SpaceX's $2T Case, Nvidia's Shock Selloff, America Turns on AI, Trump Pulls AI Order, Bond Crisis?

All right, everybody, welcome back to the number one podcast in the world. It's the All In Podcast, episode 274. Sax is out today, but we're very lucky to have Gavin Baker from Atreides Management joining us. The spicy takes must flow. Welcome back to the program, Bestie Gavin. Thanks for having me. Always love it. It's been a huge week in tech. We can start with the SpaceX and OpenAI IPOs. We've got Andre Carpathi joining Anthropic, NVIDIA crushing it. So many different places to go. But I think we'll start with Andre Carpathi joining Anthropic. Carpathi is only 39 years old. He's already a legend in the tech industry, if you don't know him. I believe he's also coming to Liquidity. Yeah, Shema? He's going to keynote on Monday morning. Oh, fantastic. No, Tuesday, Tuesday, Tuesday. Day two, I think he's keynoteing. Okay. As is Gavin. Gavin will be there. Founding member of... Gavin anchoring day two as well. Excellent. Yeah, this is Gavin's second appearance. Look at those two bookmarks, Andre Carpathy and Gavin Baker. Liquidity pulls in the stars. Obviously, Andre was a founding member of OpenAI. He led the self-driving team. Also, hold on. Gavin is going to help us judge the best ideas section as well. Excellent. I don't know if you know that, Gavin, but you're a judge. You're a judge. I'm up for anything, man. I'm easy. Yes. Carpathy also coined the term vibe coding. He recently built Auto Research. I think we talked about that here a bit. That's an open source training tool. helps AI models improve themselves by running five-minute experiments. That got over 82,000 stars on GitHub. He did that as a weekend experiment, and all these civilians started building their own recursive LLMs. Really inspiring. And the Andre Carpathy Skills is a tool based on his set of principles for Claude Code, and somebody just released that. And so that's just pretty crazy when you think about it. He's going to be in charge of a new pre-training team at Anthropic. The focus obviously being recursive self-improvement. In other words, they're going to have Claude improve itself. And they've already talked a little bit about AI, improving AI over at Anthropics. What's your take on this? Is this super important in 2026? Obviously, Karpathy is super well-respected. He's obviously one of the true talents in the space. But hey, we're in a different inning than we were, say, 10 years ago when he was at Tesla or five years ago when he co-founded OpenAI. You know what's interesting? If you go back to Google, the culture of Google, which they got right, was the singular technical talents there. They were singled out and they were called Google Fellows. I don't know if you guys remember this. Yes. Like, Amit Singhal, Sridhar Ramaswamy, Jeff Dean. These guys are stars. And what's interesting is if you track what folks, particularly Jeff Dean, I guess now, because the other two aren't there anymore, but what they did inside of Google, it's like wave upon wave, they were at the foot of those waves. What's interesting about Andres, he's been at the wave upon wave of AI. He was probably the first person that really commercialized the Richard Sutton Bitter Lesson essay when he was leading FSD at Tesla, which was really about the brute force computation. and I remember him telling me this story. I don't know if he said this publicly or not, but where he spent a portion of his time, I want to say a quarter of his time, labeling data. Could you imagine like 2016, 17, like hand labeling video data from Teslas? So he did that. Then he's co-founder of OpenAI. He's a star and he's an exceptional human being and he's super curious. And then what he's done as a kind of a free agent is also quite impressive. So I think that this is a really important deal. I think he's one of these really curious people that can be sent off and they'll just go and invent new things. And I think this idea of recursive self-learning puts these models on a combination of overdrive and autopilot. And so if you put those two things together, I think that you start to, you could potentially live out this idea that there's an order of magnitude improvement on a yearly basis. So like this new form of Moore's law. So then the model quality just goes absolutely parabolically, just like this, straight up. I think a bunch of compute at the problem and these things learn really quick, I think, is the high order bit there. Gavin, what's your take on Anthropik's recent success and their massive hiring binge? The success is extraordinary. It's undeniable. I think the fact that they were even positive, per the Wall Street Journal, in the most recent quarter, is a really important fact for the whole AI narrative. because now there's, you know, you could talk about circular funding, you could talk about ROI, and we could go look at the ROIC of the hyperscalers. But if OpenAI and Anthropic are at, call it, $100 billion of ARR now with 80%-ish gross margins on inference, like the returns are there. And then if we add in, and they're growing really fast, if we add in Gemini, we add in Cursor, we add in XAI, we add in open source, You know, it's not hard to see $200, $300, $400 billion of ARR at the end of this year at high margin. Across all of the language models. And you're talking specifically about the private language model companies, maybe not Google, which is obviously public. No, I was excluding Google. You're including Google, okay. But I was excluding, you know, a lot of the returns to this GPU spend have come from, you know, better recommender systems at Facebook and Google, Amazon, better ad targeting, better ad measurement. Sure. So I was excluding that and just narrowing it to LLMs, which I think is a possible definition. And it seems like there's going to be a really strong ROI this year, even excluding what are still some of the most economically important and profitable use cases for GPUs and AI infrastructure. I do think what Karpathy is working on, recursive self-improvement, is really important. And unlocking that and continual learning, you know, maybe the two final frontiers for AI. and just the idea of recursive self-improvement that the model, while it is training during a forward pass, has input into its training, or another model has input into the training, I think that could be really powerful. And I think Chamath's statistics of 10xing every year might seem conservative if that comes to pass. And then, of course, continual learning is the holy grail where the model learns from experiences the way humans do. Yeah. And that's something we haven't unlocked yet. And those those those two combined, I think, would they might pull the future forward in a very real way. Yeah. And we have right now. Anthropic has a decent lead on everybody else, whether it's three months or six months. Obviously, they're probably six, 12 months ahead of open source. Maybe they're three, six, nine months ahead of their contemporaries, but they have a lead. You put Carpathia in there, Friedberg. Now you have Carpathia. He does recursive. And at some point, and it may have even occurred at Anthropic, the AI is going to be improving the language model more than the humans in the loop are doing it. Obviously, they're orchestrating it, Friedberg. But at what point do we think this, let's call it super recursiveness occurs? When will we cross the recursive valley and AI is doing more to build a language model than humans are? I'm not sure when this idea that you feed the whole model into a context window to train itself and build a new model is going to happen. But I think there's probably a lot of different architectural paths that could be walked here. one of which is this idea that you could make much smaller models and then create networks of smaller models that work together where you ultimately have less energy or less cost per token produced out of a aggregation of models than you did with one single large model. I've said this probably three or four times now. There's a lot of work and a lot of opportunity ahead in kind of re-architecting models and re-architecting how models work together to solve problems. My guess is a lot of leadership that he can bring to exploring those paths. And all it takes is a minor breakthrough and your cost per token drops in half. That's a tremendous efficiency game that seems very much on the horizon because some of the early papers, I think I shared one from MIT a few weeks ago, indicate that there's a lot of room to run here in terms of re-architecting models and deployment of models. These very small models, small language models, and then verticalized ones are the future. We've got a company, Abacus, that's doing it for corporations crushing it. Everybody's got an interest in doing this. And I don't know if you saw the news this week, Chamath. It happened about two weeks ago, very quietly. Chrome included Gemini or Google included in their Chrome browser, the Gemini Nano model without telling anybody, four gigabytes on your computer. And that's the one that does like proofreading, spelling, autocomplete, all that. So now we have Google covertly installing this on everybody's operating system. Hold on, hold on. Covert's a strong word, so let's not use that word. Without telling people, without giving people a heads up. Let's say it in a way that we can both agree. We're in the phase now where I think breathlessly talking about every model improvement is a waste of time. There's no ROI in it. We are on a path of accelerated learning. and we're going to start to see end-user achievements that were heretofore impossible, that should be the focus. So, for example, we were able to solve, I'm just collectively saying we, in this case it was specifically OpenAI, by the use of a human, and this is important, you know, a math problem that stood outstanding, not been solved for decades and decades. I can tell you in a different example, there are drug candidates that are about to enter clinical trials and inds that were sitting on the shelf and people didn't think were very viable at all so we're at the phase now where these things are front and center they're useful to people they're increasingly valuable i think what we should do now is focus on these end user use cases because the way that you say it in my opinion is part of the problem because it starts to create this boogeyman us versus them thing. And I'm not saying you're doing it on purpose, but I'm saying this is exactly why I think so many people are becoming sort of like it's a four letter word now when you mention AI, because it's presented as this thing. And I think we have to present the other side of it, at least so that people have the data. So I don't think Google's in the business of doing shitty or shady things. I don't. They're not that company. There are other companies that would referring to your alma mater i'm not going to say which ones okay but google is not that company so i i think that the reason they did it was probably because there's user utility and my point is we should focus on the user utility because i think that's the story we're telling from now on because i think we collectively the four of us can responsibly tell both sides of the story in a well-balanced way because i think nobody wins if we become blood and go back in time yeah and i think that if we don't if we're not careful with our words that's what will happen yeah i'm and by the way uh obviously not a luddite but this is what you know has been reported by a lot of folks that people were surprised shocked when they saw the size of the model being done in the background and it has triggered some uh people looking at it around privacy. And I do agree that Google is not a bad actor in the space. So probably a speed arrow more than anything, I would say. Maybe just add two things. There's attorney maxing, and then there's attorney maxed. And Google is probably attorney maxed. It happened for a long time. And the second thing I would say is I do think it's incumbent on all of us as Americans who are involved in the technology industry in one way or another to be advocates for the positive, optimistic possibilities that AI introduces to everyone in this world because it is starting to feel or seem like there may be a CCP-funded campaign against AI and data centers in America. And that's very logical for China, but it is not good for America. And so I just, I think it's, we all have responsibility is what I would say. Yeah. Who do you think's doing a poor job at that and responsible for this? Is it Dario with his constant, hey, everybody's going to lose their job? Who's responsible for this? Is it the CEO is blaming AI for their layoffs? What's your take on this, Gavin? Look, hold on a second. Everybody is trading their own book. It makes enormous sense for Dario to try to create the boundary conditions for a regulatory moat because he will be inside of the tent pissing up. He's big enough now. And if you notice that a lot of the breathlessness has ramped up, and Jason, we've talked about this, you can annotate successive rounds of fundraising and successive scale with the volume. So I think that it's a reasonable business strategy. And I think that he's quite clever. And I think that, look, if you actually, and I do this, if you actually just have a Nash bot, a Nash agent inside of Quad, and you ask it what it would do, it would come up with this strategy. And meanwhile, there are other versions of other counter strategies and counter exploitative strategies. The point is that each CEO has a clear incentive. They're operating at such a level of scale that they're just reading their own book. so it's it's up to us to take a step back and actually see the forest from the trees i think nick can you find this there was a clip of sham sankar friend of the pod fabulous guy the cto palantir and he was i think he was on fox news and he said stop breathlessly asking these model makers what they think go to the end user and ask the person in the factory that's using the model and ask him what he or she thinks ask what the doctor thinks asks what the scientists think and start to tell those stories. That's what we should be talking about. Yeah, and Gavin, I was sort of asking you your opinion on who's causing this and then what's the solution? Do you have folks you think in the industry who are representing it particularly well? We can point out, hey, Elon has said we're going to move to a world of incredible abundance and working will be optional. I think that's on the margin a little scary for people to hear because they hear no job. but he does say hey universal basic income is probably going to have to come into you know place and he said that multiple times you have dario according to chamath talking his own book scaring the bejesus out of people in order to get regulatory capture what do you think is going on here and how do we do better as an industry i think chamath outlined like a very viable and positive path forward where just you know real people who are not you know at the tip of the spear. These are the positive impacts the AI's had on my life. I was at an event maybe 10 days ago, and someone who runs a hedge fund, his daughter was born with a very rare genetic mutation that effectively would have normally condemned her to a life devoid of joy, meaning everything. The neurons in her brain were not firing. So she wouldn't, you know, who knows what her life expectancy would have been or what the quality of her life would have been. And it's a tragic disease. He said he didn't accept that as an answer. He found, he did an enormous amount of research with LLMs and found an existing safe drug on the market that they thought would have a meaningful impact on his daughter's condition. And it did. It took, I think, the percentage of times the neurons were firing was 30 or 40 percent. and it took it up to 80 or 90%. And that means that she can live a normal life. She may not be as smart as she would have been, but she can live a normal life. And he's now figured out how to use AI, how to further tailor that drug. And there have been all sorts of advances in protein design, et cetera, et cetera. And he's reasonably confident he's going to have a drug in months that is a complete cure. and that's just one person one dad was unwilling to accept defeat for his daughter and who changed her life and the life of everyone else with that disease and we tell those stories so I think Elon's doing a good job a future where work is optional I think that sounds great to some people scary to others four day work week I think is probably something that sounds good to a lot of people I think Jensen is doing a good job of being an effective advocate and i do think anyone who is trying to drive regga i just we need to stay focused on the positives as well freeberg what's your take here on the ai pr crisis if we'll call it that we had three different commencement speeches that were booed eric schmidt being one of them two other ones by maybe less notable folks when you hear young people booing AI vociferously, why are they doing that, Freberg? And what's your take on the overall PR problem and how to turn it around? That's a long answer to that question. It relates in some ways to your concerns about socialism and polarization. What's the long answer? I mean, that's like why do people hate technology? The great technological. Why do they? This technology. They love their phones. They love the Internet. This technology. I think that there is like an underlying view that technology creates leverage for a small group of people, which creates power imbalances. And nothing represents that more than AI. that a small number of people that control and profit from and benefit from AI are going to end up getting outsized returns relative to the broader population. That the time to diffusion of the technology, because ultimately all technologies like commoditize and diffuse, but the time to diffusion here is such that it's going to be like extremely asymmetric for society. And I think that there is something fundamental about that. It's like, you know, nuclear bombs, I think, really created this moment in people's minds in the mid 20th century that by the back half of the 20th century gave everyone a high degree of skepticism about technology and science generally, that those who have the knowledge and those who engineer solutions with the knowledge can create outside advantages for themselves. and it puts the rest of us at risk, the rest of the world, the rest of the population at risk. And because those questions about when does this benefit me, how does it benefit me can't be answered today, the economic benefit that's accruing to the few today becomes the narrative, it becomes the story, and it becomes this like power system that a few people take from the many. And so there's something deeply disturbing for the average person about that. They don't understand how it works, why it works, what it'll do for them, when it will do it. And all that they're being told is that some people are making trillions of dollars. So I think that it's pretty obvious why this has got such a backlash. Secondly, I think that there's a deep amount of external energy that's fueling this anti-technology sentiment in the United States and has been for decades. I think to Gavin's point, I don't think it's just China with NGOs today. I think that there is a long history of state actors intervening in media activities in foreign nations to try and create the sentiment and fuel a sentiment that reduces progress in that competitive state. I think this goes all the way back to KGB design during the Cold War, and it's been refined and honed and improved over time. This is not just some conspiracy theory. There are plenty of great books about this. The techniques of what's going on specifically today, I don't know enough. I don't have any great details on that. But I don't think that there's no foreign interest in seeing technology advancement slow in competitive nations. The United States probably does similar things to other nations. And I think that that's probably a key part of this. And then I think this third piece is when the Copernican Revolution happened, it was a mind f**k. You know, like heliocentricity was a totally new way of thinking for humans, and it was deeply disruptive to the church. And it was deeply disruptive to the power centers, which were the centers that could tell people Earth is at the center of the universe. We're in control. We're the direct channel to God. And the idea that the sun is at the center of the solar system and we spin around it and we're a tiny speck in the universe was very hard for people to grasp. there's something about ai that's very like not human centric and it kind of shifts and with the ego of the human it's it's almost anti-humanist and i think that that's like a deep psychological current a lot of people and their disdain for this technology it fuels it it's not the cause but i think it fuels it so i think there's a lot of complicated aspects of this jacal you know i don't think there's like a simple put put shaman on on a podcast and he'll solve the the problems of AI right now. I think that there's a real set of shifts happening and there's a real set of global competition underway where, you know, various state and actors and interests are competing with each other. Do you think that we should slow down? I don't think you can. No, no, no. Do you think we should slow down? No, I think I was just talking to some people on a zoom right before this, but I think after the Manhattan project, the research labs were set up to maintain our scientists that worked on the, the Manhattan Project from effectively leaching back or leaking back to Russia and Germany and other places that were adversary to the United States. And they all were against the nuclear bomb. They worked on it because it was necessary for the United States security. But then when Russia got a hold of the secrets, they were leaked because people were worried that if the US had all the power, there would be no counterbalance to the power. And so the nuclear secrets were leaked to Russia for that purpose. Then when Russia had the nuclear secrets and they began developing hydrogen fusion bombs, and it was clear that they were going to race ahead, the United States raced ahead with developing nuclear bombs as a counterbalance to Russia. When the proliferation began, there was no stopping it. It began and you had to have this balance in the world. Otherwise, you have effectively an asymmetric power that can do whatever it wants globally. I think there's that moment in the world right now where if the United States does not advance its AI technology, the availability of it, TBD, industry, taxation, all these things that we're talking about doing, there will be someone else that will. And if someone else does, we can go through what would happen. There's a complicated game theory on this, but what would happen if China had sufficiently advanced models and sufficiently advanced scaled deployment of those models relative to the United States, as you do that analysis, you realize, wait a second, that's probably not a healthy place for the world to be. It's also probably not a healthy place for the United States to be the only one with AI. And so I think what we end up seeing is if we do try and slow down AI, we kind of lose this moment of balance that's necessary when you have a technology proliferation, like we saw with the arms race after World War II, that we're going to see again here. Jamath, you, I think, bring up a good point. You know, should we slow it down or could we slow it down? There actually have been some discussions about ways to do this. One of them would be hey with self people are scared that all these cab drivers are going to lose their jobs Uber drivers cab drivers bus drivers truck drivers This is you know over 10 million people in the United States driving things for a living Would you be in favor of some of the announcements that that will be a paced rollout? It won't happen all at once. In other words, those people will be giving some amount of job security to stay behind the wheel with it. Another example that's been given is if you put Optimus into Amazon factories or the figure robot just did like a week of just sorting packages. I'm sure everybody saw that video. We'll insert it here. That figure robot sorting things. Hey, if Amazon deploys those, there'll be a tax on those per hour and we'll tax humanoid robots in some ways and then use that for, say, retraining people. Those are two very specific conditions and approaches that people have been promoting. Do either of those resonate with you in any way? I think it's interesting that in all of those discussions, I've yet to see an actual survey of only the truck drivers and only the package sorters. The question that I would have is, do the people that do these jobs want these jobs? And if they do, then there's a reasonable claim to make to keep those jobs the way that they are. If you're saying, this is the job that I do, I love it, I'm able to provide for my family, great. That's a very different argument than, well, you know what? Amazon has 35% or 40% churn inside of their warehouses. And we should probably ask the question, why is that? Because if it was such a great job, I suspect the churn would be 3% or 4%. So what exactly is it that we want to protect? And have you asked them? and i think that this is just again a bunch of people in the peanut gallery who want to take a moral high ground and try to make some other group of people feel guilty or feel bad at no point are we actually asking the conversation that that we should be having which is it's interesting to me that the there was supposed to be an eo a presidential executive order that was announced today and then it was pulled it was scrubbed at the last minute did you guys notice that yeah and yesterday what was leaked was everybody that was attending it was all the big neolabs ceos and it was all the big hyperscaler ceos including friend of the pod nikesh aurora shout out to nikesh and then it was scrubbed an hour ago why was it scrubbed and the president said that there were aspects of the bill that he didn't agree with and as far as we can tell the aspects would have required some amount of supervision insight review from the federal government. Of language models specifically, of these frontier models is what I read. Not language models, just of AI, because there's going to be many different kinds. They're not always going to be language models, but of AI. So look, I think Freeburg is right. We are in a proliferation with China. I think it's actually good that China is less than nine months behind us. I think it allows us to find a detente where we have a certain magnitude of capability that they also have. And that allows all of us to then seek peace and abundance. And the fact that we are orthogonal societies, we are organized differently, increases the probability of finding peace using the Rene Girard kind of framework of mimetic theory than if it was like us and another country that was exactly similar to us. So I think what we need to do, we probably need KYC. I think that that should be something that us in China get together and say, you don't want it to get into the hands of people you can't control. You probably already KYC those models anyway inside of China. You already review those training runs before you allow these models to get released. We already know that that's happening. Yes. So we should probably do some sort of KYC so some crazy person doesn't create some biological weapon. I think that those are some reasonable ground rules. But otherwise, Friedberg is right. You have to take a little bit of a deterministic view here, which is that we are in this existential race and we need to get to the place where each of us, meaning us and China, can look each other in the eye and say, all right, weapons down, so to speak. Kevin, I'm going to hold you to answer two questions. One, should we run frontier models? Because that's specifically what was mentioned in the leak about the EO frontier models, the powerful ones. Should they be run through some sort of testing before they're released? And should there be some regulatory framework for that? That's my first question to you. yes or no question, and then you can explain your answer. Jeez, like I just think it's such a complicated topic. It feels we're a little early for that. I don't love the idea of the United States doing it and no one else doing it. I, like I think in a world where we hold hands with China, look i think that's that's much more palatable and we're aligned and we trust each other and have kind of verification uh capabilities i do great yeah let me then rephrase it should china in the u.s come up with a simple battery of things that have to be tested before these go out including bioweapons terrorism and and that genre of in that vertical of just really known dangerous things, just like the FDA might test for poisons or contaminants in a food or a drug. Would you be in favor of that? I'm curious. So a few things like the one one thing that's great about America is there is one thing that's just we have other forms of regulation, self-regulation. Sure. We have one. We have self-regulation. Also, we have the courts. and if an AI model company behaves irresponsibly, they know that there are ways that people who have been harmed can seek recourse. And so we already have a system that encourages responsible behavior on the part of the model makers. That's a great point because OpenAI is being sued right now by a kid who killed themselves after talking to OpenAI's model. So you're correct in that, yes, after the fact. And we'll see more of that. I just, you know, to me, once you give something, give a power to the government, it's almost never taken back. And it tends to grow. And it's kind of a one-way path. One-way ratchet. Yeah. And then that's a second question then. Chamath was saying, hey, nobody listens to these cab drivers or maybe the people sorting the packages. Do they want the jobs or not? Actually, the UK, there was just a 60-minute special, and UK and also Boston and New York are pretty adamant that they want humans to stay and they want to ban self-driving in those locations or severely limit it or maybe limit it in some way to let those people keep their jobs. How do you feel about that possibility? Is that something you think society should be open to, some gradual licensing? They're going to get sued for wrongful death. When somebody runs over somebody else and you could have implemented a solution that has a zero death rate, that's very different from package sorting. Go talk to the package sorters is what I say. Go talk to the people inside the Amazon warehouse. Ask them what they would rather do at Amazon. Ask them. But Gavin, what are your thoughts here on either one of those examples here? I think going to a city where you can't get an Waymo or a cyber cab is going to feel barbaric and unsafe. I don't know if you remember, but the early days of Uber, sometimes you'd go to a city where there was no Uber Yeah, it'd be incredibly frustrating. Well, I'm not going to come back until they have Uber. It's so inconvenient. And I think, so whatever individual municipalities decide, I do think, one, Shema's point is really powerful. There's 50,000 automotive deaths per year in the United States, if I recall correctly, and a million globally. And, you know, that's not tolerable. And there will for sure be wrongful death lawsuits. And then just from a convenience and quality of life perspective, I just don't think it's going to persist. And that's another great thing about America is, you know, you have this patchwork of different states and municipalities and each one doing things in a different way. And I'm not suggesting that's good for AI, but it does tend to, you know, has historically, the curly effect aside, led to, you know, I think more positive outcomes where cities and states compete. The curly effect being done. It is. This is a really important point you're making, Gavin. With flock safety, as but one example, we had an AI, there's an AI tool called flock safety. It's cameras that use AI, monitor people who are committing crimes. There's a privacy issue around it. It is bottom up. You just do it by town. It's not top down and states can regulate it. Same thing will probably happen with self-driving and states will probably have some say in how AI is deployed, even if maybe some centralized governments don't want to do that. I really think this only comes down to... The Fox Safety thing, I think, is so good, Jason. Crime is now a choice. Yeah. You know, I think the Cambridge people voted to turn off gunshot detectors two days ago. Wait, which city did that? Which municipality? Cambridge. Cambridge, Mass. That's the place where Harvard is. That's the place where Harvard is. So the geniuses coming out of Harvard in that town decided gunshot detection shouldn't occur. You don't want gunshot detection. It's wild because there's a theory that it disadvantages, that it might lead to an illegal migrant shooting a gun, being apprehended, and we don't want that. Got it. And A16Z had a great essay on flock. We can really, really solve crime, and it's just a choice. in different states and municipalities will make different choices to be pro-crime or anti-crime. And I'm sure they don't cast it as pro-crime. There's some sort of moral or ethical reason they're making that choice, but people will vote with their feet over time, and then voters will vote with their votes. And we'll see what works. Have you guys been to Vegas recently? My wife and I went to visit Vegas, and we spent the afternoon with Ben Horowitz and his wife, Felicia. She has done this incredible job with the las vegas police department it is one of the most impressive things i've ever seen and to your point crime is an option and they've said no so what happens there is they have gunshot detection they have drones that get deployed off the roof of the police building we were sitting inside of mission control where you see it happening jason if something happens they have eyes on site within minutes they can track offenders and bad guys all the way to wherever they're hiding and you walk out of it and you feel incredibly safe like they're really on top of it and when you understand the level of investment it's not it doesn't take billions of dollars compared to the cost of the crimes it's de minimis it's de minimis especially when compared to the cost of the crime occurring exactly if you gave the las vegas police department 30 40 million dollars a year it would be the safest city in america and that's all it would take. Yeah, exactly. And for the privacy concerns, Freeberg, there are very simple solutions to this. I am a privacy advocate myself. Of course, we all want some level of privacy. I had the Flock CEO in this week in startups twice in the past 10 years. He's very considered. And the way they do it with Flock is they allow you to have a rolling database. And I think there's a maximum you can save the license plates for. And they don't do facial recognition. I don't see why not. But let's put that aside. You can only keep it for two or three years. And then they insist on having an audit trail in it. So there are all little things you can do on the back end to protect privacy with audit trails, et cetera. We got a lot more to get to in the docket. I just want to give my final thoughts on what we're talking about here in terms of the AI problem and the PR problem. I think we have to recognize that the layoffs that are occurring in big tech and in a lot of these places are not just the bloating issue anymore. And I'm just going to point to two factors that I think are scaring the bejesus out of people. And we just have to admit that this is occurring as opposed to we've been debating it here. Is it occurring? Is this just cover? And are we AI washing? The first one I want to give you an example of is Matthew Prince, who is the CEO of Cloudflare, incredible company, public company. Two weeks ago, I laid off more than 20% of my workforce. I didn't do it because Cloudflare is struggling. We posted record revenue growth, have strong free cash flow, and are adding an unprecedented number customers, yada, yada, yada. And he says, basically, he's getting rid of measures. Measurers are the people who manage people and who measure data. And he just says, we're getting rid of all those people. They're unnecessary because of AI. And we'll be adding to people in other positions. At the same time, Zuckerberg did another round of layoffs. And they were done in a way that people felt was not considered and a bit, what's the word? Dystopian? Dystopian. Thank you, sir. He did him in a pretty dystopian way. Here's Zuckerberg for 30 seconds. In general, the average intelligence of the people who are at this company is significantly higher than the average set of people that you can get to do tasks if you're working through the contract, through these contractors. So if we're trying to teach the models coding, for example, then having people internally build tools or solve tasks that help teach the model how to code, we think is going to dramatically increase our model's coding ability faster than what others in the industry have the capability to do who don't have thousands and thousands of extremely strong engineers at their company. okay so what zuckerberg did at the same time concurrently he told everybody we're laying off these 8 000 people a lot of those people are incredibly talented some of them are on h1b visas creates all kinds of chaos for them in their personal lives and obviously they're having record profits there as well at the same time he was laying off those 8 000 people this is after tens of thousands of layoffs before which were obviously because of bloating he said we're putting recording software on every single person in the company's computers to study and train our model and people were like oh and previous people said i built during the ai hackathons they had months ago i built all this ai tools to make my job uh more efficient and then zuckerberg laid me off so the now for the perception people have now and it's quite correct i think is the most you can hope for here is you keep this job for some amount of time and train your way out of it and hopefully there's some more work for you but they're studying you and zuckerberg just said it plainly there hey we're going to study everybody here and that's going to lead to more replacements. This is scaring the bejesus out of people and we need to have an answer for it. Yeah. I thought the Matthew Prince note was horrible. Okay. Explain. This was like from the PR school of retards. Okay. Here we go. You could not have written a worse memo. It's like you reduce humans to a label called the measurer. And then you're like, I'm going to lay off all the measurers. I mean I just think that part of this again I'll go back to the maybe the Sham Sankar quote that I'm thinking about should be extended beyond the model makers can you just play this for one second and I'll tell you why I think this is just so and then we'll go on to the S1 from SpaceX we're listening too much to the inventors of AI I know that's appealing they're geniuses they're smart we need to be listening to the frontline factory workers who are using AI saying wow I was able to add a third shift I was able to hire more workers or the ICU nurse who says, I have more time to spend with my patients. I'm able to ensure they don't code during a shift change. So, look, my point is like the first part of what he said applies here, which is who cares what Matthew Prince thinks? Because the reality is that if this is the way that you're going to message something as critical as this, I think you did a horrible job. And now you label these people and you put a scarlet letter on their back. So now when they try to get a different job, they're like, oh, you're one of the cloud flare measurers. How does that help anybody? It didn't need to be done this way. There's enough of these tech CEOs that are now public. You can hear them. You can understand them. And I think what we're learning is, man, they're really good at one thing and they're not necessarily as good at all the other things. Yeah. Okay. And so I would say, shut the fuck up. Get behind the keyboard. Just do your job. And if you need to manage something, just manage it. But don't write these missives. You're terrible at it. All of you. You're all terrible. You suck at this. All right. End of my TED Talk. Thank you for coming to my TED Talk. Thanks for coming to Sharmad's 18-minute TED Talk. And we'll keep moving on. Sorry. And sorry. When everybody gets upset, this will be why. Yes. I do think the Zuckerberg this and Jack saying, you know, hey, we're going to have as many people. Everybody reports directly to me. This is all building this fear in society. And I think people are rightfully scared if the people building it tell you, be scared, your job's going away. Wait till the next regulatory filing comes out from these companies and they authorize a massive share buyback and an increase in their dividend. Yeah. And their cash pile grows. All I'm saying is there's a right way to do this. make these decisions and then there's a wrong way to do it, which is to message it in the way that they're doing it. So whoever is running PR and comms and approves and reviews these things are really at their job. They don't understand the moment. Oh, some breaking news here. It looks like Anthropic has hired three more people. Here we go. Oh, here we go. Personal job news from Sam Altman. He'll be joining Anthropic. I see that's pretty good. Who else is joining Anthropic? Let's see. We checked everybody's socials. Oh, Tucker. Tucker Carlson also joining Anthropic. He'll be doing their PR and podcast from Anthropic headquarters. And who else? Oh, Shema looking good. Well, it looks like you put five pounds on. And this is not how I first of all, this is not this is not what I look like. And did you get five pounds? Looks like are you not wearing are you not wearing underwear? He's no underwear and he's wearing his khakis, but I think it's just he's trying to not show off those fronty splints, those little slats he calls legs. He's covering them up now. Hold on. I don't want to leg shame you. I knew that this was going to come up. I'm going to send Nick an updated picture of my legs, and you can deal with this. You can Photoshop your legs all you want. I didn't Photoshop. You look like ostrich, brother. Those are ostrich. There's not a dog today. You've been working on it. They may not be Photoshopping. You may have been leg maxing. I've been leg maxing for two years. Are you BP 157 in your legs? What are you doing here? First of all, I'm 6'2", you f***ing goons. Okay, so... Gosh, which legs? All you little people, you know, Jason, you're 5'0". F*** all. So, you know, your ability to have... I had a good day with my platforms. Your ability to have legs is different because, like, my muscle mass won't show on my legs the way it shows on your legs. Oh, I don't think you're... Look at... You know what he's doing there? Freeberg, you see it, right? look at how scrawny the calves are and then look at how he's doing oh my god that's a push-up bra for your quads oh my god that's the equivalent of a push-up bra he has those bansu balls he put bansu balls under his hammies to you did it you're using fillets to i lifted my legs and i fly okay you know what move on this you know i would just say i think we should give credit where credit is due yeah jimoth's legs better but there's been doing a lot of work on his legs thanks it's better thank you it's bad thank you i'll give him better but i do think that he's pumping them up here okay let's keep going here all right topic two spacex just filed their s1 on wednesday they are aiming to raise 75 billy at a 1.75 trillion with the t valuations would be the largest ipo ever by more than double saudis or ramco 29 billion dollar ipo a couple years ago listing is expected mid-june likely June 12th. Ticker will be SPCX. We got a lot of interesting information in the S1 teardown. Obviously, SpaceX has three main business units. Starlink is the money printer right now, but there's a second one that's emerging. Starlink did $11.4 billion in revenue last year on 50% growth with $4.4 billion in operating income. Over 10 million people are now subscribing to Starlink, that business could easily be hundreds of millions of paying subscribers. So that's a lot of growth potentially there. The space business is but $4 billion in revenue. It's growing 17% growth, which would still be strong growth, but had $650 million in operating losses. AI did $3.2 billion in revenue. That's more than double year-over-year growth, but it had $6.4 billion in operating losses. SpaceX had $20 billion in capex spend last year. over 60% was for the AI compute build out. And obviously, they were trailing Anthropic and Open AI and Gemini in terms of XAI playing catch up. And he did a big reboot of that, as we saw on the Twitter. But here's the big one. EWS, Elon Web Services, as we call it here on the all-in pod, has exploded. Anthropic is paying SpaceX, wait for it, $1.25 billion a month to rent out Colossus one and parts of classes two it's a 45 billion dollar deal over three years 15 billion a year in other words they added a star link in terms of revenue to the party plus if they buy cursor that's going to add another two or three billion not not if i already told you they already okay i'm just trying to you know dot the i's and t's here uh but when they buy uh cursor that is two or three billion that's not in the s1 that's also growing and doubling yeah that's probably growing 2x year over year and who knows how much faster it will grow polymarket 71 chance spacex closes its first day of trading with a market cap above two trillion thank you to our partner polymarket i'll stop here gavin you've been involved in the company for a long time chmop you uh i think we're a big investor in the satellite company that became part of starlink which is the revenue driver there so you both have a lot to say about this gavin your take on the S1, and I think specifically Elon Web Services? Well, I think what's important about Elon Web Services does make me laugh. But $15 billion, that means the AI business right there is going to quadruple. It has already effectively quadrupled. I think what's important about that is there's a stat in it that for, I think, their first data center was 122 days. The second one, it took them 91 days. The third one was, I think, 66 days. They build data centers dramatically faster than anyone else at a lower cost. And now that you have a clear offtake partner, and I would expect partner to become partners, there is no reason they can't start stamping these data centers out really fast. And having watched Jensen for a long time, it is important to Jensen that his GPUs be used. And so GPUs will be allocated to who can plug them in, turn them on and start converting electrons into tokens. And so I think this business can grow dramatically faster than I think maybe what anyone could have contemplated three months ago. But $15 billion from Anthropik is extraordinary. is extraordinary. Important note, it can be canceled by either party with 90 days notice. Just want to make sure we also have that in there. So that means Elon might want his compute back or Anthropic may find another solution. So they do both have an out. And I think that's probably an important provision for everyone. But I think the other thing that came out this week, which was not in the S1, Nick, can you throw up the Parada Frontier and maybe don't include the email and the names and everything, but the Composer 2.5 stat, I think this is really extraordinary. So Cursor's Composer 2.5 model came out this week. And I mean, this is Pareto dominant. And this is just, you know, three, four weeks of doing reinforcement learning on Colossus 2 with Cursor's data. And Cursor has, we will never know, but Cursor allegedly has more tokens of coding data than exist on the public Internet. And that is a stat from, I think, more than a year ago. So I'd imagine it's grown significantly. And I think Cursor and Anthropic probably have the most proprietary tokens of coding data. And what this jump from Composer 2 to Composer 2 showed us is that when you do an appropriate amount of reinforcement learning using that data let alone injecting it into the pre of a new base model because Composer 2 is the same base model as Composer 2 which is Kami K Like this is amazing This is three or four weeks and it is Pareto dominant The Pareto frontier if you draw a curve of the blue dots you can see Composer 2.5 is literally well outside the Pareto frontier. And that's after three weeks. And what's going to happen next is you're going to have a new base model with a cursor model in it. Then the Cursor model are held using the biggest coherent compute cluster in the world. And I think this is, I think this may. It's significant. It's extremely significant for XAI and Cursor. And Cursor was dead in the water in terms of access to compute. and they were falling very far behind Codex, Google, Anthropic, and then Elon let them on Colossus and boom, instantly their models are growing faster. And this could be, we could be sitting here a year from now and they're the dominant player. And could we be sitting here, Gavin, in a year and Elon is selling compute to Google and OpenAI? Is that a possibility or not? Well, I think it's much easier to see him selling compute to Google. And I think there have already been posts about that. Yeah. And for sure, Google is going to want to be part of orbital compute. You know, it's very funny. The only people who are skeptical of orbital compute are those people who are not involved in data centers or space. Google, Anthropic, Amazon, NVIDIA. they are all very convinced that orbital compute is going to be reality and obviously spacex is extraordinarily well positioned for that but i do think that composer 2.5 data point is really powerful keep an eye on it yeah and then the other thing that's come out is grok built so what grok lacked that a lot of other models had and i do think it's important to remember that the newest version of grok 4.3 is on the parade of frontier for all frontier models and you're either on the frontier or you're not and the the companies on the frontier are xai with one build of grok 4.3 which is a 500 billion parameter model google 3.1 pro and then open ai and it's ropik and that's it those are the companies on the frontier and then the four horse and google today each have one dot on the pareto frontier and obviously you want as many dots as possible but grok lacked a harness So Claude had Claude Code, OpenAI had Codex, and now with Grok Build, there is a harness that is available to Grok. And, you know, as I'm sure. A downloadable app to translate into English that has integrations to all your favorite stuff, whether it's Notion, Gmail, Slack, etc. And if you don't have that, it's just like using a basic chatbot from a year ago. So now they have their downloadable, it's in market, and they are cooking with oil on it. and they're playing catch up, but they're moving fast. And it's more than just an app. It's a runtime. It's an environment. It manages state. It manages memory. It makes these models dramatically more useful to the extent that I think the people at the frontier all agree that the harness is essentially as important as the model, especially in an agentic world, and the harness and the model need to be developed together. So the release of GrokBuild and the pace at which they're iterating is, I think, also really encouraging. So now you have cursor, you have the cursor data, you have a clear existence proof that the cursor data is really important because Composer 2.5 is now Pareto dominant and the most selected model on cursor. And that's also important because these evals don't capture everything. This is why people on X talk about the vibes. And the vibes on Cursor 2.5 are also really good. They're immaculate. So together with GrokBuild, I think these are really important developments. Yeah. Elon was incredibly frustrated by the state of affairs at XAI. He was very public about that. And he's less frustrated now, and he's shipping a lot faster. And so I think that says something, and he has been very focused on it. So Freeberg, your thoughts on the SpaceX IPO and what this collection of companies might look like a year or two from now, especially if, like many people believe, Tesla and SpaceX merge. What do you think of dollar sign ELON as an entity and what impact it might have as if those two were put together in the market cap would put them in the fourth largest company in the world? we can revisit our earlier conversation about an anti-tech, anti-AI, anti-progress world and society ahead. And if there is an effort, a concerted effort, an organized effort by governments to stop or block access to information, restrict freedom of speech, restrict freedom of purchasing or buying things to control more things. And I think there's a trend line in this direction right now globally. The internet has always been lauded as this kind of system that provides an open alternative to physical commerce, that you could create digital commerce, digital information, digital media that you could share. And it's almost this digital representation of society. But the internet has to sit physically somewhere. And the assault on data center builds out in the United States right now, I think may indicate the importance of having an alternative internet. From the ground layer up, if you have a communication network that isn't restricted and controlled by a government on Earth, it's almost like a backup for civilization, but it's a backup for progress. And I don't own any SpaceX shares, and I'm not trying to sell the book of SpaceX. But I think that there's like an important aspect of can you create a system that's not under the control of governments as a way to ensure humanity's progress, to ensure civilizational continuity if things go south, if things aren't good, if things are restricted, and if, you know, fundamental forms of tyranny start to restrict speech, restrict commerce, restrict information flow and whatnot. And I think having like a space-based communication network, space-based data centers and space-based communication back down to Earth, wireless, I think is generally a good thing. It's good to have a backup. So put all the economics aside and the multiples and evaluations and whatnot, and whether it's SpaceX or not, I think the idea that you could have data centers store information, transmit information, route information, and access information through space-based systems that can't be controlled, manipulated, or destroyed by government is important. And I just, I like that. Yeah, if you, most people don't remember this, but when Elon was starting SpaceX, the original idea when he was running around with the Deo and they were looking at some rockets and getting carriage from Russian rockets was to back up the biosphere. And he came back from that trip. And I remember talking to him about it. And he said, I think I just have to make my own rockets because that's actually where the problem is. And it would be easier just to make my own rocket to back up the biosphere. And he wanted to put geodomes, like geodesic domes in space with all the plants and wildlife and creatures. And what incredible vision. And then, you know, there was the necessity of actually getting that up into space. And that's the unknown origin story. I will say this, Chamath, the idea of putting data centers in space seems completely doable, even though there are a bunch of people who are saying it's not, when you compare it to what happened with SpaceX, with Starlink, which people said also wouldn't work. And now he's got 10,000 Starlinks up there. The difference between a Starlink satellite and a data center satellite is really not that different. No, they're pretty different. Well, conceptually, of course, they're physically different. But conceptually, Elon put 10,000 Starlinks up. Is he capable of putting 10,000 data center rockets up there? No, look, the size is much bigger, Jason. The foils are much bigger. The wings are much bigger. But my point is it's not different if he has the new starship because that's 10 times bigger. You can't just scale like this. That being said, it's technically possible. I think he will be the first one to figure it out. But I'll just take a much more pedestrian take, which is, OK, you're sitting here. And if I'm asking myself, how do I underwrite SpaceX at two trillion? Here's the basic math that I would do. Well, last year it did $18, $19 billion. It'll probably do $25 to $30 this year. Okay, so I'm buying this thing at a fairly costly premium, right? So what am I buying? Well, I'm buying probably the most important internet infrastructure project that's happened since the internet itself. That's going to scale to hundreds of millions of users. And the reason that's going to scale to hundreds of millions of users is it's just very useful and it's just going to become cheaper and cheaper and cheaper. So that's number one. I'm buying a delivery infrastructure, but I think over time, GDP plus 10, GDP plus 15, kind of a grower. So good business, valuable business, but it's the underlying platform that allows everything else to happen. And then I'm buying an AI business, which will be at the top level, the apps, but at the bottom layer, all the compute capability. And I think when you scale that out, like, why is Colossus so valuable to Anthropic? Maybe that's like a good question to ask. It's because if you look at who's actually capable of delivering a gigawatt data center, these guys are the closest, like an actual gigawatt. And the reason is that this stuff is very complicated and very, very hard. I think you've probably heard this famous story where Jensen was like, yeah, he was the one that figured out this one thing that nobody else could figure out so that you could strip a bunch of racks and drive a bunch of east west traffic and make the whole thing work together so i suspect what happens is next year it's probably 40 45 billion and then the year after that it probably doubles again so now i'm buying it at 20 times revenue and you would say well why can you buy a company like this on revenue versus earnings and cash flow and i think the reason is because what the revenue does is it gives him the operating leverage to go and invest in all of these other businesses that ultimately consolidate his differentiation and his competitive mode. Because what he creates is a capital mode that then accelerates a technology mode that then accelerates an execution and a learning mode. And that five wheel, when it starts to spin very quickly, and you would say, hey, hold on a second, it's probably spinning quickly now. I would say we're at the beginning of the beginning. Because he's, again, he still has all these disparate assets. I still don't like the fact that Tesla's over here. And as I've told you, that will get merged in. And now you have this incredible corpus of physical capability, movement of all kinds, X, Y, and Z, right? You have learning capability, you have infrastructure, you have all the connectivity. That thing will look very cheap, I think, in a few years. and he has this one thing that nobody else, if you look at the big CEOs, who steps on stage where you're always curious, okay, what has he got up his sleeve? You know, the Steve Jobs, oh, and one more thing. This is the only guy at the scale of civilizational out of left field, he's the guy. Whether you like him or you hate him, he's the guy. And there's a premium that is well-deserved that comes with that. So if you had to pick an underwriting case, Jason, I would flex the revenue and realize that terrestrial data centers alone are $100 or $200 billion of revenue by 2030, 2032. And that means just building it. So already you're buying it at 20 times revenue just for that business. And that's just the Colossus on the ground, Earth-based. It'll be Colossus 3. No, no, forget space for a second. It's like Colossus 3, Colossus 4. It pencils out with that, yes. Getting a nameplate one gigawatt, look, it is freaking hard, man. Getting a gigawatt nameplate working is almost, and then, by the way, there's all the stuff that he can do on land that he's the best position to do. I'll give you one example. There's a great push that Jensen's making, which he needs a partner, and I think Elon becomes a natural partner, to do DC to DC. Forget all this DC to AC to DC nonsense that goes inside of a data center. All the lossiness, all the loss. Explain what that is in English for everybody. Just like, look, you go through a bunch of power transformations to actually deliver the electrons into the rack so that, as Gavin said, you can generate the token on the other end. Today, it's very inefficient. It's very costly. It requires a lot more power. It requires a lot of cooling. It requires complexity. And what people have said is, wow, if we could just do DC to DC, like it comes in as DC, direct current, it goes right to the rack as DC. But it requires a fundamental re-architecture. That's true. Jensen needs a design partner and a thought partner to get that done. He's probably the only one. So I just think there's a lot of reasons where you can underwrite this to a multiple of revenue plus the X factor, which is just the creativity and the one more thing. Love it. And then here's two charts. I'll have you comment on these, Gavin, after it. Here's the rocket sizes, just in terms of scale. And most people have not actually seen a starship in person when you see this thing in person and i i've been inside that rocket i think you were we were together gavin when we were in the first build and like inside of that you can fit 300 people it's basically like a giant if you thought of a commercial air aircraft that's what it feels like when you're inside right like a 747 in terms of the amount of space in it especially when you compare the falcon heavy which is their workhorse correct gavin yeah and starship's gonna get bigger based on their roadmap. It's going to get a lot bigger. A lot bigger. And then this one is the most interesting that this started trending last week. This is cumulative payloads launched 1957 to today. SpaceX is basically about to, in just that, and this is really what exponential growth is about, and this is what disruptive technologies are about. Just from 2012 to today, SpaceX is about to dwarf the rest of the world's cumulative payloads into space. So Gavin, maybe take the other side of it. When do these data centers in space happen? What has to happen for those to be a reality? When does that hit SpaceX's bottom line? We've heard from Chamath, hey, here's all the things that hit the bottom line in the short term and midterm. But I think data centers in space would be a midterm to long term play. Three years is what I'm hearing. So tell us about that business in relation to the two charts I just shared. Well, the one thing I would just say, well, first, all those charts about launch are before Starship was operational. And most of that master orbit was done by Falcon. Yes. And Starship, Falcon is reusable. Starship is designed to be rapidly reusable. And this is a critical difference. Like, let's say Blue Origin successfully solves reusability. They're where SpaceX was 10 years ago. Let's say China solves it 10 years ago. Rapid reusability means that you extensively refurbish the rocket, the engines, everything, the fairing. It takes a lot of time. Maybe you can fly that rocket again in 30 days, 60 days. Rapid reusability means that you can fly and land the same rocket multiple times per day. So if SpaceX, and it's really hard to do rapid reusability, I think it would have been not trivial, but much easier to have Starships working if it was just designed to be reusable. That's not enough for what Elon wants to achieve of a moon base, a colony on the moon, a colony on Mars, mass drivers on the moon. You need rapid reusability, and that is why Starship is such an engineering challenge and will be such an impressive achievement when they have rapid reusability. But I do think that Master Orbit, rapid reusability in Starship means if they get it. When do you predict they'll have that? Rapid reusability to space, you think? I mean, we're going to find out. We find out I'm going to be at Starbase today for the launch. Yeah. So, you know, we turn over cards and, you know, it's important for everyone to remember. Like, let's just say it's a fireball. SpaceX will still learn from this. Yes. They learn from failure. If you don't fail, you're not learning. Same way if you're not wrong, you didn't learn anything in that day. And this is a brand new rocket, a brand new booster, a lot of new technology. There's a lot of instrumentation on it. So whatever happens today, SpaceX is going to learn and rapidly iterate. I don't know when. I don't want to make a prediction. I would guess a year or two, maybe sooner. I think that's most consensus. A year or two is, I think, perfect consensus, yeah. We'll see. So, like, even if everybody else solves reusability, master orbit from everyone else will quickly asymptote to a very small number. As far as when will orbital compute be a reality, I would say, well, it is important to realize there is a working H100, an NVIDIA H100 GPU in space today. Yeah. Andre Karpathy both trained a model on and used for influence. So this is, you know, there's a working GPU in space today. And NVIDIA is making a space-designed version of this, which will be different because the heatsink has to be different. There's a bunch of weight that you put on it when it's in a data center that you don't need in space. And you also have to reinforce it for the journey to space because these things are going to shake and break apart. The data center ones are not made to have that many Gs put on them. So you're going to need an industrial strength one that gets to space that has a different profile. Yeah, Gavin? Well, one of the things that's been so magical about SpaceX is they're very good at engineering the rocket and the payload. So that you can use semiconductors that are not designed to be in space or satellites in space, and those semiconductors are a lot cheaper. We have a couple, my firm Atreides is an investor in a company called Exit Labs. It's a matter of public record. It's going to be in essentially every Starlink. And the chips were not designed to go to space. They're not radiation hardened. You know, everyone, you know, SpaceX really liked a lot of the specifications on the chips. And then it's like, well, we'll see how they do with rad testing. And they just happened to pass. And so that is one of like one of something that's very underappreciated, I think, about SpaceX. One of their specialities. One of their specialities. Yeah. All right. Second half of 28 to first half of 2030 would be my point prediction. All right. Let's do NVIDIA and then the market recap since we have you here, Gavin, and since Freeberg, you wanted to get in on that. NVIDIA blew out its earnings again. Q1 performance is just mind boggling. $81.6 billion in revenue, up 85% year over year, 20% quarter over quarter. High growth in the stock market for those people who don't participate. 20% would be a high growth company year over year. They did that quarter over quarter, $58 billion of net income and $48 billion in free cash flow. They're doing all this at 75% gross margins. They're growing massively. and they're obviously the most valuable company in the world at a 5.3 trillion dollar market cap stocks up but 16 year this year with all that growth that's a magnitude of that 16 percent and they've announced another 80 billion in additional buybacks on top of the 100 billion in buybacks they did at the start of 2023 so they're buying back about four percent of the company they raised the quarterly dividend 25x from one cent a share to 25 cents per share and their cfo said they're going to return 50 of the free cash flow to shareholders never been a company like this huh freeberg the the scale of this is just extraordinary uh-huh yep don't don't say it they have first there's your market report from freeberg don't seem so enthused. Yeah, it's a hmm, hmm. He's got potatoes in the oven. I have a question for Gavin. He did a really interesting talk with Patrick O'Shaughnessy. And there was this one thing that I wanted to ask you about because I thought it was so interesting. You said, when you look at the revenue multiples of the chip companies and you look at the revenue multiples of the DRAM companies, both cannot be true. In the context of NVIDIA's earnings, can you just explain maybe in plain language for folks? I just thought it was so fascinating because it explains, I think, just to set it up, where is value over the next five years? I think if you looked at Leo Aschenbrenner, his fund has gone from like $0 to $5 billion overnight, and it looks like he's just got massive puts on the chip sector, and he's kind of rotated. So just give us context, Gavin. Where's the puck going? Well, so maybe take the questions in reverse orders. For Leopold, he was clearly a brilliant man. I think he was a Rhodes Scholar at like 19, and I think my understanding is he's putting up pretty extraordinary numbers. I've yet to meet him. He actually shares an office in San Francisco with a friend of mine, so I think I'll probably meet him sometime soon. But that 13F that he filed was at the end of the first quarter when I would say we were in the thick of geopolitical fears. And I think you saw a lot of puts on a lot of 13Fs, and I don't know that those puts are still there. I think a lot of people wanted to be hedged for Iran, and now I think it's a little more clear. So I wouldn't read Leopold's 13F as being super negative on SIMI. Chips, okay. On chips. Second thing, I think cross-sectionally, if you look at the valuations for all these AI games, they can't all be accurate. You have memory makers at three to five times PE. You have NVIDIA at a really low PE. You actually have some other accelerator companies at reasonable multiples. And then you have everything else, everything in power, everything in cooling. And when I say power, I don't mean utilities. The IPPs are actually quite reasonably valued. But power, cooling, even probably some of the optical names, these are discounting very different things. If the multiples on the power, cooling, optical names are correct, NVIDIA, memory, they're going up a lot. If the multiples on NVIDIA and memory are correct, everything else is probably going to underperform. The AI market is cross-sectionally inefficient right now, which is what I was trying to say. As far as the NVIDIA quarter, they went to a new reporting structure, Data Center and Edge. And then within AI, they have hyperscalers. And then I think they call it AI clouds, industrial, and enterprise. What I believe is if we were to make a true apples-to-apples comparison, and Broadcom, you know, there's a narrative that NVIDIA is losing share to the TPU. And Broadcom guided for 143% year-over-year growth in their AI semiconductor revenue in the quarter that they will report. that's comparable to the one NVIDIA just reported. I think if you were to, and I just, I so wish they had reported slightly differently. I wish they'd done hyperscalers, AI clouds, and then industrial and enterprise. Because I think the segment that is comparable is the sum of hyperscalers plus AI clouds stripping out China. Because Broadcom just did not have the China business that NVIDIA did And I think on that basis in other words within the Western AI world within data centers that need being built whether they being built by CoreWeave XAI Amazon Google NVIDIA's AI business is growing faster than Broadcom's and faster than a lot of other companies that are seen as part of this ASIC share gain story. and you know i think jensen has become you could you can hear it increasingly frustrated and rightfully so with two things i would say what is the performance of stock to you've been vocal about that like what is going on here you're putting up record numbers and we're getting no like uh credit yeah i get it and it just how could there be a share loss narrative if i am gating share. And it is indisputably true that he is growing faster than hyperscalar CapEx, even without these adjustments. I think the other thing that's so frustrating to him is these other ASICs are not being submitted for benchmarks. They're not in the CME analysis inference max. They're not in MLPerf. I think the reason they're not being submitted is they will lose. And you can't fight shadows. And until we see a clean benchmark of whether it's GB300s versus TPU, V7s versus inferential, yeah. Yeah, versus Tradium. We're not going to know. And that's why a lot of these other chips, I think Tradium is in a great spot, aren't being submitted. But nonetheless, NVIDIA is doing well. Once you become the largest company in the world, you kind of, you tend to trade, my observation would be, at stair-step patterns, where you kind of the multiple compresses, compresses, compresses because people are skeptical of the size. Then you have a re-rating. Then you re-rate. New floors established at a higher rate. I think there was one other really important thing in the NVIDIA quarter. They said if they thought their CPU business was going to be $20 billion this year, that's a quarter there. It means overnight for one of the world's largest CPU manufacturers. I think that is a testament to... NVIDIA has a unique position. They're the only company that works with every lab. And so that puts them in the best position to architect their chips. They call it co-design for where the models are going. And I think that $20 billion CPU figure is pretty extraordinary. This is the thing, like at the end of this Grok transaction last year, my kind of prevailing thought on this is we're going to move to these domain-specific architectures. I thought that was like a fait accompli. We're just now waiting for which models. But the reality is that that DSA market evolution is actually happening inside of NVIDIA. That's what's so insane to me. That was my takeaway from the quarter as well, which is like, holy shit. These guys actually have domain-specific architectures because they're doing these design programs. This is why back to when he does DC to DC with Elon and Colossus 3 or whatever. It's another game changer for everybody. He makes nine. And then I think the cost at which you can finance these chips and these useful lives is really important. You had an incredible insight, which is the amortization schedule for CoreWeave and all these guys. They got saved. You may want to just explain what that is and why you said it. I thought that was a great insight. No, thank you, Chamath. I appreciate it. So when CoreWeave and all these neoclouds came public, and by the way, this goes for the hyperscalers, too, there was a big bear case that, hey, these guys are amortizing their GPUs and CPUs over four, five, six years, and that's way too short of a lifespan. The true lifespan of a GPU is more like two years and therefore the profits of all these businesses are overstated. The reality is... This was Michael Burry who put this out there, to be clear. Yeah, and thank you, Michael Burry. We need bears. Thank you. It's like asking Gerardo about modern music. I don't want to cast aspersions on Michael Burry. He's a brilliant man, but we need bears. Hey, somebody call Vanilla Ice and ask him what he thinks. Oh, my God. Milli Vanilli, check your hands. What a waste of time. What a waste of time. Oh, poor Mark. Come on the program anytime, Michael Burr. Go ahead, Kevin. Keep us on track. I'm happy to chat. But now that we've just aggregated it in front of us, we have these different domain-specific accelerators. You can mix and match them. And I think the GPU stays, in a lot of ways, at the center of this constellation for a while. and you can put, whether it's a Grok accelerator, whether it's a Cerebris accelerator, in front of old GPUs, use Grok or Cerebris for decode. And then those older GPUs, they have a useful life for 10 or 15 years. And this means that you can finance GPUs. I think Corey's lowest financing, I can't forget if it's 6% or 7%. 6%. It's going to come down. And if you can get an asset-backed loan, an asset-backed financing for GPUs at a lower rate than other chips. That's a profound advantage. That quarter single-handedly saved the Neo's clouds. This quarter, I mean, they single-handedly saved them all. I think they should all say an incredible thanks to Jensen. I interviewed the CEO of CoreWeave, Michael in Trader. Michael in Trader, yeah. And he was saying, hey, listen, people have no problem buying and financing these over a six-year period. and people are asking for things that are coming off and that he thinks they're going to have year seven eight nine they'll have some useful life you know uh in addition to that so yeah so he's like i i don't know what anybody's talking about here like this is just not informed analysis was his point like the game on the field and people are betting with their dollars with him he has them pay in advance and sign six-year contracts if they didn't think it has six-year lifespan they wouldn't be signing a six-year contract pretty straightforward and they can't get enough of them okay let's end on this market update macro picture not great oil remains elevated although there might be a settlement every week we have there is a settlement coming maybe this time uh 16th time it's a charm and the iran war is gonna wrap up but we're in week 12 of it and this was supposed to be four to six weeks so wars never get resolved quickly that's one thing we've learned in our lifetimes oil is driving inflation massively higher polymarket says 99 chance may inflation comes in at 4.2% or higher. Survey of Professional Forecast is projecting CPI hits 6%. You heard that right, folks. We weren't just talking about a 3% handle, which we just hit. Now people are saying 4%, 5%, and 6% in Q2. And obviously, that's a huge revision. And the narrative was, hey, more Fed rate cuts coming. Now we're talking about Fed rate increases. Inflation is causing, obviously, bond yields to rise. Ten-year hit 4.6%. You remember, we've had Besson on the pod multiple times, and his goal was to get that under 4%. Now it's significantly above that number. And also, if we go around internationally, Japan's 30-year is at a high of 5.1%. Highest ever recorded UK yields, highest since the Great Financial Crisis. Germany, highest since 2011. And in Korea, retail investors are borrowing record amounts of money to trade in AI chip stocks. They also had an incredible run in Korea, betting on crypto at the peak. So that's some sort of an interesting signal. Friedberg, is your alt personality going to come out right now? Are you concerned? Is Dr. Doom making an appearance here or do you think this is manageable? How concerned are you? What is the point of being concerned when you have ridden the roller coaster to the top and it is beginning its descent? I don't know what there is to be concerned about. The force of gravity is inevitable. The roller coaster will roll down. We will throw our hands in the air and we will scream wee as we go for the ride. Global debt to GDP is 310%. Reserve currency status to the side. And the spending problem at the federal, state, local level, the spending problem in every country to basically keep economies growing to support existing leverage ultimately creates a cascading effect. It ultimately breaks. And as it starts to break, you have massive inflation because the value of your underlying currency collapses. And then you have money printing and all this other sort of stuff, which inflates the value of assets, which allows you to keep servicing your debt. and the spiral takes off. And so we will just enjoy the ride. This is the moment, you know, 30-year treasury, 5.2%. This Japanese yield, some argue might, you know, you should talk to more active market participants than me, and probably some economists who trade the market, but I would think that this is one of those things that could be a catalyst for a credit crisis because there's a lot of people that are in this carry trade. And we'll see. You know, this is okay. This is water leaking out of the bucket. There he is. Dr. Doom is here. Chumab, your thoughts on Dr. Doom's panic attack of the month. Is this time real? Is this the 17th prediction of the next six recessions? What do we got here, Chumab? Are you concerned? How concerned are you about these signals that are flashing? I think that's exactly what that is, Jason. There are signals that are flashing. I think there's pockets of the market that still make sense that you can underwrite if you want to buy businesses that represent the future. And if you can find a few of those and you can get comfortable with that and you can own it for 10 years, I think you buy those companies. And generally, everything else, I think you should not speculate and you should generally avoid, not just because it's an upmarket, but in every market. I've learned this the hard way. We've all kind of gone through this. As I get older, it's just not worth it. The vicissitudes of the market don't give me anywhere near the sugar high it used to on the way up. And it makes me feel horrible on the way down. So how I manage myself is I have a few companies that I really believe in. I have extremely concentrated large holdings in those. Large for me doesn't mean large for everybody else. And then otherwise, I just kind of stick to my eating and keep my head down. It's a much more rational way to behave. How many public stocks can you keep in your brain and still sleep at night holding for the long-term? Is there a number for you? Is it five? Is it ten? Is it seven? It's five or less. Five or less. Five or less. And so what you're largest holding right now is what percentage of your net worth would you say? I don't know. Or like top two maybe. Oh, top two? Yeah, like one in two. One is 20, two is 15, or one is 40, two is 20. I don't know. again it depends on the day but i don't know but it's just curious but i think that's i think that's really important my point is there's no 30 things that i'm tracking i don't i don't have the time i'm not smart enough there's too much information there's like four things that i stay on top of gavin you you do this for a living how many positions do you manage and what's your take on some of the flashing signs that are saying hey slow down or maybe there might be a wreck around the corner here you know when they do the checkered flag in the f1 or whatever the metaphor you want uses? Well, so one, I manage more than 100 positions at my firm, and I do that with a team. We're over 30 people now. So it's not just me, and I work with some great people. Three things can be true. Rates going up is very concerning. What is happening with AI right now, with Anthropic growing faster than any company in history at massive scale. And certainly any country. Absolutely unprecedented. Yes, they're actually, they're now the size of, you know, yeah, they're, we pull up where they rank. They're bigger than 100 different countries, for sure. And compounding really fast, and now profitable. Yeah. Which I think really changes the moment. Which is bizarre. Yeah, yeah. How did that happen? So, those things can both be true. And I think we should all remember the tech bubble happened with, you know, the 10-year and the 30-year, much higher than they are today. and the NVIDIA of the tech bubble is Cisco and it traded 100 times forward earnings. And I think NVIDIA is probably at a low teens multiple of kind of low to mid teens multiple of real earnings. That'd be a buy side consensus, not an Atreides number. And then the third thing that I think is true is a straight up form was being closed. While it's terrible for everyone, it is relatively the best for America because we are self-sufficient in energy. we're self-sufficient in food we've become a massive exporter of oil we're now the world's largest not only oil and gas producer but oil and gas exporter and you know those three things can be true what do they mean i think it's probably hard for me to see with america being the most advantaged by what is going on we're still the best currency yes still the best economy we still have the best public market companies and we have the best private market companies yeah and we are one of the greatest producers of oil in the world so we're in good shape despite this international chaos i don't think a dollar crisis is around the world now listen like if you know the bundesbank and was still in charge you had the deutschmark and there was a currency with better fundamentals we would be at very high risk probably but just because we're the best house and what is globally a bad neighborhood of high debt levels. And we have AI in our corner and we have energy self-sufficiency. And every day the Strait of Formos is closed, I think is relatively good for the re-industrialization of America. Like, I think, you know, you have to... You're saying it's a forcing function. It makes us, just like COVID did, be more resilient and, yeah, more self-reliant. Yes, and electricity is a base input to every manufacturing or industrial process, essentially all of them. And what we make electricity with in America overwhelmingly is natural gas. And you can look it up. NG1, it is down this year. The input cost for electricity in the rest of the world, you know, lots of different things, but LNG is a very important one. And it's up 100, 200%. And so the Strait of Hormuz is absolutely bad for everyone, but relatively good for America and relatively good for Trump's policy goals. And that's why I think he's in no hurry. Every day the Strait is closed, and he does seem like a relative thinker. Every day the Strait of Hormuz is closed is relatively good for America. It's terrible for Europe. It is terrible for Asia. Japan and China need that oil. Philippines needs it. India needs it. Yeah. And so all these things can be true. But the one thing I do just want to say is rates going up and inflation going up is never good. But we have to hold what's happening with AI where the fundamentals are getting a lot stronger in our mind. And the one thing I would just add is AI has been seasonal. The market's seasonal. You know, it often, you know, sell in May, go away. and AI fundamentals also appear a little seasonal. In the past, that's been, you know, because college students, they use a lot less chat GPT and Claude in the summer. And generally people maybe work a little less hard when the weather's nice. Now with the genetic AI, will the fundamentals still be seasonal? We will see. Oh, that's a really interesting point, right? We see that e-commerce, apps, subscriptions, but as investors in a lot of these companies, We would always have these board meetings, Jamal. Oh, Q3. Yeah, people are out gallivanting and they're not playing Candy Crush or buying Calm or whatever. But oh, hey, Uber and DoorDash went up. People are traveling, etc. Okay, final story of the week. We had a 48-hour jaunt by a bunch of tech CEOs and the president to hang out with Xi. A lot of high fives, a lot of handshakes, a lot of great vibes. But coming out of it, we haven't seen anything definitive, Friedberg, in terms of policy. This was supposed to be some big breakthrough. It would have downtrend effects on tariffs, on us selling chips to china we did see a little movement there uh and the straight of hormuz we would become you know wonder twins with xi and trump reopening it but nothing really definitive other than some soybeans being sold and some h100s a200s getting sold to baidu and some of the top folks so what do and maybe some planes got sold too so other than a little bd a little business development yes uh freeberg what's the outcome here or was it just a bit performative in your mind There was a question. Would the administration leave China with a grand deal that made everyone feel like there's a long range view on a partnership? And I don't think that that's what happened. There were a few announcements, obviously, around an intention to continue to work together in a cooperative way and find a path to partnership and intention to establish additional trade deals. And, you know, there were some purchases of aircraft and some agricultural product commitments. But fundamentally, the grand deal, the big deal that I would say reduces, de-escalates tension probably didn't manifest as some had hoped it would. And I don't think it's any surprise that Putin is with Xi today. And this is also performative that following the U.S. visit, there is now a relationship bonding moment happening between China and Russia. so the story continues you know there is no happy ending and there is no rainbow colored chapter 3 in this book it's going to continue to be a dramatic arc as this rising power continues to challenge the United States and I think the story continues were you expecting a happy ending? I can't answer that question I mean to the story of the China visit I'm not talking about any other things going on in your life, but it did seem like some planes and soybeans got sold, some H-400s perhaps. But I mean, it wasn't like there was some grand deal that occurred, but it's nice to see them together, right? I mean, that is nice. I think it was successful. I think there's what you see on the surface and then there's what happens behind closed doors. And without speculating too much, I think that it was a useful and productive trip. I think the biggest thing that they probably got alignment on is just geopolitically the tic-tac-toe of what has to happen next. And I think that there's some amount of agreement there. I'm just guessing. Yeah, and so that guess, if I was going to unpack it, hey, we have Venezuela, we have Iran and Taiwan. You have lots and needs around this geopolitical chessboard. And here's what I would say just very generally. I think that there's a way to divide up the game board in a way that helps them and helps us. Gavin, any thoughts on specifically NVIDIA being able to sell more chips into China? Material for the company? Good for America? I mean, it's obviously a pretty debatable issue. I think I disagree with Chamath on this. I think selling deprecated NVIDIA GPUs to China lowers the odds of them developing their own alternative ecosystem, which would be a lot power hungrier because you bring in optical a lot earlier for scale-up fabrics. I think there's sound arguments that this is stabilizing for the world and is the best, highest probability path for keeping America ahead in AI and kind of keeping control of AI. And that's almost a shame we've had to have this debate because now people like me have said this many times in China. If they didn't understand it, they probably do really understand it. By the way, that's not to say we shouldn't have had the debate. but um that is what i believe you know reasonable minds can disagree no wait what where do you think we disagree i'm not sure i agree with you oh good i'm glad i was gonna jump in here you start you start with an agreement on no no i'm like sell i'm like sell everything to them no what i was just saying is that there was what you see on the surface of what they can speak to the press but i think the most important thing was the negotiation of hey listen like we're gonna do these things you do these other things and that's never going to get put out in a multi you know memo press release that's my point that's all i'm saying yeah i would just say listen it like american china talking is only good we want to avoid i agree these trap that is discussed and china talks about a lot they're very aware of it and they brought it up yes she brought it up by name yeah talking is a integral step of avoiding having a nice resolution. From my perspective, the greatest superpower Trump has is his ability to bond with dictators, monarchs, royal families, Gulf monarchies. He's just great at it. They see eye to eye. They vibe. He has no problem going to see them. He has no problem inviting them to UFC fights. This is like if she comes to the United States and he's sitting courtside with Dana White, that's when we know things are going to be okay. I do think he's probably giving them the green light on like, hey, Taiwan's yours. Just let's not have it during my administration. Maybe like we do a 30-year deal or a 20-year handoff deal. I wouldn't be surprised if something like that happens. Or a 100-year deal or a 200-year deal. But the one thing I would just say that I'm sure was communicated is, hey, wars consume a vast amount of oil. You buy your oil from Iran, Venezuela, and Russia. Russia alone can supply a fraction of what you need. And now it should be clear to the world. Two of the three are off the chessboard. Yeah, if you do two or three are off the chessboard, if you do something we don't like, Venezuelan oil, gone for you. American oil, gone. Brazilian oil, gone. And we'll say to all of our good friends in the GCC, we're so sorry, but we have to close the straight of Formos again. So Iran, all of Middle Eastern oil, gone for China. Now you just have Russia. And good luck fighting a war with just Russian oil against us, Japan, South Korea. Australia, UK, France, Germany, the world. Good luck. Who knows about Europe? But for sure, Japan would be there. For sure, Japan would be there. Oh, and Australia, for sure. Korea, for sure. And so I think it's going to be a more stable world on the other side of Iran, however it resolves. And I think that's nothing but good. I think that's a good insight. I think it's a great insight. All right. Listen, we missed you, Sachs. Come back soon. And Gavin Baker. Shout out to Bessie, Gavin. Thank you. Yeah, you're so great. Thanks for coming. We appreciate it. Hey, and your father-in-law, what's his name again? Jeff Painter. Jeff Painter. We love you. Thank you so much for all the kind words. We'd love to invite you to come to Liquidity or the Summit. I know you're a big fan of the show. Wanted to give you a shout out here on the show. Thanks. I used your fandom of the show to leverage Gavin, who was like, I can't make it today. I was like, tell your father-in-law, we're going to get him backstage VIP tickets to the next two events if you show up today. If you don't, I'm going to back channel it to him. All of a sudden, Gavin made it to the show. Love you, boys. A little bit of pressure. That's my way of the – that's my homo straight. Yes, I'm always there for my father-in-law. Absolutely. All right, everybody. Thanks, everybody. We'll see you next time. Bye-bye. Thanks, guys. Take care. Great job. We'll let your winners ride. Rain Man David Sack. We open source it to the fans, and they've just gone crazy with it. Love you, Wes. I'm the queen of Kewa. I'm going to leave. What your winner's line. What your winner's line. What your winner's line. Besties are gone. That is my dog taking a notice in your driveway. Oh, man. My habitasher will meet me at what? We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension, but they just need to release them out. What your feet. What your feet. We need to get merch.