. You have Dario, uh, according to Chamath, talking his own book, scaring the bejesus out of people in order to get regulatory capture. What do you think is going on here, and how do we do better as an industry?
- GBGavin Baker
I think Chamath outlined like a very viable and positive path forward where just, you know, real people who are not, you know, at the tip of the spear, these are the positive impacts AI's had on my life. I was at a, I was at, I was at an event maybe 10 days ago, and someone who runs a hedge fund, his daughter was born with a very rare genetic mutation that effectively would've normally condemned her to a life devoid of joy, meaning everything. The neurons in her brain were not firing, so she wouldn't... You know, who knows what her life expectancy would've been or what the quality of her life would, would've been, and it's, it's a tragic disease. He said he didn't accept that as an answer. He found, he did an enormous amount of research with LLMs and found an existing safe drug on the market that they thought would have a meaningful impact on his daughter's condition, and it did. It took, I think the percentage of times the neurons were firing was 30 or 40%, and it took it up to 80 or 90%.
- JCJason Calacanis
Wow.
- GBGavin Baker
And that means that she can live a normal life. She may not be as smart as she would've b- been, but she can live a normal life. And he's now figured out how to use AI how to, to further tailor that drug, and you know, there've been all sorts of ad- advances in protein design, et cetera, et cetera. And he's reasonably confident he's going to have a drug in months that is a complete cure. And that's just one person, one dad was unwilling to accept defeat for his daughter and who changed her life and the life of everyone else with that disease.
- JCJason Calacanis
Yeah.
- GBGavin Baker
And we tell those stories. So I think Elon's doing a good job. A future where work is optional, I think that sounds great to some people [chuckles] you know, scary to others. You know, a four-day work week, you know, I think is, is probably something that sounds, sounds good to a lot of people. I think Jensen is doing a good job of being an effective advocate, and I do think anyone who is trying to drive reg... I just, we need to stay focused on the positives is what I would say.
- JCJason Calacanis
Yeah. Friedberg, what's your take here on the AI PR crisis, if we'll call it that? Uh, we had three different commencement speeches that were booed.Eric Schmidt being one of them, two other ones by maybe less notable folks. When you hear young people booing AI vociferously, why are they doing that, Friedberg, and what's your take on the overall PR problem and how to turn it around?
- DFDavid Friedberg
Uh, that's a, there's a long answer to that question. Um-
- JCJason Calacanis
It relates in some ways to your concerns about socialism and polarization as well.
- DFDavid Friedberg
What is the long answer?
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
What's the long answer? [laughs] I mean, that's like, like w- why do people hate technology?
- JCJason Calacanis
Why do they-
- DFDavid Friedberg
The great technological-
- JCJason Calacanis
Why do they hate this technology? They love their phones. They love the internet. This technology, they hate.
- DFDavid Friedberg
Hmm. I think that there's, like, an underlying view that technology creates leverage for a small group of people, which creates power imbalances, and nothing represents that more than AI. That a small number of people that control and profit from and benefit from AI are gonna end up getting outsized returns relative to the broader population, that the time to diffusion of the technology, 'cause ultimately all technologies, like, commoditize and diffuse, but the time to diffusion here is such that it's gonna be, like, extremely asymmetric for society, and I think that there is something fundamental about that. It's like, you know, nuclear bombs, I think, really created this, this moment in people's minds in the mid-20th century that by the back half of the 20th century gave everyone a high degree of skepticism about technology and science generally, that those who have the knowledge and those who engineer solutions with the knowledge can create outsized advantages for themselves, and it puts the rest of us at risk, the rest of the world, the rest of the population at risk. And because those questions about when does this benefit me, how does it benefit me can't be answered today, the economic benefit that's accruing to the few today becomes the narrative. It becomes the story, and it becomes this, like, power system that a few people take from the many. And so there's something deeply disturbing for the average person about that. They don't understand how it works, why it works, what it'll do for them, when it will do it, and all that they're being told is that some people are making trillions of dollars. So I think that it's pretty obvious why this has got such a backlash. Secondly, I think that there's a deep amount of external energy that's fueling this anti-technology sentiment in the United States and has been for decades. I think to Gavin's point, I don't think it's just China with NGOs today. I think that there is a long history of state actors intervening in media activities in foreign nations to try and create the sentiment and fuel a sentiment that reduces progress in that competitive state. I think this goes all the way back to KGB design during the Cold War, and it's been refined and honed and improved over time. This is not just some conspiracy theory. There are plenty of great books about this. The techniques of what's going on specifically today, I don't know enough. I don't have any great details on that. But I don't think that there's no foreign interest in seeing technology advancement slow in competitive nations. The United States probably does similar things to other nations, and I think that that's probably a, a key part of this. And then I think this, this, like, third piece is, like, when the Copernican revolution happened, it was a mind [beep] [laughs] You know? Like, heliocentricity was a totally new way of thinking for humans, and it was, uh, deeply disruptive to the church, and it was deeply disruptive to the power centers, which were the centers that could tell people, "Earth is at the center of the universe. We're in control. We're the direct channel to God." And the idea that the sun is at the center of the solar system and we spin around it and we're a tiny speck in the universe was very hard for people to grasp. There's something about AI that's very, like, not human-centric, and it kind of shifts and [beep] with the ego of the human. It, it's, it's almost anti-humanist, and I think that that's, like, a deep psychological current a lot of people and their disdain for this technology, it, it fuels it. It's not the cause, but I think it fuels it. So I think there's a lot of complicated aspects to this, J Cal. You know, I don't think there's-
- JCJason Calacanis
Yeah
- DFDavid Friedberg
... like, a simple put, put Sham on, on a podcast and he'll solve the, the problems with AI right now. I think that there's a real set of shifts happening, and there's a s- real set of global competition underway where, you know, various state and actors and interests are competing with each other. Yeah.
- JCJason Calacanis
Friedberg, do you think that we should slow down?
- DFDavid Friedberg
I don't think you can.
- JCJason Calacanis
No, no, no. Do you think we should slow down?
- DFDavid Friedberg
No, I, I think... I was just talking to some people on a Zoom right before this, but I think after the Manhattan Project, the research labs were stood up to maintain our scientists that worked on the, the Manhattan Project from, uh, effectively leaching back or leaking back to Russia and Germany and, and, and other places that, that were adversary to the United States, and they all were against the nuclear bomb. They worked on it because it was necessary for the United States' security, but then when Russia got ahold of the secrets, they were leaked because people were worried that if the US had all the power, there would be no counterbalance to the power. And so the, the nuclear secrets were leaked to Russia for that purpose. Then when Russia had the nuclear secrets and they began developing hydrogen fusion bombs and it, it was clear that they were gonna race ahead, the United States raced ahead with developing nuclear bombs as a counterbalance to Russia. When the proliferation began, there was no stopping it. It began, and you had to have this balance in the world, otherwise you have effectively an asymmetric power that can do whatever it wants globally. I think there's that moment in the world right now where if the United States does notadvance its AI technology, the availability of it, TBD, industry, taxation, all these th- all these things that we're talking about doing, there will be someone else that will. And if someone else does, we can go through what would happen. There's a, there's a complicated game theory on this, but what would happen if China had sufficiently advanced models and sufficiently advanced and scaled deployment of those models relative to the United States? As you do that analysis, you realize, wait a second, that's probably not a healthy place for the world to be. It's also probably not a healthy place for the United States to be the only one with AI. And so I, I think what we end up seeing is if we do try and slow down AI, we kind of lose this moment of balance that's necessary when you have a technology proliferation like we saw with the arms race after World War II that, you know, we're gonna see again here.
- JCJason Calacanis
Chamath, you, I think, bring up a good point. Y- you know, should we slow it down, or could we slow it down? There actually have been some discussions about ways to do this. One of them would be, hey, with self-driving, people are scared that all these cab drivers are gonna lose their jobs, Uber drivers, cab drivers, bus drivers, truck drivers. This is, you know, over ten million people in the United States driving things for a living. Would you be in favor of some of the announcements that that will be a paced rollout? It won't happen all at once. In other words, those people will be given some amount of job security to stay behind the wheel with it. Another example that's been given is if you put Optimus into Amazon factories or the Figure robot just did, like, a week of just sorting packages. I'm sure everybody saw that video. We'll insert it here. That Figure robot sorting these. Hey, if Amazon deploys those, there'll be a tax on those per hour, and we'll tax humanoid robots in some ways and then use that for, say, retraining people. Those are two very specific conditions and approaches that people have been promoting. Do either of those resonate with you in any way?
- CPChamath Palihapitiya
I think it's interesting that in all of those discussions, I've yet to see an actual survey of only the truck drivers and only the package sorters.
- JCJason Calacanis
Hmm.
- 27:22 – 45:19
Trump pulls AI EO, US-China AI relationship, dystopian AI layoffs
- CPChamath Palihapitiya
It's interesting to me that the, th- there was supposed to be an EO, an ex-- a presidential executive order that was announced today, and then it was pulled. It was scrubbed at the last minute.
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
Did you guys notice that?
- JCJason Calacanis
Yep.
- CPChamath Palihapitiya
And yesterday, what was leaked was everybody that was attending, it was all the big Neo labs CEOs, and it was all the big hyperscaler CEOs, including friend of the pod, Nikesh Arora. Shout out to Nikesh. And then it was scrubbed an hour ago. Why was it scrubbed? And the president said that there were aspects of the bill that he didn't agree with, and as far as we can tell, the aspects would have required some amount of supervision, insight, review from the federal government.
- JCJason Calacanis
Of language models specifically, of these frontier models, is what I read.
- CPChamath Palihapitiya
Not language models, 'cause I think-- just of AI, because there's gonna be many different kinds. They're not always gonna be language models, but of AI. So look, I think Friedberg is r- is right. We are in a proliferation with China. I think it's actually good that China is less than nine months behind us. I think it allows us to find a détente where we have a certain magnitude of capability that they also have, and that allows all of us to then seek peace and abundance. And the fact that we are orthogonal societies, we are organized differently, increases the probability of finding peace using the René Girard kind of framework of mimetic theory than if, if it was, like, us and another country that was exactly similar to us. So I think what we need to do, we probably need KYC. I think that that should be something that us and China get together and say, "You don't want it to get into the hands of people you can't control. You probably already KYC those models anyway inside of China. You already review those training runs before you allow these models to get released. We already know that that's happening."
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
So we should probably do some sort of KYC, so some crazy person doesn't create some biological weapon. I think that those are, like, some reasonable ground rules, but otherwise, Friedberg is right. You have to take a, a little bit of a deterministic view here, which is that w- we are in this existential race, and we need to get to the place where each of us, meaning us and China, can look each other in the eye and say, "All right, weapons down," so to speak.
- JCJason Calacanis
Gavin, I'm gonna hold you to answer two questions. One, should we run frontier models? 'Cause that's specifically what was mentioned in the leak about the EO frontier models, the powerful ones. Should they be run through some sort of testing before they're released, and should there be some regulatory framework for that? That's my first question to you. Yes or no question, and then you can explain your answer.
- GBGavin Baker
Jeez, like, I just think it's such a complicated topic. It feels we're a little early for that. I don't love the idea of the United States, um, doing it and no one else doing it. I... Like, I think in a world where we hold hands with China, look, I think that's, that's much more palatable, and we're aligned, and we trust each other and have kind of verificationUh, capabilities. I do think-
- JCJason Calacanis
Great. Yeah. Let, let me then rephrase it. Should China and the US come up with a simple battery of things that have to be tested before these go out, including bioweapons, terrorism, a- and, and that genre of, a- and that vertical of just really known dangerous things, just like the FDA might test for poisons or contaminants in a food or a drug. Would you be in favor of that? I'm curious.
- GBGavin Baker
So a few things, like the one, one thing that's great about America is there is... Or one thing that's just we have other forms of regulation.
- JCJason Calacanis
Self-regulation. Sure.
- GBGavin Baker
We have self- well, one, we have self-regulation. Also, we have the courts, and if an AI model company behaves irresponsibly, they know that there are ways that people who have been harmed can seek recourse. And so we already have a system that encourages responsible behavior on the part of the model makers.
- JCJason Calacanis
That's a great point, 'cause OpenAI is being sued right now by a kid who su- who killed themselves after talking to OpenAI's model. So you're, you're correct in that. Yes. After the fact. Yeah.
- GBGavin Baker
And we'll see, we'll soon, we'll see more of that. I just, you know, to me, once you give something, give a power to the government, it's almost never taken back.
- JCJason Calacanis
Yes.
- GBGavin Baker
And it tends to grow, and it's kind of a one-way, a one-way path.
- JCJason Calacanis
One-way ratchet. Yeah.
- GBGavin Baker
It's a one-way ratchet.
- JCJason Calacanis
And then also second, yeah, second question then. Chamath was saying, "Hey, nobody listens to the, you know, these cab drivers or maybe the, um, people sorting the packages. Do they want the jobs or not?" Actually, the UK, there was just a 60 Minute special, and UK and also Boston and New York are pretty adamant that they want humans to stay, and they wanna ban self-driving in those locations, or severely limit it or maybe limit it in some way to let those people keep their jobs. How do you feel about that possibility? Is that something you think society should be open to, some gradual licensing?
- CPChamath Palihapitiya
They're gonna get sued for wrongful death. When somebody runs over somebody else, and you could have implemented a solution that has a zero death rate, that's very different from package sorting.
- JCJason Calacanis
Okay.
- CPChamath Palihapitiya
Go talk to the package sorters is what I say. Go talk to the people inside the Amazon warehouse. Ask them what they would rather do at Amazon.
- JCJason Calacanis
Right.
- CPChamath Palihapitiya
Ask them.
- JCJason Calacanis
Yeah, sure. G- but Gavin, what are, what are your thoughts here on either one of those examples here that Chamath's-
- GBGavin Baker
I think going to a city where you can't get in a Waymo or a cyber cab is gonna feel barbaric and unsafe, and to-
- JCJason Calacanis
Yeah. Agree.
- 45:19 – 1:11:22
SpaceX S-1 tear down! Breaking down the three major businesses and the case for a $2T valuation
- JCJason Calacanis
[laughs] Topic two, SpaceX just filed their S-1 on Wednesday. They are aiming to raise $75 billy at a $1.75 trillion with a T valuation. This would be the largest IPO ever by more than double Saudi's, uh, Aramco $29 billion IPO a couple years ago. Listing is expected mid-June, likely June 12th. Ticker will be SPCX. We got a lot of interesting information in the S-1 tear down. Obviously, SpaceX has three main business units. Starlink is the money printer right now, but there's a second one that's emerging. Starlink did $11.4 billion in revenue last year on 50% growth with $4.4 billion in operating income. Over 10 million people are now subscribing to Starlink. That business could easily be hundreds of millions of paying subscribers, so that, that's, uh, a lot of growth potentially there. The space business is but $4 billion in revenue. It's growing 17% growth, which would still be strong growth, uh, but had $650 million in operating losses. AI did $3.2 billion in revenue. That's more than double year-over-year growth, but it had $6.4 billion in operating losses. SpaceX had $20 billion in CapEx spend last year. Over 60% was for the AI compute build-out, and obviously they were trailing Anthropic and OpenAI and Gemini in terms of xAI, uh, playing catch-up, and he did, uh, a big reboot of that as we saw on the Twitter. But here's the big one. EWS, Elon Web Services, as we call it here on the All-In pod, has exploded. Anthropic is paying SpaceX, wait for it, $1.25 billion a month to rent out Colossus-1 and parts of Colossus-2. It's a $45 billion deal over three years, $15 billion a year. In other words, they added a Starlink in terms of revenue to the party. Plus, if they buy Cursor, that's gonna add another two or three billion to-
- CPChamath Palihapitiya
Not, not if. I already told you they already bought it.
- JCJason Calacanis
Okay. I'm just trying to, you know, dot the I's and T's here. Uh, but when they buy, uh, Cursor, that adds two or three billion. That's not in the S-1.
- CPChamath Palihapitiya
That's also growing and doubling.
- JCJason Calacanis
Yeah, that's probably growing tw- 2X year-over-year, and who knows how much faster it'll grow. Polymarket, 71% chance SpaceX closes its first day of trading with a market cap above two trillion. Thank you to our partner, Polymarket. I'll stop here. Gavin, uh, you've been involved in the company for a long time. Chamath, you, uh, I think were a big investor in the satellite company that became part of Starlink, which is the revenue driver there, so you both have, uh, a lot to say about this. Gavin, your take on the S-1, and I think specifically Elon Web Services.
- GBGavin Baker
Well, I think what's important about, um, Elon Web Services does, does make me laugh, but $15 billion, that means the AI business right there is going to quadruple. It, it has already effectively quadrupled. I think what's important to, about that is there's a stat in it that for, I think, the, their first data center was 122 days. For the second one, it took them 91 days. The third one was, I think, 66 days. They build data centers dramatically faster than anyone else.At a lower cost. And now that you have a clear offtake partner, and I would expect partner to become partners, there is no reason they can't start stamping these data centers out really fast. And having watched Jensen for a long time, it is important to Jensen that his GPUs be used. And so GPUs will be allocated to who can plug them in, turn them on, and start converting electrons into tokens. And so I think this business can grow dramatically faster than I think, you know, maybe what anyone could have contemplated three, you know, three, three months ago. But $15 billion from Anthropic is, is extraordinary.
- JCJason Calacanis
Important note, it can be canceled by either party with 90 days notice. Just want to make sure we also have that in there. So that means Elon might want his compute back or Anthropic may find another solution. So they do both have an out.
- GBGavin Baker
And I think that's, that's a, you know, I think that's, that's, that's probably an important provision-
- JCJason Calacanis
Yeah
- GBGavin Baker
... for everyone. But I think the other thing that came out this week, which was not in the S-1, Nick, can you throw up the Pareto frontier and maybe don't, you know, include the email and the names and everything, but the Composer 2.5 stat? I think this is really extraordinary. So Cursor's Composer 2.5 model came out this week, and I mean, this is Pareto dominant. And this is just, you know, three, four weeks of doing reinforcement learning on Colossus-2 with Cursor's data. And Cursor has, we will never know, but, but Cursor allegedly has more tokens of coding data than exist on the public internet. And that is a stat from, I think, more than a year ago, so I'd imagine it's grown significantly. And I think Cursor and Anthropic probably have the most proprietary tokens of coding data, and what this, this jump from Composer 2 to Composer 2.5 showed us is that when you do an appropriate amount of reinforcement learning using that data, let alone injecting it into the pre-training of a new base model, 'cause Composer 2.5 is the same base model as Composer 2, which is Timi k, k.25. Like, this is amazing. This is three or four weeks, and it is Pareto dominant, the Pareto frontier. If you draw a curve of the blue dots, you can see Composer 2.5 is literally well outside the Pareto frontier, and that's after three weeks. And what's gonna happen next is you're gonna have a new base model with a Cursor model in it.
- JCJason Calacanis
Yep.
- GBGavin Baker
Then the Cursor model RL'd using the biggest coherent clo- uh, compute cluster in the world, and I think this is, I, I think this may-
- JCJason Calacanis
It's significant, yeah.
- GBGavin Baker
It's extremely significant for xAI and Cursor. And it-
- JCJason Calacanis
And Cursor was, uh, dead in the water in terms of access to compute, and they were falling very far behind Codex, Google, Anthropic, and then Elon let them on Colossus, and boom, instantly their models are growing faster. And this could be, we could be sitting here a year from now, and they're the dominant player. And could we be sitting here, Gavin, in a year and Elon is selling compute to Google and OpenAI? Is that a possibility or not?
- GBGavin Baker
Well, I think it's much easier to see him selling compute to Google, and I think there's already been-
- JCJason Calacanis
That's gonna happen
- GBGavin Baker
... there have already been posts about that.
- JCJason Calacanis
Yeah.
- GBGavin Baker
And for sure Google is gonna wanna be part of orbital compute. You know, it's, it's very funny. The only people who are skeptical of orbital compute are those people who are not involved [laughs] in, in data centers or space. Google, Anthropic, Amazon, Nvidia, they are all very convinced that orbital compute is gonna be reality, and obviously SpaceX is extraordinarily well-positioned for that. But I do think that Composer 2.5 data point is really powerful.
- JCJason Calacanis
Keep an eye on it. Yeah. Yeah.
- GBGavin Baker
And then the other thing that's come out is Groq Build. So what Groq lacked that a lot of other models had, and I do think it's important to remember that the newest version of Groq 4.3 is on the Pareto frontier for all frontier models, and you're either on the frontier or you're not. And the, the companies on the frontier are xAI with one build of Groq 4.3, which is a 500 billion parameter model, Google 3.1 Pro, and then OpenAI and Anthropic, and that's it. Those are the companies on the frontier, and-
- JCJason Calacanis
The four horsemen, yeah
- GBGavin Baker
... Google today each have one dot on the Pareto frontier, and obviously you want as many dots as possible. But Groq lacked a harness. So Claude had Claude Code, OpenAI had Codex, and now with Groq Build, there is a harness that is available to, to Groq and, you know, as I'm, as I'm sure-
- JCJason Calacanis
A downloadable app, to translate into English, that has integrations to all your favorite stuff, whether it's Notion, Gmail, Slack, et cetera. And if you don't have that, it's just like using a, a basic chatbot from a year ago. So now they have their downloadable, it's in market, and they are cooking with oil on it, and they're playing catch-up, but they're moving fast.
- GBGavin Baker
And, and it's, it's more than just an app. It's, it's a runtime. It's an environment.
- JCJason Calacanis
Yeah.
- GBGavin Baker
It manages state. It manages memory. It makes these models dramatically more useful, to the extent that I think the people at the frontier all agree that the harness is essentially as important as the model, especially in an agentic world, and the harness and the model need to be developed together.So the release of Grok Build and the pace at which they're iterating is, I think, also really encouraging. So now you have Cursor, you have the Cursor data, you have a clear existence proof that the Cursor data is really important 'cause c- Composer 2.5 is now Pareto dominant and the most selected model on Cursor, and that's also important because, you know, these evals don't capture everything. You know, this is why, uh, people on X talk about the vibes.
- JCJason Calacanis
Mm-hmm.
- GBGavin Baker
And the vibes on Cursor 2.5 are also really good.
- 1:11:22 – 1:22:25
Nvidia smashes earnings but stock falls, why people are shorting chips
- JCJason Calacanis
get in on that. Nvidia blew out its earnings again. Q1 performance is just mind-boggling. Eighty-one point six billion in revenue, up eighty-five percent year over year, twenty percent quarter over quarter. High growth [laughs] in the stock market for those people who don't participate. Twenty percent would be a high-growth company year over year. They did that quarter over quarter. Fifty-eight billion of net income and, uh, forty-eight billion in [laughs] free cash flow. They're doing all this at seventy-five percent gross margins. They're growing massively, and they're obviously the most valuable company in the world at a five point three trillion dollar market cap. Stock's up but sixteen percent year this year with all that growth. That's a, a magnitude of about sixteen percent. And, um, they've announced another eighty billion in additional buybacks on top of the hundred billion in buybacks, uh, they did at the start of 2023, so they're buying back about four percent of the company. They raised the quarterly dividend twenty-five x from one cent a share to twenty-five percent cents per share, and their CFO said they're gonna return fifty percent of the free cash flow to shareholders. Never been a company like this, huh, Friedberg? The, the scale of this is just extraordinary.
- CPChamath Palihapitiya
Mm-hmm. Yep. Don't, don't say it. [laughs]
- JCJason Calacanis
There you have it. Folks, there's your market report from Friedberg. Mm-hmm.
- CPChamath Palihapitiya
Don't seem so enthused.
- JCJason Calacanis
Yeah, it's a mm-hmm, mm-hmm. He's got potatoes in the oven.
- CPChamath Palihapitiya
I have a question for Gavin. He did a really interesting talk with Patrick O'Shaughnessy, and there was this one thing that I wanted to ask you about'Cause I thought it was so interesting. You said when you look at the revenue multiples of the chip companies and you look at the revenue multiples of the DRAM companies, both cannot be true. In the context of Nvidia's earnings, can you just explain maybe in plain language for folks? I just thought it was so fascinating-
- GBGavin Baker
Yeah, that was a good point
- CPChamath Palihapitiya
... 'cause it explains-
- GBGavin Baker
Yeah
- CPChamath Palihapitiya
... it explains, I think, just to set it up, where is value over the next five years. Like, I think if you looked at Leo Aschenbrenner, his fund has gone from, like, $0 to 5 billion overnight, and it looks like he's just got massive puts on the chip sector, and he's kind of rotated. So just give us context, Gavin, where, where's the puck going?
- GBGavin Baker
Well, so maybe take the question through reverse orders. For Leopold, who's clearly a brilliant man, I think he's a Rhodes scholar at, like, 19, and I think, my understanding, he's putting up pretty extraordinary numbers. I, I have yet to meet him. He actually shares an office in San Francisco with a friend of mine, so I think I'll probably meet him sometime soon. But he's got a r- for that 13F that he filed was at the end of the first quarter when, you know, I would say we were in the, you know, the, the thick of geopolitical fears, and I think you saw a lot of puts on a lot of 13Fs, and I don't know that those puts are still there.
- CPChamath Palihapitiya
Okay.
- GBGavin Baker
You know, I think a lot of people wanted to be hedged for Iran, and, you know, now I think it's a little more clear. So I wouldn't read, I wouldn't read Leopold's 13F as being super negative on, on semi.
- CPChamath Palihapitiya
Chips. Okay.
- GBGavin Baker
On chips. Second thing, I think cross-sectionally, if you look at the valuations for all these AI names, they just... They can't all be accurate. You have memory makers at, you know, three to five times PE. You have Nvidia at a really low PE. You actually have, um, you know, some other accelerator companies at reasonable multiples, and then you have everything else. Everything in power, everything in cooling. And when I say power, I don't mean utilities. The IPPs are actually quite reasonably valued. But power, cooling, even probably some of, some of the optical names. These are discounting very different things. If the multiples on the power, cooling, optical names are correct, Nvidia, memory, they're going up a lot. [laughs] If the multiples on Nvidia and memory are, are correct, everything else is probably gonna underperform. The AI market is cross-sectionally inefficient right now, which is what I was trying to say. As far as the Nvidia quarter, I do, um... They went to a new reporting structure, data center and AI, and then with... Uh, no, data center and edge, and then within a- within AI, they have hyperscalers, and then I think they call it AI clouds-
- CPChamath Palihapitiya
AI clouds, yeah
- GBGavin Baker
... industrial, and enterprise. What I believe is if we were to make a true apples to apples comparison, and Broadcom, you know, there's a narrative that Nvidia is losing share to the TPU, and Broadcom guided for 143% year-over-year growth in their AI semiconductor revenue in the quarter that they will report, um, that's comparable to the one Nvidia just reported. I think if you were to, and I just [laughs] I so wish they had reported slightly differently. I wish they'd done hyperscalers, AI clouds, and then industrial and enterprise because I think the segment that is comparable is the sum of hyperscalers plus AI clouds stripping out China 'cause Broadcom just did not have the China business that Nvidia did. And I think on that basis, in other words, in, within the Western AI world, within data centers that are being built, whether they're being built by CoreWeave, xAI, Amazon, Google-
- CPChamath Palihapitiya
Mm-hmm
- GBGavin Baker
... Nvidia's AI business is growing faster than Broadcom's and faster than a lot of other companies that are, you know, seen as part of this ASIC share gain story. And, you know, I think Jensen has become, [lip smacks] you know, you can, you can hear it, increasingly frustrated, and rightfully so, at two things. I would say, what is the performance of the stock, uh, [laughs] to, to-
- CPChamath Palihapitiya
He's been vocal about that. Like, what is going on here?
- GBGavin Baker
Yes.
- CPChamath Palihapitiya
We're putting up record numbers, and we're getting no, like, uh, credit.
- GBGavin Baker
Yeah, I get it. It, it just... [laughs] How can there be a share loss narrative if I am gaining share? And it is indisputably true that he's growing faster than hyperscaler CapEx even without these adjustments.
- CPChamath Palihapitiya
Yeah.
- GBGavin Baker
And then I think the other thing that's so frustrating to him is these other ASICs-
- CPChamath Palihapitiya
Hmm
- GBGavin Baker
... are not being submitted for benchmarks. They're not in the SemiAnalysis Infor- Inference Max. They're not in MLPerf. And I think the reason they're not being submitted is they will lose.
- CPChamath Palihapitiya
Hmm.
- GBGavin Baker
And you can't fight shadows, and until we see a clean benchmark of whether it's GB300s versus TPU, V7s or, you know, versus-
- CPChamath Palihapitiya
Versus Inferentia. Yeah. Yeah, yeah.
- 1:22:25 – 1:32:45
Market update: Flashing red signals, oil, inflation, yields up
- JCJason Calacanis
enough of them. Okay, let's end on this market update. Macro picture, not great. Oil remains elevated, although there might be a settlement. Every week we have there is a settlement coming. Maybe this time, uh, 16th time it's a charm, and the Iran war is gonna wrap up, but we're in week 12 of it, and this was supposed to be four to six weeks. So wars never get resolved quickly. That's one thing we've learned in our lifetimes. Oil is driving inflation massively higher. Polymarket says 99% chance may inflation comes in at 4.2% or higher. Survey of professional forecasts is projecting CPI hits 6%. You heard that right, folks. We weren't just talking about a 3% handle, which we just hit. Now people are saying 4, 5, and 6% in Q2, and obviously, that's a huge revision. And, uh, the narrative was, hey, more Fed rate cuts coming. Now we're talking about Fed rate increases. Inflation is causing, obviously, bond yields to rise. 10-year hit 4.6%. You remember we've had Bessent on the, uh, pod multiple times, and his goal was to get that under 4%. Now it's significantly above that number. And also, if we go around internationally, Japan's 30-year is at a high of 5.1%, highest ever recorded. UK yields, highest since the great financial crisis. Germany, highest since 2011. And in Korea, retail investors are borrowing, borrowing record amounts of money to trade in AI chip stocks. They also had a incredible run in Korea betting on crypto at the peak. So that's some sort of an interesting signal. Friedberg, is your alt personality gonna come out right now? Are you concerned? Is Dr. Doom making an appearance here, or do you think this is manageable? How concerned are you? What is the point of being concerned when you have ridden the rollercoaster to the top, and it is beginning its descent?
- CPChamath Palihapitiya
[laughs]
- JCJason Calacanis
I, I don't know what there is to be concerned about. The, the f- the force of gravity is inevitable.
- CPChamath Palihapitiya
Here we go.
- JCJason Calacanis
The rollercoaster will roll down.
- CPChamath Palihapitiya
Doctor Doom.
- JCJason Calacanis
We will throw our hands in the air, and we will scream, "Wee"-
- CPChamath Palihapitiya
Wee
- JCJason Calacanis
... as we go for the ride. Global debt to GDP is 310%. Reserve currency status to the side. The spending problem at the federal, state, local level, the spending problem in every country to basically keep economies growing, to support existing leverage ultimately creates a cascading effect. It ultimately breaks, and, uh, as it starts to break, you have massive i- inflation because the value of your underlying, um, currency collapses, and then you have money printing and all this other sort of stuff, which inflates the value of assets, which allows you to keep servicing your debt.
- DFDavid Friedberg
And the spiral takes off. And so we will just, uh, enjoy the ride. This is the moment, you know, 30-year treasury, 5.2%. This Japanese yield, some argue might... You know, you should talk to more active market participants than me, but, and probably some economists who trade the market, but I would think that this is one of those things that could be a catalyst for a, for a, a credit crisis because there's a lot of people that are in this carry trade. And we'll see, you know. This is-
- JCJason Calacanis
Okay
- DFDavid Friedberg
... this is water leaking out of the bucket. There it is.
- JCJason Calacanis
Oh, there he is. Dr. Doom is here. Chamath-
- DFDavid Friedberg
There it is
- JCJason Calacanis
... here's thoughts on [laughs] Dr. Doom's panic attack of the month. Uh, is this, uh, is this time real? Is this, uh, the 17th prediction of the next six recessions? What do we got here, Chamath? Uh, are you concerned? How concerned are you about these signals that are flashing?
- CPChamath Palihapitiya
I, I think that's exactly what that is, Jason. There are signals that are flashing. I think there's pockets of the market that still make sense that you can underwrite if you wanna buy businesses that represent the future. And if you can find a few of those and you can get comfortable with that and you can own it for 10 years, I think you buy those companies. And generally everything else, I think you should not speculate and you should generally avoid, not just because it's an up market, but in every market. I've learned this the hard way. We've all kind of gone through this. As I get older, I, it's, it's just not worth it. The vicissitudes of the market, um, don't give me anywhere near the sugar high it used to on the way up and it makes me feel horrible on the way down. So how I manage myself is I have a few companies that I really believe in. I have extremely concentrated large holdings in those. Large for me, doesn't mean large for everybody else. And then otherwise I just kind of stick to my reading and keep my head down. It's a much more rational way to behave. So I-
- JCJason Calacanis
How many public stocks can you keep in your brain and still sleep at night holding for the long term, Chamath? What's the... Is there a number for you? Is it five? Is it 10? Is it seven?
- CPChamath Palihapitiya
It's, it's five. It's five or less.
- JCJason Calacanis
Five or less.
- CPChamath Palihapitiya
Five or less.
- JCJason Calacanis
And so what your largest holding right now is what percentage of your net worth would you say?
- CPChamath Palihapitiya
I don't know.
- JCJason Calacanis
Or like top two maybe. Yeah.
- CPChamath Palihapitiya
Oh, top two?
- JCJason Calacanis
Yeah, like one and two. One is 20, two is 15, or one is 40, two is 20.
- CPChamath Palihapitiya
I don't know. A- again, it depends on the day, but I don't know. But it's, it's-
- JCJason Calacanis
Okay. Just curious. But I think that's, I think that's really important.
- CPChamath Palihapitiya
My point is there's no 30 things that I'm tracking. I don't, I don't have the time. I'm not smart enough. There's too much information. There's like four things-
- JCJason Calacanis
Gavin, you do this
- CPChamath Palihapitiya
... that I stay on top of.
- 1:32:45 – 1:41:56
China trip flops, or was progress made behind the scenes?
- JCJason Calacanis
week, we had a 48-hour jaunt by a bunch of tech CEOs and the president to hang out with Xi. A lot of high fives, a lot of handshakes, a lot of great vibes. But coming out of it, we haven't seen anything definitive, Friedberg, in terms of policy. This was supposed to be some big breakthrough. It would have downstream effects on tariffs, on us selling chips to China. We did see a little movement there. Uh, and the Strait of Hormuz, we would become, you know, Wonder Twins with Xi and Trump reopening it, but nothing really definitive other than some soybeans being sold and some H100s, A200s getting sold to Baidu and some of the top folks. So what do... And maybe some planes got sold, too. So other than a little BD, a little business development, yes, uh, Friedberg, what's the outcome here or was it just a bit performative in your mind?
- DFDavid Friedberg
There was a, a question, would the administration leave China with a grand deal that made everyone feel like there was a long-range view on a partnership, and I don't think that that's what happened. There were a few announcements, obviously, around an intention to continue to work together in a cooperative way and find a path to partnership, an intention to establish additional trade deals and, and, you know, there were some, uh, purchases of aircraft and, and some agricultural product commitments. But fundamentally, the grand deal, the big deal that I would say reduces or deescalates tension probably didn't manifest as some had hoped it would. And I don't think it's any surprise that Putin is with Xi today, and this is also performative that following the US visit, there is now a relationship bonding moment happening between China and Russia. So the story continues.
- JCJason Calacanis
Mm.
- DFDavid Friedberg
You know, there is no happy ending, and there is no rainbow-colored chapter three in this book. It's gonna continue to be a dramatic arc as this rising power continues to challenge the United States. And-
- JCJason Calacanis
Chamath
- DFDavid Friedberg
... I think this story continues.
- JCJason Calacanis
Were you expecting a happy ending?
- DFDavid Friedberg
I can't answer that question. [laughs]
- JCJason Calacanis
[laughs] I mean, to the story of the China visit. N- not, uh, I'm not talking about any other things going on in your life. But did seem like some planes and soybeans got sold, some H100s perhaps.
- DFDavid Friedberg
Well, I think-
- JCJason Calacanis
But I mean-
- DFDavid Friedberg
I think the-
- JCJason Calacanis
... it wasn't like-
- DFDavid Friedberg
Look, without-
- JCJason Calacanis
... there was some grand deal that occurred, but it, it's nice to see them together, right? I mean, that is nice.
- CPChamath Palihapitiya
I think it was successful. I think there's what you see on the surface, and then there's what happens behind closed doors. And, uh-
- JCJason Calacanis
Yeah
- CPChamath Palihapitiya
... without speculating too much, I think that it was a useful and productive trip. I think the, the biggest thing that they probably got alignment on is just geopolitically the tic-tac-toe of what has to happen next. And, uh, and I think that there's some amount of agreement there. I'm just guessing.
- JCJason Calacanis
Yeah. And so that guess, if I was gonna unpack it, "Hey, we get, uh... We have Venezuela, we have Iran, and Taiwan. You have wants and needs-"
- CPChamath Palihapitiya
Well, I would just say, look, here's... Yeah, here's-
- JCJason Calacanis
"... around this geopolitical chessboard."
- CPChamath Palihapitiya
Here's-
- JCJason Calacanis
And-
- CPChamath Palihapitiya
Yeah. Here's what I would say, just g- very generally.
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
Like, it's just, I think that there's a, there, there's a, um, a way to divide up the game board in a way that helps them and helps us.
- JCJason Calacanis
Mm-hmm. Gavin, any thoughts on specifically Nvidia being able to sell more chips into China, material for the company, good for America? I mean, it's obviously a pretty debatable issue.
- GBGavin Baker
I think I disagree with Chamath on this.
- JCJason Calacanis
Okay.
- GBGavin Baker
I think selling in deprecated Nvidia GPUs to China lowers the odds of them developing their own alternative ecosystem, which would be a lot power hungrier, um, 'cause you do use optical... You bring in optical a lot earlier for scale-up fabrics. I think there's sound arguments that this is stabilizing for the world and is the best, highest probability path for keeping America ahead in AI and kind of keeping control of AI. And that's almost a shame we've had to have this debate, because now people like me have said this many times in China. If they didn't understand it, they probably do really understand it. And by the way, that's not to say we shouldn't have had the debate. But, um, that is what I believe, you know, reasonable minds can disagree-
Episode duration: 1:41:59
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