Stargate, Executive Orders, TikTok, DOGE, Public Valuations | BG2 w/ Bill Gurley & Brad Gerstner

Open Source bi-weekly convo w/ Bill Gurley and Brad Gerstner on all things tech, markets, investing & capitalism. This week they are joined by a surprise guest, and discuss Stargate, executive orders, TikTok, DOGE, Public Valuations & more. Enjoy another episode of BG2! Timestamps: (00:00) Intro (01:21) Stargate (15:07) Dylan Patel and Semianalysis take on Stargate (17:56) Stargate’s Impact on AI Competitive Landscape (29:03) DeepSeek (32:03) Special Guest Rene Haas (CEO of ARM Holdings) (49:46) DeepSeek continued (51:53) Trumps Executive Orders & Regulatory Freeze (54:10) Coordination in AI Legistlation (59:38) US National Debt and Balancing the Budget (1:01:08) TikTok (1:05:48) Tech Check Produced by Benny Beausoleil Music by Yung Spielberg Available on Apple, Spotify, www.bg2pod.com http://www.bg2pod.com Follow: Brad Gerstner @altcap https://x.com/altcap Bill Gurley @bgurley https://x.com/bgurley⁠ Rene Haas @renehaas237 https://x.com/renehaas237 BG2 Pod @bg2pod https://x.com/BG2Pod

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

• 0:00Brad Gerstner?

  Elon is 100% right. Nobody has $500 billion. In fact, nobody has $100 billion to contribute to this on day one.

• 0:22Brad Gerstner?

  Hey, man. Great to see you.

• 0:23Bill Gurley?

  Good to see you.

• 0:25Brad Gerstner?

  I mean, never a dull moment. Incredible.

• 0:28Bill Gurley?

  This goes well beyond being a dull moment. I think we have a year worth of activity in about 48 hours this week.

• 0:37Brad Gerstner?

  I had an amazing weekend in DC. There was a tremendous amount of optimism. I've been saying to you and our friend group that I remember during Trump won in 2016, I mean, every morning you woke up, you were kind of holding your breath at, you know, what had changed since the night before. It was really the first administration that lived on Twitter. And here we are again, you know, in some ways, the last year certainly, I feel like not a lot was going on in the world. Like, I wasn't stressing out every morning that I woke up. And, man, this administration has kicked off with a bang, and a major, major bang at the end of the day yesterday with Stargate, which we're going to talk a lot about today.

• 1:20Brad Gerstner?

  And this morning, I have to say, even for those of us who are fascinated by the back and forth in Silicon Valley bill, the back and forth this morning among perhaps the most seminal figures in Silicon Valley, you know, Elon, Larry Ellison, Sachin Adella, you know, Sam Altman, etc., over what is and what is not going on with Stargate, is truly a situation where I think in some ways, you know, facts are more intriguing than fiction. But why don't we start off by you just level-setting for folks? There was a huge announcement at the White House yesterday with Larry Ellison, Sam Altman, Masasun, and President Trump. Talk to us about what was announced.

• 2:04Bill Gurley?

  Yeah, and maybe I'll do it in kind of how it rolled over me, right? So, you know, this is the day after the inauguration and the...

• 2:15Bill Gurley?

  Kind of high profile, you know, performance Trump had with the EO signing. And, you know, rumors, I don't know, they started flipping out on Twitter or I don't know where, maybe I saw it on the TV. But like, there was going to be a big press conference and, um, and it revolved around this thing called Stargate. And reminding everyone, Sam Altman at OpenAI had been talking about the concept of Stargate for a while now. He had, he had suggested maybe him and Microsoft were going to do it. I think that's important. We can dive into that later, that it's the same name that had been thrown around. I don't think there was ever any verification from Microsoft that they were in on the Stargate project.

• 2:59Bill Gurley?

  But clearly this is something Sam's been thinking about for some time. And so it was supposed to happen at four. I think they finally, you know, started at 5:30 or something. So it was like 90 minutes late. And then, you know, this door opens and Trump comes in. And then Masasun representing SoftBank, Larry Ellison representing Oracle and Sam representing OpenAI.

• 3:23Bill Gurley?

  It looked a little haphazard. It looked like it had been thrown together kind of quickly. And clearly one of the, in my, my interpretation, one of the reasons that it might have been thrown together quickly is Trump was looking to show, um, that he was having quick momentum right out of the gate in terms of having an impact. And the things he said would, would suggest that that was part of the reasoning for doing this now and, and so quickly. I think if you just go to like the posts that OpenAI put out, it's probably got the most detail. This thing's lacking in quite a bit of detail, which is why there's so much speculation. It says the Stargate project is a new company.

• 4:06Bill Gurley?

  So even that, I think is in question. Is this a, so that's going to be a new corporate entity, which intends to invest 500 billion over the next four years. Which, you know, I, I guess Microsoft's the highest right now at 80 billion a year. So this would be, you know, 125 billion a year. They met that that commitment or target. They says we will begin deploying a hundred billion dollar immediately. There's a lot of talk of American leadership. There's talk of this being in America. It says the initial equity funders in Stargate are SoftBank, OpenAI, Oracle and MGX. And maybe, maybe you can tell our listeners who MGX is in a minute.

• 4:50Bill Gurley?

  It says SoftBank and OpenAI are the lead partners with SoftBank having financial responsibility. And OpenAI having operational responsibility. Masasun will be chairman. And it lists key initial technology partners are Microsoft, Nvidia, Oracle and OpenAI. Yeah, so I I'd say that's that's the gist of it. I mean, it sounds to me like maybe an even better funded version of CoreWeave. But I don't, there's a lot I don't know, you know, and I'm I'm asking questions like a lot of other people. How do you see it?

• 5:25Brad Gerstner?

  Well, I mean, listen, I think that for now, well over a year, OpenAI and many others have been talking about the need for massively more compute. A lot of the talk in Washington this weekend with various cabinet ministers and others was that this administration was going to dramatically accelerate power generation in the US, data center construction in the US and compute in order that we win at AI. So that there's no surprises there. You know, the fact that they were able to announce this the day after the inauguration, that it was at this scale and magnitude. Now, remember, this comes on the heels. When I think there was a lot of talk in the back half of last year

• 6:05Brad Gerstner?

  that Stargate was dead, that the need for this much compute was overstated, that maybe models were hitting, you know, some scaling limits, smaller models could get the job done. So I think there was a lot of skepticism, frankly, about maybe even the demand for compute. So there was a wall of worry. I think in the back half of last year as to what was going to happen with compute. So this was very orthogonal and much bigger even than the original hundred billion dollars talked about. When you and I first talked about the Stargate discussion in the spring of 2024.

• 6:40Brad Gerstner?

  So when they made this announcement, the first thing I started asking myself was, how do they actually roll this out, Bill? Right? Because you're right, there was a lot of white space left in this. And so I immediately, being the analyst that we are, you know, got the team on the phone and I said, we need to build a bottoms up model. Everybody's talking about 500 billion. And now this morning, we have debates between Elon, who says, funding not secured, like they don't have the money. And on the other side, we have folks saying, of course, we're already doing this in Abilene. Larry said at the press conference, they have 10 buildings already built in Abilene. They have another 10 under construction.

• 7:21Brad Gerstner?

  And we know that OpenAI is already running workloads out of Abilene, Texas, which is where this mega project's going to be built. And so

• 7:29Bill Gurley?

  I bet you, I bet you that's the first time you've said Abilene three times in a row in under a minute.

• 7:34Brad Gerstner?

  By the way, I talked a lot about Abilene last year on the pod and with our team.

• 7:38Bill Gurley?

  Do you even know where Abilene is?

• 7:40Brad Gerstner?

  I do, West Texas. You know, I thought one of the things that I hope you and I add to the conversation writ large, you know, there's a lot of talking heads and battling going on this morning, but what might this look like in reality? And so we'll share some projections that our team has made, which are, you know, obviously back of the envelope because we don't have the precise data, but let's just assume.

• 8:03Bill Gurley?

  Let me ask you a quick question. If, if this is already quote underway and this is, you know, according to the OpenAI press release, a new company, are we presuming that, that NewCo is acquiring some assets that were owned by somebody else? Who, who, on whose balance sheet was the initial project sitting?

• 8:24Brad Gerstner?

  Yeah, I honestly have no, no details on that. And if I did, I probably couldn't share them, Bill. You know, just as a reminder to everybody, I think from an investment perspective, Altimeter's invested in a lot of these companies, right? Our best perspective here is like, we know that there was construction and work going on in Abilene last year with Oracle. I assume that was kind of a direct relationship between the company and Oracle. But I have no insights about whether, you know, how this thing is particularly going to be structured. What's more interesting to me is like, what is the equity check, right? Because there's this question, you know, based on some of the tweets this morning, Gavin Baker, and we'll show that as well, said, you know, this $500 billion is totally

• 9:08Brad Gerstner?

  make believe. And so based on those, it might have you think that somebody has to show up on day one with $500 billion in order for this to get off the ground, right? They're almost saying that it's a ruse, that the announcement was just a bunch of BS. But if we break it down, let's assume they started on this three months ago, and let's assume that they were able to secure 250,000 GPUs out of Nvidia this year. If you break that down, that's about 13 billion of CapEx that they could spend in 2025. You know, in the press release you quoted, they said, we're going to start to spend $100 billion in 2025.

• 9:50Brad Gerstner?

  So with $13 billion, you know, you can stand up maybe 250,000 GPUs this year. Out of the $13 billion of CapEx required, you know, if you make an assumption about 2575 or 3070 equity to debt, that probably requires like a $3 billion equity check. And I'm assuming that there are debt providers, we've read about these deals already in the past. MGX, which is the Sovereign Wealth Fund, a big, big fund out of the United Arab Emirates, BlackRock is also said to be involved in the debt financing. But we know there are a lot of debt providers who are competing to provide debt to these data centers. So

• 10:33Brad Gerstner?

  the equity check for 2025 would be relatively small. Let's assume that they want to ramp that up, put the pedal to the floor, and ramp that up in Abilene for 2026. Let's assume that they could secure, I don't know, 2 million GPUs from Nvidia.

• 10:52Brad Gerstner?

  Now you're talking about 100 billion in total capital that would be needed. You know, 70, 80% of that goes to GPUs. 25, 30% of that goes to, you know, data center land and power. And so the equity check that would be required to do that bill is about another $25 billion in 2026. Now, just to put it in perspective, to stand up 2 billion or 2 million GPUs in 2026, you need about 2.7 gigs, gigawatts of power. Right? So this is not inconsequential at all. This would be, you know, the biggest deployment of GPUs anywhere in the world, even if they just stop there, right?

• 11:35Bill Gurley?

  Well, one thing worth noting that I failed to mention, Trump did say that one of the things that the Trump administration was bringing with to the table was going to be a push to clear regulation to allow more power generation faster. And we've heard from people like Satya who say they're power limited. And so one thing that may be new in this situation is this entity may have an advantage in getting a hold of power faster. Although there would be an incentive to do that for all of the players, I would imagine.

• 12:11Brad Gerstner?

  And I would tell you, being in Washington this weekend, speaking with, you know, folks coming into the administration like Doug Burgum, I mean, there is, if there's anything that I believe to be true, drill, baby, drill, and tapping US energy reserves and removing obstacles and regulations in order to light all this up in America rather than other places is probably priority number one.

• 12:34Bill Gurley?

  And probably the quickest thing you could do to generate power, to get it up to speed as fast as possible, just to put in a LNG plant. Like, that's very fast compared to-

• 12:46Brad Gerstner?

  That's exactly what's going on, I think, out there in Abilene. You and I should go for a visit. You know, listen, you can't get SMRs or nuclear fission or anything else that can do this. But that's why they, I think, started building there. But just back to the analysis, Bill. So to get to the end of 2026 with 2.5 million GPUs, the equity check required is something like 25, 30 billion. So that just calibrates like, how much does somebody really have to show up with? I think in order to get this stood up and then, you know, we can go into 2027, assuming that you're going to stand up another 2 million GPUs, which would bring your cluster to 4.5 million GPUs. You need another 25 billion of equity.

• 13:28Brad Gerstner?

  So at least on that score, just the question of how big is the equity check? You're talking well under 50 billion in years one and two. You're talking about $78 billion over a period of four years to the end of 2028. So we need to, the 500 billion is a sexy headline. It's important. These things are going to be built here. But the equity check required in order to stand this up. And if they just achieved what I just outlined through the end of 2028, that requires seven and a half gigawatts of power out of Abilene. And so to me, you're kind of on the outside limits of what's possible.

• 14:08Bill Gurley?

  Well, but they talked about multiple locations too. So they would move. Now, now you're assuming a three to one debt to equity, which I guess is something similar to what CoreWeave's done. Equinix is, over the years, run closer to one to one. And so that would be assuming a substantial amount of risk. Now, you know, no one's more prone to risk than Maso San and SoftBank. So it's very plausible that would be their assumption.

• 14:36Brad Gerstner?

  Right. And remember here, you know, again, over the days and weeks ahead, we're going to refine this back of the envelope. But I just, you know, I wanted to calibrate. Nobody has to come up with $500 billion right now. Nobody has to come up with 100 billion right now. Nobody needs to come up with 50 billion right now. Right? We know there are lenders willing to lend, but that's an important question and we're going to try to get to the bottom. What would BlackRock and what would MGX require in terms of, you know, that debt to equity split? So Bill, as we know, everybody had a huge incentive to get to this big number, right? Massa wanted to get to, you know, a bigger number. Trump, when they were down in Mar-a-Lago, took it from 100 billion to 200 billion, and now they got to 500 billion,

• 15:20Brad Gerstner?

  which served everybody around the table really well. We broke it down in our numbers to try to reverse engineer our way to that $500 billion in CapEx. And even in our numbers, we've demonstrated you need a much, much smaller equity check so that nobody has to show up with 100 billion or 500 billion dollars on day one. But there's another way to look at this as well, which is that we're not even talking about 500 billion dollars in CapEx. But instead, you know, Dylan, who was on our pod in December, has done an analysis that says maybe they were talking about the total cost of operation, not about CapEx at all. And he has a piece of analysis, which is quite interesting, which shows that

• 16:04Brad Gerstner?

  even if you aggressively build an Abilene, that the fact is, you're only going to be able to spend something like 100 billion in total between now and the end of 2027. I think he estimates something like 800,000 total GPUs that would get purchased over that period of time. He does note that those GPUs, which are much more powerful Blackwell and eventually Ruben GPUs, will be the equivalent to millions of H100s. So just if we want to compare what he's forecasting in Abilene compared to the 200,000 cluster that we're talking about in Memphis. But in that case as well, it's very consistent with us, the

• 16:49Brad Gerstner?

  amount of equity that would be required on day one is a fraction of the amount we're talking about. So if you're trying to square the circle, how can both Elon and Sam be right? Elon is 100% right. Nobody has 500 billion dollars. In fact, nobody has 100 billion dollars to contribute to this on day one. But both our analysis and Dylan's analysis show that that's not required in order to begin scaling this up. So Sam is also right. They are in fact building an Abilene, and you can scale up to much, much bigger clusters without this headline number being required to be delivered on day one.

• 17:32Brad Gerstner?

  But Bill, let me, let me ask you a different question. Let's assume that we're going to spend a lot more, a lot more money than we thought we were going to spend 30 days ago, or certainly three months ago. Maybe talk a little bit about where this tells us, what this tells us about where we're headed? And/or how this impacts the competitive landscape out there?

• 17:55Bill Gurley?

  Well, I think in order to do that, you kind of got to back up and, and look at the motivations of each of these parties. And I think there are numerous things going on that all led to this big event. And that's not to suggest that, that it's not going to happen. It sounds like it is going to happen. It's just there, there are a lot of different motivations. So as we talked, talked about, Sam's been talking about this for, for a while. He has a belief that he needs access to a very large data center. It appears from this, this conjecture on my part, and I'm not an investor like you. So if you can't respond, don't feel that you need to.

• 18:38Bill Gurley?

  But it appears that two things might have played a role in this happening. One is Elon and X.ai. Elon and Gavin, who's a big backer of X.ai, have pointed out that they have a competitive advantage over OpenAI because they have their own infrastructure. This isn't exactly OpenAI's own infrastructure, but it probably feels that way. So that may have provoked this a little bit. And then the other thing is just the, the much discussed relationship between Microsoft and OpenAI. This easily could be, you know, one of the pieces in the, in the back and forth between those two parties.

• 19:18Bill Gurley?

  And we got a quick press release out of Microsoft, you know, immediately after this was announced. And it's hard to dissect what might be going on there. But, but it, I think that played a role in this happening. I think my own interpretation is Microsoft didn't want to build this big, you know, OpenAI playground, or one as big as maybe Sam wanted to build. And so he went somewhere else and everybody's but everyone at the surface behaving like they're okay with that. I think the the other parties, you know, I must have always looking to be involved in the biggest movement that's happening. You know, that that happened in previous waves we've

• 19:59Bill Gurley?

  been involved with. So no surprise that he shows up here. And then for for Larry Ellison and Oracle, you know, if you look at their relative to position as a hyperscaler, I think people think of Amazon and and Google before they think of Oracle. And so this this gives them a a platform, you know, to kind of, you know, brag a little bit about that that they're, you know, at the front of the line. So I think those are the things that are happening in the background that that take us to this place.

• 20:30Brad Gerstner?

  And and I think it's important to note that Oracle was, I think, at the start helping X.ai in Memphis, but Memphis decided to go it alone and build out their own infrastructure. And as Jensen, you know, we discussed with Jensen on the pod, you know, listen, Elon's an N of one. He stood it up faster. It worked better. He built the bigger cluster. We're going to see he's going to launch Grok three here. I think they're going to have the output, the first training run on the biggest cluster in the world. And we're excited to see what what that yields. From my own perspective, I mean, set aside for a second, you know, I think you nailed it. Those those are largely the motivations of the individual parties. I think, again, just as a country, we just went through this amazing inauguration. We're going to talk a little bit about Stan

• 21:15Brad Gerstner?

  Druckenmiller, you know, later. But, you know, I think that this level of competition, that this scaling is occurring in the US, that this investment is occurring in the US. I think this fantastic for the United States of America. Like, this increases the probability that we're going to win in the race to AI. We needed more power. We need this five to 10 gigs to come online. We need to have it. Now, does that lead us to AGI or ASI or whatever? It certainly puts us, you know, in a very strong competitive position. And you're right. I think it is that competition on the field, Bill. I think it is the fact that Elon stood up a bigger cluster, and that is a competitive advantage. And he did it fast, etc. And so now you have an alternative

• 21:59Brad Gerstner?

  here, which brings me back to just what does this mean for the competitive landscape, Bill? I mean, think about it. You and I just went through this slide that we'll share again on the

• 22:10Brad Gerstner?

  Capex that's expected for 2025.

• 22:13Bill Gurley?

  Well, you've added, you've added another player on top of it. I mean, the, the person that is probably, you know, most obviously impacted by this is Jensen and Nvidia. And of course, the stock's up 5% today. So these aren't secrets. These are obvious facts.

• 22:29Brad Gerstner?

  Right, right.

• 22:30Bill Gurley?

  But, but, but it's another, yet another large customer to, you know, of Nvidia gear. And the, the size and scope of what they want to do, even if an Nvidia competitor showed up, I don't think, I don't think they could create enough production in the amount of time you need. You, you even hinted that, that Stargate may be limited by whatever Nvidia is willing to give them.

• 22:57Brad Gerstner?

  Well, I mean,

• 22:58Bill Gurley?

  Which is an interesting dynamic.

• 22:59Brad Gerstner?

  We've been chip constrained for two years. And now you have a new player on the field that may be raising their hand and saying they need 2 million GPUs. Remember, just a couple of years ago, we weren't making 2, 2 million GPUs. I think the forecast this year for, is for something like 6 million GPUs, right? So if I'm sitting in the Googleplex today, right? What does it say to me? I gotta spend more on Capex. I gotta make sure I secure my GPUs. If I'm at Microsoft, gotta secure my GPUs. I've got to make sure I'm, I'm spending enough. If I'm at Meta today, what do I need? I need to make sure that I'm not losing out to Stargate slash OpenAI in the order book for GPUs. So, you know, again, I heard just as recently as a month ago,

• 23:45Brad Gerstner?

  you know, that 2026, there's not going to be demand for GPUs and, and, and whatnot. And Dylan came on this podcast and called all of that garbage. He said, the demand is off the charts. People aren't making 12-month bets. They're making three, three-year bets. And I think, again, this is just further validation of that. Here's the way I think it changes the competitive landscape.

• 24:08Brad Gerstner?

  I think there are only, you know, the bigger the stakes get, and Sam just pushed a big pile into the middle. There are only certain companies that can be in that game. X.ai, because of the genius of Elon and the momentum they have, and the operating businesses that stand behind them are 100% going to be in that game and maybe eventually leading that game. Amazon is like, this is a real test for them. You know, is Anthropic going to be able to show, you know, they have less than a billion in revenue. They don't really have, they have good, great models, I would argue, but they don't have the consumer or the enterprise traction that the other folks do. Can they come up with the money that's going to be required? Or is Amazon willing to put up that sort of money?

• 24:53Brad Gerstner?

  You know, Amazon has never been that aggressive with CapEx relative to the other folks. Meta is going to be in the game, and Google is going to be in the game. I suspect that there, this puts more pressure on their CapEx to come up. And I think you're right that because of that, and the fact that Jensen said there are 35 other AI factories around the world that are not hyperscalers. Now you've got Oracle being a major player in the game because of Stargate. You know, again, I think this, the net-net benefit here is that we're going to get a lot better AI from all of these players. But I think you are going to be chip constrained. I think you are going to be power constrained, you know, for the next several years. And I think if you're subscale on any level,

• 25:37Brad Gerstner?

  I think those players ultimately have to get folded into a much larger entity. We saw, you know, reportedly Anthropic raised a couple billion from Lightspeed and maybe a billion, I saw today, an announcement out of Google. So they are raising money, they, you know, they do have the capital. But every time they buy in, Bill, for a little bit more at the poker table, right? Somebody else goes over the top and the demands of the pot size just get bigger and bigger.

• 26:01Bill Gurley?

  Yeah, and one of my, one of my big takeaways is, you know, and it was this already, but it's it's a sport of kings, you know, it's the amount of money that's being thrown around. You know, I think with all the announcements, the the billion dollars from Google into Anthropic almost, you know, fell through the cracks, right? Because it just doesn't, it's not as, it's not as big a number. It's part of why I think there's so much hyperbole is there's a game in the background of can I bid even more? Can I bid even bigger? Can I talk even bigger? You know, potentially to try and scare some out of the game? I also think, though, that, and we've talked about this in the past, that causes

• 26:43Bill Gurley?

  an increase of risk as well. You know, there's some point at which you deploy CapEx, which is slow to bring on, where you could overrun demand. And and if you have a three to one, you know, debt to equity ratio, that could be a real painful, you know, downside. So clearly, no one, no one right now is thinking that way. Clearly, all these people are very positively minded. I tip my hat to Sam Altman's, you know, aggressive, ambitious gamesmanship. You know, this is clearly something he wanted to do. He found the right window. It's certainly interesting to watch the the the

• 27:27Bill Gurley?

  triangle of Sam and Elon and Trump here, because some people said, oh, you know, is Elon going to tell Trump what to do? Well, clearly here, you know, you've got some dynamics, you know, where not everybody's on the same page. So.

• 27:41Brad Gerstner?

  This comes back to, you know, this question I ask about where does this tell us about where we're headed? You know, and what I mean by that question, Bill, is really where are we in the stage of model development? Because we know that this pre-training is asymptoting. You know, you've you've been at the at the forefront of discussing this. But we also know, as Jensen showed in this slide, that we now have three waves of scaling, right? We have this post-training and now this inference time compute. Lost again in the shuffle today, OpenAI announced Operator, which is again, you know, built on the back of inference time compute, which is really more around this

• 28:18Brad Gerstner?

  planning and actions. And when I look at the year 2025 and what this will enable, it clearly there is, you know, a lot more enthusiasm about the progress being made by these models, you know, whether that enthusiasm is at Google or whether it's at x.ai and what we're going to see out of Grok 3, or what they're seeing out of the O series at OpenAI. Part of the reason I think folks have the confidence to commit to this level of equity and debt is because of the use cases and the demand that they're seeing by both consumers and enterprises, you know, for more of this and the progress that's being made on these

• 29:02Brad Gerstner?

  models. In that regard, you know, maybe just talk for a second about, you know, these breakthroughs that are happening in China around DeepSeek, because I think here's a model development that there's a lot, you know, I think over the weekend, people were blown away by the benchmarks that were achieved by this small, open source, inexpensively trained Chinese model. I can assure you of this, one of the top priorities on the mind of our new AI czar, David Sacks, and lots of folks in the administration is national security. Their number one objective is how do we speed up the United States? And you saw the Stargate announcement, that's all about speeding up the United States. But the other one is how

• 29:44Brad Gerstner?

  do we not make it easy on China to compete? So here's a situation where even with deprecated chips, you know, they don't have cutting edge chips out of Nvidia, they seemingly train something that's very competitive. What's your read on that, Bill?

• 30:00Bill Gurley?

  My studying of what other people are saying, because I try and absorb as much of this as I can, is that the Chinese DeepSeek in particular has figured out a way, the word people are using is distill, they've figured out a way to Basically shrink their model theoretically, possibly by by connecting to an API of one of these other foundational models that we've talked to and using that as a guide and even make these things more efficient. So to pack the same amount of of horsepower, if you will,

• 30:39Bill Gurley?

  in a in a much smaller engine and, you know, get to the exact same competitive benchmarks on the output. And so in one way, you could say, oh, my God, like, this is this great commoditization of the foundational models. I think that's potentially valid. The other thing you could say is, wow, we're going to get so much more performance per token price. And that can increase the market, right? Because it gives so much more tools to the to the startups, you know, that they can play with. And apparently, one of the tests even had this thing doing the the chain of thought reasoning, and it was successful at that. And so when you considered

• 31:24Bill Gurley?

  that that was a 10 to 100x increase in token use, if you get down to these lower price points, now you can do even more for less. So it could unlock quite a bit. I think, for me, the most interesting part of it is, I actually think, well, I've said this before, but I think the policy of American of the American government to try and and keep China out of the AI game is futile. I've I've always felt that way. I don't think it'll work. In this case, I actually think it backfired. There is a there's a phrase that people use that constraints drive creativity. And Jobs used to say this quite a bit.

• 32:04Brad Gerstner?

  Whoa, whoa, Bill, bookmark that. Renee, Renee Haas, CEO of ARM, just jumped into our conversation, eh, Renee?

• 32:12Speaker 02

  Hello there. Hello, Bill.

• 32:14Bill Gurley?

  What? How you doing, Renee?

• 32:15Speaker 02

  I'm well. How are you?

• 32:17Bill Gurley?

  Great.

• 32:17Brad Gerstner?

  What an incredible day, Renee.

• 32:19Speaker 02

  Yeah, pretty amazing stuff, right?

• 32:22Brad Gerstner?

  I appreciate you jumping in here. I know we got maybe a 15 minute cameo. You know, we'll have you back when we can spend a couple hours together because you're such a, you know, a thought leader, having spent so much time at Nvidia, now running ARM, as most people know, Masa, I think owns 90% of ARM, so you're very close partners with Masa. Obviously, you've been party to the conversations. You're named as a technical partner along with, you know, OpenAI, Microsoft Oracle, in yesterday's really earthquake level announcement out of the White House. So Rene, help us understand a little bit how you see this playing out.

• 33:04Brad Gerstner?

  There's a lot of talk about this $500 billion number, whether this money exists. Bill and I just went through this analysis and I said, you know, from my perspective, this ramps up and it's going to be a combination of equity and, you know, and debt. You know, nobody has to show up with $500 billion on day one, you know, and I'm forecasting maybe 250,000 GPUs this year, maybe a million or 2 million, you know, next year. But what's the, what's your role in this and how are you thinking about how this scales up over the next few years?

• 33:36Speaker 02

  Yeah, sure. So I have a few roles that, you know, on this and I know you guys know Masa reasonably well. I know you do, definitely Bill. You know, I spend a lot of time with him. Part of it is they, you know, he owns 90% of ARM, so I have a lot of investor meetings with him with my, as my chief investor and talking about strategy. He has been himself personally pretty large on this idea of singularity for quite some time. And it's something that I think he's just had a vision on in the long, long game. With chat, the chat GPT moment, I think for him was a bit an accelerant relative to, there's a, there's a game to be played here relative to capital, relative to compute, relative to power.

• 34:20Speaker 02

  And he wants to play a big part in it. And I think there was just a lot of discussions, whether it was Sam Walton wanting to buy fabs or different assets that were trying to look at power in different areas of the planet. I think something had an opportunity to come together to solve this giant problem of how do you get access to so much energy that's needed, we think, to drive AGI and ASI?

• 34:47Speaker 02

  At numbers that are even well beyond the balance sheets of the giant companies like a Microsoft, a Google, a Meta, an AWS, et cetera, and Amazon. So I think this all kind of came together at right time, right place. But like everything in life with these type of things, it didn't happen overnight. There were a lot of discussions and conversations that have been taking place for weeks and actually many months. And I think this all came together with a confluence of ambitious partners like Sam, ambitious partners like Larry Ellison and Oracle, and quite frankly, a new administration that was ready to take action in a very fast way. And I think that's what you kind of all saw come together yesterday. And I think one of the most amazing things about it, I know you and Brad and I, we had

• 35:32Speaker 02

  talked about this in the past, is to imagine that 28 hours after the president took office, he's announcing a project around AI data centers and build out with, you know, three large players in the tech industry. Kind of amazing, you know, that just speaks to the importance of how the new administration views all this.

• 35:52Brad Gerstner?

  It's truly an Apollo-scale project. I guess as you think about, again, ARM, why don't you explain to us again, what is ARM actually delivering into Stargate? I know you're embedded in the GB200, but maybe just share with everybody else the role you play.

• 36:12Speaker 02

  Well, maybe at the highest level, the way to think about it is you've got a giant, as you said, Apollo Manhattan project, whatever terms you want to use about, well, I guess is probably the largest infrastructure to build out in the history of the world. And every data center, whether it's running general-purpose compute, whether it's running inference or running training, needs a base CPU to run everything, end quote. And that's our role. And whether that is going to be what we are part of today, which is GB200, and we're super happy to be partnering with Nvidia on that product, or other areas that we haven't talked about yet in terms of productization, there's lots of opportunity for ARM because

• 36:55Speaker 02

  the base CPU will be ARM. And I think therein lies a huge opportunity. You know, one of the things that people don't always appreciate with, let's take again, GB200 running in an AI data center. All of the other work that needs to take place, whether it's the hypervisors, virtual machines, anything that the "normal CPU" has to do in a data center has to be run by something. And that's what Grace does. So then when you baseline that relative to, okay, GB200 is where we are today, the opportunity going forward in terms of these large data centers doing some level of mixed inference and training, reasoning, reinforcement training, there's a lot of opportunities for ARM to do even more than what we're talking

• 37:39Speaker 02

  about today. So it's super exciting.

• 37:42Brad Gerstner?

  Bill, I know you had some questions, you know, just real tactical questions. Renee, as you think about just, you know, Stargate, it's a new company, it's a new entity. I know Mas is the chairman, but any insights for us, like, who's running this thing? And how should we think about this entity relative to the other entities? I mean, my mental framework is that it's kind of like this, this operating shell that everything runs through, but that the actual compute, the offload's going to go largely to OpenAI or 100%, you know, to OpenAI, that the inputs are going to be coming from you guys and Nvidia largely, and of course, all the other people that are going to be needed to network

• 38:25Brad Gerstner?

  and do the things in the data center. But is there an idea that you guys are investing in an entity that unto itself will have power and maybe grow in, you know, and serve other customers? Or is this really just about coordinating the activities of the people who are around the table?

• 38:41Speaker 02

  Yeah, I think what I can say today, Brad, it's much more of the latter than the former. You know, could there be opportunity for the former somewhere down the road, you know, potentially, but right now, it's what you just described. And the operational control will be from OpenAI. So they'll call the shots relative to all the things relative to the operation. Obviously, there's existing relationships with Nvidia, there's existing relationships with Oracle, existing relationships with Microsoft, ourselves. But going forward, they're going to be in a very, very key role on the operation, which I think If you kind of go back again to Sam and team spending a lot of time and energy over

• 39:23Speaker 02

  the past 12 to 18 months of seeking for ways to get opportunity and access to large resources to advance the training of these large models, it's kind of where he's kind of been with this. So I think that's a, it's not inconsistent with some of the actions and behaviors you've seen over the last, last number of months.

• 39:43Bill Gurley?

  Can you, can you think of an entity, like a comparable entity in the past? I'm having a hard time like imagining what that Brad just described actually is.

• 39:56Speaker 02

  I don't think there is a good comparison on this, Bill, because when you, when you just think about the amount of capital that's required, it's bigger than anyone, right? So it, this, this required a very, very novel set of partners to come together, both with a, a big vision, a, a, a large opportunity to get access to capital and candidly, probably a little bit of a willingness of we're going to figure this out as we, we try to grow it because we're, we're, this is not, this is beyond what we've done before. And the only analogy, and it's not, it's not a good one in terms of how I can think about it is, is maybe with Global Foundries and Bada La relative to starting to see that traditional

• 40:36Speaker 02

  fabs needed to get extra capital and that was at a much smaller scale. Now, you know, Satya talking about spending $80 billion of CapEx, you know, even, even for Microsoft, it's, it's a giant number. And at these numbers, no, no, no one company can do it.

• 40:54Brad Gerstner?

  So, so Renee, if you think about, you know, what, what's built into this forecast, you know, and, and you don't have the privilege of seeing what we talked about earlier, but I had my team do what we do well. We're a bunch of analysts. We take what's known. We try to build a bottoms up model and, you know, and what we got to really was by the end of 2028, consuming about seven and a half gigs of power. In Abilene, standing up about 2 million GPUs a year in that infrastructure. So 6.5 GPUs, 6.5 million GPUs, that would spend roughly 300, 350 billion of the 5, up to 500 billion that they said they would spend. When I just look at that level of power, you know, you know, we think about where the bottlenecks

• 41:39Brad Gerstner?

  are or where the risks are here to this build out. Obviously, this is operationally difficult, as I said, to build 2 million GPUs. I think that's a third of what Nvidia is expected to make this year. Right? So not an insignificant amount of the demand out of Nvidia. But where do you see the the bottlenecks to the extent they arise? Is it power? Is it GPUs? Is it ARM? You know, as you think about.

• 42:07Speaker 02

  Yeah, no, those are, those are, those are, those are all the right questions and stuff that we've been talking about, as you can imagine, for a number of months. One of the big bottlenecks or larger bottlenecks was or is hopefully addressed yesterday in the sense that you have a government that's going to help you in terms of permitting, in terms of regulations, in terms of that's not, that was not small, by the way, that was not small. You know, a lot of the aggressive things that were happening in terms of build out was literally buying Bitcoin mining facilities that were out of business and repurposing them. Right? Now, when you're talking about having to build a bunch of new things, regulatory matters. So that's one big one.

• 42:48Speaker 02

  Your numbers that your team looked at, I think, are probably in the right zip code. Our numbers, it might be a little bit, a little bit bigger, but your, your numbers are about right. Fab capacity does become an issue, no doubt, because when you start thinking about 3 nanometer and 2 nanometer, you know, TSMC is, is the leader, is the, the only game on town on some level. So I think that is, that is potential limitation, or at least constraint. HBM, memory and DRAM, for sure, that is another potential. And then you just get into. A couple of things. First off, when you're talking about gigawatts of power, can you locate, how physically close can those data centers be?

• 43:32Speaker 02

  And if you're trying to do training dispersed across multiple facilities, what does that look like? Can you really, really train a large model relying on the connectivity of the network across multiple physical sites? That is a challenge. Human labor to connect all these cables. I know that sounds a little trivial in the context of some of these technological problems we're talking about. Utterly non-trivial at the scale. So I think automation is a potential. I think robotics are a big potential on this. How do you build these? Do you build them from the ground up? Or do you containerize them and put them together in a modular fashion?

• 44:15Speaker 02

  So I think there are opportunities that are out there relative to scale this. Some known, some not so known. And I think all of that is going to be played out here over the next number of years.

• 44:29Brad Gerstner?

  Rene, I think you nailed it. And I think you nailed it when you said echoing Stan Druckenmiller. He said his entire career, he's never seen this big a reversal from anti-business administration to a pro-business administration. We upleveled the ambitions dramatically. Clearly, the people around the table, Larry Ellison, you, Masah, et cetera, understood that vibe shift occurring in the White House. And as I said to Bill, we have certainly intramural battles between Meta and Google and X.ai and Elon and OpenAI. But we're all on Team America.

• 45:08Brad Gerstner?

  And unequivocally, this advances us on AI at a rate and a pace that I think is great for all of us. Appreciate your leadership on that. Appreciate you jumping in here for a few minutes today. We look forward to having you back on and going deeper with you.

• 45:28Speaker 02

  Yeah, one thing I might add to this, and I don't remember, Bill, whether it was a competing podcast that you were on that you were talking about innovation. The innovation thrives because you're 3,000 miles away from a certain city in the United States. Yes. I was there the last three days. Yeah. Friggin' cold, by the way. But to Brad's point, and you know, you do the rounds of the dinners and the galas, blah, blah, blah, blah, blah. But I was struck by just the intent for a pace of change that was very stark. And it's felt much, much more business oriented than than anything else.

• 46:09Speaker 02

  And certainly in my career, I've spent a lot of time in DC, working with different administrations and different pieces of government, setting policy. And there are a lot of times you're having to explain, you know, what is it that you do? And what are your products? And what do they go into? And tell me again how they work. This time, the conversations are all about how do we remove barriers to go really fast and do it here? And I think the biggest testament I can give to it is that 28 hours after 28 hours after taking office, Donald Trump is there with Masa and Sam Altman and Larry Ellison talking about gigantic investments. It was his first press conference he did, for gosh's sake. So, yeah, I think that's something to look at.

• 46:53Brad Gerstner?

  I totally, one party below. How excited is Larry Ellison and is he really all in on this?

• 46:59Speaker 02

  Larry doesn't do a lot of public, you know, right? And he lives, you know, he lives in Florida, he likes the warm weather. He flew up to freezing Washington to stand outside and do an interview with Fox and then he was there. So, yeah, I don't want to speak too much for Larry, but he's very committed to this. And Larry, you know, he's got a lot of stuff he's doing with his Oxford Institute around advanced health research, all enabled by AI. So he's, and as I am, you and I have talked about this, Brad, I think, I think the last mile on this stuff is all about drug research and cancer research. Larry's very passionate about it. So this is a big connection to the stuff he believes very strongly in.

• 47:37Brad Gerstner?

  Well, of course, the podcast that you referenced, Bill's famous talk that everybody ought to watch pinned to his X.ai handle 2850, 2,851 miles from Washington by Bill Gurley at the All In Summit, our good friends from the All In Pod. It was an incredible talk and what I took away this weekend was exactly what you did, Renee, which is this is the first time I've seen an intersection and partnership between technology and Washington, the way I did this weekend. And given that the whole field of battle for national security has moved to the playing field of AI, it couldn't come at a better time. And so, thanks for joining us. A lot more to talk about. We'll see you soon.

• 48:21Speaker 02

  Thanks, guys.

• 48:22Bill Gurley?

  Thanks, Renee.

• 48:23Brad Gerstner?

  That was incredible from Renee. I think answered a bunch of questions. What was your takeaway from that? What was your key takeaway?

• 48:31Bill Gurley?

  I mean, I think it reinforced a lot of what you said earlier and maybe helped frame the math for the unit volume as you had structured. I'm still left with a huge question, you know, like I didn't, I didn't understand the answer about structure. Like you can't invest equity and you can't put debt on something at a three to one ratio and not expect it to be a standalone entity capable of creating equity value. So I captured one company subsidiary JV. That doesn't make sense to me. But

• 49:14Brad Gerstner?

  So more to unpack there.

• 49:16Bill Gurley?

  Yeah, I've got, I've got like three or four questions. Who's going to run it? Will they be great at it? I mean, we gave a lot of credit to Elon for being operationally tight in Memphis. We know as other companies are, will that happen here? Is OpenAI the only customer? Will it serve other people? Is it, is it a core weave lookalike, even maybe on steroids? Like I just, there's some things I still don't know.

• 49:37Brad Gerstner?

  Yeah, no, I think, I think he started to answer some of those questions, but we'll go deeper with them in time. Hey, I had interrupted you. We had bookmarked DeepSeek. I want to, I want to finish that off. And then we're going to talk a little bit about, you know, just a couple of the other impactful EOs that came out of Washington. A middle, a quick little market check. Why don't you rap on DeepSeek?

• 49:56Bill Gurley?

  Yeah, so the the point I was making when Renee popped in was that constraints can drive innovation. And so here you have a case where, you know, the the Biden administration, I think it was led by this guy Alan Estevez, and and this select committee, you know, for China that's that's inside of Congress, they're constantly looking for ways to kind of block China with with export controls. And, you know, he even on leaving, Estevez said, hey, we won, we we made it work. And, you know, meanwhile, like Eric Smith saying, we're behind. And and I certainly don't think we're slowing anybody down. But in

• 50:38Bill Gurley?

  this case, maybe by giving them constraints, we actually created a world where they innovated in a different direction, right? And created these hyper small models that they didn't need massive training infrastructure on. And so, you know, I think the reality is we did do that. We we they're, I mean, you and I have talked about this, but just some of the most remarkable entrepreneurs I've ever met are in China, resourceful. And so you tell them, well, you can't play with those tools. Well, they go and figure out how to do it with even lesser tools, and and maybe put themselves at equal footing, maybe even better footing, because they've learned to be more innovative in a way we weren't being innovative.

• 51:23Brad Gerstner?

  Well, there's a lot more to there's a lot more to discuss about DeepSeek. But I think you're absolutely right. And and and listen, there is a real risk that well intended legislation, well intended efforts in Washington backfire and result in the exact opposite result. Everybody wants to be tough on China. But being tough on China may not lead to, you know, China being slowed down, as evidenced by DeepSeek. So that may be case exhibit number one to you, Bill. So this brings me maybe to the transition to talk about, you know, what exactly happened? You know, we had the President of the United States literally at the Capital One Center. I've never seen any, nobody touches this guy. It's the greatest

• 52:06Brad Gerstner?

  marketer as president I think we've ever had. He does his inauguration, he seemingly doesn't need sleep. And at the Capital One Center, he's signing executive orders. Now, one of those executive orders, which we'll, we'll show here, halts all federal regulations that are currently being promulgated, unless they've been published in the Federal Register. And so one of the questions that I had, there's a very insidious piece of regulation, again, under the guise of being tough on China, that I think is really going to slow down American AI. And this is a framework for artificial intelligent diffusion. And it was promulgated by the Department of Commerce.

• 52:50Brad Gerstner?

  And the idea was, basically, you saw it last week, that Nvidia and all these guys can only send chips to a few friendly company, countries. And then now it creates all of these different acronyms and levels. Who can get what? People think there's a lot of regulatory capture in there for a certain company in Seattle. You know, it hurts a lot of the smaller companies. But without a doubt, I've heard across the board from almost every company in the ecosystem that this is a terrible idea. So I was hopeful that this rule, which was promulgated, would be revoked. But unfortunately, he said unless it's been published in the Federal Register. So we went and we researched, has it been published

• 53:35Brad Gerstner?

  in the Federal Register? And we'll show here that it has. So it seems to me that that EO wasn't enough to roll back this diffusion rule that was promulgated by Commerce. And Howard Lutnick or others are going to have to act specifically, I think, to roll back this rule, which I don't think is meant to be adopted for, for some, you know, three or four months, anyway. I don't think it will get ratified, but it's an example of the new look I think the administration is taking at all these things. Were there any EOs, Bill, that caught your eye?

• 54:07Bill Gurley?

  By the way, just following up on that.

• 54:09Brad Gerstner?

  Yeah.

• 54:09Bill Gurley?

  You know, we talked about this on the last podcast, but there's like 20 different state by state initiatives being pushed right now. And so I think the unfortunate reality is that, that there's so much effort and so much push to, to write regulation here. And maybe the intent of pushing at the state level is to provoke a federal. A piece of legislation because the dumbest possible thing we could possibly have is state by state. It just like it's just mud in the gears like really, really stupid.

• 54:47Brad Gerstner?

  So to put to put a finer point on that, you talked about, you know, 1047 fortunately was vetoed in the state of California, but now you have the piece of legislation working its way through Texas that we talked about. I think it's roughly 25 states that, you know, within this patchwork that have a 1047 equivalent that would be very problematic. I'm happy to report that I spent a lot of time with it with an incredible congressman from the state of California, Jay Obernolte. And Jay was the chair or is the chair of the artificial intelligence task force in the House. So from the House of Representatives perspective, he's on point developing a plan of attack. And it was great to hear Jay,

• 55:28Brad Gerstner?

  I coordinated some meetings this weekend between him and a lot of CEOs of leading AI companies. And there is a plan by Congress on the one hand to have federal preemption. Clearly, this is a matter of interstate commerce, so we should have federal preemption. But because that's going to take some time, they also have a plan, Bill, that if any of these states were to pass something like 1047, they can issue a moratorium that would effectively freeze the state law for the period of time it would take them to get the preemption passed.

• 56:04Bill Gurley?

  But that gets back to my point where that may have been the end goal all the way around. Like, so they may be happy with that outcome. Obviously, all this is going to fall on our friend, Mr. David Sacks. So I'm sure we'll have more to hear from him going forward.

• 56:20Brad Gerstner?

  No doubt about it. And I, you know, can we just say that given what's at stake right now? How fortuitous it is to have people who actually understand this stuff like Sacks helping to coordinate, right, the needs of industry and the various agencies of government. Because there's a lot of friction in this process. And I can tell you, he is working tirelessly in information gathering mode, trying to understand all these pieces and how to coordinate these priorities. But one of the things I think he and many others celebrated, one of the EOs that was revoked by Trump was the Biden EO on AI. And one of the things I would say on the Biden executive order is there were many Republicans

• 57:05Brad Gerstner?

  who said to me, you know, there's some good stuff in this. Like, you know, we need to, we need to keep certain things. And I think even Sacks and others acknowledged there's some good things in there. But the, the adopted approach was start from a clean slate, tabula rasa, you know, and rather than try to edit the Biden rule, just start with a blank sheet of paper. And if there were good ideas in there, you can add them to an executive order on AI that could come out of this administration. So to me, when I think through the most important executive orders impacting Silicon Valley, one is on this diffusion bill. We got to kill this. This was terrible legislation that was rushed out of commerce so that, so that they could say

• 57:45Brad Gerstner?

  that they were being tough on China. We got the AI EO revoked. The next one for me was, was DOGE. I mean, this DOGE EO was frankly further reaching than I expected, setting up a department or effectively a task force, a SWAT team within every federal agency, a four-person SWAT team, to go through the DOGE procedure, right? We're now in a period of maybe three to four months where the president has said he wants a reconciliation bill on his desk. He wants to, you know, put us on a path to balancing the budget. And so DOGE is going to have to move very fast. We now see that Vivek's going to run for governor of Ohio, it sounds like. And so Elon is singularly

• 58:28Brad Gerstner?

  at the head of DOGE. I think that will help make it, decisions go maybe even faster. But I was surprised at the level of coordination and reach that they already had, including around software modernization. There was an EO around software modernization across the entire government. So it was exciting to see that, that move forward quickly.

• 58:50Bill Gurley?

  Yeah, and look, I think that's one of those things where most people are skeptical. I think they've been around the American government a long enough time that they don't think that type of radical change and efficiency creation is possible. I think if you look at what Malay's done in Argentina and you say, well, what, you know, what could go right? If it were to work, it would be so positive for the US dollar, the American economy. It would be remarkably positive. And so I put it at high, high impact, still low probability in my brain, just because it's such a bureaucratic place, Washington. But it'd be great if it succeeds.

• 59:35Brad Gerstner?

  Well, I would say if you think about American national security, the two things that are top of mind for me is number one, not losing the race on AI. We got to win the race on AI. And the second one to me is our national financial security. Right? We cannot, we're on a path to financial ruin if we don't make these changes. It's immoral to leave this level of debt to our children. You know, we outlined a path on this pod to how we can balance the budget at $6 trillion of revenue and spend by the end of Trump's term. And I'm going to predict it here. I think in the president's State of the Union address in the first week of March, he's going to make a commitment to balance the budget in his first term in office. You don't have to do it in year one.

• 1:00:20Brad Gerstner?

  And listen, if we get to $2 trillion on Doge, then you'll do better than balance the budget. You'll have a surplus by the end of his first term. But I think a commitment to balance the budget in his first term would cause the bond market to react, which means, Bill, if the bond market gets bought and rates go down, our cost to borrow will go down by $100 to $200 billion per year. Right? Positively impacting even more, you know, what can be achieved here. Of course, the bond market hasn't believed and shouldn't believe because we've never delivered it, hasn't believed that we actually can make these cuts. But I'm more and more convinced that the coordination between Congress, the executive

• 1:01:03Brad Gerstner?

  branch and Doge, we're going to get something important done.

• 1:01:08Bill Gurley?

  Before we leave Washington, I gotta make a few comments about the TikTok stuff that kind of popped up in his initial, you know, press conference, Trump's initial press conference. And what I thought was different this time, and he then did it again after the Stargate conference, is that he's talking about putting partial ownership of TikTok on the United States government balance sheet, which I think is new. I think the way this happened is, I think he's, you know, been a negotiator his whole career, and he recognized that

• 1:01:49Bill Gurley?

  there was an asset that if this law is enforced, goes away. And most of that equity value probably goes to Meta, right? And maybe a little bit to Snap or if someone else pops up. But it just melts away. And so he views the enforcement as destruction of value that could be negotiated and grabbed. And so I literally think that's what's going on in his head. What he may be underestimating is the willingness of China to just let it go away, or, you know, the unwillingness of someone to buy it and then give away

• 1:02:31Bill Gurley?

  half right away to the government. So it'll be interesting. It sounds like he's only got 90 days to play this out.

• 1:02:38Brad Gerstner?

  It's a fascinating one. I mean, just to replay the weekend, Bill, TikTok went dark. They literally shut down the app, which nobody thought was going to happen. You know, I happened to tweet that I think it was going to be shut down for less than 36 hours. Sure enough, you know, he took to the floor of the Capital One Arena. He's like, I brought TikTok back for the masses. That makes kids and younger folks really excited. He's standing on the side of free speech. But yes, Trump is absolutely a dealmaker, and he thinks if the US is going to turn this on, that they're entitled to something. And I think there are a lot of people who agree with him. I think there are a couple of things. Number one, he said multiple times, I do well on TikTok. I like TikTok, you know?

• 1:03:21Brad Gerstner?

  And so I think there is a part of him that just commercially knows there are 7 million folks who make a living on TikTok. He's done well on it. He would like to keep it open. But nobody on the planet wants a fair playing field more than Trump. And he realizes that American, you know, internet companies aren't allowed to, you know, to be in China. And, you know, he wants a deal, whether the deal is as you described or some other way. I think it's, I think it's yet to be determined. But what we know for now is that it's alive, it's alive and well. And I think for TikTok shareholders, and as a reminder to folks, we're investors since 2016 in ByteDance. As TikTok shareholders, I just think they want resolution, right?

• 1:04:03Brad Gerstner?

  TikTok, you know, US is a small part of that global business. You know, maybe there'll be a commercial deal to be worked out, but to your point, it's likely to be done or not done in the next 90 days.

• 1:04:15Bill Gurley?

  Well, and, and they've had 180 days to do it. So the odds that they actually want to do it, I think, are low because they could have done it already. And I also, based on what I've read, I think it's out of Trump's hands. Like, he found a way to delay it, but Congress already voted and the Supreme Court already backed it up. He can't, he can't veto what they've already done. So it is going to come to a head pretty quickly.

• 1:04:40Brad Gerstner?

  Yeah, it was funny. In, in the press conference yesterday on Stargate, he was asked a question on TikTok, and he starts laying out his case, like what he wants, right? And he, it could have been like he was running the investment bank at Goldman Sachs, the way he laid it out. It was, it was pretty brilliant. And he said, hey, Larry, talking to Larry Ellison, why don't we just live negotiate the TikTok deal right here? I'm going to tell you what I think. You tell me whether or not you want to do the deal. So at the end of the day, remember, the Oracle Cloud runs Project Texas, which is where TikTok US is run. So Larry Ellison has a big stake here. You know, he was also there yesterday talking about that. People have, somebody asked the president, would it be okay if Elon bought part of this? He said, yes. Yes, I would be fine if Elon bought part of it.

• 1:05:24Brad Gerstner?

  So might Larry and Elon be the two buyers of 50% or more of of US TikTok? It's going to be just another party.

• 1:05:31Bill Gurley?

  But but but there's three parties like China has to want to sell. The best four, you got ByteDance, the China government, the US government. There's six parties, you know, all together. So this will be a tough one to land.

• 1:05:44Brad Gerstner?

  It's gonna it's gonna be fascinating. Why don't we maybe just want to end up with a little tech check?

• 1:05:50Bill Gurley?

  Sure. What do you see?

• 1:05:52Brad Gerstner?

  The first thing I saw, Bill, is I think it was on the the actual day of the inauguration. You know, one of our heroes, Stan Druckenmiller, was on CNBC. And he talked about his observation on this administration. And he's saying, we're going from the most anti-business administration of his lifetime to the most pro-business administration of his lifetime. And I mean, think about this guy. He's he's seen it all. And Stan is not a person prone to hyperbole. You know, when you look at what's happening in the market, just year to date. I think the the Nasdaq's up like 4% through today. That's on top of it being up a fair bit

• 1:06:36Brad Gerstner?

  since people started expecting that Trump was going to win the election. But the fact that he made those those comments, I think you got to take is is very significant. But there are two other things Stan said in that interview. He said, that doesn't mean, just because I believe that, that doesn't mean I'm all in on the markets. Right? And he said, you know, things are priced reasonably high. And so we'll show, you know, if you look at the S and P. We think that S and P is baking in a big earnings acceleration this year. And that's on top of already high multiples. So the S and P X mag seven has a big hurdle this year. If you look at if you look at what's expected out of mag seven, it's a pretty big earnings deceleration.

• 1:07:19Brad Gerstner?

  And the multiples are pretty consistent with where they've been the last five years. We'll post both of those charts in here. So number one, he said, we're not all in on the market. And then he talked about the 10 year, which we said in our first show this year. Watch the 10 year, that's going to determine where the market goes. And when as high as 48, 485, we're now down today closer to 46. And that's really about whether or not folks think inflation, you know, is reengaging here and whether or not, you know, we're going to be faced with interest rates. It's really interesting, Bill. Lennar, the home builder, down a ton yesterday. Ford, the auto builder, down today. At the same time, these tech stocks are screaming. Why?

• 1:07:59Brad Gerstner?

  Because interest rates are high, the economy is restrictive, not all parts of this market are benefiting. And I think that will be concerning to the president. He said he doesn't like these interest rates. He thinks the interest rates are too high. And Stan said, you know, I feel great about the administration, super pro-business, but we got these two things, high valuations and maybe interest rates that are going to go higher, you know, that could ruin the party. We've gotten off to a strong start here in the early part of January, but for managers like us, we're paying close attention to those things. You know, I'm kind of on record saying I don't think inflation is going to reignite. And that I think that rates will, you know, we've probably seen the top in rates for the next three, four months.

• 1:08:44Brad Gerstner?

  But hell, I don't know, you know, I'm not a macro forecaster. We just have to look at them and take them as they come. But we will, if rates were to go to five or five and a half percent, and we see that happening, our exposures would come down. But I would say right now, it's been a pretty incredible start to the year.

• 1:09:03Bill Gurley?

  Any comments on the Netflix quarter, which is, it looks like it's up 40 billion today in market cap?

• 1:09:11Brad Gerstner?

  I mean, just an extraordinary company, incredibly well-run. And frankly, it's a tailwind, another tailwind today for all internet companies. Remember one of the things I said that we were worried about, about these companies? We said FX was going to be a big headwind because the dollar has strengthened tremendously on a year-over-year basis. So we thought for most of these companies, FX was going to be a two or a 3% headwind. And they said, they took up their guidance bill, even accounting for the FX headwind. So it's a much bigger raise in guidance on an FX-adjusted basis than people expected. And it just goes to show you, you know, I was with a well-known CEO of an internet company this weekend.

• 1:09:52Brad Gerstner?

  And he said, Brad, we've doubled our revenues and our costs keep coming down because of AI. I've said that I think this moment that we're in, the next five years is going to be a golden moment of margin expansion for technology businesses and frankly, all businesses. Human productivity is going to go up, which means the cost to do exactly, you know, the things you're doing in your business are going to come down. So for market leaders who can hold on to that revenue bill, who it doesn't get competed away, their margins are going to expand. Look at what's happened at Meta and these other companies. I think that's accelerating in 2025 and 2026. You know, everything's price dependent and things

• 1:10:33Brad Gerstner?

  can change really rapidly as the first week of this year showed. But it's fun to be with you. It's going to be a fun year to do this. We'll have some more, more great guests on in the next few weeks doing cameos and for the long form. But I appreciate you doing this with me again. It keeps me sharp. All right, man. Take care. Great seeing you, Bill. Bye.

• 1:11:04Brad Gerstner?

  As a reminder to everybody, just our opinions, not investment advice.