E115: The AI Search Wars: Google vs. Microsoft, Nordstream report, State of the Union

0:00 Bestie intro! 1:49 Report about US involvement in the destruction of Nordstream pipelines, breaking away from the military-industrial complex 28:26 Bestie refresh! 33:13 The AI Search Wars: Microsoft presses hard, Google's rough week 45:06 Sundar's next move: How should Google counterpunch? Google's troubled business model, will we see successful lawsuits over training data? 1:12:41 Will generative AI commodify enterprise SaaS? If so, what happens to VC returns? 1:31:14 Disappointing State of the Union, precarious situation between debt, taxes, and entitlements Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://twitter.com/DavidSacks/status/1623540190060101632 https://seymourhersh.substack.com/p/how-america-took-out-the-nord-stream https://www.foxnews.com/politics/state-dept-vows-nord-stream-2-hunk-metal-bottom-ocean-russia-invades-ukraine https://www.state.gov/secretary-antony-j-blinken-and-canadian-foreign-minister-melanie-joly-at-a-joint-press-availability https://twitter.com/EmiliaKaminska/status/1574817556950663169 https://www.bloomberg.com/news/articles/2022-09-30/biden-says-nord-stream-leak-was-deliberate-act-of-sabotage https://www.bloomberg.com/news/articles/2022-09-27/nord-stream-probing-pressure-drop-at-second-russian-gas-link https://www.youtube.com/watch?v=OyBNmecVtdU https://www.theverge.com/23589994/microsoft-ceo-satya-nadella-bing-chatgpt-google-search-ai https://www.reuters.com/technology/google-ai-chatbot-bard-offers-inaccurate-information-company-ad-2023-02-08 https://twitter.com/Google/status/1622710355775393793 https://www.youtube.com/watch?v=QinFy0RFDr8&t=450s https://www.youtube.com/watch?v=QinFy0RFDr8&t=450s https://neeva.com https://support.google.com/legal/answer/4558992?hl=en#:~:text=Courts%20typically%20focus%20on%20whether,merely%20copies%20from%20the%20original.&text=Using%20material%20from%20primarily%20factual,than%20using%20purely%20fictional%20works https://support.google.com/legal/answer/4558992?hl=en#:~:text=Courts%20typically%20focus%20on%20whether,merely%20copies%20from%20the%20original.&text=Using%20material%20from%20primarily%20factual,than%20using%20purely%20fictional%20works. https://twitter.com/arnaudai/status/1623359864100601861 https://github.com/features/copilot https://www.theverge.com/2023/2/6/23587393/ai-art-copyright-lawsuit-getty-images-stable-diffusion https://www.theverge.com/2022/11/8/23446821/microsoft-openai-github-copilot-class-action-lawsuit-aicopyright-violation-training-data https://twitter.com/LynAldenContact/status/1620447620987785216 https://i.kym-cdn.com/entries/icons/original/000/019/304/old.jpg https://twitter.com/pretentiouswhat/status/1622832701131874306

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Chamath Palihapitiya?

  I had this thing with my oldest son where I don't know if it's all kids, but he's 13. He doesn't know how to answer the phone, not to save his life. Hello? He picks up the phone. Hello? And so, and so I said, listen, from now on, when you call me, I expect a certain way that you pick up the phone and that's going to be practiced for you, how you interact with anybody else and vice versa as well. If I call you, you have to pick up the phone. And if you don't, I'm hanging up right away. So yesterday he calls me and, and I'm like, Chumot speaking. You know, it's like, hello, Chumot speaking. Dad.

• 0:38Chamath Palihapitiya?

  Hi, hung up.

• 0:41Chamath Palihapitiya?

  He calls back, hello, Chumot speaking. Dad.

• 0:48Chamath Palihapitiya?

  Hung up again. We did this three more fucking times. And then finally I said, when will you get it through your head? Can you please just answer like if I say hello, Chumot speaking? Hey dad, it's your son. Or hey dad, it's and it's unbelievable. And he's like, well, none of my friends pick up the phone like this. And I'm like, oh my God, like, don't they think they need to have verbal communication skills? It's, it's unbelievable. And then when I call him, he picks up the phone. Hello? What? Not even hello. Huh?

• 1:19Chamath Palihapitiya?

  What is that? It's like a grunt.

• 1:21David Sacks?

  Minimal effort. It's like the minimal, minimal number of syllables.

• 1:25Chamath Palihapitiya?

  It's, it's embarrassing. Are you kids like this? Or is it just my kid?

• 1:28David Sacks?

  Actually, I don't think I've heard him pick up the phone. I need to test that.

• 1:49David Sacks?

  J Cal was on Twitter calling me out for not denouncing the Chinese balloon as strong enough language, although I don't think he understood the language I was using.

• 1:57Chamath Palihapitiya?

  Um.

• 1:58David Sacks?

  Did you understand what the word errant means? What did you think it meant?

• 2:01Chamath Palihapitiya?

  I, you know, I do understand the word errant. Yeah, it generally means straying off course.

• 2:08Jason Calacanis?

  Yeah, traveling in search of adventure, at least according to Merriam-Webster. So I just thought maybe you're being a little, but I know you're a dove. So, but I was a little dovish thinking they were just off course. I think you'd think they were off course or they were doing it deliberately. You buy that it was off course?

• 2:26Chamath Palihapitiya?

  Genuflect, go genuflect, J. K. Go, go, go, go.

• 2:29David Sacks?

  So I knew J. K. would have to join in this nationwide panic.

• 2:34Jason Calacanis?

  I didn't panic. I have no panic over it.

• 2:37Chamath Palihapitiya?

  It had a Minolta camera attached to it.

• 2:43David Sacks?

  J. K., I've got some really bad news for you. There was these things called spy satellites.

• 2:47Jason Calacanis?

  No, we know about those.

• 2:49David Sacks?

  And they can see everything.

• 2:50Jason Calacanis?

  I want to know, it's obvious people, they've been sending these balloons over here for a while. I just thought you're framing as it was errant, as in it like straight off course. Do you think it was, I'm sincerely asking, do you think it was errant? It was an accident?

• 3:02David Sacks?

  It's such a harebrained scheme to send a balloon flying over American territory that the Occam's razor explanation here is that they somehow lost control over it. And these things are not steerable. So like, my guess is that it probably wasn't deliberate just because of how stupid a plan it would be and how like obvious it would be. But it could be, I don't really know. What I do know is that the whole nation got in a lather and a tizzy and started hyperventilating about this balloon. And it just shows how reflexively hawkish the media is, you know? It's like, hey, can we just wrap up this war in Ukraine before we start another war? With an even more formidable superpower?

• 3:46Chamath Palihapitiya?

  The balloon, the balloon got more intention than us blowing up Nord Stream.

• 3:50David Sacks?

  Exactly.

• 3:51Jason Calacanis?

  Okay, well, hold on, I was ready to jump into it. No, what I would say about that is, uh, the media insight is the valid one. I was just responding to the errant and I was curious if you actually thought it was an accident. I don't think it's an accident. I don't think there are accidents.

• 4:02David Sacks?

  It clearly was off course and problematic. So, you know, I don't know about the intentionality of it. I, I think, I think it very well could have been intentional, but I tend to think, because it's such a stupid harebrained scheme, like I almost given the benefit of the doubt, not because they're not capable of spying, I'm sure they're spying on us. Obviously they're spying on us, just like we're spying on them, that's what we both do. But I, it seems like such a stupid way.

• 4:26Jason Calacanis?

  It's a made for TV moment. You have to understand the nature of live television and why the media overreacted to it. It's ongoing. So because it's not final, it's like a live event occurring, like when kids are trapped in a mine. Those are the best stories for CNN because you can keep updating people and people keep turning the TV on to check on the status. So this one was just made for CNN because obviously we're going to shoot the thing down and obviously you can interpret into it if it's an accident or not. It just gives them something to talk about on a slow news week. But it is interesting. I think your point that is interesting is, is the Nord Stream story correct or not? Why is

• 5:09Jason Calacanis?

  that not being covered? It's not being covered because there it's not an ongoing story. So that just shows you.

• 5:17David Sacks?

  No, I don't think that's right. I think it's not being covered because the mainstream media already took a side on this.

• 5:24Jason Calacanis?

  So even more cynical, yeah.

• 5:25David Sacks?

  Well, it's not, it's not just cynical. So when, when Nord Stream got blown up, the administration came racing out with the line that the Russians did it, that they, this was self sabotage. And by the way, the media repeated this endlessly. This was the media line. And it never really made sense to anyone who's paying attention because first of all, this was an economically vital asset to Russia. Second, it was their main source of leverage over Europe was their control over the gas supply. So the idea that they would shoot themselves in the foot that way, just to somehow what show how crazy they are, it never really made sense to anyone who's paying attention. And the fact that the administration

• 6:05David Sacks?

  and the media so quickly raced to that conclusion, suggested that it was maybe a cover story. Because if we had nothing to do with it, you would just be more neutral and say, yeah, we don't know what happened. But they had to like promote this line that well, the Russians did it, which just never made any sense. And now Si Hirsch has come out with this story. So it laying out in great detail how we did it. It's not just saying we did it. It's laying out who did it and how and the steps and all that kind of stuff. And just so you guys understand who this guy is, he's this legendary Pulitzer Prize winning journalist. He's like 86 years old or something like that now. But he broke during Vietnam, he broke the story of the My Lai massacre, which the military denied until he proved it.

• 6:49David Sacks?

  Uh, he broke the story during the Iraq war of the Abu Ghraib prison abuses, which again, the media, the military denied until it was undeniable.

• 6:58Jason Calacanis?

  He's Pulitzer winning is all you really need to know.

• 7:00David Sacks?

  Yeah, and here he is, basically another covert military action. And look, we don't know for sure whether it's true or not, but it looks, it looks pretty bad.

• 7:11Chamath Palihapitiya?

  Do you think that Europe knew? Do you think that the Europeans were told that the Americans were going to go and blow this thing up?

• 7:16Jason Calacanis?

  If that's true, by the way, the, the administration has said clearly, this is a false story.

• 7:21Chamath Palihapitiya?

  They said it was pure fiction. I think the specific quote was, this is pure fiction.

• 7:25Jason Calacanis?

  The Ukraine would be the most likely a person to do this.

• 7:28David Sacks?

  You, you gotta look for means, motive and opportunity.

• 7:31Jason Calacanis?

  They don't have the opportunity to go down there and place a bomb.

• 7:34David Sacks?

  I don't think, I don't think the Ukrainians have the capability to do an undersea mission like that.

• 7:39Jason Calacanis?

  Uh, interesting.

• 7:39David Sacks?

  The Norwegians do, and the story maintained that we did it with them. The British do. Story didn't say whether they were involved or not. So no, my guess is that if this was a covert US activity, it was kept to a very small group. Which is why it'll be hard to prove more definitively than this.

• 7:58Jason Calacanis?

  The other side of the argument is, this is such a provocation. And the administration saying it's fiction. So what is your response to that, Sacks? Like, would the US do something so provocative? Or would they have somebody else do it? And would Norway do something so provocative? It seems an extremely, uh, uh, it seems like an extremely offensive technique as opposed to just backing the Ukraine to defend itself against Russia's invasion.

• 8:24David Sacks?

  Here's the thing, before the invasion, Biden at a press conference said that if the Russians invade, Nord Stream would be no more. And they asked him, well, how can you make sure of that? That's a deal between Germany and Russia. We're not involved. And he said, we have ways. We have ways. Just trust me, it'll happen. Separately, Victoria Nuland, who's our Deputy Secretary of State, said something very similar about how we would stop Nord Stream if the Russians invaded. And then after Nord Stream got blown up. Lincoln at a press conference said that this was a wonderful opportunity. I was extolling all the benefits of this and then Victoria Nuland at a congressional hearing said that I'm sure we're all very glad that it's a hunk of metal at the bottom of the sea again extolling all the benefits and we've discussed the benefits on this program

• 9:07David Sacks?

  of now we've shifted the European dependence on Russian gas to a dependence on American gas. So the fact of the matter is the administration kind of telegraphed what they were going to do. They had the capability to do it and they had the motive to do it. So it's certainly a plausible story. You're right that we can't know for sure. It's a single source.

• 9:28Jason Calacanis?

  You don't believe the administration.

• 9:29David Sacks?

  Hold on, it's a single source story that depends on the credibility of Cy Hirsch. But as it stands right now, whose story do I think makes more sense? Probably Cy Hirsch's.

• 9:40Jason Calacanis?

  You believe Cy Hirsch, or the spokesperson for the CIA who wrote, "The claim is completely and utterly false." Just to be clear.

• 9:46David Sacks?

  Well, these same people denied Abu Ghraib. They denied me lie.

• 9:50Jason Calacanis?

  To be clear, you believe that?

• 9:51David Sacks?

  They deny everything.

• 9:52Jason Calacanis?

  Okay.

• 9:53David Sacks?

  They deny that NATO expansion had anything to do with the, you know, breakout of this war.

• 9:59Jason Calacanis?

  Yeah, I mean, this is one of those situations where we can't possibly know.

• 10:02David Sacks?

  Yeah, you make a good point, J. Cal, which is this, if true, and look, I'm not saying I don't know if it's.

• 10:08Jason Calacanis?

  You're leaning towards believing it.

• 10:10David Sacks?

  I lean towards thinking it's more plausible than not.

• 10:12Jason Calacanis?

  Okay.

• 10:13David Sacks?

  Uh, cause also like who else could have done it and who again, who had the motive means an opportunity. But you make a great point, which is if we did it, it's an incredibly provocative act. It's basically perpetrating an act of war against a country that has thousands of nuclear weapons. Biden promised us at the beginning of this war that he would keep us out of being directly involved. So this would directly contradict what he said at the beginning of this war. So I think it's a very scary situation here.

• 10:43Jason Calacanis?

  Yeah, I know. You've been pro de-escalation.

• 10:45David Sacks?

  If the US didn't do it, like, why don't we find the real killer?

• 10:50Jason Calacanis?

  I actually have this, I have the theory. Here's my theory. The CIA knew how to do it. Biden wants to do it. The Republicans want to do it. Obviously, the, the people who are the most pro-stopping Nord Stream have been the Republicans. They've led this charge even more than the Democrats. So it's, it's a bipartisan issue. Stop Nord Stream, bipartisan issue, hands down.

• 11:10Jason Calacanis?

  I think the CIA probably knew how to do it. And just like we equipped the Ukraine to do it, we might have facilitated the Ukraine and a collaborator, UK, Norway, some freelancers, you know, we have those freelance, uh, former Navy SEALs that operate. Perhaps the CIA just said to the Ukraine, here's a, you know, black ops group. If you wanted to engage them, you could feel free to do so. Which would then split the difference between what Cy is saying, what the CIA is saying, which is typically where the truth lies, is probably between what this investigative journalist of note has said and what the CIA is denying. The CIA probably has plausible deniability. That's my prediction.

• 11:52David Sacks?

  Well, if you could find a source for that story, Jay Cal, that lays out in the same level of detail that Hirsch has laid out in terms of the meetings that occurred, what was approved, when, how they did it, uh, that, you know, uh, when they did it, uh, the explosives they used, the divers they used. It goes into a fair amount of detail.

• 12:11Jason Calacanis?

  Incredible detail. Yeah, I mean, so down to what explosives, right?

• 12:17David Sacks?

  But you're, you're trying to put what you just said, which is basically you inventing a story on the same level as Hirsch's story?

• 12:23Jason Calacanis?

  Yeah.

• 12:23David Sacks?

  Yeah, I understand, but he actually has a lot of detail in his story.

• 12:27Chamath Palihapitiya?

  Yeah, he had, he had umpteen sources. There was a lot of people that were willing to tell the story.

• 12:33Jason Calacanis?

  No, no, I don't think that's actually the case. I don't think he has umpteen sources. And there's no, on the record.

• 12:37David Sacks?

  There was one main source. There was one main source. But who provided a ton of detail. I don't know exactly how much he was able to directly corroborate with other sources. I don't know that.

• 12:46Jason Calacanis?

  The other thing I wonder, Sax, is he, with this one source story, he, he has a collaboration with The New Yorker. And anybody would, if this was a really well sourced and you could back it up kind of story, they would love to have the ratings for this story. This is a blockbuster story.

• 13:03Chamath Palihapitiya?

  Or as happens a long time, which we learned, was it through the Valerie Plame affair? Which is that these major news publications will sometimes have a back channel, back to the national security apparatus when they have something like this. And the message was, you can't hit print on this.

• 13:19Jason Calacanis?

  Yeah, that's a possibility too.

• 13:21Chamath Palihapitiya?

  He goes and just self publishes himself, which wasn't really even an option.

• 13:25David Sacks?

  Few years ago.

• 13:26Jason Calacanis?

  Yeah, so I mean, this is this is the Roshak test of Roshak test. You have the media. You got the CIA.

• 13:32David Sacks?

  It's fodder for a great movie. What I go back to, Jake Hall, is I think you can lay out some theories about, let's say, you know, the polls did it, or maybe Ukrainians with the British or some. Yes, you could lay out those theories, but the media wasn't willing to entertain any of those theories when this news broke. What did they do? They blamed the Russians. And that story made no sense, but they said it so definitively.

• 13:56Jason Calacanis?

  I'm looking for the source on that. I'm looking for, Nick, if you could pull up the source of the administration blaming the Russians. I just want to make sure we're

• 14:02David Sacks?

  Biden did it at a press conference.

• 14:04Jason Calacanis?

  Yeah, I just want to make sure we actually have that.

• 14:05David Sacks?

  Sabotaged by the Russians. Now, they didn't push it that hard. What was interesting is the Biden administration set it, but they didn't keep coming back to it. But the media really ran with it. And when people on both the left and the right, like people like Jeffrey Sachs on the left and Tucker Carlson on the right, basically started to question whether the US could have done it. They were accused of being conspiracy theorists, and, you know, Putin stooges and all the rest of it. And now, all of a sudden, here comes Seymour Hersh with a pretty detailed story lending credence to that point of view.

• 14:36Jason Calacanis?

  Yeah.

• 14:37David Sacks?

  It just may indicate we don't know everything that's going on with this war. And I think the longer this goes on, the more dangerous it is.

• 14:46Jason Calacanis?

  Friedberg, you have any thoughts on geopolitical issues and who might have blown up Nord Stream? And what are your sources saying, Friedberg?

• 14:55Jason Calacanis?

  What are your sources in Science Quarter saying?

• 14:57David Friedberg?

  Speculation is best left to the future. I don't know about the whole speculating on what could have been done in the past by someone. Those are conspiracy theories and a little dangerous.

• 15:08David Sacks?

  They're not. They're not actually conspiracy theories.

• 15:09Jason Calacanis?

  To be clear.

• 15:10David Sacks?

  North Stream was blown up. You understand that, right?

• 15:13David Friedberg?

  Like, there's no doubt that it was blown up. Jake Hall's theory.

• 15:16David Sacks?

  Oh, yeah. Jake Hall's theory is just a story with no evidence.

• 15:18David Friedberg?

  You gotta bring data to the table.

• 15:20Jason Calacanis?

  Yeah, to their pure theory, pure speculation.

• 15:22David Friedberg?

  You gotta bring data to the table to make it a.

• 15:24David Sacks?

  By the way, speaking of which, Radek Sikorski, who is a Polish diplomat, I think he was like their foreign minister, when Nord Stream blew up, he tweeted a photo of it saying, "Thank you, USA."

• 15:38David Sacks?

  Which was one of the reasons why people thought that, okay, like, yeah, of course the US did it, you know, who has the capability to do it? Who has the motive to do it? Who said they were gonna do it? And who benefits? Ukraine. We Bono, who benefits?

• 15:53Chamath Palihapitiya?

  Who was conducting NATO exercises in that region?

• 15:55David Sacks?

  Right.

• 15:56Chamath Palihapitiya?

  Three months before the thing blew up.

• 15:58David Sacks?

  Yeah, exactly. And Jeffrey Sachs pointed that out on, I think it was a CNBC interview before they basically stopped him because he's not allowed to talk about this on, you know, network TV apparently, but he basically pointed out there were like US radar signatures in the area.

• 16:12Jason Calacanis?

  President Joe Biden declared that, this is from Bloomberg, that a massive leak from the Nord Stream gas pipeline system in the Baltic Sea was an intentional act and that the Russian statements about the incident shouldn't be trusted. It was a deliberate act of sabotage and now the Russians are pumping out disinformation and lies Biden told reporters Friday at the White House. So he didn't exactly say the Russians did it. He just said it's an act of, don't believe the Russians.

• 16:31David Sacks?

  The media did.

• 16:31Jason Calacanis?

  What's that?

• 16:32David Sacks?

  The media did. You could do one of these montages where it was like Russian sabotage. In fact, go to Matt Taibbi's blog.

• 16:39Jason Calacanis?

  Biden didn't say it was sabotage. He said it was an act of sabotage.

• 16:42Chamath Palihapitiya?

  If you actually look at what Biden said, everything he said is absolutely true if the US also did it.

• 16:48Jason Calacanis?

  Correct.

• 16:49Chamath Palihapitiya?

  Every single sentence, every single sentence that Joe Biden said is 100% true, whether we did it or whether Russia did it.

• 16:58Jason Calacanis?

  It was a deliberate act of sabotage in parentheses by us.

• 17:02David Sacks?

  Think about it. If we did it, we know they didn't do it. And then we have to be like careful about suggesting they did it.

• 17:10Jason Calacanis?

  Well, what are the Germans think? Because this is the Germans' pipeline. This, so if we blew it up, that's also on a, explain to me your thinking on the chessboard of our relationship with Germany. If we blew it up, would they not also see that as a hostile act?

• 17:23Chamath Palihapitiya?

  This is why I asked if Europe knew, because I think you have to tell Germany that it's going to happen. And I think the quid pro quo with Germany is some amount of guaranteed supply that the US directs into Europe so that they know that their long-term LNG supply is intact so that they become ambivalent, right? There's a point of indifference where the Germans say, okay, we don't know when this thing is going to get turned back on and we don't know what the implications of it are. Here's what our demands are, meaning our energy supply, our energy needs are. And so as long as the United States can say, look, worst case, we have stuff in the, you know, SPR that we can give you, there's probably a point of indifference where the Germans say, okay, we're just gonna turn around and not say anything. And I'm curious,

• 18:08Chamath Palihapitiya?

  did the Germans say anything when this happened?

• 18:10David Sacks?

  No, not at all.

• 18:12Jason Calacanis?

  I'm looking for the, I was literally just typed to Nick, what was the Germans' position on this?

• 18:16Chamath Palihapitiya?

  That's interesting, too. That's a tell.

• 18:17Jason Calacanis?

  Well, yeah, if you're breaking this down like a poker hand, we're trying to figure out.

• 18:22Chamath Palihapitiya?

  If you construct this hand, right, pre-flop, it's like, you know where both of these folks are, right?

• 18:27David Sacks?

  Okay, there was a really interesting video that a guy named Matt Orfalia, who puts together these really funny videos, he puts together these montages of media reactions to things. And what he shows is that, you know, you can have like 20 different media outlets, and they all use the exact same words. And when he clips it together, you can see the reading from somebody's talking points, and it's not really clear who. And basically, if you look at his video here on who blew up Nord Stream pipeline, you see that there was like a party line from the mainstream media on this stuff.

• 19:00Speaker 04

  Nord Stream 2, we will bring it into it.

• 19:02Speaker 05

  But how will you, how will you do that?

• 19:06Speaker 04

  I promise you, we'll be able to do it. Someone blew up Russia's Nord Stream pipeline? I mean, we'd have to conclude without the evidence that it's most likely Russia.

• 19:18Speaker 06

  Russian sabotage on its own infrastructure.

• 19:21Speaker 07

  The common sense matter. I think it's Putin's way of sending a message. What Putin is saying to us by blowing up his pipeline is, look, I can blow up a pipeline. Everyone knows that Putin did this himself. Who are these talking heads?

• 19:32David Sacks?

  Smoking gun without the correct proof.

• 19:34Speaker 07

  Yeah, I think logic and common sense will tell you that. Without the evidence. Russia was behind the incident. We can say it for sure. Who sabotaged the Nord Stream 2 pipeline? I don't know.

• 19:44Jason Calacanis?

  This nonsense.

• 19:46David Sacks?

  Come on, that's hysterical.

• 19:47Jason Calacanis?

  You know, it's these talking heads who have no firsthand experience, and they're more than willing to comment on this stuff.

• 19:51David Sacks?

  It's hysterical.

• 19:52Chamath Palihapitiya?

  It's fantastic, it's fantastic.

• 19:53David Sacks?

  All his videos are like that, where, like, he has one on the Hunter Biden laptop as well, where, again, he's got like 20 different talking heads and media outlets, all portraying it in exactly the same language. And it just makes me realize that there's a narrative.

• 20:09Jason Calacanis?

  On the Sunday morning shows, you hear the same narrative from each side. How does that actually get coordinated? Each side builds those bullet points, emails their, what do they call them? Um, surrogates. They email all the surrogates and say, just keep saying these things over and over again to codify. Yeah, it's a WhatsApp group. It's a WhatsApp group and they're just like, say this over and over again. How does it work, Sax?

• 20:32David Sacks?

  I think it's partly talking points, memos that go out to chat groups. I think it's also just people looking on Twitter. And then there's like certain key nodes that they follow. And they know, okay, this is the party line because such and such key person is saying it. And they take their cues.

• 20:47Jason Calacanis?

  It's that, uh, memetic, memetic effect that you guys always talk about? People. Memetic. Memetic, yeah, the memetic.

• 20:54David Sacks?

  Yeah, the thing to understand is that all of the prestige outlets repeat the same party line and have the same perspective.

• 21:00Jason Calacanis?

  Yeah. You gotta, you gotta do your own search for information.

• 21:03David Sacks?

  This is the beauty of Substack, actually. This is why Substack is so important is it actually gives you an alternative.

• 21:08Jason Calacanis?

  Yeah.

• 21:08David Sacks?

  It gives you an alternative because like you've got 10 different mainstream media networks or newspapers and magazines, but they all have exactly the same talking points, except maybe Fox News is kind of the one exception. Although even Fox on the whole Nord Stream thing, you saw that Fox can be pretty militaristic and they had the same generals basically blaming the Russians for this on Fox.

• 21:29Jason Calacanis?

  Yeah. Germany's position is just, hey, everybody, uh, this is sabotage. So that's it. But not who did this sabotage.

• 21:36David Sacks?

  I think you, you asked a really good question there about the German interests in this. Right now, the German economic interest and the German foreign policy interests are not aligned. What's clearly best for the German economy is to have cheap natural gas powering its industries, even if it comes from Russian pipelines. And they no longer have that anymore. In fact, they may never have that again. So they're going to pay a very high price economically, maybe forever. And remember, their, their whole economy is based on industry. They're very industrial power. So if this war drags on for a long time, I think Schultz might be in some political trouble, precisely because he's gone along with the Americans on this.

• 22:18David Sacks?

  And there is, there is a growing political opposition to this war inside of Germany.

• 22:22Jason Calacanis?

  War fatigue is a real thing and this thing's got to wrap up at some point. Any final thoughts, Friedberg? I know you didn't get too involved in that conversation, but what is, uh, any, any game theory from you?

• 22:37David Sacks?

  No.

• 22:38Jason Calacanis?

  Okay, there you have it, folks. Sultan of Science checking in.

• 22:41David Sacks?

  What's the problem? You don't want to criticize the establishment?

• 22:44David Friedberg?

  Voting, he says?

• 22:45Jason Calacanis?

  It's always very personal with Sacks.

• 22:48David Sacks?

  You predicted.

• 22:49Jason Calacanis?

  Why don't you have my position on this?

• 22:51David Sacks?

  No, I'm just, I'm trying to understand, because...

• 22:53David Friedberg?

  I don't think, I don't think anyone has, I'm not, I'm not pro-establishment. I think you know that. I think I'm, I'm just analytical around the fact that I think there's a strong orientation towards conflict. And I think there still is. I don't think that there's much of an incentive or a motivation to back down because this conflict creates a significant amount of debt owed back to the US. It creates a potential future asset stream, creates a realignment of power. Everyone's looking externally as internal, you know, economic conflict and wealth disparity issues arise and economic growth is challenged and inflation is soaring. It's a great place to, you know, address one's energy. So I think all of this stuff is detailed analytical shenanigans around who's saying what or who's doing what.

• 23:38David Friedberg?

  I think the underlying thesis and the underlying river that's flowing is one that's like looking for external conflict. I think the same is true with the US and China.

• 23:48Jason Calacanis?

  You're talking about the military industrial complex is going to benefit massively from this. The longer this drags out, the more the conflict in Taiwan heats up, the more we're going to invest in our military.

• 24:00David Friedberg?

  You know, we often talk about these things as if they're like top-down, like master plan driven. And as we all know, like they're more Ouija board driven. It's a bunch of guys that got their hand on the Ouija board and they're all just had a little too much caffeine. You know, and in this case, I think it's just more about like, everyone's a little anxious and the anxiety is leading to a desire for more conflict. We're not happy at home. If you're happy at home, you're not looking externally for conflict. That's true in nearly every developed nation on earth today.

• 24:31David Friedberg?

  That's it. I don't know. Pretty simple.

• 24:33Jason Calacanis?

  I like your position.

• 24:34David Sacks?

  I think it's a great take. I think it's a great take, actually. I think there are a lot of interests who benefit from war, and I think the foreign policy establishment is funded by those interests, and it's kind of wired for war, at least in terms of the reflex, right? Even something as relatively harmless as a balloon.

• 24:52David Friedberg?

  I saw.

• 24:53David Sacks?

  That becomes like a castus bello. It's like people are ready to go to war against China over that.

• 24:58David Friedberg?

  I saw a couple of military leaders give a talk a few months ago. It was in a private thing. So it wasn't on public record.

• 25:05Chamath Palihapitiya?

  With the establishment?

• 25:07David Friedberg?

  No, yeah, I was at the establishment gathering.

• 25:09Jason Calacanis?

  Oh, this is the Illuminati? Did you genuflect twice going in? Because that's the situation. You do one genuflect on each knee, then they give you the bag of capitalism. With the Illuminati logo on the side for your fund.

• 25:20David Friedberg?

  Yeah. What was striking to me in this particular thing where these guys were being interviewed on stage, at like a dinner thing, and they were so oriented around their next steps in escalation. And I think it speaks to the point, Sax. Like, none of them were thinking about, like, where are we at today? How do we de-escalate? What is this going to get? There was no conversation at all from anyone about resolution or de-escalation. With every single one of them, it was all about, like, my orientation for getting bigger, going deeper, going harder, going stronger, making this thing bigger. And I think that was really scary to me because I didn't, I didn't hear anyone having a conversation around, like, how do we, should we even consider whether or not this doesn't get bigger?

• 26:05David Friedberg?

  Everyone was thinking assumptively it was going to get bigger.

• 26:08Jason Calacanis?

  I like the Ouija board.

• 26:10Chamath Palihapitiya?

  You have to follow the financial incentives. When, the last time we looked at this, right? Leon Panetta and all these other guys who were screaming for war, they were getting paid by the military industrial complex. I remember when Lloyd Austin was nominated as Defense Secretary. He had some conflict issues because he was just on the board of Northrop Grumman or one of these big military industrial companies. And so, of course, these generals have to push for war because as long as they're girding for war, they're guaranteed to have. For them, a very lucrative job once they leave the military.

• 26:42Jason Calacanis?

  The Ouija board, though, Sax, I'll throw it to you. Maybe you can keep this metaphor going. The media's got their hands on it. They want ratings. You have the energy industrial complex in this German conflict, who seeks to benefit massively if people invest in renewables. Or you find other, you know, oil, you know, off Norway. Norway's oil is one of the largest reserves that's untapped. So you have this Ouija board, media, energy, and the military industrial complex all moving in at once. Maybe you could speak to that analogy.

• 27:10David Friedberg?

  And everyone wants to move it to the side of the Ouija board that says escalate. There are very few people that are, that have the energy to move it to the other side that says de-escalate.

• 27:18Jason Calacanis?

  It's not profitable. De-escalation means less energy, more, less investment. So, yeah, you're gonna go escalate.

• 27:24David Sacks?

  You know who warned us about the military industrial complex?

• 27:27Jason Calacanis?

  Yes.

• 27:27David Sacks?

  Dwight D. Eisenhower, Supreme Allied Commander in World War II, wins the war, patriot, war hero, top general, becomes president, Republican president, and his departing address warns us that, yes, we need a defense industry, but they become a vested interest in favor of foreign interventions of war.

• 27:47Jason Calacanis?

  It's 1961, he did this.

• 27:49David Sacks?

  Where's the, where's the interest on the other side of it? I can tell you this. The American people don't want to be in a war with Russia. I don't even think most of the American people want to send 100 billion over there. They want to send 100 billion to their cities to fix crime and all the other problems.

• 28:06Jason Calacanis?

  Yeah, homelessness, everything, yeah. If you've never seen that farewell address from 1961, it is well worth watching. You can find it on YouTube. Just search for military industrial complex Eisenhower. And he, and this is a person who was part of the military industrial complex, saying, watch out for this. It was a very prescient warning. Yes, he was in the machine.

• 28:24Chamath Palihapitiya?

  He helped build the machine.

• 28:26Jason Calacanis?

  Welcome to the All In Podcast. With us again, David the Dove Sax, Chamath Palihapitiya, and the Sultan of Science, who is on his podcast, or my God, so many podcasts you're doing. The Sultan of Science is in hot demand. What are all these podcasts you're doing, Friedberg? All these science podcasts pulling you in?

• 28:42David Friedberg?

  I did a podcast with Brian Keating last week, who was really kind enough to reach out. He's had some awesome guests. He's a cosmologist at UCSD professor down there.

• 28:53David Friedberg?

  And we were supposed to record that day and then we canceled, I think, last minute, right?

• 28:57Jason Calacanis?

  Yeah, yeah.

• 28:58David Friedberg?

  I was only supposed to be on with him for an hour and I'm like, oh, well, my next thing just got freed up, so ended up doing like three hours. It was, I was so, I was like exhausted that day, so I looked really hungover on the video and probably

• 29:09Jason Calacanis?

  Par for the course.

• 29:10David Friedberg?

  Stumbled a lot, yeah.

• 29:11Jason Calacanis?

  But no Lex Friedman for you. So, Chamath and I have done Friedman, Lex Friedman, but you have not. Has he invited you yet, Lex? Has Lex invited you?

• 29:18David Friedberg?

  No, no, he's not.

• 29:19David Sacks?

  Where's my invitation?

• 29:20Jason Calacanis?

  I don't know what's going on here. Collect all four, Lex. What are you doing?

• 29:24David Sacks?

  No Davos and no Lex Friedman.

• 29:27Jason Calacanis?

  What's going on? You would never

• 29:29David Sacks?

  Am I too anti-establishment? What's going on?

• 29:31David Friedberg?

  No, I'm too anti-establishment, Socks. That's, you know, you've mischaracterized me.

• 29:35Jason Calacanis?

  Nobody, nobody's inviting this quartet to anything.

• 29:40Jason Calacanis?

  Full stop. We're not doing All In Live from Davos. It's not happening, folks. Sorry, they don't have that heat. I agree.

• 29:47David Sacks?

  I'm with Groucho Marx. I don't want to be part of any club that would have me as a member.

• 29:50Jason Calacanis?

  Absolutely. And they also don't want you there anyway, so it works out for everybody.

• 29:55David Sacks?

  It does fill me with like a rage where I actually might agree to doing the All In Summit again.

• 30:02David Friedberg?

  Hey, by the way, proposal coming your way this weekend.

• 30:05Chamath Palihapitiya?

  If you want to really, really, really thumb your nose at the establishment.

• 30:08Jason Calacanis?

  Yes, let's do it.

• 30:09Chamath Palihapitiya?

  Set it during the exact same dates and times as an establishment conference.

• 30:15Jason Calacanis?

  Oh, the Alt-Davos?

• 30:16Chamath Palihapitiya?

  And then invite all the best guests so that they come to ours. Just a suggestion for you guys.

• 30:20Jason Calacanis?

  For them to choose all Ted?

• 30:21David Friedberg?

  You know how Vanity Fair does their new establishment conference? You could call it the anti-establishment.

• 30:27Jason Calacanis?

  Ooh, that could be a tagline. Let's come up with a tagline that just tweaks everybody.

• 30:31David Sacks?

  And we should create a list. We should create the anti-list. You know, they have their like establishment list. We should have the anti-list.

• 30:37David Friedberg?

  That's a good point.

• 30:38Jason Calacanis?

  I like the anti-establishment. Start with them.

• 30:41Chamath Palihapitiya?

  I have a great Vanity Fair establishment thing story.

• 30:46David Friedberg?

  Oh, good.

• 30:47Chamath Palihapitiya?

  I snuck on that list. They put me on that list a decade ago.

• 30:50David Friedberg?

  Ooh, let's pull it. Let me find a link. Go on, keep

• 30:52Chamath Palihapitiya?

  And the most incredible thing about it is that when you go to the event, which was kind of a cool event, we all had photos taken by Annie Leibowitz.

• 31:00Jason Calacanis?

  Oh.

• 31:01Chamath Palihapitiya?

  And I have a montage of some of the people that took photos that day.

• 31:08Chamath Palihapitiya?

  That's pretty cool. Me, Aaron Levy, Priscilla Chan, Bezos, a bunch of people.

• 31:13David Friedberg?

  But I look like a total

• 31:14Jason Calacanis?

  I was about to say, just before you had, just when you had the dad bod and no fashion sense?

• 31:19David Friedberg?

  Yeah, it was like, yeah. Oh, look, he looks great. Here it is. I was like, being honest with you, yeah. Basically, I had no stylist. I had a bad haircut. I was very shitty. It was like Quartering glasses.

• 31:29Chamath Palihapitiya?

  It was like a year or two post-Facebook. It was not a good look for me. Not.

• 31:32David Friedberg?

  Yeah, but that's not, yeah, yeah, but that's not the

• 31:35Jason Calacanis?

  That's not that.

• 31:35Chamath Palihapitiya?

  I'll show you the picture.

• 31:36David Sacks?

  Is that Tom Ford? That was your Tom Ford face?

• 31:38David Friedberg?

  It was, that was my Tom Ford face.

• 31:39Jason Calacanis?

  He's doing the jeans blazer thing, which is like a really tired look for a Silicon Valley.

• 31:43David Friedberg?

  Free skinny jeans, though. It's like a little loose.

• 31:45Jason Calacanis?

  Free skinny jeans, yeah.

• 31:46David Sacks?

  That is pretty sharp looking.

• 31:47Chamath Palihapitiya?

  That was it. That was in 2011. 2012. That's not so bad.

• 31:52Jason Calacanis?

  Just don't pull up the Chamath pictures when he's wearing like

• 31:55Chamath Palihapitiya?

  Oh, my God.

• 31:55Jason Calacanis?

  You know, his Macy's shirt. If you do the Google search, you put the images before 2011, you will find Chamath photos.

• 32:03Chamath Palihapitiya?

  Dude, the Facebook, we were the same. I wore the same thing every day for four years, five years. It was brutal.

• 32:11Jason Calacanis?

  Oh, my God. What is?

• 32:13Chamath Palihapitiya?

  That's also Tom Ford.

• 32:14Jason Calacanis?

  We gotta break this down.

• 32:15Chamath Palihapitiya?

  Yeah.

• 32:16Jason Calacanis?

  See, this is when the sweater game was not tight. This is like sweater 1.0 game.

• 32:20Chamath Palihapitiya?

  I didn't know what I was doing back then. Stop. Put, take these pictures off, please.

• 32:23Jason Calacanis?

  Look, oh, and he's also got the watch subtly peeking out. This is back when he was like, oh, I got a Rolex. Ooh.

• 32:28Chamath Palihapitiya?

  That's a protect. But anyways, yeah.

• 32:30Jason Calacanis?

  Whatever. This is when the watches were only five fingers.

• 32:34David Sacks?

  Out of zero.

• 32:35Jason Calacanis?

  I don't know if that watch got to six fingers.

• 32:37Chamath Palihapitiya?

  Or two, but yeah, same story. Same, same, Jake Al. Same, same.

• 32:40Jason Calacanis?

  Same, same, same. All right, well, listen. All right, listen, I got an Apple Watch and I'm gonna up.

• 32:44Chamath Palihapitiya?

  Oh, geez. That's a dad vibe. There's a dad vibe. Yeah.

• 32:48Jason Calacanis?

  Oh, he's gonna, there's the dad vibes. Wow.

• 32:51Chamath Palihapitiya?

  That must have been from Mayfield? 13, 14 years ago.

• 32:55Jason Calacanis?

  Wow. God, you had no style.

• 32:58Chamath Palihapitiya?

  I really didn't.

• 32:59Jason Calacanis?

  It was. Rough. I really did. Rough. I mean, don't pull up pictures of me. I was fat. Yeah, yeah, yeah. Pictures of me eating egg sandwiches all over the internet. Oh. Yeah, chubby J. Cal. Oh, man. Look at that face. There he is. Boy, that's plus 20 pounds. Boy. Let's keep this going. Search Wars, Microsoft versus Google. Okay, it's been a rough couple of days for Google. We've all seen it. Google and Microsoft both did live demos of their new generative AI, yada, yada, yada. You guys all know about ChatGPT. But now Bing is integrating it into their search engine, getting there before Google. And Microsoft CEO Satya Nadella, he is going ham. He looks great. He's fit. He's wearing a tight T-shirt. And he is saying he's gonna make Google dance. Dance, Google, dance. He is getting up in their business.

• 33:44Jason Calacanis?

  And listen, he is in a distant second place, so it makes sense. On the other hand, uh, Google's AI demo was frankly, a bit of a disaster, poorly received, stock they dropped 12% since this event. And their presentation did not include the chat that Bard because in search because it wasn't working. It seems like there was an error in it when they said, what new discoveries from the James Webb Space Telescope can I tell my nine-year-old? And Bard answered that it took the first pictures of a planet outside our solar system, which is false. Which of course, we all know about ChatGPT. It's only right half the time. Uh, it's a little woke, uh, on the margins.

• 34:26Jason Calacanis?

  So, um, anyway, there was a screenshot circulating today, which is probably false, but it says the following. Me and a bunch of coworkers were just laid off from Google for our AI demo going wrong. It was a team of 168 people who prepared the slides for the demo. All of us are out of jobs. I can't imagine that's real. Uh, but if it was, that would be a hardcore moment for Google to fire a bunch of people for screwing it up.

• 34:50Jason Calacanis?

  Listen, you worked in the belly of the beast for your bird. What are your thoughts on Bing poking the tiger and telling Google dance? You know, Sundar dance.

• 35:00David Friedberg?

  You know, what's interesting is Google's had like an incredible AI competency, particularly since they bought DeepMind, and it's been predominantly oriented towards kind of, you know, internal problems. You know, they demonstrated last year that their AI improved data center energy efficiency by 40%. They've used it for ad optimization, ad copy optimization, the YouTube follow video algorithm, so what video is suggested to you as your next video to watch, which massively increased YouTube hours watched per user, which massively increased YouTube revenue. You know, what's the right time and place to insert videos in YouTube

• 35:41David Friedberg?

  or insert ads in YouTube videos. So, you know, autofill in Gmail and Doc. So, so much of this competency has been oriented specifically to avoid this primary disruption in search. Obviously, now, things have come to a bit of a point because, you know, this alternative for search has been revealed in ChatGPT. And you guys can kind of think about search, and, you know, we've used this term in the past. Larry and Sergey, the textbook that they read, you know, one of the original textbooks that's used in internet search engine technologies called information retrieval. So, information retrieval is this idea that, you know, how do you pull data from a static data set, and it involves scanning that data

• 36:24David Friedberg?

  set or crawling it, and then creating an index against it, and then a ranking model for how do you pull stuff out of the index to present the results from the data that's available based on what it is you're querying for. You know, and doing that all in a tenth of a second. So, you know, if you think about the information retrieval problem, you type in the data or some rough estimation of the data you want to pull up, and then a list is presented to you. And over time, Google realized, hey, we could show that data in smarter, quicker ways. Like, if we can identify that you're looking for a very specific answer, we can reveal that answer in the one box, which is the thing that sits above the search results. Like, if you said, what time is it? You know, when does this movie show at this theater? So, they can pull out the structured data and give you a very specific answer

• 37:08David Friedberg?

  rather than a list from the database. And then, over time, there were other kind of modalities for displaying data that it turns out Or even better than the list, like Maps or Shopping, where you can kind of see a matrix of results, or YouTube, where you can see a, you know, longer-form version of content. And so these different kind of, you know, information retrieval, you know, media were presented to you, and it really kind of changed the game and created much better user satisfaction in terms of getting what they were looking for. The challenge with this new modality is it's not really fully encompassing. So if you can kind of think about the human-computer interaction problem, you want to see flight

• 37:52David Friedberg?

  times and airlines and the price of flights in a matrix. You don't necessarily want a text stream written to you to give you the, you know, the answer that you're looking for, or you want to see a visual display of shopping results, or you do want to see a bunch of different people's commentary because you're looking for different points of view on a topic, rather than just get an answer. But there are certainly a bunch of answer solutions for which ChatGPT-type, you know, natural language responsiveness becomes a fantastic and better mode to present answers to you than the matrix, or the list, or the ranking, and so on. Now, the one thing that I think is worth noting, I did a back-of-the-envelope analysis

• 38:35David Friedberg?

  on the cost of doing this compared to ChatGPT. So Google makes about three bucks per click, you can back into what their revenue per search is, a bunch of different ways. One way is three bucks per click, about a 3% click-through rate on ads. Some people estimate, this is about right, about five cents to 10 cents revenue per search done on Google, or anywhere from one cent to 10 cents.

• 38:54Jason Calacanis?

  Even if they don't click the ads, because one out of 100 people click an ad, and that's where the money comes from.

• 38:59David Friedberg?

  So let's just call it five cents, right? And you can assume a roughly 50% margin on that search, which means a 50% COGS, or cost of goods, or a cost to run that search and present those ads. So, you know, right now, Google search costs them about, you know, call it two and a half cents per search to present the results. A recent estimate on running the GPT-3 model for ChatGPT is that each result takes about 30 cents of compute. So it's about an order of magnitude higher cost to run that search result. than it is to do it through a traditional search query.

• 39:39Jason Calacanis?

  Today.

• 39:40David Friedberg?

  Which makes today.

• 39:40Jason Calacanis?

  Today.

• 39:41David Friedberg?

  That's right. And so, so that's the point. Like, it has to come down by about an order of magnitude. Now, this is a, this then becomes a very deep technical discussion that I'm certainly not the expert, but there are a lot of great experts that, and there's great blogs and substacks on this, on what's it going to take to get there, to get a 10x reduction in cost on, on running these models? And there's a lot related to kind of optimization on how you run them on a compute platform, the, the type of compute hardware that's being used, all the way down to the chips that are being used. So there's still quite a lot of work to go before this becomes truly economically competitive with Google. And that really matters, because if you get to the scale of Google, you're talking about spending eight to 20 billion dollars

• 40:24David Friedberg?

  a quarter just to run search results and display them. And so for chat GPT type solutions on Bing or elsewhere to scale and to use that as the modality, you're talking about something that today would cost 80 billion dollars a quarter to run from a compute perspective, if you were to do this across all search queries. So it's certainly going to be a total game changer for a subset of search queries. But to make it economically work for, for these businesses, whether it's Bing or Google or others, there's a lot of work still to be done.

• 40:54Jason Calacanis?

  The great part about this Chamath is that Bing gave 10 billion to our friend Sam and ChatGPT to invest in Azure, which now has the infrastructure and will be providing the ChatGPT infrastructure to startups or corporations, big companies and small alike. So that 10 billion dollars should do enough to grind it down between software optimization, data optimization, chip optimization and cloud optimization. Yes, you would think so or no?

• 41:23Chamath Palihapitiya?

  The ability to run this at scale is going to happen because we're getting better and better at creating silicon that specializes in doing things in a massively paralyzed way. And the cost of energy at the same time is getting cheaper and cheaper along with it. When you multiply these two things together, the effect of it is that you'll be able to run these models. The same output today will cost 1 one tenth, as long as you ride the energy and compute curve for the next few years. So that's just going to naturally happen. I have two interesting takeaways. And one is maybe a little bit of a sidebar. So the sidebar is if you guys were sitting on top of something that you thought was as foundational as

• 42:05Chamath Palihapitiya?

  Google Search back in 1999, would you have sold 49% of it for $10 billion? Hard no. I think the answer is no. I think the answer is no. Not in an environment where you have unlimited ability to raise capital? This is something that we've said before, which is that ChatGPT is an incredibly important innovation. But it's an element of a platform who will get quickly commoditized because everybody will compete over time. And so I think what Microsoft is doing is the natural thing for somebody on the outside looking in at an entity that has 93% share of a very valuable category, which is, how can I scorch the earth? And so Microsoft effectively for 10 billion bought almost 50% of a tool.

• 42:50Chamath Palihapitiya?

  And now will make that tool as pervasive as possible so that consumer expectations are such that Google is forced to decay the quality of their business model in order to compete. So that as Friedberg said, you have to invest in all kinds of compute resources that today are still somewhat expensive. And that will flow into the P and L. And what you will see is that the business quality degrades. And this is why when Google did the demo of Bard, the first thing that happened was a stock went off 500 basis points. They lopped off $100 billion of the market cap. Mostly in reaction to, oh my God, this is not good for the long-term business. Explain why it's not good for the long-term business on a mechanical basis. When you get an answer, you don't have to click the links?

• 43:32Chamath Palihapitiya?

  No, right now, if you look at Google's business, they have the best business model ever invented on earth ever for a profit company. It just rains money. This is a business that this year will do almost $100 billion of free cash flow. It's a business that has to find ways, and we kind of joke, but they have to find ways to spend money. Otherwise, they'd be showing probably 50 or 60% EBITDA margins and people would wonder, hey, wait a minute, you can't let something like this go unattended. So they try to do a lot more things to make that core treasure look not as incredible as it is. They have 120 billion of cash.

• 44:15Chamath Palihapitiya?

  This is a business that's just an absolute juggernaut and

• 44:18Jason Calacanis?

  They have 10 times as many employees as they need to run the core business.

• 44:21Chamath Palihapitiya?

  That, that says enough. I don't, I don't know what that is, but my point is that it's an incredible business. So that business will get worse if Microsoft takes a few hundred basis points of share. If Meta takes a few hundred basis points of share, if Tencent does, if a few startups do. Quora, by the way, launched something called Poe, which I was experimenting and playing around with last weekend. If you add it all up, what Satya said is true, which is even if all we do collectively as an industry is take 500 or 600 basis points of share away from Google. It doesn't create that much incremental cost for us, but it does create enormous headwinds and pressure for Google with respect to how they are valued and how they will have to get revalued. And that's what happened.

• 45:05Chamath Palihapitiya?

  So the last thing I'll say is the question that I've been thinking about is what does Sundar do? Right? So what's the countermeasure?

• 45:12Jason Calacanis?

  Yes, this is what I was going to get to.

• 45:14Chamath Palihapitiya?

  I think the countermeasure here, if I was him, is to go to the board and say, guys, we're going to double TAC.

• 45:22Chamath Palihapitiya?

  Right? So TAC is the traffic acquisition cost that Google pays their publishers. It is effectively their way of guaranteeing an exclusivity on search traffic. So for example, if you guys have an iPhone, it's Google search. That's the default search in the iPhone. Google pays Apple. This year, this renegotiation for that deal could mean that Apple gets paid $25 billion for giving away that right to Google. So if these, Google does all these kinds of deals. Last year they spent, I think 45 billion or so, so about 21%.

• 45:53Jason Calacanis?

  In a way, when you think about that, Chamath, Google basically paid Apple, which was working on search technology. They were working on a search solution. They paid them to stay out of the business.

• 46:02Chamath Palihapitiya?

  And they're paying everybody. So I think the question for Google is the following. If you think you're going to lose share and let's say you go to 75% share. Would you rather go there and actually still maintain your core stranglehold on search? Or do you actually want 75% share where now all of these other competitors have been seeded? Well, you can decay business model quality and still remain exclusive if you just double the TAC. And what you do is you put all these other guys on their heels because as we talked about, if you're paying publishers two times more than what anybody else is paying them, you'll be able to get publishers to say, hey, you know what? Don't let those AI agents crawl your website because I'm paying you all this money. Remember that, right?

• 46:45Chamath Palihapitiya?

  So do not crawl in robots.txt equivalent for these AI agents. And I think that that'll put Microsoft and all these other folks on their heels. And then as, as you have to figure out all this derivative work stuff, all these lawsuits, Google will look pristine because they can say, I'm paying these guys double because I acknowledge that this is a core part of the service. So that's the game theory I think that has to get figured out. But if I was Sundar, I'd double the tax.

• 47:11Jason Calacanis?

  I love the second part because, hold on, let me get Sax about. I love the second part, Chamath, because in this clip I'm about to show, Neelai Patel from The Verge did an awesome interview with Satya. And he basically would not answer this question, at least to my satisfaction, which is, hey, what do the publishers get out of this? You've ingested our information. How do we get paid? Watch this clip. It's very telling.

• 47:36Speaker 08

  The answer or even in the chat session.

• 47:38Speaker 09

  But if I ask the new Bing, what are the 10 best gaming TVs? And it just makes me a list. Why should I, the user, then click on the, the link to The Verge, which has another list of the 10 best gaming TVs?

• 47:50Speaker 08

  Well, I mean, that's a great question, but even there, you will sort of say, hey, where did these things come from? And would you want to go dig in like that? Even search today has that, like we have answers. They may not be as high quality answers. They just are getting better. So I don't think of this as a complete departure from what is expected of a search engine today, which is supposed to really respond to your query while giving them the links that they can then click on, like ads, and search works that way.

• 48:18Jason Calacanis?

  In my mind, there's a terrible answer. He needs to address how they get paid. He punted the answer and just said, hey, listen, search works this way. Sax, will the rights to the data, will, will Google just state a cora? Hey, we'll give you a billion dollars a year for this data set if you don't give it to anybody else.

• 48:33David Sacks?

  They should.

• 48:34Speaker 08

  Maybe.

• 48:34Jason Calacanis?

  Sax, the strategist, let me hear your strategy here. You're now CEO of Google. What do you do?

• 48:39David Sacks?

  I think there's maybe even a bigger problem before that, which is, I think the whole monetization model might change. So the reason why Google monetizes so well is, is perceived as having the best search. And then it gives you a list of links and a bunch of those links are paid. And then people click on them. Now, I think when you search in AI, you're looking for a very different kind of answer. You're not looking for a list of 10 or 20 links. You're just looking for the answer. And so where is the opportunity to advertise against that? I mean, maybe you can charge like an affiliate commission if the answer contains a link in it or something like that. But then you have to ask the question, well, does that distort like best answer? Like, am I really getting the best answer?

• 49:24David Sacks?

  Or am I getting the answer that someone's willing to pay for?

• 49:26Jason Calacanis?

  This is your key insight. The fact is, if Google gives you an answer, you don't click on ads. Google has had a very finely tuned balance between, hey, these first two or three paid ads, these might, the paid links might actually give you a better answer than the content below them. But in this case, if the chat GPT tells you, hey, this is the top three televisions. These are the top three hotels. These are the top three ways to, you know, write a better essay. You don't need to click. You have now been given an answer and the model is gone.

• 49:59David Friedberg?

  The paid link is still a subset in that case. So at Google, we used to have a key metric was the bounce back rate. So when a user clicks on a

• 50:09Jason Calacanis?

  Explain what a bounce back is, yeah.

• 50:10David Friedberg?

  So when a user clicks on a result on the search results page, we could see whether or not they came back and searched again. And so that tells you the quality of the result that they were given. Because if they don't come back, it means they ended up getting what they were looking for. And so ads that performed better than organic search results, which means someone created the ad, paid for it, and the user clicked on it and didn't come back and came back with less frequency than if they clicked on an organic result. That meant that the ad quality was higher than organic quality. And so the ad got promoted to kind of sit at the top and it became a really kind of important part of the equation for Google's business model, which is how do we source, how do we monetize more search results?

• 50:55David Friedberg?

  Where we can get advertisers to pay for a better result than what organic search might otherwise kind of show. And so it's actually better for the user in this case than say just getting an answer. For example, I'm looking for Playstation five, I don't want to just be told, hey, go to Best Buy and buy Playstation five. I want to be taken to the checkout page to buy a Playstation five. And I am more likely to be happy if I click on a result and it immediately takes me to the checkout page. And Best Buy is really happy to pay for you to get there. Because they don't want you looking around the internet, looking for other places. And a lot, and we, we can't convolute all search queries. Not all search queries are, hey, you know, what's the best dog to get to not pee on the floor? Whatever kind of arbitrary question you might have that you're doing research on.

• 51:38David Friedberg?

  Many search queries are commerce intention related. I want to buy a flight to go somewhere. I want to book a hotel to go somewhere. I want to buy a video game system, et cetera. That series of queries may have a very different kind of modality in terms of what's the right interface? Versus the chat GPT interface where, yeah, there's a lot of kind of organic results that people sift on the internet for today. And, and, and, and the question earlier can be resolved by Google doing a simple analytical exercise, which is, you know, what's it going to cost us and what's going to give the user the best result? And that's ultimately what will kind of resolve to the better business model. It's really measurable. I think on Chamath's point, you know, today, Google pays Apple fifteen billion dollars a year

• 52:20David Friedberg?

  to be the, the default search engine on iPhones on the Safari browser. That's only about a quarter of Google's overall TAC. The majority of Google's traffic acquisition cost is actually not being paid for search. A good chunk of that is being paid to publishers to do AdSense display ads on their sites. And Google's rev share back to them for putting ads on their sites. So, you know, the TAC number, I think maybe you kind of want to move the needle, but the majority of Google searches don't come through the default search engine that they pay Apple to be on. It might, it might move the needle a bit, but I don't think it really changes the, the equation for them.

• 52:54Chamath Palihapitiya?

  My comment is more TAC has to become a weapon on the forward foot, number one. So if you're going to spend twenty one percent of your revenue on TAC, you should be willing to spend thirty to forty percent to maintain the ninety three percent market share. I don't think what you want to see is your profit dollars decay because you lose share. It's rather better for you to spend the money and decay your business model than have someone decay it for you in general.

• 53:19David Friedberg?

  Well, Apple, at this point, Apple is really the only TAC line item for search.

• 53:23Chamath Palihapitiya?

  I understand, I'm not talking about today. I'm saying, take that idea. You have an entire sales team whose job it is right now to sell AdSense, right? You have an entire group of people who know how to account for TAC and how to think about it as a cost. But if you're basically willing to say, out of the $100 billion of free cash flow, I'm willing to go to 80 or 70 billion of free cash flow, combined with the 100 billion of short and long-term investments I have, and I'm going to use it as a weapon, and I'm going to go and make sure that all of these publishers have a new kind of agreement that they signed up for, which is, I'll do my best to help you monetize, you do your best by being exclusive to our AI agents, right?

• 54:06Chamath Palihapitiya?

  So you deprive other models of your content on your pages, because that will get litigated, and there is no way, just like, again, if you say, "Do not crawl," you're not allowed to crawl if you're Google or Microsoft or Search. So this is going to happen for these agents. It's unrealistic to expect that it won't. So my point is, Google should do this and define how it's done before it's defined for them, because right now, people are in this nascent phase where everybody thinks everybody's going to be open and get along, and I just think that that's unrealistic.

• 54:36David Friedberg?

  It's a really important kind of philosophical question. First off, like, Google today, just so people know, on AdSense is typically paying out 70 cents on every dollar to the publisher. There's, you know, it's a, it's a, it's a pretty, you know, generous, and it's, it's the way they've kind of kept the competitive moat, you know, wide and kept folks out of beating them on third-party ad network bids, because they bid on everything, and they always win because they always share the most revenue back. So they, they, they own that market. With respect to acquiring content, you know, the, the internet is open. It's an open protocol. Anyone can go to any website by typing in the IP address and viewing the content that a publisher chooses to make available on that server to display to the internet. And there's a fair use policy.

• 55:14Chamath Palihapitiya?

  That's not true.

• 55:15David Friedberg?

  And there's, you, you can, you can type in any IP address.

• 55:18Chamath Palihapitiya?

  I think 15 or 20 or 30% of the pages on the internet right now are apps that are closed. Facebook's closed, Instagram's closed.

• 55:24David Friedberg?

  I'm talking about the open internet, right? So like, the content on the open internet.

• 55:27Chamath Palihapitiya?

  But I'm saying, the open internet matters less and less.

• 55:30David Friedberg?

  Yeah, I don't know. I mean, look, you're right. Maybe there's the enhancement of the models. But my point being that if the Internet is open and you and I spent a billion lifetimes reading the whole Internet and getting smart, and then we were the chatbot, and someone came and asked us a question, and we could kind of answer their question, because we've now read the whole Internet, do I owe licensing royalty revenues to the knowledge that I gained and then the synthesis that I did, which ultimately meant excluding some things, including some things, combining certain things? And the problem with these LLMs, these large language models, is that you end up with 100 million, a billion-plus parameters that are in these models that are really impossible to deconvolute. You don't know, we don't really understand deeply how the neural network

• 56:15David Friedberg?

  is, the model is defined and run based on the data that it is constantly kind of aggregating and learning from. And so to go in and say, hey, it learnt a little more from this website and a little less from that website-

• 56:26Chamath Palihapitiya?

  No, I'm not saying that.

• 56:26David Friedberg?

  -is a practical impossibility.

• 56:28Chamath Palihapitiya?

  I'm saying, when you look at transformer architecture today, every LLM that you write on the same corpus of underlying data for training will get to the same answer. So my point is, today, if you're a company, the most important thing that you can do, especially if you have a $1 trillion-plus market cap that could get competed away, is to figure out how to defend it. And so all I'm saying is, from the perspective of a shareholder of Google, and also from the perspective of either the board of directors or a senior executive, or the CEO, this should be the number-one thing that I'm thinking about. And my framing of how to answer that question is, build a competitive moat around two things.

• 57:09Chamath Palihapitiya?

  One is at the end, which is, how much money and what kind of relationship do I have with my customers, including the publishers, and can I give them more, so that, number two, is I can affect who they decide to contribute their content to. So you're right. Let's assume that there are- Five of these infinite libraries in the world.

• 57:34David Friedberg?

  You mean non-public content?

• 57:35Chamath Palihapitiya?

  How important, and also public, how important is it if Quora says, you know what, guys? I've done a deal where my billions of paid views and all of that really rich content, Quora has incredible content, Google's paying me $2 billion a year, and so I've decided to only let Google's AI agents crawl it. And so maybe when there are questions that Quora is already doing a phenomenal job of answering, I think it does make a difference that Google now has access to Quora's content and others don't.

• 58:06David Friedberg?

  Right, for Hot Minute, they did have access to the Twitter fire hose, and that was the premise, was we could get this corpus of data that we can have in a very limited, restricted way. They paid Twitter a lot of money. I don't think that those deals exist anymore, Twitter. I mean, you guys might know better than I do, but I don't think they exist anymore.

• 58:21Jason Calacanis?

  Here's where it's a mouth, I think you're right. And maybe, Dave, I think you're being too forgiven. These models know where they got the data, and they can easily cite the sources, and they can easily pay for it. And if you want to see an example of this-

• 58:36Chamath Palihapitiya?

  Sorry, can I just add something?

• 58:37Jason Calacanis?

  Hold, go ahead.

• 58:38Chamath Palihapitiya?

  You're absolutely right. The video in the Wall Street Journal where Satya was interviewed showed a demo, and you're exactly right, they actually showed, Jason, in the search results-

• 58:47Jason Calacanis?

  Yes.

• 58:47Chamath Palihapitiya?

  The five or six, but it made no sense, because it's like, how do you know that those are the five most cited places that resulted in this-

• 58:54Jason Calacanis?

  Well, by PageRank technology, or the authority of the website, or the author. But let's pause for a second here. There is a company called neeva.com. I'm not an investor, none of us are. It's a former Googler. They have 78 employees, I think, according to LinkedIn. I just typed in, what are the best flat panel TVs? Here's the result, and as you see, sentence by sentence, as it rewrites another person's content, it links with a citation, just like the Wikipedia does. And when you scroll to the bottom of it, it tells you, hey, this is from Rolling Stone, this is from Best Buy, this is from Ratings. And if that answer is good for you, and you trust those sources, those people should get a commission. Every time, there's a thousand searches, and you come up, you should get a dollar every time your data was used.

• 59:36Jason Calacanis?

  And if not, these sites should sue the daylights out of Google. And for Google to say they can't do it is hogwash. Why isn't it fair use? They can attribute it. It's not fair use, because- In fair use, you have the ability to create derivative works on future platforms, and you are taking this person, the original content owner's ability to exploit that, and you are co-opting it, and you're doing it at scale, and that is against fair use. You're not allowed to interfere with my ability to make future products, David. You know this as an attorney.

• 1:00:05Chamath Palihapitiya?

  The problem with that idea- I'm not an IP lawyer, sorry.

• 1:00:08Jason Calacanis?

  All right, well, I play one on TV, and this podcast.

• 1:00:11Chamath Palihapitiya?

  The problem with that idea, just from a product perspective for a second, is that if you limit how they can tokenize to just being all entire sentences, the product will not be that good. Like, the whole idea of these LLMs is that you're running, you know, so many iterations to literally figure out what is the next most best word that comes after this other word. And if you're all of a sudden stuck with blocks of sentences as inputs that can't be violated because of copyright, the product will not be as good. I just don't think it'll be as useful.

• 1:00:41Jason Calacanis?

  Correct.

• 1:00:42David Friedberg?

  These are also not deterministic models, and they're not deterministic outputs, meaning that it's not a discrete and specific answer that's going to be repeated every time the model is run. These are statistical models. So they infer what the right answer could or should be based on a corpus of data and a synthesis of that data to generate a response to a query. That inference is going to be, you know, assigned some probability score. And so the model will resolve to something that it thinks is high probability, but it could also kind of say, hey, there's a chance that this is the better answer, this is the better answer, and so on. And so when you have, like you have in the internet, competing data, competing points of view, competing opinions, the model is synthesizing all these different opinions and doing what Google's search engine historically has done well, which is trying to rank them

• 1:01:27David Friedberg?

  and figure out which ones are better than others, and that's a very dynamic process. And so if, as part of that ingest process, one is using some openly readable dataset, that doesn't necessarily mean that that dataset is improving the quality of the output or is necessarily the answer from the output.

• 1:01:45Jason Calacanis?

  Correct. Let me just give everybody a quick four-factor- Education on fair use. And here it is from Google's actual website because they deal with this all the time. And when you look at it, the nature and purpose and character of the work, including whether such use is not profit or educational purposes. So that first test of fair use is, hey, if you're using it educationally and you want to make a video that is criticism of Star Wars prequels or how to shoot a shot like this Quentin Tarantino, if it's educational, it's fine. And courts typically focus, I'm reading here from Google, on whether the use is transformative. That is whether it adds new expression or meaning to the original or whether it merely copies the original. It's very obvious that this is not transformative. They're just rewriting it. The nature of the copyright.

• 1:02:30David Sacks?

  Seems pretty transformative to me.

• 1:02:32Jason Calacanis?

  I don't think so.

• 1:02:33David Sacks?

  What are you talking about? They're coming out with entirely new content.

• 1:02:36Jason Calacanis?

  They're just rewriting it. They're not actually adding anything to it.

• 1:02:39David Sacks?

  If a human did, it'd be fine.

• 1:02:41Jason Calacanis?

  If a human does it, it's not.

• 1:02:45David Sacks?

  It's pretty transformative. Come on, J. K. It's pretty cool. Listen, J. K., I think, I think. I think the rights issue, I think the rights issue is just like the cost issue, which is a problem today, maybe, but it's going to get sorted out.

• 1:02:56Jason Calacanis?

  But, but here, let me finish.

• 1:02:57David Sacks?

  New technology waves that are this powerful don't get stymied by either chip costs or legal rights issues.

• 1:03:04Jason Calacanis?

  They do by lawyer.

• 1:03:05David Sacks?

  They're going to get worked out.

• 1:03:06Jason Calacanis?

  You're 100% wrong. YouTube got stopped dead in their tracks and the only way YouTube and Napster got stopped in the tracks, I predict this is going to get stopped dead in its tracks with YouTube level near-death experience lawsuits.

• 1:03:18David Sacks?

  This is different.

• 1:03:18Jason Calacanis?

  And Google was enabled piracy and then they had to build tools to fight against

• 1:03:23David Sacks?

  I deeply disagree with J. K. I deeply disagree with you. I disagree with both of you guys. You guys both think that all, that cost is going to stand in the way. Nothing's going to stand in the way of the AI.

• 1:03:31Jason Calacanis?

  No, it's going to stay.

• 1:03:32David Sacks?

  I don't think it's standing in the way. The AI wants to happen.

• 1:03:34Jason Calacanis?

  Big companies using AI to, to.

• 1:03:37David Sacks?

  The AI is already happening.

• 1:03:38Jason Calacanis?

  AI is happening.

• 1:03:39David Sacks?

  Let's move the conversation forward. Actually, I want to tell you my AI experience.

• 1:03:43Jason Calacanis?

  I would like to make my point.

• 1:03:44David Sacks?

  We don't need your amateur lawyer opinions.

• 1:03:46Jason Calacanis?

  I am going to give my point. I don't give a shit if you want it or not. The effect of.

• 1:03:50David Sacks?

  Are you going to bill us $500 an hour for pretending to be a lawyer on TV?

• 1:03:53Jason Calacanis?

  The effect of abuse. Let's look at this.

• 1:03:56David Sacks?

  He's better call Saul. I've heard this point of you before from you.

• 1:03:59Jason Calacanis?

  Here it is. Okay, take it easy, Mr. Sub. Better call J Cal.

• 1:04:03David Sacks?

  You've done this.

• 1:04:05Jason Calacanis?

  The effect, listen to this, the effect of the use upon the potential market for or value of the copyright work. Uses that harm the copyright, listen to this, very important.

• 1:04:15David Sacks?

  When the AI takes over the world like Skynet, J Cal's gonna be like, I thought we'd stop this with rights.

• 1:04:21Jason Calacanis?

  Listen to this. AI is not gonna be stopped, but companies using AI to steal content will be. Effective use, uses that harm the original copyright owner's ability to profit from his or her original work by serving as a replacement.

• 1:04:34David Sacks?

  Check out, they're gonna figure it out.

• 1:04:35Jason Calacanis?

  For that work are less likely to be fair uses.

• 1:04:38David Sacks?

  They're gonna figure it out.

• 1:04:39Jason Calacanis?

  The one.

• 1:04:40David Sacks?

  Okay, great. Okay. You made your point. You made your point and you made me right.

• 1:04:44Jason Calacanis?

  Sorry, do we need to get to Marjorie Taylor Greene for you to have a good show? Sure. Let's queue up Marjorie Taylor Greene.

• 1:04:50David Sacks?

  No, no, hold on, hold on.

• 1:04:51Jason Calacanis?

  How much did you raise for her?

• 1:04:53David Sacks?

  I have something, I have another aspect of the AI thing I want to talk about. Besides just this, like, internal rights issue that you're going on and on.

• 1:05:00Jason Calacanis?

  Better call J Cal, go.

• 1:05:02David Sacks?

  So I had an interesting, you know, AI experience this week, and I think we're all gonna start having these stories.

• 1:05:08Jason Calacanis?

  Oh, you use the AI to make a script of how to talk to your kids?

• 1:05:10David Sacks?

  Every week there'll be some new, like, use case that you see that you're kind of blown away by. The use case I saw this past week in a product demo was they were showing me like an Excel spreadsheet, like a very complicated Excel spreadsheet modeling a financial asset. And they had a plugin to a ChatGPT type AI. And so they just asked it, they typed in, what does this spreadsheet do? And it spit out like a one paragraph explanation of what the spreadsheet did, and it was really good. I mean, because me just eyeballing the spreadsheet, I could not have figured out like instantly what that thing did. It would have taken me like a while to figure it out. It told me, here are the key inputs, here are the key outputs.

• 1:05:52David Sacks?

  So that was number one. Then they did something I think even more interesting, which is they said. Give me the formula that tells me when the yield is above 2% and this and that and that. And the chat GPT spat out a formula that was like perfect Excel logic. That was something that, you know, you or I could never figure out, right? You'd need like a super pro user of Excel to basically know how to do this stuff. So it spit it out and like boom, it worked instantly. They copy and paste into the spreadsheet and you could basically, like the spreadsheet was much more advanced now. So what it got me thinking about is that we're going to have these little assistants everywhere.

• 1:06:33David Sacks?

  You combine that power with say, speech to text, right? Because we could have just talked to it, it would, the speech to text would transcribe the instruction, spit it back out and you're going to have these like little personal digital assistants in applications. I think, you know, it's pretty obvious to see how AI could replace call centers with, you know, having the frontline call center operator be, instead of being a human, it could be like an AI. But this is actually even before that. Like you could actually, I think in every single application that we use, there's going to be an AI interface and like a, it is probably going to be voice based, where you can just say to it, hey, I'm trying to accomplish this. Like, how do I do it? Can you just make it happen?

• 1:07:16Chamath Palihapitiya?

  Totally.

• 1:07:17David Sacks?

  And it's going to be really powerful, actually.

• 1:07:19Chamath Palihapitiya?

  I have an idea. I was hanging out with Andre Karpathy and I gave him this following challenge.

• 1:07:24David Friedberg?

  So there I was.

• 1:07:25Chamath Palihapitiya?

  So there I was. I said, if you had to build Stripe, I said, how many engineers do you think it would take you and how long would it take you to build a competitor? I was just, just a thought exercise. You know, it would take hundreds of millions of dollars and years. Now imagine you could, you were feeling threatened by Stripe. Imagine you're a large company. Visa, Mastercard, just as an example. You can now actually get one or two really smart people like him to lead an effort where you would say, here's a couple hundred million dollars to compete with Stripe, but here are the boundary conditions. Number one is you can only hire five or 10 engineers.

• 1:08:08Chamath Palihapitiya?

  And so what you would do is you would actually use tools like this to write the code for you. And the ability to write code is going to be the first thing that these guys, that these things do incredibly well with absolute precision. You can already do unit testing incredibly well, but it's going to go from unit testing to basically end to end testing. And you'll be able to build a version of Stripe extremely quickly and in a very lean way. So then the question is, well, what would you do with the 200 or 300 million you raised? And my thought is you use it again as tax.

• 1:08:39Jason Calacanis?

  Acquire customers.

• 1:08:41Chamath Palihapitiya?

  You go to customers and you're like, well, listen, if Braintree is going to charge you one basis point over Visa, Mastercard and or sorry, 100 basis points and Stripe will 50. You know what? I'll charge 10.

• 1:08:53Jason Calacanis?

  Margin destruction.

• 1:08:54Chamath Palihapitiya?

  Margin destruction.

• 1:08:55Jason Calacanis?

  Totally.

• 1:08:56David Friedberg?

  And this is going to make everything.

• 1:08:57Chamath Palihapitiya?

  So interesting. You can take any business that's a middleman business. I think this is the point. Any middleman business right now that doesn't have its own competitive mode can be competed against. Because now you can take all of those input costs that go into human capital. You can defer that, have a much smaller human capital pool and push all of that extra money into traffic acquisition.

• 1:09:19Jason Calacanis?

  This goes to the movement in Silicon Valley of being more efficient. This is going to lead to that efficiency.

• 1:09:23David Friedberg?

  Benefit of all of this is economic productivity because the end customer that's using that tool that you just mentioned, they now have a lower cost to run their business. And their total net profits go up. And this is what happens with every technology cycle. It always yields greater economic productivity and that's why the economy grows and that's why I just want to say this is so important. That's why technology is so important to drive economic growth, not debt. We've historically used financial engineering to drive economic growth.

• 1:09:49Jason Calacanis?

  And this is why we need immigration.

• 1:09:51David Friedberg?

  Technology and innovation drive this.

• 1:09:53Jason Calacanis?

  What about China?

• 1:09:54David Sacks?

  Wait, what are you talking about? What we're describing here is, is AI making it harder and harder to make humans productive. So you want to like bring in millions of.

• 1:10:05David Friedberg?

  It's more productivity per human of labor. Yeah, human, one human, one human can, can do the coding that 20 humans would do before.

• 1:10:13David Sacks?

  Assuming they're skilled enough to use the AI.

• 1:10:15Chamath Palihapitiya?

  Guys, go back to, go back to like traditional capitalism.

• 1:10:18Jason Calacanis?

  Easier than programming.

• 1:10:20Chamath Palihapitiya?

  Go back to traditional capitalism for a second. So go back because the Stripe example is another good one. So if you have this business model, right, how does the ecosystem get efficient, right? How do we create more opportunity to use Friedberg's language? Well, the only way that it really happens, how does cost go down, is that certain entities become big enough that they can drive the prices down, right? An Uber, a DoorDash, or whomever says, yes, I need payments capability. So Braintree, give me your best bid, checkout.com, give me your best bid, Adyen, give me your best bid, Stripe, give me your best bid, you compete it down, right? Amazon comes in, Walmart comes in, they do it in physical CPG goods, they do it online, they do it for all kinds of technologies. But you've never had an internal form that can create hyper efficiency

• 1:11:04Chamath Palihapitiya?

  and basically create customer value like this thing can, because this thing can allow

• 1:11:11Jason Calacanis?

  Let me show you an example.

• 1:11:12Chamath Palihapitiya?

  a billion, jillion, 10-person companies to get created that can do the work of 10,000 people.

• 1:11:16Jason Calacanis?

  These are the two.

• 1:11:17Chamath Palihapitiya?

  That's so cool.

• 1:11:17Jason Calacanis?

  Hold on, let me show you two things. These are two aha moments I had this week. This first one was called Galileo AI. It was just a tweet. You describe the design of an app. And here they say, an onboarding screen of a dog walking app.

• 1:11:28Chamath Palihapitiya?

  Incredible.

• 1:11:29Jason Calacanis?

  And you type that in, and it gives you a welcome screen. That's like a seven out of 10. Then it says, oh, a way for people to change their name, phone number, password. You know, that classic screen on any app, I need to change my thing. Boom, it gives you that. Well, then, at the same time that people are making text to UX, user interface, beautiful here, this stuff will get dumped into Figma. But then, there's GitHub Copilot, which if you haven't seen, we all know it here. This is allowing you GitHub, and GitHub Copilot, GitHub is bought by Microsoft, another one of Satya Nadella's incredible acquisitions. This guy's like the new Zuckerberg. I mean, what an incredible person to come after a bomber who's just so effective at what he's doing.

• 1:12:13Jason Calacanis?

  As you're writing your code, it fills in your code. It knows what you're writing, just like in an email. And it's a smaller subset of information than email. Email, you could write anything. You could be, you know, talking to a lover or a business person, whatever. Here, when you're doing programming, it's a much finer data set. These two things are going to come together where you're going to be able to build your MVP for your startup by typing in text and then publish it. You're not going to need a developer for your startup. That is transformative in the world.

• 1:12:41David Friedberg?

  Let me ask you guys a question. Do you think that this leverage, and I argue this is all about like leverage. It's one person can generate X units of output more.

• 1:12:51Jason Calacanis?

  Yep.

• 1:12:51David Friedberg?

  Do you guys think that this commoditizes and puts at risk, SaaS in particular, like all of enterprise SaaS, because it becomes such a commodity to basically build a business that does something now? Or does it create much higher returns for investors because you invest so much less capital to get to a point of productivity with that business, or revenue with that business than was needed before?

• 1:13:12David Sacks?

  I'm not sure. I tend to think that if it gets easier, then everything becomes more competitive. So.

• 1:13:20David Friedberg?

  Right.

• 1:13:21David Sacks?

  I don't know, but.

• 1:13:22David Friedberg?

  So value gets competed away.

• 1:13:23David Sacks?

  By the way, I would slightly disagree with the characterization.

• 1:13:26David Friedberg?

  Does this scare you as an investor in?

• 1:13:28David Sacks?

  I don't know. I mean, like, for example, in that demo we just saw, what does the AI do? It exports the new design assets to Figma format.

• 1:13:37Jason Calacanis?

  Yeah, it just makes you faster.

• 1:13:38David Sacks?

  So if you can create a SaaS product that becomes a standard, everyone's still going to want to use it. And there's like really good reasons for that. So I don't know. I don't think, I don't think business software is going away. I also don't think that like you're not going to need to hire engineers because Copilot is just going to do it for you. I think what Copilot will do is make your typical engineer more productive.

• 1:13:58Jason Calacanis?

  Yes.

• 1:13:59David Sacks?

  They had some graphs around how like Copilot reduced coding time by 50%.

• 1:14:05David Friedberg?

  Right.

• 1:14:05David Sacks?

  So I think you'll be able to get a lot more out of your developers. I think that's sort of the key is a lot of the drudgery work gets taken care of.

• 1:14:13Jason Calacanis?

  The answer, Friedberg, to your question is, I think more startups, more niche startups will make better products, and then you'll just have many more folks like making SaaS for dentists, making SaaS.

• 1:14:24David Friedberg?

  Are those ventures, they don't get big enough, right? I mean, in that case.

• 1:14:28Jason Calacanis?

  Well, entry price matters.

• 1:14:29Chamath Palihapitiya?

  It'll be poorer returns.

• 1:14:31Jason Calacanis?

  Well, entry price matters too. If you're investing at five million like I do in companies when they're just on napkins and, you know, back of envelope, there's plenty of room. If you have a $200 million exit, that's a 40x.

• 1:14:41David Sacks?

  But there could be a lot of new categories too, like a lot of new categories.

• 1:14:45David Friedberg?

  There could be a lot of, a lot of traditional industries.

• 1:14:48David Sacks?

  There's a lot of traditional industries that get disrupted. Like, we're thinking about just software displacing software. It could be software displacing like industries that aren't even software yet.

• 1:14:57David Friedberg?

  Video games. I think the entire video game industry is going to get completely rewritten with AI because you're not going to have a publisher anymore that makes one game that everyone consumes. You're going to have tools that everyone creates and consumes their own game. You guys want to watch this cool clip? It's 58 seconds long.

• 1:15:11Jason Calacanis?

  Go ahead.

• 1:15:12David Friedberg?

  This is a music.

• 1:15:12Jason Calacanis?

  Clip day here on All In.

• 1:15:14David Friedberg?

  But I thought it was really cool.

• 1:15:15Jason Calacanis?

  Is this AI turning you into Eminem? This is what the world's waiting for. I hope it's you doing an Eminem song.

• 1:15:21David Friedberg?

  I'm naturally Eminem-like, but this is a...

• 1:15:24Jason Calacanis?

  Only in your anger.

• 1:15:25Speaker 07

  This is the future rave sound. I'm getting lost in an underground. This is the future rave sound. I'm getting lost in an underground.

• 1:15:33David Sacks?

  Is that Eminem?

• 1:15:34David Friedberg?

  It's David Guetta, David Guetta playing Eminem at track with Eminem's voice, right? And the track just became hugely viral.

• 1:15:42Speaker 10

  Something that I made as a joke and it works so good, I could not believe it. I discovered those websites that are about AI. Basically, you can write lyrics in the style of any artist you like. So I typed, "Write a verse in the style of Eminem about future rave." And I went to another AI website that can recreate the voice. I put the text in that. And I played the record and people went nuts.

• 1:16:15Jason Calacanis?

  All right. It's, that is nuts. It's nuts. And the crowd went wild for it. So here it is, folks. Whoever makes the best Friedberg Eminem hybrid rap with David Sacks as the hype man is getting a free VIP ticket to All In Summit 2023.

• 1:16:30David Friedberg?

  I think we need a real performance at All In Summit 2023.

• 1:16:33Jason Calacanis?

  1,000%. You and I are so in sync these days, Friedberg.

• 1:16:37David Sacks?

  There are going to be a lot of interesting mashups that get created. Like, for example... You'd be able to create a movie where, let's say you want to make a western and you want John Wayne to star in it. I mean, you obviously got to get the rights from the

• 1:16:48David Friedberg?

  But let's say you want to make it.

• 1:16:49David Sacks?

  No actor ever goes away. You could, there's gonna be a database of all of them. But if you wanted to make it.

• 1:16:54Jason Calacanis?

  It's gonna be better. You're gonna be writing the script. As you write the script, the AI is gonna be showing you that scene in real time.

• 1:17:00David Friedberg?

  And you don't have to publish it, right?

• 1:17:02Jason Calacanis?

  Cloudy day, rainy day, it'll just change in real time. Think about what that would do for Star Wars.

• 1:17:07David Friedberg?

  Yeah, just like Instagram, just like Instagram and TikTok, basically democratize like everyone's ability to create and publish content. This takes it to a whole nother level where the monopoly that big, um, uh, production houses have because they have the big budget so they can afford to make a big movie. If that cost of making a $10 million movie goes to $10,000 or $1,000 of compute time, anyone sitting in their studio in a basement can start to make a movie. And it really changes the landscape for all, um, media, not just movies, music, video games. And ultimately, the consumers themselves can create stuff for their own enjoyment and maybe the best of those products win.

• 1:17:45Jason Calacanis?

  Yeah.

• 1:17:46David Friedberg?

  But, but having each individual create their own content.

• 1:17:49David Sacks?

  We've just become a lot more like the music industry. I mean, remember, anyone can really create a song now. And they do, and, and people do go viral on TikTok.

• 1:17:55Jason Calacanis?

  Then they upload it on DisroKid and it's on Spotify.

• 1:17:58Chamath Palihapitiya?

  Did you guys see this article in the New York Times that was kind of throwing some shade at the CEO Goldman Sachs, David Solomon?

• 1:18:06David Friedberg?

  Yes.

• 1:18:06Jason Calacanis?

  I did see the headline. He looked great in the picture, but I didn't read it because I figured it's hate.

• 1:18:10Chamath Palihapitiya?

  They were talking about his, his side gig as being a DJ, but specifically they called out a potential conflict of interest. And it's related to this because what, I guess he had gotten a license to a Whitney Houston song. And he remixed it and released it on Spotify.

• 1:18:29Chamath Palihapitiya?

  And her biopic is about to come out and they thought that there could be this perceived conflict because Goldman works on behalf of the publishing company. And my thought was along the lines of what you guys said, like, why is this a story? Meaning David Solomon should be able to go to any website, license the song, make it, and then submit it back to them for them to approve. Because the quote in here that, that matters is the company that licensed it said, we are in the business of making sure this body of music stays relevant. So obviously you want Whitney Houston songs, Michael Jackson songs, you want John Wayne. You want these people to live on in culture because it's part of our culture.

• 1:19:06Jason Calacanis?

  Look at this subhead. David Solomon brushes off DJing.

• 1:19:10Chamath Palihapitiya?

  The better way to maximize it will be like this, go and use it, create a derivative work. Let us see it if we like it. So like Guetta should be able to just give that back to Eminem. If Eminem's cool with it, he should be able to ship it and just be done.

• 1:19:21Jason Calacanis?

  What a non-story. Like the New York Times is just so anti-billionaire. David Solomon brushes off DJing as a minor hobby that has little to do with his work at the bank. But his activities may pose potential conflicts of interest. It's like, what are they writing about? Is there not something more important than this?

• 1:19:39Chamath Palihapitiya?

  Do we think that David Solomon or any CEO of any major bank on Wall Street would put their job at risk running one of the 20 or 30 most important institutions in the financial architecture of the world to license a Whitney Houston song that they can play at Coachella? I mean, does that pass the smelt test?

• 1:19:56Jason Calacanis?

  No, no. And, and just for the record, iconoclastic David Solomon, you're going to be doing the opening night DJ set for All in Summit 2023. The grift, the grift is on. Let's get him. He's booked. If the New York Times hates him, you got, anybody the New York Times hates on, you got a slot. You got a slot. That's it. That'll be our lens here.

• 1:20:16Chamath Palihapitiya?

  Dave Chappelle?

• 1:20:17Jason Calacanis?

  Dave Chappelle for sure. 1,000%. I mean, he looks good. It looks like he's living his best life. So finance nerd.

• 1:20:23David Sacks?

  Does this just like offend them somehow? It just like offends them that a corporate CEO could?

• 1:20:28Jason Calacanis?

  Well, that anybody's happy.

• 1:20:29David Friedberg?

  Well, I, I, I think it's kind of, I think it's kind of cool. This guy.

• 1:20:34Jason Calacanis?

  Punk rock.

• 1:20:34David Friedberg?

  Yeah.

• 1:20:35Jason Calacanis?

  Fuck yeah.

• 1:20:36David Friedberg?

  Let him do his thing.

• 1:20:37Chamath Palihapitiya?

  I've always wanted to be a DJ.

• 1:20:38David Friedberg?

  Yeah.

• 1:20:39Jason Calacanis?

  Oh, DJ Palihopetia.

• 1:20:41Chamath Palihapitiya?

  Spin the one and twos.

• 1:20:42David Friedberg?

  You could be DJ one night at the All In 2020, 30 after-party and we'll use AI to help you out.

• 1:20:47Chamath Palihapitiya?

  Sadly, when I should have been learning how to DJ, I was playing the violin.

• 1:20:51Jason Calacanis?

  Oof, ah, you should get up there and irkle your violin under a DJ set.

• 1:20:56David Friedberg?

  Come on, I played violin for 10 years. We can play a duet together.

• 1:20:59Chamath Palihapitiya?

  I played 14 years in an orchestra. I played in an orchestra.

• 1:21:03David Friedberg?

  Oh my God, I never knew this.

• 1:21:04Chamath Palihapitiya?

  Never again.

• 1:21:05Jason Calacanis?

  This is all kind of revelations happening here. By the way, here is my most, pull up that first chat GPT I gave you. This was an aha moment, me and. Saks were doing our weekly mastermind group. Saks and I get together, we kind of like co-mentor each other. Here was uh, somebody who blew us away during our mastermind group. This was a chat GPT. I did this one because I was trying to figure this out. How do I make my spouse and kids feel heard? And in chat GPT gave us a great one. Give them your full attention. Number two, empathize. Number three, validate their feelings. There you have it, Saks. Just put that into your subroutine, you'll be fine.

• 1:21:37David Friedberg?

  Let me use this as an example. What public, so that's obviously the aggregation and synthesis of lots of different self-help websites. How do you describe attribution of that answer to a particular content publisher? Honestly, serious question.

• 1:21:49David Sacks?

  Fair use. Derivative work.

• 1:21:52Jason Calacanis?

  I think in this case, it would be compassionate that you could do this under our

• 1:21:56David Sacks?

  No monetization opportunity there. There's no monetization.

• 1:21:58Jason Calacanis?

  Yeah, you say that because you hate content providers, but here I tell you, this is compassionate publishing. I think the GPT, the chat GPT should be given a pass.

• 1:22:05David Friedberg?

  You have weird blinders on on this one, J K. I'll be honest.

• 1:22:07Jason Calacanis?

  No, they know who they got it from. They know who they got it from.

• 1:22:10David Friedberg?

  It's a synthesis of lots of websites. It's a very smart synthesis.

• 1:22:13Jason Calacanis?

  You can build the software.

• 1:22:14David Friedberg?

  It's not pulling a result from someone's website. It's like read hundreds of websites and it's like average them.

• 1:22:19Jason Calacanis?

  Bull dog.

• 1:22:20David Friedberg?

  How do you pay for the average?

• 1:22:21Jason Calacanis?

  It's, that's complete bullshit. They could say, as we ingest this stuff, tag it.

• 1:22:25Chamath Palihapitiya?

  That is how it's being done.

• 1:22:27Jason Calacanis?

  And then you could publish it. When you publish it, you say, hey, where do we source this from?

• 1:22:30David Friedberg?

  You're going with J K. Is that what you're saying?

• 1:22:32Chamath Palihapitiya?

  No, I'm saying it's not bullshit. That is, what you said is exactly how it's being done.

• 1:22:35David Sacks?

  Right. And, and, and J K, if, let's say that the AI is using a hundred different websites and synthesizing a hundred websites. What's the incentive for the marginal hundredth website to say, well, opt me out unless you pay me?

• 1:22:48Jason Calacanis?

  Right. So that's a shakedown. That's a shakedown.

• 1:22:51David Sacks?

  OpenAI will just be like, okay, fine. We'll, we'll just work with the other 99.

• 1:22:54Jason Calacanis?

  And this is why content providers, this is my best piece of advice. You asked a question, I'll give you the answer. Content providers as a group need to get together and fight for their rights in unison. New York Times, Metacritic.

• 1:23:04David Sacks?

  Fight for the right to party?

• 1:23:05Jason Calacanis?

  No, fight for the right to get paid and to survive.

• 1:23:08David Friedberg?

  I'll tell you what I think is gonna happen.

• 1:23:09Jason Calacanis?

  And say, as a group, either give us these terms or don't index us.

• 1:23:13David Sacks?

  You're trying to unionize all the content creators.

• 1:23:16Jason Calacanis?

  Absolutely, unionize all of them. They should be a united front like the music industry. Why do you think the music industry gets paid by Peloton and anybody else?

• 1:23:23Chamath Palihapitiya?

  Because it was easy for the

• 1:23:24Jason Calacanis?

  Five of them get together and they fight.

• 1:23:26Chamath Palihapitiya?

  There's five of them and you could organize, but there's millions and millions of publishers. I think the point here is that technology is fundamentally deflationary. Here's the next great example.

• 1:23:35David Friedberg?

  Correct.

• 1:23:36Chamath Palihapitiya?

  Where the minute you make something incredible, costs go down, but also frankly, revenue and profit dollars go down in the aggregate. Doesn't mean that one company can't husband a lot of it and do incredibly well like Google has done, but it's just gonna fundamentally put pressure on all these business models. Which is why I think it's important for Google to take Google should go and they should cannibalize their own business before it is cannibalized for them.

• 1:24:01Jason Calacanis?

  Free birth final word.

• 1:24:02David Friedberg?

  Here's another way to think about it. I think that if this goes as we all predict and everyone's saying it's gonna go, it is more likely than not that many of these quote content publishers that aren't adding very much marginal value are going to go away. That you could see the number of content sites offering self-help advice and how to do this and how to do that. Ninety-five percent of them go away because all of that work gets aggregated and synthesized and presented in a really simple, easy user interface that makes them completely oblivious. And I'm not discrediting the value that many content publishers provide, but the, um, you know, the requisite at that point to be valued as a quote novel content producer is gonna go way up.

• 1:24:40David Sacks?

  Like the offset to that though, is it's so much easier to create content because of the AI.

• 1:24:45David Friedberg?

  Totally true.

• 1:24:45David Sacks?

  You know, we have this company, Copy AI, where even before this chat GPT stuff, you would just go there and say, I want to write a blog about X, Y, and Z. You just give it a title and it spits out a post and then they'll actually give you 10 different blog posts and then you just select the one that is the direction you want to go and you keep doing, you know, human selection on it.

• 1:25:05Jason Calacanis?

  But how does new intelligence get put back into the system? That's based on an existing corporate system.

• 1:25:11David Sacks?

  No, you have like a corporate blog, so you publish it to your corporate blog.

• 1:25:13Jason Calacanis?

  My point is if there is now Some new information in the world. Who is going to add that to the corpus if everybody is just stealing content and rewriting it? Not stealing.

• 1:25:23David Sacks?

  Humans have always had a desire to create. Most people create for free. There's a head of the long tail that actually gets compensated. The rest of the long tail has traditionally gotten nothing and they do it because they want to create.

• 1:25:34Jason Calacanis?

  It's kind of like saying.

• 1:25:36David Sacks?

  The creation is going to explode because it's so easy.

• 1:25:38David Friedberg?

  Beethoven listened to Haydn and then Beethoven wrote novel symphonies and his symphonies were incredible and he built on the experience of listening to Haydn. The same is true of how content is going to evolve and it's going to evolve in a faster way because of AI. And this content is not just being retrieved and reproduced. It's being synthesized and aggregated and represented in a novel way.

• 1:25:58Jason Calacanis?

  By the way, I want to answer that. I want to answer that, please. If ChatGPT takes a Yelp review and a, you know, a Conde Nast traveler review and they represent it based on the best content that's out there that they've already ranked because they have that algorithm with PageRank or Bing's ranking engine. And then they republish it and then that jeopardizes those businesses. That is profoundly unfair and not what we want for society. And they are interfering with their ability to leverage their own content. It is profoundly unfair and those magazines and newspapers need to... What's up?

• 1:26:31David Sacks?

  You're going to get steamrolled.

• 1:26:32Jason Calacanis?

  It's possible. YouTube is a great example. YouTube was going to get shut down. Sequoia and the YouTube founders sold it to Google because they were so scared of the Viacom lawsuit and how well it was working against them. They thought this is, this business will never fly if we don't have a big partner like YouTube, like Google to support the lawsuit. They, they won the lawsuit or they settled it because they were able to do content ID and allow content creators. The only reason YouTube exists is, hold on, let me finish, is because they let content creators watermark and find their stolen content and then claim it. And when they claim the stolen content, they were able to monetize it. That's what's going to happen here. There'll be a settlement where they are going to be able to claim their content.

• 1:27:17David Friedberg?

  I will bet any amount against your, your, your, your premonition here, J Cal. This is like the opposite of No Verdas.

• 1:27:24Jason Calacanis?

  Propose a bet.

• 1:27:25David Sacks?

  You've seen these AIs that generate images, right? Like Stable Diffusion and like Wally or whatever. You literally just tell it, I want this image in this style. And boom, it's done. And it would take an artist weeks to produce that. And you can do it in five seconds. And you could tell the AI, give me 20 of those. And then you just keep iterating and in five minutes, you've got something mind blowing. So the fact that it's so much easier to create content, you can do the same thing with the written word. The people who need to be compensated, J Cal, if they don't get what they want, they may just go away, but there'll be 10 times or 100 times more people.

• 1:27:56Jason Calacanis?

  Here's how long you are. Thank you for bringing up this example so that I can prove how long you are. Getty Images is suing Stable Diffusion at the moment. Here is what the dipshits at Stable Diffusion did. They trained their AI on Getty Images with the watermarks on them and they've been busted and they are dead to rights now and they are going to pay a hundred million dollars or more to Getty Images for stealing their content and allowing it to be republished in a commercial setting.

• 1:28:24David Sacks?

  Those images are all too good to me.

• 1:28:25Jason Calacanis?

  Over time, this will get resolved, J Cal. Stable Diffusion copied the Getty Image watermark and put it on a reproduced work.

• 1:28:35David Sacks?

  Okay, I think, I think Stable Diffusion's bigger problem is they can't do noses and ears and eyelids. That looks like a bigger problem to me.

• 1:28:44Jason Calacanis?

  Anyway, shout out to Stable Diffusion for stealing Getty Image content.

• 1:28:48David Friedberg?

  By the way, Mozart influenced by Heidegger, not Beethoven, sorry.

• 1:28:52David Sacks?

  By the way, there's a really, there's a really interesting topic about AI that we don't have time to get to this week, but I think we should put it on the docket for next week, which is, should AIs be trained to lie?

• 1:29:02David Friedberg?

  Super important.

• 1:29:04David Sacks?

  Cause that's happening right now.

• 1:29:05David Friedberg?

  And the last thing. Or have opinions.

• 1:29:08Chamath Palihapitiya?

  The last thing I'll say on this, from my perspective, maybe we can jump on after this, is this is the best thing that could happen for all of the monopolists in technology because. Microsoft taking 500 or 600 basis points of share is the best way to ensure that the FTC has zero credibility in going after Google or anybody else in tech.

• 1:29:27David Friedberg?

  Right.

• 1:29:27Chamath Palihapitiya?

  Those, all of those things I think are DOA. So in some ways, actually, Google leaking 5% or 6% of the market share is a really good thing because the FTC is rendered toothless in making any claim.

• 1:29:38David Sacks?

  Assuming they understand that. That's such a good point. I mean, it's kind of a good news, bad news scenario with this whole thing. The good news is that the Google monopoly's finally been cracked. The bad news is that it's Microsoft and even bigger monopoly, that's the one that's done it. But it just shows like how vulnerable all these big tech companies are.

• 1:29:55Chamath Palihapitiya?

  TBD.

• 1:29:56David Sacks?

  TBD. And they may all end up competing with each other.

• 1:29:58David Friedberg?

  What's great is everyone, everyone's got a tactical nuclear web now and we don't know where it's going to get pointed and who's going to shit set it off and where and like the weaponry has completely changed. Yeah, the weaponry totally changed.

• 1:30:09Jason Calacanis?

  And to prove how wrong you guys are, here is the verge on the co-pilot. Here's the other lawsuit. Open source writers.

• 1:30:19David Friedberg?

  Nick, are you feeding him this nonsense?

• 1:30:20Jason Calacanis?

  No, this is, I've been tracking this. You people haven't. You guys need to watch what's happening right now. Co-pilot, GitHub, ChatGPT, and Microsoft are being sued by developers because co-pilot was built off of stolen content. These lawsuits are just beginning and it's going to result in licensing fees.

• 1:30:40David Friedberg?

  This will be a transitory effect and it won't, it won't change the dynamics of where this is going over the long term.

• 1:30:45Chamath Palihapitiya?

  It changed the dynamics of YouTube in the long term, so let's keep going.

• 1:30:47David Friedberg?

  I don't know. They're doing pretty good.

• 1:30:49David Sacks?

  We have a portfolio company called Source Graph which is building and.

• 1:30:52Jason Calacanis?

  Why don't you just put your logo page up if you're going to go through the whole portfolio?

• 1:30:55David Sacks?

  No, they're, I mean, they're building something similar. But it's, it's opt-in. You just opt into the, you know, you just get all your customers to opt into it.

• 1:31:02Jason Calacanis?

  Okay.

• 1:31:03David Friedberg?

  Let's move on to State of the Union.

• 1:31:06Jason Calacanis?

  What do you want to move on? You want to do the crackdown?

• 1:31:07David Friedberg?

  You want to do the Twitter execs? I think Sacks's point about AI ethics would be a great chat. Let's talk about it next week, though.

• 1:31:13David Sacks?

  Yeah, I think there's more time.

• 1:31:14David Friedberg?

  The State of the Union, I don't know about you guys, but I found it one of the more profoundly disappointing, saddening states of the union I've ever seen.

• 1:31:22Jason Calacanis?

  Unpack that, unpack that.

• 1:31:23David Friedberg?

  Why? I think it was, you know, we often kind of focus on the one-year cycle of what the State of the Union says, but I think what's more important is how much the data that's coming through in the State of the Union supports the more scary long-term cycle. I've talked about this a lot on how scared I am about kind of where, where we're headed with respect to the US's ability. To fund its financial obligations. And the scary moment at the State of the Union, besides Biden's inability to kind of articulate much very well, which was honestly a really discouraging sight to see, was, you know, when he talked about, you know, the Republicans are trying to cut Social Security and Medicare.

• 1:32:04David Friedberg?

  The US Treasury put out a projection, which I tweeted last week, originally shared on Twitter by Lynn Alden. This is the US Treasury's forecast of debt held by the United States over time. And the assumptions in this forecast are, we've got a certain amount of debt today, and we're running Social Security and Medicare forward without cuts. And so what happens as we make these Social Security, Medicare payments, and we accrue and pay interest on the debt that we hold today, and we don't change the tax rates in this country, and this is what happens. So it's a runaway kind of debt scenario, and the US, by definition, has to default at some point, because you cannot tax every dollar of the economy at 100% at some point.

• 1:32:47David Friedberg?

  And so, you know, there are two ways this can go. The first way is you have to cut back on these major kind of, you know, expense commitments that naturally balloon over time, and that is Social Security and Medicare. And the other one is that you just tax a lot more, and when you tax a lot more, economic growth gets affected, and it makes it really hard to eventually pay off that debt, and the debt continues to spiral. So I think what we saw was, number one, the announcement by Biden, hey, Republicans are the ones who want to cut Social Security and Medicare, and they all screamed, and they said, no way, no way, we'll never do that. And a lot of them did interviews afterwards and said it's total BS if Biden would say that, which I think supports what the polls have shown, which is, on both sides of the

• 1:33:29David Friedberg?

  aisle, people do not want to see Social Security and Medicare cut in any way right now. That means you can't, and you guys saw what happened in France, where they pushed back the retirement age by two years, and there was effectively riots across the country. I don't know if you guys saw this a few weeks ago, we didn't talk about it, but it was pretty brutal, pretty ugly. And so this is a real cost that's coming bare. It's coming bare in the United States, not just with the publicly funded social security and Medicare programs, but also with a lot of the private pensions that are going to need to get bailed out with the same federal money because they're not going to let those things go bankrupt. And that's another trillion plus of liabilities. So, you know, that that cost is going to balloon. And the only solution at that point is to introduce massive tax hikes. And so they propose this billionaire tax, this tax on unrecognized capital gains.

• 1:34:12David Friedberg?

  It is literally, if you keep social security and Medicare where they are, and you don't pay down the debt, and you don't grow the economy fast enough, you have to introduce significant tax hikes across corporate and the individual taxpayer base. And so, you know, it really, again, if you zoom out, it really indicates this steepening curve that the US has to climb its way out of. And as you tax more, there's less to invest in the economic growth. The government is a far worse investor in economic growth than the free market. And that means that we can't grow our way out and grow GDP enough to ultimately cover our debt obligations. And this is what Dalio, Dalio's book that I mentioned in 2021 was so kind of importantly sharing. This is a multi-hundred year cycle, and the last couple decades get really nasty.

• 1:34:57David Friedberg?

  And this chart, which is a forecast from the actual US Treasury, highlights the problem. And the comments made at the Congress, in front of the Congress this week by the President of the United States, indicates how serious of a problem this is going to be because no one wants to cut these major cost obligations that we have coming due.

• 1:35:13Jason Calacanis?

  What are you talking about? Saxed, aren't you and the Republicans, you want to cut Medicare and get rid of it? Isn't that what Biden said? You guys want to get rid of it?

• 1:35:20David Sacks?

  Hell, no.

• 1:35:21Jason Calacanis?

  Okay, what was that kerfuffle about? With your, uh, who's the person on your squad who is yelling and screaming out at the President of the United States?

• 1:35:28David Sacks?

  No, that doesn't matter. That was just sort of silliness.

• 1:35:30Jason Calacanis?

  But who was screaming at him?

• 1:35:31David Sacks?

  I don't know. But let me tell you what happened in the State of the Union, is that Biden was basically trying to take a page out of Bill Clinton's playbook. When Bill Clinton lost the midterms in 94, he basically triangulated to the center. And he did two things. He started going for kind of small ball. He started playing small ball politics. It was like school uniforms and things like that that were relatively unobjectionable and that regular middle-class people could get behind. And then he basically posed as the defender of entitlement programs. Back then, he, in 96, he ran against Dole by portraying Dole. He went all the way back to Dole's vote against Medicare. This is what the Biden team is teeing up for the reelection in 24, is they're talking about

• 1:36:16David Sacks?

  things like curbing Ticketmaster fees and fixing right turn red lights. I mean, seriously, like total small ball. Okay, they're gonna try and pretend like he wasn't the most radical tax-and-spend progressive over the last two years that we've really ever had in American history. They're gonna try and make everyone forget that and just talk about the small and objectionable stuff. And then he's also gonna, again, pose as the stalwart defender of entitlement programs that are very popular. And partly, they're doing this, they're already, I think, getting ready for DeSantis on this, because if you read some of the political analysis on this, and Josh Barrow had a good column, and Andrew Sullivan had a good column,

• 1:36:57David Sacks?

  talking about this, that way back when DeSantis was in Congress and he was like a backbencher, he voted for, you know, some Republican budgets, a Paul Ryan budget, that had some of this entitlement reform in it. So they're gonna try and portray him as against entitlement reform. Now, I don't think it's gonna work, because all he had to say is like, listen, that was a long time ago. I wasn't voting for cutting entitlements. I just voted for my party's budget. That's irrelevant. I can tell you I will not cut entitlements. So any smart Republican is gonna take entitlement reform off the table, because it is a total third rail, and they will lose. And I think Trump had the right instincts on this, and I'm sure that any major Republican will have the right instincts on this. What did you think of the... You see the way they're throwing Rick Scott under the bus. Rick Scott had this

• 1:37:42David Sacks?

  proposal about having...

• 1:37:47David Sacks?

  Entitlements go from being sort of permanently entitled to being something that gets voted on every year. And the rest of the Republican caucus is like, hell, no, we're not touching that. And they can't run away fast enough from Rick Scott. So Freeburger is right, there is no appetite for entitlement reform. And I would tell any Republican, if you want to do entitlement reform, it's got to be bipartisan.

• 1:38:09Jason Calacanis?

  Trumath, any thoughts on the State of the Union?

• 1:38:11David Sacks?

  You gotta do, you gotta do what Ronald Reagan did, which is join hands with Tip O'Neill and Moynihan, and you jump off the cliff together. Do not stick your neck out on this.

• 1:38:20Jason Calacanis?

  Trumath, any thoughts on the State of the Union writ large?

• 1:38:22Chamath Palihapitiya?

  No.

• 1:38:24Jason Calacanis?

  Marjorie Taylor Greene yelling liar at the president?

• 1:38:28Chamath Palihapitiya?

  Um, no.

• 1:38:30Jason Calacanis?

  Okay, well, that's the most boring state, uh, segment of the show.

• 1:38:33David Sacks?

  Well, you know, Jake, I mean, like, both sides engaged in a lot of, like, weirdness. I mean, Biden was like bellowing at various points in his speech. It was quite bizarre. And you're right, there were some Republicans in the audience who were braying like jackasses. And it's unfortunate because I think-

• 1:38:49Chamath Palihapitiya?

  Utterly, utterly disappointing.

• 1:38:51David Sacks?

  I think if the Republicans had just calmed down, I think Biden's sort of weird mannerisms, where he was like practically yelling, it was like Abe Simpson, you know, old man yelling at the cloud, and-

• 1:39:02Chamath Palihapitiya?

  Yeah, they, they do a good job of like, right at the moment of self-immolation, they let him off the hook.

• 1:39:08David Sacks?

  Totally.

• 1:39:09Chamath Palihapitiya?

  It's really incredible. Republicans, just, they have no impulse control. Right when they could just be quiet, sit there, calm, quiet, and let Biden do the damage to himself, they just cannot-

• 1:39:20Jason Calacanis?

  I like McCarthy, I like McCarthy telling Marjorie Taylor Greene, shh, shh, and Mitt Romney telling that other liar guy to get the hell out of here.

• 1:39:27David Sacks?

  Listen, it's always been hard to control backbenchers. That's just the reality. That does not speak for the entire party.

• 1:39:33David Friedberg?

  How do you, uh, how do you guys feel about being taxed on your change in net worth from year to year?

• 1:39:41Jason Calacanis?

  You mean a wealth tax?

• 1:39:42David Friedberg?

  Wealth tax, yeah.

• 1:39:43Jason Calacanis?

  If it's a, if it's for billionaires, totally cool. If it's for centimillionaires or decamillionaires, absolutely off the table.

• 1:39:50David Friedberg?

  To your cutoff, huh?

• 1:39:50Jason Calacanis?

  We want those people to grow their wealth and invest. The billionaires, yeah, sure.

• 1:39:54David Sacks?

  Is that what you think is coming, Friedberg?

• 1:39:56Jason Calacanis?

  Yeah. So hard to execute on. What are you supposed to do? Like?

• 1:39:59David Friedberg?

  I would love to see a website where you have a piece of yarn. You know, those, the site where you have, and then you have like a little pin and you kind of push the pin out and the other one has to go in. You can't have it all. You can't have low taxes and have these entitlement programs and have this level of spending. It's impossible. You have to tax. That's the only way. Or you have to cut the entitlement programs or you have to cut the spending.

• 1:40:22David Sacks?

  Well, you're, you're, you're right about that, Friedberg, but let me tell you why the American people think it would be ridiculous to cut their entitlements. They've watched as Washington spent eight trillion dollars

• 1:40:33David Friedberg?

  Correct.

• 1:40:33David Sacks?

  on forever wars in the Middle East. They just watched as Biden spent trillions enriching the pharma companies on a fugazi that didn't work.

• 1:40:43David Sacks?

  They've just watched as hundreds of billions went to climate special interests of the Democratic Party.

• 1:40:48Jason Calacanis?

  Did you say the vaccine was a fugazi?

• 1:40:50David Sacks?

  We talked about that. Let me bring it back down.

• 1:40:52David Friedberg?

  Just say it.

• 1:40:52David Sacks?

  But the point is, they've watched, they've watched as trillions. Hold on. They've watched as trillions of dollars have gone to the donor class and they are going to rise up and say the hell with you. If you cut off our social security that we paid into for decades while enriching all these special interests.

• 1:41:09David Friedberg?

  Yeah, tax cuts. I don't advocate for any of these points.

• 1:41:13Jason Calacanis?

  And the bailouts of corporations in the great financial crisis. You're right. The citizens know.

• 1:41:18David Friedberg?

  I think, I think it's just an analytical certainty that, you know, you gotta zoom out and stop thinking about the yearly cycle and the election cycle on this stuff and just look at where we're headed over a multi-decade cycle.

• 1:41:29Jason Calacanis?

  Okay.

• 1:41:30David Friedberg?

  And there's just no resolution to this problem.

• 1:41:31Jason Calacanis?

  What happens if there is a wealth tax?

• 1:41:33David Friedberg?

  Based on the way we're all oriented right now, huh?

• 1:41:35Jason Calacanis?

  If there is a wealth tax, let's just say on billionaires or centimillionaires.

• 1:41:38David Friedberg?

  Let me just say one thing. Sorry, Jacob. But let me just.

• 1:41:40Jason Calacanis?

  What would they do? Would they leave the country? Go to Puerto Rico?

• 1:41:42David Friedberg?

  Well, that, that did happen in France, by the way. I think 40% of the people that were taxed left. And then they came back.

• 1:41:48Chamath Palihapitiya?

  It would violate our constitution.

• 1:41:51David Friedberg?

  That's that'll be it'll be litigated for sure.

• 1:41:53Chamath Palihapitiya?

  It'll go to Supreme Court, yeah.

• 1:41:55David Friedberg?

  If you can get the cost of energy in this country to drop by 50 to 75% and you can increase energy capacity by 10 to 20 fold, then you have a fighting chance because you can actually grow the economy out of the problem. And that's really where I am optimistic and excited about opportunities like fusion. And you guys can make fun of me all you want, but if we can get to a point where we can increment energy capacity by an order of magnitude, there is economic growth that will arise from that, from all these new industries and these production systems. And that's how we can grow our way out of the debt entitlement tax problem where one of those three things has to give in the absence of that.

• 1:42:33Chamath Palihapitiya?

  You know what the cheapest source of energy is today? Fusion. It's three cents a kilowatt hour.

• 1:42:41David Friedberg?

  Fusion, you mean?

• 1:42:42Chamath Palihapitiya?

  No, it's fusion. It's the sun using solar panels. There it is.

• 1:42:49David Friedberg?

  Yeah, the problem, honestly, let me just say this one thing. The problem is can you scale energy capacity by 10x?

• 1:42:55Chamath Palihapitiya?

  Yes.

• 1:42:56David Friedberg?

  And can you do it fast enough? And that's the real technical.

• 1:42:58Chamath Palihapitiya?

  While creating jobs.

• 1:42:59David Friedberg?

  That's the real techno-economic question, right?

• 1:43:02Chamath Palihapitiya?

  I posted a link in my reading list today, this week. You guys can go look at it. The most prolific distribution of fusion technology is China actually deploying solar on every single rooftop in China. The United States could do it too, and you will 10x the power available.

• 1:43:17David Friedberg?

  Well, yeah, I mean, they are producing.

• 1:43:19Chamath Palihapitiya?

  And it'll be zero.

• 1:43:20David Friedberg?

  They're increasing their, I mean, they're adding, they're adding half a terawatt.

• 1:43:23Chamath Palihapitiya?

  It'll happen in the next years. It's just sometimes we want to create intellectual complexity. I love these different forms of fusion. I just think it's a 50-year trudge to get it because even.

• 1:43:33David Friedberg?

  I'm not betting, I'm not betting on it. I'm just saying it's, there is a.

• 1:43:36Chamath Palihapitiya?

  No, I'm just agreeing with you. I'm just building on your point to say it's actually happening. Fusion is what is actually creating abundant zero-cost energy today.

• 1:43:44David Friedberg?

  Yeah, and so, look, if we can increase energy capacity in this country by 10x, energy production capacity by 10x, and we can do it in the next 20 to 30 years.

• 1:43:53Chamath Palihapitiya?

  You can do it in 10 by putting solar on every rooftop.

• 1:43:56David Friedberg?

  If we can, we have a path out of the entitlement, tax, debt problem. Otherwise, one of those three things is going to give, and it's going to be ugly.

• 1:44:04Chamath Palihapitiya?

  The thing that we are lacking right now is not actually the generation capability, which is incredibly cheap, but it's really scalable storage. And once we figure that out, which is actually the real technical bottleneck to abundant, zero-cost energy, we'll have your boundary condition met, and we'll have it well before different forms of fusion are commercializable.

• 1:44:24Jason Calacanis?

  France had an exodus of an estimated 42,000 millionaires between 2000 and 2012, and really, and before Macron killed it.

• 1:44:36David Friedberg?

  They only had the wealth tax for 12 years, and then they reversed it.

• 1:44:39Jason Calacanis?

  They were just losing their tax base so violently, they had no choice.

• 1:44:42David Friedberg?

  That's what's happening in California.

• 1:44:43David Sacks?

  That's what's going to happen in California if they move forward with this discussion.

• 1:44:45Jason Calacanis?

  It's happening in California already without the wealth tax.

• 1:44:47David Sacks?

  Right.

• 1:44:48Jason Calacanis?

  It's happening already, and now you look at it.

• 1:44:50David Sacks?

  Well, because they're stupidly telling people that this wealth tax is going to have a 10-year look forward. So, everybody I know is at least talking about, hey, could this happen in the next 10 years? Because if it might happen five years from now, we got to leave now, because if I wait...

• 1:45:04Jason Calacanis?

  They're going to chase you.

• 1:45:05David Sacks?

  They're going to chase me.

• 1:45:06Jason Calacanis?

  Yeah, specifically you.

• 1:45:07David Sacks?

  [laughing]

• 1:45:08Jason Calacanis?

  They hate you.

• 1:45:10David Sacks?

  No, I mean, it's a problem.

• 1:45:13Jason Calacanis?

  It is a serious problem.

• 1:45:14David Sacks?

  But let me tell you, I mean, to Friedberg's point, it's not just Ray Dalio, the great political satirist, Pedro O'Rourke, who died last year. He wrote that American politics is defined by the formula, X minus Y equals a big stink, where X is what people want from government, and Y equals what they're willing to pay for government. And that difference is basically the big stink. And the job of politicians is to manage that stink. And the problem is, the politicians have not been doing a good job managing it, and they increasingly do a worse job managing it. So, yeah, at some point, it's going to blow up.

• 1:45:48David Friedberg?

  Yeah. You guys want to hear a crazy statistic? I was pulling this up the other day. You know what the budget per capita is of the city of San Francisco? So, how much the city spends per year divided by the number of people that live in the city?

• 1:46:00Jason Calacanis?

  Well, we know it's a couple of billion-dollar budget, we know only a couple of hundred thousand live there.

• 1:46:04David Friedberg?

  13 billion-dollar budget.

• 1:46:05Jason Calacanis?

  Yeah, and it's 800,000 residents?

• 1:46:06David Friedberg?

  It's $18,000.

• 1:46:08David Friedberg?

  per citizen per year. That's how much the city of San Francisco spends. A third of that money, by the way, 30% of it goes to, or 25% goes to public healthcare. Now, when you look at that $18,000 budget per capita, it is more than every single state of the Union on a per capita basis, except Oregon and North Dakota, which have very weird budgets. So San Francisco spends more than every other state per capita. It spends more in aggregate than 16 US states. And the federal budget per capita is $15,000. The federal government's budget per capita is $15,000. So San Francisco spends more than 15 states, and spends more per capita than every other state except two, and spends more than the federal government per capita.

• 1:46:52David Friedberg?

  And I think that really highlights, and you need to tax the base to do that. And now we are seeing San Francisco is the largest population of exodus, and population exodus of any city, and business exodus of any city in the United States. That is your predictor. That is your predictor of where this goes.

• 1:47:08David Sacks?

  Right, and Miami, Florida, by contrast, has no state income tax. They just rely on property tax and sales tax, which California has as well. There is a income tax and cap gains tax of zero in Florida, and they seem to make it work.

• 1:47:25Jason Calacanis?

  880,000 people was the peak in San Francisco, 2018, 2019, 2020. And then in 2021, 815, so 10%.

• 1:47:35David Friedberg?

  Yeah, some estimates show it's as low as 6.

• 1:47:37Jason Calacanis?

  And it's gone even further in 2023.

• 1:47:38David Friedberg?

  Yeah, some people think it's down to 615 now.

• 1:47:40Jason Calacanis?

  I think it is.

• 1:47:40David Friedberg?

  Hard to track, but yeah.

• 1:47:42Jason Calacanis?

  Well, you have a lot of people who owned homes there, and maybe owned second homes, because let's face it, it was a well-heeled group of individuals living there. And a lot of them just still have their places, but they've left. And then they're in the process of selling their places.

• 1:47:53David Friedberg?

  Anyway, the point is, increasing the tax rate is a great short-term solution. But over the long term, if that budget per citizen isn't brought in line, there is no way to tax the base enough without causing the tax base to leave. Forget about what anyone's personal opinions are. That's just the economic reality of what happened in France. It's what's happening in San Francisco. There's a lot of great predictors in history of where this has happened. And so something has to give, or you have to have a miracle, like an energy miracle. But, you know, we'll all keep investing for that.

• 1:48:23Jason Calacanis?

  All right, everybody, this has been an amazing, amazing episode of the All In Podcast. 115 episodes for the dictator Sultan of Science and for the pacifist David the Dove Sacks. I am the world's greatest moderator, Jay Cow, and we'll see you next time. Bye bye. Love you besties.

• 1:48:46Speaker 07

  Let your winners ride.

• 1:48:48Jason Calacanis?

  Rain Man David Sacks.

• 1:48:53Speaker 07

  And instead, we open source it to the fans and they've just gone crazy with it.

• 1:48:57Jason Calacanis?

  Love you besties.

• 1:48:57Speaker 07

  Queen of Kinoah.

• 1:49:06Jason Calacanis?

  Besties are gone.

• 1:49:08Speaker 07

  That is my dog taking a piss in your driveway.

• 1:49:13Chamath Palihapitiya?

  Oh, man. My hot tub dancer will meet me at a place. We should all just get a room and just have one big U. Georgie because they're all just pissed. It's like this like sexual tension that they just need to release somehow.

• 1:49:24Speaker 07

  What? You're the bee. What? You're a bee. We need to get merch.

• 1:49:30Jason Calacanis?

  Besties are back.