How the Pentagon cut Anthropic over terms-of-service clauses

Jason Calacanis 0:00 All right, everybody. Emergency podcast time, episode 263 of All-In. We have Emil Michael, the Under Secretary of War for Research and Engineering, working directly for Pete Hegseth. We had to get this out to you on Thursday night because it is an emergency pod. One of my old besties, Emil Michael, is here. Emil and I, uh, were part of Team Uber back in the day. He was Travis's right-hand man, some might say fixer, and Emil Michael is now the Under Secretary for War here in the United States, serving his country like our bestie, David Sacks. Welcome to the program for the first time, Emil Michael. How you doing, brother?

Emil Michael 0:41 I'm doing good. Uh, I hope it was more than a fixer, but, you know-

Jason Calacanis 0:46 Well, deal maker-

Emil Michael 0:46 ... raising twenty billion dollars is, uh, you know.

Jason Calacanis 0:48 Fixer. I mean, you, you got it done.

Emil Michael 0:49 Yeah.

Jason Calacanis 0:49 You got it done. The hard- He would give you the hardest things. Yeah? Just to-

Emil Michael 0:52 That's right. Fair enough.

Jason Calacanis 0:53 If it was hard, and that's what a fixer is.

Chamath Palihapitiya 0:55 An operational ax. That's what they call them.

Jason Calacanis 0:58 All right. Sure.

Emil Michael 0:59 [laughs]

Jason Calacanis 0:59 Uh, in Brooklyn, we call them fixers. With us again-

Chamath Palihapitiya 1:02 A rainmaker.

Jason Calacanis 1:03 There's that, too. There's that, too. Making it happen. With us again, Chamath Palihapitiya. How are you, brother?

Chamath Palihapitiya 1:11 Great.

Jason Calacanis 1:11 Yeah. Look at that smile. What do you got going on? [laughs] You got some pokers in the fire.

Chamath Palihapitiya 1:18 Local.

Jason Calacanis 1:19 I'm not gonna say. In the coming weeks, I think some news is gonna drop. That's my prediction. I don't have any inside information.

David Friedberg 1:23 Are you loving Chamath's tweet mogging that's been going on this week?

Chamath Palihapitiya 1:26 So good.

Emil Michael 1:27 So good.

Chamath Palihapitiya 1:27 So good.

Jason Calacanis 1:28 But he's, he's-

Chamath Palihapitiya 1:29 So good.

Jason Calacanis 1:30 He's looks maxing-

Chamath Palihapitiya 1:31 It's just so good

Jason Calacanis 1:31 ... by default, but he's been mogging-

Emil Michael 1:33 Yeah

Jason Calacanis 1:33 ... the gooners.

David Friedberg 1:35 Yeah. So funny.

Chamath Palihapitiya 1:36 What was your favorite, Friedberg? [laughs]

David Friedberg 1:38 The one I sent you this morning that you said. What did you say? [laughs]

Chamath Palihapitiya 1:40 It's so funny.

David Friedberg 1:41 Are you collecting your [laughs] losses by tax harvesting?

Chamath Palihapitiya 1:45 What did you say?

Emil Michael 1:46 Oh, my God.

Chamath Palihapitiya 1:47 Chamath said, uh... Oh, my God. It was just like-

Jason Calacanis 1:50 Getting spicy out there, folks.

David Friedberg 1:50 "Yes, I did. Yes, I did."

Chamath Palihapitiya 1:51 "Yes, I did."

Jason Calacanis 1:52 [laughs]

Chamath Palihapitiya 1:52 Yes. Someone said something to Chamath. He's like, drops in, "Why is everyone so mad at Chamath? All he did was lose billions in retail investors' money by pro-

Jason Calacanis 1:59 Oh

Chamath Palihapitiya 1:59 ... promoting [laughs] one-page SPACs. It's not like he then told them to enjoy their capital losses or anything. Give the man a break. Chamath's response, 'Yes, I did.'" [laughs]

Jason Calacanis 2:08 [laughs] All right. Piling on is your sultan of science.

David Friedberg 2:12 Mm. So good.

Jason Calacanis 2:12 Everybody's favorite. Had a great-

Chamath Palihapitiya 2:14 So good

Jason Calacanis 2:14 ... he had, um, some great science that he brought to the show last week. Friedberg, how are you doing?

David Friedberg 2:20 Uh, yeah, I've been traveling this week. Back at home.

Jason Calacanis 2:22 All right. Sacks is out today. He's very busy on Capitol Hill. We'll talk about what he's up to next week.

David Friedberg 2:27 Let's go. Come on. Let's go, let's go.

Chamath Palihapitiya 2:29 Let's go. Go, Jason.

Jason Calacanis 2:30 All right. The US and Israel launched a joint attack on Iran on Saturday. Today is day six of Operation Epic Fury. Iran's supreme leader, Ali Khamenei, was killed within hours of the operation. 40 senior officials have also been killed. Death toll so far, about 1,000 people according to reports. Tragically, six US Army Reserve soldiers were killed following a drone strike on a base in Kuwait. A US submarine sank an Iranian ship off the coast of Sri Lanka. This is the first torpedo kill since World War II. Why we're at war? Been a bit of a moving target and a debate. First explanation from Rubio, he said Israel was gonna attack and the US had no choice but to participate. Later walked that back. Trump made it clear this is not a regime change effort, but we're doing this to stop terrorism and the development of ICBMs by obviously a pretty crazy group of individuals, and obviously nuclear bombs, which we blew up a couple weeks ago. Trump also mentioned the people of Iran should seize the moment, quote, "and take their country back." Hegseth, who I believe is your boss, Emil, said, quote, "This is not a so-called regime change war, but the regime sure did change, and the world is better off for it." So here's an interesting Polymarket. Right now, US forces enter Iran, this is boots on the ground, by the end of March, 40% chance. By the end of the year, 59% chance. So the idea that we're not gonna have boots on the ground, the sharps on Polymarket believe we will. Will the Iranian regime fall? By June 30th, 39% chance according to Polymarket, and by the end of the year, 51% chance. So Emil, I guess there are two questions people really wanna know. I'll leave off why we're doing this. I think President Trump has been pretty clear now. But how long is this gonna take is the one question, and are we gonna have to have boots on the ground? And maybe what is success here?

Emil Michael 4:35 Um, I think the, the president talked about this is a weeks not months kinda operation, and it's aimed at the, essentially disarming the, the regime, uh, or the country from, uh, i- in such a way that they can't supply Hezbollah, Hamas, um, Muslim Brotherhood, all the kinda terror groups that get sponsored by weapons and money from Iran, not to mention the nuclear bit. And that's why you see from the reporting they're going after the depots. The, the, you know, we went after nuclear sites before. They're a prodigious drone maker, these, like, h- huge one-way attack drones that can go hun- you know, hundreds and hundreds of miles. Um, lots of ballistic missiles, uh, that are aimed at every country in the Middle East, as you've seen, they've attacked them. So I think that's one. In terms of boots on the ground, there's no scenario where we have some protracted boots on the ground, Afghanistan, Iraq two-like scenario.

Jason Calacanis 5:40 Friedberg, your thoughts on this war. Obviously, a lot of people voted for Trump in order to have the peace dividend, that he was, in his first term, absolutely the peace president, and now here we are, eight countries have been bombed, and we've had two leaders deposed, and one of those two have been killed.Your thoughts, Friedberg

David Friedberg 6:03 I think the president and the administration have probably the biggest meetings of the term coming up in China in April. My estimation, based on the conversations and the comments made by the president before he came into office and since he's been in office, is that finding a grand bargain or a deal with China is probably one of his top priorities. And if you think about the importance of that, is the US gonna wade into a giant global conflict led by a US-China rift, or is the US gonna find some grand bargain? I think he would probably have a preference for the grand bargain. And that being the case, I think you could look at the, in the context of Maduro and the actions in Iran as creating maximal leverage going into those negotiations that would-

Jason Calacanis 6:51 The reason for that, Friedberg?

David Friedberg 6:53 Ninety percent of the oil that comes out of Iran goes to China, and there's been a long-developing and developed relationship between Maduro's government and China, and these are big economic drivers or support the economic driving in China. So creating leverage by having significant influence or damage or destruction to those supply chains for China gives the United States footing to be able to negotiate a better deal for America. I would imagine that the president's intention here isn't to go and decide who should be in charge and drive regime change and end in a multiyear conflict with Iran. But ultimately, if there's some transaction with China that gets everyone out of this and puts the US on a strong footing where American businesses can sell into China, which is very challenging, as everyone knows today, and there's parity, regulatory parity, economic and trade parity between the US and China. There's a point of view on what happens with Taiwan and availability of key technologies like semiconductors. I think it could be a win-win, and I think that a deal with China could be the crowning achievement of this administration, particularly going into the midterms. So the timing is right, and I think that's probably a, a core part of the motivation here.

Jason Calacanis 8:07 Chamath, your thoughts on this action and why we're doing it. You've heard obviously the president has his position. We're not doing regime change. It's a secondary effect, obviously, but we wanna stop those ICBMs and nuclear bombs from being developed, and we wanna stop terrorism. Additionally, Friedberg says, "Hey, we're framing this great, you know, discussion we're gonna have with Xi and China, and oil is part of that." Where do, where, where do you think you stand on all this?

Speaker 8:38 I'll build on both what Emil said and what Friedberg said. I don't think this is about regime change, and I don't think it's about a local regional conflict. I think if you take a step back and zoom out, the most important thing that we did in the last three months was by taking out Maduro and by taking out the Iranian leadership, we have created enormous leverage, as Friedberg said, with China. Now, why is that important? Because I think all of this centers around that geopolitical discussion. Last night, something important happened, which is that the official Chinese bureaucracy posted what their GDP targets were, and it was shocking to anybody reading it because what we saw was that they guided to a range of four and a half to five percent, which if you look at the historical context of that growth, is the lowest that it has ever been in about thirty years, so three decades, so before they entered the WTO. And the question that one should ask yourself is, when a country that's growing at eight, nine, and ten percent start to grow at half that rate, yet have double the number of people and double the GDP, what happens? You already have incredibly high domestic unemployment, especially youth unemployment. Does it become more or less chaotic? And I think the historical artifacts of every other country would show that it will become more chaotic. If you have that as a starting point, what is it in China's best interest to do? And I think it becomes obvious that the right thing to do would be to invade Taiwan. Why? Because you start to create a sinkhole that occupies your people, that occupies resources, that can get domestic production up and running, that can start to generate a war machine, and you see the economic impact of war machines in any country during any conflict. And if I had to guess, just to build on what Emil said, the president saw that, and I think what they did can be summarized in this chart which I sent to Nick. So if your goal is to prevent war with China, which is a massive global conflict, which could be nuclear, which could be cataclysmic, how would you do it? And this chart paints one way to do it. If you look at the conditions inside of the Chinese economy, the most interesting takeaway is that they are enormously dependent on imported oil, so about twenty percent of their economy. But it's not twenty percent of their economy because it's a hundred percent of these critical things that create GDP: logistics, transportation, aviation, feedstock inputs. And of that nineteen percent, about a fifth of it comes exclusively from Iran and Venezuela, and now all of that is off the table. So if you take that and then you see what Steve Witkoff and Jared Kushner and Josh Greenblatt have been doing, which is trying to get a deal done in Russia, and you put all of these things together, because by the way, if you add Russia into that mix, it's about forty percent of China's oil. Not only do you re-dollarize, not only do you stop the funneling of all of these illicit oil funds to creating chaos all around the world, but you hem in China going into a massive moment at the end of March, beginning of AprilWhere as Friedberg said really astutely, there is the potential for a grand bargain, and I think that secures global safety. In that, that is a huge thing for America

Jason Calacanis 12:20 Emil, how much does this have to do with China?

Emil Michael 12:24 I think, you know, my instinct is, and I'm not speaking for the administration on this, is that's a second-order benefit to some of these things. Like the, um, you know... And you said eight, eight conflicts. Every- They have not been eight conflicts. There was, like we inherited Gaza, we inherited Russia, Ukraine, um, Venezuela was its own operation, and then you could sort of attach to it the drug boats that were coming out of that as like one big operation. Um, and then the Houthis was just Biden was ignoring the Houthis. They were just shooting at our ships, so that was like very limited in terms of like, "Stop shooting our ships. We need freedom of the seas." And that wasn't sort of a, you know, so that's something any president should be doing generally, I think.

Speaker 13:10 Sure.

Emil Michael 13:10 Um, Iran being the one, you know, material conflict outside of Venezuela, so

Emil Michael 13:16 it's not, it's not that many. And, and how long did Venezuela last? It was one raid, one night.

Jason Calacanis 13:21 I guess that's a really important-

Speaker 13:23 A few hours.

Emil Michael 13:24 Yeah. [laughs]

Jason Calacanis 13:24 This is important. This is an important note, I think, for you, Emil, to sort of, uh-

Speaker 13:28 Five minutes would have been longer than that

Jason Calacanis 13:28 ... explain to us there's a new-

Speaker 13:30 [laughs]

Jason Calacanis 13:31 ... approach here with regard to the, these actions, which is no boots on the ground, and we seem to, uh... And, and you of course have better information than anybody else does. I don't think anybody would have known Venezuela would have gone as well as it did, and so far, and, and listen, we got a long way to go with Iran, this has gone very well as, as well. So explain to us what you know a- and what you, the President, and Hegseth know that we don't that makes these two operations go so smoothly. What, what is it? There, and there's obviously some new technology here in, in the case of what happened in Venezuela.

Emil Michael 14:08 Yeah. Besi- besides the discombobulator, what we've got is-

Speaker 14:12 [laughs]

Emil Michael 14:13 ... a very well-trained military. Like the, the global war on terror was dis- disaster in so many respects, but the people now who are fighting that are generals now, and so they've learned a lot of lessons. And you compare that to the Chinese military, they don't have a lot of experience. In fact, the, the decapitation they did in the Chinese military, the one guy they took out was the one guy who had experience in Vietnam, so they don't have, uh, conflict experience. And that matters because you understand going in what are the things that could go wrong. Um, and then you, you have incredible technology, space, air, land, sea, cyber, um, all kinds of effects that you could bring together. And so you imagine, uh, 100 guys goes into the most fortified compound in Venezuela where the president is, you know, take him and his wife out safely and are out with no KIAs. Um-

Jason Calacanis 15:11 Incredible

Emil Michael 15:12 ... I mean, it's, it's incredible, right? You, so you-

Jason Calacanis 15:14 Stunning.

Emil Michael 15:14 Yeah, so... A- and they, they, these things, these war games have been on the, on the shelf for a long time. Every, every scenario has been planned for years ahead of time. Midnight Hammer in Iran was planned years ahead of time in terms of, how would you do it if you were going to do it?

Speaker 15:30 Mm.

Emil Michael 15:30 Um, and then you keep refreshing the tactics, tactics, techniques, and procedures, and you're updating them. So we have a very sophisticated way of, of doing these things to minimize loss of life and maximize success.

Speaker 15:42 Can I ask a question?

Jason Calacanis 15:42 Of course you can.

Speaker 15:43 I, I don't wanna, I don't wanna derail this conversation, but is the discombobulator real? Like, what can you say about the discombobulator?

Emil Michael 15:49 I can't say a word about it.

Jason Calacanis 15:49 It's real.

Speaker 15:50 I completely f- I was like obsessed with this when I saw it on X. I was like, "What is this thing?" I mean, I need it in my house. Like can you just [laughs] push a button and all these mosquitoes-

Jason Calacanis 15:59 And that's just for when Hellmuth shows up

Speaker 16:01 ... Oh my God.

Emil Michael 16:02 Not meant for your kids. I don't know if they're behaving badly. No, it's, can't talk about it.

Jason Calacanis 16:06 Emil, do you think we would've been able to pull off that mission as successfully as we did five years ago, 10 years ago? Has the technology improved that quickly that this is not something that's been possible historically, and how does that change the, the pacing and the face of war for the next couple of years?

Emil Michael 16:22 I'd say no. It wasn't only a technology maturation from five years ago. It's the, uh, rules of engagement. The rules of engagement that we used to have, uh, there were so- There, I mean, if you read about them, some of them are insane. Like if, in Afghanistan, if the guy had a small gun, you had to have a small gun, and, you know, there was this parity-

Speaker 16:45 Oh, yeah

Emil Michael 16:45 ... in weird ways. And when you're like, "Well, but is the objective to have like a fair fight or an unfair fight?" Um, well, if you're on our side, you want it to be unfair, so the rules of engagement were relaxed to be-

Speaker 16:57 Who writes those, Emil? Who sits in an office and says, "You can't shoot back if a combatant is shooting at you if you aren't matched gun for gun"?

Emil Michael 17:06 Yeah, I mean-

Speaker 17:07 Who, who writes that?

Emil Michael 17:07 ... crazy policies that are written into military departments, and that's why when Secretary Hegseth talks about, um, this kind of thing and what was happening with him when he was in Afghanistan, if you ever read his book, in Iraq, he's like, "The rules of engagement were so punishing that we were, we were at risk all the time." 'Cause you had to have like a legal understanding what was happening in every minute in the battlefield as opposed to, well, your job is to, you know, take out these guys and protect these guys. Here's your munitions. Here's like the, the, the red lines, and then like in the middle of that, go. Use your judgment. You're a commanding officer. Use your judgment on how to win, and we've kind of gone back to that. Use your judgment. Push, uh, responsibility field. Still have your red lines, but other than that, the objective is the objective. It's, it's more of a Colin Powell approach. It's like go all in, have a clear objective, come out, use overwhelming force, and we were not doing that for the last four years.

Jason Calacanis 18:05 And then going back to the, the face of war going forward, my understanding is that there have been more drones deployed by the United States this past week than we've done in the history of military activity. Is that right?And like how does that really change things going forward here?

Emil Michael 18:21 Ch- it changes it big to-- Well, so, so the Predator drone was the first big drone program like ten, fifteen years ago. It was this big honking drone. Um, and then if you remember, Obama would take out some of these Al-Qaeda leaders with drones on their balcony and things like that. Uh, I think we, uh, President Trump took out Soleimani with a drone near his car. That was the beginning. And then Iraq, uh, sorry, the Russia, uh, Ukraine war happened where it's like drone on drone. Seventy percent of the, the, the casualties are for dr- because of drones. So um, drone-on-drone warfare, robot-on-robot warfare, those things are the future for sure, right?

Jason Calacanis 18:59 And-

Emil Michael 18:59 And that's why companies like Anduril are companies like Anduril is because they're making unmanned systems.

Jason Calacanis 19:05 A- and this has been something you've specifically been very focused on, and you tweeted today a little bit about a competition. We'll play a little video here. And this LUCAS-

Emil Michael 19:13 Yeah, this is amazing

Jason Calacanis 19:14 ... Low-Cost Unmanned Combat-

Emil Michael 19:15 Yeah, yeah, yeah

Jason Calacanis 19:15 ... Attack Systems. It used to take a lot of time, it certainly wasn't startup time, to get new product into the channel for our military to use. Explain what program you're running here. It feels like the DARPA self-driving challenge all over again. A- and what these drones cost. I know there's a company making them for, I think, thirty-five thousand dollars. Am I correct?

Emil Michael 19:37 I mean, the, the small drones like I'm holding right there that are way cheaper than that. The LUCAS-

Jason Calacanis 19:42 Sure

Emil Michael 19:42 ... one-way attack drone, which can go five, six, seven hundred miles at the speed of an airplane, carry a big warhead.

Jason Calacanis 19:50 [laughs]

Emil Michael 19:50 Those are like fifty, eighty thousand dollars, depending on what kind of equipment you put on, you put on it. But the-- we have a drone dominance program and the real-- a- and we basically have to build an arsenal for, for drones. Now, are we likely to have a territorial conflict like Russia-Ukraine with Canada and Mexico? No. But [chuckles] but we do wanna take out drug drones at the border, and we want-- But long one-way attack drones are important for, you know, any kind of major conflict like you're seeing in Iran, but also to protect military bases for America-

Jason Calacanis 20:24 Mm-hmm

Emil Michael 20:24 ... two fifty World Cup, uh, Olympics in 'twenty-eight. Like there's other, there's a lot more uses of drones for surveillance, not just for, you know, for combat.

Jason Calacanis 20:34 There you're showing drones that are sort of human operated, but how much of this should basically be AI so that it's just some computer vision, and again, back to what you said before, a model understands the rules and the red lines, but otherwise is be on task and accomplish your mission. How much of it is one versus the other?

Emil Michael 20:53 I mean, it sh-- I believe that a sophisticated drone war is gonna be drone swarms controlled by AI to some degree or another, right? To what degree the control matters. Like for example, drones have decoys. They could spit out, you know, they could dazzle, they could put out things. So how do you discriminate what's a drone and how to hit it? You know, you could use AI for that because it's learned, you know, how to do automatic target recognition, for example. Um, and then also could it identify a person and that, and, and does that make it safer? So it's going after actually someone you wanna get and not someone you don't wanna get. Um, so there's a lot of uses for AI at the edge, if you will, um, in the future here. The, the Ukrainians and Russians do something called like a kill box, where they lose comms 'cause it's jammed for this drone, and then it just starts going in a box and looking for, you know, a per- the person they're trying to get, and they're trying, they're starting to use AI to do that.

Jason Calacanis 21:51 Wow.

Emil Michael 21:51 And China has this, uh, ability already probably times some magnitude, yeah? They have drone swarms because they can, they can force the companies that make them, not just DGI, to interoperate. So interoperating drones called heterogeneous autonomy, right? You take different kinds of drones and how they communicate with one another and then make sure they're not going after the same target is like a pretty complex thing that they're definitely working on.

Jason Calacanis 22:21 A- and let's talk, uh, about the fidelity of these. Obviously, AI is a new technology. They-- it can make mistakes. Anybody who uses it on a day-to-day basis might experience a hallucination. How confident are you in the AI Ukraine and Russia conflict? T- they obviously are not gonna be as thoughtful maybe as we are in putting this together. They're in a, a hot war right now. But we, as the United States, have to be very thoughtful about this, so how confident are you that this isn't gonna make a mistake? I think that's the key to a lot of this debate. And, and when will it be, you know, perfect, defined as much better, and I guess this dovetails with the self-driving [chuckles] , you know, thoughts. It has to be a magnitude better than a human. So when will this be a magnitude more accurate than, you know, when we have, uh, make a mistake as a, as a military and we kill a civilian?

Emil Michael 23:12 Yeah. No, it's, it's a good question, and, um, I don't know when that moment hits, that FSD moment where it get, kinda gets better. It's certainly not there, and you wouldn't wanna take huge risk with that in like, you know... There, there's a gradation of when you would use that and what kind of risk you were trying to take or not. If you were trying to take out a drone using AI, using a, like a laser or something, you'd be pretty like, okay making mistakes 'cause you just missed the drone. You know?

Jason Calacanis 23:40 Mm.

Emil Michael 23:40 Like whatever with the, with the, with the laser.

Jason Calacanis 23:42 Sure.

Emil Michael 23:42 And laser goes off, it's all over. Um, if you were doing something more sophisticated in a population area, have a densely populated area, you'd take less risk. So we're developing procedures, tactics for each scenario, and this is part of the debate I had with Anthropic, uh, uh, which is we need AI for things like Golden Dome.

Jason Calacanis 24:01 Mm.

Emil Michael 24:01 Chinese hypersonic missile comes up, you've got ninety seconds before it separates, and all kinds of decoys and you don't know where the actual payload is, and you wanna get it, hit it from space, and a human can't, doesn't have the reaction time, doesn't have the, may not be able to discriminate with their own eyes what they're going after. That's a pretty, you know, low-risk thing because it's in space, and you're just trying to hit something that's trying to hit youSo I think in the next ten years, you're gonna see a lot of these applications develop AI to one degree or another, so long as we think it's safe and it's not gonna do the, you know, make mistakes.

Jason Calacanis 24:36 Before we get onto the Anthropic discussion, and we really appreciate you coming here, and my Lord, this has been so informative, so thank you, Emil, for coming here and explaining to the American public and to us what you're working on. It really makes us, uh, I think, speak for everybody, really confident in what you're doing, and it's so great that you've, you know, left the private sector to do this.

Speaker 24:55 What I would say just very quickly, Emil, is I think that not enough people understand that the American military has had to fight with one hand tied behind their back. Just that little-

Jason Calacanis 25:05 Hmm

Speaker 25:05 ... insight that you just gave about Afghanistan to me seems so scary because the men and women that sign up for the American military, they're doing this to fight on behalf of this country. They deserve a lot more than being sent there and all of a sudden being given this rulebook and say, "Do your best." And it's like, oh wait, you violated nineteen rules trying to protect America, do your job. That's insane. Let's just, you know-

Emil Michael 25:30 It's really insane in some cases. And we, I, I... My, my belief is that's what the frustration for those soldiers who are out there in those wars had more than anything. There was the broader frustration of like what are we doing here? And then the secondary frustration was, well, I'm here, why can't I do my job?

Speaker 25:47 Yeah. Is there, is there much of a debate internally, Emil, and sorry, JCal, before we move forward on this-

Jason Calacanis 25:52 No, go ahead

Speaker 25:52 ... regarding this idea of full autonomy in military action? I don't wanna speak ahead to the Anthropic point, but it was something that the media seemed to say was part of Dario's concern, is that when you press the button and hand over complete autonomy, and there's a kill action that you're now giving to a robot or to some autonomous system, do we then kind of have a moral issue at hand? And is that something that's kind of debated or discussed, and is that the right way to think about the framing of what goes on?

Emil Michael 26:22 I mean, we're not even close to there yet, right? We're [chuckles] like this, the systems are not... We, we wouldn't feel that a system, uh, that would have sort of like real risk for a civilian is ready to launch yet. So we're not even debating that. We're just trying to get basic autonomy in drones, basic autonomy in underwater unmanned vehicles, basic autonomy that, you know, you've heard of this collaborative aircraft that fly along with a, with a jet craft so that it has more firepower-

Speaker 26:52 Sure

Emil Michael 26:52 ... but it's still tethered to what the jet does. So we're, we're-

Jason Calacanis 26:55 That's incredible, yeah.

Emil Michael 26:56 Yeah. So we're just at the very beginning of this stuff. Uh, but for Golden Dome, it's a good example of like, yeah, who can oppose that? Like, [chuckles] it's the only way to get at a threat like that. Um, so who could oppose if you have a military base and you have a bunch of soldiers sleeping, that you have a laser that can take down drones autonomously on that. So there's, the, it's, it's pretty scenario by scenario, but I don't-- We're not having a lot of debate because the Skynet thing is so not a realistic thing at this moment, right? Except if... One thing I did tell the Anthropic guys, I was like, you know, or I'd tell this to any AI company, "Your models are getting stolen by the Chinese. They're gonna un-guardrail them and use them against us, and then you want our [chuckles] models to be less capable against your models." It's sort of asking-

Jason Calacanis 27:41 They're not gonna be thoughtful enough. [laughs]

Emil Michael 27:43 [laughs]

Jason Calacanis 27:43 They're gonna go for it.

Speaker 27:44 That's war, right.

Emil Michael 27:44 Yeah.

Jason Calacanis 27:44 And you know, if we just benchmark this against where we were at, you know, but ten, fifteen years ago, there was the WikiLeak of collateral murder, I think they called it, where we tragically had an Apache take out some journalists. And this technology, even applied today, probably would've avoided that in my mind, yeah? Like, we have enough that when you're targeting not drones, but you know, people on the ground with an Apache, this would've probably avoided that.

Emil Michael 28:14 Yeah. Or, or you know, the Kuwaiti aircraft hitting, you know, an American aircraft, making a mistake 'cause it doesn't have the identification. I mean, the, it's the same self-driving argument to a degree. Like self-driving could save lives even though it's scary to look at a car without a human behind the wheel, but there's tons of scenarios where it's a way better, safer option, more precise, um, than the alternative.

Jason Calacanis 28:39 All right, before we move on to the Dario thing and Anthropic and that ruhaha, there was one piece that we haven't addressed with this interaction, Friedberg, Chamath, which is, uh, the Israeli government and their desire to take out this regime and, uh, us, according to Tucker Carlson and a large contingent of the MAGA base, they feel that we are captured by this group. Does Israel have too much influence over the United States with regard to these actions in the Middle East? This is, you know, a, a big debate within the party, within the Republican Party, within the MAGA constituent. Hey, we, number one, we don't want these wars. Number two, is Israel driving this thing to the point of Rubio's quotes that, "Hey, we're doing this because Israel's going anyway"? I think we should address it here. Not that I have a personal stake in this. I'll give my personal opinion at the end.

Speaker 29:30 I don't think the president is captured by Israel in the least. I think he decides what is in the best interest of the United States, and if Israel can be a part of that, then they're a part of it. And look, let's be clear, they're incredibly capable. And so in something like this, to be able to incorporate the intelligence of Mossad, what you're seeing today in this Operation Epic Fury, we're four days in, Iran has been ninety percent depleted of all of their munitions it looks like. They're just firing no more missiles out from Iran to anywhere else. There's fleets of drones and planes just waiting. Everybody knew where the Iranians were. It's great that when we make a decision on something that we need to do, we can rely on our allies. I think the opposite question should also be asked, like what was the UK doing? Why is Spain pontificating? Why was Europe taking the weekend off before they could even issue a statement? Why don't you ask that question?

Jason Calacanis 30:27 Yeah, no, it's an equally valid question. You know, uh, and, and Friedberg, do you wanna get in on this or no?

Speaker 30:34 I'm a Jew, no one's gonna care what I have to say.

Jason Calacanis 30:36 [laughs]

Speaker 30:36 'Cause they're either gonna, they're either gonna be like, totally, like-

Jason Calacanis 30:39 Or they're gonna-

Speaker 30:40 Or they're gonna say, "This guy's a [beep] Jew. We shouldn't listen to him."

Jason Calacanis 30:42 [laughs]

Speaker 30:42 So, like, let's move on. Go ahead.

Jason Calacanis 30:43 Yeah, yeah.

Speaker 30:44 Yeah.

Jason Calacanis 30:44 Emil, any thoughts on, on this, uh, kerfuffle?

Speaker 30:46 I mean, I do, I do wanna know from Emil, though, like-

Jason Calacanis 30:48 Yeah

Speaker 30:49 ... d- you know, is this Iron Dome working, this laser in Israel system? Is this operational, and if so, is there any success metrics you can share around it?

Emil Michael 30:58 I mean, I think the, the golden... Sorry, the golden dome. Iron Beam was the first generation-

Speaker 31:02 Iron Beam

Emil Michael 31:02 ... of, of the Israeli air, air defense thing, and then they're build- building Iron Beam and, and I think it's still early-ish, but yeah, it works. They, they're g- they're a technologically sophisticated country that's very small that has, like, a reason to invest in these things, and they have a lot of smart people to do them. So I think, I think it's good, but-

Speaker 31:23 Does it primarily work on rockets? And I guess I just wanna understand the logical evolution of this because in the '80s and '90s there was a lot of conversation about space-based lasers that could shoot ICBMs out of the sky to avoid, you know, global nuclear war, and we could always take out every nuclear warhead delivered on an ICBM. Is that technology feasible? Is there a place in the near future where we could see basically maximal global deterrence using these systems, either ground-based or space-based, to take out hypersonic missiles?

Emil Michael 31:53 I think, I think the, the harder but more valuable problem to solve would be the space-based way of doing it because then, um, you could get at any kind of, almost any kind of threat that hits space, but you still need a ground layer because there's cruise missiles that could come at you, there's drones, and so on. So, so we called it multi-layers, like, how do you, how do you get every kind of weapon at every layer? But, you know, directed energy, lasers, uh, as they get more powerful, you could take on a bigger weapon farther away, right? So those, uh, so those technologies as, that as they improve, it gets more and more capable, and I think all these defense systems, uh, are gonna get more and more capable to get more and more of a variety of weapons at farther and f- farther standoff, which is what you want. You want it to t- you don't wanna shoot it when it's right over Tel Aviv. You wanna shoot it, you know, when it's still over their, their land ideally.

Jason Calacanis 32:48 Are, are the laser interceptors in the field today? There's reports that they are.

Emil Michael 32:53 I, I think there's some. I think they've demonstrated some of them.

Jason Calacanis 32:56 Got it. And, and is this our technology or Israel's technology? 'Cause President Trump said, "Hey, that's actually our technology." I- is there any insight there?

Emil Michael 33:04 We, we, we have collaborations with Israel on some of the stuff. They have their own, we have our own. Um, so it's not, this is, uh... But they're good at tech. We're good at tech. There's certain, there's certain ways you get part of our system and part of their system because it's like a he- it's a f- quickly evolving part of, of science right now. How do you cohere beams of light to, like, get distance? How do you use high-powered microwave to, like, just drop drones in their tracks? Um, there's lots of different ways to get at some of these things. Um, and, and yeah, a lot of it's ours, uh, and a lot of, and some of it's theirs.

Jason Calacanis 33:41 Yeah, and, uh, to, to the earlier question, you know, I, I am pro regime change if it can be done thoughtfully, and obviously isolating a dictator, that's the best thing you can do. We've done that successfully with, you know, Putin, Kim Jong Un, et cetera, keep diplomacy up. But if there is a moment in time where you could free the people of Iran after 50 years of being subjugated by these lunatics and dictators, I'm all for it, and I actually trust President Trump to make that decision. I know this may sound crazy. People think, like, I'm a, a libtard or something because of the way my besties frame me on this program-

Speaker 34:18 [laughs]

Jason Calacanis 34:18 ... which is completely inaccurate. I'm an independent.

Speaker 34:20 You are.

Jason Calacanis 34:21 I actually-

Speaker 34:21 You are not independent

Jason Calacanis 34:22 ... I'm completely independent.

Speaker 34:23 You're not? Okay.

Jason Calacanis 34:24 And I am, just based on my voting.

Speaker 34:26 Okay.

Jason Calacanis 34:26 And I'm not on either one of these sides.

Speaker 34:27 Fine.

Jason Calacanis 34:27 I am pro President Trump, and I trust his judgment. I think he has more information than us. I think you have more information. I actually trust you guys to do it thoughtfully, and there obviously was a window here. Israel can have their own, you know, motivation. There could be the China motivation, but there's also spreading democracy-

Speaker 34:42 Can I say something on that?

Jason Calacanis 34:42 ... which might be the least of people's concerns here, but that's on the top of my list.

Speaker 34:47 Yeah.

Jason Calacanis 34:47 I would like to see the people of Iran free.

Speaker 34:49 Just to build on your point, Jason, the thing that Emil said before, which I think is important as well, is we have an enormous amount of learnings about what happened in Iraq.

Jason Calacanis 34:58 Yeah.

Speaker 34:58 We also have a ton of learnings between the Iran-Iraq War, and a ton of learnings in '53 when us and the British deposed Mossadegh in the fir- or at least fomented that and put the Shah, and then the Shah was booted out.

Jason Calacanis 35:11 Yeah.

Speaker 35:12 If you take those three chapters in Iranian history or that regional history, there's a ton to learn. And to your point, there is a way to effect what we need to do without creating some 20-year forever war.

Jason Calacanis 35:26 Yes.

Speaker 35:26 There was an incredible tweet. I don't know if you guys saw this. Somebody said, "So every war doesn't have to be three decades and trillions of dollars to your friends in Virginia, Maryland, and DC."

Jason Calacanis 35:38 Yeah.

Speaker 35:38 Did you guys see that tweet? It's true.

Jason Calacanis 35:40 Yeah.

Speaker 35:40 These things can be one and done, in and out.

Jason Calacanis 35:44 And if President Trump succeeds here, I just wanna also give him some flowers here, the people of Venezuela and the people of Iran being free represent about 5% of the people in the world living under an autocracy, under a dictator. If those both flip back to democracies, he'll have done more for the spread of democracy than any president for many decades, perhaps in our lifetime. This would be incredibly noble. Incredibly noble, incredibly just, and-

Speaker 36:11 Would you in the human rights set want him to get the Nobel, then?

Jason Calacanis 36:15 Ab- absolutely. Uh, give him all the Nobels. Like, literally, if you can free people-

Speaker 36:22 All the Nobels

Jason Calacanis 36:22 ... all of them. Give him every prize.

Emil Michael 36:23 Oh.

Jason Calacanis 36:23 Give him an Oscar-

Emil Michael 36:24 Physics, chemistry

Jason Calacanis 36:26 ... a Grammy, a Keaton-

Speaker 36:26 Chemistry [laughs]

Jason Calacanis 36:26 ... economics.

Speaker 36:27 He can have everything.

Jason Calacanis 36:29 Physics.

Emil Michael 36:29 Literature.

Jason Calacanis 36:29 Philosophy.

Emil Michael 36:31 Jake Cal's an independent. When's the last time you voted for a Republican presidential candidate? Just curious.

Jason Calacanis 36:37 Yeah.

David Friedberg 36:38 Say it. Say it.

Jason Calacanis 36:39 No, no, no, no. Um-

David Friedberg 36:41 Mondale. [laughs]

Jason Calacanis 36:42 No, no, I didn't-- I would have voted for... If I was of age, I would have voted for, um... I wouldn't have voted for the Bushes. I voted for the moderates, um, uh, uh, obviously, uh, Clinton and Obama.

David Friedberg 36:54 Oh, we're playing the woulda, shoulda, coulda game?

Jason Calacanis 36:56 But I, I would have voted for Reagan in this situation.

David Friedberg 36:58 I would have.

Jason Calacanis 36:58 Yeah, absolutely.

David Friedberg 36:58 I would have bought Nvidia at four dollars.

Jason Calacanis 37:01 Well, no, and I, I didn't vote for Kamala, so I'll leave it at that. But I voted probably f- four- thirty-five percent-

David Friedberg 37:05 Why do you leave it at that? Why didn't you say that you voted for President Trump? Just say you voted for President Trump. You did.

Jason Calacanis 37:09 I don't, I don't want to complicate things here.

David Friedberg 37:10 But you did, so just say it.

Jason Calacanis 37:12 I didn't vote for Kamala. I'll leave it at that. All right. Election over.

David Friedberg 37:14 It's so, it's so weird that you s- you'll say you're a moderate, but you won't say that you voted for President Trump.

Jason Calacanis 37:18 I am supporting President Trump in about sixty, seventy percent of what he does. Uh, let's leave it at that. Three, two.

Jason Calacanis 37:24 All right, let's talk about the economics impact of oil and insurance. Oil has rose to eighty-four dollars a barrel Wednesday. Strait of Hormuz, here's a video, is, uh, basically a standstill at this point. Here's the clip. You can see the traffic slowing down, and then, hey, some of the dots are even going away. That could be, uh, ships were taking out. Unless the strait opens, three point three million barrels of daily production would be lost early next week. And then there's insurance companies, they've all canceled the war risk coverage of vessels in the Gulf, effective March fifth. Supertanker traffic dropped ninety-four percent within the first forty-eight hours. Trump said the U.S. would provide political risk insurance for all maritime trade through the Gulf, especially energy. Friedberg, your thoughts on the economic second-order effects that we're starting to experience here, and over the next four weeks could be, um, you know, intense and acute.

David Friedberg 38:21 The modern insurance market emerged specifically to solve the risks of maritime trade. So in the seventeenth century, Lloyd's of London, which was a coffee shop in London where all the maritime traders would get together and they'd talk about, "Hey, what's the safest route so pirates don't get our ship, and so you don't run into weather?" That's where they would kind of have these conversations, and eventually they started underwriting the risks of the shipping, uh, routes and giving each other guarantees. They said, "Hey, if you make this route, great, you pay me a certain amount. And if you don't make the route, I'll pay you the lost value." And that's how Lloyd's of London, which is the kind of world's biggest reinsurance market, started. Today, Lloyd's of London has seventy-eight what are called syndicate members. And these are kind of these pools of reinsurance that underwrite big, crazy risks like maritime insurance for folks that are moving oil tankers through the Strait of Hormuz, which the IRGC just announced they're shutting down. When the IRGC announced that they were shutting down the Strait of Hormuz, there's a significant risk of all the mines going in the strait and the ships getting attacked and blown up, so loss of value. The insurance premium spiked initially from a quarter percent, so point two five percent of the value of the ship, to one point two five percent. So it went up by like five X. And so folks had to pay a lot more of the value of their ship in order to continue the routes and get guarantees that they'll make it through. And then all of the markets started to shut down. So once the conflict got heavier, everyone said, "Let's shut this thing down." And that's, uh, obviously a massive risk to energy prices globally, which drives inflation and puts U.S. economic security at risk. And so this is a brilliant move, I would say. The U.S. government stepped in with the U.S. International Development Finance Corporation, which was actually, funny enough, started a couple of years ago, like in twenty nineteen or something like that, as a kind of output of one of the agencies that provided credit from USAID. Much talked about USAID. [laughs]

Jason Calacanis 40:14 [laughs]

David Friedberg 40:14 And so they're, they're leveraging the credit capacity of this old USAID agency to go out and say to all the shipping companies, "Hey, we'll give you insurance on your routes." And the reason they need it is the shipping companies are levered. They take on debt to buy the ships, and the debtors require that they have insurance or else they're not allowed to take the routes because the debtors are ultimately gonna be out the money. And so the shipping companies themselves need to have insurance, and so this provides a market that has now gone away. Very smart, and ultimately, a lot of people are saying this could actually reshore or onshore maritime insurance back to the United States-

Jason Calacanis 40:54 Mm.

David Friedberg 40:54 -and create an entirely new insurance industry here in the U.S. that has historically been served almost exclusively by European syndicates and European partners, and it actually creates a big economic opportunity as this war dies down for American insurance companies and American brokers to basically be the underwriters and the guarantors of this sort of insurance and create a new industry. So-

Jason Calacanis 41:16 That's good.

David Friedberg 41:16 -uh, super, super interesting kind of side story on what's

David Friedberg 41:19 going on here.

Jason Calacanis 41:19 All right, some breaking news here, folks, via Bloomberg. The Pentagon has formally notified Anthropic that it's been deemed a supply chain risk. This has never happened to an American company. It has happened to Russian companies, uh, and Chinese companies, Huawei. And for background, the Department of War canceled Anthropic's two hundred million dollar contract on Friday and said they would do this. The dispute came down to two clauses, according to sources, and we have one of the principals here, so we will hear directly from him in a moment. Anthropic had two concerns. Number one, fully autonomous weapons, AKA murder bots, as we previously discussed. Dario didn't feel that their technology was reliable yet and wanted some assurances. The second thing Anthropic said was, uh, they were concerned about mass surveillance of Americans because they believe this technology is uniquely powerful and, uh, it's... can do things beyond what a series of webcams or a network of 7-Eleven cameras can do. The Pentagon said they want it all lawful use. Dario, you're welcome to come on the program next week or any time to give your side of the story, but this week we have Emil. Emil, your thoughts, and explain to us what happened here and how this broke down.

Emil Michael 42:40 It's worth a little history, short history. SoIf you remember the Biden executive order on AI, which was this crazy executive order that limited the amount of compute any model company could do, and was essentially grandfathered in a few sm- a small number of AI companies that they were gonna designate the winners, and everyone else was out, so they could have more control on what they did. Um, Anthropic was one of those winners. Um, and then they were smart. Actually, it was a good sales strategy to sell into the most sensitive parts of the US government, like s- all of our combatant commands, CENTCOM, Cen-Central Command, that's doing the Iran fight now, the INDOPACOM command, which is sort of responsible for China, several of the intelligence agencies, and they did forward deployed engineers, Palantir style. So they were very, got very sticky, um, to the workflows and all that. And so I came in and I got the AI portfolio for department in August, and I said, "I just wanna see the contracts," you know, the old lawyer in me. And I looked at the contracts, I was like, "Holy cow." They say you can't use them for t- you can't use them to plan atta- a kinetic strike. You can't use their AI model to move a satellite. You can't... There was a, a twenty-page-

David Friedberg 43:58 You can't do a war game scenario with it?

Emil Michael 44:00 You could do a scenario, but you can't, like, let's suppose you're writing a plan saying, like, "If this happens, here's what we would do." And it might involve a kinetic strike which causes harm to a human. So you're like, "Well, what do you think these folks do?" You know, this is the Department of War. This is what we do. And so I said, "Okay, well I, I've gotta, number one, have direct relationships with these companies, not just through Palantir, 'cause I wanna use it more broadly. And then number two, I need to have the terms of service be rational relative to our mission set." So we started these negotiations and, and it took three months, and I had to sort of give them scenarios about, like, this Chinese hypersonic missile example. They're like, "Okay, we'll give you an exception for that." "Well, how about this drone swarm?" "We'll give you an exception for that." And I was like, "The exceptions doesn't work. I, I can't predict for the next twenty years what all the things we might do, use AI for." Um, and so, so all lawful use seems like a good thing. If Congress wants to act, great. We have our own internal policies, like, we'll follow them. We're not knuckle draggers here. We want [chuckles] , we don't wanna hurt people unnecessarily. So, you know, it's our province to decide how we fight and win wars, um, so long as they're lawful. And I think at some point it turned into a PR game for them because they were not gonna win this, the intellectual battle of, well, we're gonna stop you. We're gonna use our judgment 'cause we think Congress is behind and impose it on the US military. And it became this, like, let's find the issues that are most inflammatory, robot weapons and mass surveillance. And you're like, we're the Department of War. We're not the FBI. We're not Homeland Security. We're not ICE.

David Friedberg 45:43 You're not allowed to legally spy on Americans.

Emil Michael 45:45 Yeah. You're not, you're not. So it's-

David Friedberg 45:47 Yeah.

Emil Michael 45:48 So [chuckles] so you're like, w- and then what it came down to on that issue, just as an anecdote, is they didn't want us to bulk collect public information on people using their I-I or AI system, and they wrote it in a way that I was like, "So you're telling me before we got to bulk collect, if someone types in, you know, Chamath's, uh, LinkedIn, it's pre-- I, I'm using public um, available information that I'd be violating your terms of service?" They're like, "Yeah, well, okay, let's rewrite it." So it was months of this, like, stuff, um, which, which was sort of interminable, and then the trigger point was after the Maduro raid. One of their execs called Palantir, who we buy their selves through, and asked them, uh, "Was our software used in that raid?" Which is by the way, classified information, anyway, so we're trying to get classified information and implying that if there was use in that raid, that that might violate their terms of service. So-

David Friedberg 46:45 So they wanted to enforce, this is very important here.

Emil Michael 46:48 Yeah.

David Friedberg 46:48 They wanted to enforce their terms of service. They went behind your back to try to collect information to then maybe pull your license for their technology.

Emil Michael 46:58 M- I, you know, it wasn't by, behind my back. I, I don't wanna accuse them of that. Palantir is the prime contractor, their sub. Um, but it raised enough alarm with Palantir, who's got a trusted relationship with the department, to tell me, and I'm like, "Holy [beep] what if this software went down, some guardrail kicked up, some refusal happened for the next fight like this one, and we left our people at risk?" And I had-- So I went to Secretary Hegseth. I said, "This would happen," and that was like a woe moment for the whole leadership at the Pentagon, that we're s- potentially so dependent on a software provider without another alternative that has the right or ability to do, to not only shut it off, maybe it's a rogue developer who could poison the model to make it not do what you want, uh, at the time or sort of trick you because you have to trick it. I mean, all these things that we know are, we, we worry about models or hallucinate purposefully or do s- or not follow instructions, like some insider threat stuff. So then that culminated in the Tuesday kind of dramatic meeting with Hegseth and Secretary Hegseth and me and, and Dario, um, with the Friday deadline that, that got blown, and I, I never thought they really wanted to make it.

David Friedberg 48:09 Emil, is, is the model entirely hosted by Anthropic? Or just explain to us technically, does this sit in a cloud that Palantir runs for you guys? Um, i- is there really technically a way that employees at Anthropic could kind of interfere or intervene in the use of the model-

Emil Michael 48:26 Yeah. So they-

David Friedberg 48:27 ... functionally?

Emil Michael 48:27 They put their model in AWS GovCloud.

David Friedberg 48:31 At GovCloud, yeah.

Emil Michael 48:32 And then Palantir serves it from there, and they refresh it. They held the control plane for the model. So, so yeah.

David Friedberg 48:41 They can change the model weights if they want. They can do whatever they want.

Emil Michael 48:45 Yeah.

David Friedberg 48:45 The insight into this thing is unbelievable. Not just governments

Speaker 48:49 But now if you're running a company, the reality is that what Anthropic showed, which by the way is their right at some level, is that they are going to have a political perspective and a set of terms that reflect their philosophy, and that that philosophy can change on a dime. But what the government did was also completely reasonable, which is we can't rely on you if you're going to be completely unreliable and disallow things that are reasonable. I'll give you a different example to make the point. There's a state that wants to run some healthcare program, but they're a pro-life state. You can't conduct abortions in that state. Does that mean that the Anthropic engineers can decide, you know what, we're pro-choice, so we're gonna change the access model and the capability of that model inside of that state? Is that allowed? Should that be allowed? At one level, you'd say this is a private company, they're allowed to choose. But what that really means is for the government, for all the states, for any city, for every company, you cannot choose to only use one of these things, because it is just a matter of time until some person inside of one of these companies goes on some lunatic moral tirade and then jeopardizes your business against something that is nothing about law, but is everything about subjectivity. That is the huge thing that this thing tore open this weekend. So if you're not figuring out how to be multi-model and agnostic across these models, you're taking on enormous business risk after Friday because you can't tolerate that these folks will do that. It's too critical of a technology. By the way, this is deplatforming all over again. Remember what happened when you didn't like what was said, now all of a sudden you were deplatformed. This is that times a thousand, because this is not about posting on social media. This is about using fundamental technology to either advantage or disadvantage your business. Emil?

Emil Michael 50:50 Yeah. I mean, I think I described it the other way the other day as these co-- the leaders of these companies say they're gonna cause fifty percent white-collar unemployment. This is as powerful as a nuclear bomb. Y- it's like fifty thousand geniuses in a data center, so you could have a small country coerce the world into its whatever. So you're like, "Holy cow." All right, so this is a general substrate of intelligence, of te- of technology that's applicable to a lot of things. Very generalized. It's not like Workday so-- like HR software where you could just use a competitor. This is going to be part of our everyday life in so many different ways, and the controlling, the mora-- like what, whether it has a moral conscience, I mean, Anthropic has its own constitution. It has its own soul. It's not the US Constitution. So you're subject to that, plus whatever whims and how that changes, and that's a scary thought for, for Americans generally. Um, and I think that did come through a little bit today, and in the coming years it's gonna be a bigger and bigger deal.

Jason Calacanis 51:51 So take us through OpenAI software, Gemini software, and Groq software. Have they pushed back on any use, or are they like Dell or Apple, they sell you a computer and you have the computer, and you can use it as you will? Have any of those given you any pushback?

Emil Michael 52:09 So Groq's all in for all lawful use cases across all-

Jason Calacanis 52:13 Okay

Emil Michael 52:13 ... classified and unclassified networks, as you'd expect because, and, you know, Elon's truth-seeking. We want truth in Department of War. We don't want ideology-

Jason Calacanis 52:21 Great

Emil Michael 52:21 ... because ideology will mess with operational decisions. Like, you, you don't want anyone to, anything to be fake or tilted.

Jason Calacanis 52:28 Where, where is Sergey and Google and, and, and Sinovate?

Emil Michael 52:30 We have them. We have Google for all lawful use cases on unclassified networks, and we're trying to move them to classified networks. They're just-- They have to build out infrastructure 'cause this stuff's complicated.

Jason Calacanis 52:41 Okay.

Emil Michael 52:41 And then-

Jason Calacanis 52:41 So they're in compliance in terms of what you're looking for as a partner, and then-

Emil Michael 52:44 Yeah

Jason Calacanis 52:45 ... I guess the last one is OpenAI, and Sam seems to be just characteristically playing both sides a bit.

Emil Michael 52:51 No, no.

Jason Calacanis 52:52 Like trying-

Emil Michael 52:52 He's, he-

Jason Calacanis 52:53 Where is he at?

Emil Michael 52:54 To his credit, um, I called him and then said, "I need a solution if this thing goes sideways. I need multiple solutions. I'd like you to be one of them." And he's like, "Okay, well what can I do for the country?" I was like, "I need to get you up running as soon as I can." And he was, he was trying to protect Anthropic, to his credit. He was like, "Don't do, don't call him a supply chain risk. That's bad for the industry. Let me, maybe I can negotiate terms that they'll find acceptable." Uh, but he's in the middle because they're, they compete for the same researchers. So a lot of this comes down to this thousand researchers, like baseball players that get traded between these companies [laughs] .

Jason Calacanis 53:33 Money ball, yeah.

Emil Michael 53:34 Yeah.

Jason Calacanis 53:34 You take the best of the best.

Emil Michael 53:35 It's a very money ball-ish sort of thing, and there's not that many of them, and you lose twenty percent of them, and all of a sudden, you know, you, they launch Claude Code before you launch Codex or something like that, and then the numbers change pretty dramatically. So he was being a real patriot, um, to his credit and trying to him, him, you know, help Anthropic while they were trashing him and recruiting [laughs] from his company. And I, I'm not biased. I just, I want all of them. I want to give them all the same exact terms, uh, 'cause I need redundancy, and I wanna see if they diverge or not or do they con... If they converge, maybe I only need two over time, but we don't know. It's too early.

Speaker 54:11 But why, why keep them in the mix, Emil? So if there's clearly, like, a difference of operations and philosophy in how they wanna run their business, and there's other models, is, is their model particularly good at particular applications that make it important to keep it in the mix, given that there are three or four other kind of alternatives here?

Emil Michael 54:31 Anthropic, you mean?

Speaker 54:33 Yeah.

Emil Michael 54:33 Uh, well, because number w- the, the number one reason we were having this conversation at all is 'cause they were deeply embedded, so now I have to unentangle them. And the other companies have not gone as heavy enterprise, enterprise sales, forward deployed engineers, government business. So they have to catch up, not necessarily the capability of the model, but just how do you serve the government?

Speaker 54:56 The government.

Emil Michael 54:56 And Anthropic is just way ahead on thatRight

Jason Calacanis 54:59 But the models themselves you don't think are uniquely advantaged, or do you have a view on that at this point?

Emil Michael 55:03 I don't have a view on that. I don't, I don't think they're, you know... I-I mean, certainly Claude Code was, was innovative and ahead. That's true. Um, but I... Do I believe in twelve months Codex is not gonna be close? I think it will be.

Speaker 55:17 I think you're right. There's an asymptoting that's happening. If you just look at the, like, the confidence interval on how overperforming or underperforming some of the leading models are, the error bars are shrinking, right? The confidence intervals, like, these things are all kind of becoming the same. Eventually, they're all getting access to enough power, enough compute. They're generating similar results, it turns out, which I think you would expect. So even more important that you have a complexion of models. The other thing, Emil, I don't know if you saw this, but they posted about the revenue ramp of Anthropic. And well, I have a s-small software company called eighty ninety, and I asked the team, "Let's go look at our OPEX." I posted it 'cause I was so shocked at these numbers. Our costs have more than tripled since November of '25. Between the inference costs that we pay AWS, which is ginormous, between our costs with Cursor, between Anthropic, we are just spending millions.

Emil Michael 56:17 So now p-more per unit and more, more in aggregate.

Speaker 56:20 Both. But the problem is that my costs are going up three X every three months, my revenues are not. [laughing]

Jason Calacanis 56:28 Token use is very addictive.

Speaker 56:30 I, I... Yeah, and, and by the way, because everybody's gotten infatuated with what we call these Ralph Wiggum loops, like, just like send the thing off, and, like, it'll just go figure something out. A, it never figures anything out, and B, you just get this ginormous bill from Cursor. So one of the things we had to do was just we had to say, "Guys, you gotta deprecate Cursor 'cause you're just wrapping Claude code and charging us way too much for these tokens." But I don't know if you're seeing any of this thing where, like, the tool usage, it's so great to use these tools, let's be honest. It's super fun.

Jason Calacanis 56:57 They're phenomenal.

Speaker 56:57 It's like you feel like a genius. But then the ROI of these tools are really important. I'm not sure that that's as much of an issue for you or not in, in the Department of War.

Emil Michael 57:07 Not yet, but it will be. It w-

Speaker 57:09 Yeah.

Emil Michael 57:09 It will be for sure.

Speaker 57:12 Let's, um-

Emil Michael 57:12 As people find more and more use cases, the use cases get more sophisticated, so the next marginal thing you have it do is likely to be harder and therefore be more consumptive, right?

Speaker 57:23 Right. Right.

Jason Calacanis 57:24 Let me just ask, Emil, the important question that I think triggered a lot of the news this week is why then designate them a supply chain risk? Why not just abandon them, move on, use the other vendors? Like, why take this kind of punitive action?

Emil Michael 57:38 Yeah. So I, I don't view it as punitive, and I'll tell you why. It's if their model has this policy bias, let's call it, based on their constitution, their culture, their people, and so on, I don't want Lockheed Martin using their model to design weapons for me. I don't want the people who are designing the things that go into the, the componentry to come to me because if that poison... If you believe the risk of poisoning-

Speaker 58:06 You're compounding that risk

Emil Michael 58:07 ... insider threat, it, it, yes.

Speaker 58:08 Right.

Emil Michael 58:08 It can enter into any part of the defense enterprise, but it's just the defense enterprise. So Boeing wants to use Anthropic to build commercial jets, have at it. Boeing wants to use it to build fighter jets, I can't have that because I don't trust what the outputs may be because they're so wedded to their own policy preferences.

Jason Calacanis 58:30 I guess a dovetail to that is why couldn't this have been handled quietly? Is this Anthropic who made this a public spat, or was it the administration that made it a public spat, or two to tango?

Emil Michael 58:43 I mean, th-they have a very good, sophisticated press operation [laughs] and, like, really good at painting us as doing mass surveillance where, where w-w-where your, their issue was, like, some commercial database thing that someone else could buy. They didn't want us to buy to use it, which I'm not even sure we buy them, except to do recruiting for soldiers. And you know, we run schools, hospitals. We do a lot of things at DoD. We don't just fight wars. And, um, and the way they were able to characterize these two things, which are genuinely scary to people, but were not the real issues, um, it was really the you worry... I worry about them shutting off our system at a moment of need, or them messing with our system at a moment of need. Those were where we were scared.

Jason Calacanis 59:27 But the thing that came to mind is if they are selling you batteries, and you need to use the batteries or the laptops, however you need to use them lawfully, okay, that should be enough for them, unless they are peaceniks, and they don't want to be involved in selling weapons, which by the way, was Google's position for many years. They just didn't want to be involved in it. Because to your point, they want to recruit talent that is also aligned with that. So this just seems to be maybe this isn't the right partner for the Defar- Department of War.

Emil Michael 59:56 Yeah. You sh-

Jason Calacanis 59:56 That, that-

Emil Michael 59:56 If you, if you don't want your stuff to be used for Department of War stuff, you shouldn't be selling to the Department of War. [laughs]

Jason Calacanis 1:00:02 Pretty sure. It's in the name.

Emil Michael 1:00:05 Yeah. [laughs]

Jason Calacanis 1:00:05 It's in the name.

Speaker 1:00:06 [laughs]

Jason Calacanis 1:00:06 Well, and then also, I have to say, when, you know, you said, "Hey, we don't know what... how we're gonna use this thing," like, i-immediately came to mind was, like, 9/11. You, you have to go check with them, uh, you know, if you find out there's another 9/11 unique, you know, black swan event that's gonna occur, and you have to go clear it with them? Like, you, you... That speed is important.

Emil Michael 1:00:26 That was literally the comment. That was literally the comment-

Jason Calacanis 1:00:29 Oh, really?

Emil Michael 1:00:29 ... when I was go- Yeah. So I was in a room of 20 people, so this is now undeniable if every- everyone, Daria wants to deny it.

Jason Calacanis 1:00:36 Okay.

Emil Michael 1:00:36 And I was given these scenarios, these golden dome scenarios and so on, and he's like, "Just call me if you need another exception." And, you know, [laughs] I'm like, "But what if the balloon's going up at that moment, and it's, like, a decisive action we have to take? I am not gonna call you to do some- It's, like, not rational." And-

Jason Calacanis 1:00:52 Yeah

Emil Michael 1:00:53 ... [laughs] uh, so it... that was another holy cow moment of, like, how they think about it

Speaker 1:00:59 That just means that what he wants to be is the Secretary of War.

Emil Michael 1:01:02 That's right.

Jason Calacanis 1:01:03 He wants to be the, the god-king there, I guess. Yeah.

Speaker 1:01:06 You can't do that. The thing that shocks me, Emil, I don't know, you-- maybe you can't say anything, but may- guys, you can comment on this. It's clear that Anthropic just lost all the Republicans. But I think that if they think that they have the Democrats, that's fleeting as well, because I think progressive Democrats fundamentally just hate Silicon Valley and technology, and so there's no way they're gonna let some god-king over here that they don't control either. And so in both ways, I think they accidentally may have pissed off every constituent. The longer-term fallout amongst them and progressives will come home to roost because as the progressives want more control and these guys push back on them, they're just gonna fall into the same situation.

Jason Calacanis 1:01:49 Yeah, I mean, it's an interesting perspective. I think if you don't want to be involved in war, that's your right. I think you mentioned this, like, three times, Chamath, just don't sell bullets if you don't wanna be in... But you can't call Smith & Wesson and

Jason Calacanis 1:02:03 say, "Can I-

Speaker 1:02:04 The other thing is, what the hell was the senior management and the board talking about over these last few days? Because to me, it would have sounded insane. So then the question is, were people just so breathless to buy this revenue curve? What is the board doing? What is the senior management really doing? What do you change, guys? What do you think you would tell them if you were sitting inside of the board of Anthropic right now?

Jason Calacanis 1:02:25 Freberg, w- if you're an investor, you're on the board, what do you say to Dario when he says, "Hey, I, I need to dictate to Emil and Hegseth how they use my tool," and everybody else is just saying lawful use as the standard? What's your coaching advice?

David Friedberg 1:02:39 Well, it's also a very unusual circumstance because I don't think any business in history has grown as fast as they have in the last ninety days. So they've added, what was it, six billion of ARR-

Speaker 1:02:51 Yeah

David Friedberg 1:02:51 ... in a month or something. I mean, that's-

Speaker 1:02:53 Yeah

David Friedberg 1:02:53 ... absurd. Like, I mean-

Speaker 1:02:54 It's absurd. It's absurd.

David Friedberg 1:02:56 It's absurd.

Jason Calacanis 1:02:56 It's a great product.

Speaker 1:02:57 It's absurd.

Jason Calacanis 1:02:57 OpenClaw has driven a lot of this.

Speaker 1:02:59 It's absurd.

David Friedberg 1:02:59 If you're on the board-

Speaker 1:03:00 You're closing your eyes. Yeah. [laughs]

David Friedberg 1:03:01 You're shutting the [beep] up.

Speaker 1:03:02 Yeah.

David Friedberg 1:03:02 You're just shutting the [beep] up 'cause something's working.

Speaker 1:03:04 Yeah.

Jason Calacanis 1:03:05 You're selling a secondary? [laughs]

David Friedberg 1:03:07 But I actually think, I think he's off doing his thing, and they're gonna let him do it, and I don't think that company's worth three hundred fifty billion anymore. God knows what it's worth.

Speaker 1:03:14 Oh, w- oh, that's interesting. Where do you, if you get put a block of stock right now, where do you put a bid in? I'll tell you where I put a bid in.

David Friedberg 1:03:20 Oh my God. I had, I had this conversation at dinner two nights ago. It's like you have to pick between OpenAI at their current mark, Anthropic at their current mark, or Google, and it's either multiple from here or net market value creation from here 'cause those are actually two very dis- different conversations.

Jason Calacanis 1:03:38 Explain the difference.

David Friedberg 1:03:39 I think the net market valuation 'cause Google's already worth three trillion, so if they double, they've added three trillion. But I think Google is the bet. I think Google is the market value creator bet.

Jason Calacanis 1:03:50 Okay.

David Friedberg 1:03:50 But I think Anthropic is the multiple bet. I think Anthropic is a trillion five market cap at the end of the day u- unless this blows them up.

Speaker 1:03:58 You're still buying the five X versus the three X kinda thing.

David Friedberg 1:04:01 You'd buy the five X instead of the two X.

Speaker 1:04:03 But if you get put a block of stock now, do you buy it at the last post, or do you buy it at a discount, or do you just say, "Ah, I just buy it at the last post 'cause it's going to-

David Friedberg 1:04:09 Anthropic is worth a lot more than three fifty.

Speaker 1:04:12 Yeah.

David Friedberg 1:04:12 That's for sure.

Jason Calacanis 1:04:13 Yeah. I, I... It's undervalued compared to ChatGPT, that's clear.

David Friedberg 1:04:15 They just added six billion in the last month.

Speaker 1:04:17 Yes. [laughs]

David Friedberg 1:04:17 And I will tell you anecdotally, anecdotally, I, um... Everyone I talk to is on CoWork. Everyone has, like, gone deep on this. Everyone's amazed and shocked and actively using it, and everyone's saying the same thing-

Speaker 1:04:29 Yes

David Friedberg 1:04:29 ... which is Anthropic may actually ful- be fulfilling the promise of AI. I will also say that it's only gonna take ninety days for Google to flip on a virtual version of CoWork. And once Google, like, has this integrated with G Suite and you have a virtual hosted version of CoWork, I think Google sweeps the market with this same, uh, competitor. But right now, CoWork is such an incredible product, and everyone's saying the same thing. It's like giving-

Speaker 1:04:52 Elon-

David Friedberg 1:04:53 Um, giving truth to AI.

Speaker 1:04:54 Elon said something with respect to Grok, which was that he expects it to exceed all of these coding models probably in the May spin, but for sure by June. So to your point, Friedberg, like, what... Like, I guess my question, guys, to you is, like, what happens-- Okay, what do you guys do? Emil, what do you do when all the models asymptote? Let's just say by October of this year, let's just say I can guarantee you, just for the thought exercise, by October, all the models are the same. Do you just take a complexion of them all and say, "Great, we're gonna build some governance layer around it, and now we're indifferent?" Or-

Emil Michael 1:05:35 Yeah

Speaker 1:05:35 ... like, what do you do, Fried-

Emil Michael 1:05:35 I, I would love to be indifferent because then I could compete on price, right? And then, then I have, uh, then I have one, one main and one redundant or two mains, and I'd need at least two.

Speaker 1:05:49 Yeah.

Emil Michael 1:05:49 Anthropic's not gonna be one of them if they continue sort of with their, their sort of posture, so then it would be three, and if one gets wobbly from a policy scenario too, 'cause they all, you know, except for Elon's, is based in San Francisco and has that, that vibe to it. [chuckles] So, uh, you kinda wanna have two or three at any given time, and yeah, then I-- then you price compete them. I do think Google has a long-term strategic advantage, not 'cause of, not only because of their consumer thing but because they have their own cloud. So between them, they don't have the margin on top of the cloud that Anthropic will have to pass on.

Speaker 1:06:23 Right.

Emil Michael 1:06:23 So it's an interesting-

Speaker 1:06:24 Yeah

Emil Michael 1:06:24 ... economic pro- uh, uh, proposition from them. Uh-

Jason Calacanis 1:06:30 And just to build on your point, Friedberg, after you finish your, uh, insightful comments.

Speaker 1:06:36 [laughs]

Jason Calacanis 1:06:37 Here, pull this up, Nick. Almost on cue, Friedberg. You're s- such an oracle. Here is the announcement from Google. Google Workspace is now integrated for agents, and 40 agent skills were included today. Emil, you've been great today, super honest. Dario's, uh, position, I'm gonna give you some fast balls here. Dario says, "The real reason the Pentagon and Trump admin do not like us is that we haven't donated to Trump."While OpenAI, Greg, have donated a lot, here's Claude's answer to that claim. Here's nine companies and their activities with the administration, from the inauguration to attending the inauguration, to the White House CEO dinner, to the Melania documentary. If you go through and you look at these nine companies, Microsoft, Apple, Tim Apple, NVIDIA-

Emil Michael 1:07:32 [laughs]

Jason Calacanis 1:07:32 ... Amazon, they have all participated. There's one company that hasn't participated, and that's Anthropic. Are-- Is Anthropic being singled out because they are not genuflecting and because they're not paying the cover charge? People say this administration is pay for play. That's the accusation he's making. I'd say maybe there's a cover charge. Nobody likes to pay it, but the other companies have. What do you think here to his claim?

Emil Michael 1:07:57 I mean, it's literally one of the dumbest things I've ever heard. I, I-

Jason Calacanis 1:08:01 [laughs] Okay

Emil Michael 1:08:02 ... truly, just because I'm like, "I'm in the Department of War. I need to win wars. If you help me win wars, and I don't have to waste time transitioning you out, them, that makes me thrilled." Um, and, and sort of it's a criticism on m-me because it's not like Trump, President Trump dipped in and is like, "Hey, Emil, by the way, those guys didn't give me any money. You can't [laughs] use them anymore." I mean-

Jason Calacanis 1:08:23 Obviously

Emil Michael 1:08:24 ... it's sort of like l- like i-invention in his own mind. It's like, I don't know if people sleep at night if those thoughts get in there. Um, [laughs] and, and I was trying to work with them. Why would I spend three months trying to negotiate with them to get to a single standard if I would've just said, "Okay, guys, you're out. Bye"? So I think it's just some internal psychosis that's the only way I can explain that.

Jason Calacanis 1:08:47 Okay.

David Friedberg 1:08:48 It could be on Dario that he's antagonistic to the administration, both with respect to how he operates commercially, and it's also reflected in the fact that he doesn't want to support the administration but-

Speaker 1:08:57 I have a different theory.

David Friedberg 1:08:58 Yeah, go ahead.

Speaker 1:08:59 I have my own take.

Jason Calacanis 1:08:59 [laughs]

Speaker 1:08:59 I think that they have a massive instance of cowork running internally that helps-

Jason Calacanis 1:09:04 Hmm

Speaker 1:09:05 ... them come up with business strategy, and I bet you there's, like, some element of AI that says, "Yeah, you should do it. Do it. It just makes sense."

Jason Calacanis 1:09:13 Zig where they zag and get more press?

Speaker 1:09:15 And so now there's some, some [beep] Claude bot telling them to basically tell the Department of War to pound sand.

Jason Calacanis 1:09:21 Claude bot. [laughs]

Speaker 1:09:21 It's gonna turn out to be the stupidest decision.

Jason Calacanis 1:09:24 Let me... Listen, if I was chairman of the board of that company, I'd pull Dario aside and I'd say, "Listen, you're obviously a genius. We obviously have the best tool in town. This is not a battle you can win, and it makes no sense. You're gonna come across as not being patriotic. And Tim Cook is showing up for the Melania premiere. Would it kill you to support the president? Would it kill you to show up?" Look what happened-

David Friedberg 1:09:44 I think that's the, I think that's the wrong advice

Jason Calacanis 1:09:46 ... when Biden, look what happened when Biden excluded Elon.

Speaker 1:09:48 No. I'll, I'll-

Jason Calacanis 1:09:48 That ankled him. Show up for the president.

Speaker 1:09:51 I'll tell you, I'll tell you what I-

Jason Calacanis 1:09:52 Show up for America and be a patriot. You don't have to donate, but be a patriot and show up for the dinners.

Speaker 1:09:57 That's terrible advice. Here's my advice.

Jason Calacanis 1:09:59 Okay, here's your advice. Okay.

Speaker 1:10:00 Hey, Dario, call Emil back right now and say, "You know what? Sorry. We [beep] up. We're gonna own this, and we're gonna put out-

Jason Calacanis 1:10:08 Hmm

Speaker 1:10:08 ... a press release that says, 'We support our customers' use of our models to do everything and anything that's lawful,' number one, and number two, that our terms of service are written in stone, and that you can expect solidity and reliability from us, and this was just a misstep."

Jason Calacanis 1:10:29 Camille, how do you respond?

Emil Michael 1:10:31 I mean, I would say that's what I've always wanted. I need a reliable, steady partner that gives me something-

Jason Calacanis 1:10:37 Okay

Emil Michael 1:10:37 ... kinda work with me on autonomous because someday it'll be real, and we're starting to see earlier versions of that, and I need someone who's not going to wig out in the middle, [laughs] and we're just at the early stages and is rational.

Jason Calacanis 1:10:51 Right.

Emil Michael 1:10:51 But then, you know, you called President Trump in your 5,000-word essay on Friday a wannabe dictator. You're gonna have to apologize to more people than just me.

Jason Calacanis 1:11:01 Yeah, maybe time to re-underwrite the position here. Uh, let, let, let's just say kumbaya, everybody. Kumbaya.

Emil Michael 1:11:07 Kumbaya.

Jason Calacanis 1:11:07 We solved the problem, and look who's on the line, surprise guest. Dario's here. I thought I would surprise everybody. Nick, pull Dario up. No, he's not

Jason Calacanis 1:11:14 here.

David Friedberg 1:11:14 What's your view on how the industrial supply chain for hardware components and systems is coming along in the United States? Because my understanding is we're trying to reduce dependency on Chinese-manufactured components. Where are we with respect to where we need to get to in the US manufacturing supply chain?

Emil Michael 1:11:33 We are early days. Um, critical minerals, you see, you've seen the action around that. Um, you'll start to see, so I have the Office of Strategic Capital, which has 200 billion in lending authority, and what we're trying to do is, is it's like a Treasuries plus 100 bips, loan to companies, show them that the department needs their solid rocket motors, their batteries, their fiberglass, like all the things that we, that we're heavily dependent on for ind- our defense industrial base that are completely outsourced to China and domesticate them here. Um, and we've got, uh, a bunch of great people running it, so I- but, but it's early days. It's gonna take for the rest of the term to get, um... I think we'll get critical minerals done before the rest of the term, where, where we have access to what we need to from us or allied countries. Um, uh, but from batteries, it's like the next problem I'm trying to solve, for example. Batteries are totally outsourced, both technologically and from lithium to China. Um, and there's like, you know, kinda call it 20 critical things. If I could get to all of them at some level, but then it'll take a few years for them to, like, build plants and do that stuff, but they're, they're, it's, it's very important. I hope whatever administration comes next continues it because I'm all free market, but, but we outsourced ch- so much that, um, you know, it, it crippled sort of the, the kind of com- the assembly part of putting all these things together.

David Friedberg 1:13:04 Hmm. Do we have a munitions risk right now, given the conflicts that we're involved in?

Emil Michael 1:13:08 We, we don't have a munitions risk, but, um, we do need to plus up because-The Europeans are taking a long time to contribute. Like Ukraine, Russia has consumed a lot of munitions from, like, all over the world. And then, uh, obviously these conflicts we've been in and, um, we need to have, like, the next generation. We're still-- There's still a large degree we're fighting with nineteen-eighty Cold War weapons, right? And not modern weapons.

Speaker 1:13:37 Right.

Emil Michael 1:13:37 And so we need to plus up those things that, uh, to, to regenerate them. I mean, our nuclear missiles are fifty years old. Some of the planes are forty years old, so all that has to be renewed.

Speaker 1:13:49 Hmm.

David Friedberg 1:13:50 Do you think, um-- Just speak to the venture capitalists in the audience. Are we in the early stages of this kind of defense tech boom? Is defense tech well-funded at this point, or is it kind of too hypey and bubbly, and that's not really the issue? It's not about funding the companies, it's about funding some of the further upstream, uh, issues that we're facing. What's, what's your view on where we are there?

Emil Michael 1:14:10 There's more defense tech venture capital than ever by, you know, three X more than last year. So, you know, the, it, it's growing. What I need to do and what the department needs to do is have some of these companies win big contracts quick, like whether, you know, Anduril, sure, um, uh, Sirona, sure, like bunch of these companies, so that more money flows in, more entrepreneurs do it, and I could buy more. Because generally, I do think warfare is going from big car-carrier ships that cost twenty billion dollars and a decade and a half to build to mass, attritable, low cost, um, uh, things, and that's what these new pro-- these new entrants can do. So we need those to succeed so that the flywheel goes with venture capital money, entrepreneurs, capabilities.

David Friedberg 1:15:00 In that sense, it-- and what I've heard as kind of the explainer for this is we're moving from the old primes to the new primes, that there's gonna be a small set of big winners and then obviously lots of seconds and, and subs and whatnot. Is that really how this market's gonna evolve? So are we gonna end up with Anduril, Palantir, and maybe three or four others, and that's where most of the value is gonna accrue from a market perspective?

Emil Michael 1:15:22 I mean, Anduril and Palantir want that, and I joke with them all the time about it, but I, I want... I definitely want at least a second layer that's innovative and trying to disrupt the first layer all the time. I met a, a mom-and-pop, like, wholly owned company that, that makes these missiles called ERAMs that are-- we really sell and send to Ukraine, and they do it with, like, thirty people, and they can do a thousand a year 'cause they've designed a manufacturer and it's awesome. So I want companies like that to continue innovating. Maybe Anduril then buy, buys them. But the, the one of the reasons the primes are such a small number, it's not the only, but it's one, is they learn how to contract with the government. They learn how to go through the bureaucracy, and that became a competitive advantage. I'm trying to take that competitive advantage away.

Speaker 1:16:07 That's a really important point. How do you disassemble all that bureaucracy so that product innovation can actually get to you?

Emil Michael 1:16:15 Yeah. So we, we did a big req... So part of it comes down to requirements reform. What used to happen is people are like, "Oh, we need a new fighter jet." So Army, Navy, Air Force put into the requirements and were, you know, it would-- we needed to be stealthy, to hold a missile, to hold four humans. And, you know, it became this un-buildable thing, but the contractor didn't care 'cause they're getting paid cost-plus. So like, "Sure, I'll fulfill your requirements." Two years from now, you're like, "Oh, that was never engineered properly." It'll be another few years late and a couple more billion dollars. So we're trying to change that to, I tell you my common operational problem. I need a bunch of missiles that can go five hundred miles or more that have this kind of blast. Come to me with solutions. As little requirements as possible on that side. And then on the contract piece, trying to get to as close to commercial contracts as possible. And this is gonna ta-- And this is where the startups are so good. They'll do fixed cost pricing. They'll do be-- you know, pa-- you don't pay me as much if I deliver late. You pay me more if I deliver early. Um-

Jason Calacanis 1:17:20 It's very disruptive to the existing system, yeah?

Emil Michael 1:17:22 Super disruptive.

Jason Calacanis 1:17:23 [laughs]

Emil Michael 1:17:23 But that's, that's what I'm, I'm, like, waking up every day trying to do.

Jason Calacanis 1:17:28 So you could put out something saying, "Hey, the Strait of Hormuz is super important. We need to keep it open. We need these type of devices to keep it open, but come to us with your ideas."

Emil Michael 1:17:37 Yeah.

Jason Calacanis 1:17:37 And let them be creative entrepreneurs as opposed to, you know, just trying to goose the profits. Yeah.

Emil Michael 1:17:43 Yeah.

Jason Calacanis 1:17:43 It's really brilliant. Yeah.

Speaker 1:17:45 Emil, you also oversee DARPA, yeah?

Emil Michael 1:17:47 Yeah.

Speaker 1:17:48 DARPA's the father of the modern internet, and it's created a lot of really critical technologies. Can you talk about what's going on in there? Are there interesting things that you think our audience should know about that you're trying to push forward?

Emil Michael 1:18:00 I mean, there's so much. Probably my favorite part of, [chuckles] of my, my office is like... Because there, that's where you-- it's sort of the, it's still a very honored profession to be part of DARPA. Like, you know, being up, being in government service for a long time has sort of reduced in its stature since the Manhattan Project. Now, because now, now if you're a great ass, you know, uh, someone who wants to do rockets and stuff, you go to SpaceX. DARPA still has the best of the best, and so the most creative ideas happen there. One of the things that they're working on that's public is they're trying to use biology to synthesize critical minerals. So, so how do you, so how can you just pull them out of ground, use biology to do it, so you don't need to do all this crazy, messy, dirty refining? That would, like, change the game big time on our ability to get the critical minerals we need faster and leapfrog the Chinese in terms of tech. Um, so they're doing a lot of that kind of stuff. They're deep in cyber. Cyberattacks are, are the next huge threat with AI, right? The, what, what we saw with the creating all these agents to attack systems, that Anthropic act- happened to them. Um, so they're, they're, they're working on... That's, it's not a ton I can talk about kind of DARPA because it's so, it's so-

Speaker 1:19:14 Yeah

Emil Michael 1:19:14 ... classified, but those are a couple of examples for you.

Jason Calacanis 1:19:18 All right, speaking of classified, uh, just two quick questions before we wrap here. Are there aliens, and when are you going to tell us? [laughs] As in number two, uh, in all seriousness, I, I'm curious, what have you learned about China and where they're at and the threat there and our ability to counter it? Like, give us some idea of where we're at as a country, 'cause we hear a lot of hyperbolic stuff. They're building this incredible mobile small navy. They've got hypersonics. They're just way ahead of us. You know, we hear these things, but realistically, are we competitive?

Emil Michael 1:19:51 Um, I fought... Well, I'll answer your first question, was I fought for the alien portfolio. I didn't get it. [laughs]

Jason Calacanis 1:19:57 You didn't get it.

Emil Michael 1:19:59 [laughs]

David Friedberg 1:19:59 More work to do.

Jason Calacanis 1:19:59 More work to do. [laughs]

Emil Michael 1:20:01 All, all the guys on my team were like, "Dude, you got to get this for us. Please talk to the secretary."

Jason Calacanis 1:20:06 [laughs]

Emil Michael 1:20:06 "We want to do this."

Jason Calacanis 1:20:07 Alien tech.

Emil Michael 1:20:08 But I, but I... I was like, you know, as long as I had 100% access to everything, I would do it, because that would be awe- that would be amazing, right? [laughs]

Jason Calacanis 1:20:15 Lightsabers would be a game changer. [laughs]

David Friedberg 1:20:16 Yeah.

Emil Michael 1:20:17 Um, but on the second one, uh, it is true that Chinese have had the greatest military buildup in world history in the last 15 years, and we were asleep at the wheel to some degree because we were focused on global war on terror. So they've advanced without sort of us thinking about threat. That being said, our operational expertise and our space, like we have some sophisticated stuff. So, you know, our subs, our space layer, um, we still have the best stuff in the world. That does, you know, but, but we have to make sure that gap doesn't narrow.

Jason Calacanis 1:20:54 Right. We can't be complacent. We should sleep well at night knowing you're there-

Emil Michael 1:20:58 Yeah

Jason Calacanis 1:20:59 ... knowing President Trump's allocating money towards this, and he's decisive in his actions.

Emil Michael 1:21:03 Yeah.

Jason Calacanis 1:21:03 But we cannot be complacent.

Emil Michael 1:21:04 We can't be complacent.

Jason Calacanis 1:21:04 It's time to invest.

David Friedberg 1:21:06 This, I, I feel like this week was a true reminder of how fortunate we are to have the defense that we have for the United States. When you look at what happened in Dubai and in Doha and in Tel Aviv, and you see how people in their residential homes are getting attacked and bombed, you realize just how fortunate we are to have all of the layers of protection that we have by our government. And I've actually come around-

Jason Calacanis 1:21:29 So true

David Friedberg 1:21:29 ... to this quite a lot. I'm a true kind of arguably libertarian at heart, small government, but the one thing that I've realized is so critical for us to have the freedom to do all the things we want to do is defense. And so I think it's an amazing institution, very valuable to the United States. Emil, thank you for what you do.

Emil Michael 1:21:47 Appreciate it.

Jason Calacanis 1:21:47 Yeah, thank you, Emil.

David Friedberg 1:21:48 Yeah.

Jason Calacanis 1:21:48 Really appreciate you coming on and, and being so candid and thoughtful-

Emil Michael 1:21:52 Yeah

Jason Calacanis 1:21:52 ... and insightful.

Emil Michael 1:21:53 It was great.

Jason Calacanis 1:21:53 This has been-

Emil Michael 1:21:53 That was a fun episode. [laughs]

Jason Calacanis 1:21:54 ... an, an amazing episode. We'll see you next time. Bye bye.

David Friedberg 1:21:57 Besties are back.

Emil Michael 1:21:57 Love you boys.

Jason Calacanis 1:21:58 Bye bye. [upbeat music]

David Friedberg 1:22:00 Let your winners ride.

Jason Calacanis 1:22:03 Rain man, David Sacks.

David Friedberg 1:22:07 And it said, "We open sourced it to the fans, and they've just gone crazy with it."

Emil Michael 1:22:11 Love you, besties.

Jason Calacanis 1:22:12 Ice queen of Kin Wah. Let your winners ride. Let, let your winners ride. Let your winners ride. Besties are back.

David Friedberg 1:22:21 Gold, gold 13. [laughs] That is my, uh, dog taking a piss in your driveway, Sacks. [laughs]

Jason Calacanis 1:22:26 Wait, no, no, serious. [laughs]

David Friedberg 1:22:28 Oh, man.

Jason Calacanis 1:22:28 My, my amateur will meet me at Blitzen. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this, like, sexual tension that they just need to release somehow. Wet your feet. Wet your feet.

David Friedberg 1:22:41 Wet your feet.

Jason Calacanis 1:22:43 Feet. [laughs] We need to get merch. Besties are back.

David Friedberg 1:22:45 I'm going all in. I'm going all in.