AI Giants HATE Open Source, the World is on Fire, Greenland | Weekly Recap

What's up, everybody? It's Tom Bilyeu here: Want my help starting a business? Join me here inside Zero To Founder https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show Sign up for my AI Masterclass: AI Masterclass https://tombilyeu.com/ai-masterclass?utm_campaign=Live%20Masterclass&utm_source=podcast&utm_medium=evergreen Follow Me: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Tailor Brands: Check out Tailor Brands to get started with your business today: https://bit.ly/TailorBrandsSept Quince: Free shipping and 365-day returns at https://quince.com/impactpod ElevenLabs: Book your demo at https://elevenlabs.io/impactpod Cash App: Download Cash App Today: https://capl.onelink.me/vFut/v6nymgjl#CashAppPod *Cash App is a financial services platform, not a bank. Banking services provided by Cash App’s bank partner(s). Prepaid debit cards issued by Sutton Bank, Member FDIC. Cash App Visa® Debit Flex Cards issued by Sutton Bank, Member FDIC, and The Bancorp Bank, N. A., pursuant to a license from Visa U. S. A. Inc. See terms and conditions for the Sutton prepaid card, Sutton debit flex card, and Bancorp debit flex card. Cash App Green features, Savings, Direct deposit, Round ups, Overdraft coverage and Discounts provided by Cash App, a Block, Inc. brand. Visit cash.app/legal/podcast http://cash.app/legal/podcast for full disclosure. Ketone IQ: Visit https://ketone.com/IMPACT for 30% OFF your subscription order. ATT Business: Switch to AT&T Business at https:// https://incogni.com/impactbusiness.att.com http://business.att.com Incogni: Take your personal data back with Incogni! Use code IMPACT at the link below and get 60% off an annual plan: https://incogni.com/impact Quo: ​​Try for free PLUS get 20% off your first 6 months at https://quo.com/impact Pipedrive: Get more leads and grow your business. Go to https://www.pipedrive.com/impact and get started with a 30-day free trial. Netsuite: For the first time ever you can try NetSuite Next for free. If your revenues are at least in the seven figures, go to https://NetSuite.ai/Theory https://netsuite.ai/Theory. Butcherbox: Go to https://ButcherBox.com/IMPACT https://butcherbox.com/IMPACT to get $20 off your first box, plus your choice of free ribeye, new york strip, or filet mignon in every box for a year — with free shipping always The team breaks down a real and fast-moving shift in the AI industry: open-weight models, which were a rounding error (~7% of traffic) back in December, have exploded—accounting for 56% of tokens generated by August, with Vercel CEO Guillermo Rauch reporting a single-day record of 78.4% on September 19th, and spending on three Chinese labs (Moonshot, DeepSeek, z.ai) on that day topping spend on OpenAI. The host walks the money: open-weight share of dollars on the Vercel gateway went from under 4% in June to 8.6% in July to 14% in August, average price per token fell 23% in August alone, and developers are splitting the workload—hard, high-stakes work still goes to Anthropic (which has held 61%+ of gateway spend every month since December), everything else goes to whatever's cheapest. His read on what's breaking: not the frontier, but the low end of the big players—OpenAI's and Google's cheap "gateway" models are getting obliterated as people conclude "you're not as good as Anthropic, so I'll either pay for the best or use the cheap stuff." The real winners, he argues, are the chipmakers and cloud/inference providers (like Vercel), because value is shifting from owning the model to just providing access to the compute—the commoditization of intelligence. He frames the optimistic upside: companies will increasingly host their own open-weight models to keep their work proprietary and build a real edge, rather than everyone using the identical public tool. Ryan pushes the counter-thesis—that if OpenAI had stayed the 2015 nonprofit and gone all-in on open source (his analogy: how OBS open-sourced screen recording and dominated), the US might be further ahead of China. Tom steelmans it but argues the fatal flaw: someone has to build the "brains," the data centers are staggeringly expensive, and there's still no observed ceiling to how much smarter models get with more compute—so without the profit incentive to aggregate that capital, AI would have stalled out entirely. His synthesis lands close to the Musk-era idea: keep the frontier model paid to fund the enormous buildout, let older generations go open source to drive sub-frontier innovation, and don't let the government kill open weights. They also dig into China's logic—giving models away free as an authoritarian-enabled disruption play they can clamp down on later once they're manufacturing their own chips—and the cynical data angle that free Chinese models feed usage data straight back to labs that can close them off anytime. A sharp, first-principles look at where the AI value—and the risk—is actually moving. The team steps back from any single flashpoint to map how the world's conflicts are increasingly linking into one interconnected crisis. The weekend's near-escalation—a Houthi missile barrage on Riyadh, an Aramco depot fire, a State Department warning to reconsider travel to the entire region, and Trump briefly in "deciding mode" before reportedly backing off—is treated as just one node in a much larger web. The host lays out the loosely-sourced but growing hypothesis tying it all together: a China-Russia-Iran-North Korea alignment whose logic is to keep the US bogged down in as many places as possible—so China can move on Taiwan (possibly accelerating a 2027 timeline if it feels cornered on AI and chips), Russia can test whether NATO's guarantees mean anything while a wartime economy gives Putin every incentive to keep the Ukraine stalemate going, and Europe openly tells its citizens to prepare for war, with Germany talking about the biggest military on the continent. Threaded through every conflict is the same economic engine: the disruption of the Strait of Hormuz and Bab el-Mandeb has pushed shipping costs from roughly $6–7 to $23+ per barrel, and that slow-building penalty cascades into fuel, food, and fertilizer crises—potentially a hard-winter scenario that pushes Europe to "escalate to de-escalate." The host's synthesis: calling it World War III is overstated, but these conflicts are genuinely connected and waiting on a spark. He traces the root cause to the erosion of the US as the "monolithic keeper of global peace"—a decline he pins on internal division and a watershed in Russia's Ukraine invasion—and argues America is now in a "Suez Canal moment": if it can't reopen Hormuz by force, the world's near-universal "back down when America says so" reflex collapses, and the US has to actually fight every skirmish at an unaffordable cost, on top of staggering debt. He frames it as a once-in-a-century shift in great-power politics unfolding at the exact moment AI emerges as the defining strategic technology, and closes on his recurring warning: regulating AI to death would hand China the opening to corner "intelligence itself." (A chat-prompted aside, which the host flags as a troubling hypothetical, entertains whether a large-enough war could be used to justify postponing an election—landing on Congress as the necessary check.) The team breaks down Trump's declaration of an "ultimate deal" with Denmark over Greenland—and separates the victory lap from the substance. The host's read: much of what Trump is trumpeting was already in place under the 1951 US-Denmark agreement (which lets the US operate military bases there), and he's taking a modest update and blowing it up for low-information voters who only hear the headline. But there is a genuinely new and strategically significant element—Greenland can no longer allow foreign-adversary infrastructure, specifically shutting China out. He explains why that matters: China has been insinuating itself into the Arctic (icebreakers, a new shipping route, calling itself "Arctic-adjacent"), and Chinese-built infrastructure/tech has a documented pattern of quietly sending data home (he cites a Nordic test where an isolated Chinese car kept pinging China), so keeping Chinese equipment out of a territory that sits on the direct line of any Russian attack on the US—and any future "golden dome" early-warning/defense system—is a real national-security win, one he says Denmark, Greenland, the UK, and the US all seem to accept. His broader points: this is smart strategy people miss because they hate Trump, and he argues there's a real shift toward Americans who no longer believe the US has moral standing to be the strongest power—a view he rejects, favoring a US that reestablishes its moral core but refocuses on hemispheric defense rather than policing the world. His sharpest criticism is Trump's method: publicly humiliating counterparts ("be the little bro, pat them on the head") breeds the exact resentment now visible with Canada and Europe, when the same wins could be gotten privately while letting the other side save face. On the forward look, he frames Greenland's real friction as a potential US-Europe proxy fight, notes that Europe won't fully hitch itself to China because China is aligned with Russia (a "suicide mission" militarily), and addresses a viewer point that America is rapidly losing soft power—arguing the only durable way to bring allies back is genuine economic and military strength (people getting richer by aligning with America), not threats, which produce brief compliance and permanent option-seeking. His path: stabilize Iran, lean into the Abraham Accords and hemispheric energy (Venezuela + US), stop policing the world, calm the violent left-right whipsaw, and grow the economy through AI. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:00Tom Bilyeu?

  Let's talk about the moment your side hustle becomes a real business. Now, I see way too many founders stay stuck running their business like it's a hobby. And then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University. And the first step in the path to building a legit business is registering it. And Tailor Brands will help you do just that in a few clicks. An LLC, a limited liability company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Tailor Brands doesn't stop at the filing.

• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Tailor Brands and get started on your business today. This is a paid advertisement.

• 1:07Speaker 01

  We've reached an agreement with Denmark and Greenland.

• 1:10Tom Bilyeu?

  Trump has suddenly come out with a victory lap, saying that we have secured the ultimate deal with Greenland. Never seen anything like it. This is the greatest thing ever. The question becomes, is there really anything new here? Or is this basically the same thing that was playing out in 1951? So in 1951, there's an agreement struck between the US and Denmark that basically says the US can have as many military bases as it wants. But the real thing that is becoming interesting here is that even when you talk to Denmark, they are saying, yes, there is something new that has happened here. And it's a big win for Trump, but this is also a win certainly for Greenland. It's a win for Denmark. It's a win for the UK.

• 1:52Tom Bilyeu?

  And so this seems like something that everybody is getting on board with. But let's break down exactly what's happening. So first and foremost, Trump needs a win. Now, the vast majority of humanity, I won't lump you guys into that, but the vast majority of humanity is a low information decision maker in their lives. They hear headlines, that's all they need. So you guys are going to be well informed enough to know that basically Trump is taking a small thing and blowing it up into something big. And he's going to say, see, I told you I was going to get control. And he's going to realize that most people do not understand that most of this stuff is already in place in 1951. And so while there is a new element to keeping foreign involvement out.

• 2:33Tom Bilyeu?

  So take for instance, Greenland will no longer have the ability to do things like have Chinese infrastructure. Now, that may not seem like a big deal until you understand, forget which country it was. I think it was one of the Nordic countries. They took one of the Chinese automobiles that are now selling like hotcakes and they isolated it. So it couldn't see anything around it. And they wanted to just see what will it do? Where will it be communicating to? And the vast majority of the communications were going back to China. So even when this thing doesn't have, it's not, it doesn't need navigation data or anything like that. It's constantly sending pings back to China. China is very smart. I won't even say China's not dumb. China's brilliant, man.

• 3:17Tom Bilyeu?

  They are chock full of a bunch of engineers that understand that information is power. And if they can be mapping the territory, if they can be getting data streams about how people are spending their time on their phones, if they can be listening into conversations, if they can bundle that up and be constantly sending a stream of that back to China, then obviously they're going to have an informational advantage over everybody else. And this was why the TikTok thing was such a big deal. If they also have algorithmic influence over a country, then they're going to have a massive advantage. So they can control both what people look at and what they see and get an informational loop by having infrastructure somewhere.

• 3:58Tom Bilyeu?

  So if you're the US and you know that China has always been excluded from the treaties and things around the Arctic because they're not actually in it, then you're, you start asking the question, okay, these guys who can actually go under the ice, which very few people can, China, who is sending icebreakers up to the Arctic to try to make a new shipping route, they're making themselves, they are insinuating themselves into the Arctic to try to get some amount of control over that. If you're the US and you're looking five, 10 years into the future and you know that your biggest adversary is China by a country mile, then you start saying, okay, hold on, this isn't just about them not being able to have a base.

• 4:43Tom Bilyeu?

  It isn't just about the US being able to have bases, which we already have. This is about us making sure that they're not able to do what they've done in so many places in the world, which is actually go and get their equipment put into the infrastructure of the country. Now, with that as a backdrop, let us check in with the, one of the members of parliament from Denmark. Now, earlier in this interview, he said, listen, this isn't that big of a deal. We had a lot of this already in place in 1951. And so Trump is, you know, doing a bit of his victory lap, which is the one of the things that Trump needs. But this actually is a win. Let's hear it from him.

• 5:25Speaker 02

  To my last point, which was on security, things have changed. Tell me about what, what your understanding is of that, the current threat and why it perhaps is beyond the scope, if indeed it is, of Europe and NATO, and it has to take the US having this position.

• 5:45Speaker 03

  No, but it's changed in that way that the US and US equipment will be in Greenland. Not Chinese equipment, not Russian equipment. That's a huge win for the president and his men, I would say. So in that regard, that's an extension of the 1951 agreement.

• 6:15Speaker 02

  Was there ever a risk of Russian equipment being in Greenland?

• 6:22Speaker 03

  There's always a risk, but realistically I don't see it happening or that it could have happened. So now it's just formalized. Now it's certain that it is NATO led by the US that will take care of the security in and around Greenland.

• 6:45Tom Bilyeu?

  Okay, so we'll see if there's really something meaningful that comes out of this as we begin to get the documents and the conversations that have been happening behind the scenes, which will come out years later. And so we'll find out if there was really a there there here. But when you think about people being low information voters, Trump got what he needed, which is basically to be able to claim, I told you that I was going to get control of this situation. I got control of the situation. Now, he was saying wild, crazy shit, as is his way, talking about, we're basically going to get Greenland one way or the other. It's going to be ours, not taking military action off the table. If you guys remember, whatever, eight months ago, a year ago, I forget exactly when.

• 7:26Tom Bilyeu?

  But when you had European nations sending troops there because they wanted to find out exactly what was going on, how was the US going to respond? Thankfully, cooler heads prevailed. That didn't escalate. Thankfully, we've taken a diplomatic solution. But we now have an opportunity for Trump to take an exit ramp and say, okay, listen, I got exactly what I was looking for. I have won the day and we can move on. Now, I will say, in a future where we're having to be cognizant of what Russia's doing, we're having to watch what China's doing. China was making a play down in South America with the Panama Canal. Obviously, that was one of the first things that Trump addressed. China was certainly flirtation, flirting, being a little flirtatious, touching up Greenland, if you will,

• 8:11Tom Bilyeu?

  trying to get into a position where they had a known presence, where they were included in conversations about it because they were calling themselves Arctic adjacent. And so just trying to become a bigger part of that conversation. Obviously, they weren't doing that for shits and giggles. They were doing that because there's a strategic advantage to having a presence there as any attack on the US, certainly from Russia, is going to go over that area. And so if you're trying to build some sort of golden dome to be able to protect the US, to have early warning systems, you're going to need to be able to have a stronghold in Greenland to make sure that you have eyes to protect the US. Now, here is the fascinating part for me.

• 8:49Tom Bilyeu?

  Because people hate Trump so much, I think they stopped thinking strategically about the US. Also, I really do believe there's been a shift in the mentality to a large portion of people in the US that no longer believe that America has a moral justification to be the strongest country in the world. And I think that there are Americans that want to see America's role in the world be far less muscular. They want to see us weakened, which is wild to me, but nonetheless, I think is extremely true. And so I'm sure there are going to be people that they don't like this because Trump did it.

• 9:31Tom Bilyeu?

  And they don't like this because they want to see our position weakened on the global stage. Now, speaking as somebody who very much wants to see America reestablish its moral core, I think that we do owe that to ourselves and to the world. But in a world where we can refocus on why we are doing what we are doing, focus on American safety, not just trying to project strength everywhere, focusing on our hemisphere, that being able to

• 10:00Tom Bilyeu?

  To defend ourselves is paramount. That that is job number one of a government. And if being able to have bases, more bases than we have currently, which was already covered in 1951, but be able to keep the infrastructure and just presence of foreign adversaries out of the area so that we can build technology that we certainly don't want their eyes on, so that we have defensive capabilities that we don't want them to know about, don't want them to have any way to interfere with. I think that is a win. Now, the fact that everything with Trump has to be done the fucking hard way, where he's trying to slap people around emotionally, which, by the way, just Jesus, man, I can't stress this enough.

• 10:44Tom Bilyeu?

  Whenever you're doing a negotiation, you've got to give the other person the ability to walk away from the table saying that they won. And if you're making them accept that they're the little guy in a public forum, it's absolutely asinine. You are giving them every incentive in the world to find a way to backstab you. And that is much of the chaos that we see going on in Canada. That's much of the in terms of the the relationship between the US and Canada. That's exactly what we see going on in Europe. When you ask somebody publicly to be the little bro and to pat them on the head, they are going to resent you in the extreme. It's one thing to do it privately, but giving them a public face where they can save face. It's another to be that dismissive of people in public.

• 11:26Tom Bilyeu?

  It is a way that Trump has that I think worked fine in the real estate, New York era, behind the scenes, all of that. Sure, you can go in and do that and the person still gets to, you know, hold their head high coming out of the negotiation because nobody heard you be an asshole. But when you're an asshole on the public stage, it creates a totally different dynamic. Nonetheless, we have gotten here. Somehow, some way, either because he was distracted in other places, somebody got him to shut the fuck up and just get the deal done behind the scenes, which I am very happy to see actually played out. So from a US, US's ability to protect itself from a growing array of adversaries, I think this is a very strong move.

• 12:05Speaker 01

  Looking at this, obviously, we have a situation where we Trump, Trump won in Greenland in the past. And because of the the language of this deal, it basically allows the US to build new sites without Danish or Greenland sign off. Firstly, do you think there comes a point where a local government says no, and this all collapses? But then, secondly, at what point do you think this stops being defense and almost encroaching upon the independence of the people living in the territory?

• 12:32Tom Bilyeu?

  Well, okay, so this gets into is Greenland actually a sovereign nation or not? And the obvious answer is they're not. The having a relationship with Denmark is going to be much more sort of handholding negotiating with the US are just going to tell you what to do. So I imagine that is going to feel very different to Greenland. I think this is largely going to come down to who's president. Trump is only going to be president for another two years, no matter what. So I imagine that there's not going to be too much friction in the next couple of years. Hopefully, we get somebody far more diplomatic in office after that. So that's not something that I see on the horizon now, given the short timeframe that you'll have a person like Trump in office.

• 13:17Tom Bilyeu?

  Now, if we continue to go like lunatic populist, I guess all bets could be off. But I'm optimistic that we won't go that route. So I don't worry about that. That's not even on my bingo card right now in terms of the real friction being between the US and Greenland. I think the real friction is going to be between the US and Europe writ large, which will then become a proxy over Greenland if they feel like he's doing something untoward in Europe, whether that's through tariffs, whether that's through seemingly supporting Russia. You continue to see people try to push a narrative that's already been debunked, even by Snopes, which is that Trump was leaking information to Russia. Again, debunk, debunk, debunked.

• 14:02Tom Bilyeu?

  But it shows you that people are harboring this sense that the US and Trump specifically are not European allies anymore. And listen, there's enough smoke there that I understand why people are feeling that. So I can see Greenland becoming a bit more of a proxy battle, which is what it felt like when this first came up, that Trump was using it to ruffle feathers. He was using it to signal to Europe that we are not a united front. If you guys don't get in behind my agenda, there's going to be problems. So that would be where I could see this becoming a problem. But I think the reason they've signed off on this agreement is partly because Europe isn't dumb. You don't want to put yourself in a position where you're completely beholden to China. They might be making those decisions right now from the perspective of trade

• 14:48Tom Bilyeu?

  that China can make a lot of stuff that's cheap for us. Remember, that is a great way to disguise the decline of your own economy. If you can't grow, at least make things cheaper. And that has been, I think, a huge impetus behind the importation of cheap immigrants and the increasing, increasing, increasing trade with China. It's just, okay, our, you know, GDP per capita is not growing at the rate that it should be. And so the way that we're going to trick people into think that they're getting richer is to continue to partner with China. So, fine, that's what you're going to do on the trade perspective. I think it is very short sighted. But when election cycles are measured in a short number of years, I certainly understand the incentive to end up in that position.

• 15:33Tom Bilyeu?

  But from a military perspective, if you know that Russia is your biggest threat and China is allied with Russia far more than they're aligned with you, that would be a suicide mission to pair yourself directly with China on all fronts. So part of the language that has been coming out post this Greenland agreement is, yes, this is good for Greenland from a protection perspective, because you still have, the US is still the strongest military in the world. Whether we are what we once were, I think is self evident. We are not, but we are still the strongest military in the world. So if you're Greenland, it's like, do I want Europe to be the person I'm counting on for protection? No, definitely not. Do I want the US for sure?

• 16:18Tom Bilyeu?

  Do I want the US and Europe together? Yes, that would be my ideal. So I think it would be very unwise of Denmark, be very unwise of Greenland to be anything but enthusiastic about having defense brought to you by the US. Now, given that Greenland is not exactly a gigantic population that's spreading out all over the country, as long as the US isn't building bases that is, you know, directly encroaching on the economy of a local area, I think you're going to be fine. So I expect this to be relatively peaceful moving forward. They get the security guarantees that they need. Trump stops being a psychopath because he has the story that he needs.

• 17:03Tom Bilyeu?

  And we march forward and get Trump out of office and hope for something more amenable in the future. That is how I imagine this will play out.

• 17:10Speaker 01

  Curious your take on this because Quant Ash says in the chat, and I think this summarizes this whole story about America and its allies right now. But what America is losing fast is its soft power, which is arguably the most effective type of power. No one wants to play Trump's shitty games. Do you think this continues to get worse for us as Trump wraps up his last two years in office? Or do you think there's any way he can turn that around and maybe bring some allies back to the table respectfully?

• 17:34Tom Bilyeu?

  The only way he's going to be able to turn this around is through economic and or military strength. People have to get richer by cozying up to America. And remember, they already have a status quo. So I don't think it works to threaten to constantly make them poorer. Now you're just strong arming people and it will get them to line up briefly, but they will always be looking for and working towards other options. But if he were to somehow pull a rabbit out of his hat in Iran, actually stabilize that, get the Abraham Accords as indicative of that region moving in lockstep together towards something that's economically prosperous. If he's able to do that, then I think people will line up behind the US again.

• 18:19Tom Bilyeu?

  If, on the other hand, and by the way, I think as a part of that, he's got to stop trying to police the whole world. He's got to think, okay, we're focused on our hemisphere. We're going to make sure everything is great there. We're going to produce more oil between Venezuela and the US. We're going to produce more oil than they were doing in the Middle East anyway. And so now we're all locked and loaded. You guys can send your ships here. We're going to be nice and stable. If America actually gets its shit together and, I mean, this is a tall order, but is not as violently whipsawing back and forth between the left and the right, that would go a long way. And then is able to start growing their economy through AI. That's really going to be the only thing.

• 19:04Tom Bilyeu?

  Then, if they do that, plus get Iran under control, then you would see people start to realign. That's never going to be easy, given a populist leader on the left or the right. And right now, obviously, we have the most bombastic, the most unnecessarily irritation causing president that we've had in quite some time.

• 19:27Tom Bilyeu?

  But yes, people will always fold in behind strength, period.

• 19:32Tom Bilyeu?

  We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. There's a reason Quince sells cashmere for $60, and it isn't the cashmere. It's real 100% Mongolian cashmere. It's the same stuff luxury labels charge a fortune for. Quince just works directly with ethical factories and cuts out the middleman. So there's no need for a markup and no logo tax. The $60 goes to the actual sweater, not the fancy name on the tag. That's why everything they make runs 50 to 80% less. And it's not just the cashmere. I ordered a few things myself, their fleece joggers, a couple of their tees, which I wear obsessively.

• 20:13Tom Bilyeu?

  First thing I noticed was the quality, soft, well-made, built to hold up. They make down jackets and wool outerwear now, too. So upgrade your stuff to things you'll actually wear. Find your next fall favorites at Quince. Download the Quince app for app exclusive offers or go to quince.com. Get free shipping on your order and 365 day returns. Now available in Canada and the UK, too. And when Quince asks where you heard about them, let them know it was Impact Theory. It's the best way to support the show. Let's talk about what it means to actually be visible in today's day and age. When you build something public, whether it's a business or an audience, anything on social media, you become a target.

• 20:56Tom Bilyeu?

  This is something that legitimately keeps me up at night because our data isn't just on the obvious broker sites. It's on old news portals, public forums, obscure directories, places you would never think to look. That's where Incogni's exposure scanner comes in. It hunts down your personal information across the wider web, not just the 420 plus broker sites. Incogni already removes your data from automatically. They can't harm you if they can't find you. Go to incogni.com/impact and use code IMPACT for 60% off an annual plan. Try it risk-free for 30 days.

• 21:35Tom Bilyeu?

  That's incogni, I-N-C-O-G-N-I.com/impact and use code IMPACT.

• 21:45Tom Bilyeu?

  Thanks for sticking around. Let's get right back into the action. So the Houthis fired a ballistic missile barrage at Riyadh. It was the first attack on the Saudi capital since the Yemen war restarted. The Saudis say it shot down. That's a little hard to believe when the Aramco fuel depot that's by their international airport was burning. So as a PSA, remember there was propaganda all over the place at all times. So something is going on at their airport hit maximum disruption on Flight Radar 24. So basically, the whole thing was on lockdown. So I don't buy that they were obviously able to stop everything unless they had a planned fire at the facility. That night, the State Department was telling Americans to reconsider travel to the entire region.

• 22:28Tom Bilyeu?

  If you guys were on X this weekend, you know exactly what I'm talking about. For a hot minute yesterday, it really looked like things were going to escalate rapidly. Trump was popping off with some insane tweets. I don't think anybody's super surprised about that, but promising he was in deciding mode about what was going to happen in Iran. But then rumors started coming out that he actually was against doing more attacks. That he didn't want to spread his attention out, that his advisors were telling him, listen, man, the war has already put a massive strain on the military. We do not need to open another front on this. The rumors behind the scenes are that Saudis have been going to Trump nonstop. There have been three, I think, pretty confirmed reports about MBS going directly to Trump and saying, listen, we need help with this.

• 23:13Tom Bilyeu?

  Then there was like this floating rumor that they were moving away from a Chinese-led deal around crypto that would further help migrate Saudi away from the US dollar. And as you guys know, the petrodollar is basically what has continued post Bretton Woods, continued to give US the role as a reserve currency. So that's a pretty big deal. And people were trying to link the two things, but that actually, the pullback there had happened months ago. And supposedly they're still dealing with it. But the rumor that was being spread was basically MBF very specifically got rejected by Trump. And so was going back to Trump and saying, hey, we'll do this thing. We're going to move away from that deal, basically re-embrace the dollar.

• 23:57Tom Bilyeu?

  And that gave Trump what he needed to move forward with the attacks. Now, so far, the attacks haven't happened. So I think it is likely that all of that is largely BS, that Trump actually is backing off because he understands that opening yet another front would be extremely risky at this point. And there is a lot of nested sort of madness going on between what we have happening in Russia, Ukraine, which I think is the one that's probably most misunderstood right now in the world. There's something about the conflict in Iran that has captured people's attention far more than what's going on in Russia, Ukraine. But if you guys are watching what is coming out of Europe, that's starting to get pretty wild

• 24:39Tom Bilyeu?

  with people just nakedly calling for their citizens to prepare for war in the coming years. We'll get into the specifics of that, but you've got a narrative that is gaining in traction that goes something like this, that you've got China, Iran, Russia, North Korea in sort of a loose alliance. The idea being to keep the US bogged down in as many places as possible so that China can move on Taiwan. Russia can find out whether NATO alliances actually mean anything at this point.

• 25:16Tom Bilyeu?

  And then regroup in a post-peace world to then make further potential incursions into Europe. And you've got European leaders indicating, and I don't want to overstate any of this because this stuff is sort of loosely pieced together based on, I won't say cryptic, statements that people in Europe have made, but certainly statements that are not direct where they're saying this is exactly what's going to happen, but with a growing hypothesis that peace in Russia, Ukraine may be more dangerous for Europe than the current status quo. Now, how could that be? The reasoning goes like this, that what's happening in Russia right now

• 25:59Tom Bilyeu?

  has completely transformed the Russian economy to a wartime economy. So that the growth that's actually happening in Russia is led by the war machine. Plus, you have people on the front lines that are essentially being radicalized and mobilized, organized. And if they come home, now they become a potentially very disruptive contingent. And you run the risk of a military coup or at least disruption caused by people returning back from the front lines. And if that's true, then you've got a massive incentive for Putin to just keep the war going as long as possible, assuming that they're not losing ground. And so if you have these two countervailing forces that both kind of like the stalemate.

• 26:44Tom Bilyeu?

  So you've got Europe using this opportunity to re-militarize. You've got Germany talking about becoming the biggest military in Europe once again. We know how that's played out before. You've got the UK directly telling its people to prepare for war in the next few years. And this growing sort of hypothesis that we might actually be better off with this stalemate keeping Putin busy than we would be in peacetime. And so you put that all together, you've got the US stretched very thin. You've got China still with that looming threat that we're going to move into Taiwan, which obviously would have massive implications for the US.

• 27:23Tom Bilyeu?

  You've got an incentive for China to see the US drug more into the conflict, not only in Iran, but in Russia, Ukraine. And so Trump showing actually a little bit of restraint here against the Houthis is probably well-advised. Now, we'll see if that ends up holding as landed diesel prices or landed gas prices, I think, across the board, actually, are getting pretty outrageous as differentiated from just the cost of Brent crude. But meaning physically, what does it cost to actually ship something? And obviously because of the shutting of the Strait of Hormuz and the Bab al-Mandab Strait, you've got this double whammy where now something that used to cost about $6, a little bit less

• 28:08Tom Bilyeu?

  per barrel to ship from West Africa over into, can't remember if that was for Europe or Asia, but that, the $6, $7 price tag has now jumped to like $23 plus. And that's per barrel. So landing it, shipping it is the thing that's growing increasingly more expensive, which is going to continue to put a strain on the global economy. And so all eyes on the oil crisis, even though if you're watching it on a day-to-day basis, the swings aren't that crazy. But all of this stuff is building up this penalty that everybody is taking around the world that's causing everybody to scatter and try to find new resources.

• 28:50Tom Bilyeu?

  But when you're talking limited resources, somebody somewhere isn't going to get what they were expecting to get. And so when you have all of these different pockets of conflict simmering and the background economic pressure is only building, then stability is not in your future. And so that becomes the backdrop to this warning over the weekend that certainly on Sunday night.

• 29:16Tom Bilyeu?

  Seemed very, very serious. Now, my hope is that that's dissipated. Trump has backed off, but only the fullness of time is going to show where this settles out. Because if Saudi Arabia continues to get beleaguered, the UAE is proving itself to be more aggressive as well, you're going to run into the possibility that that just continues to explode, especially as the Houthis get more emboldened by success. So fingers crossed, but it's certainly not trending in the right direction right now.

• 29:47Speaker 01

  We've talked about it a bunch, and I see people in chat mentioning it as well. But right now, we're seeing basically a bunch of alliances kind of turning on each other, things growing and growing and growing. Now we have the prospects of potentially Taiwan being invaded. And I'm curious, do you think we are already on the path of opening up an all out war across the world? Or do you think there's still a ways to go? And if so, what's that tipping point?

• 30:09Tom Bilyeu?

  To me, everything is so interconnected right now. Calling it World War III is too bombastic, but to say that all of these things really are connected, and now you're just waiting for that spark that brings them all together. This is something I mentioned before, but it bears repeating that what made Japan strike the US in Pearl Harbor was that we cut them off from their oil. And so as the US has a blockade outside of the Strait of Hormuz and is literally stopping oil from getting to China, if that ends up becoming a problem, which is a question mark of how long this drags on. But if China finds itself in a position where it's now draining its strategic reserves

• 30:51Tom Bilyeu?

  again, then you could see China saying, okay, we have a limited window where we're going to move on Taiwan. We wanted to do it in 27 anyway. We were originally going to try to do this all diplomatically, but now let's really make a move. That then draws everything into pretty sharp relief in terms of, okay, now if I'm China, do I want to nudge North Korea to make a little bit of noise in South Korea to make sure that the US just has way too many things to focus on? It's possible. I'm not going to say that it's likely. I do think China wants to do things, intervention wherever possible. But some of this comes down to just how seriously they feel that they're being isolated on AI, because right now, chips are how we have slowed them down.

• 31:35Tom Bilyeu?

  If they are looking at that battle and thinking, okay, hold on a second. We've got our reunification efforts as they see it with Taiwan. We're actually falling behind in AI, their perception in this thought experiment. The US is bogged down between what they're having to send to support Ukraine and obviously massively in the Middle East. Now, could we pull them into having to deal with both Taiwan and South Korea at the same time? Also, me, China, can I convince Putin that don't take any off ramps right now? Keep these guys distracted? And then all of a sudden, it's just blatant that this is one thing. And these are the two great powers colliding head to head.

• 32:19Tom Bilyeu?

  China using Russia as like the little bro state to try to keep the US distracted. And so at that point, do you then have to sound the alarm as the US and say, Europe, you got to get off your asses? You need to like get overt now about what you're doing in Ukraine. And so if, if everything were to sort of coalesce in that way, which is only one of the ways, by the way, that I could see this ultimately coalescing, then yes, at that point, it does sort of become officially, I don't even like to say World War III because it really does just feel like it's a bit overstated. But that, that is the fear, that there's just this like scope creep, there's too much

• 33:02Tom Bilyeu?

  opportunistic reason for China to, to keep things going with Russia, to continue to help Iran in the ways that it can, so that all of that continues to drag out. Because right now, the thing that we're being asked to believe, asked to be believed by Scott Besant, is that, all right, we've got this anaconda situation. So we're shooting everybody in Iran, and we're constricting them from an economic standpoint. And that's all going to play out. There's, they're not going to have any more time. All the pre-sold oil that was going to China, that's drying up. So even that money's running out. They've got massive inflation in Iran.

• 33:44Tom Bilyeu?

  Now, I would not expect that massive inflation to break the back of the Iranians, because you, in their minds, they have God on their side. That becomes a totally different war. And so if China is able to continue to somehow, some way, get funding into Iran, and it just drags and drags and drags, then yeah, this escalates long before it dissipates. And so right now, there's no sign that the strategy with Iran is working, other than trust me, bro, stuff that we get out of the administration. Because if the Houthis really are just a proxy for Iran, somehow, some way, they're getting what they need to be more aggressive than ever.

• 34:28Tom Bilyeu?

  So I think that they are still banking on the strategy that they can disrupt things globally by shutting down both straits, and that the world will feel the crisis then as much as they're feeling the crisis. And then it becomes, who really has the will? I won't even say politically, because I think of the US, it's political will, but in Iran, it's more a theological will. Now, I do think Iran is a divided nation. I just don't know, is it 80/20 in one direction or the other, 50/50? Like, what exactly is that split? But right now, we have supposedly broken their back like 32 times, and they just keep going, and it's getting more aggressive, so.

• 35:13Speaker 01

  Do you think there's any world, this is posed by kid of City and Moon, where Trump uses everything going on, this potential looming threat of a, of a World War III type scenario? Do you think he uses that to tighten his grip on power coming up through the midterms?

• 35:27Tom Bilyeu?

  Nobody's going to let a good crisis go to waste, so Trump chief among them. This is where I just am driven absolutely bananas by his whole third term thing. So do I think he would use it to consolidate power if it presented itself in a way where it's like, hey, guys, this is World War III, like, we're really in the middle of this? Doing an election right now would be completely nonsensical. And the bad news is, if it really had escalated to that point, it probably would make sense to postpone the election. But because you have somebody who isn't doing it for the right reasons, yikes. That one would be, that would be so psychologically detrimental to the US, that I really, really

• 36:11Tom Bilyeu?

  hope that we don't find ourselves in that situation. So yes, I can certainly see him going, okay, I'm on the other side of my midterm elections. I lost. My only way to maintain power is on a war footing. But on that, that's where we're going to have to rely on Congress to be that check and balance. Because assume that he loses the Senate and the House, and wants to do sustained military intervention, he's not going to have the ability to push beyond the whatever 60 days that it is. So if he's officially declaring, yo, this is World War III, then he would have to have Congress get in and say, cool, we're on board. And so that is, again, where I will say, anybody that celebrates China, I think is

• 36:56Tom Bilyeu?

  out of their minds. You want to have the checks and balances. You want a system where you can have one group stymie the other and make it impossible for them to move forward. So that would be the hope. And so the, call it the psychological danger zone, would be a world war that is so obvious that it's like, okay, yeah, an election right now wouldn't be in anybody's best interest. But that would be, the divide would accelerate.

• 37:24Speaker 01

  And proving and justifying your, this is all economics argument that we've talked about since February, taking just a look at the full global conflict right now with Russia and Ukraine with what happened this past weekend, I've noticed they're hitting more refineries than they are the front lines. Do you think at this point, Ukraine understands that the only way out of this war for them is an economic path and not a path of continuing to throw numbers at it because they don't have the numbers to stand up against Russia? Or do you think?

• 37:50Tom Bilyeu?

  Do I think that they think it's the only way? No, probably not, because for years, they were willing to just keep, and look, I don't know how much of this is propaganda, but you see all the time footage where it's like, look, these are Ukrainian frontline soldiers in handcuffs, being sent to the frontline. Hey, these are kids just like walking their dog in the streets of Ukraine. They get snatched, thrown in a van, and taken to the front lines. So they certainly have a willingness to conscript if the propaganda is accurate through pretty vicious means. So I won't grant that they see that as the only option, but this is what happens in wartime. This is what I was talking about at the beginning of this. The thing you really have to worry about is what happens when you build a very efficient wartime economy?

• 38:35Tom Bilyeu?

  Getting out of that is far more difficult than people give credit to. Like even in the unwinding, the aftermath of World War II, there was some ungodly number of people that were slaughtered. Just in the like, okay, all the troops are going home now. And so people understand that that is an incredibly dangerous period. So I would not, um, I, I wouldn't look at that and think, oh, everybody is just racing to peace. It is this very uneasy thing. So, um, Ukraine has done a very good job of becoming a, the world leader in basically offensive, modern warfare, which is wild to think, but you've got the US appealing to them to learn how they're doing it.

• 39:20Tom Bilyeu?

  So they're getting better and better at hitting Russia in that way. So even if it's not the only way that they see forward, it's certainly the smartest way. Like you want to build technology that's going to give you an advantage in warfare. This is always the way of things. Now, the fact that they're hitting the energy infrastructure is smart. And this is probably the thing to best understand about what's happening in Ukraine. Is they understand they have to make this war so unpopular inside of Russia that Russia is just like, okay, we've got to take an off ramp. Now, listen, there are plenty of historians that will give you the following thing. Right now, I, I've not looked, I don't understand Russian culture well enough to know if this is a worthy thing to repeat. So I will caveat this by saying

• 40:02Tom Bilyeu?

  there are historians of Russia that take the, uh, read of their historical actions that they take a very eastern mindset to their own people, which is that they're all disposable. And all that matters is the survival of the state. And so they will just continue to throw people at that. Now, the problem is Ukraine is very much, if not directly Russian culture, they are certainly Russian culture adjacent. And so are they going to run a similar strategy? And so you have these two nations that will both continue to throw people at the front line, getting better and better at a wartime economy, getting better and better at killing each other. And so the question becomes, um, will there be that uprising of the populace such that they can actually overcome an authoritarian dictator?

• 40:47Tom Bilyeu?

  That is, that is a, a big task. So we will see if the economic devastation ends up being something that causes Russia to move. Or if the perhaps more terrifyingly likely, uh, result is that this drags on for another year. We miss another, uh, round of fertilizer, just to give one example. Fuel costs skyrocket globally. Uh, you've now got food crises in addition to fuel crises. And so you've got, I mean, this is all going to come down to how bad will the winter be this year? If it's a mild winter, expected to drag on even longer. But if it's an extreme winter in Europe and you've got hundreds of thousands of people dying across Europe

• 41:32Tom Bilyeu?

  just from freezing to death in their own homes because they can't afford to heat them, uh, which does happen every year, by the way, same thing that happens in the summer. Uh, people dying of heat stroke. So, uh, when you can't heat or cool your house appropriately, you're going to find a lot of old and vulnerable people dying. So if we start seeing that kind of sweep with food scarcity, now all of a sudden you've got Europe like, we can't do this anymore. We've got to escalate to de-escalate, as they say. And again, that's another scenario under which this becomes a breakaway problem. So we will see, but man, this is one of those where every time I go to do a show, I'm like, I wanna focus on social stuff.

• 42:12Tom Bilyeu?

  I wanna have a more playful, uh, like sort of, um, spine to the day. And I'm just like, Jesus, like they're the, these conflicts are becoming so interrelated. And most importantly, understand why all of this is happening. This is happening because the US as the, um, monolithic keeper of the global peace fell apart. Certainly during Biden, maybe it even started, uh, in Obama. So you've got the weakening of the US's ability to back most people down. Call it 95, 98% of the skirmishes are all just, we're the US, we say so, back down.

• 42:56Tom Bilyeu?

  We've got the military strength, we've got the reputation, we've got the financial ability. And so everybody just backed down. And it really was a watershed moment when Russia invaded Ukraine. And at the time, I don't think a lot of people understood what it was really signaling. And what it really was signaling was, yeah, I don't give a shit. Like, I don't think that you guys, you guys being NATO, I don't think that you've got the will to fight this war, so I'm gonna do what I want. Now, I think that Putin thought that it was going to be very easy to steamroll Ukraine. And I think he was very surprised to find out that it didn't play out like that. But nonetheless, it tells you the world's view of the US. Then the US goes through all the drama that it's going through

• 43:39Tom Bilyeu?

  in terms of internal division, beginning to tear itself apart. And China becoming more and more economically sovereign and in a just massive leadership position from the ability to produce. And that part is the thing that I don't think people fully understand. So now you have a peer competitor with the US that is aligned with Russia. And now I think the US right now is still in the middle of its Suez Canal moment, where it's going to show an inability to reopen the Strait of Hormuz through force. And once that happens, then the world goes, oh, okay, these guys aren't going to be able to back us down.

• 44:18Tom Bilyeu?

  And so we go from a 98% back down rate to, uh, I mean, 50%, 40% back down rate. And so now we're actually having to fight all of these battles. And that's where the cost structure just becomes unbearable. And if we were in a good economic situation, coming into whatever this moment is going to be known as, it might be different, but we're in a horrific economic situation. So normally you take on the kind of debts that we have now to prosecute the war. But if you're coming into the war already with these insane debts, now you're really in trouble and it becomes a, an inflationary environment. And the world leaders everywhere are hyper aware of this stuff. So they understand the weakened position that the US is in.

• 45:03Tom Bilyeu?

  And I think a lot of people are going to make small little plays here and there. I'm not saying military incursions, but just places where, look at how Canada is being with the US, right? Oh, like, hey, we can just cozy up to China and Europe. We don't really need the US like we used to need the US. Now, that may be bluster, but nonetheless, it creates another bit of drama that the US is going to have to deal with. And so all of that just spreads the US incredibly thin and puts the world in a very unstable position. I, I've been talking about this since, since I started doing a live show. It's actually one of the reasons I started doing a live show is we're all about to live through a change in great power politics. Now, what does that really mean?

• 45:48Tom Bilyeu?

  I will point you guys to the Middle East. So the last time that we had this sort of like shakeup in great power politics was at the end of World War I, when the Middle East was basically arbitrarily subdivided. That has not gone well, at least from my read of things. So when you look at the prolonged instability that that's created there, I think that the world is going to feel the echoes of this destabilization for a while. Now, whether it looks like, um, the period between World War I and World War II, or it looks more like the Cold War, that is a huge question. I would much rather it look like a, uh, nerve wracking, but stable-ish

• 46:33Tom Bilyeu?

  balance of power that we saw during the Cold War. But that remains to be seen, especially with AI looming on the horizon. Yeah, every time I talk about this stuff and I, I am reminded of all the different ways that these things are interconnected, from the economics to the actual warfare, to the, um, cultural divisions in different countries, to AI all happening at once. It, it is a wild time. For AI to be playing out at the same time that a balance of power is playing out is crazy. And that's why I'm just like, to all the US people that wanna see AI regulated to death in the US, be careful what you wish for, because China will see that as an opportunity to go, oh, cool. If you guys are going to, uh, abdicate the throne or abdicate your responsibility,

• 47:19Tom Bilyeu?

  then we're going to step in, uh, and play that role. And we will keep developing AI because, as they know, it is intelligence itself. And whoever can corner the market on intelligence, you can outsmart everybody else. Taking a short break, but there's more Impact Theory after. Stay tuned. Let's talk about how much you're paying to stay safe online. Count it up. A VPN, a password manager, something to block ads and trackers? The service scrub your data off of broker lists? A tool to flag scam emails? That's five. Five subscriptions, apps, logins. And most people still have gaps. That's the problem Surfshark solves. It's not a VPN.

• 48:02Tom Bilyeu?

  It's an all-in-one security suite, one tool that protects your connection, your personal info and your devices all at the same time. Go to surfshark.com/tomb or use code TOMB for four extra months of Surfshark, backed by a 30-day money-back guarantee. That's S U R F S H A R K dot com slash TOMB. Surfshark.com/tomb. Use code TOMB for four extra months of Surfshark.

• 48:39Speaker 02

  Thanks for staying tuned. Now, let's get back to it.

• 48:42Tom Bilyeu?

  In December, Openweight AI models have completely like underperformed. They were nothing. Nobody cared about them. 7% of the traffic, right, is happening at the Openweight model. But now, you've got an absolute explosion happening, and they are accounting for much, much bigger amounts of the AI. And so what you're seeing is this shift from the very, very little AI happening on Openweight models, now shifting over to a lot of it happening over on the Openweight side of things. And so what's really interesting is what is that going to do in terms of how things are going to play out for the AI industry as a whole?

• 49:25Tom Bilyeu?

  So as we talk through this, remember that the entire industry is the bet that the world is making right now. Everybody's betting that AI is going to be the next big thing. And we are way, way out over our skis in terms of all of the debt that's going into AI right now. And so the big question that we've been debating now is why are OpenAI and Anthropic going to the government and basically appealing more or less to be nationalized? I will put forward that this is really all about them trying to do two things. One, they have to protect themselves from Openweight models so that they can basically survive, because they have this huge debt burden that's coming.

• 50:07Tom Bilyeu?

  And if the revenues don't come in fast enough, which they're not currently, and Openweight models are proving that they're going to strip more and more revenue away from them over time, then they've really got to protect themselves. And so getting the taxpayer essentially on the hook is a big part of why they want to do this. If they can get regulatory capture, they can keep their competitors out, they can outlaw OpenAI, and they can say, hey, listen, if you want us to go up against China, you're going to need to make sure that we're able to thrive, even though the revenue may not be coming in at the rate that we needed to to pay off this debt. So help us make some of these debt payments, and we'll keep making sure that you can go against China. Okay, that's the first thing. The second thing is that ultimately, these guys have probably a lot of potential litigation coming their way

• 50:51Tom Bilyeu?

  in terms of they have been peering into, whether intentionally or unintentionally, the way that people are using their models and absorbing that. And basically, they were launching businesses on the back of that. So they were launching competitors to some of the people, the software applications that were using their AI. So I think that they're going to have a lot of litigation woes, and so they also need to protect themselves from that. Okay, as you have that looming, now you start looking at the fact that by August, the Openweight models were accounting for 56% of the tokens that are being generated. So on September 19th, Versale CEO Guillermo Rauch posted a single day record of 78.4%.

• 51:33Tom Bilyeu?

  Now, please keep in mind, that's one day, it's on a Saturday, so there's a whole bunch of things that go into that. Because volume is basically the easy part, the Openweight models are cheap, obviously. So the real question is what's happening to the money? But what they're seeing is that the money is moving. So Openweight models took under 4% of the dollars spent on the gateway that we're talking about, Versale, in June. So just June. Now, in July, it jumps to 8.6. Then, in August, it goes to 14%. And we're just seeing this steady increase. So by those rates, you can expect September to be even bigger. And so on the record day that Rauch is talking about,

• 52:13Tom Bilyeu?

  he said spending on models from three Chinese labs, so Moonshot, DeepSeek, and Z.ai, added up to more than the spending on OpenAI. They're very aware of this trend. Now start thinking about some of their appeals to the government in that context. So what they see, like as you really dig into the data, developers are starting to split the workload. So the hard, high-stakes work still goes to Anthropic, which has held at least 61% of the gateway spend every month since December. Everything else is going to whatever's cheapest. And so the average price per token on Versale fell 23% in August alone. So that is what is really got the whole industry scared,

• 52:55Tom Bilyeu?

  because the amount of debt that they've taken on is so staggering. So Rauch noted that for most of the dollars, they're going now to US inference providers. So what that means is who's really winning in AI right now is chip manufacturers, because they don't care whether you do this on Claude directly or OpenAI directly, or if you're just doing it on a cloud provider that has built a data center and is now leasing out compute. And this is what we mean when we talk about intelligence becoming commoditized. You have these data centers, they don't have models themselves. They're either running a licensed version of Claude or OpenAI,

• 53:38Tom Bilyeu?

  or they're hosting you or any other company that's running an Openweight model. That's where we're starting to see the value shift. And so the question is, what does that end up doing to the entire global economy essentially? Does it just shift the value from one place to another? No big deal, still a ton of value? Or in breaking that frontier model narrative, do we run into a concern that basically money is going to be leaking out of the ecosystem? Because what we thought was going to generate money inside of these companies is now not going to the companies that we thought, that debt is still going to implode, there aren't going to be enough people running these free models. What's that, what is that going to look like? I think it's probably just going to shift the value.

• 54:20Tom Bilyeu?

  Because unless people move away from AI, it's just going to shift the values from, okay, we thought it was going to be these two companies, to just like every technological revolution behind it, the people we think in the early days are going to be the winners, end up not being necessarily the people that win, and the value shifts somewhere else in the system. So that would be my guess on where this is all going to play out.

• 54:43Speaker 01

  I feel like for the longest time, we've just assumed that the best model is going to be what wins. But right now, I feel like the data is showing that the cheapest acceptable model is where most of the work is happening. And do you think that quietly kills the incentive to actually build something dramatically better? Because a lot of these are for profit? Or do you think it only incentivizes people to make better models but cheaper?

• 55:05Tom Bilyeu?

  That's one of the biggest questions is will we be able to justify the expense that we put into the frontier models? That is an interesting question. As of right now, the answer is yes. The frontier models are going to keep getting developed, and what we see is actually breaking is not the high end of the frontier, it's actually the low end of the big players. So OpenAI is getting obliterated just because people are reading the situation as you guys are not as good as Anthropic. So I'm either going to pay for Anthropic, or I'm going to do the cheap stuff. Same thing with Google, their entry models are getting obliterated. So basically, everybody's losing their entry level, their cheap way of getting people in, their gateway models, if you will. But Anthropic's highest tier is still performing well.

• 55:48Tom Bilyeu?

  And that certainly comports with the way that we use AI here at Impact Theory, which is there are some things where I'm like, I'm not cost-sensitive at all. This thing is either not going to be possible for us, or we need to use Claude, or we're pretty agnostic still between Claude and the 6.0, which I can't believe I'm blanking on his name.

• 56:12Speaker 01

  Oh, Opus? No.

• 56:13Tom Bilyeu?

  No.

• 56:14Speaker 01

  Oh, I forgot the name too. I'll look it up while you go.

• 56:16Tom Bilyeu?

  Yeah, so that for us is like, okay, there's stuff that we can only do at the high end.

• 56:20Speaker 01

  Astra.

• 56:21Tom Bilyeu?

  Astra, thank you. To the stars. That I think is going to keep going. But there are some things that it's like, we can't afford to use that for this high-level thing. So you prove out what it can do at the frontier, and then for the other stuff, or for things you need to keep proprietary, you're going to use an Openweight model. Now, I actually think that's a big part that we have to put on the table is right now, there is a feeling when you engage with AI that this is incredible, but everybody has access to it. And that is very distressing. As somebody who you feel like you're thinking through all these very complicated problems, you're leveraging AI in a way that other people can't, so we all have access to the same tool. But I'm making changes to my tool that now make it more efficient at doing what it's doing,

• 57:06Tom Bilyeu?

  or certainly more unique in doing what it's doing. If you can abstract that away, so that I can have an Openweight model and I can do it myself, now whatever I build remains proprietary. That is a far more interesting world. And so given that I think more and more companies are going to wake up to that, I think that there's going to be a ton of innovation around helping companies host their own models. So going back to, this is really just a value shift away from, I care about one of these companies, to, no, there's probably going to be one sort of frontier model that creates the like, okay, you need magical thing to happen, here is said magical thing, go do, you know, the hardest of the hard things you need to do in our model.

• 57:47Tom Bilyeu?

  Then for the rest, you take that back and you keep things proprietary on your home-cooked meal, or your home-cooked model. And that becomes the way that you differentiate yourself from the rest of the group. And when I think about that, that makes me feel so much more optimistic about what's going to happen to AI, because I can still create an advantage by myself and the people on the team here. And so that feels, follow the incentives, feels like the most obvious first principles, thought through outcome.

• 58:16Speaker 01

  You touched on China's piece in all this earlier in this episode. And obviously, we know China, they're giving their model away for free, basically capturing none of the money. So the question becomes for us, like, why do it at all? Like, what's the strategic payoff for DeepSeek or for Moonshot if the profit goes to the US GPU owners?

• 58:32Tom Bilyeu?

  Okay, so part of it is that you know that the US is making this huge bet. You've been handicapped, so you have to think about it from the chips perspective. Right now, China can't keep up with the US on the frontier models. So they're like, well, we can make a sub-tier model, or we can create free models to disrupt the economic progress that they're making. So that for sure is part of their strategy. And so they're distilling the models down, giving it away for free. Because they're authoritarian, they know at any time they can clamp down on open source. So if they're able to start manufacturing their own chips, which they are already beginning to do, and if they can scale up and begin home-growing their own stuff,

• 59:13Tom Bilyeu?

  then they can say, okay, no more open source here in China, or it, you know, is relegated to some area. And now we're actually able to compete at the frontier. They can nip that in the bud. So they've got no downside, only upside. And when you're given the hand of cards that they've been dealt, it's a very, very, very smart play. Also, if we want to be a little bit cynical for a second, if it's a Chinese model, and you know at any time you can tell DeepSeek, I want all that data, whatever reporting there is, they're going to be able to gain access to that. And just like Anthropic and OpenAI are likely to get lawsuits because they were doing exactly that, where the models were learning from the way that people were using it, China, who's known for stealing IP from everybody...

• 59:59Tom Bilyeu?

  You've got a grease shoot of it just giving you all the data, how people use it, what questions are asking, all of that kind of thing, or even just learning, basically getting human feedback from the model. What did it like? What did it not like? What were the final outputs? What were the approaches? And so now your AI is getting smarter and smarter, even though it's open source, you can go in, get that information, close it off in the rest of the world if you ever want to. So it puts them in a far stronger position, given the sort of weak position that they're starting from.

• 1:00:30Speaker 01

  So OpenAI, when it first came out in 2015, was a nonprofit. I started looking into it because the movie's coming out and I'm very excited because I love that director.

• 1:00:39Tom Bilyeu?

  Who's directing it?

• 1:00:40Speaker 01

  Luca Guadagnino, guy who did Challengers, Bones and all, a bunch of good dramas.

• 1:00:46Tom Bilyeu?

  I don't know that I've seen anything of his. Never heard the name.

• 1:00:47Speaker 01

  I'll give you some recommendations off camera. But anyway, so they started as a nonprofit in 2015, and then around 2019 is when they became a for-profit company, and they did some restructuring in 2025, but remaining for-profit but public benefit corporation, right? Do you think there's a world where China wouldn't be as ahead of us if they had stayed nonprofit and decided to compete with China on the open source front? Because I think like what we've been talking about, it is very clear that open source is starting to dominate, right? So if they had not had as hard of a switch to a for-profit incentive, do you think we would be ahead?

• 1:01:23Tom Bilyeu?

  It's no, is the very clear answer. The interesting thing is that you think open source would make this advance faster. And let me, if I had to steal man your argument, what would you have to believe to think that that is true?

• 1:01:39Speaker 01

  I could use the example I have.

• 1:01:41Tom Bilyeu?

  Yeah, please.

• 1:01:41Speaker 01

  Because I am looking at open source from the perspective as a content creator. So OBS, Open Broadcasting System, is an open source software that revolutionized like screen recording for everyone, right? And up until that, people would pay for Fraps or Screen Grab or all these different alternatives. But the minute OBS made something open source that people could contribute to, people could just donate to help out with this company, that became the definitive, everyone's using this model, and now you don't see any paid for screen recorders, and they're the dominant one in the market and the most powerful because they take so much from its users to develop that. So I guess my logic is, if we're using these AI models, they're already training themselves off of us, and we had started

• 1:02:23Speaker 01

  not focusing on making money as a company and just, let's make the best possible AI model. I almost feel like we would have been ahead of where China's at because China started so much later in the game than we did.

• 1:02:32Tom Bilyeu?

  It's interesting. You have a fundamental flaw in the way that you're thinking about it, and by all means, argue to the death here, I'll be so curious to see if I can convince you. The big problem is that the reason you need the profit incentive, the very reason that doing everything open source is never going to be the winning strategy for a lot of things, is that there has to be somebody somewhere that builds these brains. So the data centers are required, and I don't know if people are just losing sight of the fact that so far with LLMs, we have not seen a limit to the more neurons, GPUs, you put into the stack, the smarter it gets. We have not found the ceiling to that.

• 1:03:10Speaker 01

  Yeah.

• 1:03:11Tom Bilyeu?

  And that's why these guys just keep bringing on more and more and more and more. And if they could get another $10 trillion, they would build bigger and bigger data centers. And it really becomes a question of, okay, at some point, maybe that asymptotes, and at that point, it's like, you still would never have gotten to that point had you not invested the insane amount of money into getting the brain up in the first place. Now, once the brain exists, then it's like, okay, hey, we want people to be able to start innovating at the level of efficiency, algorithm, model structure, reinforcement learning, all of that. So we want open source to exist for sure, for sure. But the model that's always made the most sense to me, and I don't know if they actually made good on this promise,

• 1:03:55Tom Bilyeu?

  but Elon Musk was talking about, whatever our current model is with Grok will be paid for, and then whatever is sort of the, you know, model maybe two or three generations old, becomes free, open source. And it's like, yeah, that's really...

• 1:04:07Speaker 01

  Like, they opened up the code?

• 1:04:08Tom Bilyeu?

  They said they were going to.

• 1:04:10Speaker 01

  Oh, well, I meant, I was just asking for clarification because he said free, and then, so...

• 1:04:13Tom Bilyeu?

  I think, I'm almost certain what he said was open source.

• 1:04:16Speaker 01

  Gotcha. Okay.

• 1:04:17Tom Bilyeu?

  So, because he was the reason that OpenAI became OpenAI, was he wanted it to be something that everybody had access to. He, I don't think he ever thought that, oh, this will be the way that it gets developed faster than anything else. I think people just wildly underestimated how expensive it was going to be to build out the infrastructure. And so, right now, my instinct is that you want open source to exist because there'll be a ton of innovation that's sort of sub-frontier, if you will. And if you kill that off, then costs are going to stay high unnecessarily, and innovation will slowly wither. But without the profit incentive, you would not be able to aggregate the capital you need to make

• 1:05:01Tom Bilyeu?

  these brains bigger and bigger. So I think AI would have stalled out, despite the fact that I am a huge proponent of making sure that open weights remain a thing, and that we do not want the government to shut that down by any means.

• 1:05:16Speaker 01

  Given that stance, do you think then, Vercel, has the chance to hurt innovation in regards to all this, given that they're trying to become this toll booth almost for the industry?

• 1:05:27Tom Bilyeu?

  I don't, I don't think of them at all as a toll booth. What I, the right thing to read into the story of Vercel is that you're basically going to get a bunch of people that are cloud intelligence providers. And so they will commoditize the thought process. So inference just means the machines are thinking. And so, right now, everybody was thinking that the Frontier Lab was going to be where all of the money was captured. But what we're seeing now is that's actually not true, where it's starting to shift, and we'll see if it holds. But where it's starting to shift is that you're getting people that are like, no, I don't need that model for a lot of the things that I'm doing, on these

• 1:06:12Tom Bilyeu?

  peak days, up to 78%. What I need is just access to the intelligence, the inference, the compute, the thinking. So I need access to the GPUs, I just don't need access to that specific weighted model. So that, you need somebody that's making sure that that interaction is facilitated. So I don't see them as rent-seeking or middlemen toll booths. It's just like, that, that whole process will capture a ton of the value if open weight models are as big of a part of the future, because I don't think it's going to do away with the Frontier models. But I think it is going to be a big part of the, the play here to make this accessible to companies that really want to deploy it at scale.

• 1:06:58Tom Bilyeu?

  Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break, and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done. You're getting 75-plus ingredients, vitamins and minerals, pre and probiotics, nutrient-dense superfoods, everything that used to require six, seven different supplements, and perfect

• 1:07:39Tom Bilyeu?

  planning now happens in one drink that takes about 30 seconds to make. Right now, AG1 is giving you $87 worth of free gifts with your first subscription. You get a welcome kit, travel packs, vitamin D3 plus K2, and flavor samples. Click the link in the show notes or visit drinkag1.com/impact to claim this offer.