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70 min read · 13,747 words- 0:00 – 1:00
Intro
- SPSam Parr
All right, everyone. We just finished recording this pod, and we wanted to come back and give a little bit of an intro because I feel so many different emotions, and here's why. The stakes of this are super, super, super high.
- SPShaan Puri
Yeah, we're talking about what's going on with robots in the real world. So robots that are being used. We have specific examples of really cool businesses that are doing robots for, you know, lawn care, restaurants, all different types of things. But then we go over the Elon Musk versus Sam Altman lawsuit. What is this lawsuit between two of the power players of Silicon Valley, and what's our take on it, which might surprise you, as well as some of the brilliant, the nuance, the, the marketing and PR that's going on here. We kinda call it out.
- SPSam Parr
This is actually... We have fun while doing it, but this is actually really, really important in my opinion. Listen to the entire thing, and you have to listen to the first half to build up the story and the stakes for the second half. Trust me. You're gonna understand exactly what I'm talking about when you get through the whole thing. So enjoy it. [upbeat music]
- 1:00 – 4:00
Single purpose robots are here
- SPShaan Puri
All right. What up, Sam?
- SPSam Parr
Hey. What's going on?
- SPShaan Puri
Sam, I gotta tell you something. When it comes to kissing, eating ice cream before bed, or business, timing is everything, my friend.
- SPSam Parr
[laughs]
- SPShaan Puri
And I think [laughs] I think that timing is important in all aspects of business, and in technology there's a moment happening right now. I can feel it. I can feel it in my b-
- SPSam Parr
[laughs]
- SPShaan Puri
It's like when you hit your funny bone and your whole arm gets hot. I can feel it right now. Shit's about to change. Robots are going wild. I gotta talk to you about robots.
- SPSam Parr
And they've, like, been around for a minute, but now it actually feels like it's a reality.
- SPShaan Puri
Exactly. So right now a lot of people are talking about Tesla because Elon Musk came out and he said the future of Tesla is this humanoid robot. And I forgot what they call him, like Optimus or some shit like that. So it's like, uh, he's like, "Hey, we got this robot that can walk around, pick up stuff, do tasks. It's gonna change the workforce." And, um, your boy, Brett Adcock, he's got a company called Figure, which you're an investor in. They have their robot, and I think they just raised like a billion dollars or something, right? Like, that's last week.
- SPSam Parr
I think they raised $600 million at a two and a half or $3 billion valuation, I think.
- SPShaan Puri
Nice little investment there for you.
- SPSam Parr
I know.
- SPShaan Puri
[laughs]
- SPSam Parr
I was in the first, I was in on the first round. I doubled down and did on this round. Is this gonna be my, my Mona Lisa? Is this gonna be my, my big win?
- SPShaan Puri
Well, it could've been anybody's 'cause you had him come on the podcast and tell the world what he was doing. So, uh, go- good on you. You... Multibillion dollars, uh, valuation right now. So that's a big deal, and people are really excited about that. I think there's these stats that say if, uh, basically labor is 50% of the GDP. The labor market is a 10 times bigger market than transportation, which makes sense why Elon is like, "Hey, forget cars. It's all about these robots. The... We're just, we're an AI company. We're doing robots." Um, he's very good at repositioning and re, um, reimagining the vision of the company over and over and over again, right? It went from affordable electric cars to self-driving autonomous vehicles, robo-taxis that will just drive people everywhere. Your car will become an a- appreciating asset instead of a depreciating asset. And then now it's actually f- it's not even about cars, it's about AI robots, and that's, that's the future. But I wanna tell you about something that's less fancy than that because I think it's gonna come first, and that is single purpose robots, AKA Roombas on steroids. And Roombas on steroids, you know, the Roomba was a, it's a single purpose va- little vacuum robot that just goes around your house and it... But it's in the wild today. It, like, actually works. It's actually useful for people. Uh, an even better example I think is the dishwasher, which is in pretty much every home in the United States right now, and it saves you a ton of time. Uh, like when your... Like, my dishwasher broke last week. Terrible experience when your dishwasher breaks. The dishwasher is a single purpose robot that's actually out there in the wild. We should be striving to create something as useful as the dishwasher. That should be the North Star right
- 4:00 – 10:30
Self-driving lawn mowers
- SPShaan Puri
now for a lot of, lot of companies, and there are. So I s- I went on Twitter today and I saw this great video that was about, um, s- a company called Electric Sheep. Have you seen this?
- SPSam Parr
No.
- SPShaan Puri
All right. So-
- SPSam Parr
Electric Sheep? That's a-
- SPShaan Puri
Electric Sheep
- SPSam Parr
... I, I don't know what it is. That's a great name, I think, and I think it's a la- a lawnmower.
- SPShaan Puri
It is... Imagine if you took the Roomba and you put it in the lawn. [laughs] That's what it is. It's a-
- SPSam Parr
That's a great name
- SPShaan Puri
... it is a robot that mows your lawn, does all the kind of landscaping. What's interesting about these guys that I found pretty fascinating is not only are they a company that's, like, a bunch of guys in a garage building a robot, like a, a lawnmower that's got a camera on it that can go around your lawn, they're actually buying up and rolling up landscaping services. So it's a combination of a sweaty startup and a moonshot startup together. So these guys are going out and they're buying all these landscaping businesses in the Bay Area, uh, 'cause they're like, "Well, we need a, uh, like a testing ground for robots." Like, you have to actually... Like, in their office it's just, like, an AstroTurf, and they're like, "Yeah, well, it can do this square AstroTurf pretty easily. It's not so bad." But in the real world, your lawn has got all kinds of different lumps and dips and divots and trees and rocks and it has to be able to work. How are we gonna get the best data, right? The same way that Tesla is putting all, like, the cars on the road collecting data at all times, and they're collecting, like, whatever, 100 times more data than the next biggest self-driving car company. These guys are trying to do that with their lawn care robots. So they're buying these landscaping businesses, then they use them for, as a sandbox. They take the robots out and they try to use them. They, they mow your lawn normally, but they'll try to test the robots as well. They gather the data, and then over time they're like, "Well, we're buying these landscaping businesses at one valuation. But then what we'll do is we'll st- slowly start to replace the workers in the landscaping business with the robots and actually have improved margins. Um, and so we're gonna like... It's like a private equity play as well. [laughs] And so I thought that was a pretty fascinating approach that I hadn't heard before. I can't decide if that's just overkill, like maybe that's not actually necessary to, to, to, to do two hard things at once, but I did find it very interesting. What do you think of that strategy?
- SPSam Parr
I'm looking at their website. All right, so it's slick. This is cool I agree with you. The whole, uh, overkill thing, that bothers me. That could be true
- SPShaan Puri
Well, the problem is, like, the, the founders, like, w- the founder like went to Stanford, and like you're smart enough to build a robotics company, that's almost... You're smart enough where you can get yourself into trouble. [laughs]
- SPSam Parr
Right.
- SPShaan Puri
You could, you could be like, "Oh, we'll vertically integrate," and it's like anytime you use the words vertically integrate, be real careful. You might be mid-witting the shit out of your plan right now.
- SPSam Parr
Basically, like for him, there needs to be a Venn diagram of this guy, this founder of sh- uh, Sheep Robotics, he's like the dumbest smart person-
- SPShaan Puri
[laughs]
- SPSam Parr
... and he needs to hang out with the smartest dumb person.
- SPShaan Puri
[laughs]
- SPSam Parr
And we need that like [laughs] we need that like Venn diagram overlap to, to make this the perfect business.
- SPShaan Puri
[laughs]
- SPSam Parr
That's, that's kinda like what he's doing. Uh-
- SPShaan Puri
Exactly
- SPSam Parr
... this is awesome. This is awesome. This is cool. Uh, another thing that I worry about, this is badass, but is it a badass team and a badass execution on like a-
- SPShaan Puri
Small opportunity
- SPSam Parr
... yeah. Like lawn... I mean I gu- I don't know. Is lawn mowing a big, big... I mean, is it as grand of a plan as what these people are actually capable of doing?
- SPShaan Puri
I think so because I, you know, I don't know how big the landscaping industry is, but I know that anytime private equity's going and rolling up things, there's a lot of money to be made. They w- they wouldn't... Private equity doesn't roll up, you know, like, uh, lemonade, you know, small lemonade stands, for example. [laughs] Like they go into things that are, that, that are cash flowing, you know, i- i- industries. And so I do think if you added up all the landscaping businesses and you're like, well, y- you know, either what they're gonna do is they're gonna use them in their own business to get it right, and then they're gonna go lease or sell these robots to every landscaper in the country and be like, "Hey, would you like to improve your, your operating margins by, you know, 10%, 20%? Use these robots." And so that, either that's what they're gonna do or they're gonna go try to out-compete them somehow on price. I don't really love that idea. So, so I think it has to be they're just using this to prove their own tech to then go lease these out to every other landscaper.
- SPSam Parr
So on their About page, they list their team, and I guess, uh, their advisors include this guy named Dan Foley. It says Dan Foley was a CEO of a company that sold to BrightView. I googled BrightView. BrightView's a commercial landscaping company that did th- roughly $3 billion last year in revenue.
- SPShaan Puri
Yeah.
- SPSam Parr
And publicly tr- it's publicly traded. It's, it has a shit market cap, it's multiple-
- SPShaan Puri
So what you're saying is the newsletter guy is [laughs] calling the land guy small? [laughs]
- SPSam Parr
No. What I'm saying is I, yeah, I did call it s-
- 10:30 – 14:00
Robot line cooks
- SPShaan Puri
the first one. Now I have a similar, you know, uh, w- where else are robots being used? Again, these single purpose robots. Not the general robots, but single purpose robots. In the same way that we got specific AI before we're getting arti- AGI, artificial general intelligence, we got specific AI where it's like, you know, I don't know, it's been like 20 years since, uh, DeepMind could just beat Garry Kasparov at chess, right? Like we, we solved chess, then we solved Go, then we solved math, then we solved route planning. You could do these single purpose AIs that way before you can get to general AI. So similarly, I think the timing of the opportunity is not in the f- the Tesla robot or even, sorry, the Figure Robot, which is like just a human robot that could do everything. Uh, you know, that is the big, biggest win obviously. But I think before then, almost by definition, we have to see these specific single j- one job robots 'cause you're g- it's gonna be easier to build a one job robot than it is gonna be to build a general robot that can do all jobs. And so, um, here's some other ones. So I don't know if you know this, Sam, but this podcast is not only listened to p- by people who are trying to make their first million, but maybe by people who are trying to make their, their hundredth million, their, their ne- their next million. There, there's more millions to go, and one of those people is the CEO of a, of a restaurant called, uh, Sweetgreen. And so the, the CEO of Sweetgreen is a listener of the pod. And I was looking up where else are robots being used, and I saw that Sweetgreen actually now has a, what they call their infinite kitchen, which is a like robot-driven version of Sweetgreen. So Sweetgreen is like a salad, uh, bowl type of, type of concept. You normally go in there and there's like, you know, whatever, four people working the line and then there's like four people in the back kitchen doing prep. Just like most fast casual restaurants. And what they've done is they basically went in and they were like, "Hey, what if we..." They s- first I think they bought a robotics company for 50 million bucks, and then they used that technology to build a concept where you basically have, like, one person in the store, and the rest of it is all done by robots. And so click this link that, um, I put in our sheet. We could show this on YouTube. Um-
- SPSam Parr
By the way
- SPShaan Puri
By the way
- SPSam Parr
... uh, th- is this Jonathan Newman?
- SPShaan Puri
Yeah.
- SPSam Parr
I know that he's a listener. You wanna know how I know he's a listener?
- SPShaan Puri
Don't tell me you're getting free Sweetgreen and I'm not.
- SPSam Parr
L- no, even better.
- SPShaan Puri
[laughs]
- SPSam Parr
He emailed me, and he took a screenshot, and he showed that he subscribed to My First Million on both-
- SPShaan Puri
[laughs]
- SPSam Parr
... YouTube, podcasts for Apple, and Spotify. So if you wanna be like John and start a multi-billion dollar company, you gotta subscribe. That- that's all you have to do.
- SPShaan Puri
I don't think there's been anyone who subscribed that isn't rich and famous and successful and desired by-
- SPSam Parr
[laughs]
- SPShaan Puri
... many people of the opposite sex, or the same sex if that's what they're into. It's just a thing that works, all right?
- SPSam Parr
[laughs]
- SPShaan Puri
Um. [laughs] Okay, so, so Sweetgreen. Uh, so check this- this video out. So basically what they did was they made these, like, this kitchen, it's just like a giant wall where all the ingredients are in these, like-
- SPSam Parr
Awesome
- SPShaan Puri
... little robotic kind of dispenser arm type things. And whatever you order, the bowl goes across the conveyor belt, and then it's like the bowl is spinning, it's, like, rotating so that it drops in all the ingredients in the right spots. And again, they have all kinds of ingredients, right? So, like, this sounds pretty simple, it's just, like, dispensing. But, like, maybe dispensing almonds is really easy, but feta cheese, which is really crumbly, you gotta be careful with it, right? Like, so you so they basically fine-tuned this thing, and now this concept can do 500 bowls per hour. And I DM'd him and I was like, "How much does, like, the hu- like, a human li- like, your normal restaurant line do?" He's like, "Maybe, like, 170 to 200."
- SPSam Parr
Wow.
- SPShaan Puri
So you get basically, like, more than 2X the speed, and now you have a robot that does work that can work 24/7,
- 14:00 – 19:30
Op ex over cap ex
- SPShaan Puri
never calls in sick, never, uh, you know, ag- always get- puts the right proportion into, into every bowl. You know, you have perfect food control cost. And so you end up with a better version of an employee. And the strategy, the way that I think about this is you trade Op ex for Cap ex. And trading Op ex for Cap ex is actually a pretty good idea. Um-
- SPSam Parr
I think you should further explain what that means.
- SPShaan Puri
So today all restaurants work with human labor. Your human labor is your operating expense. It's the Op ex. And so, and what that means is that for every hour that you're operating or every- every bowl that you're selling, you need to pay a certain amount in wages to, to employees. And so let's say today, you know, you're paying 20 bucks an hour to people that work in these restaurants. You got, you know, 10 people working in the restaurant at any given time, blah, blah, blah. You can add it up, and let's just pretend that your labor costs come out to 33% of your revenue. And so the opportunity here, which is I would say normal for, for a restaurant, food costs usually 30%, labor costs usually 30%. Um, and so you- you- you add these up. You're right, you can't change the food cost, but could you change the labor cost? And so what the, what he did with these restaurants is every restaurant, to put in these robots costs more money. It costs more Cap ex, which is, like, the initial upfront investment. And it- it, I think in their last earnings call they said it's about 500K to put the robot in. So you put an extra 500K to build the store, but again, this is 500K of Cap ex, which means you can depreciate it, which is good for your, you know, tax purposes and whatnot. Um, and it's a one-time cost. Versus your Op ex is a every day of, of operation. And what they found was for that extra 500K investment, they get a- at least an extra 7% of, you know, of net margin from, uh, from those restaurants that ha- because they have less Op ex. And so you would take that, and that basically creates, you know, some break-even point where you say, "Okay, cool. Two years in, we're gonna have paid off, you know, the cost of this robot or whatever." Um, and also he's like, "You know, the 500K Cap ex, that's today, and this is the most expensive it's ever gonna be. Like, the costs are only gonna drop as we scale up, as we refine the, as we simplify the design. Like, every version we come out with is just gonna be lower cost than this one." And I asked him, I go, "In 10 years, what are the odds that, um, your restaurants are basically robot, robot driven, not human labor?"
- SPSam Parr
Is this guy... Sweetgreen's publicly traded, right?
- SPShaan Puri
Yes.
- SPSam Parr
Is he, are you allowed to say what he's gonna say right now?
- SPShaan Puri
I told him, I said, "Is there anything in, that I can't share in this?" And he goes, "No, I've shared all this." But he was basically like, "It's very high." Right? Like, uh, and just- just thinking about that a little bit out loud, it's like, man, that means that the next 10 years in my, you know, very eas- you know, hopefully for, in our lifetime, restaurants are just gonna go fr- you know, a lot of restaurants are gonna go from you walk in and there's just, like, a bunch of people who are sort of disgruntled people who would rather just be checking their phone right now than, you know, sitting there with this, like, stupid uniform on, and it's just gonna go where you go in, you push a button, and then your bowl gets made by a robotic arm, and then you walk out. [laughs] Like, that's gonna be thing. There's gonna be one human in the loop. One, one human whose job is now called, you know, robot maintenance, robot operations, and they're basically the guy who's like, "Oh, the carrots machine got a jam. Let me go and, uh, take a little fork and, and unjam that thing," or, "Hey, I gotta refill the container of apples." And so what the, what these guys do with the Sweetgreen restaurant is the humans are all in the back doing the fresh prep of ingredients, and then the robots are serving the customers, and that's how they split it today.
- SPSam Parr
So you and I are, are fairly optimistic. Uh, you know, we try to see the, the bright side of most things. You in particular do that. But let's try to be pessimistic right now a little bit. So the argument that you're gonna see from a lot of, actually most people, I would think, but particularly pessimists, but m- most people I think are gonna be pessimistic on this, they're gonna say, "But this is gonna ruin the economy. This is gonna ruin jobs." And let me ask you a question before you actually give your opinion. You have, Shaan, you own a business that employs warehouse workers. W- roughly, what's your annual turnover for your warehouse workers? Like, how often do they quit?
- SPShaan Puri
Well, we use a 3PL now, but before when we, when we had it in-house, it was, I would say every year we're gonna replace 90% of the team.
- SPSam Parr
So I was reading, I think it was Amazon, I forget, someone who employs 10 or hundreds of thousands of warehouse workers. For them it was [laughs] it was 100%.
- SPShaan Puri
[laughs]
- SPSam Parr
So it was 100% turnover rate. And I remember talking to Brett, uh, from Figure, and I go, "Brett, are you gonna, like, are you preparing to, like, be the most hated man in America right now?" And he was like, "Well, why?" And I said, "Well, because like you're gonna be re- you're get- you're taking jobs." And he was like, "Well, I'm not actually taking jobs. In fact, there's all these warehouses that no one will, no one's gonna work there. They just literally cannot g- they cannot convince people to work there, they, whether they can't afford it or if it's just, uh, people, uh, aren't interested in that type of work." And then, and then he goes, "Plus, the average turnover on a lot of warehouses, it is 100%." So, like, they just can't keep people, like, in these jobs for a long time. And so my question to you is, are you pessimistic at all of what's gonna happen in 15 years, 20 years? You know, my first job, I was a laborer and then a dishwasher. I bet, I think you probably have done similar things like that. What's gonna happen?
- SPShaan Puri
Yeah, my first w- my first business was a restaurant business. I was the guy chopping tuna and doing all that stuff in the back, doing dishes, you know, every, every night. Um, I think there's two versions of pessimism. The first version is, it's not gonna work. The second version is, it's gonna work, and that's a bad thing. You're talking about the second version, right?
- SPSam Parr
I think that's, I think, I think it's gonna work. It 100%-
- SPShaan Puri
[laughs]
- SPSam Parr
... is going to work, I think. And so I don't-
- SPShaan Puri
And by the way, I, I asked the guy, I was like, um, how...
- 19:30 – 22:00
What could go wrong?
- SPShaan Puri
He's like, "What's the non-obvious, like, only when you're in the weeds doing it is it really obvious about this, but to the outside person they maybe gloss over it?" I was like, "What's, what's that insight?"
- SPSam Parr
That's a great question.
- SPShaan Puri
He goes, "Well, it's like, it's like most things in technology." He goes, "The first 90% is easy, which makes it really easy to have, like, a sweet demo. And m- everybody just immediately is like, 'Oh man, this is gonna change everything.'" And it's like it will eventually, and probably a lot longer than we th- we, we want. Um, because he goes, "The n- so the 90% is easy. The next 9% is 10 times harder." So it's like, you know, uh, uh, the simple stupid example of this would be like, you know, dispensing almonds, easy. Dispensing the right amount of crumbly feta cheese, it is literally 10 times harder than the almonds problem, right?
- SPSam Parr
Or, like, on a Tesla, like, my Tesla self-drives and it's, uh, the autopilot is mostly good unless it's a flashing yellow light.
- SPShaan Puri
Right.
- SPSam Parr
Then it, like, freaks out and I almost die.
- SPShaan Puri
Right, or it's like if it's a dewy morning, or it's a foggy this, whatever, or it's rainy here, or there's construction there, right? There's like all these edge cases. And then that's what he said is, like, the last 1% is, it's even 10 times harder than that first one. And he's like, "So with self-driving cars, the problem is nobody wants a 99% good self-driving car, even if that's actually five times better than a human."
- SPSam Parr
Yeah.
- SPShaan Puri
It's like, if I'm gonna die, I'm gonna die at my own hands, not at the hands of this r- you know, this piece of software. And so that makes it really hard to roll out these things and get s- and, and deal with the PR backlash every, anytime there is a, a crash or a, or a re- a bad result, even if it's less pr- even if it's a better probability than, than humans driving. But I don't think you have the same problem with restaurants, right? Size of the prize is smaller, but also the barrier to entry is, uh, the barrier to deployment is much smaller, where it's like, "Oh man, I asked for light sauce. This is medium sauce," [laughs] right? Like, you know, it's like, whatever. It's okay. It's not a self-driving car crash. And so I do think that that's the case here, where a lot of people can get 90% of the way there, getting the next 9% 10 times harder, getting the final 1% 10 times harder than even that. Uh, in software development, we used to say this, where I would always be... 'Cause I'm the non-engineer. I worked at a company of all programmers, and I'd just be, like, walking around, you know, eating cashews and just walking around just like, "Hey, hey guys, how's it coming? What-
- SPSam Parr
[laughs]
- SPShaan Puri
... When, when do you think it's gonna be done?" And they're like, "Well, we're about 90% of the way there." Or, "We got, like, 90% of the things done, so we're about halfway done."
- SPSam Parr
You're like, "Great. 10 minutes, we'll be done."
- SPShaan Puri
And I was like, "Wait, 90% done, so you're halfway done?"
- SPSam Parr
[laughs]
- SPShaan Puri
He's like, "Yeah, the last 10% always takes ha- at least double the time that you've already spent."
- SPSam Parr
That's insane.
- SPShaan Puri
I was like, "All right. Cool."
- 22:00 – 24:00
Sam Altman's call for Universal Basic Income
- SPSam Parr
[laughs]
- SPShaan Puri
[laughs]
- SPSam Parr
That's um, that's how math works.
- SPShaan Puri
[laughs]
- SPSam Parr
I, uh, do remember-
- SPShaan Puri
Anybody need coffee? I'll go get some.
- SPSam Parr
[laughs] Like 10 years ago, universal, uh, income or un- you know, or universal wages was, like, a thing.
- SPShaan Puri
UBI.
- SPSam Parr
UBI. We're gonna, you're gonna, we're gonna give everyone in America a, a bunch of money. And like, I'm a capitalistic guy, and I was like, "What? F- that, that's the worst." And then I learned two things. One, do you know in Laska- in Alaska, I've had a friend, I've had friends move to Alaska. You know, they do that. They've been doing that for decades. They give you-
- SPShaan Puri
Right
- SPSam Parr
... five grand. Uh-
- SPShaan Puri
The oil, oil dividend, right? It's like you get a share of the money that they were making from having so much natural resources, I think.
- SPSam Parr
I don't... Yeah, maybe. I don't know where it's from. And I, I believe, if I'm not mistaken, I think sometimes it's a tax credit where, like, you just pay less in taxes, or if you don't owe an- any tax money, you literally get a check of like $4,800 or $5,500, something like that. And then the second thing that I learned was I started researching UBI and I was like, wait, why is Sam Altman advocating for U- UBI? Like, why are all these, like, really smart robot makers-
- SPShaan Puri
[laughs]
- SPSam Parr
... advocating for it? And I'm like, [scoffs] shit, they know. They-
- SPShaan Puri
It's like when my wife comes home and like, "Why is the kitchen clean? What did you do?" [laughs]
- SPSam Parr
[laughs] Yeah.
- SPShaan Puri
Why are you cleaning up this mess? You did something else. [laughs] That's what he's doing by starting UBI.
- SPSam Parr
Which he has. He has. Uh, you know, I think Sam Altman, along with a few other guys, are doing experiments in San Francisco where I think they're giving $800. I forget. I don't even wanna say 'cause I'm gonna get the numbers wrong. But it was like a, a, a fairly small sum.
- SPShaan Puri
They stopped. They stopped now. They, I think they did it for, like, some number of years and that was the experiment, and then they stopped. And I f- We should go look up actually what actually happened, but I remember reading something that was, like, not, like, entirely positive. It wasn't like, "Oh my God, this is great. We, this is the program we need to roll out nationwide." It was like, well, no. That's not, that's not what the takeaway was.
- SPSam Parr
But it's still an interesting concept to me that I'm open to learning more about because when I learn more about these robots, I actually do think, I'm like, I'm just old enough where I think this isn't gonna impact me, but
- 24:00 – 28:00
Preparing for the AI winter
- SPSam Parr
for most Americans who are born, who are young now, it's gonna have a massive impact on their future.
- SPShaan Puri
Yeah, yeah. Uh, and so that second concern of like, oh wait, this is the, this is the real version of they took our jobs. Like, hey, it wasn't the immigrants. [laughs]
- SPSam Parr
[laughs] Yeah.
- SPShaan Puri
It was the dorks building robots that took all your jobs. Um, yeah, I do think that's true. In fact, it's kind of a paralyzing thought 'cause it's not just labor jobs, actually. It seems like the knowledge jobs are going first.
- SPSam Parr
For sure
- SPShaan Puri
... every two weeks, it's like, oh, video editor's out of a job. Oh, Photoshop d- u- useless skill now. Okay, well, lawyers? Don't need them, right? [laughs] It's like, it's like clearly the breadcrumb starts to get laid where you're like, okay, today they haven't replaced all these, but what's gonna happen in V12 of this, like, of this product? Like, this V12 is just gonna do the job for doctors, for, for, you know, for everybody. For, for all these d- designers, for video editors, for all these things. And so it's kind of a paralyzing thought, and it reminds me, um, they did this interview with Elon Musk, and he was like... They're like, "You're really worried about AI, right?" And he's like, "Yeah, I'm extremely concerned about AI. It stresses me out. I lose sleep over AI." And they were like, "So why are you working on AI, then? Why are you developing it?" He's like, "Well, basically, I think this is gonna happen either way. It's, it is inevitable. M- my mind told me that." He goes, "And then I just had to decide, do I wanna see the AI apocalypse in my lifetime, or do I wanna die and then not, not get to witness it?" He's like, "I decided I'd like to witness it." [laughs]
- SPSam Parr
[laughs]
- SPShaan Puri
Which is just a hilarious thing, 'cause I thought he was gonna say something else. I thought he was gonna say like, "You know, I can use this for good." And instead he's like, "I'd just rather see it in my lifetime than not see it." [laughs] He's like-
- SPSam Parr
What if-
- SPShaan Puri
And then, he's like, "Then I felt good, and I just operated, I just continued on." That's kinda how I feel when I see the AI, like, getting so much better. I'm like, dude, I don't know if any of my businesses will even make sense in 10 years. Well, all right, carry on then. I, I... What am I gonna do about this?
- SPSam Parr
Yeah.
- SPShaan Puri
Like, am I really gonna go stop the progress of technology? No. Am I gonna anticipate this now and, like, change everything that I'm doing now? Also doesn't really make sense. Let me just make hay while the, while, while it's possible and see what happens.
- SPSam Parr
I think that when it comes to AI and these robots, I think what it is is it's sort of like a squirrel preparing for winter, where between now and the next, like, 10 years, the name of the game is just pile away as much as you can-
- SPShaan Puri
[laughs]
- SPSam Parr
... to get above this certain threshold to where you can make it through this winter that is never going to end. And so it's like between now and whenever this moment happens, if it's gonna be in 5 years or 20 years, the name of the game is just hurry up and, like, board up your home for the storm to come. So just, that way you're safe for it, and that you're just, you're independent and you're all right. But once that, once it, like, once ever that threshold or that time comes, a lot of people, I think, are actually gonna be screwed. I'm not gonna predict what's gonna happen, 'cause I have no, no idea. But I just think that between now and then, the name of the game is just to make as much money, set up your life in such a way where you can pile away all these nuts, and you're just g- and you're just good for the winter. That's, like, basically how I've been living.
- SPShaan Puri
I, I don't know what the right mindset it. I think that's, uh, for, for, w- right or wrong, that's also my mindset, is just, like, do good-
- SPSam Parr
Get it while it's hot [laughs]
- SPShaan Puri
... get it while it's hot. Do, do good while the getting's good, right?
- SPSam Parr
[laughs]
- SPShaan Puri
And it's like, well, I... But I also am not, like, blinders on about this stuff. In fact, one of the na- the name of my original holding company was Inevitable Outcomes. And I was like, well, why don't I just figure out what is inevitably gonna happen and then go invest in that? Because th- that, that's just a better thing to work backwards from. If you realize that something is inevitable, that's way different than speculating of, like, well, maybe this could be the case. It's like once you know something is inevitably gonna happen, then you just have to figure out which company's gonna win, which is actually like you've reduced the problem set down into which company's gonna win a- and, and when is the right time for, for a business like this to exist. I, th- I started this episode talking about timing because I think that these sp- single purpose robots is gonna be the big winners in the next cycle here, where, like, you have the knowledge
- 28:00 – 32:30
Robotics-first Chipotle
- SPShaan Puri
work, like LLMs, ChatGPT type of stuff, but then I think you're gonna see these specific robots. I think both of those are gonna be really, really successful. What you're not gonna see is the... I don't, I think the human robot, I think it has to be further out than, um, than this. This is my, my opinion. You know, there's also o- other versions of this. So th- we talked about the Sweetgreen one. [smacks lips] You know, the founder of Chipotle has a new restaurant concept that's all robotic first.
- SPSam Parr
What is it?
- SPShaan Puri
Oh, and by the way, uh, one other insight the Sweetgreen guy said, he goes, "The key is not to retrofit the restaurant." He goes, uh, "What everybody tries to do is they have their existing restaurant, then they try to install a robotic arm that can try to use their existing restaurant layout," 'cause it's cheaper, right, to not rebuild a restaurant. And his quote was, "Everybody's trying to retrofit. I'm different. I'm willing to blow the whole thing up." [laughs] Quote, "I'm willing to blow the whole thing up." And he was basically saying, like, we just thought through from first principles, if this was a restaurant that was not gonna have humans working on the line, it was gonna have robots, how would you design every part of this restaurant? And then let's build those. And so they did two this year. They're up and running, and now they're doing, like, 10 more in the, uh, to scale this up.
- SPSam Parr
What's it called, and what do they serve? So is it called Kernel?
- SPShaan Puri
The... So s- now St- uh, what's his name? Um-
- SPSam Parr
Steve Ells
- SPShaan Puri
... Steve Ells, the guy fr- who created Chipotle, he's got a new one called Kernel. And Kernel is basically, like, some kinda, like, vegan bowl type of concept. And so you can see videos of it, uh, where it's basically, like, dispensing stuff into a bowl, and then it's, like, shak- there's, like, an arm that's just shaking the bowl just to mix it for you. [laughs] It's pretty hilarious.
- SPSam Parr
The crossover of vegans and, uh, apocalyptic, uh-
- SPShaan Puri
AI [laughs]
- SPSam Parr
... like, AI people, I don't... That Venn diagram I don't think is gonna cross over nicely.
- SPShaan Puri
Yeah. [laughs]
- SPSam Parr
Like, you know what I mean? Like, [laughs] like, "Hey, do you wanna go to this, uh, restaurant that has no humans working ever 'cause fuck people?"
- SPShaan Puri
[laughs]
- SPSam Parr
"Yeah. Do they, do they sell hummus?" [laughs] You know what I mean? Like, that conversation is not gonna be, is not-
- SPShaan Puri
Pl- plant-based, machine-operated, baby.
- SPSam Parr
Yeah. [laughs]
- SPShaan Puri
Who's, who's got that tattoo? Nobody? [laughs]
- SPSam Parr
[laughs] That's not a huge crossover. But it looks cool. So he has two or three of these locations?
- SPShaan Puri
Yeah, so I don't think this one's, like, as figured out. It doesn't seem like it's as promising, but, uh, there's a bunch of people doing this. There's, SoftBank had poured, like, hundreds of millions into a pizza bot that I've talked about a lot, which is, pizza's the big prize here. Pizza is a, a much simpler dish. Like, y- uh, it's, as a single, single item, it's the most popular kind of, like, fast casual type of, type of food. And- If you could j- And it's also owned by chains, and so you can get, if you can get Domino's as a customer, you're gonna get to go in whatever, like, you know, 5,000 Domino locations. And so whoever can build a pizza bot that can make a perfect pizza every time, perfectly circular, perfect ratio of ingredients, never calls in sick, can work 24/7, um, consistent, it doesn't matter if that thing costs, like, you know, $500,000. You'll be able to sell into all the Domino's, all of the Pizza Huts, all of the chain, chain pizza stop, shops in order to, um, uh, to do this. Um, so I think the pizza bot is, like, you know, the big opportunity here.
- SPSam Parr
I, uh, I'm, I like to think of myself as an independent-thinking person. I like to live my life somewhat independently, and I don't wanna rely on other people. I, that's why I like to start my own companies. When I went to Brett Adcock's warehouse or factory, whatever you call it, and he showed me, he was like, "Check this out. We're learning how the Achilles on a human works, and we just got our humanoid to move its foot, like, in a dorsiflexion way. And, like, we also, like, here's, like, this human knee that we're studying. Now our guy over here is making the knee so he can, like, move." I saw this stuff and I was like, "Dad, can I come?" And c- [laughs] like, I was like, "Can I, should I drop everything and just come and join you?" Like, it felt like-
- SPShaan Puri
Sam Adcock? [laughs]
- SPSam Parr
Yeah. [laughs]
- SPShaan Puri
Sounds great. [laughs]
- SPSam Parr
It, it felt like I was in a cult. Like, I was meeting, like, Charlie Manson and I was like, "Yes, sir. Who would you like me to kill?"
- SPShaan Puri
Right.
- SPSam Parr
Like, I was just, like, so into this. I remember s- going to my wife, I was like, "You should quit your job." [laughs] I was like, "Sarah, I don't, I, I'm not smart enough, but will you quit your job and go work here?"
- SPShaan Puri
[laughs]
- SPSam Parr
I was like, I just was so into it when I saw this stuff. This is... And, and the, and the cool thing about this topic is that it's happening this second right now, and this isn't far away enough to say one day in the future. It's like it's happening now, and over the next couple months and couple years, we're gonna see it in play, and I think that's why this topic
- 32:30 – 38:30
Sergey Brin's viral Q+A
- SPSam Parr
is very r- really fascinating.
- SPShaan Puri
By the way, this is also the magic of Silicon Valley. Like, one of the reasons to be in the Bay Area is you will... 'Cause he's, uh, hi- his factory's in the Bay Area, right?
- SPSam Parr
Yeah. It's in, uh, it's South San Francisco. Uh, uh, it's just north of Palo Alto.
- SPShaan Puri
So you will go, you will either meet somebody, you'll be at a dinner and hear something, or you'll drop by somebody's office and you'll see what they're working on and how they're approaching it, and then you will walk out being like, "My life is meaningless."
- SPSam Parr
Yeah.
- SPShaan Puri
"Everything I do is absolutely meaningless. I am a small p- small, pale dot on a giant rock, and I m- I mean nothing, and what I'm doing is nothing." Most people, that's a pretty, uh, disempowering feeling. But for me, I wanted to be in situations like that. I wanted people who could basically, like, blow the ceiling off of what I thought was possible, what I thought was cool, what I thought was interesting, and be like, "No, no, no. You thought that was interesting? This is interesting." And, um, that, that happened the other day. I don't know if you saw these videos that were going viral. Some people were at a hackathon down in, uh, also in Sunnyvale or Mountain View somewhere doing, like, a, there's, like, something called, like, the AI House or some shit like that.
- SPSam Parr
[laughs]
- SPShaan Puri
And during the hackathon, during the hackathon, this guy walks in with this cool-looking jacket and, like, disheveled hair, like he's-
- SPSam Parr
Ooh
- SPShaan Puri
... been in, like, a cryogenic freezing tube-
- SPSam Parr
Oh
- SPShaan Puri
... for the last 10 years.
- SPSam Parr
[laughs]
- SPShaan Puri
And it's Sergey Brin, it's the founder of Google, just showing up at the hackathon, and he gave an impromptu talk. Did you see this?
- SPSam Parr
No. What did he say? [laughs]
- SPShaan Puri
[laughs] Well, he goes up there and he's just, gets really into details about Google's Gemini thing, like, about, like, bugs that they're fixing and stuff like that. Like, not like some grand visionary talk. He was just like, "Yeah," like, "Here's what the, here's what it could do, here's how it works, here's how we're thinking about this." And he's just talking to a bunch of guys, and all of them... This is hilarious. It went viral 'cause there's a guy sitting there, the guy who asked the question in the clip, and his shirt is just a shirt that looks like someone's body with flesh-
- SPSam Parr
Yeah. [laughs] I saw that
- SPShaan Puri
... with boobs.
- SPSam Parr
[laughs]
- SPShaan Puri
And he asks him a serious question. He's like, "What is it about the, uh..." 'Cause you know, like, Gemini got in trouble for being, like, too woke or whatever. Like, the thing wouldn't generate images of white people. And he's like, "How come your, you know, the, the LLM is not generating images? Uh, you know, what, what's your views on the policy of that?" And nobody even calls out, nobody... Like, Sergey Brin doesn't point at him and be like, "Dude, uh, can we get a different question? Not the guy with the boob shirt."
- SPSam Parr
[laughs] I'm looking at him now. It, it, it's just, like, a, a guy who looks like me, just, like, a, like, a normal-looking dude.
- SPShaan Puri
[laughs]
- SPSam Parr
But he's got a f- a flesh cover.
- SPShaan Puri
Flesh shirt. [laughs]
- SPSam Parr
But it's, it's tits. It's, uh, it's, he's got boobs on his shirt. [laughs] And-
- SPShaan Puri
Nobody references it. Nobody acknowledges it. It's just like, "Yeah, carry on. What? Live and let live. Maybe that's the San Francisco way."
- SPSam Parr
Oh. [laughs]
- SPShaan Puri
And so it's a very strange place, but it's strange in a way where kind of amazing things happen, like the founder of Google just showing up at your hackathon and, uh, and answering some questions. This is p- pretty wild.
- SPSam Parr
I ex- So I experienced this all the time in San Francisco when I lived there. There'd be so many times where it was like, I've, I've told many stories about this, where I'd go to someone's office and there's just, like, huge screens with porn playing and it's like, well, they're just working on this, this website, and it's a, and it's, like, they make porn. And so it's just, like, normal. We, like, normalize it. Or there's been other times where, like, I've seen, like, I've come into the office and there's people sleeping under desks and stuff like that, and just, like, weird shit that we would make fun of, or things on that TV show Silicon Valley where they, like, have Nippler, and, like, s- [laughs] like, I've experienced this in real life, and it's fun to make fun of, but honestly it's awesome. It is so awesome to, like, be around these freaks. You remember when hacker houses were, like, just getting going? I would go to these h- these houses, and you would see that they'd have shared kitchens, and, like, half the time it was, like, just powders. It's like, well, these guys just live off these pow-
- SPShaan Puri
[laughs]
- 38:30 – 42:30
Elon is suing Sam Altman
- SPSam Parr
like, "Oh, I'm stupid. You're better than me."
- SPShaan Puri
Right. [laughs]
- SPSam Parr
And this, like this is awesome. Uh, yeah, I, I feel like that on a regular basis when I, when I would go around these weirdos, and I love them.
- SPShaan Puri
So we gotta also talk about this, uh, lawsuit. So Elon Musk sued Sam Altman, and there's probably, there's a good analysis out there about this lawsuit, but I wanna point out a couple of things. So here's my frame of this. Elon is good at PR. [laughs] He's not just good at engineering, he's not just good at business, he's not just a technologist, he's also kind of a master of PR. And I should have known this because Tesla runs, basically spends nothing on TV commercials. Every other car company spends like billions of dollars on, um, you know, uh, uh, like all other car companies in total will spend like a b- over a billion dollars on marketing. Whereas Tesla runs no commercials, yet Tesla's brand is huge, and it's because Elon is kind of a master of marketing. He's a master of PR. And he does this with Twitter, he does this with, with Tesla, and he's doing it with SpaceX. And now seeing him do this with this lawsuit, it's the first time that I've ever seen him do this in, in public. But it's basically he's gonna lose the legal battle, but he's gonna win the PR war, I think.
- SPSam Parr
Uh, have you ever been through a lawsuit? Do you know what the discovery phase is?
- SPShaan Puri
Uh, no I haven't, but I'm familiar with the idea of discovery.
- SPSam Parr
So basically, I don't exactly know, uh, what all the rules are, but I've like, I remember there was a time I was gonna sue someone, uh, 'cause I thought something didn't work out and I, and I, I thought they'd violated a contract and I'd lost money because of it. And I was gonna sue them.
- SPShaan Puri
Some guy at the gym didn't rack his weights?
- SPSam Parr
[laughs] Yeah.
- SPShaan Puri
[laughs]
- SPSam Parr
Yeah. Insulted me.
- SPShaan Puri
Bro code has been broken. [laughs]
- SPSam Parr
[laughs] I can't let this stand.
- SPShaan Puri
[laughs]
- SPSam Parr
Uh, and so I, uh, I was gonna do it. I hired a lawyer and they're like, "All right, but y- " They're like, "You're probably gonna win this thing. You're not gonna win that much money." And I'm like, "But it's the principle of the thing, whatever." And they're like, "Okay, cool. But do you know what discovery is?" I was like, "No, tell me more." And they're like, "We're gonna get access to your email, to your phone records, to your text messages, and they're gonna be able to see all of it. And in many cases," and this is where I don't entirely understand how it works, "but in many cases that's completely public record." So if I file a lawsuit, that part is public record, and oftentimes the, the things they discover will be in public record. And I was thinking about it, it's like, did I just text my wife the other day to let her know that I farted but a little something came out?
- SPShaan Puri
[laughs]
- SPSam Parr
Because I think I did text that, and I don't want that in public. And that's like a 3 out of 10 on the PC meter. Like, what's the 9 out of 10, and would I be okay with them seeing that? And that's when it finally hit me. Of all the years of people telling me, "Don't write of, like offensive or crazy stuff on text messages or email," that's why. Is 'cause I just didn't want that embarrassing stuff to be seen. So I didn't end up going through with it just for that reason. And so in this lawsuit, we're gonna see all types of private conversations that these people have. I think Elon doesn't give a shit, but I think the average Joe would, including me.
- SPShaan Puri
Well, I, yeah, I don't know. Uh, we should know more about this. I don't know how discovery works of like what parts get... Because not everything goes public, but-
- SPSam Parr
Not everything, no
- SPShaan Puri
... stuff does. So it's like, what, what's, what's the, where's the line and how does that work? 'Cause I think Elon has a lot to lose too with that. Like, nobody wants their shit out there in the public, and so-
- SPSam Parr
But he does. Like when he, when he tw- when he texted that guy, the, the former CEO of Twitter, he replied with all the stuff of like, "Can we talk about this?"
- SPShaan Puri
[laughs]
- SPSam Parr
And he just reply was, "What have you done this week?"
- SPShaan Puri
[laughs]
- SPSam Parr
Like I, I feel like in his mind he thinks-
- SPShaan Puri
Well, selectively, yes, he wants to do that. [laughs]
- SPSam Parr
But in his mind he's like, "I'm gonna say stuff that I want the world to see." You know what I mean?
- SPShaan Puri
Right.
- SPSam Parr
It's like all part of the game to him.
- SPShaan Puri
So in this lawsuit, there's act- actually some stuff that's in there that I thought, I found pretty interesting. So could I just like tell you what I thought was interesting in this? So he, um, so it starts off basically, the whole lawsuit starts off, the, the document, and it says, well, humans have transitioned from a labor economy to a knowledge-based economy, and now knowledge is basically getting wrecked by AI. So first, AI got so good it could beat the best human chess players. Then it could find the best, uh, routes between
- 42:30 – 45:00
Larry Page calls Elon a "speciest"
- SPShaan Puri
two points, like two best streets to take, fastest route. Then it could beat more complicated games like poker and Go. And what it talks about is that Elon Musk s- saw this happening- And he was, I think, on the board of or an advisor to a company called DeepMind, and he's like, "Oh, DeepMind's really interesting." He meets the founder of DeepMind, this guy, um, Dennis, uh, uh, uh, c- I don't know how to pronounce his last name, and he sa- he's basically like, "What are your views on AI safety?" 'Cause Elon for a long time had been worried about AI safety, and he walks away like, "I don't think this guy's really, you know, concerned with AI safety. I think he's just trying to build really powerful AI. Okay, whatever." But he gets pretty worried because he finds out that Google is gonna try to buy DeepMind, and he's like, "Well, Google has the most data because they have emails, they have Search, they have YouTube." So he goes, "Google has the most data. DeepMind has a monopoly on AI talent, and so they have the best AI talent, and what the result will be is that AGI, when it eventually gets done, uh, artificial general intelligence will be in the hands of, you know, the biggest monopoly, you know, private company out there." And he's like, "Okay, that's a little bit worrisome." And he goes and he hangs out with, uh, Larry Page, the founder of Google, and he's telling him, like, "Larry, I'm worried about AI. What are you guys doing about AI safety?" And he's like, basically kind of, the way Elon describes it, he kind of s- pats him on the head. He says, "Oh, don't worry about that. We're not worried about that." He's like, "Well, you know, AI could take over and basically eradicate the human race if it, you know, goes wr- there's a path where this goes wrong." And he's like, "Well, that'll just be evolution." And he's like, "Don't be such a speciest, Elon."
- SPSam Parr
[laughs]
- SPShaan Puri
And he's like, "Speciest?" He's like, "Yeah, you're favoring the human species."
- SPSam Parr
Oh my God.
- SPShaan Puri
He's like, "Yeah, I'm pro human." And so he gets really pissed about this, and he, he says that this is when he stopped talking to the CEO of Google. So he, after that, that's like the trigger according to Elon. And again, I think a lot of this is Elon crafting a narrative. I'm not sure... I'm n- not saying that these things didn't happen, but I think he's very good at creating an origin story-
- SPSam Parr
Right
- SPShaan Puri
... and creating a bad guy, and then painting himself, oh, what do you know, as the hero. [laughs] And so he, here he goes. So now what he does is he teams up with Sam Altman. So Sam Altman, who's the CEO of OpenAI, in 2015 wrote the following. He goes, "The development of super machine intelligence," at the time that's what he was calling it, SMI, super machine intelligence, "is probably the greatest threat to the contin- continued existence of humanity. There are other threats, but they are unlikely to destroy every human in the universe the way SMI could."
- SPSam Parr
What a great, what a great [laughs] opening
- 45:00 – 48:30
The Manhattan Project of AI
- SPSam Parr
sentence.
- SPShaan Puri
Oh, geez. [laughs]
- SPSam Parr
Yeah. [laughs] All right. Continue, Sam.
- SPShaan Puri
That was your day. [laughs]
- SPSam Parr
[laughs]
- SPShaan Puri
So Sam is worried about this. Elon's worried about this. They get together bec- oh, uh, then there's the trigger. Google's buying DeepMind. I di- I didn't know this. Uh, the, in the lawsuit it shows that, uh, Elon then went to the PayPal co-founder, this guy Luke Nosek, and tried to quickly, like, emergency raise $500 million to buy DeepMind instead of Google, just to keep it out of the hands of Google. And he fails. It g- uh, he c- can't pull the deal together in the, in the, in the last minutes. DeepMind gets bought by Google, and now, now Elon's really worried. And so Sam Altman then goes to Elon and says, "Hey, why don't we create a nonprofit AI lab to catch up with Google?" And actually the origin of this was to do it inside Y Combinator, where Sam was currently the president. So I don't... Did you know that, that the o- the origin of OpenAI was actually supposed to be inside of YC? And he called it, "What if we created the Manhattan Project, uh, for AI?" And he's like, what if YC did a call to arms and was like, "Hey, we need to develop this technology to f- that basically we need the anti-Google. Like, we need to get the best people we can to start working on this as a research project." And what he said originally was, "We'll give them equity in YC as their upside, and so they can work on this as a nonprofit."
- SPSam Parr
And I think-
- SPShaan Puri
That was the original idea
- SPSam Parr
... I think he said that, like, no person will have control over this thing that we're making, and instead they were gonna get equity in YC. That's how the, the whole flip went.
- SPShaan Puri
He's like, "It'll be a nonprofit that how do we pay these top AI researchers 'cause Google's gonna pay them a shit ton? Well, we'll give them equity in YC. YC's our, our huge, you know, cash cow, and so that'll solve that problem." And he's like, "We'll have a board of directors, me, you, Elon, and then we'll pick three others." And, like, if it's... He, he says, this is the, like, initial email. He goes, "If it's not obvious what the right thing to do is, then the five of us will decide." [laughs] Like, that's the governance idea, okay? So that was the original idea. It evolves a little bit. And-
- SPSam Parr
By the way, Elon's reply to that email was great. And so Sam wrote, like, a fairly casual... I, I mean, he used the, uh, verbiage like you said, those sentences that are, like, a big deal, but it was, like, a casual almost email with, like, five points. And Elon's reply was, "Agree on all."
- SPShaan Puri
Yes. [laughs]
- SPSam Parr
Like, that was it.
- SPShaan Puri
Right. [laughs] I have moved straight to the end. Um, so yes, agree on all. So they start, and they're like, "Cool. We're making this nonprofit, um, and it'll be open source." Elon comes up with the name OpenAI. He's like, "Let's just put it in the name. Uh, this is open source AI." And in the next five years, Elon contributes $44 million to this nonprofit, and they develop some pretty interesting tech. So, so ChatGPT now, GPT-4, it's, it could do... It, it's like in, it's in the 90th percentile at the lawyers, like, the bar exam. It's in the 99th percentile, uh, for the GRE, the verbal section. It's a, even a 77% at the advanced sommelier test, which I don't even know how that would work. Uh, it's like the sommelier, like, the wine test. [laughs] Um, and so he's trying to in the lawsuit argue that it's already AGI, which it's not, but, but he's trying to make that argument, uh, because w- his whole, his whole legal case f- uh, rests on this idea that there's been a breach of contract, and they breached the founding agreement. But there is no actual founding agreement. What he's calling the founding agreement is, like, what we call the gentleman's agreement. It's basically, like, a handful of conversations, emails, and then just, like, the initial founding, like, in- articles of incorporation of the d- of the company. He calls all of that together the founding agreement, and he says they breached that, but it's not actually a, uh, a, a agreement.
- 48:30 – 51:00
Rumors around Q-Star
- SPSam Parr
I'm a moron. I, and I don't know anything about legal stuff, but I think that that actually counts as so- I mean, there's been, I think there's precedent where that matters.
- SPShaan Puri
So but in this case, basically he has to establish that there is a founding agreement and that it's been breached. But if you go look at the founding agreement, like, those emails, like- One time they're talking about we could give equity in YC. That's just, like, brainstorming. That's not, like, the agreement. Then later, they h- they do have a little bit more formal of like, okay, it's gonna be a nonprofit, it's gonna be whatever. But in the articles of incorporation, it specifically says, like, um, "We will open source this, you know, whenever, um, you know, w- whenever we deem appropriate."
- SPSam Parr
Yeah, vague stuff.
- SPShaan Puri
It's like... It is vague, right? It's like, "We will rele- we will develop this for the benefit of humanity."
- SPSam Parr
We're definitely-
- SPShaan Puri
It's like-
- SPSam Parr
... doing this maybe.
- SPShaan Puri
[laughs] Someday.
- SPSam Parr
Yeah. [laughs]
- SPShaan Puri
Exactly. When we want.
- SPSam Parr
Yeah. [laughs]
- SPShaan Puri
And so they basically left themselves, like, complete latitude to do whatever the hell they want, and that's what they did. Now, what I think is interesting, so Elon says a couple other things. So one, he says, "GPT-4 is already so good," at, like, those test scores. He goes, "And now they're developing this thing called Q-Star." Have you heard about Q-Star?
- SPSam Parr
No. What is it?
- SPShaan Puri
So Q-Star is reportedly, like, the new, um... What, what, what... Not reportedly. Rumored to be the thing that the OpenAI is working on that is, like, n- next, next level after GPT-4. So it's like instead of GPT-5, they're using some method called Q-Star, which they think is, like, a leap in the intelligence. Um, which is really exciting because even GPT-3 to GPT-4, GPT-2 to GPT-3, like, those are, like, pretty substantial improvements, but not, like, a huge leap, whereas Q-Star reportedly is, like, what the huge leap is. There's rumors where Sam Altman, um, came out and said, you know, like, uh, "I was in a meeting, like a de- we did a demo or we had an internal d- meeting the other day and I s- you know, I saw something that, like, blew my mind. Like, basically saw something that just, like, was awe-inspiring." And it's like, what? Well, what is it? And he hasn't shared any details. This was also right when the, that big coup happened, they fired Sam Altman.
- SPSam Parr
I saw that.
- SPShaan Puri
One of the r- one of the rumored reasons was, and this could be total bullshit, we- we don't know, th- but this is one of the rumored reasons was the, the board saw that how powerful Q-Star is, and they were worried Sam is way too fast and way too loosey- loosey-goosey, way too aggressive, and now this weapon is getting too, too powerful is kind of the, the idea there. So anyways, he talks about... Elon talks about that in the lawsuit, that they're developing Q-Star and whatever. So it's kinda like confirmation that this thing exists. Um, although the fun- the legal language he uses in all this, he goes, at the every, start of every
- 51:00 – 58:30
We read Elon's emails
- SPShaan Puri
sentence, uh, every paragraph, it says, "Using knowledge and belief." And basically it's like saying, like, "We don't have evidence, but, like, I know some things and I believe this to be true," and then it says all of the claims. So who knows? It's kinda like Elon's claims. A couple other big pieces of this. So I wanna read you some, uh, some Elon emails f- that, that did get surfaced in this. So one of the key things that happened early on was they had this dinner, and at the dinner it's Sam Altman, it's Greg Bach- Brockman, it's Elon, and then it's this guy, Ilya. Ilya was the lead... You know, one of the leading deep, deep learning researchers at Google, and he became the chief scientist of OpenAI. The, the, the big turning point was he, Elon recruited Ilya away from Google to OpenAI. This is when Larry Page stopped talking to him, 'cause he was so pissed that you recruited my, like, top guy and you declared war basically. And recruiting him was, like, a Herculean effort, basically. Getting him to leave Google, and Google was offering him, like, a blank check.
- SPSam Parr
This is a fucking movie.
- SPShaan Puri
And exactly. This will be a movie, for sure. Um, so then Google starts offering all of their talent, like, crazy lavish offers. They just up the ante like crazy. They're like, "We're gonna price anyone out of this market."
- SPSam Parr
How much, do you know?
- SPShaan Puri
A million... Like, I don't know, like, millions of dollars p- per, per employee minimum. For some people, $10, $15 million, um, a pay package annual. And so it was like, okay, well, uh, Sam and Greg email Elon saying, "Hey, it's getting really hard to recruit. Um, you know, we have to think of a strategy here. Google is doing this." Elon replies, he goes, "We need to do what it takes to get top talent. Let's go higher. If at some point we have to revisit what our current people are getting paid, that's fine. Either we get the best people in the world or we will get whipped by DeepMind. Whatever it takes to bring on the ace talent is fine by me. DeepMind is causing me extreme mental stress. If they win, it will be really bad news with their one mind to rule the world philosophy. They're obviously making major progress, and they should, given the talent, l- uh, level of talent over there." And so he basically gives them the green light, like, "I'll keep funding more. Go get the best talent." And so in 2016 he gives them 15 million. In 2017 he gives them 20 million. In that five-year period he gives them $44 million in total. Now, the problem is Elon, the biggest backer and the original backer, says he doesn't own anything in OpenAI, the for-profit company. And the, this is the strongest part of his case. Here's what he says. He goes, "How is it that you can create a non-profit company that is supposed to be non-profit and open source, raise m- millions of dollars from people... You take $50 million from me, you hire the best people in the world, and you, you write down that this is your charter, and then you end up a closed source, maximum for-profit company owned by the most valuable company in the world, [laughs] Microsoft, owned 49% by them. How is that possible?" And he's like, "Two things." He goes, "If..." He goes, "If it is possible to create a non-profit, hire people, and basically s- fund all of the research on, uh, you know, basically, like, in a tax donation way where you, for every dollar you're putting in you get 50 cent rebate back from the government." Um, he's like, "If that's possible, and then you can just flip to a for-profit when you make breakthrough technology, why is everybody not doing that? Why is that not just the default for every single technology company in the world? Either it's illegal or everybody should be doing it. It can only be one of those two things." And I love this argument from Elon. I think this is a tremendous argument, and there's no answer to that question yet of either this is illegal or every single company in the world is gonna do this. Why would you not?
- SPSam Parr
We are... We, you and I are not... I wouldn't... I'd say we are fans of Elon, Elon's work, but we're, we're lukewarm on him as a human being. And we are only hearing one side of this story. But in the last 10 minutes, only knowing what I know just from those 10 minutes, he's right.
- SPShaan Puri
[laughs] Yeah.
- SPSam Parr
Uh...
- SPShaan Puri
So then, then he gives this analogy. Again, master of PR. He goes, "It's like if I donated to a [laughs] a non-profit charity that said, 'We're gonna save the Amazon rainforest.'" And then that charity took all our money, and then they created a for-profit logging company that was just cutting down trees [laughs] in the rainforest and selling the lumber. That's what's happened. That is OpenAI. [laughs] And so he says it is a de facto subsidiary of Microsoft. And he goes... He, he includes this quote. And this quote, I think, is gonna become very problematic, I predict, it's gonna become very problematic for Microsoft in the future. So it's the Microsoft CEO saying... W- remember when all the OpenAI drama was going down and Microsoft's stock price started to tank because they were like, "Oh, shit, you put... You've given $10 billion or whatever to OpenAI, and they're about to, like, collapse. This is bad for Microsoft, and they're gonna go create, like, a new company that you don't own. That's bad"? Um, and so then he came out and he said this publicly. He goes, "If OpenAI disappeared tomorrow, we have all the IP rights, all the capabilities. We have all the people. We have the compute. We have the data. We have everything. We are below them, above them, around them." It's like, wow.
- SPSam Parr
The, the CEO of Microsoft said that?
- SPShaan Puri
Wow. Yes, exactly. And so that also weakens the case that OpenAI is this, like, nonprofit, non-controlled-by-Microsoft entity when he came out and said that, "We are below them, above them, and around them."
- SPSam Parr
What?
- SPShaan Puri
Goddamn. What a, what a, what a phrase. [laughs]
- SPSam Parr
Dude, this is, uh, riveting. This is riveting.
- SPShaan Puri
[laughs] That's me when I... If I go to Chick-fil-A and I order nuggets. I'm below them. I'm above them.
- SPSam Parr
[laughs]
- SPShaan Puri
I'm around them. I have them.
- SPSam Parr
Oh.
- SPShaan Puri
They are mine. Like, [laughs] dude, that's a... What a, what a phrase.
- SPSam Parr
The, uh... By the way, the, the way they call this the Manhattan Project-
- SPShaan Puri
Dope
- SPSam Parr
... the best.
- SPShaan Puri
[laughs]
- SPSam Parr
That is the best. That is so good. All of this is just epic. Can you imagine these nerdy, uh, AI engineers who were probably, like, bullied and were dorks throughout all the years? Now they're like, "Oh, me? You want me?"
- SPShaan Puri
[laughs]
- SPSam Parr
"No. Boys, come on. Let's be civil about this." They're just getting fought over, and we're talking about 15 or $20 million a year packages. That's insane. Everything about this story's insane.
- SPShaan Puri
You're right.
- SPSam Parr
But-
- SPShaan Puri
This needs to be a movie. If you're making the movie or you wanna make the movie of this, get in touch with me. Let's, let's create the movie of this. This is gonna be like The Social Network movie all over again.
- SPSam Parr
Uh, an epic photo collage or something like that would also suffice, too.
- 58:30 – 1:01:44
Making sense of the war against OpenAI
- SPShaan Puri
OpenAI, right? Like, Grok, uh, he has, he has xAI, which is, uh, like, his, uh, his AI company. It's his AI competitor to OpenAI. And he has Grok, which is the competitor to ChatGPT. That's, like, the product name. So he obviously has, you know, interests in this. And, uh, I think, you know, one thing that's clear out of this is it's definitely mission-driven. Like, in the same way that, um, I used to think when it was like, oh, Jeff Bezos is doing a rocket company. It's like, oh, is this just, like, a giant dick-measuring contest between, like, billionaires? Like, just the last level of the game is you say, "I, I win Earth. Okay, let me go win Mars now," right? Like, that's kinda what it seemed like was, "Oh, I'm gonna build a bigger rocket than you." But then you read that, like, even 25 years ago, Bezos was, like, really obsessed with the idea of space travel and, um, has been a giant fanatic about it and, and been, been trying to donate to it and trying to advance the cause in that, and that now, like, even with these companies, he's in all the engineering meetings, the planning meetings every week. It's like, oh, okay, this wasn't what I thought it was. In the same way even-
- SPSam Parr
By the way, it could still... It could be that, and that's okay. It could be mission-driven and ego-driven and profit-driven, and that is okay to have all those things, too.
- SPShaan Puri
That's a better way of putting it, yeah. Like most things, uh, it's accelerating because of multiple causes. Multiple... There's multiple things, multiple tailwinds pushing it. But I would say, like, the hater in me wanted to discredit it, but the realist in me when I go back and read old interviews or watch old videos before Amazon was super successful, it, uh, it becomes clear that actually it was a deep interest. So similarly here, even though I think it's part of it is he's trying to bog, uh, OpenAI down with a lawsuit and spin the PR battle in his favor, uh, and he has a direct competitor, it's clear that OpenAI wouldn't have even... would not have existed and would not have been successful had he not genuinely had this fear and concern and belief about what needs to happen with AI long time ago. So, you know, that... I think that's, that comes out very true in this. There's, there's a paper trail of evidence.
- SPSam Parr
What a fucking pod.
- SPShaan Puri
[laughs]
- SPSam Parr
I feel amped and scared, excited, nervous.
- SPShaan Puri
[laughs]
- SPSam Parr
I feel all types of emotions. Great job.
- SPShaan Puri
It's like a great first date. It's like, right? You... Aren't you supposed to, like, trigger, like, adrenaline or, like, the fight or flight response in people, and that's, like, what bonds you?
- SPSam Parr
[laughs]
- SPShaan Puri
I feel like that just happened to us. [laughs]
- SPSam Parr
Yeah, except my version of that was, like, on our first date, we went on a motorcycle, but, uh, now we're talking about, like, the world maybe ending in 20 years.
- SPShaan Puri
[laughs]
- SPSam Parr
Uh, good job. This is... You, you did a good job.
- SPShaan Puri
Sit down, babe. I've got a court-
- SPSam Parr
[laughs]
- SPShaan Puri
I, I got a court case to tell you about. [laughs]
- SPSam Parr
[laughs]
- SPShaan Puri
Dinner? No, we're not doing dinner. [laughs]
- SPSam Parr
I... Okay, so you made it this far. To, to folks listening, go to the YouTube and tell us in the comments do you actually think this is gonna be horrible? Do you think this is gonna be great? Or is it what Dharmesh said where it's somewhere in the middle where it's not gonna be as good or bad as we think? But Shaan, bravo. You did a good job. This was a great, good pod. Uh, and we'll end it there. That's the pod. [upbeat music]
Episode duration: 1:01:44
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Transcript of episode LAk815WOR0Q
