The Manosphere Report

0:00all right everybody welcome back to the number one podcast in the world the fantastic

0:05four the original oh the cast is back the cast is brothers in arms brothers

0:11in arms here we go good boys we got a big news week david sacks

0:16is back and he's in the great state of texas how's it been sacks has

0:22texas been for you so far it's been great although i just got back from

0:25dc i got like three hours sleep last night so but we had a lot

0:28of news this past week yes and we'll be talking about p cast and your

0:33role in the and your role going forward in the trump administration big news that

0:40we'll be talking about today also relates to you oh sultan of science david freeberg

0:45with your background from the iconic film for those not watching looks like the iconic

0:51film in louise i wonder if that has something to do with the budget of

0:55california which you've been outspoken about recently great great rent which i'm a mega great

1:01with mom thank you boys i retweeted it too if only thank you boys if

1:05only you could be allowed the time and space to do those kinds of rants

1:09on this pod yeah thank you very much if you kept interrupting him sacks and

1:14just let him go here he is he's going again he's going there it is

1:17dr doom dr doom your mayor your new governor would you consider it freeberg after

1:23a hollow running for governor there is no after a hollow oh please do it

1:27oh please do it wow that'd be so great i'm tempted to buy a hollow

1:32for like five or six billion so he just it's a dirty game paul it's

1:36california politics is dirty man i don't even know what it does i'll just have

1:39somebody else deal with you imagine the oppo research no no no we get him

1:44elected he would do an incredible job he would save the fourth largest economy in

1:48the world it would be incredible it'd be amazing i would love the here's the

1:51oppo resource acts david freeberg went to a rave in 1999 and stayed up until

1:5810 a .m we have witnesses once he he got tilted at the poker game

2:03stole a bunch of pistachios and lactate and ran home he did anthropic on a

2:27generational run and open ai crashing out a bit boys let's chop it up here

2:33just looking at anthropic pretty major heater this year january they launched co -work for

2:41business users you know what that does cron jobs you can connect to your gmail

2:44your notion whatever it is and then opus 4 .6 which consensus wise everybody thought

2:50this is a major step function jensen michael dell everybody's called it out jensen actually

2:56called it back in november an inflection point and the first agentic model and opus

3:024 .6 has basically dell said hit a threshold that we haven't seen before in

3:10terms of real productivity in teams february they dropped a bunch of clogged code plugins

3:15that caused the sass apocalypse not the sax apocalypse the sass software as a service

3:20it was a sax apocalypse too yeah there was a little bit of that back

3:24and forth as well no i mean as a sass investor it was a yes

3:28it was a bit of it you you you were the tip of the spear

3:31there we'll get into it my exit comps were affected that's all yes it seems

3:36like you may have divested you but you know it had x you but you

3:38know it had x the right time all right six billion dollars in annual run

3:43rate was added in february alone brad referenced a couple of weeks ago here on

3:47the pod earlier this week they announced computer use a new agentic system for enterprise

3:54grade kind of open claw functionality now you can use the clawed app from your

3:59phone to control your desktop computer really slick feature here's the calendar release over the

4:06past two months for the team at anthropic dario come on the pod anytime uh

4:11sax you've had a couple of flare -ups uh and obviously the administration uh and

4:18the department of war had their kerfuffle but just you know looking at it objectively

4:24what's your take on the surging anthropic generational run as i've described it here well

4:33i've never been a critic of anthropics products i've always been an admirer of their

4:37products i think last year i gave them credit for mcp i agree that they

4:40seem to be performing very well now the company made a big bet on coding

4:45as the kind of big breakout use case whether that was done for business reasons

4:50or ideological reasons i'm not sure anthropic is sort of the most agi pilled of

4:55all the frontier labs and i think they made this bet on coding as their

4:59way to get to recursive self -improvement as it turns out it was a very

5:02good business move as well because code is the gateway into enterprise and enterprise it

5:10budgets and so they're able to grow revenue pretty quickly as a result of getting

5:14into enterprise also coding seems to be the basis for these other product extensions so

5:21like you said they went from cloud code to cloud co -work the idea being

5:25that well if you can generate code you can also generate powerpoints or spreadsheets and

5:31you do that by generating the code to create that output so that was the

5:36first extension now they are extending into agents this computer use product is kind of

5:41like an open claw knockoff so it looks like the generational run for mac mini

5:47is just about over look i think they're firing on all cylinders my issues with

5:52them in the past were related to what i have called the regulatory capture strategy

5:56they do want a permissioning regime in washington for chips and models meaning you have

6:02to go to washington to get permission to release new models or to sell gpus

6:07anywhere in the world i think that's excessively heavy -handed their motives for doing that

6:12may be pure it may not be regulatory capture it may be ideologically motivated regardless

6:16i do think it is a form of regulatory capture because it plays into the

6:20hands of the big companies and creates moats that new entrants will not be able

6:24to overcome so i have let's say philosophical objection to that part of it but

6:30again i'm not a detractor of their products by any means with respect to what

6:33happened between them and the pentagon i'm not involved in that i've stayed out of

6:37military procurement in general i don't get involved in what are called party matters i

6:41just focus on policy matters which affect the whole space i saw emil michael making

6:46this point a couple weeks ago on our podcast that if you as a company

6:51don't want your products to be used in war don't sell to the department of

6:56war it's in the name but if you do you know if if you do

6:59decide to sell to the department of war you should expect it to be used

7:03for all lawful uses so i think that was a very pragmatic observation again i

7:09just have to underscore this again i'm not involved in that dispute it's the base

7:13of a lawsuit right now and i don't want someone you trying to draw lines

7:17between dots that aren't there.

7:19So, again, I'm staying out of that one.

7:21Objectively, they've been treated the same as any other large language model, even though they're

7:26not fans of the administration, they're not donators to the administration.

7:29They have specifically been critical of the administration as a company, perhaps cynically, Freiberg, as

7:35a strategy to get, you know, it's one of the conspiracy theories here in Silicon

7:41Valley is Dario is taking the position of being anti this administration, anti President Trump,

7:48in order to get all the PhDs, you know, there's like three or 4000 of

7:52these highly sought after PhDs, and it's a way to have them, you know, vote

7:56with their presence to come work in Anthropic, your thoughts on that?

8:00And then just generally, their generation actually believes it.

8:03And I think they've actually created and fostered a culture of that since the beginning.

8:07And I think that they're representing it as a branding exercise at this point.

8:11But I don't think it's made up.

8:13I think it's directly representation of the people that work there and what they believe.

8:17Yeah. And it's a strategic advantage.

8:20Because probably of those 3000 PhDs, 90 % of them are left leaning, and wouldn't

8:26want to work necessarily. Look, I mean, like, like, like most things we see in

8:32the world today, and economics today, and markets today, and business today, everything seems to

8:37be politicized. And you have a left and a right version of everything.

8:40You have a left and a right version of media, you have a left and

8:42a right version of what food to buy, you have a left and a right

8:45version of what AI tool to use.

8:47So, you know, this effectively may just be the natural manifestation in the AI market

8:51of what's going on elsewhere in society, as we all kind of fracture and hustle

8:55over to our side. All right, Chamath, before I go to open AI and their

9:00recent moves, any thoughts on Anthropic and Dario's positioning of the company?

9:05Look, I think both are incredible businesses.

9:07We're in the part of the cycle where we're trying to create drama where I

9:12don't think drama exists, because they're still fundamentally in very different go to market motions.

9:19Now, they may converge and compete over time.

9:22But I think it's important to separate where each of them are good from an

9:26enterprise lens, which is where I see most of the action, particularly through 8090.

9:31It's all anthropic all the time.

9:33And I agree with Sachs.

9:34My philosophical issues with the management aside around their ideology, and sometimes how they use

9:42some of the capital for things other than tech and R &D, I have issues

9:46with those things. But in terms of the quality of that technical team and what

9:51they create, it's head and shoulders above anything else.

9:54It allows us to build a vibrant business.

9:57Now, do I have issues with how much it costs?

10:00Yes. Do I have issues with how fast we're consuming tokens?

10:03Also, yes. But I think those will get sorted out.

10:06And those are really tactical issues.

10:08So the reason why I think we're all breathlessly trying to pit OpenAI versus Anthropic

10:14is because we want some drama.

10:16But the reality is these are very different businesses.

10:18And Nick found this tweet, which I thought was really interesting.

10:21And because even at the absolute highest level, these things are sort of presented in

10:28an apples to oranges way.

10:30And there's like these very basic issues of rev rec that are fundamentally different.

10:36And you may say, well, who cares about revenue recognition?

10:39While the people that are trying to write the headlines that say one is overtaking

10:43the other and this or that sort of miss the fact that they're in completely

10:48different businesses, which has guided how they even think about growth.

10:51And so if you normalize these two businesses, what you would see is OpenAI.

10:55is still the overwhelming revenue generator in this space.

10:59And that over time, Anthropic is catching up.

11:02And so this is this little diagram that tries to explain this.

11:06OpenAI is three quarters consumer subscriptions and a quarter API.

11:12Anthropic is almost the exact opposite.

11:16OpenAI is used by consumers overwhelmingly.

11:18Anthropic is used either directly or through things like GitHub and Cursor.

11:23But OpenAI, as a result, has a very conservative way of recognizing revenue.

11:28Anthropics, they sort of recognize gross tonnage as their revenue.

11:33And so when you start to hear these things about like, oh, this thing is

11:36at 20 billion and OpenAI is at N billion, they're two totally different conversations.

11:41And I think right now it's more about the press cycle of trying to create

11:44clicks than it actually is about the underlying quality of each business.

11:48Both are incredible businesses as this demonstrates.

11:52And by the time it goes public, both of these two businesses will have a

11:57very clean and I suspect normalized way of telling a story so that you can

12:03actually compare. But what I would tell people right now is everybody's running with numbers

12:08to try to create a narrative that I don't think makes sense or applies to

12:11either. Yeah. And there's been a lot of strategy change.

12:14OpenAI, some people are saying, is crashing out in panic mode.

12:19Obviously, they own the consumer with ChatGPT.

12:21They are the verb, like, you know, taking an Uber or Googling something.

12:25People, consumers always just say, hey, did you check ChatGPT?

12:30But obviously, other large language models are catching up.

12:34Here's a look at... can we say something to that, Jason?

12:36Because like, look, you mentor tons of startups.

12:40Saks has done it. Freebrook has done it.

12:42I do it. What is the one thing we tell folks?

12:45Focus, focus, focus, focus. Yes.

12:48100%. Do one, maybe one and a half things, but do it incredibly, incredibly well.

12:54And everything else, you start to bleed and smear.

12:57What was that Brad Garlinghouse term?

12:59Peanut butter. Peanut butter. Yeah, you smear the peanut butter too far out.

13:04And so, this is a good moment, by the way, if either of these two

13:07companies are in the smearing phase to recalibrate and reset because you just can't do

13:13everything. Speaking of smears, I couldn't help but notice that Emile Michael was smeared by

13:20an article, was it in Lever or something like that, accusing him of having a

13:25conflict in the Anthropic dispute?

13:28What was conflict? Did you guys see that?

13:30I didn't. Yes. I saw the article, there was an article that said that he

13:34was an investor in perplexity and therefore he's conflicted in his negotiation with Anthropic.

13:43Perplexity is LLM agnostic, that's a stupid claim.

13:47Right. Well, it's obviously written by people who don't understand anything about AI really.

13:52Perplexity is a wrapper, like you're saying, it uses multiple AI models and I don't

13:57think they sell to the Pentagon, they're not a competitor to Anthropic and moreover, as

14:02I understand it, Emile's ownership of shares in that company was blessed by the Office

14:07of Government Ethics. Nonetheless, I think the timing of this is very suspicious and it

14:12reminds me of what happened to me when I started opposing Anthropic and all of

14:16a sudden there was that hit piece in the New York Times accusing me of

14:19having conflicts and I'll just say that Anthropic may pose as this company that's on

14:25the side of the angels but they've hired a number of very seasoned brass knuckle

14:30political operatives in Washington and and that's what happened And, you know, members of the

14:34Biden administration, Laura Loomer actually just had a piece today on one of them.

14:37I'm not going to rehash that.

14:39But the bottom line is this is, I think, frankly, a political operation that's willing

14:44to get down and dirty.

14:46And they're not always on the side of the angels.

14:48I think they can be quite ruthless.

14:49Sachs, remember, I told you you get one Biden mention a month in 2026.

14:53So you just used it up.

14:55So I don't want any more Biden, Biden, Biden.

14:57He's retired. That was not a Biden mention.

15:00No, but the truth is, these dipshits, whoever wrote this story, the actual best feature

15:06or amongst the best features of perplexity, which is actually got a really great co

15:11-work competitor called Computer I've been playing with.

15:13I'm not a shareholder, to be clear.

15:15There's no book being pumped here.

15:17The model council is like the greatest feature that they have.

15:22And what is really brilliant about it is you ask it a question, Sachs, it

15:26will go to all three different major models.

15:29You can pick which ones, including open source.

15:32Then it tells you where they differ.

15:34And it tries to figure out why they differ.

15:36This is like one of the great features of the product.

15:38I think perplexity is like could be a really great company as well, even without

15:43a language model. But let's talk a little bit more about OpenAI here and their

15:49market share, because I think you're correct, Chamath, but they are getting off their game.

15:54Here's what's going on. Quick look at the consumer market.

15:58And obviously, they started with 100 % market share, right?

16:01They created the category in 2023.

16:04Dropped down to 85 % market share 2024, 75 % market share 2025.

16:10But by how much has the market grown?

16:13Precisely. So, the market is still growing.

16:16So, in terms of number of searches and queries, they're obviously growing tremendously.

16:20But they have major, major competitors, and the market share is going down.

16:24I had my team over at This Week in AI do a more thoughtful analysis

16:29of where this is going.

16:30And if you take a look at this, there's three players, and I'd like to

16:35get your guys' take on this, who really haven't shown up yet.

16:40Apple, Meta, and obviously Windows.

16:43All three of those underrepresented.

16:45If you give them credit for just getting, you know, a half point of market

16:49share here and starting to intercept, which I think those three players were here, will

16:53be here. They're going to be well under 50 % market share.

16:55And I think ChatGPT is going to have some big challenges there on the consumer

17:00side. While they're doing this stuff in consumer, they are cutting back on all their

17:05side projects. So, you probably heard about the Sora video app.

17:09That's been shut down. This is kind of major news because Disney was going to

17:14put a billion dollars into opening as part of it.

17:18And they had done a licensing deal, and they were going to integrate Sora, this,

17:22you know, short video product, into Disney+.

17:25All of that's now been canceled.

17:27The billion is not going in.

17:28The billion's not going in.

17:30The licensing deal. All of that.

17:32And then, in addition, there's supposedly, at OpenAI, a newfound focus on chasing Anthropic down

17:40the enterprise path. So, getting off their game, getting a little discombobulated, perhaps, or maybe

17:45getting focused on what matters, which is enterprise, apparently, in terms of revenue.

17:51OpenAI also offered private equity investors a guaranteed minimum return of 17 .5 % as

17:57part of a joint venture that would help PE firms deploy AI and ease the

18:04high upfront cost of that.

18:06So, lots of questions here, Chamath.

18:08I don't know if you've tracked this PE model.

18:12But obviously, a lot of people are doing roll ups in services, accounting, legal, Josh

18:18Kushner's got a big effort here, a bunch of private equity firms trying to essentially,

18:24I guess, and run the transition process and arguably what you're doing with the software

18:30factory at 8090. So your thoughts on OpenAI and this pivot and this private equity?

18:35I think it makes a lot of sense for OpenAI to focus on a few

18:38things and do them exceptionally well.

18:41I disagree slightly with your first part, which is I think that people like to

18:45make new decisions about new experiences.

18:48And I think that OpenAI has incredible consumer mindshare.

18:53I just see like how my kids use it.

18:55They started there and it's very hard to get them to switch.

18:58Even when I say, hey, have you tried Gemini?

19:00They use Gemini. And to your point, the reason is because they stumble into it

19:04more. Yeah, but if you give them a cold navigation experience, they rely on chat

19:08GPT. And it's the same, by the way, on the other side in the enterprise,

19:13if you give us a cold problem, my default reaction would be to use Anthropic.

19:19Now, I actually think that that's quite healthy, because you're going to segregate the market.

19:23And I think, look, if you go into the Wayback Machine, when we first started

19:26talking about this thing, this is sort of how we all postulated this would work,

19:31where even if OpenAI just won the consumer business, it is a multi -trillion dollar

19:36company with enormous scale and value.

19:39And I think that that's okay.

19:41So I think that what they probably need to do is say, where are we

19:45the strongest? Where is there the most obvious traction?

19:49Can traction in another market like an enterprise bleed into consumer usage?

19:55If it's true, then you have to win the enterprise.

19:58I think winning the enterprise, though, is a very different game than winning consumer.

20:03Very different set of features, very different set of expectations.

20:07So I think people either have to decide you're going to compete everywhere, or pick

20:12one thing and just nail it.

20:14And if I was OpenAI, and you had to pick one thing, you would pick

20:18consumer because they're the juggernaut, and they're the clear leader, and they have an enormous

20:22brand. And Freeberg, let me pull you into this, because my base case here is

20:27that all consumer queries are going to be free.

20:30Apple is going to make them free.

20:32They're already free for Google.

20:34I think Meta is going to make them free and actually have a decent product

20:37soon. And Microsoft, same thing.

20:38And ChatGPT has decided to push off advertising.

20:42They were going to put advertising in it.

20:44You remember, they got mocked by Anthropik with their Super Bowl ads.

20:47So what do you think is going to happen on the consumer side?

20:50Consumers generally don't pay for services.

20:52That's usually 5 % to 20 % of the market is paid services, and everything

20:57else is free and ad supported.

20:59But it looks like Apple and Google are going to just let it rip.

21:04So that could take the revenue oxygen away from ChatGPT.

21:08So what is your thought here on who wins consumer?

21:11I don't think that it's going to be free.

21:13I think there's 290 million subscribers for Spotify.

21:19They're paying, what are they paying, 20 bucks a month or something?

21:22Probably less on average because it's global number, but yeah.

21:25Netflix has 325 million paid subscribers.

21:29And AI that can book your travel, answer questions for you, track your calendar, do

21:34your email, et cetera, et cetera, et cetera, et cetera, is likely going to be

21:38the most valuable, call it meta service that consumers have ever seen.

21:42And I think it's very likely that we're going to end up seeing many more

21:45consumers subscribe to a consumer AI service than we've seen even with cable television.

21:50i mean think about your cell phone everyone's paying 50 60 bucks a month for

21:53a cell phone why not pay 80 bucks a month more more you pay 100

21:57bucks you pay 100 bucks and by the way in the pandemic remember what we

22:00saw the two things that people refused to cancel was not your mortgage payment or

22:06any car payment you were willing to go into arrears and into default the two

22:11things that people would would always keep was the cell phone number one and then

22:14electricity number two chat gpt will be there so i think that's going to be

22:17the case with these consumer apps jcal i think that they're all going to be

22:20like ultra valuable and they're going to layer in services on top of them like

22:24for example do you want to watch video embedded in your consumer ai app do

22:29you want your consumer ai app to you know do your finances for you and

22:33it could be that the consumer ai app becomes the new platform much like the

22:38iphone was for the app economy there could almost be whether it's through kind of

22:42connectors or embedded tools an incredible ecosystem that where traditionally advertisers actually pay to be

22:49embedded and show up inside of the ai app and the consumer can either pay

22:53for it or the advertiser can pay for it so i think there's going to

22:56be a very different economic model and still very early days sax the numbers right

23:03now would be more in my estimation about 50 million people subscribe to chat gpt

23:09they got a billion users or they're trended to a billion i think they probably

23:12hit it in the next month or two certainly they had 900 million two or

23:16three months ago so it's about five percent where do you think this winds up

23:19do you think it becomes you know 300 400 500 million consumers are willing to

23:25pay 20 bucks a month for this or do you think it's more free and

23:28the data and the ad supportedness of it go the meta and the google route

23:33i think it's possible that you could get a few hundred million subscribers for the

23:37premium tier look i think most consumers will take the free service in exchange for

23:42advertising right some ad supported model which by the way i think could be quite

23:46successful when chat gpt started displacing google for search a lot of people were predicting

23:52the death of google's model because who'd want to look at 10 blue links i

23:57think that's true but i think you can do something much more compelling in ai

24:00chat compared to just a list of links so in any event i think ad

24:05supported models might make a comeback here in addition to premium models all that being

24:11said though you know as an investor i always liked b2b businesses better than b2c

24:16because it is hard to monetize consumers their willingness to pay is not that high

24:22and they tend to have high churn rates whereas businesses tend to be very sticky

24:26and you can upsell them and you can get more than 100 net dollar retention

24:32year over year so if you can make an enterprise business work it's always been

24:36a model i've i've liked but you know that being said obviously some of the

24:41most valuable companies in the world are consumer companies meta google apple these are all

24:46consumer first companies and look i think ultimately both models can work obviously both can

24:51work question is which one i guess it really comes down to how motivated do

24:56we think google and facebook will be to build that bridge from their ad networks

25:01to their ai offerings obviously facebook is kind of mia in all of this but

25:07google is not and i think that will be the determinant here is well google

25:12is going to compete very vigorously for the consumer because it is existential to them

25:16i mean it's very clear that search and ai chat are kind of merging into

25:21one space that means that ad links will kind of merge into being in chat

25:26advertising so they have to it with that and compete for the consumer.

25:30I also think that Google is in an outstanding position to do the whole open

25:35claw thing because they already have access to your calendar, your documents, your email.

25:40So the agent doesn't really have to earn your trust because you already trust Google

25:45with all of your stuff.

25:46So I'm kind of waiting for the Google version of open claw because I don't

25:50really want to share all my documents with some new service.

25:54They're the only one that has so much free cash flow that they can almost

25:58view it as two separate companies, which it effectively is.

26:01GCP over here runs the enterprise play and then Google consumer over here runs the

26:07consumer chatbot play and they can keep them segregated.

26:11That's so much harder for a startup to do because on top of just keeping

26:15everybody organized, you have the financing problem of constantly having to raise more money because

26:21you don't yet have a profit engine that spits out cash.

26:24They're probably the only one.

26:25And you can see it in the valuations actually, which I'm going to get to

26:28in a second, but people believe the durability of Google more than they believe the

26:31durability of anything else. And Saks, I think you weren't on the pod last week

26:36or maybe two or three weeks ago, but Google has announced Google workspace studio to

26:41do AI automation. And it's yeah, it's online and people are playing with it already.

26:47So they have joined the open claw party.

26:51By the way, you asked a different question earlier as well, which is around the

26:56PE story. And I think the PE story is a window into the rest of

26:59the broader market. The real open question is what are these companies worth?

27:04There's like a very threshold question.

27:07It's sort of like a very important fork in the road right at the outset,

27:10which is, do you believe that we're on a path to super intelligence where everything

27:15is incredible, where there's infinite abundance, where you can magically describe things and beautiful things

27:20appear, complex things appear, groundbreaking things appear?

27:24Or do you believe that it's good next generational software?

27:28And the answer to that question is really important because we're financing things like it's

27:32the former. And GC has a big move in this.

27:36Hamant was on the program in January when we did the interview show and he's

27:40got GC buying up and rolling up accounting firms, et cetera, healthcare firms, hospitals, et

27:47cetera. This seems to be part of the future of venture capital is taking AI

27:52sacks and actually buying out, or I should say big VC, kind of starting to

27:57look like private equity, buying out hospitals, accounting firms, business processing firms in India, putting

28:05them all together and then running them with AI.

28:07So any, any final thoughts on that sacks as a business strategy?

28:11Well, I think it's interesting.

28:12They're kind of betting on the idea that they can own the change management around

28:19AI. And this is the thing is everyone just kind of assumes that you throw

28:24AI over a wall and a business just automatically knows how to use it and

28:27drive efficiency from it. And what we're seeing is it's pretty difficult.

28:31Chamath, you've seen that. There's McKinsey studies showing that like 95 % of enterprise pilots

28:36aren't successful. There's tremendous value, latent value in AI, but it's hard to know exactly

28:42how to deploy it at this point in time.

28:44So I guess what these private equity firms are saying is that we know how

28:47to drive value from this.

28:49And if we own the business and then own the change management, then we'll be

28:53able to, you know, create value that way.

28:55Their business model makes solving this problem existential.

29:00And this is sort of along the lines of this essay that I wrote.

29:03Let me just give you the thought exercise and you guys react.

29:05Today, we live in a world where this is exactly what we have to do

29:07with this. And I was going to take the advantage of this and you guys

29:07have to keep it from coming to the next page.

29:07And then you can see how to the whole market is trying to debate what

29:10is the P -E ratio that you'd be willing to pay.

29:14So Facebook is incredibly durable.

29:17I'm willing to pay 30 times.

29:19NVIDIA is really durable. I'm willing to pay 40 times.

29:21Tesla is incredibly asymmetric to the upside.

29:24I'm willing to pay 200 times.

29:26And then Caterpillar or John Deere, I'm willing to pay 15 times.

29:30I'm just using these as an example.

29:32And what it's effectively signaling to you is how durable all of these cash flows

29:37are. And all we do in the public markets when we make an investment is

29:42we're just guessing. When do the cash flows run out?

29:45And we try to say, well, here's how much it's worth and here's how much

29:48I'd be willing to pay for today.

29:50But if you go back to this example and you say, well, what if there's

29:54this super intelligence on the horizon?

29:56I think it's fair to ask the question, what is anything worth?

30:00And what is anything worth in year 10 or year 15 or year 20?

30:04Because if you have infinite abundance and you have all this creativity, won't all companies

30:10be disrupted? And won't we be in this constant churn of everything getting disrupted all

30:16the time? And if you were faced with that problem in the public markets, how

30:21would you react? And I think the canary in the coal mine are the SaaS

30:26stocks. Yes, we jokingly call it the SaaS apocalypse, but I think it's much more

30:30important. I think it's a big societal question.

30:32How do you view capital markets?

30:34How do you view the health of a company in a world where we've been

30:39told there's a super intelligence on the horizon that makes everything much more fragile than

30:43it was before? And the market reaction is to put all these companies on a

30:47spectrum. And they started here in software, and they're re -rating everything down.

30:54And they're changing the way that things are being framed from price to equity to

31:00a multiple of the cash that you have on hand.

31:03And I think that has huge implications, mostly to Silicon Valley and largely to employees,

31:09because we all sell the dream.

31:11We start a company and we're like, okay, small salary, big equity upside.

31:15But that's implicitly saying in 15 or 20 years, this thing is going to be

31:18worth some gigantic number. But if instead, every business gets disrupted every five or six

31:23years, all you're going to end up with is just the cash.

31:27And so what should employees do?

31:28The rational reaction from employees will say, you know what, I don't want your equity,

31:32give me more money. And if all of a sudden you do that, the valuation

31:37multiples and the complexity changes again.

31:39So I had my team put this chart together.

31:41Okay, what is this? Took a handful of SaaS companies and took the mag six.

31:47And I just said, okay, if you take the market cap and you divide it

31:51by the annual free cash flow, what that tells you is how many years does

31:55it take to get back if you bought a share of stock?

31:57How many years does it take from the free cash flow to come back so

32:00that you've earned back the cost of one share?

32:04Snowflake in 2023, it would have taken you almost 100 years.

32:10And where is it now?

32:11It's been cut in half.

32:13Service now, it's last year in Workday, you see it.

32:16And I think what this speaks to is the beginning of this re -rationalization in

32:21the public markets of saying, if superintelligence is coming, we have to be very careful

32:28about what we're willing to pay for these things.

32:30But if you look on the right -hand side, and the mag seven, what's so

32:34interesting is Apple, Microsoft, Meta, and Alphabet, the market is completely flipped the other way.

32:40And what they're saying is, we believe that these cash flows are essential.

32:45potentially monopolistically durable forever. That's the only reason why you would walk them up like

32:51this, except NVIDIA, which is the most unbelievably accretive, well -run company, highest margins, making

32:59$200 billion. And they're treating it like they're treating ServiceNow and Snowflake.

33:05I just think it's so interesting what's happening.

33:07I can't explain this, but here, this data sort of shows this reset that we're

33:12going through, a very complicated reset in the capital market.

33:14Freebird, what's your take on this reset as Chamath describes it?

33:19Do you think this is just a flight to the quality of the free cash

33:24flow of the Mag6 and just how much cash they print?

33:27And then maybe the other ones are smaller footprints and they're just more disruptable.

33:32We had this discussion many years that Google and Apple, Microsoft, they would all be

33:36disrupted at some point, Facebook.

33:38And that just simply hasn't happened.

33:40They've gotten much more nimble at copying products or incorporating, you know, features and products

33:45into their core offering. So your thoughts?

33:47It's probably generally correct that there will be a decline, but there's also the selective

33:53opportunity. Did you guys see the LP slides that went on the internet from Toma

33:57Brava's LP conference? Yeah, those are great.

34:00Nick, maybe you could find that.

34:01They kind of highlight that within the broad market scape, there are companies that are

34:06not just going to sit idly by and let AI kind of delete their business

34:12value, but they're integrating AI themselves and they've got high quality people to do so.

34:17And they're reinventing their product themselves.

34:19So they've already got a beachhead, they've already got customer access, they've already got enterprise

34:23users. And in fact, if they can integrate AI into their products and into their

34:26tools, there's almost this like selective dispersion that happens in the market.

34:31And so the winners are going to win, I think truly in every market, not

34:35just in software, but across every market, including an industrial supply chains on who is

34:41going to implement and utilize AI tools and agents to do work.

34:45And it's going to expand the work productivity of that organization, not just create new

34:50features, which is what we focus on when we talk about software companies, but really

34:54imagine a complex business being able to do 10 times the output it can do

34:58today with the same capital equipment and the same labor force.

35:01Freeberg, what do you pay for in a world of super intelligence versus in a

35:05world of non super intelligence in terms of the durability of the business?

35:10Yeah, it's hard to say, man.

35:11I mean, we don't know, right?

35:13And that's why all the discount rates are going through the roof.

35:15And that's why the valuations are collapsing, because we just don't know what multiple or

35:19what discount rate you apply or what terminal growth rate or which, which effectively implies,

35:24what do you do in your PA?

35:25Like, do you say, I don't think Disneyland is going anywhere.

35:28You know, I think there's some stuff that you could say is the counter AI

35:31portfolio and the counter AI portfolio, I think it's like physical experiences.

35:35Halo, they call it Halo, high asset, low obsolescence.

35:39Okay, that's a great X.

35:40Yeah, I'm not a big investor trader like you guys, but that makes a lot

35:43of sense. I mean, I think that's like intuitively, to me, that seems to be

35:47an area where people are going to be spending a lot of time and they're

35:49going to, they're going to have durability in those businesses.

35:52I think businesses like Nat Gas Production, you know, I just bought LNG, that Chenier

35:58company. Chenier, yeah. Chenier, yeah.

36:00I bought Chenier, given all the craziness in the Middle East.

36:04And you know, I visited there with Doug Burgum.

36:06So it was the first time I'd ever been exposed to this business.

36:07And I checked it out.

36:08That's a great business. It's a great business.

36:09Really well -run business. So I think that's got durability, obviously, unless it gets blown

36:13up by some enemy, that would be a problem.

36:15So the Atoms thesis that TK shared.

36:19Yeah, Atoms, real life, mining is a great one.

36:23Obviously, I think the space - industry is going to be a lot bigger than

36:25we recognize. I actually think there's probably a 15 to $30 trillion a year economic

36:32opportunity on the moon. That kind of a business, like you're going to see with

36:35SpaceX's IPO, is going to have an insane multiple.

36:38So I think to your point, Shemaat, there's a lot of stuff getting steamrolled here

36:41with crazy high discount rates where you just don't know.

36:44And there's a bunch of stuff where the pathway over the next 15 to 30

36:47years is maybe independent or unlocked because of AI.

36:50And then there's a bunch of stuff that's just higher multiple because that's where capital

36:56starts to float. There are probably three things that we would agree are great moats

37:01for businesses, brands, network effects, and the management team.

37:05Those come into play here as well.

37:06Yeah. I don't know if I would consider a management team to be a moat.

37:10I mean, it's like Warren Buffett says that you want businesses that are so strong

37:13that they could be run by a bunch of monkeys because one day they probably

37:16will be. Well, I was thinking more like, obviously, Elon and Tesla is going to

37:21just relentlessly innovate. It's a great point, by the way, and it's true, especially in

37:26the age of agentic AI.

37:27Yeah. I mean, look, I think though that just up leveling a bit, I think

37:31you are right that the key question is moats, because I do think that there

37:35are still strong moats in a lot of different kinds of businesses.

37:38And a lot of them are very subtle.

37:40Like you said, some are network effects.

37:41Some of them are the difficulty of producing physical world products, things like that.

37:47So there's a lot of different types of moats out there.

37:50And that is the key question as we enter a world of, let's call it

37:54digital abundance. Yeah. The network effect of Apple's ecosystem, and they have hardware, right?

38:01And they've been just on that path of making their own silicon.

38:04That's incredibly defensive. And they have brand, right?

38:07So that is pretty strong for Apple.

38:09And then you'd take Tesla, the same thing.

38:10You got Elon, Elon, relentlessly innovating, and it's hard hardware stuff.

38:15And then if you look at Meta and Google, these are incredible brands with great

38:18management teams and constantly innovating.

38:21If I had to bet, I'm going to bet that brands go to zero.

38:24Really? Yeah. Because I think that when you can make things that are as good

38:30or better, and you can make them in a cheaper, faster, better way, people want

38:36that abundance more than they want an affiliation to a brand.

38:39Example? So the perfect example is actually what Tesla did to BMW, or Tesla did

38:45to Mercedes, what Tesla did to Porsche, what BYD and Geely have done to the

38:51car manufacturing cycle in China.

38:54This is a fundamentally cheaper, faster, better product.

38:58Yes, it's got a great brand, but nobody's going to pay a premium for these

39:02products. The reason why Y has outsold everything else is because the Model Y is

39:06priced better and it's superior on every operational dimension of comparison.

39:11That's also true for the cars in China.

39:14So I think it's the opposite.

39:17I think that brands and the pricing power brands, other than maybe premium luxury goods,

39:23but even that's eroding. Like look at the stock, like, I don't know, Nick, show

39:26the stock chart of LVMH or Ferrari.

39:30This is not a commentary on the quality of the actual product, but what this

39:35shows an erosion of pricing power.

39:37All of these things are being eroded away.

39:40Yeah, this would be the value prop.

39:43Most people in brands would just say value propositioning.

39:46So JetBlue is a value brand.

39:49Tesla Model Y, perfect example of a value brand.

39:51And if you look at Apple's recent cohort, what did they focus on?

39:54The Apple MacBook Neo, which is a value laptop, 600 bucks, 700 bucks.

40:00So they're even going down market to try to capture that.

40:02value and to your point maybe the right word is abundance like the brands that

40:06bring abundance that bring more to the table than their competitors and they are able

40:12to bring more at the same unit cost or less capture share that's probably true

40:19you know what's interesting about that shama as we open up the aperture of this

40:23if you one of the thesis we talked about here a couple years ago say

40:27what happens with ai disruption job disruption etc costs coming down on cars with model

40:34y getting cheaper cyber cab coming in byd obviously if you go to any foreign

40:39country byds are everywhere and they cost 15 grand then you look at apple making

40:43the neo that's a 600 laptop everything getting cheaper seems to be happening i just

40:48think it's very hard to know which these companies can be disrupted a year ago

40:52on this pod we were saying that google was going to be toast or some

40:55of us were saying it because it looks like yeah okay fine but yeah you

40:58know it looked to us like chat gpt was taking a massive share from google

41:02search and the adwords model was becoming obsolete now because of the success of gemini

41:10and the potential for personal digital assistance personal agents i think we're probably pretty bullish

41:16on that company and look at their stock chart it's reflects that i mean i

41:20think it's doubled in the last year now you take something like apple on the

41:23other hand and i'm not saying this is going to happen but i'll just throw

41:26out a counterfactual which is what if your personal digital assistant or a personal agent

41:32gets so good that you don't need to check your phone you just tell it

41:35what to do and you don't need the wall of apps anymore i mean the

41:38way that you call an uber won't be to punch a few buttons you'll just

41:43tell it what to do so you could imagine the phone operating system getting disrupted

41:47if the agents are good enough you're on to something huge because what you're saying

41:51is i can confirm this to you 80 90 we sell enterprise software i'll tell

41:56you three conversations with huge enterprises asked exactly what you just said and we jokingly

42:00called it strangulation as a service which is they all say the same thing what

42:05you just said okay look get all this complicated ui out of the way get

42:09all of these products out of the way find a way to create a shim

42:12where i can just write what i need tell it what i needed to do

42:16it deals with all this complexity in the background i never want to see these

42:19things ever again and that's what people want to your point they want they want

42:24to be able to like say okay pay this with my venmo or use my

42:27mx in this situation or get me that flight in some way and have all

42:32these wonderfully smart agents do all the work behind the scenes and that's actually tracks

42:36with exactly what i've seen with open claw perplexity computer claude co -work instead of

42:42going to your notion instead of going into your gmail instead of pulling up your

42:46calendar you ask it hey what's on my schedule this week it brings it to

42:49you so you could you could have a dumb you know flat terminal you know

42:55chat interface on the hundred dollar device and it would do just as good just

42:58to make the counter argument against myself i mean yeah even though i think that

43:03you'll just increasingly tell your agent what to do instead of be clicking around or

43:08you know touching the screen you still need a dashboard or a user interface to

43:13like check on it and just see readouts of information you still need to be

43:17able to visualize it where is the uber that i've asked to be sent to

43:20me how far away is it still want to see it on a map so

43:22i could imagine that even if let's say you know siri plus plus becomes the

43:27dominant way of interacting with your iphone you'll still want that apple user interface hard

43:33to say i mean i see a lot of people out there tweeting that apple

43:37is brilliant for kind of missing the whole ai wave and not spending a lot

43:41of money money on data centers or capex and then there's other people who say

43:45well wait a second they're they're missing critical capabilities then there's a question of will

43:51they be able to make deals for you know an ai powered siri i don't

43:55know i think this is very hard to know at this point in time all

43:58right and we will be discussing all these hard topics at liquidity may 31st through

44:04june 3rd chamath some big announcements here from you you have taken control this is

44:11what happens in the game of thrones known as the all -in corporation the partnership

44:17the partnership if we call it that ship the chaotic partnership no mids there it

44:23literally is chaos wait why are we doing this in california i don't even think

44:28i can go back to the state at this point in time you can come

44:31for 48 hours making it i don't know by the way there are some people's

44:34acts that zero days in state at this point i love it i love you

44:37can do 48 hours it's okay well gavin newsom might meet you at the airport

44:41you can get picked up at the airport the air by the way the airport

44:44is about 10 minutes from the venue you could fly in and fly out same

44:47day and you don't have an overnight no is that how it's counted that's how

44:51it's counted as an overnight in california head on pillow yeah you can come in

44:55on monday then fly out fly out to incline sleep you know at our friend's

45:00house and then fly back in on tuesday and then fly back out you'll be

45:03fine or you could fly to vegas do a blackjack run overnight blackjack run and

45:08then you come back in the morning we just freshen up no just get your

45:11fresh shirt nice and rested let me announce the next two speakers oh my god

45:14i'm so excited but just for background trimoth comes into this thing liquidity was this

45:18little conference i did it's now part of all in and i start setting up

45:22all the speakers and then trimoth goes not good enough i'm not showing up unless

45:25i pick all speakers and you know what freeberg and i did well finally this

45:29melon farmer is going to actually do some work great what did you call me

45:33what melon farmer it's a when um they play a quentin tarantino movie on like

45:40tv instead of saying mother effer samuel jackson says melon farmer oh i see so

45:47this melon farmer took unilateral control of the 10 speakers 10 speaker slots very coveted

45:54okay so we've announced dan lobe we've announced sarah fryer incredible and i'm very very

46:00very honored and excited to announce that bill ackman and andre carpethy will also be

46:07speaking at liquidity four heavy hitters six to go two more goats on the roster

46:12of goats so goaded and we have a handful of other yeah there might be

46:17some surprise guests unannounced guests show up tbd can't say tbd tb more announced soon

46:23but we're making let's get dario to show up dario come to the show come

46:27hang out with the all -in boys i'm really excited you know what andre's gonna

46:31do what andre agreed to do is he's gonna do like uh five or ten

46:34minutes of slides on like the future of the world with ai and then we'll

46:37do a fireside love it that's gonna be tremendous and you know he's uh he's

46:42been on a heater himself with his recursive uh github oh dude auto research is

46:47incredible and bill ackman has a ton of points of view on all of this

46:50stuff so we'll get a lot of his thoughts i want to give a shout

46:53out to freeberg because when we did the interview with jensen he's like guys i

46:58was like i like had a glass of wine on a sunday i like coded

47:01a replacement to my hris system i asked all my team to do it and

47:05i was like oh my god this is incredible so i asked our folks i'm

47:08like hey i don't like the website this is 80 90 and the next day

47:12they're like yeah we vibe coded a new one we'll have it up and then

47:16i'm like well do you like the cta's and how it's doing they're like no

47:19no no we put into auto research and we doubled the click through rate.

47:22And I was like, to Freebrook's point, this was, this would have been many man

47:28months, tens of people. And instead, all these recipes, by the way, these playbooks, you

47:36know, like the person that runs growth at OpenAI publishes his recipes.

47:40Yeah, you've been claw pilled.

47:41That's it. You've been one shotted.

47:43It's really incredible. This is why like, I mean, you commented on my post yesterday,

47:47I wake up every day and my head spins.

47:49I'm like, what is what is going on in the world?

47:51It's crazy. Like every day feels like a new era right now.

47:55Yeah. And it's disoriented. Because I think what's really interesting is you pull what would

48:02have normally been something that's call it a period of timeout, like a year out

48:05or two years out. And you can pull it in and say, I can get

48:08that done in three days.

48:09And I don't need to hire people.

48:10All the sequencing and staging that would normally go into accomplishing something has been reduced.

48:16And then the time rushes in, so all your ideas rush into you.

48:19And they're all like immediately accessible.

48:21And that's why it's like, so every day is like, Oh, my God, it's disorientating.

48:25Yeah, that is, I have, I bought the domain name annotated .com like 15 years

48:30ago for four grand. And I wanted to create a service, like a bookmark service,

48:35Chamath, where you like highlight a paragraph from the New York Times, and then you

48:37write your comments on it, saves it, and you basically have the service.

48:40And I was talking to some developer about making it, and I literally vibe coded

48:44it and the Chrome extension this past week.

48:46And I was like, Okay, I've been sitting on this domain and project for like,

48:5215 years. And I did it in a weekend.

48:55Isn't it crazy? Weird. It's like very weird.

48:57It's really, it's just makes it feel like a simulation to me that everything can

49:01just manifest itself. It's the Star Trek version of the world.

49:05Like remember the replicator sacks, we just say Earl Grey tea at this temperature.

49:09That's happening in business. Now you're like, CRM system build annotated .com build this new

49:14website for 8090. And it's a replicator just gives it to you.

49:18It's very strange. I've only felt this feeling twice.

49:24Once I was on the outside looking in.

49:26I was a derivatives trader in Toronto.

49:30I was looking at the first .com wave.

49:34And I was like, I got to be a part of this.

49:36How do I get to be a part of this?

49:38And I got a job and I went amp and kind of the rest was

49:43history. When the original iTunes, but I missed the wave financially didn't do anything for

49:49me, but I was in the right place.

49:51You got to the beach with a surfboard.

49:54That's all that matters. Then the second wave I crushed and the move to mobile

49:57and social. But this way feels like 100 times bigger than that.

50:02It's a tsunami by comparison.

50:03I had three of these.

50:04It's probably what it's like to be at Nazare in Portugal.

50:08You guys ever see those clips of like that crazy place where like there's like

50:12100 foot waves or whatever, and you're just towed in and you're like, okay, let's

50:16just - Here we go.

50:17This could end one of two ways.

50:18Let it go. Let's do it.

50:20Glory or goodbye. No, it was like literally when I first saw a PC, when

50:26I first got on the internet and then saw a mosaic, like those two moments

50:29in the early 90s. And then seeing the iPhone, I think that like those three

50:33moments - The iPhone was very special.

50:34All right. Rough week for Zuck.

50:36Two verdicts. Went against Meta in two days.

50:40They were first found liable for allowing child predators to access minors on Facebook and

50:46Instagram. New Mexico jury ordered Meta to pay $375 million in damages.

50:51The AG's office there ran an undercover investigation.

50:53They created fake child profiles.

50:55Facebook, Instagram, these accounts were contacted by predators.

50:58People showed up, yada, yada, yada.

51:01A whistleblower and former meta engineer testified that his own 14 -year -old daughter received

51:05sexual solicitations on Instagram. Then on Wednesday, an LA jury found meta and YouTube negligent

51:11for designing addictive platforms that harmed a young user's mental health.

51:16Basically, the plaintiff in this case, Sachs, said they started using YouTube at age six

51:21and Instagram at age nine.

51:23And she testified that features like notifications, algorithms, made the app so addictive that it

51:29caused depression and anxiety through that compulsive use.

51:34You have some thoughts on this.

51:35And we had Jonathan Haidt, right?

51:38Didn't we do an interview together?

51:39Wasn't that one of the first joint interviews?

51:41Freebird did? You and I did.

51:42You and I did, yeah.

51:43Incredible book. He had a very important point, which is to try and keep kids

51:49off cell phones and social media until they're 16.

51:52And he was kind of cheerleading this verdict.

51:55But, you know, I'll take a little bit of a contrarian to the popular kind

51:59of sentiment on this. And I'll just talk broadly about this idea of tort litigation.

52:04Tort litigation, you know, costs our economy $900 billion a year in the United States.

52:08It's $900 billion a year.

52:10That's how much is spent on the litigation costs, the settlements, the judgments.

52:15It's 3 % of GDP.

52:16And it's growing roughly 10 % per year.

52:18And these civil penalties decided by juries like they're, you know, going against big companies

52:24like Meta and YouTube, but it's also food companies, restaurants, everything.

52:28Anytime there's a window to sue someone and extract value from them, tort firms are

52:34all over them. You know, it's called the tort tax now in America.

52:37It's not just losses paid by the companies.

52:40Because fundamentally, when a big company pays out these tort taxes, they're going to invest

52:44less, there's less R &D, less product development, costs stay high.

52:47There's fewer new product launches.

52:50And there's all these crazy restrictions on stuff.

52:52So, you know, look, I agree, social media causes immense harm, particularly causes harm for

52:58kids, kids should not be on social media until they're 16.

53:01Absolutely agree. Maybe adults shouldn't either be on as adults.

53:06But fundamentally, I think there's an important question that we often ignore, which is who

53:09is fundamentally responsible for that harm.

53:13You know, should the sugar beet and sugar cane farmers be responsible for diabetes in

53:17America? Should the soda companies be responsible, the retailers selling the soda, the FDA for

53:22not stopping it all? And fundamentally, I think we have to ask the question, what

53:26role does individual choice play, an individual responsibility play in this equation?

53:31If everything is a liability, what do you think anything?

53:34I think we have to take personal responsibility.

53:37I think the parents that are absent taking care of their children are responsible for

53:41harm to their kids. You shouldn't let your kid play with a gun.

53:44You shouldn't let your kid go to some sketchy neighborhood after hours by themselves.

53:49You shouldn't let your kid play video games 100 hours a week.

53:52You shouldn't let your kids eat nothing but soda and potato chips.

53:56You have responsibility as a parent.

53:58And I think parents should keep kids off screens and keep kids off social media.

54:01Once the harms are known of excess use or the harms are known of exposure

54:05to this sort of thing, I think there's responsibility that sits with the parents.

54:09What about things like tobacco or processed food or?

54:12Yeah, this is the key.

54:14Yeah, and I look, I mean, the same is true of alcohol.

54:16I mean, dude, like alcohol is terrible for you.

54:18There's nothing good about alcohol.

54:19But I think I should have a choice on whether or not I want to

54:22consume alcohol, whether or not I consume tobacco, whether or not I consume processed goods.

54:27And the recognition that it's bad for you should be publicized by the government should

54:30be publicized by the government should be publicized by the government.

54:36It's a good name. sense there should be human liability and human responsibility expectations in

54:41a society we never talk about responsibility we always talk about where the government failed

54:45us and where these companies f***ed us and we never talk about what did we

54:49individually do wrong how did i individually choose to eat 100 f***ing sodas a week

54:53how did i individually choose to get my kids addicted to social media where the

54:57f*** was i as a parent like we don't talk about our responsibility and by

55:01the way this fundamentally addresses this point about human agency which i think is more

55:05critical in this era than ever because ai is going to flood us with f***ing

55:09everything all the time non -stop what we choose to do in a world where

55:13we're already getting everything and how we choose to not take everything that's being offered

55:17to us i think is a critical part of what's going to distinguish human success

55:21from human failure and it's going to become more apparent in the future and not

55:24everything is about liability and not everything is about the government failing us it's about

55:28people making choices and we don't talk about it but on counter i i agree

55:34personal choice super important what you're probably leaving out here yeah which you're definitely leaving

55:40out here is when these companies know they're doing something damaging and they do it

55:45anyway that was the key to the rjr with the whiskey company what about what

55:51about a whiskey company selling whiskey to an alcoholic so i don't have company selling

55:58potato chips to an obese person i'll put those two aside because i don't think

56:01we've seen major cases about that but i will say the auto industry knew for

56:05a long time about seatbelts you remember that and they didn't deploy them rjr nubisco

56:11they knew that these were addictive and they designed the cigarettes to become more addictive

56:18and they didn't tell people about the health risks asbestos same thing lead paint same

56:24thing this has happened over and over again where corporations subvert the release of information

56:31to make additional profits so the question here with facebook is did they know how

56:35addicted these were did they know kids were being assaulted sexually and and they could

56:40have done something about it or didn't they and so agree that there's too much

56:45litigation that's absolutely true the kids being assaulted absolutely true yeah we agree on that

56:49not releasing information about the level of addiction if they had it that's certainly bad

56:54should the product be legal number one and if the product is legal who's responsible

56:58for using it you know and where do we draw the line and if we

57:01don't want but if we don't want people to make choice that we shouldn't put

57:03it out there but if you as a corporation know it's dangerous and then you

57:07lean into that if you know uh as is the case with facebook that this

57:12is super addicting super damaging to young girls and then you lean into making it

57:16more addictive and you don't put safeguards in place and you can prove that like

57:20rjr like asbestos like what are the safeguards on whiskey what's the what safeguards does

57:26a whiskey company put age what safeguards does a casino put hold on you asked

57:30the question yeah age is one second after age which is what we're really talking

57:36about with kids and jonathan hate would agree that they shouldn't be using this until

57:40they're 16 so i think that's a perfect analogy uh age gating and then labeling

57:45and then if they know of something that's really damaging releasing that so there was

57:49a whole thing about alcohol and pregnancy and they covered up in the alcohol industry

57:54or didn't disclose exactly how damaging it was to drink alcohol on a on a

57:59fetus or a developing fetus and then remember all those signs went up in bars

58:03in the 70s and 80s that was directly because of that so labeling information and

58:09age gating would be the logical things to do for social media and that's what's

58:12happened in the past so that that's the answer to your question i don't know

58:14about age gating but I think informing parents about the risks is fine.

58:17Like, that should be a responsibility.

58:19But, you know, the tort lawyers are one of the largest donors in political elections

58:23in the United States. They donate largely to Democrats in local elections and Republicans in

58:28national elections. And then they are the largest donor class to elections of judges.

58:33And it's a business. And I think we don't talk enough about the business of

58:37tort law, the business of litigation in this country.

58:40And we often ignore this question about choice.

58:43And I don't want to live in a world, J.

58:44Cal, where the government and companies are telling me what to do and what not

58:47to do, how to live my life, et cetera.

58:49Saks, let me jump in here.

58:50Personal freedom and personal responsibility versus, hey, corporations may be knowingly doing things.

59:00And parental responsibility, J. Cal.

59:01Parental responsibility in there as well.

59:02Yeah. What do you think, Saks?

59:04Well, look, there's no question that the trial lawyers want to turn Meta into RJR

59:08and Nabisco and the cigarette companies and try to fit their fact pattern around that.

59:12I just think that the activity is fundamentally different than smoking.

59:15I mean, smoking is manifestly harmful to you regardless of what your age is.

59:20And the only reason we allow it is because of assumption of risk it's a

59:24free country. I think in the case of social networking, it's much more unclear what

59:29the harms are and what the benefits are.

59:31And I think it's much more subjective and it's much more of a personal choice

59:34for adults and also for parents.

59:37Freeberg, I mean, one area where I disagree with you a little bit is you

59:39said the harms of this are immense and well -known and understood.

59:44If that's the case, then let's just ban it for under 13 or under 16

59:48or whatever it is. But I don't think that's the case.

59:51And because it's unclear, I think it's up to parents to decide what's appropriate for

59:56their families. And at the end of the day, I think the right way to

59:59deal with this is parental empowerment.

1:00:01You give parents the controls to set screen time limits or to decide what apps

1:00:06their kids install. Now, the debate has now moved over to AI apps.

1:00:11And there's a lot of parents groups that want to ban kids or teenagers from

1:00:16being able to use AI chat apps because there was a couple of cases of

1:00:21self -harm. Now, my reaction to that is, look, I've got a 10 -year -old.

1:00:25And if he starts using ChatGPT to get answers to questions, I would consider that

1:00:31to be a good thing.

1:00:32I mean, I'll keep an eye on the usage, but I want him to be

1:00:34an AI native. I want him to be able to do research.

1:00:38You know, I want him to be able to know how to use these tools.

1:00:40I want him to get the right skills to be successful in the 21st century.

1:00:44In China, they're incorporating AI into K -12 education.

1:00:47Are we going to ban it for our kids and teenagers?

1:00:51I think that'd be a terrible mistake.

1:00:52So I think when it comes to AI and AI chat apps, it has to

1:00:56be up to the parents because there's too much manifest good that can come out

1:01:00of kids learning how to use these apps.

1:01:04Maybe social networking is in a different category, but I got to say, I do

1:01:07think that the harms have been exaggerated because the trial lawyers have an incentive.

1:01:11And just to give you some facts about that LA case, so just so you

1:01:14understand, in this LA case, they were sued by a 20 -year -old woman who

1:01:22claimed that she became depressed because of using social media.

1:01:27And she apparently suffered body image issues because of social media, and she was able

1:01:33to win this judgment for millions of dollars.

1:01:36Look, I think there's big causation problems with that case.

1:01:38In the case of that plaintiff, the evidence showed that she came from an abusive

1:01:42home. Her father had abandoned her.

1:01:44Her own mother had body shamed her, so it was very unclear where her body

1:01:49image issues were coming from.

1:01:50I think it's possible that social media contributed to it.

1:01:53or it could just be that social media was a scapegoat.

1:01:56I also got to say that I do think it's a dangerous precedent.

1:01:59I mean, are we going to allow plaintiffs, lawyers to sue Spotify because you created

1:02:06a playlist of sad music and that music contributed to your emotional distress?

1:02:12I mean, that's kind of what we're saying.

1:02:13You got to remember, these are free services that people have a choice whether to

1:02:18use them or not. And if social media is making you feel bad, if listening

1:02:21to the wrong playlist is making you feel bad, then stop doing it.

1:02:25But what's going on here, I think, is the trial lawyers are trying to create

1:02:29the next big tobacco and their goal is to try and sue these companies into

1:02:33oblivion. And I don't think that's the right answer either.

1:02:37The consensus, Chamath, is kids who use this two or three hours a day, this

1:02:42has been across many research studies, is that it's massively correlated with depression and anxiety

1:02:52and eating disorders, specifically in young girls, like if you get to two or three

1:02:58hours a day of this.

1:02:59So that correlation is, I think, pretty well established.

1:03:02You pretty famously said, hey, and you worked at Facebook, so you saw this coming.

1:03:07But I think at Stanford 27, 2018 timeframe, you actually had some comments on this.

1:03:13We could either play the clip or you could just describe it, I guess.

1:03:15I said what was obvious to me then.

1:03:17I lost a lot of friends at Facebook when I said it, unfortunately.

1:03:20But essentially, what I said was, I don't let my kids use it.

1:03:24And I don't think that this is a constructive part of a developing child's diet.

1:03:30I do think that Sachs is right that I view AI chat differently.

1:03:34There are different guardrails that are required so that if you go down some sort

1:03:38of, you know, dark corner.

1:03:41But that's possible to understand, and the product is architected in a way to create

1:03:47cul -de -sacs. So if you're thinking about self -harm, or you're thinking about these

1:03:51other things, social media is very different.

1:03:53It's an incredibly fast -twitch algorithm.

1:03:56And that's the optimization. And until the incentive for that optimization changes, these outcomes will

1:04:02continue to compound. I think the interesting thing is that the LA lawsuit was an

1:04:08individual lawsuit. The young woman, I think, was awarded $3 or $6 million.

1:04:14Yeah. The other one, though, that they lost this week was in New Mexico, and

1:04:17that was for $375 million.

1:04:21And that was more around, I think, child exploitation.

1:04:24Yeah. The thing that I'll note is that these trial lawyers, which I'm not a

1:04:29fan of either, have been trying, as Sachs said, and as Freeberg said, to make

1:04:32these folks a target because there's so much money on the line.

1:04:35And they've been batted back pretty successfully.

1:04:38But this was the first time where they were able to navigate the Section 230

1:04:45protections that Facebook and Google have typically used to protect themselves, because Google was a

1:04:50part of the LA lawsuit.

1:04:54And they were able to go down the pathway of product liability language.

1:04:57Now, to Freeberg's point, I think he's generally right.

1:05:01I think it's my responsibility as a parent to take care of myself and my

1:05:04children. But to the extent we don't change these product liability laws that are on

1:05:10the books, I think the door has been opened and a map has been drawn,

1:05:15which is this is how you navigate around Section 230.

1:05:20And you can get a decisive lawsuit in your favor against these large companies with

1:05:27enormous cash flows. And so I expect that this will be a death by 1000

1:05:34cuts kind of scenario, where folks are just going to rally around this.

1:05:39I don't think it's right.

1:05:40But I do think that that's the rational reaction to what just happened.

1:05:44I mean, look, $6 million to an individual 20 year old girl or $375 million.

1:05:49These are huge numbers. And the reality is that I think we've opened the floodgates.

1:05:55I do think there should be a better response.

1:05:57And I do think that parents should take a lot more responsibility.

1:05:59But I do hope that these products allow us a kill switch for when our

1:06:06kids are under the ages of 16.

1:06:08Frankly, I would love a kill switch under the age of 18.

1:06:11And there has to be simpler ways to age validate.

1:06:13You know, we used to work around this thing called COPPA compliance.

1:06:16COPPA is bullshit. It's a nothing burger, like a six year old can vibe code

1:06:21their way around COPPA. So it doesn't do anything.

1:06:25And so age verification is completely broken.

1:06:27It's harder to get age verified for a porn site than it is to get

1:06:30un -age verified for Facebook.

1:06:32Same word, Chamath. How did you get around it?

1:06:33Yeah, how do you know that?

1:06:35How do you know that?

1:06:36Chamath, that's just for uploading.

1:06:37You were uploading at the time, Chamath.

1:06:39This is not your only proof of age.

1:06:44We actually deal with this in our new AI framework that the administration released last

1:06:50week, because the number one issue is around online child safety, which I think, again,

1:06:56is mostly about social networking, but it touches on AI.

1:06:59And so it's kind of gotten lumped together.

1:07:02And I think we're, I mean, I'm referring now to the White House has said

1:07:05it's willing to support some form of age assurance technology and parental controls.

1:07:11So look, I think there needs to be a conversation around how true it is

1:07:16that social networking is just a fountain of ills for young people.

1:07:19If that's true, then why wouldn't you just disallow it, right?

1:07:23But if it's unclear, and I think it's more on the side of unclear, this

1:07:27is me, then it's up to the parents.

1:07:29And what you want to do is, again, have the age assurance technology and the

1:07:33parental controls and let the parents decide.

1:07:35I don't think that social media is net bad, broadly speaking.

1:07:41But I will tell you that if my child uses it for two or three

1:07:46hours a day for multiple days in a row, they become retarded.

1:07:49Yes, they act weird. And so I don't know what to tell you, except I

1:07:53would love a kill switch until these kids turn 18.

1:07:56On all these products, all of them.

1:07:58This has to do with dopamine, by the way.

1:08:00What I do instead is I use Apple's family sharing, but it's hard.

1:08:05And I'll tell you why it's hard.

1:08:06Our schools give our kids Chromebooks and say, use these Chromebooks, because that's the way

1:08:14you're going to access your LMS, your information, your content, your homework.

1:08:18And you know what's an integral part of that?

1:08:20YouTube. And then now it becomes a backdoor.

1:08:23So even when we take the devices, I take my devices, we lock them down,

1:08:26you can't bring them to your room, the whole thing.

1:08:30But if they need to do homework, and I catch them in a little break,

1:08:34I'm like, what are you doing on YouTube?

1:08:36They're looking at shorts. Of course, that's what they do.

1:08:39Yes. And so it is a whack -a -mole problem for parents.

1:08:43I think I'll just give myself the final word here on behalf of the group.

1:08:48It's obviously addicting. It's obviously the industry has not policed itself, nor would they police

1:08:54themselves, because they want to get people addicted now.

1:08:57So they're addicted when they're adults.

1:08:58The rest of the world has realized this.

1:09:01Australia now has 16 enforced.

1:09:03Malaysia, 16. Other countries are right behind them, Spain, Germany, UK.

1:09:08And what should happen here in the United States...

1:09:10states is this should be done with the handset manufacturers if android and apple showed

1:09:17leadership with facebook and said we're going to by default when you buy a phone

1:09:23you're going to have to age verify you know kids under a certain age which

1:09:27you kind of do already when you create a family plan like you did we

1:09:31could solve this problem and then parents would opt in to giving their kids access

1:09:35to this no good comes out of kids under 16 using social media and jonathan

1:09:41in our interview said you should be putting phone lockers in and our school is

1:09:46doing that other schools are doing it is the greatest thing ever kids are school

1:09:49no and then they love it i don't think it's that great i'll tell you

1:09:52why our school does the phone condoms i don't know what they're called but like

1:09:56you put them in the bags and you whatever the real problem is that there's

1:10:01enormous social pressure when you're in high school to use these products i'll give you

1:10:05a specific example our rule is you cannot get instagram or tiktok until you're 16

1:10:10i would love it to be 18 but we all agreed 16 and we're able

1:10:15to maintain that rule but then high school comes around and i have two kids

1:10:19in high school now oh we need snapchat no you don't no yes we do

1:10:23no you don't okay great we'll have no friends thanks a lot we'll just sit

1:10:26here in our room dark and there and you know there's an enormous amount of

1:10:30social pressure so when you talk to the other parents it's like hey guys can

1:10:32we all agree that we don't need snapchat you just can't get uniform agreement across

1:10:37all parents because everybody views this problem differently and so i had to change the

1:10:41rule now when you get to high school you're allowed snapchat but not instagram and

1:10:46you know when you're 16 you get instagram and that's the best we could do

1:10:50and tiktok all that stuff but yeah it's an impossible task for a parent i

1:10:54find it indispensable to be able to do i message with my kids and also

1:10:59i like the location awareness you can track location you compare i message those features

1:11:05to snap is it really that different i don't think it's that different well so

1:11:09you're really gonna you're gonna ban you're gonna ban snap no i can't my point

1:11:14is i had to give them snap but you're right i was like why can't

1:11:16you use i message they're like dad don't be a loser yeah no i signed

1:11:21for a snap account just so i could i message them where they are where

1:11:24they're messaging i prefer if they were just on i message but anyway that's the

1:11:28reality so you can talk about banning all these things but again i think you're

1:11:32on a slippery slope and i gotta i gotta i'm saying me as a parent

1:11:36ban no i'm saying me as a parent yeah you're setting guidelines in my house

1:11:40this is the rules when you become a freshman i'll give you snap and when

1:11:44you're 16 i'll give you instagram and tiktok otherwise shut the f**k up put your

1:11:48head down by the way i also have a tip for parents you know this

1:11:52issue with like kids in headphones where they want to be listening to stuff all

1:11:55the time and you have kids walking around like zombies with headphones i replace their

1:11:59headphones with over the these brand called shocks or something it goes over your ear

1:12:05but your ears open so you can listen to an audiobook or music and still

1:12:10be able to talk and so since we did that it's like much less drama

1:12:14around the over the ear headphone issue managing teenagers well again it sounds like you're

1:12:19exercising parental supervision yes it really makes sense that later when your kid turns 20

1:12:27they could sue these companies for well to your point i just think it has

1:12:32emotional distress that doesn't make sense you're right because to your point that girl said

1:12:37she was using it from the age of like six and ten yeah it's one

1:12:40product six and yet that's crazy crazy i agree with you socks that's crazy where

1:12:45were the parents all right we got time for a you think one more topic,

1:12:51be amazing. President Donald Trump, 47th president of the United States, announced his Council of

1:12:58Advisors on Science and Technology.

1:13:00It's called PCAST. Sachs, you have now, am I correct in saying, moved from the

1:13:11czar of crypto and AI to now the leader of PCAST?

1:13:14Is that the correct way to frame this?

1:13:16Well, the president has appointed me to be a member of his Council of Advisors

1:13:20on Science and Technology and to co -chair it, along with Michael Kratzios, who's the

1:13:24director of OSTP. I'm still an AI advisor, but I do it on behalf of

1:13:29PCAST now. So you remember last year I was in SGE, we got up to

1:13:34130 days. I used that time up and the president appointed me to this new

1:13:38role, allows me to continue being a technology advisor, in fact, on a wider range

1:13:42of issues. So before it was AI and crypto, now it's whatever PCAST wants to

1:13:48study or talk about or make recommendations.

1:13:50I think in addition to AI, other areas that are interesting are nuclear power, quantum

1:13:56computing, advanced semiconductors, all these different areas.

1:13:59I think we've got some biotech.

1:14:01Thank you, Freeberg. And we have some incredible people who are now on PCAST to

1:14:05kind of run with this.

1:14:07Yeah, I'm looking at it.

1:14:08Mark Andreessen, Sergey, Michael Dell, Larry Ellison, David Friedberg, Jensen, Lisa Su, Mark Zuckerberg, and

1:14:20some other folks there that maybe not as recognizable by the audience.

1:14:25How were they selected? The only criticism I've seen of this is lots of business

1:14:30leaders, great. Lots of technology, great, but maybe a little light on the scientists.

1:14:37Well, I don't know. We have people who've won a Nobel Prize for physics on

1:14:40there. We're talking about people who are experts in, like I mentioned, quantum computing, fusion,

1:14:47nuclear, biotech, pretty much everything across the board.

1:14:51I would say that one difference between this PCAST and previous ones is you have

1:14:55more doers, more builders, people who've actually created products or companies.

1:15:00We think that's a good thing.

1:15:02Why would it be a bad thing?

1:15:04I mean, is it a bad thing that Mark Andreessen invented the first internet browser

1:15:08or Jensen invented the GPU?

1:15:11If you're going to make recommendations about advanced semiconductors, don't you want to have someone

1:15:15who actually invented some of the key products in the space?

1:15:17The big question, of course, Zach, is, as we've seen here with Science Corner, is

1:15:21how do you plan on staying awake for these meetings if it's going to be

1:15:24like all science is usually when you take your bio brain for a nap?

1:15:28Well, it's science and technology.

1:15:31So I'm going to focus on the tech stuff.

1:15:34Got it. And then we got Freeberg to focus on the science stuff.

1:15:36Got it. So Freeberg, this is incredible.

1:15:38You've joined President Trump's administration now.

1:15:43I will say I'm honored to be invited and appointed by the president, and I

1:15:47appreciate Sachs and Michael Kratios.

1:15:49You look back at PCAST, it's kind of rooted in FDR when he formed this

1:15:54Council of Advisors on Science, when nuclear physics and quantum mechanics was starting to kind

1:16:00of reinvent what was possible in the world.

1:16:02We're sort of at a similar era today, because arguably AI is reinventing what is

1:16:06possible in the world. And I think there's this kind of acute moment that we

1:16:10find ourselves in, in this extraordinary race against China.

1:16:13I'll give you a statistic.

1:16:1510 years ago, China published 50 % of the number of scientific research papers in

1:16:19peer reviewed journals, as the United States.

1:16:21Last year, they published 50 % more than the United States.

1:16:25This is across all disciplines and domains.

1:16:27including physics, material science, chemistry, biochemistry, broad life sciences.

1:16:32There's this moment that we're in right now where both the world is being reinvented

1:16:35by AI, but there's this extraordinary race with China, not just in fundamental research and

1:16:40discovery, but in the industrialization of new discoveries and new technologies.

1:16:45You could feel it in DC this week, I was at the Hill and Valley

1:16:48Forum, but literally everyone in Silicon Valley, everyone in DC is like, absolutely honed and

1:16:55focused in on what is going on in China.

1:16:58It used to be in biotechnology, for example, that China was kind of a copycat

1:17:03and a me too, or they were really good, for example, in manufacturing.

1:17:06But it is now the case that in many subdomains, China is becoming the scientific

1:17:11leader in biotechnology and in life sciences.

1:17:15And that is a scary thought, because ultimately, China could end up engulfing the entire

1:17:19pharmaceutical industry, and basically becoming the leader in things like medicine, but most importantly, foundational

1:17:25things like AI. So I just want to defend and speak for a moment about

1:17:29the choice about putting what I would say are like industrial science and technology leaders

1:17:34on this commission, because this is a moment where there's an industrial race, not just

1:17:38a discovery race underway. And that's why this moment is so critical.

1:17:41Anyway, I'm very appreciative to have an opportunity to serve and thankful to David for

1:17:47his leadership and related news, Chamath will be joining the President's Advisory Council on bomb

1:17:53pots and wagering. And when I saw this, I saw PC and I was like,

1:18:00Oh, is it podcasting? I'm in.

1:18:02Finally, I've been invited to the President's Council on podcasting.

1:18:05So big, big news coming.

1:18:06I don't want to tip anybody's cards.

1:18:08We'll let you know when that happens.

1:18:09Yeah, absolutely. When the President's Council on podcasting emerges, me and Lex Friedman will make

1:18:16our way to Washington, D .C.

1:18:18to serve. I want to thank the President as well.

1:18:20And that's a great honor to be named to co -chair this.

1:18:24It is, like Freeberg was saying, this is a fairly august body that goes back

1:18:27a long time. I think the modern incarnation was created in 1990 by George Herbert

1:18:32Walker Bush. So this has been around for over 30 years.

1:18:35In its current formulation, I think we have a slightly different take on it, which

1:18:39is we're going to have these builders and doers on there.

1:18:43Like Freeberg said, we got some catching up to do on our industrial policy.

1:18:47We have named 15 people.

1:18:49There's still nine more slots.

1:18:51We can have up to 24.

1:18:52So I think it's possible that at some point there'll be a second round.

1:18:56And if we're missing some expertise, they can be filled in.

1:18:58Obviously, that's up to the President.

1:19:00He can decide later who else might join us.

1:19:02All right, everybody. That's another amazing episode.

1:19:04The number one podcast in the world.

1:19:06The All In Podcast. Bye -bye.

1:19:09Love you, boys. Bye -bye.

1:19:12We'll let your winners ride.

1:19:15Rain Man David Sack. And it said we open source it to the fans and

1:19:22they've just gone crazy with it.

1:19:23Love you, Wes. I'm the queen of Kenwa.

1:19:26I'm going all in. Let your winners ride.

1:19:32Besties are gone. That's my dog taking a notice in your driveway.

1:19:37Oh, man. My habitasher will meet me at once.

1:19:42We should all just get a room and just have one big huge orgy because

1:19:45they're all just useless. It's like this like sexual tension, but they just need to

1:19:49release somehow. Wet your feet.

1:19:52Wet your feet. We need to get merch.

1:19:57I'm going all in. I'm going all in.

1:20:02I'm going all in. But let's go theo.

1:20:03He'll be there. He'll be right back and forth with you, guys.

1:20:04The new website sked it up ,橘 Ю, man.

1:20:04He'll be apa - reporters, miss a shirt.

1:20:05So when I'm gone, going to call it...

1:20:05Get a photo. Going all in

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