All-In PodcastTrump's Cabinet, Google's Quantum Chip, Apple's Flop, TikTok, State of VC
EVERY SPOKEN WORD
150 min read · 30,062 words- 0:00 – 4:01
The Besties welcome Keith Rabois!
- JCJason Calacanis
All right, everybody. Welcome back to the number one podcast in the world, the All-In Podcast. With me again today, Chamath Palihapitiya, your chairman dictator. How are you doing, brother? How you feeling?
- CPChamath Palihapitiya
Doing great. Fresh off the Holiday Spectacular.
- JCJason Calacanis
Hm. Good times.
- CPChamath Palihapitiya
It was great.
- JCJason Calacanis
And then, uh, getting ready for a little ski. You and I will be doing a little skiing together with Friedberg. That'll be quite nice. The three of us on the slopes.
- CPChamath Palihapitiya
I have- I have to say, Friedberg, I don't think you've skied with me and Jason. Jason is an excellent skier. I mean-
- JCJason Calacanis
I've heard.
- CPChamath Palihapitiya
His form, his beautiful-
- DFDavid Friedberg
Have I- have I skied with you, Jason? I don't think I have.
- CPChamath Palihapitiya
His brother is excellent too. They're both like-
- JCJason Calacanis
Josh the Black Bomber is good, yeah.
- CPChamath Palihapitiya
Yeah.
- JCJason Calacanis
Shout out to Josh the Black Bomber. It's gonna be fun.
- DFDavid Friedberg
Jason's got those hips. He's got- he's got skiing hips. They kind of shift left/right, left/right.
- JCJason Calacanis
Yes. Childbearing.
- DFDavid Friedberg
Yeah.
- CPChamath Palihapitiya
Childbearing hips, yeah.
- JCJason Calacanis
You know, it's kind of like when I went to the Tom...
- DFDavid Friedberg
The hips are wider than the shoulders, yeah. The worst.
- JCJason Calacanis
It reminds me of how I went to the Tom Ford, uh, out-
- CPChamath Palihapitiya
(laughs)
- JCJason Calacanis
... I went, when I went to Tom Ford to get my suit. I'll do that in just a second. But with us again, of course, your cackling sultan of science. Friedberg, how are you doing?
- CPChamath Palihapitiya
Have you guys seen that clip of the guy with the fake bum that runs around the cities?
- JCJason Calacanis
Yes, with security guards.
- DFDavid Friedberg
(laughs)
- CPChamath Palihapitiya
It's like some sort of a crypto put on or something. It's hilarious. This guy- What does he do?
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
He's got like a big Brazilian butt and he just runs around in tight khakis. It's hilarious.
- DFDavid Friedberg
Nick, can you find a clip of this guy?
- JCJason Calacanis
Oh my God, it's so ridiculous.
- 4:01 – 13:09
Keith explains why he returned to Khosla Ventures, the differences between Founders Fund and Khosla, and his husband Jacob Helberg's role in Trump Admin
- CPChamath Palihapitiya
now. Before we jump in, I actually have a question for you.
- JCJason Calacanis
Starting already.
- CPChamath Palihapitiya
How does that happen, Keith? How do you... You're at Founders... Sorry, and then you get... What, like what pulled you to go and work with Vinod, and then what pulled you back? Like how does that process work? Because these things are typically meant to be sort of forever jobs. That's true. So I, you know, had the benefit of having Vinod on the board of Square, which I think is typically how executives, uh, wind up turning into VCs, is you forge a relationship with board members. So like for example, Roelof Botha, who runs Sequoia, w- uh, had Mike Moritz on his board. Roelof was our CFO at PayPal and Mike recruited him. So that's a very common... Same thing, Ravi at Sequoia today was the COO and CFO of Instacart. Again, same thing. Mike recruited him into Sequoia. So I think that's typically, uh, how people become VCs. I always knew I wanted to be a VC since 2003. I was a very active angel investor, as you know. Even when I was, you know, concentrating on all these other jobs, I was writing a lot of checks. And so, anybody who's writing a lot of active angel checks probably has in the back of their mind, "One day I might want to be a professional investor." We could talk about the merits or demerits of that, but like the goal was pretty clear in my mind. And then, at some point, I think you have to make a decision. What do you want to be in life? Um, you know, venture has long time horizons. It is a job for life. Like 15, 20 years is pretty much what you have to commit to. So you don't really want to start venture when you get too old, because 20 years, you know, you'll be like Donald Trump age.
- JCJason Calacanis
Yeah. You, you have to have a long horizon.
- CPChamath Palihapitiya
So I can run for president if... I can run for president in 25 years or something. Keith, why did you leave Founders Fund to go to Khosla? So, Khosla was great. I spent six years there. The truthful reason why I left, it's kind of funny given COVID and how history changed, is I hated commuting up Sand Hill Road every day. We were one office, period, in office every single day. And I felt like the future of investing was more in San Francisco than in Palo Alto at the time. And I just despised sitting in a car 45 minutes each direction. Turns out, you know, COVID changed everything, how people do their work. Like we're recording this by Zoom. Before COVID, we'd probably all be in the same studio recording a podcast like this. And so, but the node and the team was very inflexible about it. And Founder's Fund was located in the city. Obviously, I knew Peter since college as, uh, Jason alluded to. And I decided that, you know, it was better for me. I remember talking to Sam Altman and I said, "Am I crazy for changing funds mostly on a commute basis?" And Sam said, "You're human. And every single study of human happiness is, it's inversely-
- JCJason Calacanis
Yes.
- CPChamath Palihapitiya
... correlated to your commute time." He's like, "There's nothing wrong with being human." In any event, there are a lot of similarities between FF and KV. Re- both are great funds that have put up, you know, incredible returns, have funded iconic founders and companies, but they're very different. KV is involved as early as possible, and FF is a momentum investor and is maybe the best in the planet as, at being a momentum investor. So almost every successful investment out of Founders Fund over eight funds, was invested at 500 million dollars or more in true valuation. And almost every single investment at KV in eight funds was like the seed or series A investment, with very few exceptions ever.
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
And so Anduril and Ramp-
- JCJason Calacanis
Wow.
- CPChamath Palihapitiya
... were the only exceptions at Founders Fund. And at KV, the only exception would be Stripe, which I led in, you know, 2013 or so, which is an order of magnitude higher valuation than any KV investment, initial investment ever. So KV's much more an input-driven organization. Founders Fund's much more output-driven and, you know, there's great technology companies that are input-driven, think Amazon, Apple. And there's great technology companies that are output-driven. So you can choose, but certain people are going to be better in some environments and other people are going to thrive, you know, in other environments. I fit in really, really well at KV.
- JCJason Calacanis
You enjoy the early stage, you enjoy year zero, year one, year two. Right, is my perception.
- CPChamath Palihapitiya
Well, A, I'm very good at it.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
You know, I think I prefer to invest as early as possible on a keynote deck only. Like if I meet a founder-
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
... and there's a keynote deck, there's no product, there's no metrics, that's my sweet spot because I also know nobody else in venture is good at that. Nobody else who's still active in venture.
- JCJason Calacanis
What's the secret? What's the secret from a keynote to a check?
- CPChamath Palihapitiya
It, it comes down to founder assessment. At the end of the day-
- JCJason Calacanis
Got it.
- CPChamath Palihapitiya
... the only data point is, is this founder capable of building an iconic company, period. And I prefer to compete when there's no metrics because you, all the metrics are going to do is confuse you. That said, there's a lot of investors who are very good once there's product metrics, financial metrics. And so I have to compete with people who are pretty good at what they do, so I'd prefer to go as early as possible. And then secondly, I like company building. Like I think part of my role is to help the founder increase the amplitude or probability of success.
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
And I enjoy that. At FF, that's very controversial.
- JCJason Calacanis
Yeah. Ah, right, yeah. The founder reigns supreme and everybody else is there to get out of the way, right. Yeah.
- DFDavid Friedberg
I've had both KV and FF as investors, lead investors, in both Climate and at Ohalo now. So I know both firms really well. And it's really, I always, people always ask me about the difference between the two. That's always what I get to. It's like Founders Fund, they have this kind of mantra, they find great founders and just get out of the way, let them run.
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
And they don't want to be helpful. That's not their, their objective. They feel like if they have to be helpful, it's not the kind of founder... I mean, Keith obviously speaking-
- CPChamath Palihapitiya
Yeah.
- DFDavid Friedberg
... outside of yourself. And then at Khosla, as you know, Vinod has been extremely... and, and the whole team there, especially at Climate and always, have always been extremely helpful. So adding board members, introducing commercial partners, being like very traditionally proactive, participatory VCs on the board. Very different, both very valuable. When I had a board issue at Founders Fund and there were some board members that did not like my strategy, they had issues with what I was doing with the company, uh, at Climate Corp at the time. Founders Fund actually stepped up and protected me, and they got the board, the rest of the board together to protect me, uh, in a way that was like actually at a very kind of crucial moment for the, for the business. And as a result, we had a massive exit within a year.
- JCJason Calacanis
I saw Bryan Singerman, uh, is leaving. So does anybody know which ambassadorship he's taking? (laughs)
- 13:09 – 25:59
Business acumen of Trump's cabinet and appointees, diversity of opinion
- JCJason Calacanis
And interestingly, what, what's turning out to be interesting as Trump assembles this group, I'd love to get the panel's thoughts on it, is not everybody thinks the same. Jacob's position on TikTok, which we'll get to in this show, very different than some other people in the administration, and even Trump himself flip-flopped a little bit on that. So what are your thoughts, as we get started here, just on that assembly of people, you know, including Sachs, obviously, who couldn't be here this week, but will be on future episodes. There's your announcement, folks. What are your thoughts on that, this sort of diversity in opinion in the administration and how that all sorts out? 'Cause some people are very Trumpian.
- CPChamath Palihapitiya
I think it's extremely exciting.
- JCJason Calacanis
Yeah, yeah.
- CPChamath Palihapitiya
I think it's very obvious watching from afar that the way Trump makes decision is he likes to ask a lot of people a lot of different questions, and then he makes the decision. That's why he's, to some people, the media enemies are very unpredictable, is he doesn't just take one source of input, and so you can never totally predict the output. But he arrays an interesting cast of characters and listens to them. Like, so for example, I haven't spent that much time with him, but in so far as I have, he would go around the room and ask every single person at dinner, "What's your view on X?" And literally go around a room of 28 people and listen to every single person. So I think that's how he makes decisions.
- JCJason Calacanis
X being a topic, not the website X.com.
- CPChamath Palihapitiya
Not X. Yeah.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
Everybody knows what his opinion-
- JCJason Calacanis
Oh, my old friend.
- CPChamath Palihapitiya
... on X is. I think he likes X.
- JCJason Calacanis
Chamath, any thoughts on this, um, the wider team as we see it get assembled? We obviously don't have Sachs here. He joined the team. What's your sure thoughts on the collection of characters and executives?
- DSDavid Sacks
Here's an interesting tweet that I saw, Nick. Can you just share it with the, with the guys?
- JCJason Calacanis
Oh, net worth of each one.
- DSDavid Sacks
Now, the reason why it was interesting to me was not the net worth per se, but I think this is the first time that I can remember, in modern history at least that I've been in the United States and following US politics, where such an enormous number of business people have been motivated to come and work inside of the administration. And I think that it creates this very interesting contrast and compare. I think that the Democrats would never have assembled a group of people like this, even though the Democratic Party has a version of this chart that they could have made. There's a lot of extremely talented business people that support the Democratic Party. The problem is that they believe it's deeply unfashionable to get strong, competent business people to take a pause in their business career and come work in government, and you almost look down on people that are successful. Whereas the Republican alternative here, if it creates a movement, so to speak, so that subsequent presidents tap folks on the shoulder, I think we'll be much better off. And the reason is pretty simple. I think that the United States economy is too complicated to be managed by theoreticians, by folks with random PhDs and absolutely no working experience in the real world. And when you bring those people in to oversee those PhDs, I think you probably get better outcomes. So I hope this becomes a standard, which is ask these very talented, clearly demonstrated successful people with judgment to hit the pause for a year or three or five, whatever it is, step into government, help the country, and then go back.
- JCJason Calacanis
And this was what the founding fathers, Dave, actually prescribed. This is what they wanted. They wanted people who were in business to do a tour of duty, to serve their country, and then to get out. They were not interested in career politicians. Correct?
- DFDavid Friedberg
I've said this a number of times, but all of the founding fathers had jobs, had professions, and they stepped in to serve their country as a civic duty, participated in the process of executing the, the responsibilities of government, and then stepped out and went back to their private lives. I think it is such a more powerful model for government than people who choose to, to be politicians, to represent people as a living, because it creates extraordinarily nasty incentive structures if that's the model, which is, for example, to curry favor with private industry participants and then go cash that favor in after you leave. And I think that this alternative where you have people who are, everyone looks at them and, "Oh, they're all billionaires," and so on, they're actually, as, because they're independently wealthy and they have enough money than they'll ever spend... I think Larry Page once said, "You can never spend more than a billion dollars in your life no matter how hard you try." It's literally impossible. People think like, "Oh, you could spend all that money." Actually, when you buy stuff, most of the stuff you buy are capital assets that you end up selling later. It's very hard to spend at that level. So when you have people that are truly independently wealthy...... their motivation is actually quite different than someone who's trying to make it from 100K to 500K of net worth, or 50K to a million of net worth. And I think it actually creates a higher degree of freedom and it aligns the people much more in the long-term outcome of government, rather than their own personal interests.
- DSDavid Sacks
No. And, and they're just smarter. So I'll give you a, a simple example. Maybe we'll talk about this later, J Cal, I'm not sure. But when I saw the DOJ's theoretical guidance on the Google antitrust matter, their idea is to divest the browser and I kind of scratched my head thinking, "Would any reasonable business person think that that was the right remedy?" Meanwhile, three weeks later, Google's like, "Here's a super chip in quantum computing-"
- DFDavid Friedberg
(laughs) Here's, here's a quantum computing.
- DSDavid Sacks
"... that breaks the world."
- DFDavid Friedberg
Yeah.
- DSDavid Sacks
And I thought, "How is it that these folks are so disconnected from reality that they don't understand what's actually sitting inside this company?" And I think it's in part because they don't know the right questions to ask. And the reason they don't know what the right questions to ask is they've never worked in the real working world.
- DFDavid Friedberg
We have a professional class of politicians and, and their understanding is 10 years old.
- DSDavid Sacks
But it's not just politicians, this is also bureaucrats. So my point is, these folks need to get off the sideline and work in a company for a while, know the bowels. They'll be much better able to guide these regulatory agencies if they actually just know what's going on. So if the right answer is some antitrust issue with a company where you need to divest, wouldn't it be great where, like, 100 smart businessmen looked at that and said, "That makes sense"?
- JCJason Calacanis
(laughs)
- DFDavid Friedberg
But let me give you the counter to that, Chamath, because the counter to that, which it comes up a lot, just so you can, like, frame the response, is why are all these people coming out of pharma companies to regulate pharma? Why are all these people coming out of big ag companies to regulate big ag? Why are all these people that come from energy companies coming to regulate energy? The common refrain is businesspeople are basically bringing business interests into the government by transporting themselves into these regulatory bodies, versus having career politicians, or what you call bureaucrats, be kind of independent regulatory authorities. So what's the response in that context to that, that refrain?
- DSDavid Sacks
They're absolutely right, and that's how it should work. The United States can no longer afford to be a bleeding piggy bank for bad ideas. So yeah, like, if a bureaucrat thinks the right thing to do is to divest a random browser to fix Google's monopolistic tendencies, that's not a remedy.
- JCJason Calacanis
Or spend tens of billions of dollars on a super, on a high-speed rail, like we, you were talking about earlier this week.
- DSDavid Sacks
This is not logical, it's not meaningful, it's misguided. So if what we want is kindergarten soccer where everybody gets to touch the ball, that's what we are getting right now, which is, it's not useful. So I would rather have a businessperson with a direct point of view. And by the way, with the level of transparency, the big issue, I guess, Freeburg, that that would create is-
- JCJason Calacanis
Yep.
- DSDavid Sacks
... could these people advantage themselves somehow to make more wealth? But the reality is, that would be so obvious and laid bare. What happens today is they burrow at this mid-level of an organization and they do exactly this, but it's not laid bare.
- 25:59 – 43:50
Google's new quantum chip: potential impact on encryption, cryptography, and more
- DFDavid Friedberg
to. Google's new quantum chip is super impressive. Freeberg and I were talking about that on the group chat. On Monday, Google announced its latest quantum chip. It's called Willow. Here's the chip if you haven't seen it. It's, uh, beautiful. It was fabricated in Google's new chip plant in Santa Barbara. They started this project back in 2012, their quantum computing project, and the headline basically is Willow performed a standard benchmark computation in under five minutes that would've taken today's fastest super computers ten septillion years, or 10 to the 25th power, which is billions of times (laughs) older than the universe. If you don't know what quantum computing is, Freeberg will expand on it, but basically, computers are binary. You've heard this before, one and zeros. Quantums use qubits. You know, those are zero, one, or both at the same time. And, uh, Google got a, a 5% pop. They're up 13% in the last five days, probably on the other news that Gemini 2.0 is out as well, which is unbelievable. I've been playing with it. What do you think, Freeberg, of this big announcement? Google's announcement is a paper published in Nature that follows a preprint they actually put out in August, so this news has been out for a little bit. There was obviously a press cycle this week around it to kind of make a big thing about it, but it is a very kind of important milestone in the evolution of quantum, uh, computing. So do you want me to kind of talk about quantum computing again? I think we've talked about this in the past, like- I mean, maybe a brief primer for people, but like what, what does this mean practically? I think what people want to know is when did these- Yeah. ... things actually have an impact in the way, say, NVIDIA's GPUs have had? Yeah. The big breakthrough here is that the whole basis of a quantum computer is called a qubit or a quantum bit. It's radically different than a bit, a binary digit, which, uh, we use in traditional digital computing, which is a one or a zero. A quantum bit, you can kind of think about it as a wave function. It's sort of a quantum state of a, of a molecule. And if we can contain that quantum state and get it to interact with other molecules based on their quantum state, you can start to gather information as an output that can be the result of what we would call quantum computation. (laughs) And that sounds complicated, but what it really means is that instead of doing kind of binary computation where we're adding numbers together or doing kind of other traditional arithmetic, there are really interesting functions you can do with qubits. Qubits can, for example, be entangled, so two of these molecules can actually relate to one another at a distance. They can also interfere with each other, so canceling out the wave function, and then when you read it out, you get a, a result that is basically a very, very complex problem that is solved through this quantum interpretation. It's really hard to kind of highlight how different this is from traditional computing. So quantum computing creates entirely new opportunities for algorithms that can do really incredible things that really don't even make sense on a traditional computer. They're not possible to kind of resolve on a traditional computer. And sorry, let me just state one thing. The quantum bit needs to hold its state for a period of time in order for a computation to be done, and so the big challenge in quantum computing is how do you build a quantum computer that has multiple qubits that hold their state for a long enough period of time that they don't make enough errors that you can actually do a computation with them? So what Google was able to demonstrate here is they created these, call it, logical qubits. So they put several qubits together, and by putting several qubits together, they were able to kind of have an algorithm that sits on top of it that figures out, hey, this, this group of physical qubits is now one logical qubit, and they balance the results of each one of them. So each one of them has some error. And as they put more of these together, what they were able to demonstrate for the first time ever is that the error went down. So when they did a three-by-three qubit structure, the error was higher than when they went to five by five, and then they went to seven by seven, and the error rate kept going down and down and down. So this is an important milestone because now it means that they have the technical architecture to build a chip or a computer using multiple qubits that can all kind of interact with each other-... with a low enough fault tolerance or low enough error rate that they can start to do these quantum calculations. This is a, a, a big area of opportunity. One of the very interesting areas that a lot of people are talking about is in cryptography. So, there's an algorithm by a professor who was at MIT for many years named Shor. It's called Shor's algorithm. And in 1994, 1995, I think, around that time, he basically came up with this idea that you could use a quantum computer to factor numbers almost instantly, and all modern encryption standards, so all of the RSA standards, everything that Bitcoin's blockchain is built on, all of our browsers, all server technology, all computer security technology is built on algorithms that are based on number factorization. So if you can factor a very large number, a number that's 256 digits long, theoretically, you could break a code. And it's really impossible to do that with traditional computers at the scale that we operate our encryption standards at today. But a quantum computer can do it in seconds or minutes. And that's based on Shor's algorithm. And if you want, there's some great YouTube videos that describe Shor's algorithm and how it works, but it's, like, mind-blowing when you look at it. It's, like, this really, like, non-intuitive but simple set of steps that, when you put them together on a quantum computer, it's like this thing can instantly figure out all the factors and then you can break a code. One of the things that this highlights is that in a couple of years, theoretically, if, if Google continues on this track, and now they build a large-scale qubit computer, they theoretically would be in a position to, to start to run some of these quantum algorithms, like Shor's algorithm. And so we're now kind of spitting distance or a couple of year- it's not really clear, is it three years, five years, seven years, but a couple years away from having computers that theoretically could crack all encryption standards. And there are a set of encryption standards that are called post-quantum encryption, and all of computing and all software is gonna need to move to post-quantum encryption in the next couple of years. So there's, like, this big kind of push now to, like, how do we do that? How do we accelerate it?
- DSDavid Sacks
I saw Sundar post it. I saw it in my feed. I ended up missing my next meeting because I had to figure out how long will it take for us to crack the encryption standards that we use for Bitcoin. Nick, here's the answer, 'cause I was so tilted by this idea.
- DFDavid Friedberg
Hmm.
- DSDavid Sacks
So, if you think of Willow as essentially like one stable logical qubit equivalent in a chip, we need about 4,000 to break RSA-2048, and we need about 8,000 to b- to break SHA256, which is the underlying encryption framework for Bitcoin. So, I think you're right. I think we're in the sort of like-
- DFDavid Friedberg
The end game?
- DSDavid Sacks
... two to five year shock clock. No, I mean, I think what'll have to happen is some of these chains will need to obviously re-implement something at a pretty foundational level. The weird thing is, Freeberg says, is like the Willow chip's error correction gets better the more of these things you start to use together. Now, there are some really big problems inside, inside these chips, like logical interconnects are very complicated. If you put two chips on a board, like, the C2C communication is cal- this, all this stuff that we haven't figured out how to do-
- DFDavid Friedberg
Mm-hmm.
- DSDavid Sacks
... but this is a big deal (laughs) and I was, so I was really like, "My God, what's going on here?"
- DFDavid Friedberg
Other projects at Google are finally landing. You have Waymo-
- DSDavid Sacks
It's really incredible.
- DFDavid Friedberg
... and you have this now. I mean, Project Loon might be gone, but, you know, I think those projects, we're gonna see a couple of them change the world, yeah? Just to give you a sense on the numbers, like Google's target for fault tolerance on a quantum chip to make it logically useful is one times ten to the negative six. Right now, this Willow chip is kind of running at 99.7%, so it's still a few orders of magnitude away. They have a long way to go in getting the fault tolerance low enough to actually build, uh, logical gates using qubits that can resolve kind of computational output. And so there's still, there's still a build cycle ahead and that pathway's a little bit unclear. But what they've shown is... This almost feels like the Shockley transistor moment. It's like here's this-
- DSDavid Sacks
It- that's exactly right.
- DFDavid Friedberg
... like, you know, here's this-
- DSDavid Sacks
You can ha-
- DFDavid Friedberg
... this transistor. Now everyone's like...
- DSDavid Sacks
You have a lossy transistor, and then you'll figure out P injunctions. You'll figure out all of these ways of just, like, getting the error correction down. Uh, but by the way, this reinforces what you said before, which is it's hard for an outsider like us to comprehend what's really happening inside of Google because the business they've built was able to fund this. I mean, and, and I, I went down a rabbit hole 'cause I'd never heard of who this guy was that, that runs this, Helmut Neven. Um-
- DFDavid Friedberg
He's in Santa Barbara. They have a whole team in Santa Barbara they've been running for, like, 10 years.
- DSDavid Sacks
He has his own law, Neven's Law, and then I went down the rabbit hole of that. But what's amazing is, so valuable for humanity, Google had the money to fund him for the last 12 years.
- DFDavid Friedberg
Exactly.
- DSDavid Sacks
And-
- DFDavid Friedberg
The greatest money printing machine of all time is paying dividends. Yeah.
- DSDavid Sacks
But isn't it great to know Google takes these resources from search? And sure, maybe there's waste and... or maybe they could have done better with the black George Washington or maybe they could have done better with YouTube. But the other side is they've been able to, like, incubate and germinate these brilliant people that can toil away and create these important step function advances for humanity. It's really awesome.
- DFDavid Friedberg
DeepMind is on that list as well. Keith, what are your thoughts about-
- DSDavid Sacks
DeepMind, yeah.
- DFDavid Friedberg
Yeah, DeepMind. Yeah.
- CPChamath Palihapitiya
Yeah. So I, I think... First of all, I think there's a long time before this becomes a commercial product or application of any sort. So, you know, it's great that they're taking money, but think about it as like almost like Stanford takes money or the US government funds basic research in some ways. This is at least a decade out kind of thing. Um, there's another... I mean, out- this area way beyond my expertise, but I've been talking to a lot of smart people 'cause I do do financial services innovation and obviously encryption is pretty critical, whether it's Bitcoin or other places, and th- there's a couple concerns. One is it's not even clear that you can verify that this is true, um, by the way. Like, standard computing, to explain sort of the magnitude of difference...... standard computing would take, uh-
- DFDavid Friedberg
(laughs)
- CPChamath Palihapitiya
... ten to the 25th years, uh, to verify that what G- uh, Google analysis is accurate. So, there's a chance-
- DFDavid Friedberg
Right.
- CPChamath Palihapitiya
... that it's not even true. But-
- 43:50 – 54:30
Apple developing new server chip for AI inference, iOS flop, why its product culture is failing
- JCJason Calacanis
Hey, um, speaking of chip news, Apple is making its own AI server chips for internal use. A report just came out that Broadcom and TSMC are helping them develop AI inference chips, you know, inference chips like Rock, uh, Chamoth, and there are obviously GPUs, like Nvidia GPUs. Those are like the giant dump trucks that help you build large language models. Uh, these inference chips are kind of like speeder bikes, you know, motorcycles, quickly getting you the results from the same ones. It's called Baltra, Baltra. I don't know what that's, uh, in reference to. Mass production in 2026. They don't plan on selling the chips. They don't plan on cloud computing. The reason they're doing this, obviously, is because they really want the iPhone to be the interface, and they have planted their flag that they want to have privacy and have AI working off of your local device and not having access to your data, but having a compelling AI experience.
- DSDavid Sacks
My gosh, my- my iPhone does not work. I'm sorry. I'm just gonna say it, okay?
- JCJason Calacanis
Okay. (laughs)
- DSDavid Sacks
I don't know what happened in-
- JCJason Calacanis
You upgraded your software, that's what happened. (laughs) You're on iOS 18. It doesn't work.
- DSDavid Sacks
Um, I- after three years, I upgraded to the newest phone. I upgraded to the newest OS. The phone doesn't work, meaning, like, to call people, I can't call my wife anymore. I can't call my kids anymore. The phone bricks constantly. My photos app doesn't work. It is just really bad.
- JCJason Calacanis
Mm-hmm.
- DSDavid Sacks
And I think for a company of this scale, I don't understand how it does not go through a more complicated test harness that catches all of this.
- JCJason Calacanis
There is definitely some-
- DSDavid Sacks
I'm sorry, I'm- I'm- I'm not trying to complain, but... 'Cause I know it's hard for them-
- JCJason Calacanis
It's fine.
- DSDavid Sacks
... and I know it's complicated, and it's really bad.
- JCJason Calacanis
You're not the only person. People are freaking out about the interface changes on photos, crashing is a major thing, and Apple intelligence just doesn't work. So, it does seem, Keith, that Apple has gotten off their game of making polished stuff to race to try and, I guess, catch up to their perception of, you know, AI being a disruptive force at the interface level, i.e. your phone or desktop. What are- what are your thoughts on, uh, this new story about them doing more chips? They've obviously had great success with the processors and phones and now the M4. Incredible, if you haven't tried the Mac Mini, best computer for the dollar in the world right now. But what- what are your thoughts on Apple?
- CPChamath Palihapitiya
So, the most important thing about Apple is to remember it's vertically integrated, and vertically integrated companies, when you construct them properly, have a competitive advantage that really cannot be assaulted for a decade, 20, 30, 40, 50 years. And so chips, classic illustration, go all the way down to the metal and build a chip that's perfect for your desired interface, your desired use cases, your desired UI, and nobody's gonna be able to compete with you. And if you have the resources, the- you know, 'cause you need balance sheet resources to go the chip direction, um, it just gives you another five-to-10-year sort of competitive advantage. And so I love vertically integrated companies. Uh, you know, I posted a pinned tweet, I think it's still my pinned tweet about vertically integrate is the solution to the best possible companies, uh, but it's very difficult. You need different teams with different skill sets, and you need probably more money, truthfully, more capital.
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
But Apple is just going to keep going down the vertical integration, software, hardware, you know, all day long. And there's nobody else who does hardware and software together in the planet, which is kind of shocking in some ways. Is there a world-class company, a company that's world class in both software and hardware, other than Apple?
- DSDavid Sacks
Tesla.
- CPChamath Palihapitiya
Yeah, maybe.
- JCJason Calacanis
Nvidia? Google?
- CPChamath Palihapitiya
Nvidia, well, may- not really. Could they do a world-class UI? You know, may- maybe, maybe there's a foundation. They don't have a different vision, maybe a different team, not clear. Tesla's close, I guess. I'd say the software is good.
- DSDavid Sacks
If you define software as it touches a consumer, Tesla, Apple, in some ways Google, maybe Meta with the Meta glasses.
- JCJason Calacanis
Trying.
- CPChamath Palihapitiya
Trying.
- JCJason Calacanis
Attempting.
- DSDavid Sacks
You can't say Nvidia because I think Nvidia touches the consumer through an app that then sits on top of CUDA, which I think is- that's a brilliant strategy for them, but it's- it's- yeah, it's- it's a hard game.
- JCJason Calacanis
It would be Apple, then Tesla, and then a long tail of people-
- CPChamath Palihapitiya
Right, well, so anyway, this is the point, Apple-
- JCJason Calacanis
... experimenting, right? Right.
- CPChamath Palihapitiya
... has a lot of competitive advantages that they, you know, have been actually leveraging for about 15 years now. And even back then, Steve, there's some old great Steve videos, I'll- I'll see if I can find you a clip, where he talks about this very intentionally from the 1990s. You know, when he came back to Apple, he said, "We're doing vertical integration," basically using those words of software and hardware, "and there's going to be nobody else that can compete with us." I think it's in an interview he did in- it's published in, uh, In the Company of Giants, I believe.
- JCJason Calacanis
Mm-hmm.
- 54:30 – 1:03:55
TikTok panics after appeals court upholds the "divest-or-ban" law, with a January 19th deadline
- DSDavid Sacks
Yeah. True.
- JCJason Calacanis
Let's go to the app level here. TikTok is scrambling right now after an appeals court upheld the January 19th deadline-
- DSDavid Sacks
Oh, red meat for Keith.
- JCJason Calacanis
... for divestment. Here we go.
- DSDavid Sacks
Red meat. Keith Leraboi red meat.
- JCJason Calacanis
Back in April. Here we go.
- CPChamath Palihapitiya
I refer you to my Twitter feed. (laughs) My X feed.
- DSDavid Sacks
(laughs)
- JCJason Calacanis
(laughs) I mean, you and Jacob must sit... I mean, what do you do? You just sit at dinner and, uh, feed the kids and then, uh, talk about TikTok and, and China? It's, uh, it's g- in which I give you fun.
- CPChamath Palihapitiya
Well, I think TikTok is pretty obvious, like (laughs) so it's not, you don't even have to have a conversation in my view. Like, TikTok is a threat.... to the national security of the United States. And that's why-
- JCJason Calacanis
100%. Why?
- CPChamath Palihapitiya
And that, well, okay-
- JCJason Calacanis
Explain to people who are like-
- CPChamath Palihapitiya
100%.
- JCJason Calacanis
... "It's just an app. It's just an app."
- CPChamath Palihapitiya
100%.
- JCJason Calacanis
Why? Why? Why 100%?
- CPChamath Palihapitiya
Well, so I think there's different dimensions. One of the problems is there's so many things wrong with TikTok (laughs) that actually sometimes people get confused because there's not just one of these or sometimes it's just one that... So, they are definitely using the app to track data about Americans. And there's evidence that regardless of what alleged protections exist, there are people in China monitoring what certain people in the United States are doing. And the CEO lied under oath to congressional committees about this and the evidence is now in the public domain. Hopefully, this Justice Department will prosecute him for lying under oath. I think setting a really good example that you cannot just perjure yourself before Congress.
- DSDavid Sacks
Sorry, Keith, can you double click into that? So what did, how did it come into the, into the open source that what he said was a lie? Like what, what exactly-
- CPChamath Palihapitiya
Yeah. So there are people in China who on the record have said they had access and have had access to American user data, which he swore to, under oath, to the Congress that they were storing the data in Texas somewhere, and that there's no possibility that, you know, Chinese nationals in China could access the data. There is now several, um, instantiations of this in the public record, let alone what's privately available.
- JCJason Calacanis
Yeah. I mean, the case specifically too, back in 2022, ByteDance, the parent company of TikTok, had used an app to track locations, had used their app to track the location of journalists because they were trying to track leaks outside of TikTok.
- CPChamath Palihapitiya
Sources, yeah.
- JCJason Calacanis
Yeah, so-
- CPChamath Palihapitiya
Then secondly, let me, let me keep going here because it's worse. So there's a law. The fundamental problem is in China, there's a law that says if you're a Chinese company, upon request of the CCP, you must provide all user data. So any Chinese company is subject to that law, period. There's no court intervention, you don't need a subpoena, blah, blah, blah. And so it... Any Chinese, any executive at that company is subject to significant penalties on the record for not providing any user data at the request of the CCP. So as long as that law exists, there's a real structural threat to the United States. Now, then there's the, is the app being used, manipulated on a content basis to influence, you know, policy in the United States, to disadvantage this or that or create hostilities? I don't really know the answer. I think there's been studies that suggest that and, you know, pretty rigorous methodologies, but that's a separate level. And then third is, there's the, why the hell are we allowing Chinese companies to compete with us when no American content-based organization is allowed into the Chinese market? Whether it's-
- JCJason Calacanis
Reciprocity. Mm-hmm.
- CPChamath Palihapitiya
Whether it's Meta, Google, X. You know, there's a strong argument there that, "Reddit, if you don't allow our content or non, you know, non-Chinese content into your market, why should we be enabling Chinese companies to be successful," in quotes, "in the US market?" And that's more of a, a fair trade, free trade.
- DSDavid Sacks
Keith, do you think that the Pegasus spyware that can infiltrate WhatsApp so that you can turn on the mic and listen remotely, and it has no fingerprints, it's very difficult to detect. Do you think an equivalent, let's call it a backdoor, exists inside of TikTok?
- CPChamath Palihapitiya
Yes. So my evidence for this that I believe is an interpolation of what's in the public domain, is if you looked at that vote to ban TikTok, it was extremely bipartisan despite, you know, controversy. And what happened was that vote was taken a week after there was an intelligence briefing to both the House and Senate Intelligence Committees that was, that's confidential. And the votes, you know, all of a sudden flowed through. I think there's things that are not in the public domain about TikTok that spooked a lot of elected officials and led to this bipartisan consensus. How many bipartisan votes do we see on a allegedly controversial issue that, you know, basically didn't... The vote was like, you know, like not even close in either house?
- JCJason Calacanis
360 to 58.
- CPChamath Palihapitiya
Yeah. When you see a vote like that on something meaningful, never.
- 1:03:55 – 1:12:34
State of Venture Capital, why Stripe is still private, thoughts on crypto
- JCJason Calacanis
you go.
- DSDavid Sacks
Denver cut, yeah.
- JCJason Calacanis
All right, let's wrap up with a venture update here at the darkest hour, Keith, sometimes before the dawn. VC deal activity has, uh, getting close to, uh, pre-COVID numbers. In 2019, obviously, a major funding drop-off happened in 2022. Yeah, it's been a couple of years of this, but deals, uh, the number of deals is coming back, the amount being put to work coming back to, I would say, the steady state, perhaps even normal level. Uh, and, um, but VC exits, sadly, are not keeping up. But we did have ServiceNow go public today, up 50%. And the wrath of Lina Khan is officially over. She's out. Andrew Ferguson is in. This looks like a great appointment, another one by Trump in the column of somebody who wants to allow business to occur and wants a free market. He wants to do basically everything Lina Khan, uh, didn't do, which is allow some M&A. Rabois, what's your pulse like here? Uh, and what's your take on the venture industry? And then we'll go into M&A and exits. We- we'll start with just investing. Is it, is it ramping up? Are you seeing high-quality companies?
- CPChamath Palihapitiya
Well, I'd say that you should cut that data by AI and non-AI, and you might see a tell two different cities. My anecdotal experience is there's AI companies where the market's pretty hot, maybe cooling a little bit, but hot, and AI companies with the right team are getting funded, you know, frequently, quickly, et cetera. And then there's non-AI companies, and I think you'll see a very different, you know, sort of chart there. I do think net-net, you're probably at a city state that looks reasonable across 40 years, you know, like et cetera. But, um, it would be interesting, and, you know, you have to make some methodological decisions about what's an AI company and what's not. But if you could do that, it'd be interesting to see if the lines, you know, look similar or not. But it's pretty hot. Like, people starting companies, fou- founders are optimistic. Crypto companies also, you know, are back in vogue, obviously due to the change in-
- JCJason Calacanis
Hm.
- CPChamath Palihapitiya
... administration. I think a lot of people have been hesitant to start new crypto companies and, you know-
- JCJason Calacanis
Of course, yeah.
- CPChamath Palihapitiya
... there's a belief and confidence in the new administration, the SEC, et cetera. So we'll see if the innovation accelerates, you know, with all of the new capital and all the new founders, uh, back in crypto. In enterprise software, it had been pretty cool, non-AI based enterprise software. But, you know, like as you mentioned, with the IPO this week trading very aggressively, I think, you know, maybe there's some inspire- inspiration there for, you know, more traditional, boring type companies.
- JCJason Calacanis
(coughs) Stripe. Stripe. Stripe.
- CPChamath Palihapitiya
Stripe should go public, but, uh, you know, they don't listen to me, so. (laughs)
- JCJason Calacanis
Yeah, you didn't... Why aren't they going public, Keith? What's, what's the story with the boys over there? Why don't-
- DSDavid Sacks
They're waiting to get disrupted by crypto stable coins.
- CPChamath Palihapitiya
(laughs) So-
- JCJason Calacanis
I mean, seriously.
- CPChamath Palihapitiya
Look-
- JCJason Calacanis
Talk about missing your window. Get out there, boys.
- DSDavid Sacks
They bought that crypto stable coin company for like a billion dollars.
- JCJason Calacanis
Huh. Defensive, yeah. Defensive mode.
- CPChamath Palihapitiya
Yeah. I, I personally believe and subscribe to the view that companies should go public as early as possible in the very early, you know, sort of school of thought, which-
- JCJason Calacanis
What amount of revenue? What amount of revenue? Put a number on it.
- CPChamath Palihapitiya
50 million minimum, but predictability matters, you know, definitely, so not just 50. Like, but 50 with line of sight to 100 and knowing 100-
- JCJason Calacanis
Got it.
- CPChamath Palihapitiya
... to 200.I wrote a whole chapter in Elad Gil's, you know, High Growth Handbook on why companies should go public as early as possible. So I, I've been on this crusade forever. I like accountability, transparency, discipline. I think they are good things. And, you know, there's a critique that, like, "Oh, you're not going to be innovative anymore." If you look at some of the companies we've been talking about, what are some of the most innovative companies in the world, they're public companies. It just takes the right leader to say, "I'm going to be innovative and I don't care what the bureaucrats and lawyers, you know... I'm just not gonna get distracted with that."
- JCJason Calacanis
Hmm.
- CPChamath Palihapitiya
And so, I- I like public companies. And so I think you'll see a lot of the companies I am involved in go public at a fairly rapid clip, by histor- historical standards. Different founders, though, have different sort of views on this. It's very reasonable. Stripe, SpaceX, you know, for example, founded 2003. Who knows, you know, (laughs) when it's going to be a public company. So you can have a very successful company like SpaceX or Stripe, but my preference is to go public early. And then you have the capital, resources-
- JCJason Calacanis
Mm-hmm.
- CPChamath Palihapitiya
... equity or capital to be strategic, uh, per your point about potentially missing the window.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
That they were able to transact, you know, in that particular case and get ahead of the curve, or at least not miss the curve. But sometimes when you're a private company, there are strategic assets that you can't get your hands on. And, you know, think about Facebook buying Instagram. We talked about the taste issue. Instagram had taste at the time. Like, Kevin had taste.
- JCJason Calacanis
Yeah.
Episode duration: 1:28:18
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