The Stablecoin Future, Milei's Memecoin, DOGE for the DoD, Grok 3, Why Stripe Stays Private

Jason Calacanis 0:00 All right, everybody. Welcome back to the number one podcast in the world. I am your host, Jason Calacanis, and with me again, a couple of my besties. David Friedberg, you know him as our sultan of science. Lots to get into today, sultan. Hi, how you doing?

Chamath Palihapitiya 0:18 I'm keeping busy. Thank you.

Jason Calacanis 0:19 Keeping busy. Chamath and I on Valentine's Day, we had a little trio. We were on MKUltra's podcast and it hit number four, All-In Podcast, of course, number one. Uh, Chamath, uh, uh, reflections on our Megyn Kelly, our triumphant Megyn Kelly Valentine's spectacular?

Chamath Palihapitiya 0:38 Uh, it was fine. It was good.

Jason Calacanis 0:40 Okay. Wow, thanks. You're such a great performer, giving me so much to work with, Chamath, as always. But it was a great, great pod. Shout out to our friend and friend of the pod, Megyn Kelly, and also we've got an incredible duo. For the first time, we've invited a duo to join us in the red throne. David Sacks is sick. He's busy saving the country, but we're really excited.

John Collison 1:04 (laughs)

Jason Calacanis 1:04 The Coulson brothers are with us.

John Collison 1:06 Thank you for having us.

Chamath Palihapitiya 1:07 You guys wanna hear a great lost porn story? John has one for you.

John Collison 1:10 The last time we met Chamath was 18 years ago when-

Jason Calacanis 1:15 Oh.

John Collison 1:16 ... we were working on our prior startup, Automatic, with Harj and, and Kul Tiger.

Chamath Palihapitiya 1:21 You were how old?

John Collison 1:22 They were 17, 18, 19.

Chamath Palihapitiya 1:23 It was one of these San Francisco setups where it was, like, a two-bedroom apartment. There was a few of us living there, I think maybe six people working out of there. And-

John Collison 1:32 A normal number.

Chamath Palihapitiya 1:32 Exactly. Normal numbers to load up a, a two-bedroom apartment with. And then Chamath, you came and, and visited. This is what's so brutal about this, okay? I could have invested a dollar.

Jason Calacanis 1:42 (laughs) One single dollar.

Chamath Palihapitiya 1:45 And I would have made a billion dollars. I remember meeting these guys.

Jason Calacanis 1:48 Huh.

Chamath Palihapitiya 1:49 And I was with Alan Morgan, who was my boss at the time. I was a junior principal at Mayfield.

Jason Calacanis 1:55 Shout out, Alan.

Chamath Palihapitiya 1:55 And I think we tried to... Guys, I don't know if you remember, Patrick and John, I think we tried to invest in, in the business or it didn't happen or then you ended up shutting it down, but right away, you spun back up and started Stripe.

Jason Calacanis 2:07 Hmm.

Chamath Palihapitiya 2:07 And I just watched from the sidelines the whole way. It is such a... First of all-

Jason Calacanis 2:12 It still is.

Chamath Palihapitiya 2:13 ... it's an amazing... Well, no, it's an amazing place for Silicon Valley where you can, like, see these people just keep pushing the boundaries up and up and up, number one. Number two-

Jason Calacanis 2:21 Yeah.

Chamath Palihapitiya 2:22 ... the thing that is such a learning for me is, like, why didn't I just pick up the phone and call them at any point in the last (laughs) 17 years? Like, what am I thinking?

John Collison 2:29 (laughs)

Chamath Palihapitiya 2:29 It's so brutal.

John Collison 2:31 I'm going all in. Let your winners ride.

Chamath Palihapitiya 2:35 Rain man, David Sacks.

John Collison 2:39 I'm going all in. And I said, we open source it to the fans and they've just gone crazy with it.

Jason Calacanis 2:43 Love you, man. Nice.

John Collison 2:44 Queen of quinoa. I'm going all in.

Chamath Palihapitiya 2:48 Oh my God, it's so brutal.

Jason Calacanis 2:50 It is brutal. It's, it's so brutal.

John Collison 2:50 Two things. One, um, first, you probably don't remember this, but I remember that meeting that, you know, we offered you, uh, "Do you want something to drink?" We did not have a broad selection. I think we had water or milk in the fridge.

Chamath Palihapitiya 3:01 (laughs)

John Collison 3:02 And, and, uh, you asked for a glass of water. Um, and so I went over to the sink and I realized that we hadn't really been on top of the, uh, the washing up. So I had to sort of gingerly wash a glass for you-

Chamath Palihapitiya 3:12 (laughs)

John Collison 3:13 ... (laughs) to get your glass of water, which, um, can't remember if you touched it over the course of that meeting. But then secondly, like, when we started out with Stripe, like, the fintech sector basically didn't exist. I mean, the, the word hardly existed, um, and-

Chamath Palihapitiya 3:28 Didn't exist, yeah.

John Collison 3:30 Yeah, peop- people just didn't think that... I mean, you know, teenagers, who weren't actually teenagers at the time, but, you know, people in their early 20s, college kids taking on, you know, PayPal or the incumbents or regulated financial services or whatever, you know, people just didn't think it was a good idea. So, I don't know. Uh, you, you, you certainly were, like... The vast majority of investors we spoke with in the first year or two of Stripe turned us down. So, uh, you were, (laughs) -

Chamath Palihapitiya 3:52 (laughs)

John Collison 3:52 ... you were not anomalous.

Chamath Palihapitiya 3:53 Oh my gosh.

Jason Calacanis 3:53 John, tell us what that meeting was like. And to just take you back to the moment, here's a picture.

Chamath Palihapitiya 3:58 Stop, stop, don't.

Jason Calacanis 3:59 Here's a picture.

Chamath Palihapitiya 4:00 Oh my God.

John Collison 4:00 (laughs)

Jason Calacanis 4:01 No striking. Here's a picture of pre, pre nine-figure Chamath.

Chamath Palihapitiya 4:07 Oh my God.

Jason Calacanis 4:08 And this is when he shopped at Macy's. Does that... Maybe that jogs some memories, John, when that guy walked in with his khakis and that light pink Brooks Brothers shirt. What'd you think?

Chamath Palihapitiya 4:19 I don't know. I think you can, uh, you can go back and find historical photos of anyone and use them too. Like, if that's the worst historical photo you have, that's pretty...

John Collison 4:26 That's pretty lightweight stuff,

John Collison 4:28 exactly.

Chamath Palihapitiya 4:28 Jason, do you want to tell everyone in the audience what Stripe is and-

Jason Calacanis 4:32 I mean, do we have to? Okay, Stripe processes payments. This is a ten-plus-year-old startup that... Basically, if you're a startup company and you want to do transactions, you use Stripe. For example, the All-In startup uses Stripe to pay for the tickets, and then we give these guys, for some reason, a half million dollars every year. No discount, they don't sponsor the event, and, uh, they're making a fortune. They got 10,000 employees and, uh, the company changed the world.

John Collison 4:59 Well, we've never been, uh, we've never been offered to, to sponsor the event. I didn't know this was, uh, this was an option, but-

Jason Calacanis 5:04 Well, you hit us up for a half milly last year. I mean, maybe this year we, we can hit you up and negotiate it live.

Chamath Palihapitiya 5:10 (laughs)

John Collison 5:10 That's broadly accurate. I would just fact check that it's nowadays not just startups, even though they run on Stripe-

Jason Calacanis 5:15 That's true.

John Collison 5:15 ... but also the world's largest enterprises, Hertz, Amazon, Ford, all these kind of companies.

Jason Calacanis 5:20 Oh.

John Collison 5:20 And so-

Chamath Palihapitiya 5:20 There we go, Tim.

John Collison 5:21 ... when we started out with Stripe, we thought it would only be for startups. Like, we thought those were the people who needed a problem solved and we thought payments was broken for them. And as time went on, we just found out it was kind of broken for everyone. And so-

Chamath Palihapitiya 5:32 And sorry, is it public how much volume you guys do a year? Do you guys talk about that?

John Collison 5:36 It's more than a trillion dollars a year.

Chamath Palihapitiya 5:37 A trillion, uh, dollars a year is processed through your network? Yeah.

John Collison 5:40 Yeah, which, which works out to, you know, global GDP is around 100 trillion a year, so it works out to around 1% of global GDP.

Chamath Palihapitiya 5:45 Incredible.

John Collison 5:46 And you could say, well, you know, GDP is, is final goods and, and, you know, Stripe's process is more than only final goods, so it's not like exactly the right... No one says that kind of stuff. Only you said that. Okay, well, look, you could say it's not exactly the right or a fair comparison or something, but, but Stripe mostly is used to sell final goods. So I think it's, uh, I think it's reasonable.And just the other thing I'd say is, uh, you know, people, I think, reasonably think of Stripe as a payments company because, you know, that is certainly what we started out doing and, uh, and it's, uh, certainly the largest line of our business. But the thing we kind of realized a couple years in is that, you know what, business... Like, the- the- the structural, secular thing that's happening is that every kind of money movement is going from being manually orchestrated to being orchestrated by software and there's, you know, some program somewhere making the thing happen. And so because of that, like just because of what we hear from customers and the, the pull there, we're now, you know, helping with lending, we're helping with card issuance, we're helping with treasury and money storage, we're helping with cross border money movement. And so-

Patrick Collison 6:45 Stable coins. We gotta talk about stable coins.

John Collison 6:47 Stable coins, yeah.

Jason Calacanis 6:47 Now it's got a stable. Hmm.

John Collison 6:49 Yeah.

Jason Calacanis 6:49 Why'd you do a stable coin?

Patrick Collison 6:50 Stable coins are finally happening (laughs) and they're really useful. Like, we've followed crypto for a long time. The Bitcoin white paper dropped in 2008, the year before we started working on Stripe, and so it's been funny where Stripe and crypto have grown up together. And, you know, we tried to make Bitcoin happen as a payment method on Stripe.

Jason Calacanis 7:08 Hmm.

Patrick Collison 7:08 Just wasn't that good as a payment method. I mean, it's good as a store of value, as kind of a gold substitute, but transactions are slow, transactions are expensive. You never know-

Jason Calacanis 7:17 Hmm.

Patrick Collison 7:17 ... exactly how much you're gonna get because it's not denominated in dollars. The stable coins are now really good if you look at, you know, something on an Ethereum L2 or a Solana or something like that. And so we bought a company called Bridge late last year, who is building the Stripe of stable coins. And so if you're... I mean, I think you guys have talked about them a little bit, but you know, people like SpaceX using them for treasury management, people using them to offer US dollar services to people all around the world. Just, stable coins are, I think the first really big payments use case and I think it's finally coming because the tech is good enough.

Jason Calacanis 7:49 Is there a moment, guys, where... Is it a regulatory event where you'll say the Visa, MasterCard duopoly can get challenged? Is there a set of boundary conditions that you have written down where when you can check a few of these boxes, you know that it's time for those companies to get dismantled?

Patrick Collison 8:05 The behavior we're seeing right now is that stable coins are most interesting and seeing most adoption where there is some cross border component. And so, uh, you need to manage corporate treasury around the world. You want to send remittances to people in other countries. Often it's people in other countries who want to hold dollar balances or things like that. What we've always seen is that, I don't know, in the US things work pretty well, in Europe things work pretty well, and so we even see this pre-crypto where the way people pay for stuff has been radically changing. You know, UPI in India, PIX in Brazil, you have all these designed by central banks, actually really good kind of government run Venmo solutions. Those have all happened in emerging markets broadly and not in the US and Europe. We certainly keep our eyes peeled for that changing at some point, but I think right now, I don't know, Patrick, would you characterize it that way? That like, a lot of the interesting stuff we see is happening internationally?

John Collison 8:57 Yes. So, you know, with respect to Visa and MasterCard, I think an important thing to keep in mind is that most of the interchange fees that are charged to merchants, and you know, you mentioned kind of what we charge, the All-In podcast, you know, the vast majority of that flows right back to the, uh, to the issuing banks, uh, in the form of interchange. And almost all of that flows right back to the consumers in the form of, you know, the lending that the, the, the, you know, the cards themselves represent, but then also in card rewards. Like, card programs are not actually big profit pools, uh, for most of the major banks. And so I think any, you know, any substitute for, for Visa and MasterCard in that sense, you know, the sort of a question of, well, are the consumer rewards going to go down? Are the consumer protections gonna go down? Would we be extending less consumer credit? And maybe other points in that space are viable, but you know, it is- it is a set of trade-offs and it's not as simple as this- this, uh, enormous rent extraction happening. John's totally right. I think the interesting use of stable coins is cross border, is outside the US. I mean, the big use case that's taking off right now is consumers in other countries seeking to hold dollars. You know, we in the US here today, you know, we obviously benefit from being able to do that. The vast majority of people in the world have kind of a... Are- are subject to a worse currency. Worse in the sense that it's less stable, uh, it's more inflationary, you know, storing savings is- is- is much less favorable. Uh, you know, if you look at the naira, for example, there are a lot of people in Nigeria and the- the currency there has devalued by a factor of, you know, three or four over the last couple of years. And so that use case of consumers being able to store dollars is really exploding. And we think about this really as kind of an analogy to the, to the eurodollar system, where, you know, the eurodollar system in the '70s and '80s, this was a way for companies-

Jason Calacanis 10:26 Right.

John Collison 10:26 ... to store dollars and to, you know, have something more stable and- and, uh, and reliable and so forth, but it was only accep- I mean, I think the minimum transaction size was like a million dollars, so and so there was kind of a very high barrier to entry. Whereas with stable coins now you can be a consumer in Ecuador and you can have like a 10 US dollar balance and that was just not a product that was accessible to you before. And so I think it's- I think it's a really big deal, you know, certainly for people in those countries, and in some sense also for the US because the dollar's status as the world's reserve currency I think was, is- is, you know, in the process-

Jason Calacanis 10:54 I mean, that is-

John Collison 10:54 ... of becoming much more deeply established.

Jason Calacanis 10:56 Yeah, that is the huge win for allowing stable coins and, you know, making them legal, giving them rails, putting aside Tether and all the bans and fugazi stuff they've been doing or have done in all the lawsuits that they've lost and- and the bans in different countries. Having USDC, having yours and other ones in the United States means we can regulate them and they have to buy treasuries and so-

John Collison 11:20 Exactly. Yes.

Jason Calacanis 11:21 Okay, dollar supremacy continues and that's fantastic, but right now All-In, just using the example, could accept payment in stable coin, correct? With Stripe we just check a button and we get stable coins.

John Collison 11:34 Correct. Yes.

Jason Calacanis 11:34 Okay, so then the next piece I have is we-

John Collison 11:36 And we'll- we'll- we'll follow up with you afterwards, uh, to make sure we, uh-

Patrick Collison 11:38 Exactly, get that going.

John Collison 11:39 ... you can- you can turn that on.

Jason Calacanis 11:39 Yes.

David Sacks 11:39 Well, I'm actually really excited that you guys-

Jason Calacanis 11:41 Freeberg's gonna be texting me.

David Sacks 11:42 ... are gonna be sponsoring the All-In Summit this year. That's actually exciting.

John Collison 11:45 (laughs)

David Sacks 11:45 So I love it.

John Collison 11:45 Both of the Freebergs just-

Jason Calacanis 11:46 No, Freeberg is great at securing the bet.

David Sacks 11:48 Yeah.

Jason Calacanis 11:49 The thing that's interesting, though, is if, let's say we had a milli sitting in our Stripe account and then we had to pay a venue or pay other vendors and we're sitting there in a euro coins called Bridge. Is that what it's gonna be called or is called?

John Collison 12:03 Bridge is the- is the company, is the platform, and you know, that's-

Jason Calacanis 12:06 Okay.

John Collison 12:06 There are certain-

Jason Calacanis 12:07 Okay, so they're not a stable coin.

John Collison 12:08 APIs for orchestrating. Correct.

Jason Calacanis 12:09 Got it.

John Collison 12:09 Correct. Correct.

Jason Calacanis 12:09 But you'll have a Stripe stable coin at some point, yeah? Like when named Stripe?

Patrick Collison 12:13 Well, we actually has one already.

John Collison 12:14 ... yeah, Bridge has a small stable coin for-

Jason Calacanis 12:17 Great.

John Collison 12:17 ... but we don't need to get into the details, but Bridge is primarily a set of software APIs.

Jason Calacanis 12:20 Got it. Well, you'll obviously have a Stripe stable coin.

John Collison 12:22 The point is, if you turn on stable coin acceptance with, um, you know, for all in, today that'll use USDC.

Jason Calacanis 12:27 Perfect. Now, could we then go pay people from our Stripe account, and then you could lower our fees if they were also doing stable coins? Does that exist today or is that something coming next year?

John Collison 12:40 Look, you could pay people in stable coins, but again, to the point of where you'll see adoption first, paying people via bank transfer in the US, like yeah, it's not great, it's kind of slow, everything like that, but it's fine, it's not the biggest problem, and if you want to-

Jason Calacanis 12:55 And, and it's really cheap today.

John Collison 12:55 Yeah.

Jason Calacanis 12:55 Yeah.

John Collison 12:56 Exactly. Whereas the people who are using Bridge, it's like Scale AI is, you know, they have to pay the contractors all around the world-

Jason Calacanis 13:03 Yes.

John Collison 13:03 ... and when you want to get money to people in the Philippines, that starts to get really annoying and expensive. And so just from our point of view, the like real hair on fire problem is the international stuff, and domestic, I'm not, I assume you're paying domestic suppliers?

Patrick Collison 13:17 Well, I, I think-

John Collison 13:17 It'll come later.

Patrick Collison 13:17 ... I think you're, I think, think you're answering narrowly to, you know, stable coins, I think everything you j- you just said is, is, is right, but I will say, I think Jason, your intuition, that, man, it's really inefficient and annoying to, you know, engage in B2B transactions and to get these invoices paid-

Jason Calacanis 13:29 Yeah.

Patrick Collison 13:29 ... and just like the whole system. And if you look at most companies, they're losing 1%, 2%, 3% of revenue-

Jason Calacanis 13:34 Yeah.

Patrick Collison 13:34 ... to AP and AR. Now, some of that might be because of the transaction rails themselves, a lot of it just because of, you know, broke, inefficient processes, uh, where you have humans sending invoices, humans reconciling them, you're trying to line up transfers in your bank account statement and figure out, you know, what corresponds to what and so on. And that's super inefficient, and so we're separately, I mean, stable coins will be part of the solution here, but, but, but there's more to it.

Jason Calacanis 13:55 Is there-

Patrick Collison 13:55 Separately, we were trying to solve that with a product called Stripe Billing which we actually just announced, uh, last week has passed, you know, half a billion in, uh, in ARR. And so, uh, we-

Jason Calacanis 14:04 We can send an invoice to somebody with Stripe Billing?

Patrick Collison 14:06 Exactly.

Jason Calacanis 14:06 Got it.

John Collison 14:06 Exactly.

Jason Calacanis 14:07 So, it's like FreshBooks or whatever those other products on the market are.

John Collison 14:10 All is amazing, all the back office.

Patrick Collison 14:11 Is there a version of a network effect inside of Stripe for their customers where, if I just allowed you guys to just be integrated into my GL somehow, and you gave me some kind of phantom bank account, why isn't it just a ledger entry if I'm just making a payment from me to somebody else that's also on Stripe?

John Collison 14:30 The thing we really want to solve is all the calculation, the ID verification, the risk, like th- those are the things that are actually expensive, um, uh, if you, uh, if you look at this flow, uh, it's where companies lose their money today. Having said that, you're right, um, you know, we're... The fraction of money movement on Stripe for, you know, the two counterparties are both part of the Stripe network is obviously growing-

Patrick Collison 14:53 Mm.

John Collison 14:53 ... and so I think that'll be another way we can reduce fees over time, although again I, I actually think the biggest part of that is, is gonna be because we reduced fraud.

Patrick Collison 14:59 Fraud, yeah.

John Collison 14:59 Like both counterparties are known-

Patrick Collison 15:01 Yeah.

John Collison 15:01 And like, I talked to a company, a payroll company recently and they were describing, you know, how big a deal it is for them that, you know, people signing up, you know, fraudulent companies, whatever, and, you know, they can lose millions of dollars in a single attack. And so having some kind of trusted node rather than just-

Patrick Collison 15:15 That's a great idea.

John Collison 15:16 ... like a routing, routing and an account number-

Patrick Collison 15:17 Great idea.

John Collison 15:17 ... that would be a really big deal for them.

Patrick Collison 15:19 Look, you have a very good pulse and what I would say is that, as a subset of the economy, you probably reflect a large part of the global economy. Have you ever been approached or have you ever considered on a regular basis publishing some sort of economic sentiment? One of the big things that we've talked about is how many backward revisions there are to everything from non-farm payrolls to GDP that they've become so unreliable. And so it's very difficult for people that are transacting in market to know what to do.

Jason Calacanis 15:50 Mm.

Patrick Collison 15:51 Have you guys ever thought about that? Because I'm sure that you have a much more accurate sense of where the economy is than many other people.

John Collison 15:56 We have, and I feel a bit rueful, you know, with you asking the question because I feel like on some level we should have done it. And the thing that makes it kind of tricky is because, well two, two, two things. One, Stripe is not like a full cross-section of the economy, you know, we're more biased towards online, we're more biased towards innovative companies, you know, whatever, it's that, that, you know, it's kind of net that out somehow. And you know, there can be these stories where, I mean, during COVID, like the online economy was doing great, uh, the offline economy is sort of a different story so the interpretation can be a bit, uh, tricky. But then just the second thing is the Stripe business is growing so quickly and changing so fast that again, you know, it's not necessarily representative of, of the economy and even if Stripe is way up year over year, you know, you'd, you have to be a bit hesitant in drawing conclusions from that. Having said that, I think in principle you could draw, you know, some conclusions and you know one thing we, we, we did look at, uh, was just inflationary data over the last couple years, and I think you can construct and the team did construct a pretty reliable kind of leading indicator-

Patrick Collison 16:47 Huh.

John Collison 16:48 ... for inflation. And so we, we, we would like to share that openly because, you know, I think it's, I think it's a public good for there to be better and more reliable economic data.

Jason Calacanis 16:56 All right, Friedberg, before we get into the docket, you got any questions for the boys here?

David Sacks 17:00 If you were to kind of build the financial system from scratch today, we've got Swift, we've got banks that store assets, we have credit cards and these credit card networks, then we've got transaction service providers that sit on top of this. What's the right solution, if we were to build a financial system for the world from scratch today, and can you guys see a world where we bridge away from the credit card networks, where we move out of some of these legacy systems? Or are they so deeply ingrained in everything that it's o- it's gonna continue to be the same where we've got to build these complicated solutions into and around the legacy of financial infrastructure?

John Collison 17:40 I'll give my view and then I'm curious what, um, Patrick has. I would say firstly there is just general tech scalability, you know, there's the, um, you know, the finance industry has its version of the mine shafts for sure, where everything should be, uh, you know, highly scalable in real time, and I think in a way stable coins are solving something that you wouldn't, you don't technically need full decentralization to do, but the ability to make kind of real time payments any hour of the day or night is a useful property. And again, some private systems have, uh, also built that. I think a big one for us is trust.

Patrick Collison 18:14 ... and the fact that the fraud problem hasn't really been solved in online payments, a big reason people come to Stripe is basically we are a reputation network across the internet economy. And so when someone comes and buys something from a Stripe user, 93% of the time, we have seen that card before. And so the merchant can know something... and know that they can trust this end user. And it's gotten to the stage now where if someone comes along and buys with a credit card, if they're, you know, signing up with an email address or a phone number or something that we haven't seen before, that is just ipso facto suspicious because, you know, they are coming along and maybe trying to... it's a stolen credit card or, or, or something like that. And so a big part of what Stripe ends up doing is acting as a reputation network to keep fraud out of the system that maybe you would have wanted to design in from, from day one.

Jason Calacanis 19:06 Well, in fairness, Chamath told me I could use that credit card anytime I want.

Patrick Collison 19:10 (laughs)

John Collison 19:10 (laughs)

Jason Calacanis 19:10 I don't think he remembers, but I think you need to turn my account back on. And Freeberg, I just got news from, uh, our CEO, John. Mastercard just canceled their sponsorship of All In Summit, so we... this is costing us a fortune, this podcast so far.

John Collison 19:23 Two things. One, to your point about just all these different networks and so forth, I think stable coins are going to be a big part of, uh, uh, a big part of the solution. I actually don't think that's gonna supplant all the consumer-facing networks. I think we're gonna see consumer-facing networks built upon and that, you know, substantially leverage these things, but I think stable coins will probably be the common rail. And then just secondly, I think part of what you're hearing is most businesses lose more money to fraud than they do to the kind of pure transaction costs themselves. And so, you know, you're hearing us talk a lot about fraud here, uh, and that's because, one, it's just... it's a, a huge economic cost for these businesses today. And there's even indirect costs where you make the consumer experience more hostile because you have to protect against, uh, you know, uh, possible fraud. Like, you know, why, why do you have to type in all these numbers when you transact?

Patrick Collison 20:01 How am I gonna be locked out of my bank account? Yeah.

John Collison 20:03 All this stuff, exactly. But then secondly, I think these... we can just see it in the data, these problems are actually getting worse and harder because, you know, ML, AI, globalization-

Patrick Collison 20:12 All the deepfake stuff.

John Collison 20:13 ... you know, everything. Yeah, exactly. And so like-

Jason Calacanis 20:15 Mm-hmm.

John Collison 20:15 ... you know, various fraud metrics across the industry and the ecosystem are way up over the last couple of years. You know, and Stripe actually down by 80%, but it's, it's really becoming an acute issue.

Jason Calacanis 20:23 All right. And we'll get into, uh, staying private longer and when you guys are gonna pull the IPO trigger later in the show, but we gotta get through this docket. We got so many great topics to talk

Jason Calacanis 20:31 about. Let's get to our first story here. It's a kind of a fun one. Jamie Dimon went on a rant about remote work and, and Zoom, uh, in a town hall. And, uh, here's a snippet.

Jamie Dimon 20:42 A lot of you were on the (beep) Zoom-

John Collison 20:44 (laughs)

Jamie Dimon 20:44 ... and you were doing the following, okay? You know, looking at your mail, sending texts to each other about what an (beep) the other person is.

John Collison 20:50 (laughs)

Jason Calacanis 20:51 (laughs)

Jamie Dimon 20:51 Okay? Not paying attention, not reading your stuff, you know, and if you don't think that slows down efficiency, creativity, creates rudeness and s-... it does, okay? And when I found out that people are doing that... you, you don't do that in my goddamn meetings. You go to a meeting with me, you got my attention, you got my focus, I don't bring my goddamn phone. I'm not sending texts to people. Okay? It simply doesn't work. The young generation is being damaged by this. That mean, they may or may not be in your particular staff, but they are being left behind. They're being left behind socially, ideas, meeting people. In fact, my guess is most of you live in communities a hell of a lot less diverse than this room. That's not how you run a great company. We didn't build this great company by doing that, by doing the same semi-diseased (beep) that everybody else does.

Jason Calacanis 21:36 Kelson Brothers, tell us about how you run Stripe. Are you remote? Does this resonate with you four years after, uh, we've come out of the pandemic?

Patrick Collison 21:45 I love listening to Jamie Dimon rants. Like, I feel-

Jason Calacanis 21:48 Mm.

Patrick Collison 21:48 ... like that's business ASMR. Um...

Jason Calacanis 21:51 (laughs) Business ASMR.

John Collison 21:53 That has helped me a great podcast.

Jason Calacanis 21:54 I was about to say, I'm subscribing. That's an instant $10 a month subscription. But what do you think, John? Yeah.

Patrick Collison 22:00 Uh, I don't know. People just said a lot of (beep) during the pandemic. Like you remember, it's like, "Oh, handshakes are gonna be over. Business travel is gonna be over. Every company-"

Jason Calacanis 22:08 Hm.

Patrick Collison 22:08 "... is gonna be fully remote." I would say Stripe broadly is in a pretty similar spot to where it was beforehand, which is most people go into an office, like most people are, you know, uh, part of our San Francisco office or New York or Dublin or, or Singapore or wherever. And then we have a bunch of people also who work remotely. I think, uh, kind of obviously, you know, Jamie is right on some points. I think also working remotely has had a bunch of benefits where there's a way larger talent pool available to companies-

Jason Calacanis 22:36 Sure.

Patrick Collison 22:37 ... like Stripe. And there's a lot of people, you know, you see, uh, the kind of the two-body problem where it allows a lot of couples where, you know, maybe one partner is assigned to some hospital in Idaho and like they don't get to choose what hospital necessarily they got assigned to and the other person gets to work a, a high paying tech job. And so I don't know, I think when-

John Collison 22:55 Like one, like one of the theories for, uh, declining dynamism in the US and declining TFP is that allocative efficiency, uh, of, of, you know, people declined as women enter the workforce because now you have the... you know, what John describes this two-body problem where, you know, both people have to make coordinated switches and, uh, and you'll just-

Patrick Collison 23:14 Remote work's

David Sacks 23:14 ... it's remote work's .......................... actually.

Jason Calacanis 23:16 Yeah. Freeberg, you're running a company now. You're the CEO of Ohalo. Tell us, uh, does this resonate with you? What do you think? Especially about younger people, his point and like being rude or being focused, being in the meeting and then like maybe there's too many meetings where people are partially paying attention. Maybe there should be half as many meetings and people should be paying attention. What do you think?

David Sacks 23:36 Well, there's always room for optimization there. We, we deal with this too. Too many meetings, too many people. I think what was most striking for me about the Jamie Dimon rant and the resonance it seems to be having, particularly in Silicon Valley and particularly with folks that are in leadership positions or on boards, is that this is another example of what I think is kind of a different tenor for leaders in business right now relative to where we were a few years ago. Leaders are starting to step up and speak their mind and speak more directly and lead from the front rather than lead from the back. I think the last couple of years, and I would say that the whole kind of transition awo-... away from wokeism and coddled employee workforces, which is something that a lot of folks talk about, um, I'm not trying to just characterize it, I'm just saying that's the characterization that's been placed on it, is that the employees made the decisions and then the leaders kind of said, "Okay, I'm subjugated to the employees' whims and needs." And look at what's gone on with Zuck. He said, "You're with me, you're against me. Here's a buyout option." Elon obviously was a exemplar of this at Twitter. Uh, we've now seen this-

Jason Calacanis 24:40 Coinbase.

David Sacks 24:41 ... become-

Jason Calacanis 24:41 Yeah.

David Sacks 24:41 ... Coinbase Brian in his letter, and we've now seen this become, I think, a bit more of a standard in the kind of emergence in the post-COVID era that leaders can lead from the front, speak directly, and say, "This is the way things are going to be. My job is not to coddle my employees. My job is to lead my employees, so that our organization, our team wins and we-"

Jason Calacanis 25:00 Hmm.

David Sacks 25:00 "... achieve our mission." That's the objective. It's not to create a family workplace for everyone to be happy all the time. It's to help the organization succeed. And so I think I have heard from people individually. I've seen this tenor shift underway right now, um, and I think that Jamie Dimon is another kind of exemplar of this that, that seems to have some resonance.

Jason Calacanis 25:18 All right, Chamath, I want you to respond specifically to this next clip. Let's play the second clip about organizational bloat.

Jamie Dimon 25:25 Every area should be looking to be 10% more efficient. If I was running a department of 100 people, I guarantee you, if I wanted to, I could run it with 90 and be more efficient. I guarantee you. I could do it, 'cause, I could do it in my sleep. And the notion these bureaucracies, "I need more people. I can't get it done."

Jason Calacanis 25:43 Hmm.

Jamie Dimon 25:43 No, because you're, you're filling out requests that don't need to be done. Your people are going to meetings they don't need to go to. Someone told me to a, a proof of his wealth management that they had to go to 14 committees. I am dying to get the name of the 14 committees.

Jason Calacanis 25:56 (laughs)

Jamie Dimon 25:56 And I feel like firing 14 chairmen of committees. I can't stand it anymore.

Jason Calacanis 26:01 All right, Chamath, the bloated bureaucracy at big companies. Your thoughts?

Chamath Palihapitiya 26:06 Well, you know, there's that adage that says something akin to, "50% of advertising is useless. We just don't know which 50%."

Jason Calacanis 26:13 Yeah.

Chamath Palihapitiya 26:14 I think it's probably true for most corporate structures in general, which is that a lot of the organizational bloat has evolved because of the way that people have responded to how you use technology. So, meaning, if you we- look back 50 years ago, if you look at that famous picture of the Microsoft early team, they didn't rely on software necessarily. There wasn't Salesforce. There wasn't Workday. There wasn't all of this infrastructure. And so instead, they probably organized by what they were good at, and they just tried to do things efficiently. And I suspect that many companies in the absence of technology found a way to just be very efficient. That started to change when you had these rigid demarcations of where one job ended and another job started. And part of why that happened is because you had all this software that went in and convinced people this will create efficiency, but in return, the chief marketing officer's job is X, Y, and Z. This is how the roles are defined.

Jason Calacanis 27:14 Hmm.

Chamath Palihapitiya 27:14 This is how people do it. And so I think that the reason why things have become so bureaucratic and bloated is that there is just this propensity to run towards software because you think it's a solution. At best, it's a symptomatic aid. It doesn't-

Jason Calacanis 27:31 Hmm.

Chamath Palihapitiya 27:31 ... address the root cause. And in fact, it promotes bureaucracy, and it promotes the bloat that Jamie's talking about. And if you look at Jamie's PnL, he spends $16 billion a year on IT. And I suspect that if you streamline-

Jason Calacanis 27:44 Say no more.

Chamath Palihapitiya 27:44 ... that, you'd actually have half as many people because they'd be doing the job in a wholly different way. And by the way, the, the counterfactual to it is if you look at companies like Facebook or Google or Tesla or SpaceX who designs, and I'm sure Stripe is the same, who designs a lot of stuff internally that's custom-built for their org, I think the way that you see this in the revenue per employee and a bunch of these other metrics in terms of the efficiency of those companies. So, I think what he is talking about is that he is a victim-

Jason Calacanis 28:14 Hmm.

Chamath Palihapitiya 28:15 ... of this push to productivity because he would look like a Luddite if he didn't adopt technology, but by adopting the off-the-shelf stuff, he introduces organizational bloat because these things are demarked very, very rigidly.

Jason Calacanis 28:27 Yeah, and you got the marketing team, as you mentioned, using HubSpot, and then you got, like, the sales team using, I don't know, Salesforce, and it's just-

Chamath Palihapitiya 28:33 Tool upon tool upon organizational bloat. The other thing I just want to say on the first topic is, I've mentioned this before, other than engineers who are, who are naive but can be extremely productive from day one, there are very few other job types where naivety is an asset. Most people early in their career are in a J-curve where they are negatively contributing, and the whole, the whole, the whole goal is that-

Jason Calacanis 28:58 Yes, slowing everybody down, yeah.

Chamath Palihapitiya 29:00 And the whole goal is that you invest in these people so that they come out of the J-curve. There are probably other jobs that are like engineering, but many, many are not.

Jason Calacanis 29:08 Hmm.

Chamath Palihapitiya 29:08 And so I think it's important to get the kind of mentoring you get by being in an office, and in the-

Jason Calacanis 29:13 Correct.

Chamath Palihapitiya 29:13 ... absence of that, I think these young people, like Jamie said, are totally lost. That's, that's on them. But then for the company, they're completely unproductive and useless, which is on us.

Jason Calacanis 29:23 Hey, John, uh, Tobi d- I don't know if you know Tobi from Shopify, but he did this, like, zero-based budgeting kinda concept for meetings. He just purged all meetings at the beginning of the year. He just, like, deleted everybody's (laughs) meetings from the top down. I'm curious how you think about bloat and just all of these meetings and committees. Do you worry about that at Stripe?

Patrick Collison 29:43 We know Tobi very well, and I don't know, I always feel like, yeah, we should, uh... I'm tempted to, uh, take some of, uh, the ideas. Like, we haven't done the meeting deletion one, and you just say, "Oh, the meetings get recreated," but they measured it, and they didn't, it sounds like. Uh, and I do always enjoy Tobi's perspective, which is, I think that, you know, many organizational problems are, in fact, software problems. And, you know, you just need to write a script to literally... Like, I think he wrote the script to delete all the meetings-

Jason Calacanis 30:10 Yeah, she did. (laughs)

Patrick Collison 30:10 ... uh, you know, from the Google Calendar instance. But, uh, there, there's kind of this purity that, uh, uh, you're, you're over-intellectualizing your problems. And I, I do agree with Chamath on the remote thing where, like, it's, it's very dangerous. Uh, uh, one thing that can be dangerous with as CEOs think about this stuff is, I think there's these unfair... Anecdotes that feel unfair that get people really riled up, the quiet quitters, the anti-work subreddit, you know, all these t- talk of people working two jobs.... and that generates a lot of energy with corporate leaders, but you don't want to design your policies around, like, the bottom 5%-

Jason Calacanis 30:44 (laughs)

Patrick Collison 30:44 ... of the company. That would be a horrible mistake.

Jason Calacanis 30:45 No. (laughs) Yes.

Patrick Collison 30:46 Yeah, you want to design your policies against the top 10, and we have some, like, outrageously productive remote people and they're off in, again, the cabin in Idaho somewhere just, you know, cod- coding up a storm. The thing that we have seen, and interestingly we measured this before COVID, 'cause we were doing a lot of remote hiring and we wanted to see... we wanted to see how much we should lean into it, is that it is not good for early career people. We can actually measure it in our productivity data before the whole discussion about remote work happened during COVID, and it's bad from a work point of view. It's also just bad from a personal point of view where they go mad 'cause they're 23 years old-

Jason Calacanis 31:18 (laughs)

Patrick Collison 31:18 ... and they're not going into an office and just going to-

Jason Calacanis 31:19 And they're in solitary confinement.

Patrick Collison 31:21 Exactly. Yeah, yeah, yeah.

Jason Calacanis 31:21 Yeah. I mean, it's literally solitary confinement. It's ridiculous. And by the way, breaking news here. Jamie Dimon now, uh, knows which 2,000, or I'm sorry, 1,739 employees to lay off first. There is a Coworker.org petition to get Jamie to retract his statement, so the opt-in has been created behind the curtain.

Patrick Collison 31:41 If I know Jamie, I know he'll be, uh, retracting that statement right away.

Jason Calacanis 31:45 Absolutely he will bend to the pressure of those 1,700-

Patrick Collison 31:48 Exactly.

Jason Calacanis 31:49 ... mids. Patrick, how do you deal with mids at Stripe?

John Collison 31:51 (laughs)

Jason Calacanis 31:51 How do you deal with the mids? The people who-

John Collison 31:53 I can't come-

Jason Calacanis 31:53 I'm not saying you have any, but maybe you've run into, 'cause you've got over 10,000 employees. When somebody's averaged that much make you crazy, how do you deal with it?

John Collison 32:02 No, the median employee at Stripe is awesome. The median employed at Stripe... employee at Stripe-

Jason Calacanis 32:07 Okay.

John Collison 32:07 ... is, is not the median person in the population at large, although I think the median person in the country is we, um, you know, we employ people

David Friedberg 32:13 We've put a lot of work into this 7015 team, excuse me. Yeah, yeah, yeah. Um-

Jason Calacanis 32:15 Well, no, I was using the term mids. Mids are people who are just average people, not the above average Stripe people who opt into that. But how do you deal with low performance is kind of what I'm getting at.

John Collison 32:23 Well, look, you need to have an aggressive performance management culture and to stay on top of that. And, look, it's, it's not... it's, it's not good for anyone to keep those people around because nobody likes feeling that they aren't succeeding.

Jason Calacanis 32:34 Mm-hmm.

John Collison 32:34 And so if those people are, you know, their careers aren't advancing, they're not getting, you know, positive feedback from their manager or from their peers, they aren't shipping things, like whatever, this is just, like, not a good e- equilibrium for anyone. So we really try to, you know, stay on top of that. We track it closely. The thing just on this discussion broadly to say is I think people very readily fall into a kind of normative moralizing perspective on this stuff of people should be in the office, they shouldn't be in the office, but, like, there's a lot of should here. And I think it's helpful to just, one, kind of as John referenced with, you know, s- some of the analyses, just, you know, be quite empirical and objective and just, like, look at what the data says. And, and then second, just recognize there's a lot of heterogeneity, as in people have different preferences, people have different abilities to work effectively, you know, when they're by themselves and, you know, some don't. Organizations are doing different kinds of work. Nvidia, you know, last I checked is doing pretty damn well and, you know, Jensen is y- on the record as saying he, you know, doesn't give a (beep) about where you work. Coinbase, Shopify, you know, there are all these, you know, remote first companies. And then, you know, I was recently chatting to the folks at Jane Street and they really believe that, you know, being co-located and to be able to share ideas on the trading floor and, and so forth is, is really important. But I don't think these pictures are nece- or these worldviews are necessarily contradictory. They probably hire different kinds of people who are in different kinds of businesses and so on. And so I don't know, I guess I'm just skeptical of flat shoulds in this space-

Jason Calacanis 33:52 Mm-hmm.

Patrick Collison 33:52 There's many paths to heaven.

John Collison 33:53 ... and I think there's a lot of them. Yeah.

Jason Calacanis 33:54 Many paths to heaven, uh... All right. So let's move on to our next story. Uh, the number one-

John Collison 33:58 Oh, no, no. Just saying la- last thing we should just keep in mind, um, labor productivity in the US is up like 20% in the last 10 years. And so just, like, again, you just, you just look at the data. Just the median person in the economy, or the average person is, uh, is producing 20% on, on an inflation adjusted basis more than they were 10 years ago.

Jason Calacanis 34:13 Yeah. And that's gonna keep ramping up with AI and all these amazing tools that are coming out. We'll leave that on the side for now, 'cause that would be an hour long rabbit hole we could jump down.

Jason Calacanis 34:22 But we got to get back into Doge. The number... Well, I've heard a couple criticisms of Doge. One of them is it's one sided. We're only hearing about, you know, people on the left doing grifts and US aid. The other one is, hey, you're, you're pointing at little tiny things like US aid. When are you gonna get to defense spending and Social Security? Well, here we are. Washington Post is reporting that in between doing sets of 47 push-ups, Defense Secretary Pete Hegseth asked senior leadership at the Pentagon to develop a plan to cut 8% from the defense budget each of the next five years. That's compounding 8%. Here's a chart. We're talking about close to 300 billion in savings over five years if, uh, they hit, which isn't a crazy target, 8% a year. It's just crazy in our country, where we haven't even been able to have our Defense Department pass a basic audit, if you've seen those type of reports. Let's pause there and just talk about military spending, Chamath.

Chamath Palihapitiya 35:23 I think that military spending needs to sit downstream from technology, because if you... if it doesn't, you're sort of misappropriating the money. And what I mean is that we're inventing incredible capabilities in AI and autonomy. I think that you need to take those things first and figure out how to projectize them, because I think that builds the kind of modern war machine we need. Otherwise, what happens, I tweeted about this, Nick, maybe you can find it, but, like, the CBO red flagged a project where the Navy was about to appropriate $1.2 trillion to build frigates. Now, there's a body, I think, of, of military planning that says this is a projection of power and so you need to spend this kind of money because people want to see the big boats and the big iron in the water. Okay, and, and maybe there's something about that, but the reality is you can't be spending three or $4 billion a boat (laughs) and taking, you know, eight, nine, ten years to build these things. It's... So this is not sustainable, and part of why they do that is it's not coupled to what's actually happening with respect to innovation, where there are core pockets of companies. Sironic just announced a $600 million raise today.... Saildrone announced hundreds of millions of dollars of contracts with the Navy. Anduril is doing that with the Army. So I think that military spending needs to happen downstream from what's actually happening in technology, broadly speaking. We don't have that. What you have instead are system integrators with extremely deep connectivity that are able to contract well, not necessarily to invent well.

Jason Calacanis 37:03 Freeberg, any thoughts there on cutting defense spending? Obviously we have, uh, to Chamath's point, amazing founders like my guy, Palmer Luckey, cutting the cost of very important, uh, armaments-

Chamath Palihapitiya 37:17 He's not your guy. He hates you.

Jason Calacanis 37:17 That's my guy.

Chamath Palihapitiya 37:18 He hates you.

Jason Calacanis 37:19 My bestie. Oh, no. We... It's all a joke, everybody. Calm down. We just have a little back and forth.

David Sacks 37:22 He literally hates you, Jason. He, he-

Jason Calacanis 37:24 No, I talk to-

David Sacks 37:25 He literally despises you.

Jason Calacanis 37:25 Listen, I know all the board members.

David Sacks 37:27 And he'll never stop-

Jason Calacanis 37:27 I got a personal relationship with him but-

David Sacks 37:28 ... till your, till your career has ended.

Chamath Palihapitiya 37:29 He's gonna send one of those drones to your ranch.

Jason Calacanis 37:31 He loves J Cam.

David Sacks 37:32 Yeah.

Jason Calacanis 37:32 He loves it. He... Everybody needs a foil. Uh, and, uh-

David Sacks 37:35 Creates all sorts of problems for the rest of us when you go out and talk (beep) about people for no reason. It's great. Super awesome.

Jason Calacanis 37:39 What are you talking about? I never talk (beep) about Stripe. Guys-

David Sacks 37:42 (laughs)

Chamath Palihapitiya 37:42 You don't have any beef with J Cam.

David Sacks 37:43 You just called our employees MIDs for no reason. For no reason, you're just like, "Oh, what about your MID?" Yeah.

Jason Calacanis 37:47 That was a hypothetical.

David Sacks 37:48 Yeah.

Jason Calacanis 37:49 Okay, I did say that you s- you, you guys pocketed 500 large.

John Collison 37:52 Look, we, we can come to the summit and, you know, Palmer-style just like-

David Sacks 37:56 (laughs)

Chamath Palihapitiya 37:56 Yes. Yeah.

John Collison 37:56 ... pop off everything.

Chamath Palihapitiya 37:57 Oh my God, yes. Oh my God. (laughs)

Jason Calacanis 37:58 Long list of things I've said about you.

John Collison 38:00 And another thing...

David Sacks 38:00 (laughs)

Chamath Palihapitiya 38:00 Please. Please. Yes. Absolutely. Shout out to my guy, Palmer Luckey.

David Sacks 38:05 On both of those.

Chamath Palihapitiya 38:05 But what do you think, Freeberg? For serious, let's get back on track here.

David Sacks 38:07 Okay, so here's what I (laughs) ... Here's what I think. If you take defense down to first principles, there was an excellent tweet that we were all texting about yesterday. It may be observation that Trump's negotiations with Russia and China, where there's all of this hemming and hawing about those negotiations being complying with the wants and needs of dictators may actually be a shift in strategy on the global relationship the United States has with other global powers. In particular, a shift from the objective being about US primacy and the US being kind of the sole great power on Earth to recognizing that that's no longer the case, and that in a multipolar world, we no longer need to invest in wars, need to invest in conflicts, need to invest in defense with supposed allies to try and build up our strength across the globe. And I'm not saying that this is necessarily the right strategy, but it was an observation that maybe the strategic imperative is now to have kind of a, a multipolar stance in the world, rather than a stance of primacy. And in that framing, you then ask the question, okay, ad... Make that the case now, if we do agree that we are all gonna settle into a new world where China, Russia, the United States are not necessarily equal powers but shared powers, uh, across the globe, in that context, do we need to have as much of an investment in global defense? Do we need to continue to pour dollars into building up arsenals and military bases and troops and stations and positions all around the world? Perhaps not. Perhaps the world gets divided peacefully and we open up global trade relationships and everyone benefits economically from the advances in technology and improvements in productivity and the world order is peaceful but multipolar. Maybe that's the new era that we're entering, and in that context you don't need as much of a defense. And separately, to Chamath's point, there's different technology that's now in play. We've seen it in the Ukraine-Russia context that a $10,000 drone can destroy a $10 million piece of equipment, and China now has drone factories that can output millions of drones each month. So if China develops this new type of arsenal with millions of autonomous flying systems that can go and attack troops and attack expensive pieces of equipment, do we really need aircraft carriers? Do we really need tanks? And I think that's the whole Hegseth-led, um, Trump-led conversation that's underway in defense right now. Number one, multipolar. Number two, therefore we don't need as much defense spending. Number three, maybe the defense spending that we do do should account for the new technology on, uh, in play in the battlefield and that really changes the character of how the Defense Department is structured and how funding is structured. So that's really, I think, the way to look at it versus, "Hey, let's just cut defense spending for cutting's sake." Um, and that might be what's going on right now.

Jason Calacanis 40:53 A holistic view of it. Patrick, any thoughts on, um, what we're seeing in defense tech and, uh, saving money through Doge?

John Collison 41:01 Well, obviously what, um, what, you know, Anduril and others are doing is, uh, is pretty amazing. Um, but, you know, we're, we're obviously not defense experts, uh, but sort of just bringing the credit card merchant, uh, perspective, uh, to bear here. Uh, you know, we naturally just go and look at the, the time series, um, and the, sort of the data around it, and I guess I'm struck by... And again, maybe I'm getting some of the details wrong here. I'm... This is outside of our zone, but as far as I can tell, the cuts proposed over the next couple of years for the Def- for the Defense Department are of approximately the same magnitude as the reduction in the defense budget that occurred between 2010 and today. And so, it's not like this is some unprecedented transformation in DOD budget. Uh, we've, we've, we've done this. And then secondly, you know, as far as I can tell, one of the most ecumenical, uniformly shared bipartisan issues in Washington is the inefficiency and the profligacy of defense procurement. You had James Fallows writing a book about this in the late '80s. You had, you know, Augustine's Laws, another whole book about this. Just everyone seems to, you know, uh, fervently believe, um, that defense procurement is monstrously inefficient. Now, you know, it's possible to make budgetary changes without fixing that, but obviously the prospect of meaningful improvement there, uh, seems, uh, seems like it would be, you know, really beneficial.

Patrick Collison 42:24 A- and if I can just give a quick book recommendation, you know, this book Boyd by Robert Coram about John Boyd, the Air Force colonel who, you know, was part of the reformist, uh, movement. I feel like everyone in Silicon Valley has that book on their shelf and no one's actually read it.

Jason Calacanis 42:36 (laughs) I did.

Patrick Collison 42:36 But it is a... exactly. Uh, it i- it is kind of-

Chamath Palihapitiya 42:40 Those references, sprinkling some OODA loops into your remarks, uh, always helps.

Patrick Collison 42:44 Exactly. Yeah, yeah, yeah. Um, sounds smart. But, uh, that is a great book and it's a book about Air Force procurement essentially, where he had his... you know, uh, basically the story was that the Air Force generals of the time wanted planes that were bad, and he had a theory about better fighter jets. Uh, and he had his fingerprints all over the F-16 and the A-10 and the F-15 and, uh, various aircraft. And it was a real battle to get the Air Force to produce better aircraft. And they really... you know, the generals really wanted these bad aircraft that they had planned. And so that's a fun read at this moment in time when it feels like we have this similar transition from manned, unmanned, and everything like that.

Jason Calacanis 43:20 Tell us the name of the book again. I know there's many books about John Boyd.

Patrick Collison 43:22 It's called Boyd by Robert Coram.

Jason Calacanis 43:25 Got it.

Patrick Collison 43:25 And it's a, it's a really engaging read. It's also just very well written. It's this kind of narrative non-fiction style.

Jason Calacanis 43:30 Yeah.

Chamath Palihapitiya 43:30 Yeah.

Patrick Collison 43:31 This-

Jason Calacanis 43:31 There it is. Okay, everybody. An- another book selection from the All-In Book Club, brought to you by Stripe.

Chamath Palihapitiya 43:37 (laughs)

Jason Calacanis 43:38 Uh, use the code ALL-IN to get a year free of Stripe.

Patrick Collison 43:41 We haven't even gotten to the Stripe Press books.

Jason Calacanis 43:43 Absolu- oh, you do actually have a series of cool books. Yeah, we'll, uh, we'll plug those towards the end. Uh, all right. Chamath, you, uh, added a crypto update.

Jason Calacanis 43:51 Uh, Crypto Corner is back. We had an exciting week of innovation in the crypto space last week. Argentine President Milei, who is a hero to a lot of people in, uh... on the right, uh, or for government efficiency, promoted a meme coin. It was called Libra, $Libra. And, uh, he originally tweeted, "This private project will be dedicated to encouraging the growth of the Argentine economy," uh, with a link to Libra for his citizens to go buy it. And buy it they did. (laughs) But he deleted that tweet when this whole thing came apart and said, "I was not aware of the details of the project, and after having become aware of it, I decided to not continue spreading it." The market cap ripped 4 billion. It crashed 95% as these meme coins always do. 74,000 traders lost almost 300 million, 24 wallets had losses over a million, and Milei has been sued 100 plus times already. And this just happened last week. He's being investigated by his own government now, and, uh, there is an impeachment, uh, attempt underway by the opposition. Milei's team told CNN that his endorsement of the coin was a mistake. Really? Oh, wow. Going out on a limb there. According to insiders, Milei never actually owned any Libra and was not associated with the coin. I think family members maybe put him up to it. The details of why he brought it remain a little bit unclear. There's a lot of speculation. Chamath, your thoughts.

Chamath Palihapitiya 45:26 It's kind of crazy. I mean, he was on such a positive upswing of momentum. It doesn't make much sense why he got embroiled in all of this. The, the problem with this though is I think that the coverup is always worse than the crime itself.

Jason Calacanis 45:39 Hm.

Chamath Palihapitiya 45:39 So, the first message was, you know, very Clintonesque, like, "I did not have sexual relations with that woman." He was like, "I did not endorse it. I just shared it" (laughs) was his justification for how he, how he, um, could rationalize what he did. The kid that's behind this thing, Hayden Davis, I think, is his name.

Jason Calacanis 46:03 He was on Coffeezilla. It was an incredible one-hour... Did you see that, the Coffeezilla interview?

Chamath Palihapitiya 46:08 No, I saw, I saw some of the clips on X and it was pretty brazen because he, he essentially said that he had Javier Milei in his pocket, and then there were text messages that used some pretty colorful language to basically say the same thing. Then on top of that, there were some text messages that seemed to implicate Milei's sister as having got some of the money from all of this. I don't know, the whole thing just makes absolutely no sense. That he was doing so much good, and now he's gonna g- go through this whole cycle of trying to wash his hands of this whole thing is a complete waste of m- time and effort. I don't know why he did this.

Jason Calacanis 46:42 And there was another, like, interesting little tidbit. Uh, Friedberg, uh, friend of the pod, David Portnoy, supposedly he's been getting in on this and he's a gambler and he loves gambling and he looks at his gambling obviously. He had put reportedly millions of dollars into this, and this guy we're talking about gave him his money back. This guy also has something like $100 million sitting in a bank account anywhere. What's your take on all these meme coins, Reber? I don't like them.

Chamath Palihapitiya 47:10 Hm. (laughs)

Jason Calacanis 47:10 I don't think that they're-

Chamath Palihapitiya 47:12 Okay.

Jason Calacanis 47:12 ... like, good. I don't think they're productive.

Chamath Palihapitiya 47:15 All right.

Jason Calacanis 47:15 I think that a bunch of people are gonna put money in and lose money.

Chamath Palihapitiya 47:18 (laughs)

Jason Calacanis 47:18 And a few people are gonna make a lot of money. And, you know, but at the end of the day, it's no different than the people that sell trading cards or the people that create and sell collectibles and get paid for them. And this is just effectively a digital collectibles business. Unfortunately, I think it's, like, amplified by, like, 1,000 x. Hm. Because collectibles businesses have friction and they're manual and you gotta ship them. And this creates, um, a bit more of a digital frenzy where you see the social feedback loop happen really quickly in real time, and that drives these things to a high value, which means people have the ability to lose a lot more than they otherwise would. But, look, I mean, these are not helping the financial system get rebuilt, as we talked about earlier. They're not, uh, creating productive value. They're entertainment mechanisms just like any other kind of gambling system might be. And, you know, people can choose to do that if they want, but personally, I'm not into it. I just think it's stupid. But whatever. Patrick- Each to their own. Yeah. Do you think these are like collectibles or do you think they are perceived by the people buying them more like securities and more like Bitcoin? They do, uh, to steel man the other side of the argument, uh, they do trade with a ticker symbol. They are traded, uh, on major platforms like Coinbase and, uh, Robinhood.... and people share charts about them, uh, so where do you stand on it? You're in the finance business. Meme coins good, meme coins bad?

John Collison 48:41 I'm ￠ basically with Dave. I mean, uh, uh, well, they seem to me to be maybe analogous to, to gambling, um, which, you know, I don't know that we want to ban gambling. Uh, like, if you're able to do it responsibly, and you, you understand what you're getting into and so forth, like, I guess that's fine. But as you say, (laughs) judging by the tweets that I see, there are an awful lot of ticker symbols and charts and prognostications about future price trajectories and so forth, that lead me to think that people are placing so much more weight on the asset and security value of these, uh, as compared to the, I don't know, some numinous, intrinsic, uh, aesthetic value.

Jason Calacanis 49:28 Yes.

John Collison 49:29 So, yeah, it seems-

Jason Calacanis 49:30 John, uh-

John Collison 49:30 It's-

Jason Calacanis 49:31 John-

John Collison 49:32 Yeah.

Jason Calacanis 49:32 ... maybe two things could be true here. People are gambling, and they are being presented as financial instruments, and they're trying to trick the suckers at the table. The suckers, in this case, being the people who voted for Malay, to Chamath's point. This is the unbelievable self-ohm of the, of the decade.

John Collison 49:48 Yeah, look, uh, I don't like meme coins. I think they're bad. And I think they're part of, like Patrick said, a, a broader swathe of things that we need to figure out societally, where the legalization of sports betting and combined with highly targeted advertising, I don't know if you guys have seen the stats on, you know, whales in sports betting losing very large amounts of money. And it's just these heartbreaking tales, and there's a very large number of them, of people kind of losing much more than they expected. And I don't know, we have to, to reckon with these societal questions. I don't think there's super easy answers. They come along from time to time. I only learned recently that, um, state lotteries are a relatively recent phenomenon. Like, I think it was one state started doing it in the 1970s, and then a bunch of the other states followed suit. But it's kind of odd when you step back that, like, I pass a billboard on 101-

Jason Calacanis 50:40 For Powerball.

John Collison 50:41 ... for, you know, the state of California trying to, you know, get me to buy lottery tickets.

Chamath Palihapitiya 50:44 Sell a negative EBEV bet.

John Collison 50:46 Yeah, just like, but that's become very normalized. And so I think there's a bucket of hard questions here around, you know, meme coins, sports gambling, whatever.

Jason Calacanis 50:54 Mm.

John Collison 50:55 I don't know what you do, but there's a lot of... Meme coins are not the only place you find these very heartbreaking stories.

Chamath Palihapitiya 51:01 This is the, this is the first time where they've actually talked about, or at least where I saw the details of how this stuff happens because he laid it out. And there's these people called snipers that go and like pump up the bids right as soon as the coin gets launched and then they're able to fi- so there's like this entire mechanism.

John Collison 51:20 I was gonna-

Chamath Palihapitiya 51:20 It's all so shady.

John Collison 51:22 I was gonna say some there or other, I feel like the specific thing within meme coins that's probably most pernicious is like the rugging dynamic. And if you have meme coins-

Chamath Palihapitiya 51:32 The hot girl.

John Collison 51:33 Shh. But without the, without the pump and rug, if it was like, I don't know, just some memetic tracker of some sentiment or something, like maybe that'd be okay. But the, the, the, like the particular way in which they seem to be, you know, employed is like, yeah, some, some sort of discontinuous run up and then about the rug.

Chamath Palihapitiya 51:50 What do you think, J Cal?

Jason Calacanis 51:52 I agree with you, Chamath. Uh, Malay had the greatest PR run of all time, I think.

Chamath Palihapitiya 51:56 Whoo.

Jason Calacanis 51:57 I mean, he became an inspiration to all of us here in America who were concerned about the deficit and out of control spending and ridiculous departments. We heard Jamie Dimon talking about ridiculous committees and all this nonsense. I don't know if you guys remember, but remember he was like, "Minister of Culture, (Spanish word) , and Minister of Gender, (Spanish word) ." This was the precursor to, of course, Doge, where now we're like USA deleted, Department of Education deleted, you know, Defense Department minus 8%. And you know, what I really find terrible about this is that what it means for leadership. What Malay did was he rug pulled the people who put him in office. The people who voted for Malay are the ones who got hurt here. And when you think about leadership at its core, it really is about putting the needs of your constituents ahead of your own interest, the needs of your investors, in the case of, you know, if you were running Stripe, right? You got to think about all these shareholders. Leadership, you know, at its core is, I think, setting the example, right? You set the ster- the, the standard, the moral, the ethical, the vibes, the culture. You set that standard. He had set such a great standard that we all loved. And, you know, the appearance of impropriety is impropriety in my mind. That's the leadership standard that should be here. So even being near this, your sister launching it, your brother launching, whatever it is, he then went on to taunt. This is where I really, you know, like people make mistakes, but... And this is a stupid one to make, but the taunting of his own followers, you know, "I'm out on Malay right now." This is what he said. "The reality is, if you go to the casino and lose money, I mean, what is the claim if you knew that it had these characteristics?" This is another failure of leadership. Leaders own their mistakes. They don't attack the victims, you take ownership of it. And the way you should judge people, I think, is what they do when they're given a lot of power and what they do when they make mistakes. Malay is a failure on all of those fronts. It's absolutely abhorrent. That's it. Thanks for coming to my TED Talk. (laughs) No, I'm just, I'm on fire about it. I just think it's like really terrible.

Chamath Palihapitiya 54:07 Do you need help getting off your moral grandstand now?

Jason Calacanis 54:09 I do. I do, actually.

John Collison 54:10 That's a good question. Yeah.

Chamath Palihapitiya 54:11 Okay.

John Collison 54:12 (laughs)

Jason Calacanis 54:12 Yeah, I'm over it. I'm sorry.

Chamath Palihapitiya 54:13 Good question.

Jason Calacanis 54:13 I actually care about morals, ethics and leadership. I think that there is a standard-

Chamath Palihapitiya 54:17 Of course, you do.

Jason Calacanis 54:17 ... set by these people.

Chamath Palihapitiya 54:18 That's what I, that's what I think about when I think about you.

Jason Calacanis 54:20 Yeah, of course.

Chamath Palihapitiya 54:22 Yeah.

Jason Calacanis 54:22 Thank you. Uh, all right, with friends like these Carlson Brothers, can you imagine, imagine-

Chamath Palihapitiya 54:26 Can you please say their-

Jason Calacanis 54:27 You have to deal with-

Chamath Palihapitiya 54:27 I'm so annoyed. Can you please say their name right?

Jason Calacanis 54:29 Carlson, Carlson-

Chamath Palihapitiya 54:29 Yeah.

Jason Calacanis 54:30 I said-

Chamath Palihapitiya 54:30 Pronounce the goddamn I, okay?

John Collison 54:31 (laughs)

Jason Calacanis 54:32 Carlson. I'm pronouncing the Irish. Okay? We, we speed things up a little bit. We put them together.

Chamath Palihapitiya 54:37 (laughs)

Jason Calacanis 54:37 We did something a little bit different. You wouldn't know this from being from Sri Lanka, a great country.

Chamath Palihapitiya 54:42 (laughs) You guys wouldn't know why anyone watches this show, would you?

Jason Calacanis 54:45 Oh, yeah. I don't know. Somehow it just makes the news and everybody says-

Chamath Palihapitiya 54:48 You have no context for this.

Jason Calacanis 54:50 It's funny-

Chamath Palihapitiya 54:50 Why do you make every show a train wreck? And we have to get it out of the...

John Collison 54:53 The banter is why- Why people come. ... people listen, you know. S- s- so many TV shows are about, it's nice to have friends. I mean, you look at Friends or How I Met Your Mother. My wife and I are rewatching the West Wing right now and it's basically-

Chamath Palihapitiya 55:04 Oh, great show.

John Collison 55:04 ... a show about, you know-

Chamath Palihapitiya 55:05 By the way, say more, John.

John Collison 55:05 Yeah, but it's just like they're all buddies and-

Chamath Palihapitiya 55:07 Yeah.

John Collison 55:07 ... loyal to each other and everything. And I think the underlying idea behind lots of TV shows is it's nice to have friends and-

Chamath Palihapitiya 55:14 Wow.

John Collison 55:14 ... I think that's the, the success of The All-In Podcast.

Chamath Palihapitiya 55:16 West Wing, by the way, is an inc- is an incredible-

Jason Calacanis 55:18 Incredible.

Chamath Palihapitiya 55:18 What, which season are you on? It's an incredible show.

John Collison 55:20 We're up to season four now.

Jason Calacanis 55:22 God. I gotta get on that.

John Collison 55:23 It's five or seven. It's, uh, five or seven. Yeah, yeah. I've never, I've never gotten on The West Wing, but yeah. But of course, Sorkin left after, uh, season four.

Chamath Palihapitiya 55:28 Season, yeah.

John Collison 55:29 And so many people said we couldn't kind of- get away.

David Sacks 55:31 The whole thing about the great debate that America needs to have, I think is still like the missing aspect of modern politics, is everything gets-

Jason Calacanis 55:38 Explain the great debate, yeah.

David Sacks 55:39 Well, the great debate is like let's talk about the topic that's at hand and talk about it on the merits of what's right for the country.

Jason Calacanis 55:45 Hm.

David Sacks 55:45 As opposed to everything being about attacking because the other side brought the idea forward and now we have to attack the other side and frame the idea as being beneficial to them and hurtful to us. Nothing actually gets resolved because we don't end up having objectivity around these conversations, around some of the major issues that the country faces. Many of which, by the way, both sides have valid points of view. And if we can kind of have the great debate, if we can have these conversations-

Jason Calacanis 56:10 Mm.

David Sacks 56:10 ... like DOGE, right? Like abortion, like, you know, the rights of states, like spending, like there are all these things that we should be talking about rather than use that moment as a way to attack the other side politically so I can make sure I've got points and kudos leading into the next election cycle. It's just awful. Anyway, I miss that about The West Wing. It feels like a purist, like just a beautiful, like way of thinking about how things could really work.

Chamath Palihapitiya 56:31 I wonder, I wonder what it would be like to watch The West Wing and then House of Cards back to back.

Jason Calacanis 56:36 (laughs)

David Sacks 56:36 (laughs)

Chamath Palihapitiya 56:36 That's something I should... No, but ser- it's like really a juxtaposition, those two different shows.

John Collison 56:40 Yeah. But, Dave, isn't The West Wing kind of the opposite of what you just said you want The All-In to represent? Because I see, I see The West Wing as being sort of fully immersed in and representing, you know, one sort of particular worldview. There was-

David Sacks 56:54 Yeah.

John Collison 56:55 ... uh, you know, there was... In some sense, we look back on the '90s at the Clinton years or something as, you know, this period of great harmony in the country and, you know, that harmony might have been great and the economy was doing well and, you know, all the things. Um, but it wasn't exactly a period, I mean, whatever, I wasn't here in the '90s, but, you know, from afar, it did not feel to me when I was eight or whatever, as a period of tremendous ideological, uh, debate and fervor and schisms and all the rest.

David Sacks 57:18 During the '90s, during the Clinton era, you're saying? Yeah, yeah.

John Collison 57:21 Yeah. And, and I think, I mean, maybe I'm wrong, but I think of The West Wing a- as, you know, a kind of recapitulation of the Clinton years.

David Sacks 57:26 Well, maybe, maybe, maybe they were... I mean, maybe they were the compromising party because, I mean, tell me another modern Democratic president that's had any point of view on balancing the budget and creating a surplus, which-

John Collison 57:37 Oh, he was a centrist, yeah.

David Sacks 57:38 ... I think was, was aligned with the Reagan point of view at the time and he kind of, you know, again, as J- uh, J Cal said, he was a centrist and he brought, brought the, the parties closer together rather than farther apart with how they operated.

Chamath Palihapitiya 57:49 I ag- I agree with Patrick. I'd say, uh, the, the thing that makes The West Wing a great show is that it's about the insider nature of the White House and The West Wing and-

David Sacks 57:56 Yeah.

Chamath Palihapitiya 57:56 Where you see these characters, like Toby, who would never be a star in any other show-

David Sacks 58:02 Mm-hmm.

Chamath Palihapitiya 58:03 ... under any other circumstance (laughs) on any network ever.

David Sacks 58:06 (laughs) Mm-hmm.

Chamath Palihapitiya 58:06 And instead, he's one of the central quasi-good, quasi-nefarious bully kind of... You know, he was like a- the precursor to the Rahm Emanuel archetype in the Obama White House, I think.

David Sacks 58:19 Mm.

John Collison 58:19 I also found it funny where, you know the way, uh, Dominic Cummings has talked about just his experience of life in government, was that it's so distracting trying to get anything done because, you know, you have some plan, you get up in the morning and you're gonna go do something that matters for the country and then you're just instantly by 8:00 AM, you know, sideswiped by-

David Sacks 58:35 Yeah.

John Collison 58:36 ... some-

Chamath Palihapitiya 58:36 Totally.

John Collison 58:36 ... kind of silly controversy of the day. That's basically (laughs) many of the episodes of The West Wing-

Chamath Palihapitiya 58:41 Yeah.

John Collison 58:41 ... where they like have some actual important thing-

David Sacks 58:43 Totally.

John Collison 58:43 ... that they want to get done and then they just get waylaid by a silly controversy.

David Sacks 58:48 Yeah, totally.

Jason Calacanis 58:48 It seems to me like you're also the product of the technological innovation that occurred during your presidency and during your term. And if you think about Clinton, he got to ride the internet and this massive economic boom. And you look at, you know, Reagan, the PC boom. I mean, sometimes the timing really matters, I think. Uh-

John Collison 59:09 No, no, I think, you know, and again, I'm not any grand expert on the, on the Clinton years, but I think, you know, it is interesting where, you know, one of the first acts of the Clinton presidency was the, was the Deficit Reduction Act. Um, uh, you know, Dave, to your point, you know, when's the last time that a, you know, a Democratic president, you know, really, really cared about the deficit? And I think federal spending fell by five points of GDP-

Jason Calacanis 59:30 Mm-hmm.

John Collison 59:31 ... over the course of the, of the Clinton presidency, which is re- really not a small amount, you know? So obviously, there were some kind of structural tailwinds from, you know, technology-

Jason Calacanis 59:38 Defense.

John Collison 59:38 ... and th- the internet and all the rest. So yeah, a bunch of that was defense but, but like nonetheless, so hey.

David Sacks 59:44 He did it, yeah.

Jason Calacanis 59:44 Well, and the la- and the last two administrations, and you look at California, there were massive windows of surplus and there were massive windows of a surging stock market over the last eight years and we plundered and we wasted them by adding 16 trillion to the debt during a good time. Like, what's gonna happen during a bad time? Just absolutely brutal. Let's move on. Where do we want to go here? We got Grok-3. We got the China private sector. We got a victory lap for Freeberg. You heard it here first.

David Sacks 1:00:14 Guys, I want to ask you guys questions about Ark Institute and the Evo model.

John Collison 1:00:17 We

John Collison 1:00:18 should do that. The model is cool.

Jason Calacanis 1:00:18 All right, let's do the Ark Institute. Freeberg, why don't you ask the question?

David Sacks 1:00:22 Patrick runs the Ark Institute, right?

Jason Calacanis 1:00:24 Okay, yes.

John Collison 1:00:25 I'm one of the co-founders and then there are two scientists who, who run it.

David Sacks 1:00:27 You're one of the co- And you guys are funders of it or... Yeah, maybe you guys give us the intro to Ark Institute.

Jason Calacanis 1:00:30 They put a lot of money into this, yeah.

David Sacks 1:00:32 Yeah.

John Collison 1:00:32 Yeah, so, uh, the Ark-

Jason Calacanis 1:00:33 Big check.

John Collison 1:00:33 ... Institute is a nonprofit. It does basic biology research. It's in Palo Alto next to Stanford. It's about 230 people today. And, uh, yeah, John and I are among the funders of it, but there's a, there's a bunch of other very generous donors. Can you explain Patrick's idea of curiosity-driven research that's on the website? Yeah. There's kind of two things behind it. So the first is scienti- the vast majority of biology scientists today-... receive NIH grants doing basic research, and the NIH grants are, one, just hard to get and annoying to get. As you know, scientists spend 40% of their time working on grant overhead and so forth. But worse, like even more perniciously, the grants are very restrictive in terms of the kind of science they can do. And so we ran a survey of scientists back a, a couple of years ago, of top scientists, and four out of five, like 79% of them told us that if they could just spend money however they wanted, if they weren't kind of limited by, you know, what they're prescribed by these NIH grants, four out of five told us they would change their research agenda a lot. And, and so I think the analogy here is imagine if there was only one VC firm and it was run by the government. (laughs) How would that change the-

David Friedberg 1:01:35 And that VC firm had strong opinions on what kind of companies people should build.

John Collison 1:01:39 Exactly. I mean, you know, li- literally the, the, the grant panels at the NIH are, um, they're consensus-based, like explicitly. They've kind of consensus-based scoring mechanisms and they, you know, penalize you if you're doing work outside of your field and so forth. So hey, we, we, we kind of, we do, go to all this work to train these amazing scientists and then we sort of don't let them pursue their best ideas. That's kind of problem one in Arc, the, the Arc investigators, you know, they're funded to do whatever they want, curiosity driven research. And then the second thing behind Arc is, uh, is this idea that you can kind of divide diseases into three categories. You know, you have infectious diseases, a- and we, we, you know, broadly speaking know how to, you know, generate cures for and treatments for infectious diseases. We have monogenic diseases like one genetic mutation or something and, eh, we don't know how to cure those in most cases but we can, you know, we can at least screen for them and so on. And, and then we have what the biologists call complex diseases where there's some kind of gene environment interaction. That's most cancers, most autoimmune diseases, most neurodegenerative diseases and so forth.

David Friedberg 1:02:34 Alzheimer's, things like that.

John Collison 1:02:36 Exactly. And we've never cured a complex disease. And, you know, and many of these diseases are very tragic precisely because, you know, we, not only have we not cured them, we don't even have treatments as, you know, as John says, uh, in, in the case of Alzheimer's for example. And so, you know, the question is, can we do something about this and, you know, what would a research agenda and program that, you know, can, that can help, you know, shine some light on these complex diseases look like? And our hypothesis, now we'll see, we'll see, uh, how much it's born out, but our hypothesis is that we've gotten a couple of new technologies over the last couple of years. Single-cell sequencing. We can sequence the, the DNA or the RNA just, like, in one cell. Eh, we've, you know, fancy new functional genomics and CRISPR technologies, eh, so you can make these, you know, fine edits and perturbations, again, even just in a single cell. Eh, and then obviously you have transformers and AI and ML and all this stuff. And this is kind of a new read, think, write loop in biology that just didn't exist a decade ago. And again, the question is, uh, is this powerful enough now to, you know, solve some of these previously intractable, uh, diseases? And so yesterday Arc released this new, uh, foundation model for biology. It's the largest biology ML model ever. It's m- it's, uh, it's actually I think the largest open source AI model ever.

Jason Calacanis 1:03:51 This is EVO2 you're talking about.

John Collison 1:03:53 Exactly.

Jason Calacanis 1:03:53 E-V-O, the number 2. EVO2.

John Collison 1:03:55 Yeah. And so it's not just open weights like, uh, like, you know, uh, the DeepSeq model or LLaMA or something. It's actually, it's open source and it's the training code is, uh, is public.

Jason Calacanis 1:04:05 Mm-hmm.

John Collison 1:04:05 And, you know, it's, you can, people can go read the blog post or the paper or whatever, but the thing that I find amazing about EVO and that just really surprised me is, so it's trained on nine trillion base pair gene tokens. So, you know, uh, ChatGPT, LLMs are normally trained on, on, you know, the, on human language. This is a, a language model, but it's trained on, on DNA, the language of life. And there's only one human genome in the training set. It's mostly other species. And even though it's only seen one human genome, it's state of the art at predicting the pathogenicity of human genome mutations. And so, you know, a famous mutation is the BRCA mutation for breast cancer. Like, it's state of the art at predicting the, the pathogenicity, the harmfulness of, uh, of BRCA mutations. Again, it only saw one human-

David Friedberg 1:04:54 Despite never having seen one in humans.

John Collison 1:04:56 It's, it's only seen one human genome and that human, you know, did not have, uh, these pathogenic mutations. And so it's, it's kind of learning something deep across the tree of life and I don't know, I find that pretty cool.

David Sacks 1:05:06 And sorry, is there a phenotypic data set that's used in training? So I think, like, you know-

John Collison 1:05:11 Nope, totally unsupervised.

David Sacks 1:05:13 ... when you're typically... Right. And so when you're building models in typical, like, genotype by phenotype models, you're trying to look at the phenotype, the physical characteristics of-

John Collison 1:05:23 Yes.

David Sacks 1:05:23 ... the organism. What can it do?

John Collison 1:05:25 Yep.

David Sacks 1:05:25 What does it look like? What are the features? And then you look at the genome and so that tells you, hey, these are the specific genes or alterations or mutations that drove this particular phenotype is kind of what the model tries to learn over time with the objective being, hey, can I ask it to define a genotype or a genome based on a phenotype, based on a physical set of characteristics I'm looking for or vice versa? Maybe you can just help us understand what, what is it trained on and how, you know, how did that kind of-

John Collison 1:05:51 Yeah.

David Sacks 1:05:51 ... you know, prediction in BRCA, you know-

John Collison 1:05:53 Yeah.

David Sacks 1:05:53 ... how is that possible?

John Collison 1:05:55 Great question. So it's totally unsupervised. That is to say, you know, you're showing us lots of genomes, uh, and any kind of latent structure that it learns is just based on trying to figure out how to kind of organize, uh, that knowledge. But we're not showing it any labeled data or phenotypic, you know, kind of outcome data or, you know, what have you. And so then you're able to... You can give it a, a genetic sequence and ask relative to its understanding of the genetic universe, how likely is this particular sequence? And so then you can do things like, uh, like, you know, predict anomalous or pathogenicity or whatever.

David Sacks 1:06:28 Right.

John Collison 1:06:28 You can also then kind of using the embeddings of the upper layers, and we don't have to get too technical here, but, like, you can train another model on top of the model, um, and, uh, and even if you showed maybe only a couple of examples, it learns very quickly, okay, kind of here's, you know, here's how the weights of EVO2 correspond to this particular task. And those, uh, those sort of models trained on top, uh, turn out to be, you know, really accurate.

David Friedberg 1:06:54 You guys open sourced the base model or you open sourced the fine-tuned or both?

John Collison 1:06:59 ... we open-sourced the base model, but there, there's no kind of proprietary reason that we didn't open-source the fine-tunes. Like, it's really easy to produce them, and yeah. If anyone wanted one of them, we'd, we'd, we'd happily share it.

David Sacks 1:07:09 Where does it stand in the spectrum of different tools that folks would, would use to solve these life sciences problems? There's cell models that are being developed by some, then there's these protein models. Where does this fit?

John Collison 1:07:23 This kind of landscape of, of, um, of foundation models and biology, it's obviously very new, so it's, uh, um, it's a bit of an open question sort of how exactly people are gonna find, you know, ways to, to, to use it and, and applications for it. Part of it I think is cool, is that proteins and RNA and, I mean, phenotypic expression and everything, you know, all these things sit on top of the DNA. Like, in some sense, the DNA encodes everything because, you know, the, the whole organism comes from the DNA. And so, I guess the question would be, and, and you know, we don't really know yet, is DNA all you need? (laughs)

David Sacks 1:07:57 Yeah.

John Collison 1:07:57 Uh, and with EVO1, we saw some, you know, encouraging, uh, suggestions that, for example, you can build really good protein structure prediction models out of a DNA foundation model, even if you don't train on a lot of, you know, protein structure, uh, data, so. But I, I, I'd say just it's a really exciting time and it's kind of an open question, and I don't know if you analogize EVO2 to, I don't know, whether it's GPT-2 or 3 or something, but you know, I, I think we're gonna see a similar Cambrian explosion of, of applications over the next couple of years. The thing we're really excited about at Arc is, is training, yeah, cell state models and trying to better understand, you know, how cells, you know, what, what causes them to change states, and so we're thinking a lot about that. But, but you know, the reason that... The weights are on Hugging Face, and hopefully we'll be surprised in, in what

David Friedberg 1:08:44 And Patrick, do you just expect that over time, as Stripe continues to grow, you can just take the ex- some of your own excess capital and other people will do the same and keep funding Arc? And then if there's something that Arc creates or innovates on, if it can generate some amount of money, it would just kind of flow back? Is it meant to be self-sustaining or is it always just gonna be via patronage from successful folks that just wanna keep it going?

John Collison 1:09:09 John and I are, you know, w- we are ourselves very committed to this, and, um, and you know, we're, we're kind of underwriting this, uh, in that regard. But, well, one, we're just lucky where there's a, a growing donor pool of other people supporting it, and I