Aaron Ginn, John Gedmark, Jordan Schneider, History of U.S. China Relations, OpenAI Explores Social Network Arena

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

• 0:00John Coogan?

  You're watching TVPN. It is Tuesday, April 15, 2025. We are live from the Temple of Technology. The fortress of finance. The capital of capital. This show starts now. We got a great show for you today, folks. We're doing a little bit of a mini deep dive on China. Brother behavior. Lots of brother behavior going out throughout this story. The size gong, an homage to Chinese culture, all that they've built. But now, unfortunately, relationships with, between the US and China are degrading. Have soured. With a trade war, and so we want to take you through it. And it starts with a very stupid question, but on this show, there's no dumb questions because we're in golden retriever mode. And that dumb question is, how did we get here?

• 0:40John Coogan?

  Because, you know, you learn about World War II in, in high school or middle school. And in World War II, I remember going to war against the Japanese, not the Chinese. And China was actually the US's ally. And then, of course, it flipped at some point. And if you're, you know, if you've studied history, you know exactly what's going to happen in this story. But there's a bunch of interesting anecdotes and turns and debates and a lot of different historical milestones that actually led to the relationship degrading and then building back up and then degrading again. And so I want to take you through the full ebb and flow of the US-China relationship to kind of understand how did we actually get here? Because we used to be partners with China, like we fought the Japanese with China.

• 1:24John Coogan?

  We had a good thing going. We had a good thing going. But obviously, the trade war has broken out. Thank God it's not a hot war, kinetic war. But it's interesting to know all the history here. And so that's what I wanted to dig through today. But first, switch your business to ramp.com. Time is money. Save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more. All in one place. Fantastic. Anyway, let's move on. So

• 1:50John Coogan?

  I've, I've always been, I've always been interested in this. How did the relationship initially sour? Of course, the history here is that during the World War II, the US was allied with China's nationalists against Japan. But after 1949, the Communist Revolution created a new reality. And by the late 1940s, Americans viewed the loss of China to communism as a geopolitical blow amid the, the emerging Cold War. This set the initial tone of hostility. So.

• 2:20John Coogan?

  In October of 1949 Mao Zedong's Communist Party won the Chinese Civil War, founding the People's Republic of China, PRC, in Beijing while Chiang Kai-shek nationalists fled to Taiwan. So our guys in China left mainland China and went to Taiwan. That's why we're on Taiwan's side, basically. But it's crazy that this has been going on for 90 or 80 years now and we're still in the, yep, we still are guys, we still like China, but we just think of China as Taiwan. And that's really the initial split there.

• 2:53Jordi Hays?

  And China views Taiwan as China.

• 2:56John Coogan?

  Yes, little bit different, but basically the US refused to recognize the People's Republic of China, PRC, and continued to recognize the ROC in Taiwan as the legitimate government of China, which it seems like almost edgy today to be like, oh, like Taiwan is the real China. Like, that's something that NBA players don't say, right? But it makes sense in the context of, oh, well, we were fighting the same war with this government, the nationalists, Chiang Kai-shek's nationalists. We were fighting with them, then they just kind of lost their civil war and they're in exile, but they're on an island that's like kind of over there, it's all the same, so we're on the same team.

• 3:35Jordi Hays?

  And one thing that's unique about this dynamic is that the People's Liberation Army, the armed forces of China, serve the Communist Party.

• 3:43John Coogan?

  Yes.

• 3:44Jordi Hays?

  They do not serve the country of China as just purely a nation. They serve the party.

• 3:49John Coogan?

  And in America, that would be crazy. It's like the Proud Boys serving at the pleasure of MAGA, basically.

• 3:57Jordi Hays?

  Yeah, that's dramatic, or simply the Marines being on the side of the Democrats.

• 4:02John Coogan?

  Yeah, exactly, exactly. Like, if either of those happened, that would be like, we'd be like, whoa, okay. But it's a one-party system and that's the nature of it.

• 4:09Jordi Hays?

  And if you have an issue with it, the army comes after you and, you know, takes care of you.

• 4:14John Coogan?

  And so, obviously, like, the threat of communism is the defining theme of the Cold War, and the US adopts a containment policy. And so, this was an attempt to diplomatically isolate and economically strangle the new communist government, still very heavily driven by trade and tariffs and who does deals with who. Washington encouraged allies to shun Beijing. Americans were prohibited from travel or trade with China. There was no trade whatsoever with China, and China was kept out of the United Nations with Taiwan holding China's UN seat. And so, then...

• 4:48Jordi Hays?

  That would be frustrating.

• 4:50John Coogan?

  Yes.

• 4:51Jordi Hays?

  Got to give them that.

• 4:53John Coogan?

  And so to contain communist China, the US bolstered alliances around Asia. They did security pacts with Japan, South Korea, the Philippines, Australia, New Zealand, and support for Taiwan. So from the Chinese perspective on the mainland, they're kind of surrounded. They have this alliance with Russia going, but it's very tenuous. In the 1950s, the US began providing military and economic aid to French Indochina, Vietnam, and later directly intervened in Vietnam. The Vietnam War, of course, partly aimed at curbing Chinese communist influence in Southeast Asia. Now, we go to the Korean War, 1950 to 1953. The Korean War was the first bloody clash between the US and the PRC. In June 1950, North Korea, backed by Stalin and later by Mao, invaded South Korea. When US-led UN forces pushed

• 5:38John Coogan?

  north towards the Chinese border, Mao sent hundreds of thousands of Chinese people's volunteers to fight US/UN troops in Korea. The war was brutal, resulting in 36,000 American deaths and hundreds of thousands of Chinese casualties, and ended in a stalemate. That's why Korea is still split to this day.

• 5:57Jordi Hays?

  And it's so wild to think of, we think of the American involvement in foreign conflicts as, you know, World War II, Korean War, Vietnam, then you get into the Middle East. But thinking about the Korean War happening immediately following World War II, like there was almost little to no break.

• 6:15John Coogan?

  And also, I mean, people still think about the Vietnam War about Vietnam. And really, it's a battle between China and America.

• 6:23Jordi Hays?

  Yeah.

• 6:23John Coogan?

  And same with Korea in many ways. And so, and if you, if you, there's a fantastic documentary on Frontline, I think it's PBS, about the Chosin River Valley Battle, the Battle of the Chosin in Korea. And it was, it was like 20 degrees below freezing. Everyone was freezing. It's just like one of the most brutal wars ever fought, or battles in war ever fought. You should go watch it. So Mao touted that China had fought the American superpower to a standstill, reinforcing his regime's legitimacy. The US came to view the PRC as direct military adversary. So this is kind of the nadir of US-China relations, like they're openly fighting and seeing each other as rivals.

• 7:04Jordi Hays?

  And Mao was spreading fake news.

• 7:06John Coogan?

  Fake news.

• 7:07Jordi Hays?

  He famously said the US was a quote-unquote "paper tiger" that could be defeated by determined revolutionary forces. A propaganda line to bolster Chinese morale despite the war's costs.

• 7:18John Coogan?

  Yeah, Paper Tiger looks dangerous, not actually dangerous in reality. That's the whole thing with the Paper Tiger, but.

• 7:24Jordi Hays?

  Or more like a bioengineered.

• 7:28John Coogan?

  Yeah, so things continue to heat up after Korea, there's the US Taiwan Defense Pact in 1954. Soon after the Korean armistice, the US signed a mutual defense treaty with the Republic of China in Taiwan, pledging to defend Taiwan against PRC aggression. And this is kind of the foundation of like this idea that like we have Taiwan's back still to this day. It all started back then. American naval patrols in the Taiwan Strait began effectively drawing a line that Mao's forces dared not cross. And there's still this debate about, oh, should China be doing military exercises in the Strait?

• 8:04Jordi Hays?

  And back then, I believe they had little to no navy at all, them being China, right? They've, they've developed the navy over time, but it's certainly not, it sort of pales in comparison to US Navy, which has continued to plague them in various ways.

• 8:23John Coogan?

  And so throughout the 50s, the Taiwan Strait continued to be a flashpoint. The PRC bombarded the ROC-held islands near the mainland, provoking crises in 1954, 1955, and 1958. The US responded with forceful warnings, even hinting at a nuclear retaliation to deter PRC invasion of Taiwan. And so this whole, this whole America trying to get China not to invade Taiwan has been going on for 70 years now. The crisis subsided with neither side fully escalating to war, total stalemate, but they reinforced Beijing's view of the US as determined to block China's unification with Taiwan. And so the, the mainland China says, hey, those guys, they, they, they lost the, they lost the war. They lost the civil war.

• 9:07John Coogan?

  Historically, this was all one place. You know, it'd be like, in their view, it's like Robert E. Lee hanging out in Hawaii. And it's like, no, that's, that's our thing. Get him back on our team.

• 9:18Jordi Hays?

  Funny call.

• 9:19John Coogan?

  Right? It's like, I mean, I don't, I don't think that that's legitimate, but I think that's kind of how they see it. And so there's more ideological warfare during this revolution phase, fierce rhetoric prevailed. US leaders spoke of the PRC as part of the red menace and Chinese state media vilified American imperialists for encircling and threatening China. And America was kind of encircling China in the sense that, you know, you got Japan, you got Australia, you got the Philippines. There's a lot going on in that, in that, in that area. There was no official contact between Washington and Beijing, Beijing. Instead, each sought to determine, to undermine each other. The US via embargoes and support of adversaries in China and China via sponsoring revolutionary movements.

• 9:58Jordi Hays?

  And that's, that's been, we should actually ask Jordan about this later on the show, but this sort of common thread between the, in the US-China relationship is that there has never seemingly been great comms between the two leaders.

• 10:12John Coogan?

  Yes.

• 10:12Jordi Hays?

  Or really much of either. So it's like, we're doing, you know, now we're doing trade on a massive scale. You would think over the last, you know, 30 years, which was relatively stable in the history of US-China relations, you would think that there would be sort of more open comms. The president could call up Xi, have a conversation, work stuff out there, you know.

• 10:37John Coogan?

  It's always super controversial. Like, I remember this idea that like Donald Trump would go and meet with Kim Jong-un in North Korea was like deeply controversial, but I'm genuinely pretty pro

• 10:48Jordi Hays?

  comms.

• 10:50John Coogan?

  I think communication is, is, is like the only thing that stops kinetic warfare often. And so it's very important to have these, these, these rivals communicating and. Ideally, like, humanizing each other and realizing that if they, if they, if the relationship sours enough, like, both countries will suffer. But, but it is, it is incredibly diplomatically controversial with all these different scenarios of like, we would like to invite you to invite us to have a call with you. Like, that's something that actually-

• 11:20Jordi Hays?

  Yeah, that happened over the weekend.

• 11:21John Coogan?

  That happened over the weekend.

• 11:21Jordi Hays?

  I think it was Saturday.

• 11:22John Coogan?

  And it's like-

• 11:23Jordi Hays?

  It was like, you know, the White House-

• 11:24John Coogan?

  Just pick up the phone and call each other.

• 11:26Jordi Hays?

  Yeah.

• 11:27John Coogan?

  Come on, let's just call each other. Send us a text message, get on Signal, you're fine. So, in the 1960s, there's this strategic opening, the Sino-Soviet split. And so, even as China remained hostile to the US, a rift grew between the PRC and its erstwhile ally, the Soviet Union. By the late 1950s, Mao resented Soviet policies and leadership. In 1960, the USSR withdrew advisers from China amid disputes over ideology and the direction of communist development. Tensions escalated into armed border clashes between China and the USSR in 1969. And so, uh-

• 12:02Jordi Hays?

  Well, yeah, you also-

• 12:03John Coogan?

  This gives the US some leverage.

• 12:04Jordi Hays?

  Some backstory here. So, in the early 1960s, um, it was actually 1959 to 1961, I will say that communism was not working-

• 12:16John Coogan?

  Yep.

• 12:16Jordi Hays?

  -well in China.

• 12:17John Coogan?

  Yep.

• 12:17Jordi Hays?

  And so, a lot of these issues, you know, probably stemmed from the USSR basically saying, like, whatever you're doing isn't working because 30 million people have died of starvation in like, a two-year period.

• 12:29John Coogan?

  Yep.

• 12:29Jordi Hays?

  Figure it out.

• 12:32John Coogan?

  And they basically told them, "Skill issue."

• 12:34Jordi Hays?

  Yeah.

• 12:34John Coogan?

  "You gotta keep going. You gotta do more communism."

• 12:36Jordi Hays?

  Yeah.

• 12:37John Coogan?

  They were like, "Hey!"

• 12:37Jordi Hays?

  Didn't learn the lesson there.

• 12:38John Coogan?

  "We're gonna try some other stuff, maybe, at this point." But, this split meant that by the late 1960s, Beijing saw Moscow as a greater threat than Washington, especially because of the border. Like, they, Russia and China have a border right there, and so, if conflict brews, it's really, really dangerous. So, the US noticed, notices this growing feud and views it as a strategic opportunity. President Nixon and his adviser, Henry Kissinger, later exploited this rift to wedge apart the communist bloc, aiming to befriend one to isolate the other. Nixon wrote of playing the China card against the USSR. Uh, thus, as the revolution era closed- The stage was set for an unlikely thaw. China, isolated and threatened by a superpower

• 13:20John Coogan?

  neighbor, the Russians, and the US bogged down in Vietnam and seeking an exit, both had incentives by 1970 to reconsider their, their relationship. And so, the reperchment starts 1971 to 1979, and there's this funny term ping pong diplomacy, because the whole thaw of this relationship began on the ping pong table. You'll love to see it.

• 13:42Jordi Hays?

  As many relationships.

• 13:44John Coogan?

  As many deals get done, yes.

• 13:45Jordi Hays?

  I think there's a lot of relationships of mine that I could improve by playing ping pong.

• 13:49John Coogan?

  I, I completely agree. So in 1971, April, China invited the US table tennis team to Beijing during the world championships. American athletes became the first official US visitors to Communist China, and their goodwill visit captured global attention. Finally, like the global populace is saying like, oh, well, like, they're getting along and they're playing ping pong, like, maybe things aren't so bad after all. Pretty cool.

• 14:12Jordi Hays?

  It's a really wild setting to be a ping pong player, not even a pro ping pong player, because I don't think it was even then much of a, maybe like a full-time thing. You, you were maybe doing some other stuff on the side, and you, you get tasked with going to Communist China and being the first Americans to be welcomed into.

• 14:34John Coogan?

  But this is, I mean, the, the Olympics throughout history have been like hugely geopolitically important moments with, with, what was that ice hockey story where the Russians come, play the United States, or, you know, all the stuff that happens in Germany. Like, there's all these times when, when these kind of like silly sporting events act as like olive branches.

• 14:56Jordi Hays?

  Ways to bring people together.

• 14:57John Coogan?

  Bring people together and say, hey, we're not so different.

• 14:59Jordi Hays?

  Blood enemies.

• 15:01John Coogan?

  Exactly. If we can play ping pong with each other, we can, we can maybe do a little bit of trade. And so, behind the scenes, this is what's interesting. Behind the scenes, speaking of comms, Nixon had long harbored a plan to engage China in July of 1961. Nixon's National Security Advisor, Henry Kissinger, made a secret trip to Beijing to confer with Premier Zhou Enlai. This covert diplomacy paved the way for a breakthrough announcement. And the way they pulled this off was really crazy. I think he had to go to like India and then through Tibet and then into China. He couldn't go directly. No one knew he was there and it was like this very controversial, very highly risky move, both from like a security perspective, but also just from a public perception perspective. Because of course, America's been beating this drum of like, we're enemies with China.

• 15:44John Coogan?

  And if you want to change that, you can't just come out all of a sudden and say, hey, actually, we're going to be friends. You have to work up to that. And if you don't have any cards to play, there's not really going to be that much support for it. So in October of 1971, a few months after Kissinger and Zhou Enlai start talking in China, the United Nations voted, votes to seat the PRC as the legitimate representative of China, expelling Taiwan's ROC from the UN. The US opposed this at the time, but did not prevent the outcome, which was kind of like, you know, horse trading a little bit. And so then in February of 1972, the next year, Nixon actually goes and visits China. And there's this incredible opera called Nixon in China by John Adams, that you should

• 16:27John Coogan?

  definitely go see if you haven't, all about this trip and how, like what an incredible culture clash it was and how, how kind of ambitious it was.

• 16:36Jordi Hays?

  And I was in China in 2016.

• 16:38John Coogan?

  Yeah.

• 16:39Jordi Hays?

  And let me tell you, there was a culture crash. And that was, that was in Shanghai, right? The most westernized part of China.

• 16:47John Coogan?

  Yeah.

• 16:48Jordi Hays?

  After decades of aggressive development and, you know, plenty of, you know, foreign companies setting up there, operating, et cetera. So in the seventies, visiting Communist China had to have been truly, truly wild.

• 17:05John Coogan?

  I mean, it's like less than 10 years after the two countries were losing tens of thousands of soldiers in direct conflict, essentially. It's like.

• 17:13Jordi Hays?

  Yeah, not to mention even in 2016, if, wherever you went as a foreigner, you would have people taking pictures of you because it was just so foreign.

• 17:22John Coogan?

  Just so foreign, yeah.

• 17:23Jordi Hays?

  That it was like seeing a giraffe walk down, you know?

• 17:25John Coogan?

  Yeah.

• 17:26Jordi Hays?

  Uh, Melrose.

• 17:27John Coogan?

  Yeah. Yeah. So Nixon goes to Beijing in 72. This, he becomes the first US president to ever set foot in mainland China. He spent eight days in China, meeting Chairman Mao Zedong and holding talks with Zhou Enlai. Uh, this is called the week that changed the world, reflecting its strategic significance. The two Cold War adversaries begin bridging a 23-year gulf. The image of the staunch anti-communist Nixon, Nixon shaking hands with Mao was iconic. You can see it there. Uh, a dramatic realignment of geopolitical relationships in the Cold War.

• 18:03Jordi Hays?

  And imagine just the dynamic here around translation.

• 18:07John Coogan?

  Oh, yeah.

• 18:07Jordi Hays?

  Like trying to negotiate and, and repair a very damaged, you know,

• 18:13John Coogan?

  Totally.

• 18:13Jordi Hays?

  geopolitical.

• 18:14John Coogan?

  Yeah.

• 18:15Jordi Hays?

  Geopolitically, you know, one of the most significant relationships. And you're having to do it all through a translator.

• 18:21John Coogan?

  Yeah.

• 18:21Jordi Hays?

  Even that dynamic is, is shocking.

• 18:24John Coogan?

  So there's a few things that come out of these talks. The US acknowledges the one China principle, the, that China, the Chinese on both sides of the Taiwan Strait maintain China is one and Taiwan is part of China, while not explicitly endorsing Beijing's sovereignty over Taiwan. And both nations expressed opposition to hegemonic, to hegemonic ambitions in Asia, implying a common interest in containing Soviet power. So, uh, Nixon's really kind of like saying like, okay, guys, you both have a claim here. We're going to recognize both of your claims, but really let's focus on the Russians.

• 18:59Jordi Hays?

  Yeah.

• 19:00John Coogan?

  And so.

• 19:00Jordi Hays?

  Nice spin. It's called a spin.

• 19:02John Coogan?

  It's good spin. Uh, so this laid the diplomatic framework for improving ties without resolving all the differences at once. And this served both nations' interests for China facing a hostile Soviet Union. Better relations with the US offered security and access to technology since, uh, the US and the Soviet Union were in the space race, developing a lot of advanced technology. China was falling behind. As a, as a partner, the United States could kind of backfill that where the Soviet Union wasn't. And for the US, aligning with China would pressure the USSR, who was the Cold War's primary foe, and help the US extricate itself from Vietnam. And so Zhou Enlai said, he gave a toast and he says, "The Pacific Ocean is big enough to accommodate both China and the United States."

• 19:43John Coogan?

  This quote encapsulated hopes that the two great nations could coexist peacefully despite ideological differences. So, the next few years- This ocean's big enough for the two of us. It is. Basically what he said. Basically, yeah. So, following Nixon's trips, Sino-American relationships warmed gradually, albeit short of formal diplomatic ties. There were high-level exchanges and people-to-people contacts, scientific, cultural, journalistic exchanges began, ending decades of mutual isolation. The US began relaxing trade restrictions on China. And so in 1973, the two governments opened liaison offices in each other's capitals, de facto. There are embassies, but they didn't call them embassies because that's like a little bit too much. They don't want to rush into anything. Yeah. It's all very slow.

• 20:28John Coogan?

  It's like they were engaged. Yeah. But not married. They're just dating. They're, what do they call it? It's not like cold launch, hot launch, isn't that the thing? Soft launch. Soft launch. They're soft launching the relationship. So, after Mao's had, after Mao's health had declined, there was some political turmoil, the Cultural Revolution ends, and then Mao dies in 1976. This gave way, this gave way to the rise of Deng Xiaoping, a reformist leader keen on modernizing China with foreign help. And so, a very big pivot in the politics of China at the time. This leadership change on the Chinese side made, made full reprimand more feasible by the late 70s. Yeah. And so, in the early 1970s, there was a shifting dynamics. Nixon leveraged this, leveraged the China opening to pressure North Vietnam, which

• 21:13John Coogan?

  relied on Chinese and Soviet support, into peace accords. So, that kind of ends the Vietnam War. Meanwhile, the Soviet Union, alarmed by US-Sino closeness, China, China, America working together, pursued calming down like control arm, arms control agreements with the United States. And the, and this is kind of the beginning of the end of the Cold War. And so, China benefited as well. The threat on, of a two-front confrontation with the US and the USSR eased. Like, that would be the nightmare for China if they wound up fighting America and Russia at the same time. And so- The culmination came at the decade's end in September of 1978. President Jimmy Carter and China's leaders agreed to establish full diplomatic relations

• 21:57John Coogan?

  effective January 1st, 1979. The US formally recognized the PRC and severed official ties with Taiwan. This meant the US acknowledging Beijing as the sole legal government in China. After something like 30, 40 years, they say, hey, you guys won the civil war 30 years ago. We're going to recognize that you kind of run the place and they kind of do. So it's not that unreasonable, but you know.

• 22:22Jordi Hays?

  They have a little bit of size on Taiwan.

• 22:23John Coogan?

  They do, they do.

• 22:24Jordi Hays?

  And they won.

• 22:25John Coogan?

  Yeah. What is underrated is like, is like the geographic and population is, is so disparate. But at this time, like in terms of technology, military economics, Taiwan is still very dominant and, and doing very well and, and holding its own. So as part of the normalization, Washington affirmed the one China, one China policy, recognizing the Chinese position that there is but one China and Taiwan is part of China. In return, Beijing accepted that peaceful resolution to the Taiwan question would be pursued. This was left ambiguous. So they say, hey, we want to put.

• 22:59Jordi Hays?

  It would not be pursued fully.

• 23:03John Coogan?

  Yes. I mean, you could still hope for that. That's kind of what happened with Hong Kong. It was like not super violent, but it wasn't great. There were a lot of protests, but that's kind of the idea.

• 23:14Jordi Hays?

  It's hard to see the protest.

• 23:15John Coogan?

  But it doesn't seem like Taiwan wants to go that direction. But you know, what would be a peaceful resolution? I mean, I guess Taiwan could say, hey, we want to be part of China. We're cool. We're voting for it democratically. Like that's the nature of democracy. You can vote to join an authoritarian country, I guess. Would be weird though.

• 23:33Jordi Hays?

  And I'm sure I have no hard info here, but I'm sure that China has made a bunch of efforts to organically turn Taiwan.

• 23:43John Coogan?

  Yep.

• 23:44Jordi Hays?

  To the point where they just vote to join.

• 23:45John Coogan?

  That's the Hong Kong playbook.

• 23:46Jordi Hays?

  Yeah.

• 23:47John Coogan?

  It's, it's, it's, you know, political support for pro-China, pro-mainland leadership in the government, and then eventually more and more ties, diplomatic ties, until there's the, they kind of merge. And so there was the Taiwan Relations Act in 1979 to reassure Taipei and Congress. The US passed the Taiwan Relations Act in April of 1979, allowing continued commercial and cultural ties and obligated the US to help defend Taiwan. This act, while not a formal treaty with Taiwan, effectively guaranteed US support, a point that Beijing grudgingly tolerated but viewed warily. And talk about a crazy-

• 24:24Jordi Hays?

  Which again is a bit of a strange dynamic to be like, hey, we've got, we've got comms. We have a relationship, but by the way-

• 24:32John Coogan?

  Taiwan is part of China, but we will also defend Taiwan against China.

• 24:35Jordi Hays?

  With our lives, if you try to touch it.

• 24:37John Coogan?

  It's kind of a weird dynamic that they're playing both sides here, but that's the only way that it-

• 24:41Jordi Hays?

  Geopolitical finesse.

• 24:42John Coogan?

  Yeah. So in 1979, Deng Xiaoping visits the United States, which is a groundbreaking trip for a Chinese leader. Deng charmed Americans, famously donning a 10-gallon cowboy hat at a Texas rodeo, symbolizing the new, the new friendship. He sought US investment and technology to jumpstart China's modernization. Deng declared, "China needs to catch up with the modern world at the Texas, at the Texas rodeo." Now, I don't know if he said that at the rodeo, but he said, he toasted to the future of the friendship with President Carter, and he declared that there should be peace in the Pacific. These optimistic notes underscored the sense of a new chapter. Look at that photo of, of him wearing the 10-gallon cowboy hat.

• 25:24Jordi Hays?

  We need 10-gallon hats.

• 25:25John Coogan?

  And, and interestingly, Xi Jinping did something similar where he visited some farms in Iowa, I believe, or, and when he, when he was much younger. And there are these great cultural moments. As, as, as high stakes as these relationships are, you get the feeling that like, at, at some point, like, these are just bros hanging out, like, drinking-

• 25:45Jordi Hays?

  Have you seen the picture, have you seen the picture, by the way, of Xi in 1985?

• 25:51John Coogan?

  No.

• 25:52Jordi Hays?

  In, uh-

• 25:53John Coogan?

  Okay.

• 25:54Jordi Hays?

  I'll try to-

• 25:55John Coogan?

  Pull that up, Senator Ben, we'll, we'll, we'll throw it up. So by the late 1970s, the US and China were in fact tacitly allies against Soviet expansion. They shared intelligence on Soviet military moves and China benefited from limited US technology transfers. The Soviet invasion of Afghanistan in 1979 further united- Washington and Beijing in opposition. And so this was really the transformation of the relationship. Two decades of isolation has officially ended. And so in the eighties and nineties, we're talking about reform, more economic opening and deepening engagement. And so under Deng Xiaoping's leadership, China embarked on sweeping economic reforms in the late seventies and eighties. Moving away from Maoist autarky, Beijing, welcome foreign trade, investment and technology.

• 26:40John Coogan?

  Special economic zones were set up to attract overseas capital. And millions of Chinese students were sent abroad, many to US universities to study science and management. And this was the beginning of.

• 26:50Jordi Hays?

  Check out this picture, by the way. This is Xi.

• 26:53John Coogan?

  This is Xi Jinping in San Francisco.

• 26:53Jordi Hays?

  In San Francisco with the Golden Gate Bridge.

• 26:56John Coogan?

  Wow.

• 26:56Jordi Hays?

  Fantastic bridge, just smiling, having the time of his life. He forged lifelong friends on that trip to Iowa. It was an agricultural.

• 27:06John Coogan?

  In another world, he stays here, gets into Y C, builds a SaaS company. We'd be looking at a completely different world.

• 27:12Jordi Hays?

  Completely different world.

• 27:13John Coogan?

  Ah, the road not traveled sometimes. Anyway. So the US enthusiastically supports China's reform and opening policies. American businesses and technology poured into China, seeing vast market potential. It was a great deal for American businesses because they just have a massive new market. And this isn't even to talk about the supply chain, which we'll get into later. The US government facilitated scientific and cultural exchanges. Bilateral trade exploded from a negligible amount in nineteen eighty to tens of billions by the end of the eighties.

• 27:43Jordi Hays?

  Popped.

• 27:44John Coogan?

  By nineteen eighty four, Deng could famously declare to get rich is glorious. Reflecting China's new pragmatic embrace of wealth and markets, a quote often attributed to him. So very different from the from the Cultural Revolution, the communist mindset that I think people will put on China in the seventies. And so during the during the eighties, the US and China found common cause in opposing Soviet aggression. They cooperated indirectly in conflicts like the Soviet Afghan War. The CIA and the PLA coordinated to funnel weapons to Afghan guerrillas fighting Soviet troops. That turned out to be a bad decision, but but they were working against the Russians at the time. Of course, this, you know, the all the weapons became the like the training ground for the Taliban.

• 28:29John Coogan?

  It was very bad. Anyway, it was a little bit of.

• 28:31Jordi Hays?

  Reagan.

• 28:33Jordi Hays?

  Even went as far as to export them some military equipment.

• 28:37John Coogan?

  Yep.

• 28:38Jordi Hays?

  That is one of the most sacred bonds that two countries can have. In many ways, it's dark, but it's true.

• 28:44John Coogan?

  Yeah.

• 28:44Jordi Hays?

  Despite his anti-communist rhetoric, Reagan was committed to further normalizing ties with Beijing.

• 28:51John Coogan?

  I mean, we, we'll, we'll talk about Bill Clinton's perspective on China and what the internet would do to bring democracy to China. But this has been a thing since Nixon and it continued through Reagan is, I can fix her. I'm built different. Once they see how America works, they're gonna, once they get a little taste of our rockets, they're gonna wanna go full, full capitalist.

• 29:12Jordi Hays?

  This is interesting. In 1982, the US and the PRC signed an agreement where the US agreed to gradually reduce armed sales to Taiwan, uh, which was aimed at placating China, though the US kept selling defensive arms per the Taiwan Relations Act.

• 29:26John Coogan?

  Yeah.

• 29:26Jordi Hays?

  So clearly, uh, again, they just can't, uh, pretty much impossible to pick a side. And everybody's just sort of kicking the can down the road.

• 29:35John Coogan?

  Yeah.

• 29:36Jordi Hays?

  On, on the big, uh, question.

• 29:38John Coogan?

  Yeah. And so, uh, by the mid 1980s, thousands of American companies were doing business in China and China's economy was growing. Double-digit GDP increases. You'll love to see double-digit GDP increases, folks. And hundreds of thousands of Chinese students and scholars were studying in American institutions. So there were a lot of people-to-people bonds, of course. Um, both sides largely viewed the relation, the relationship as mutually beneficial. The US saw a vast new market and a potential partner, while China gained access to capital and advanced knowledge. Uh, but there were some frictions. Uh, there were some ideological differences. American leaders occasionally pressed Beijing on human rights and political freedoms, a theme that continues to, till today. Uh, and there were trade imbalances. You, China's exports to the US were growing faster than imports

• 30:23John Coogan?

  because China was still not a consumption-based economy, highly savings-driven. And so this US trade deficit with China, while modest then, was beginning to draw attention. And of course, now it's like front and center. It's like the most important, uh, just point, discussion point in the US-China relationship. And then, of course, there was the Taiwan issue.

• 30:41John Coogan?

  Let's move on to Tiananmen Square and the Butchers of Beijing. This is 1989. The booming 1980s relationship came to a sudden crisis in mid 1989. Over a million Chinese, led by students, gathered in Tiananmen Square, calling for democratic reforms and an end to corruption. On June 3rd and 4th, 1989, China's communist leadership ordered a military crackdown. PLA troops opened fire on the protesters, killing hundreds to possibly thousands of unarmed civilians. And the world watched in horror because photos like this were disseminated in American media. And so President George H. W. Bush publicly condemned the violence and suspended military sales and high-level contacts with Beijing. Congress imposed sanctions.

• 31:25John Coogan?

  Chinese officials were hit with travel bans and bilateral aid programs were frozen. Washington and its allies essentially put the US-China relationship on hold. During, in 1992, during the US presidential campaign, Bill Clinton criticized Bush for being too lenient on Beijing after the massacre. And this is what's so fascinating about the US-China relationship is that it's not strictly a left-right issue. We talk about this with Trump put tariffs on China during his first administration. Biden kept those in place. And so it's not like, oh, the Republicans are the China Hawks, or the Democrats are the China Hawks. It's always going back and forth, ping-ponging, based on what's actually happening because that's kind of the nature of geopolitics.

• 32:09John Coogan?

  And so Bill Clinton accused President Bush for being too lenient on Beijing after the massacre, accusing him of coddling the Butchers of Beijing. This strong remark reflected widespread American revulsion at the Chinese regime's behavior in a sense that the US should not conduct business as usual with a government that crushed peaceful protests. It's very anti-free speech. How can we do business with them if they're not embracing the most basic of our, what we see as human rights? Privately, Bush sought to preserve the strategic relationship. Just weeks after Tiananmen, he secretly sent Brent Snowcroft to Beijing to meet Deng,

• 32:50John Coogan?

  delivering a personal message that the US wanted to maintain ties despite public outrage. The secret diplomacy, kept from Congress at first, showed Bush's desire to sustain the engagement framework, albeit under criticism. So the the Tiananmen events chilled but did not permanently rupture US-China relations. The sanctions and global opprobium isolated Beijing for a short period, but China's importance and the underlying strategic economic interests led to gradual resumption and of engagement in the early 1990s. And so at a certain point, Bush is saying like, yes, they're violating human rights over there, but it's really far away and we're making a lot of money. So we got to stay the course. That's basically what happened. So Bill Clinton comes in and he moves from post-Tiananmen isolation back to a policy of constructive engagement with

• 33:34John Coogan?

  China, which again, like complete flipping from from the from the campaign promise of like, the butchers of Beijing, I'll never deal business with them. And then all of a sudden, he's like, well, I mean, we could probably do a little bit of business. We could probably get a little bit of money.

• 33:47Jordi Hays?

  Just a little bit of business.

• 33:48John Coogan?

  Just a little bit of money. So Clinton initially tied China's trade status to human rights improvements.

• 33:53Jordi Hays?

  It's this interesting dynamic. I think there was a continuous belief that if you could get China to adopt free market capitalism, that over time, you know, the free market would guide China to a system that was, I don't know, who knows if it would ever been long-term aligned with US interests. But the, I do believe that, you know, everyday citizens of every country in the world don't have this sort of general, I don't want to generalize this too much, right? But like, people in China don't have as much of a, you know, the sort of geopolitical power players, you know, want want people to believe like

• 34:36Jordi Hays?

  this is like, you know, citizen on citizen conflict, but it's really not.

• 34:39John Coogan?

  Yeah.

• 34:40Jordi Hays?

  Right? It's like every, every individual wants to, you know, further their own life and, you know, live in a sovereign country.

• 34:48John Coogan?

  I mean, when you think of like America's Bill of Rights and like free speech, that is very much aligned with just. Capitalism. And so you would, it does stand to reason that if you get a country to go full capitalism, full democracy, free speech and human rights will kind of follow. But that's not always the case. And that's where we get to this like state hybrid comment, uh, hybrid capitalism that's, that's eventually developed. Um, and so Clinton, he's, he's channeling the art of the deal here. He's saying, hey, China, we're going to trade status to human rights improvements. Uh, your trade status is going to be linked to human rights improvements. In 1993, he threatened to revoke China's most favored nation trade privileges. This came up on the all in show, uh, last week.

• 35:33John Coogan?

  If, if human rights didn't improve, however, by 1994, he de-linked, uh, human rights from trade, concluding that engagement was better, was a, was a better strategy to influence China. So he is saying, you know what? I'm not going to break off trade if you don't, if you don't clean up the human rights stuff. Instead, I'm just going to focus on increasing trade. And that I think that will lead to human rights improvements, which is, it is somewhat reasonable. It didn't really play out, but to some degree it made sense. Um, this pivot acknowledged China's rising economic weight. And so there's just a certain amount of pressure. And this is the pressure that's been building and building and building where it's like decoupling every single year.

• 36:11Jordi Hays?

  U S businesses putting pressure on the admin to say, hey, we want to be doing business there. We need to have a, uh, you know, actual, uh, you know, relationship, uh, between government to government.

• 36:22John Coogan?

  Totally.

• 36:23Jordi Hays?

  For us to confidently go and do business.

• 36:25John Coogan?

  Every, every step that the relationship, the, the trade, uh, that the trade relationship grows, makes it more painful to break off. And so there's going to be more pressure. And so high level visits between U S and China continue. 1997, Chinese President, uh, Jiang Jimin, uh, made a state visit to the U S. And in 1998, Clinton traveled to China for a summit symbolizing the full normalization after Tiananmen. Clinton spoke to university. They're back. But there are some security crises. The Taiwan Strait crisis happens in 1995 when Taiwan's President Li was allowed to visit the US. Beijing was furious, seeing it as a US breach of the One China policy. China conducted missile tests near Taiwan to intimidate the island ahead of its first democratic presidential election.

• 37:08John Coogan?

  Clinton responded by deploying two US aircraft carrier groups to the vicinity in a show of resolve. The crisis subsided. Taiwan's election proceeded, but it was a very hot and tense moment. And then there was the Belgrade Embassy bombing in 1995. During NATO's air war in Yugoslavia, US bombs mistakenly hit the Chinese Embassy in Belgrade, killing three Chinese journalists and diplomats. Washington apologized profusely, calling it a tragic error due to an outdated map. Many Chinese believed it was intentional. Anti-US protests erupted across China. US consulates were besieged by angry protesters and angry demonstrators. The incident badly strained relations. And then there was also a lot of surveillance and spying accusations during the late 90s.

• 37:53John Coogan?

  There was fear of Chinese espionage. Allegations of Chinese theft of US nuclear secrets at Los Alamos surfaced in 1999. This injected some distrust, but it didn't halt the engagement. Everyone's making too much money. And so, trade overdrive begins during when China enters the World Trade Organization. This is a centerpiece of late 90s engagement. China really gets integrated into the global economy at this point. Clinton pushed for a landmark trade deal to allow China into the WTO. In 2000, he signed the US-China Relations Act of 2000, granting China permanent normal trade relations. This is the P N T R that came up on the All In Show again.

• 38:35John Coogan?

  This paved the way for China's WTO entry in 2001. And so, the US believed that WTO membership would bind China to global trade rules, open China's markets to foreign goods and investment, which kind of happened, but not for social networking and tech companies, which we'll get into. And Clinton argued that by embracing China in the WTO, quote, "The United States is exporting freedom by sending China a message that economic freedom can ignite demands for greater political freedom." So you get richer, and then you start saying, "Hey, I want some free speech. I want to yap. I want to start a podcast. I got money. I can afford a Shore SM7B now, so you're not going to censor me, China."

• 39:15Jordi Hays?

  Let me yap.

• 39:16John Coogan?

  So... The US becomes China's key market and China becomes the US's key manufacturing hub. By the late 90s, China's export-led growth was heavily fueled by the US market. China ran large US, large trade surpluses while Americans got low-cost goods. This is the Happy Meal of the, of the late 90s. US manufacturing sectors like textiles, toys and electronics began to feel the impact of Chinese competition, but US policy remained firmly committed to economic engagement. And so, the late 90s were often described as a honeymoon period for the US-China relations. Aside from some hiccups, Jiang Zemin spoke of constructive, of a constructive strategic partnership with the US

• 39:56John Coogan?

  and Clinton toasted to China's peaceful rise, a term China itself later adopted. However, unresolved issues persisted. The US continued pressing China on human rights. There was the treatment of Tibet. You might have remembered the Free Tibet movement that a lot of Hollywood actors were involved in. And, you know, just a general lack of democracy. China's military modernization began, albeit from a low base, which the Pentagon watched closely. In 1996, US Defense Secretary William Perry raised concerns about China's missile buildup. And by 2000, a Congressional Cox report warned of Chinese nuclear espionage. But despite such concerns, the two countries keep engaging with each other.

• 40:40John Coogan?

  So, post-World Trade Organization entrance, China's economy absolutely takes off. It's sustained 10% annual GDP growth.

• 40:50Jordi Hays?

  And the context here, for me personally, is being born in the 90s. Growing up at this time where US-China relationships, you know, is, you know, this honeymoon period. Trade is accelerating. It feels like China is opening up and modernizing. I had this dream as a young child of being an international businessman. Like, I just had this idea of like, the thing to be was a guy wearing a suit with a briefcase, doing international business. And so, as I got into school, once I got to college, I still had this sort of idea that China was going to be an important market for US tech, which I was interested in. So, I started studying Mandarin.

• 41:33Jordi Hays?

  I studied abroad in China, got in at effectively like a YC equivalent in China.

• 41:40Jordi Hays?

  And realized very quickly that China, the Chinese market, despite what was being marketed broadly, had no interest in foreign, really foreign businesses being involved on the ground in China at all. And it really just, it completely, I basically slammed into a wall and within two weeks realized that like, this is not a place that US technology companies are ever going to do business. But it was, I felt like I was sold a very, very different dream.

• 42:10John Coogan?

  Yeah.

• 42:11Jordi Hays?

  There was still this idea on the ground, even people that were optimistic that, hey, like, Google's banned, but like, there's still going to be, there's still tons of opportunities here.

• 42:19John Coogan?

  Yeah. This was the lack of reciprocity. So by the late 2000s, and especially in the 2010s, US officials and business leaders accused China of failing to reciprocate the openness that it enjoyed from the West. So there were market barriers. China maintained high barriers for foreign countries in many sectors like finance, telecommunications, media, even as Chinese firms freely accessed US markets. Now that's stopping, but for, for all of the 2000s and 2010s, any Chinese company could come here and sell DJI drones and TikTok and all sorts of stuff.

• 42:55Jordi Hays?

  No, this was really, this was really a cell phone because it was, how long did we have to go where, like you said, US, US firms were being effectively stonewalled in China?

• 43:07John Coogan?

  But no one kind of realized it. Yeah. It was rough. So foreign companies in China face joint venture requirements, equity caps and favoritism towards state-owned enterprises. You need to set up this, something called a variable interest entity.

• 43:20Jordi Hays?

  Yeah. So this was interesting. So when, so when I was there, there was a foreign, I was, I was helping, you know, I was like an intern for this foreign startup.

• 43:28John Coogan?

  Yeah.

• 43:28Jordi Hays?

  And there had to be like a, a, you know, Chinese person that was an equity holder in the company that did no work.

• 43:38John Coogan?

  Yep.

• 43:38Jordi Hays?

  They were not involved with the company at all. They didn't even have a board level role. It was just basically, effectively a wealth transfer to someone local. And then that person was like, and, and the, the reason for that. Is is not just the economic reason, but it's an influence thing. It's like if you come in here and you do anything bad, this person is basically like

• 43:57John Coogan?

  They can take all the assets of the of the of the Chinese entity at any moment.

• 44:01Jordi Hays?

  Yeah.

• 44:01John Coogan?

  They it's it's

• 44:02Jordi Hays?

  Yeah, but but also it it puts the representative, the Chinese representative in a weird spot if the the foreign firm is not acting

• 44:09John Coogan?

  Yep.

• 44:10Jordi Hays?

  in the interests of

• 44:11John Coogan?

  Yeah, it's very

• 44:12Jordi Hays?

  China broadly.

• 44:13John Coogan?

  And then there was also intellectual property theft. The US became alarmed by widespread IP theft and industrial espionage attributed to China. American firms reported being forced to transfer technology as the price of market entry. So hey, you want to sell that car here? We got to see the blueprints, basically. And then there were state-backed hackers implicated in theft of trade secrets in 2014.

• 44:37Jordi Hays?

  That's such a crazy dynamic. If you want to enter this market, give us the exact playbook to

• 44:43John Coogan?

  Give us the codes to Zion. Really? In 2014, the US indicted five Chinese military hackers for cyber espionage against US corporations. And of course, there was accusations that Beijing was manipulating its currency to keep exports cheap, a stance that led the Treasury almost to label China a currency manipulator on multiple occasions, and eventually it did so briefly in 2019. There was also the lack of political reform. Like, everyone was hoping that the economic growth would help liberalize China politically, but that just did not materialize. In fact, if anything, China became more authoritarian and Xi Jinping became essentially a dictator for life. And so the CCP had no intention of loosening its monopoly. There was no two-party system. There was no one else.

• 45:28John Coogan?

  And this was like a core assumption of the US engagement strategy was that, hey, we're going to take this leap of faith. We're going to bring you into the global economy and we're going to expect that you evolve into a democracy over time. Because China was on that track for a little bit and it didn't happen.

• 45:42Jordi Hays?

  To give China a little bit of credit, we were doing the same thing with with Taiwan and basically saying like, yeah, you're the one, China.

• 45:48John Coogan?

  Yeah.

• 45:49Jordi Hays?

  You know, we're we're on your team. Let's do this together and simultaneously selling, you know, weapons to Taiwan.

• 45:55John Coogan?

  Yeah.

• 45:56Jordi Hays?

  Everybody was everybody was two-timing.

• 45:58John Coogan?

  Yeah, and so during the Obama era, this is the beginning of a tougher stance. So pivot or rebalance to Asia in 2011. The Obama administration announced a strategic pivot to Asia, devoting more diplomatic and military attention to the region. This was partially to reassure Asian allies in the face of China's growing assertiveness. Secretary of State Hillary Clinton in 2011 outlined a policy in an essay titled America's Pacific Century, calling for an increased US engagement across Asia as a counterbalance to China's influence. This included stationing Marines in Australia, strengthening ties with other Asian countries and moves. And these moves were controversial. Beijing definitely viewed them with suspicion.

• 46:41John Coogan?

  There were also the Trans-Pacific Partnership, which was a standard free trade agreement with Asia-Pacific nations, but not China. So there's a new trade deal that advantages everyone but China. The TPP aimed to set rules on labor, environment, and state-owned enterprises implicitly pressuring China to reform if it ever wanted to join. And so they basically structured this trade deal to say, hey, you got to follow all these different things that you're not doing right now. Oh, turns out everyone just happens to do this, except for you. Why don't you come on and reform and then you can join because it'd be great. You'd have more free trade.

• 47:14Jordi Hays?

  So as China became more assertive territorially, especially in the South China Sea, the US pushed back diplomatically. In 2010, Secretary Clinton stated the US has a national interest in freedom of navigation in the South China Sea, which irked Beijing. In 2015, US Defense Secretary Ash Carter publicly warned China to halt its island building and militarization of reefs in the South China Sea, saying the US opposed turning these features into military outposts. China was basically like, we'd like some strategic islands, so we're going to make them. The Pentagon began regular freedom of navigation operations near Chinese claimed areas, which I'm sure people are familiar, which is basically just navigating boats through those areas.

• 47:57John Coogan?

  We could be here at any moment. Yeah, show of force. Power projection.

• 48:02Jordi Hays?

  Yeah, the US, often with the EU and Japan, brought cases to the World Trade Organization against Chinese practices, i.e. China's export restrictions on rare earth minerals, which they're doing again now. Critical materials for high-tech products led to a joint World Trade Organization complaint in 2012. While the US won some rulings, China sometimes complied minimally or found workarounds. Annual strategic and economic dialogues were established to air grievances and press China on issues ranging from currency reform to market access. There was very little sort of progress during this time.

• 48:37John Coogan?

  Yeah, they also host the Dalai Lama, which is very controversial to China. They don't love what he's pitching about universal rights, but Obama kind of frames this as this is, you know, general strategic, like a general strategic and economic issue. By Obama's second term, US rhetoric had sharpened. Officials openly talked of China as a strategic rival in certain domains, even as cooperation continued on climate chains and Iran's nuclear deal. And then in 2012, 2013, this is when Xi Jinping really takes over. He becomes the general secretary in 2012 and president in 2013, and he centralized a lot of power

• 49:18John Coogan?

  and championed the Chinese dream of national rejuvenation. They did domestic tightening.

• 49:23Jordi Hays?

  This was basically his Make America Great Again campaign.

• 49:27John Coogan?

  Yeah, yeah, yeah, basically. And so they did a military buildup. The PLA got a massive overhaul and budget increases. Dick Cheney was not super happy about this. And then Xi Jinping launched industrial policies like Made in China 2025. It's now 2025, and it seems like mission accomplished, guys.

• 49:46Jordi Hays?

  Yeah, to some degree. Look, he was focused on semiconductors, AI, 5G.

• 49:51John Coogan?

  And they're still not on the leading edge.

• 49:53Jordi Hays?

  I would argue that they're not on the leading edge of semiconductors, although they're making great efforts. They are not, you know, Tyler Cowen yesterday was very

• 50:01John Coogan?

  They're behind on AI a lot.

• 50:02Jordi Hays?

  ... which is that they're behind on AI. The most exciting AI projects they have that are public are trained on American models.

• 50:09John Coogan?

  They're doing well in smartphone manufacturing, 5G for sure, and then electric cars to an increasing extent, drones certainly. So important high-tech sectors, but not the key foundational technologies necessarily, but they're certainly working on it and investing very, very heavily.

• 50:26Jordi Hays?

  And in 2013, China began the vast Belt and Road infrastructure project across Eurasia, extending its economic and political influence, another point of US concern. Seen as Beijing creating a synocentric order.

• 50:39John Coogan?

  Yep.

• 50:39Jordi Hays?

  Again, people have been very sort of concerned, afraid, annoyed, frustrated with sort of Belt and Road Initiative.

• 50:46John Coogan?

  Yep.

• 50:47Jordi Hays?

  But at the same time, I do want to give them a little bit of credit that the US has just aggressively done many similar things over a long period of time.

• 50:56John Coogan?

  Yep.

• 50:56Jordi Hays?

  Sometimes with different structures, right?

• 50:59John Coogan?

  Yep.

• 50:59Jordi Hays?

  You know, the IMF and some of these sort of like more

• 51:03John Coogan?

  Yeah.

• 51:04Jordi Hays?

  global organizations are oftentimes carrying out a lot of those efforts, but

• 51:09John Coogan?

  Yeah.

• 51:10Jordi Hays?

  still.

• 51:11John Coogan?

  And so Xi Jinping starts talking about the century of humiliation. That's from 1839 to 1949, when China was subjugated by foreign powers, vowing the great rejuvenation of the Chinese nation. And so he is arguing that China should no longer be pushed around or play second fiddle. It would reclaim its rightful place as a great power, the kingdom under heaven, the middle kingdom. This fueled a more assertive foreign policy. China became less willing to hide and bide, which was Deng Xiaoping's old mantra, to remain low profile. And so several incidents of deteriorating relations started to emerge in the mid 2010s. There's cyber espionage clashes in 2015. There's a massive hack of the US Office of Personnel Management.

• 51:55John Coogan?

  I actually know someone who was in the database at that time and all of their stuff got leaked because of this. It's kind of crazy.

• 52:01Jordi Hays?

  And they, was it made public?

• 52:03John Coogan?

  Uh, I'm not, I think it might have been made public. I'm not actually sure, but basically if you worked for the federal government, all of your personal data was leaked to China. And this was why, this is widely attributed to Chinese actors. The US accused China of hacking companies. Obama and Xi Jinping reached a 2015 accord not to conduct economic espionage in cyberspace, which helped briefly, but distrust remained high. And so there was also a standoff in the South China Sea. By 2015, 2016, China had built and militarized artificial islands with runways and missiles in disputed waters. The US responded with more.

• 52:42John Coogan?

  With more military tests.

• 52:44Jordi Hays?

  Navigation.

• 52:44John Coogan?

  Operations, that's right.

• 52:45Jordi Hays?

  Procedures, I believe.

• 52:46John Coogan?

  Phone ops.

• 52:47Jordi Hays?

  Yeah.

• 52:48John Coogan?

  And rallied allies to condemn these actions. And I remember there's some very viral YouTube videos about like China's artificial islands because it's just like, how are they doing that? We don't do that. That's a crazy idea to just go and like build an island. But it makes a ton of sense. If you need to project power, you build an island, you kind of control it and then you can put a a tank or a turret or missile or a plane on it. And so the economic dialogues start stalling. Annual talks are yielding only incremental Chinese concessions, which frustrates US negotiators. Market forces, market access for US firms remain restricted by 2016. Calls grew louder in Washington that engagement had failed to change China's behavior sufficiently.

• 53:31Jordi Hays?

  At this point, Obama was frequently saying, please, which was.

• 53:36John Coogan?

  Please.

• 53:37Jordi Hays?

  He would ask China to play by the rules of the international system, warning that if it didn't, the US and others would enforce those rules.

• 53:43John Coogan?

  Yep.

• 53:44Jordi Hays?

  Chinese leaders, meanwhile, accused the US of trying to contain China's rise.

• 53:48John Coogan?

  Yep.

• 53:48Jordi Hays?

  And not respecting China's core interests like territorial integrity, the whole big Taiwan thing. But needless to say, saying, you know.

• 53:57John Coogan?

  Yeah. And so then, of course, 2016, Trump gets into office. There's the 100 Year Marathon book that's very informing of China's strategy. And Trump is way, way more aggressive in the rhetoric. He says they're stealing American jobs. He's gonna, he says he's, promises to get tough on China and demand reciprocity. And this did resonate with a lot of American voters in industrial states. And that's a big part of why he won.

• 54:23Jordi Hays?

  The job loss, you know, the various.

• 54:25John Coogan?

  Yep.

• 54:26Jordi Hays?

  You know, firms, manufacturing, you know, companies that had basically been shut down due to not being able to be competitive with China for various reasons. That was still fresh on a lot of people's minds.

• 54:36John Coogan?

  Yeah.

• 54:36Jordi Hays?

  Right? If even, you know, if somebody had a family business that had shut down 10 years ago.

• 54:41John Coogan?

  Yep.

• 54:41Jordi Hays?

  And Trump gets into office and starts talking like this.

• 54:44John Coogan?

  Yep.

• 54:44Jordi Hays?

  That family is not forgetting that that happened.

• 54:47John Coogan?

  Totally. And so we're talking about a Chinese trade war today. It's actually a trade war too, because the first Chinese trade war happens in March of 2018. Trump announces tariffs on 50 billion worth of Chinese imports. And then Trump eventually widens that to 25% tariffs on about $250 billion in Chinese goods, which are industrial components, electronics, et cetera. And additional tariffs on the rest, roughly 300 billion consumer goods at 7.5%. Virtually all Chinese exports to the US were hit. And the administration justified these as necessary to counter economic aggression and massive trade imbalances. So Trump has been beating this drum of

• 55:30John Coogan?

  of economic warfare with China is happening. I'm going to lead the charge. Again, and again, and again, he's back in, he's doing it again. It's not, this should not be unexpected. And so China retaliates, placing tariffs on tens of billions of dollars of US exports, targeting politically sensitive products like soybeans, agriculture goods and autos. For example, when the US levied $34 billion in tariffs, China responded with 34 billion on US goods. Trump escalated, raising tariffs from 10% to 25% on 200 billion of goods. Beijing answered with its own increases. And so there's this tit for tat spiral that rocked global markets and stoked recession fears. By 2019, bilateral trade volumes fell, supply chains began adjusting, and companies in both countries felt pain. American farmers in particular were hit

• 56:13John Coogan?

  or hurt by lost exports and Chinese manufacturers faced higher costs and uncertainty. And so now we get into

• 56:21Jordi Hays?

  And then COVID.

• 56:21John Coogan?

  Revenge.

• 56:23John Coogan?

  It's great.

• 56:23Jordi Hays?

  COVID came immediately after this.

• 56:26John Coogan?

  Yep.

• 56:27Jordi Hays?

  There's, you know. We won't get into COVID on this podcast.

• 56:34John Coogan?

  I think it's more relevant to stick with the crackdown on Chinese tech, specifically Huawei and ZTE. So the US banned government use of Huawei and ZTE products citing espionage risks. And this was the big 5G debate. The US also pressed allies with mixed success to exclude Huawei from their 5G networks, portraying it as a Trojan horse for Chinese spying. Of course, like if a 5G tower is intercepting all internet traffic, it's going to be pretty easy to spy, especially if it's unencrypted stuff. So Huawei responded with lawsuits, but this tech decoupling aimed to protect the US national security and technological leadership in the face of China's rapid advances.

• 57:14John Coogan?

  And so in 2018, the US Justice Department charged Chinese intelligence officers and hackers in several cases of economic espionage, and the US passed more laws to tighten scrutiny of Chinese investments, especially in tech startups. Sanctions were also imposed related to human rights. The US sanctioned officials involved in Xinjiang's mass detention of Uighurs and for undermining Hong Kong's autonomy. China angrily counter-sanctioned some US lawmakers and NGOs.

• 57:45Jordi Hays?

  And this is from the US Department of State website. It says, "Also required of every company in China, a branch of the CCP is nested within Huawei's corporate structure." And they say Huawei has deep ties to the Chinese Communist Party and military, and it's a privately held company, which is interesting, too. So I think the American companies and politicians at this time that sounded the alarms were absolutely correct that just strategically cannot, you know, the US cannot rely on telecommunications infrastructure from a privately held company with ties to foreign military, which is a political adversary.

• 58:25John Coogan?

  And so Trump is getting much more aggressive about China in America simultaneously.

• 58:32John Coogan?

  Chinese officials are starting to use sharp rhetoric against the West and they call this the wolf warrior diplomacy. And so the Foreign Minister Wang Yi blamed Washington for the worsening relationship, accusing it of McCarthyism. And there's some crazy wolf warrior like tweets and quotes out there that are really, really aggressive. And it sounds just like Trump, but from the other perspective. It's very much like, this is a failing country, they're the worst. It's very funny. And so, of course, there's a lot of propaganda and conspiracies around COVID-19. Obviously, that sours the relationship, but most people are super familiar with this. And so, in 2020, in July, the US Secretary of State Mike Pompeo delivered a speech at the Nixon Library titled Communist China and the Free World's Future.

• 59:17John Coogan?

  He bluntly stated, "The old paradigm of blind engagement with China has failed. We must not continue it. We must induce China to change." Pompeo proclaimed, "The era of engagement is over," citing China's unfair trade, human rights abuses and aggression. He called on the world to join the US in resisting the CCP's ambitions. This was essentially an obituary for nearly 40 years of US-China policy and set the ideological groundwork for a new

• 59:42Jordi Hays?

  But also not the first time

• 59:44John Coogan?

  No.

• 59:44Jordi Hays?

  that communication had entirely broken down.

• 59:47John Coogan?

  Yeah.

• 59:48Jordi Hays?

  Right?

• 59:48John Coogan?

  Yeah.

• 59:48Jordi Hays?

  This happened after Tiananmen Square. And anyways, this story is still unfolding.

• 59:56John Coogan?

  Yeah, yeah. And it kind of brings us up to today. I mean, obviously Biden kept a lot of pressure on China and now Trump has escalated things to what feels like 11. But we have three great guests today, breaking down various aspects of the US-China relationship, what's going on in Taiwan. But we're starting with a more optimistic take on how to support Taiwan with a satellite that will provide internet. And so, we are joined by the founder and CEO of Astronis. And welcome to the show, John. How you doing?

• 1:00:31Speaker 02

  Hey guys, how's it going?

• 1:00:32John Coogan?

  It's great.

• 1:00:33Speaker 02

  Thanks for having me. Great to have you.

• 1:00:34John Coogan?

  Congratulations on the announcement. Would you mind just giving us the the high level announcement? And and even just like a little breakdown of Astralis and what? How you describe the company on day to day basis?

• 1:00:50Speaker 02

  Yeah, of course. So today we had this very cool announcement. You go check it out on on Bloomberg and some other some other places. We announced a new satellite for Taiwan, and this is a special kind of dedicated satellite in a high orbit that is called geostationary orbit. So it's a very special orbit. It's been around for, you know, been around since the beginning of the space age, but essentially allows you to park a satellite over a country or a region of the world and provide continuous service with just that one satellite. Or, oh, wait, what the hell?

• 1:01:29John Coogan?

  You look and sound good to us.

• 1:01:33Speaker 02

  Something glitched on my Zoom, but it's all good. You guys can hear me?

• 1:01:35John Coogan?

  All good, yeah.

• 1:01:37Speaker 02

  Okay, excellent. So you can provide this service with just one satellite or in some cases, a couple of satellites parked up there and essentially create this backbone in the sky.

• 1:01:49John Coogan?

  Yeah.

• 1:01:49Speaker 02

  And this is really important in a case like Taiwan, which I'm sure we'll get into.

• 1:01:53John Coogan?

  Sure. Can you give us a little history of the company? And because I know you launched satellites before and you I we have heard about Alaska and and a few other countries. What has the rollout been now that you're kind of in the commercialization stage of the company?

• 1:02:10Speaker 02

  Yeah, so we started the company coming up on nine years ago.

• 1:02:14John Coogan?

  An overnight success.

• 1:02:17John Coogan?

  We love an overnight success on this show. Congratulations. We love to see it. Just a quick, quick nine year journey. Good job.

• 1:02:25Speaker 02

  Honestly, incredible timeline.

• 1:02:27John Coogan?

  Yeah, it's incredible.

• 1:02:28Speaker 02

  Appreciate that. Yes, yes, we did. Yeah, we just sprang into being with this, you know, beautiful manufacturing. Just snapped your fingers, basically.

• 1:02:37John Coogan?

  Fully formed. Yeah, fully formed.

• 1:02:38Speaker 02

  It just manifested it. Magically appeared. So we started the company actually to do this one thing, which I, you know, I always like to joke is there are no pivots. We started with this exact.

• 1:02:51Speaker 02

  Thesis in mind and then we just have been, you know, grinding away, executing on that all the way through, but it is, you know, do a next generation satellite design using all the latest small satellite technology, but in high orbits, which have a number of benefits and a number of use cases that are, they're very different from, I'm sure what you, you know, you and your viewers have heard about in lower earth orbit. So yeah, like Starlink and OneWeb and some others that are in lower earth orbit have a lot of advantages. Um, and, uh, high orbits have their advantages as well. And that's for both commercial and military and defense applications, um, which we are, are also now charging head on. So, um, we started the company, uh, you know, on, on some early, uh,

• 1:03:36Speaker 02

  commercial customers that we found. And now, you know, fast forward today, we've signed contracts for, you know, more than, uh, more than 10 of these satellites commercially. We also have a number of US government defense programs, uh, that are, that are in work as we speak. So there's a, there's a lot going on. Um, but this one, this was an important, important one for us.

• 1:03:54Jordi Hays?

  Yeah. Can you talk about your neighbors in geostationary orbit? Uh, I, I saw on your site, there's $15 billion worth of these satellites being sent up every single year. So there's other people, you talk about kind of like

• 1:04:09John Coogan?

  Yeah. What else is up there? Is it like the Hubble telescope? Like, like how high are we talking? Higher than the ISS? Like really? Explain it like we're five. Explain it like we're

• 1:04:16Speaker 02

  Oh, yes, yes, yes. Yeah. No, no, for sure. So it is about a hundred times farther away than, than lower earth orbit. Um, it's about 10th of the way to the moon. And as, as you, as you said, there's about, uh, $15 billion worth of these satellite, large satellites launched to GEO and other high orbits every year. Um, but historically those have always been giant behemoth satellites that cost hundreds of millions on, uh, really for the, the commercial side is in this like few hundred million range. And then on the military side, the satellites cost over a billion dollars per satellite. Sometimes multiple billions.

• 1:04:54Speaker 02

  Per satellite. So we're talking and we're talking huge satellites the size of like a double decker London, you know, big red London bus, that kind of, that kind of size. Um, and then they're really designed to do uh, everything from, you know, broadband communications. This is where all broadcast satellite television has always been from. And then there's some important national security missions uh, up there as, as well. And so the 15 billion is total between commercial and military. Um, but you know, I mean, it is a huge number. I was just like, it's one of these very big industries that isn't talked about a lot. And so we said, hey, there's nobody really taking a new approach here. It feels like we could go do something really interesting and, and perhaps quite valuable.

• 1:05:38Jordi Hays?

  And ta- talk about today's uh, announcement and the significance of it. I imagine this is not the kind of partnership that you started working on in Q1. It's probably something that's been in the works for a really long time. Like what, what, what, what, you know, what it's even like the timeline to make something like this happen, right?

• 1:05:55John Coogan?

  Do you have, do you have one click checkout? Can Taiwan just go, please, just buy now?

• 1:05:59Speaker 02

  Yes, exactly.

• 1:05:59John Coogan?

  Buy now, pay later.

• 1:06:01Speaker 02

  No, no, for sure. It, it, it is a longer, longer sales cycle for, you know, a hundred million dollar plus uh, deal, but obviously worth the, worth the effort. This is, so this is a commercial contract with a telco called Chungwa Telecom. It's the largest telco in Taiwan. They have about a $30 billion market cap, um, seven or eight billion a year in, in annual revenue. So it's very, I mean, this is a big country, big, uh, uh, big company, right? It's, it's like in that Fortune 500 class of company. And they, among other things, in addition to managing, you know, operating the cell tower networks for Taiwan, they also manage the undersea

• 1:06:41Speaker 02

  cables uh, for Taiwan. They also uh, manage uh, satellite connectivity for the government of Taiwan. So they have a, you know, they have a big footprint there as you would expect. And so working with them, you know, going back, I don't know, at least a, a year, maybe closer to 18 months ago on where this could be, you know, this valuable asset for them. Um, and then it, you know, sort of going through the, I, I would call it all the normal enterprise sales uh, activities from there, right? You have to get together with our technical teams, with their technical teams, hash out exactly what the, the technical specifics are of the satellite and then the, the network. Around it and then, you know, we're hammering out the business terms.

• 1:07:25Speaker 02

  So it's a, it is a big deal for us. Uh, and I think a big deal for Taiwan, you know, this is something they very badly need, as I'm sure you guys, uh, you know, as I'm sure has not escaped your attention.

• 1:07:39Jordi Hays?

  Uh, what, what does it actually take to get the satellite up to geostationary orbit? Uh, assuming you guys are partnered with, you know, SpaceX on the transport side, but what are, what are all the different kind of steps?

• 1:07:51John Coogan?

  Is this uniquely unlocked by SpaceX in dropping launch costs? I'd love to know kind of the general trend in mass to orbit and how that's enabling the business.

• 1:08:01Speaker 02

  Oh, a hundred percent. Yes. I mean, there's no question. Space, when SpaceX came along and really dropped the launch costs in a big way with the Falcon nine. Um, you know, that enabled a whole array of, of, you know, of just like new, new space opportunity. Mostly, like I said, we've seen most of that in low earth orbit, but, uh, absolutely still the case for us in, in higher orbit. I think the difference is it's a lot higher than the, the higher orbits, it's a lot harder to get to. So you have to, uh, have your own onboard propulsion. The rocket doesn't actually get you all the way there.

• 1:08:33Jordi Hays?

  That's what I was getting at. Yeah.

• 1:08:36Speaker 02

  Yeah. So in lower orbit, the rocket just drops you off where you want to be. And you deploy satellites and there's satellites in, in lower orbit that have no propulsion, uh, extra propulsion onboard. I don't know. They don't need it. Um, the, we are quite the opposite. So you get dropped off in this transfer orbit, but it's really on us and any other satellite that goes to GEO to do the rest of the propulsion ourselves, uh, and, and get ourselves the rest of the way up to GEO. So that is where we had to really design the whole satellite system around this electric propulsion system. We use an ion thruster, very high performance. Um, that allows us to, you know, essentially, um, have all the fuel onboard that we need

• 1:09:17Speaker 02

  in the size of, of a couple of tanks that, that are basically look like, you know, a couple of scuba tanks. Right. It's just like that, that size of tank, that much xenon gas, which is the propellant. And we can actually get all the rest of the way there up to GEO. So, um, you know, between, between that and if there's sort of more recent technologies, I think what we're doing today just wouldn't have even been possible technically until. Um, you know, coming when around the time we started the company eight, nine years ago. Um, because you, you really had a few of these pieces coming together, including the, the uh, electric propulsion. So yeah, it is, it is a, it is a more challenging orbit to get to for sure.

• 1:10:01John Coogan?

  Interesting. How, how did you get into this? I actually don't know your background before you started the company.

• 1:10:08Speaker 02

  Uh, I'm, I'm an aerospace engineer. I'm a space guy. I've been a space guy since I was a kid. Did my degrees in aerospace engineering, uh, worked on some big satellite programs. Uh, worked at, you know, a couple of the big defense contractors, which I will remain, you know, remain nameless for this, but spices say, learned that was, you know, not what I wanted to do with the rest of my life. It's working at the big, uh, defense primes and, you know, seeing how they operate. I think there's also, um, you know, there's something there that, that we just, we gotta fix, you know, we gotta fix for the country or we're gonna be in certain trouble. So,

• 1:10:44John Coogan?

  Yeah.

• 1:10:44Speaker 02

  Um, no better way to do that than, than starting your own company.

• 1:10:47John Coogan?

  Yeah, we talked to Ian Cinnamon over at Apex Space and he was talking about building a satellite bus or a platform for low earth orbit satellites, kind of, uh, almost acting as like a supply chain partner to speed up, uh, you know, uh, delivery to low earth orbit, like smaller companies that want to get going. Uh, you started the company so long ago. I imagine that that thruster is, is in-house. You built all this. Are there any other partners other than SpaceX that have been helpful to you as you've built out or, or what does the modern space economy and, and landscape of partners look like as someone's building a company like Astronis?

• 1:11:27Speaker 02

  Oh, that's a great question. Um, so true. A lot of these, a lot of these pieces were not in place when we started the company. Um, but as these pieces come along, we absolutely take advantage of them. So that includes, uh, you know, more rockets coming online.

• 1:11:42John Coogan?

  Sure.

• 1:11:42Speaker 02

  Um, you know, some of them have, have, have, have, um, more, uh, what we call Delta V. To to get to the to the higher orbits. That also includes some of these transfer vehicles. So we call it, you know, orbital transfer vehicles. So like impulse space.

• 1:11:57John Coogan?

  Impulse.

• 1:11:58Speaker 02

  Uh, for example, um, you know, no questions. Those things come online. We can, we can take advantage of those and use that uh to really to to, I mean, not to benefit us, but to benefit our customers, right?

• 1:12:10John Coogan?

  Totally.

• 1:12:10Speaker 02

  We can get a satellite there faster. They get the, you know, faster time to market. They get the spacecraft and their service that much faster. Um, if they uh, um, you know, if if if they come online and and do the the kinds of things that we're talking about. Uh, the orbital transfer vehicles, they may have more fuel on board, which means a longer life to the satellites. So a lot of these, there's, there's a lot of great opportunity to, you know, come in and and add pieces to the to the ecosystem for sure.

• 1:12:39John Coogan?

  Are you expecting Starship to change the business? Um, I know Starship's gonna be able to dump out like way more mass in LEO, but uh, does it also make to get, does it also make getting to GEO easier because it's just a bigger rocket?

• 1:12:54Speaker 02

  Um, well, it'll, it will, uh, I believe it is is heavily LEO optimized. So using it, we will most likely, it's, it's not strictly necessary. We, we, we don't have to do this, but um, we will most likely you want to use one of these orbital transfer vehicles.

• 1:13:10John Coogan?

  Sure.

• 1:13:11Speaker 02

  And I think that's, that's actually like part of the genesis of of, you know, why Tom started impulse space was he saw this like, uh, you know, this, this real need there. Um, but uh, it will result in lower launch costs, right? I mean, which just really benefits everyone. I, I, I think it's a huge, um, it's gonna be a huge boon to the, to the industry. Uh, and, you know, I, I'm very much looking forward to, to, uh, to it flying, yeah.

• 1:13:40John Coogan?

  Can you talk a little bit about uh, how a modern telecom company delivers internet? Because I imagine uh, Chungwa Telecom has cellphone towers and maybe some 5G stuff. And then also maybe now they have GEO satellites and those plug into the rest of the system? Or or are they, or are they trying to specifically create like? We're going to sell you a separate product that's a satellite dish that will interface with this geo internet product and it's like a completely different line. Just like, you know, I have a Verizon plan on my iPhone. I also have a Starlink terminal for when I travel. They're two completely separate products and networks and bills.

• 1:14:22John Coogan?

  But how are the telecoms thinking about providing kind of a 360 experience to the customer?

• 1:14:30Speaker 02

  Yeah, so for a telco, we are providing what we call trunking and backhaul, right? So trunking is exactly what you'd imagine, a giant pipe that allows them to bring, you know, huge amounts of data, pipe, huge amounts of data from point A to point B. And then backhaul is, in their case, imagine you have cell towers out in remote areas and you need, those cell towers are acting like any normal cell tower and to the end user, they don't know the difference, right? They're just, their cell phones connected whatever cell tower they're the closest to. But if the cell tower is in a remote area, it doesn't make sense to run a fiber line to that cell tower. And so you need to do that backhaul link, that is, connect that cell tower to the

• 1:15:12Speaker 02

  network through some other way. And satellites are a, you know, a very advantageous way to do that, especially in certain cases. I think what we've seen with a lot of telcos that we work with, like Chongqing Telecom, is they really, yeah, they do see it as a very separate kind of of need and product offering than what people might get at their homes with, whether that be their terrestrial provider or a Leo provider like Starlink. What they are really looking for is dedicated capacity that is set aside for their exclusive

• 1:15:56Speaker 02

  use. And it's on these, what we call SLAs, service level agreements, you know, guaranteed uptimes, where they, and they know it's there whether they are using it or not. It's just always... Guaranteed to be there for them. And then on top of that, you imagine what, I mean, you can just think about what kind, you know, what some of these customers, Fortune 500 customers might want in an enterprise grade offering. It's security. It's, you know, a lot, a lot of the customization. So, understanding exactly what the, the different endpoints of the network are, exactly what equipment is used and, you know, getting to work with us to pick that equipment, if they have a preferred vendor for that networking equipment.

• 1:16:40Speaker 02

  And then really just having this insight and transparency into exactly what's happening on their network at any given moment. So, among other things, they know where their data is going and where it's not going. They know, for example, that their citizen's internet traffic is not going up to a satellite and then landing in some other country outside of their control, where maybe they don't, you know, they don't trust that country. They, they just don't know what's, what's happening to that data. So, that's where we've seen this, this need out in the market for a, a true enterprise grade offering that has this kind of, all these, all these aspects to it. Yeah.

• 1:17:16Jordi Hays?

  How, how do you think about scope creep when you're sending a, you know, multi hundred million dollar, hundred million dollar satellite up into the air? Everybody in, you know, traditional software is familiar. You start building something or you start something out and you're like, oh, what if we added this button or this feature or things like that? I imagine there's a huge incentive to try to scale capabilities and, and offer a bunch of capabilities, but at the same time, like you kind of needed to do. Every ounce matters. Yeah, every ounce matters and there's like one or two things that are critically important for the sort of value of the product.

• 1:17:48Speaker 02

  Totally. I, you know, when, when the, when the customer asks for something and they know that there's a, you know, there's like a hundred million dollar contract there waiting, the sales guys always want to say yes. So.

• 1:18:04Speaker 02

  So you gotta figure out ways to help them say yes to things without, as you said, you know, giving into to this like, um, uh, you know, giving, giving into this temptation to just like customize everything. Yeah. So we have a standard satellite design. We have a few pieces to it that are, that are essentially modular. So, um, you can sort of plug and play a few different things like, like Lego blocks for slightly different customer configurations. Um, but that's it, right? We draw the line there and then there's only so much that we're willing to customize the design and you have to, you know, it's something you have to say, no, like, hey, uh, if, if, if we were to totally customize this thing for you would be, the cost would, you know, balloon way beyond what, what you are, you know, what, what you're willing to pay here. So, um, I, I think

• 1:18:47Speaker 02

  that's, uh, I think this works well for us. You know, we've sold, like I mentioned, a lot of, a lot of satellites of, of this, uh, using that approach. And I think, um, you know, yeah, there's, there's, there's always ways to, to make it work.

• 1:19:00Jordi Hays?

  Yeah. I love the, the, the meme of, uh, you know, the, the sales guy just promised like a bunch of features and the CTO is saying, yeah, of course we can do that.

• 1:19:09John Coogan?

  You want it to be, just be able to go up and back whenever you want? For sure.

• 1:19:12Jordi Hays?

  Yeah, we'll make it happen.

• 1:19:13John Coogan?

  Yeah. Yeah. You want it to land on the moon and then come right back? Yeah. Obviously.

• 1:19:17Speaker 02

  Yeah. A little bit different. I don't, I mean, well, I guess I don't really know in enterprise software land, but I can imagine that happens all the time. And, you know, it's like, um, sometimes they just have to put up with it, but it's a little harder to like, build a totally different satellite design, but physical satellite hardware than to add some extra software features.

• 1:19:40Jordi Hays?

  Yeah, no, I totally get it with the, with software. It's like, okay, you know, this engineering team is going to have to spend, you know, uh, two days over the weekend, like, you know, shipping this, but it just doesn't quite work the same when you're sending nine figure payloads to space. Um, can you talk about, uh, security, kind of like risks in, um, in geostationary orbit versus low earth orbit? Are you far enough away that, that, that it's like, uh, you know, maybe more secure environment or, or less risk? Or are the risks still kind of very real?

• 1:20:13Speaker 02

  Yeah, so I mean, I'm I'm gonna be a little limited in what I can go into here since I do have a security clearance. The the there are different threats to higher orbits and geostationary orbit than there are to lower earth orbit and different different counter different counters to those threats. I think what I would say is that, you know, our plan is and what we're executing on is we're building many of these satellites, we're spooling up our production here, here in this building, to build, you know, many dozen, build and launch many dozens of these satellites, including we'll have on orbit spares, we'll have satellites that we could bring in and and and add to the,

• 1:20:58Speaker 02

  you know, add to the network or or replace if if a satellite was lost for whatever reason. And you actually imagine, I mean, that actually is an easier problem to solve than an undersea cable, fiber optic cable being cut. That fiber optic cable is being cut, you you just think about the difficulty to replace that, you have to actually get, you know, a ship to roll that out over, oh, hold on.

• 1:21:24John Coogan?

  Thousands of miles, right? I I somewhat related to that, but probably something you can talk about. In terms of space junk, we hear these stories about like, oh, the ISS had to dodge some satellite debris. Is is that a problem for you? Do you have systems and thrusters that can turn on if you're detecting something? Or is it clear enough that it's not really an issue at this point?

• 1:21:48Speaker 02

  No, it's true. I mean, it it it occasionally, it's it's much more, it's much more rare in GEO than in in LEO these days, but the orbital, you know, the the orbital, you know, space, like airspace, but space, space, is being actively monitored at all times by the US military. They actually do this, you know, your taxpayer dollars at work, they do this and broadcast to the entire world if they believe there could be a collision between two space objects. And they they call it a conjunction event and you get a conjunction warning. And you on, you know, onboard, like we do have thrusters onboard, rocket thrusters that we could

• 1:22:33Speaker 02

  use to do these evasive maneuvers and get the satellite out of the way if we really believe there was a real risk of some kind of collision there. Like I said, quite rare in GEO, um, not, I mean, certainly not unheard of, but rare for you to, to get one of those warnings. Um, more common in LEO, but that is just becoming a reality in, uh, you know, in the space environment now. I mean, that's just a reality we're gonna have to all deal with.

• 1:23:00John Coogan?

  Makes sense. Uh, speaking of undersea cables, uh, it's been 10 years working on this. Can you take me through what the next 10 years might look like? I know that a geostationary satellite, uh, is mostly, in the case of an island nation, mostly going to act as backhaul between cellphone towers on that country. But is there a future where, uh, instead of going through an undersea cable from an island in the Pacific to mainland America, uh, you could actually do the backhaul, backhaul in space between two geostationary or, uh, satellites? Is that something that's possible even? Or, or I know it might not be as fast, but...

• 1:23:39Speaker 02

  Well, that is the, that is the use of this Taiwan satellite today, actually, that we announced today. It will actually have a couple of different, you know, it will be able to provide service on the island, um, but it'll also be able to be a relay to locations off the island in the case that all their, all their fiber lines are cut and they would otherwise just be totally isolated from the outside world, right?

• 1:24:05John Coogan?

  It seems really, really important.

• 1:24:08Speaker 02

  That is very important. That is a real concern. You can imagine if you were just getting your communications, you know, piped in with these undersea cables and then one day, uh, someone accidentally drags an anchor across, you know, all of them, um, that you would, you could end up very isolated and, and in fact, completely unable to talk to the outside world. It's very scary.

• 1:24:31John Coogan?

  That is very scary.

• 1:24:33Speaker 02

  A very scary scenario for, for a country like that, right? Um, and there's a, and there's a lot, there's a, there are many such countries. That have these concerns now. The world is a more complicated and I would say dangerous place than it was in the past. And so, you know, we have, this is where we have seen a significant demand for this kind of service now.

• 1:24:56John Coogan?

  Do you have any insight into how Taiwan and the Taiwanese government views civil military fusion? We've, we've heard from Palmer Lucky that, you know, every boat that's built in China needs to be able to be built to military specs. Obviously, you're doing a commercial deal here, but how does Taiwan think about that? I feel like in America, if AT&T does a deal, the government's like, or the DoD is like, okay, cool. Like, you know, that's kind of its own thing. Taiwan might have a different positioning, but what is your take on how the Taiwan government views civil military fusion?

• 1:25:31Speaker 02

  Yeah, that's a good question. I mean, this, this is, this is a commercial, this is a commercial deal.

• 1:25:39John Coogan?

  Yeah.

• 1:25:39Speaker 02

  Sure. And it is one of our commercial satellites coming off our, our commercial production line. I think what I would, I think what I would say is that, you know, where we've seen interest from the DoD, it is actually also for these same satellites off of that same production line. They are very interested in this dual-use type of scenario where they actually get to benefit from all the private capital that we've raised. We've invested that into this production capability. So then therefore, you know, we're using it commercially, we're using produce, and then if we use that same production capability to produce satellites for them, then they get a much lower price point than they would otherwise. If they just like, all this investment had come in to stand up a whole new production

• 1:26:22Speaker 02

  line just for a military, you know, a new line of military satellites. So that is where, right? That, that's the benefit of, of dual, of a dual-use technology. Like, they are getting that benefit in a way they just wouldn't otherwise. And I think Places like Taiwan, they saw the, they saw the benefits from that also. They saw our US military contracts. They know that we have designed something that the military is interested, not in some upgraded, you know, super, uh, you know, turbocharged version of what we have today, but, but what we actually have today. And they are, they're basically getting that same thing, right?

• 1:27:04Speaker 02

  So that is, I, I, maybe that's slightly a different way to look at it, but there's definitely, you know, we're, we are definitely seeing a closer, um, you know, amount of overlap of, of our commercial industry and the, and what the DOD is looking for than ever before, I think, in the, in the US. As I'm sure you guys are seeing with a lot of companies you're talking to.

• 1:27:24John Coogan?

  For sure. Uh, I'm a big fan of the moon. I want to go to the moon. I want to be able to listen to podcasts on the moon. Are you going to be able to help with moon comms in the future?

• 1:27:34Speaker 02

  Uh, a hundred percent. Yes. Um, we actually, yes, we, we have an early NASA study contract. We're studying that for NASA. Uh, NASA is going to need every, everything that we have in, like every space service we have for Earth, we're going to need another copy of that around the moon. We're going, moon's going to need its own GPS. Moon's going to need its own comms networks, uh, both, you know, moon to moon, uh, you know, lunar service to lunar surface comms as well as relays back to Earth. Um, there, and then they're going to need all these transportation systems. I think with the moon, the, the most interesting story that nobody is talking about is we have a real space race with China happening

• 1:28:17Speaker 02

  as we speak, and it's very concrete. There is a series of craters on the moon that we know have water ice trapped in them and they're, these are permanently shadowed craters on the lunar south pole. Um, and it is extremely valuable real estate. Like those, that real estate and those mineral rights, if you want to call that. Enormously valuable because you can use that water to create rocket fuel, which you can use to then use the, uh, have the moon be this, um, this stepping stone to other places in the solar system. And whoever gets there first and really decides, we're going to actually, we're not just going to plant a flag, we're going to, we're going to put down a fence.

• 1:29:00John Coogan?

  Base, yeah.

• 1:29:02Speaker 02

  And we're going to say, this is our lunar property. Like whoever does that first, um, they, there's, you know, there's no reason they to, to not believe they, they will just maintain that forever, for all time, right? I mean, it's currently totally green field. Now, if, if all the nations on earth agree to not do that, which they essentially did through international treaty, I'm sure the US would abide by that. But if China decides to just cloud that treaty and ignore it, and just go land and start grabbing territory there, um, we would be, it would be incredibly dumb for us to, uh, let them charge ahead with that and, and miss out and let them get there first. So,

• 1:29:43Speaker 02

  um, and this is, this is like, I mean, China just landed a new lunar sample return mission that allows them to demonstrate all the technologies needed to essentially do human missions, do other types of, of missions for, uh, for all the things I'm talking about. And honestly, we just, we haven't been talking about it enough. Because we're, we're, we're, we're sort of letting China just go out and do all these things in space without even calling attention to it. I mean, I, I honestly, I mean, I think, I think our new NASA administrator, uh, Jared Isingman, who's going to be absolutely fantastic, I think, I, I suspect he will talk about it once he gets in the seats. We've been waiting for him to get Senate confirmed.

• 1:30:26Speaker 02

  Um, I think you'll see other, uh, folks in the space industry start to talk about it. Because it, it's a, it's a big deal. Like, we need to start getting, um,

• 1:30:35John Coogan?

  Serious about the moon.

• 1:30:37Jordi Hays?

  Yeah. Do you, do you think in some way, la- last question, then we'll let you go. Do you think in some way, you know, calling this, you know, the Space Force, the Space Force kind of like allowed people to not take it at, like, it doesn't, in many ways, I think the name sounds cool, but I think a lot of people didn't feel like it was a super, you know, serious initiative? When it actually, it absolutely is something that, you know, should be mass, you know, continued to be invested in massively and taken more seriously?

• 1:31:07Speaker 02

  Um, oh, I mean, I, you know, I think.

• 1:31:10Jordi Hays?

  And I mean, I mean, more like the broader social media reaction to like, oh, like, you know, great, we have a space force versus no, this is absolutely a new frontier of defense and warfare, and, and it should be taken more seriously than ever.

• 1:31:26Speaker 02

  Yeah, I mean, it's important to, you know, keep in mind the space force in government terms, space force is still very new, right? It was, uh, these things take a while to get established, and, and also, um, you know, essentially to, to really put forward their mandate. I also would argue that under the passive, the previous administration, things were a little muddled in exactly what their, their mandate would be. Um, I think under the Trump administration has been, it's very clear. Uh, their mandate is to counter the, um, uh, all of the, uh, activity and I would say aggression that we're seeing from China in space. And we're going to see them, um, you know, I think we're going to see a lot more from space, from space

• 1:32:06Speaker 02

  force in the near term here. So, um, you know, yeah, I, I think, I think, you know, sort of, I think, stay tuned on that. And then, um, you know, we will also, and I think we'll also see an increasing amount of coordination between our civil space community, NASA, and the space force than we had in the past. And again, that's going to go back, I, I take it back to, you know, what China's doing on the moon. There's, they, they have no, you know, not only do they have coordination, I mean, there's, there's just no divisions at all between their military space, civil space, and even their commercial space. It's

• 1:32:46Speaker 02

  all just one big industry blob of, of activity that's, you know, we can't even draw lines there. So I think to counter that, we are going to see more, uh, operation there. And it, and I think people will start taking it very seriously very soon.

• 1:33:01Jordi Hays?

  Great. Well, thank you for starting the company 10 years ago and for, uh, yeah, congratulations. Congratulations on the milestone.

• 1:33:08John Coogan?

  Kind of a right place, right time story, really, when I think about it.

• 1:33:11Jordi Hays?

  10 years in the making.

• 1:33:12John Coogan?

  10 years in the making. Anyway, uh, this is fantastic. Thanks so much.

• 1:33:15Jordi Hays?

  Thank you, John. Congratulations to the whole team. Cheers.

• 1:33:18Speaker 02

  Have a good one.

• 1:33:19Jordi Hays?

  All right. We have Jordan coming on. I'll be right back.

• 1:33:21John Coogan?

  Perfect. Uh, Jordan, when you're there, welcome to the show. We're excited to catch up. Talk China. There's so much to talk about. You're in the right business. You're here at the perfect time. How you doing, Jordan? Can you hear me?

• 1:33:37Jordan Schneider?

  Yeah, are we on?

• 1:33:39John Coogan?

  We're on. How you doing?

• 1:33:41Jordan Schneider?

  I'm pissed off, John.

• 1:33:43John Coogan?

  What's happening?

• 1:33:44Jordan Schneider?

  I'm not happy.

• 1:33:46John Coogan?

  This is, this is the, you should be celebrating. This is the best time to listen to China talk. If you're not listening to every single episode that you put out, you're falling behind. And so it's gotta be just a bull market in every single stat you're tracking. No?

• 1:34:02Jordan Schneider?

  Except for, except for America. Except for the America stat that I'm tracking, which is the only one that I care about, John. I wanna win. I wanna industrialize. I want a golden age for America. But what we are seeing now is 2015 Warriors era execution of how to lose a trade war.

• 1:34:19John Coogan?

  But what about, uh, reframing it using, to use a metaphor, like imagine playing like a beautiful, beautiful violin concerto on the Titanic as it sinks. Like that would be laudable, right?

• 1:34:31Jordan Schneider?

  Yeah, it's really fun to play a violin until your conductor gets thrown in a van and sent to El Salvador. This is the world we're living in, John.

• 1:34:42John Coogan?

  Oh, no. Uh, well.

• 1:34:46Jordi Hays?

  Jordan, it's great to see you.

• 1:34:47John Coogan?

  Yeah, good. Yeah. Good to have you back. You came on with a bang. Um, maybe we could set the table like, like, how have you been processing the, the tariffs? Uh, have you been on a roller coaster? Is it, has it just been blackpilled the whole time?

• 1:35:01Jordan Schneider?

  It's all the way down. It's all the way down. Look, I wanna believe. I really wanna believe. I was gonna give him a chance. I was sitting there, you know, January 10th, like, look, this guy, he's got some moves. He's got some moves. Okay, he wants to change the way R and D gets funded. He wants to bring manufacturing back. He wants to fight a trade war with China. I mean, like, sure, okay, you can, you can, I'll put in some table stakes for that. But what we're. Can we start, can we start with the, can we start with the research? Please. John, Jordy? Yeah. Let's start with that. Okay.

• 1:35:38Jordi Hays?

  Start with the facts.

• 1:35:39Jordan Schneider?

  Xi Jinping would cut off his left hand for the basic research university industrial complex, which America has, which no other country in the world can hold a candle to. Until 20, until late 2025, where every single good STEM PhD and STEM, uh, and STEM professor who, who can get a job anywhere decides they're fucking sick of this and doesn't want to live their life terrified that they're going to be taken away from their family and their research and you know, they're all their professional opportunities because they got a fucking traffic ticket. And this is the world we're living in now. John, you went to Northwestern, right?

• 1:36:19John Coogan?

  Northeastern, yeah.

• 1:36:20Jordan Schneider?

  Forty, forty visas already.

• 1:36:23John Coogan?

  Yeah.

• 1:36:23Jordan Schneider?

  Forty people's lives fucking ruined because, um, Marco Rubio thinks that it's cool to, um, to pick fights with biotech and CS PhDs.

• 1:36:35John Coogan?

  Yep.

• 1:36:36Jordan Schneider?

  What are we doing here?

• 1:36:37John Coogan?

  Okay, wha- what about? Let's go back to the initial trade war with China led by Trump. 2019 tariffs kind of go in this tit for tat spiral. 34 billion on, on US good, 34 billion on Chinese goods. We were discussing it at the top of the show. Starts with 50 billion.

• 1:36:57Jordi Hays?

  Those are rookie numbers.

• 1:36:58John Coogan?

  Then 250 billion. Um, what is your postmortem on the 2019 US-China trade war?

• 1:37:05Jordan Schneider?

  The 2019 US trade, it was kind of a wash and, and you can sort of write it off because the US economy was growing and we weren't picking a trade war with every other fucking country on the planet.

• 1:37:18John Coogan?

  But is it, is it possible that we land in the same place? And in the next four years, you're like, well, yeah, we can write off the first two trade wars, but the third one's the real bad one, right? Is that possible?

• 1:37:30Jordan Schneider?

  Here's the thing, here's the thing. John, Jordy, tell me about what the risk free rate is and why it matters for our capital investors.

• 1:37:38John Coogan?

  Yes, yes, yes, it's very high.

• 1:37:39Jordan Schneider?

  Have we done that yet?

• 1:37:40John Coogan?

  Yes, we talked about the basis trade. It's not looking good.

• 1:37:44Jordi Hays?

  Well, yeah, Joe, Joe, uh,

• 1:37:46John Coogan?

  Joe Weisberg.

• 1:37:46Jordi Hays?

  Joe was, was talking earlier with, with Tracy specifically about, uh, In the the the U S T bill being potentially the greatest export that we could ever have. And I think that's an interesting positioning. Can we talk about your your audience are is, you know?

• 1:38:06Jordan Schneider?

  Deep state people.

• 1:38:08Jordi Hays?

  No, I was gonna go, I was gonna go towards.

• 1:38:11Jordan Schneider?

  He is by his own definition. He says he's to our cash for the deep state.

• 1:38:13Jordi Hays?

  Yeah, yeah, yeah.

• 1:38:14Jordan Schneider?

  It's not me making it up. This is what his his words.

• 1:38:17Jordi Hays?

  It's great.

• 1:38:17Jordan Schneider?

  Lovers of freedom and democracy. That's what we're encompassing. Okay?

• 1:38:22Jordi Hays?

  Yeah, yeah, yeah.

• 1:38:24Jordi Hays?

  What what's the what's the reaction from your business audience right now? Are they still at a standstill? Is it, you know, we can't make any decision because we don't have full clarity on what the world looks like in 90 days? You know?

• 1:38:38Jordan Schneider?

  Look, it's not, it's not gonna be 90 days. It's gonna be four years because this man likes to be in the headlines more than he likes literally anything else. So he is going to keep doing things that put him in the headlines. He can't take wins. He was handed such a. He was like, yes, yes, he is gonna be in the headlines next month, but it could be because he's fighting with Rosie O'Donnell. Right? And that has a. Please, oh, my God, what I wouldn't do to have him pick fights with Rosie O'Donnell. That is the timeline that we should all be rooting for. We need Donald Trump. If you want to take it all out on me, I'm here. I'll, I'll, I'll, I'll be the sacrificial lamb for America's basic research ecosystem. If you want to pick, if you want to pick a fight with a shitty podcaster.

• 1:39:24Jordan Schneider?

  I mean, like, you know, it's, it's, we've got, we've got a brain drain of America. We got a capital drain of America. We got a geopolitical drain of America because he wants to be buds with Putin and take over Greenland. And oh, by the way, we are selling the best chips we have to China because Jensen spent a million dollars to have a burnt steak at Mar-a-Lago. I mean, it's like, truly, we're just checking off every box of dumb thing to lose this tech war.

• 1:39:50Jordi Hays?

  Yeah, we, we, can you, can you talk about the decision that, that kind of flew under the radar? Was this Friday or I don't even know if it was yesterday at this point, but Nvidia is allowed to export the, what is it? The H?

• 1:40:04John Coogan?

  The H20.

• 1:40:05Jordan Schneider?

  So it's just an infringe trip, which skirts right under the export control regulations. And Biden didn't do it because he's an idiot. And now Trump isn't doing it because he likes getting, you know, people to pay a million dollars to have dinner with him. There is no reason Nvidia does not need the money. It's like $2 billion of revenue. Like they will be just fine without it, but we're living in this timeline where if you, you know, please.

• 1:40:33John Coogan?

  So if it's $2 billion in revenue, then well, it's only $2 billion of AI data center capacity, and that's not enough to build a GPT five level model. And so it's irrelevant. Like those two things can't be the same, right?

• 1:40:47Jordan Schneider?

  Yes and no. I mean, it's like, okay, sure. So like, what are, what are, what are like, uh?

• 1:40:53Jordi Hays?

  Okay.

• 1:40:54Jordan Schneider?

  Like, like, like.

• 1:40:54John Coogan?

  Cause I'm running too hot now, John.

• 1:40:56Jordan Schneider?

  I'm running too hot.

• 1:40:58John Coogan?

  Yeah, I mean, I mean, the, the, the steel man here is that you like, like, yes, you don't want them building super intelligence, GPT seven level models, like, you know, the, the, the project Stargate, the $500 billion data center cannot be built in China. But yeah, take $2 billion, fine tune GPT outputs. It's still going to talk about Tiananmen and you have DeepSeek, which is basically an American model, then or Manus, which is clawed, like vended into China. And that's actually, we were talking to Tyler Cowen yesterday about this. He was saying that this is a win for American hegemony because the Chinese leading models have American preferences baked into their weights at a very deep level.

• 1:41:34Jordi Hays?

  Yeah, I mean, if we're, if we're, if we're thinking that our models are going to democratize China, I mean, that's a, that might be one or two steps too far away from me.

• 1:41:43Jordan Schneider?

  It would be like trying to nail Jello to a wall. Playbook, John, is the way we kind of already are, which is sell all the chips into Malaysia. And if Chinese companies want to sort of run their cloud out of Malaysia and Singapore, then okay, and we can shut it off if and when we just. Decide you want to shut it off, but selling chips directly into China, there's no upside to it. Um, because you're just opening yourself up to this like whole other universe of risks of maybe these $2 billion of chips actually do end up being enough to fast follow and you know, compete with like a, a totally fucked up meta and an open AI who doesn't really.

• 1:42:21John Coogan?

  Don't let a hyperscale hear you say that 2 billion could ever compete with 65 billion in capex. That's ridiculous.

• 1:42:27Jordi Hays?

  Can you break down?

• 1:42:27John Coogan?

  We need to spend 65 billion this year.

• 1:42:29Jordan Schneider?

  65 billion, okay.

• 1:42:31John Coogan?

  They're all spending 65 billion, every single hyperscale.

• 1:42:33Jordan Schneider?

  Let's see next quarter, just what that 65 billion dollar number is going to be looking like. I mean.

• 1:42:37John Coogan?

  Probably higher, probably higher.

• 1:42:39Jordan Schneider?

  I wish, I'd love to, I'd love to.

• 1:42:42Jordi Hays?

  Jordan's, Jordan's not, he's not AGI pilled.

• 1:42:45John Coogan?

  He's so blackpilled right now.

• 1:42:46Jordi Hays?

  His timeline is so extended.

• 1:42:48John Coogan?

  Yeah.

• 1:42:48Jordi Hays?

  Uh, we're, we're talking 20, 2080 at this point.

• 1:42:51John Coogan?

  2080.

• 1:42:52Jordi Hays?

  2080. Uh, I want to, so, so we covered, uh, earlier on the show, the sort of, uh, venture capitalist version of the history of US-China relations. So like sort of high level, you know, trying to, trying to get into the dynamic. There was, um, uh, a few days ago, uh, April 11th, the US told China to request a Xi-Trump call. This was reported, uh, which is sort of a funny, you know, it's just a funny way to go about trying to get a phone call.

• 1:43:19John Coogan?

  I just met you. Yeah.

• 1:43:21Jordan Schneider?

  This is crazy.

• 1:43:23John Coogan?

  Here's my number. I mean, just call, right?

• 1:43:27Jordi Hays?

  Just call.

• 1:43:28John Coogan?

  Just call, just call.

• 1:43:28Jordan Schneider?

  I think we're, we'll just pick up the phone and call.

• 1:43:31Jordi Hays?

  No, but, but talk about, talk about the history.

• 1:43:33John Coogan?

  Troy, this is how, this is how you do negotiations, right?

• 1:43:35Jordan Schneider?

  But this isn't unique to Trump. Like this was the same negotiation that we saw with Reagan, Nixon, Clinton, like, like the, the whole politics of diplomacy have always been extremely convoluted. And there's never been an era where it's been like, oh yeah, this, it was the Democrats that always just picked up the phone and called or it was always the old school Republicans. It's like Trump's just repeating the playbook of the last 60 years of US-China diplomacy, in my opinion.

• 1:43:56Jordi Hays?

  John, have you done a video about, uh, Qian Chexin?

• 1:43:59Jordan Schneider?

  No.

• 1:44:00Jordi Hays?

  If, if not, you should.

• 1:44:01Jordan Schneider?

  Okay.

• 1:44:02Jordi Hays?

  So he, um, is a, uh, uh,

• 1:44:08Jordan Schneider?

  Sorry, let me get the, okay, so born, born in China, came to the US to study at MIT in 1935. He was, got a clearance during World War II, was a part of a lot of classified work, was best buds with Van of our Bush, you know, part of America's missile program in their early days. 1950, McCarthy shows up and blows up this guy's life. He says, you know what? Fuck it, I'm gonna move back to China and proceeds to turn into the father of China's nuclear and intercontinental ballistic missile program. And this is the playbook that we're currently running now, is we're taking all of these smart people and telling them they're not welcome here.

• 1:44:53Jordan Schneider?

  And this is, I, I, I am so sure of it, and it's just like, it's just ripping me up inside that 10, 15, 20 years from now, we are going to see companies founded, we're going to see weapons developed by people who at a sort of hinge moment in their life, you know, 30 some odd years old, they're thinking about where they want to build their life, they're thinking about where they want to start a family, and they see that, you know, this country is not open to them. And, and it's just like, we have this founder cult in, in Silicon Valley, right? You know, the 10x engineer, like, there are going to be a handful of people who are going to end up kind of determining the future of technology and the future of the world.

• 1:45:34Jordan Schneider?

  And we're taking on risk, which we really don't have to, by telling all these people.

• 1:45:40John Coogan?

  So I, I agree with all that. That's not about communication and picking up the phone, but also, also, China, they, they do have TikTok, they do have DJI, they do have Unitree, like, they have the companies already, like, it's not like they're, they're like, oh, we haven't thought to build a competitor to Facebook or Instagram, like, they've done it successfully, like, like, we're, we're in a competition now.

• 1:46:05Jordan Schneider?

  Exactly, we're in a competition, so we can't be fucking around anymore. And we're gonna have four more years of fucking around. And it's, it's just dumb. And like, I still, I still think we're gonna pull it out. Like, I still, I still have faith, you gotta believe, right? But it's just.

• 1:46:21John Coogan?

  We're gonna be sitting here in, in, in six years being like, oh yeah, we can totally sweep that one under the rug, but this one's the real deal.

• 1:46:29Jordan Schneider?

  I really hope not.

• 1:46:30John Coogan?

  We can hope.

• 1:46:31Jordan Schneider?

  I really, I really hope you're right, John.

• 1:46:33John Coogan?

  Yeah, yeah, you should, you should, you should, you should hope that we're right about this.

• 1:46:37Jordi Hays?

  No, uh, but, but talk, talk to me, going back to my original question.

• 1:46:42Jordan Schneider?

  Sorry.

• 1:46:43Jordi Hays?

  Maybe it's not, maybe it's not as exciting for you, but I think it's just interesting.

• 1:46:46Jordan Schneider?

  Okay.

• 1:46:47Jordi Hays?

  Uh, what's up with, you know, the US and China never being able to consistently have,

• 1:46:52Jordan Schneider?

  Communication.

• 1:46:53Jordi Hays?

  you know, clear, direct communication between, you know, the White House and Beijing?

• 1:46:58Jordan Schneider?

  Yeah. Um, you know, I think there's a, there's a really interesting arc of the way that the Chinese government has sort of viewed US-China interaction over the past 15 years in a way that's different for really the second half of the Cold War. So from like, you know, uh, post-World War II Stalin up until really the Cuban Missile Crisis, the US and China, the US and Soviet Union weren't really talking. And then you had the Cuban Missile Crisis, people got really freaked out and both countries realized that eh, it actually probably behooves us to be able to interact with each other

• 1:47:39Jordan Schneider?

  in a more straightforward way as opposed to, you know, finding like business people and like, you know, ambassadors handing people notes because we don't have like good, uh, sort of leader-to-leader, uh, uh, interactions. And then, um, even though there were scares, uh, for the rest of the, the, the Cold War, at least there was enough of a kind of, uh, uh, muscle memory in terms of these two, uh, countries interacting with each other that, that people started to get a better understanding of, uh, uh, you know, what strategic intentions were. So the Chinese government, I think, like, first off, does not price in the risk of

• 1:48:20Jordan Schneider?

  an accident turning into something really horrific, nearly as much as the Soviet Union did over the course of the Cold War. And they see that, you know, the, the Biden administration and the Trump administration, uh, and, and the Obama administration as well, like, understand. And that this is can be a scary thing and they see it as a shit to negotiate with. So if you're if you're not worried about like, you know, planes hitting into each other and you think you can get something out of, you know, setting up like regular dialogues or calls or what have you, then, you know, you're gonna you're gonna put it on one of

• 1:49:01Jordan Schneider?

  your five asks. But the the sort of the other thing that I think, you know, she's looking at when he saw what happened to Zelensky and the and the White House, right, is like, you know, you, I think the willingness to assume like interpersonal risk is a lot lower for that system. And they want to have stuff a little more baked out before you kind of like do one of these like leader to leader conversations. So whatever, they'll talk at some point, like, I don't know if they're going to like, end the trade war. I'm not really sure what like the aims are, because it seems like they changed a lot

• 1:49:42Jordan Schneider?

  over the past two weeks and they'll probably keep changing. But yeah, it's just hasn't really been a priority for the Chinese government, because it's a thing that they think they can squeeze us on is is the us wanting to have these conversations to, you know.

• 1:50:00Jordi Hays?

  One of the thing that that's repeatedly come up in our conversations is just the nature of, you know, US tech companies broadly being banned from doing business in China, everything from, you know, Google to Meta, others. And a lot of the people that come on our show are not even allowed to travel to China because they're in anything defense, aerospace related.

• 1:50:23Jordan Schneider?

  Sure.

• 1:50:24Jordi Hays?

  On the ground in China, do they do does the government or the military, I don't even know how much this information would ever appear online and available, do they laugh at us for allowing TikTok and DJI and Unitree? Like, do you think it's silly? It's like you're tariffing our, you know, cheap toys, but then you let us sell, you still let us sell DJI drones, you still still let us distribute brain rot to 100. Like, is it a funny thing to them? Because to me, it's a terrible irony in that, like, we just can't get a TikTok ban across the line, or we can't. We haven't been able to get them to sell it yet. And, and again, like these sort of industries and products that have, you know,

• 1:51:06Jordi Hays?

  extreme national security risk, you would think those would be the easiest things that the United States could make a sort of collective decision on that would. So I'm curious what their sort of like reaction to the silliness of it all is.

• 1:51:20Jordan Schneider?

  Oh, yeah. Laugh, laugh, laughing their way to the bank. I mean, like, look, there, there, there is, there is definitely like some trade war shit that needs to be happening. Step one, TikTok and DJI, you said it yourself, Jordy. I mean, it's like, I would love for there to be a like really wonderful globally competitive supply chain that America can create the sort of autonomous drones that Ukraine has been able to, to, to leverage. And even they still have to buy stuff from China because there's not enough, there's not enough there, there ex China. But instead, we're kind of going in a very different direction. So, yeah, I mean, it's, you're, you're totally right, Jordy.

• 1:52:03Jordan Schneider?

  It's just, there's, there's not a strategic vision that we're seeing out of this political moment. And I think there, you know, not to put China 200 feet tall, like, there's definitely things that they're not, they're going to do wrong and their economy isn't perfect and they're sort of like techno industrial complex is not perfect. But they figured out a lot of this manufacturing stuff.

• 1:52:33Jordi Hays?

  And, yeah, so, so the one thing that's clear, very, very good at manufacturing. I don't think anybody disagrees on that.

• 1:52:41Jordi Hays?

  How do you judge, like, what do you look for to understand? You know, if China was really suffering right now from these new tariffs, we wouldn't know about it, right? It would be, it's sort of like, it's not like they're going to come out and start saying, you know, talking to the people publicly and saying.

• 1:52:58John Coogan?

  We can see it in their stock market, right?

• 1:52:59Jordi Hays?

  Yeah, sure. But, but like, there's a lot of information control in the same, in a way that that's not necessarily the case. Like if a US business. Business is being affected by the tariffs. That person's gonna go on LinkedIn and TikTok or they'll come on TVP and they'll say like, yeah, my costs are up. You know, whatever, 300% and.

• 1:53:18John Coogan?

  Unless they're coping really hard.

• 1:53:19Jordi Hays?

  Yeah, but but how do you try to judge the the actual impact of the tariffs in the in the domestic? You know, you know, the the.

• 1:53:31Jordan Schneider?

  Yeah, I see what you're saying, Jordi. I don't think it's as it's as opaque a system as like, you know, the CIA. And different corners of the US government were having these like big drawn out debates in the 1960s, 1970s and 1980s about how large the Soviet. Economy was because they were saying like, okay, let's say they percent they spend 10% of GDP on.

• 1:53:58Jordan Schneider?

  You know, on defense. So like, you know, what's the base that they're doing this off? And it was really hard to figure out how big the how big the Soviet economy is. I don't think it's that hard to figure it out today. As as John said, we have trade data. We have the stock market. We have, you know. Quarterly earnings from from all these companies. And I think there's like enough out there of like chatter of people saying like, oh, shit, I got laid off because of the trade war. That like, you know, you'll you'll you'll be able to pick up the the atmospherics just in the same way you you can by having. You know, reading Joe Weisenthal's Twitter feed, right?

• 1:54:36John Coogan?

  What about what about kind of the the new ally ships that are building? I mean, you obviously you were very upset about like, you know, America kind of potentially frustrating. Trade partners like Canada, UK, Australia, France, like we shouldn't be pushing them away. Some of that subsided. It still feels like in general, if we're going towards a more bipolar world and you're and you are creating some sort of broad Western alliance, like. You're gonna put the five I's together. You're gonna put NATO and America together. But who is who's on China's side? I've been worried about like a China, Russia, Iran coalition forming.

• 1:55:16John Coogan?

  Are there other countries that are starting to flip into Chinese allyship more seriously post trade post trade war?

• 1:55:24Jordan Schneider?

  Yeah, I mean, this is a really interesting thing is like the reason that China wasn't really able to capitalize during trade war number one is because they were feeling their oats and they thought they could still do wolf warrior diplomacy and bully other countries around, even though Trump was sort of like shitting on them in their own way. And it'll be fascinating over the next few years to see whether or not they take, they sort of learn from that experience and take a more conciliatory approach and, you know, don't try to like, you know, nickel and dime these countries in order to really potentially win them over. But, you know, Southeast Asia, like, okay, I guess like we did 76% tariffs on Vietnam

• 1:56:09Jordan Schneider?

  and then we cut it back, but like, who knows, we're gonna go with that. But it's two things. It's like, are we going to go to China or are we just gonna cut trade deals with every other country X the US so that we're going to, you know, the sort of like the free world X US is going to have this, you know, thriving inter, you know, thriving trade ecosystem, which we're just not gonna benefit from because those supply chains won't run through the US or our consumers won't get to benefit from or our exporters won't get to benefit from. So, you know, there is like, there are a lot of like intellectual risks here. There's the intellectual risk of like thinking China's 100 feet tall and, you know, we're

• 1:56:54Jordan Schneider?

  shot and there's no way we can compete with these companies. But there's also the intellectual risk of thinking America's 200 feet tall and we are like, you know, we're still only 25% of global GDP and that's, that's a whole lot of GDP out there, which is gonna be thinking about what to, you know, what to do and who to trade with and where to invest. And so

• 1:57:15Jordi Hays?

  I have a question. What is the, so China blocked orders of Boeing aircraft to their national airlines. Are we gonna see They're gonna go Gulfstream. Yeah, that would be cool. They prefer the G650. Do you have, do you have any sense of, I'm assuming that China's been aggressively trying to clone various, you know, US commercial aircrafts for years. Is that as advanced as the automotive industry in China or is it, is it a ways behind?

• 1:57:54Jordan Schneider?

  Yeah, it's interesting. That one's kind of been like the final frontier.

• 1:57:59Jordan Schneider?

  It has been a clear national priority for a very long time. And jet engines are really hard, apparently, even if you layer on industrial espionage and like an enormous amount of state support. My guess is that like the reason it has taken so long for Comac to to get its shit together and and build competitors to Boeing and Airbus is is probably the fact that it is state owned and there are just like poor incentives going on versus the sort of free market, free for all that you saw on the electric vehicle industry just attracted better talent, more capital.

• 1:58:36John Coogan?

  Phone companies moved over into cars and they're not doing that in planes, right?

• 1:58:41Jordan Schneider?

  Yeah, so I think there's, you know, and there's like relatively limited upside. It's like a national prestige product as much as it is a capital, you know, a capitalist endeavor to make these jets. So we'll have to see. I mean, I'm like, look, if they can't do it, the orders will just go to Airbus. And like, that sucks, but it is what it is. And I think, you know, these, that industry in particular, there's so much like geopolitics baked into it that I'm not shocked that that was that was on the, you know, first list of like things to things to start cutting from a US import perspective.

• 1:59:19John Coogan?

  Last question, you seem pretty blackpilled. How's Dylan Patel doing? Have you done a wellness check? You seem pretty blackpilled when you talked to him a few days ago. What's his mindset like right now?

• 1:59:31Jordan Schneider?

  I wish him the best. I don't know. I think he's, it's just, like, like, I thought AI would be our out.

• 1:59:43Jordan Schneider?

  But if we're gonna sell them all the chips and we're gonna screw up the like American capital base that we're banking on to fund all this AI expansion, and we're gonna throw away the AI diffusion role such that like the chips are actually just gonna end up going to Saudi Arabia and Qatar and Brunei, then.

• 2:00:06Jordan Schneider?

  You know, it's, it's just, we're just taking on risk left and right. And like, we might be able to pull it out. But it's, um, uh, it's, it's, it's hard to watch. Thank you for letting me have, turn this into the Jordan Schneider therapy session.

• 2:00:22John Coogan?

  We're gonna leave you with a white pill one way or another.

• 2:00:25Jordi Hays?

  Oh, I just had a question of like, where does, where does the Middle East really sit in all of this, right? It feels like in many ways, uh, you know, we cover business and technology. In many ways, the relationship between the US tech industry and

• 2:00:45Jordi Hays?

  Saudi Arabia, you know, Qatar, UAE is, you know, thriving just due to the, the capital flows. But, you know, how do they think about even picking, you know, I haven't seen themselves inserting themselves into the story over the last couple of weeks. And I'm sure that's for good reason. Uh, but I'm curious how you see them as a player in all this.

• 2:01:08Jordan Schneider?

  Yeah, it's interesting. I feel like, I feel like their diplomatic system like knows how to play the kleptocracy game much better than Canada or Europe. Uh, you know, they got their reps and sets when it comes to dealing with, you know, family dynasties and whatnot. So they're smart to keep quiet. I think, um, uh, you know, the, the diffusion rule that the Biden administration put out at the very end was really a play to force them to pick sides. And basically the, the deal was like, look, if you want access to the future, if you want access to compute, then you really gotta play ball with us and you gotta play ball with our AI cloud providers and our sort of like broader

• 2:01:52Jordan Schneider?

  defense ecosystem. And if you're gonna, um, you know, have too much China AI in your, um, you know, in your national bloodstream, then we're gonna reconsider whether or not we're gonna let you, um, you know, buy chips and access our models and whatnot. So we'll see, this is a regulation, which I think is gonna be a really interesting bellwether. Because it was a very clever, um, uh, hinge to sort of. Force the Middle East governments and the governments and the money that came with that to invest in the Western as opposed to the Chinese technology stack. And look, if they're, if they don't love what they're seeing, maybe they'll be more excited to, if they A, don't love what they're saying and B, we, we take away the jack that we had

• 2:02:38Jordan Schneider?

  around them, then you know, you could see them starting to wiggle in other directions and, and take, and take side bets on a pot that they may have had to have gone all in with us. If it wasn't for all the craziness we've seen over the past few months.

• 2:02:53Jordi Hays?

  Got it. Very last 30 second question. How real do you feel the yield coming out of TSMC Arizona is, or is it marketing to the admin that, hey, we're doing what you want? And Nvidia coming out and saying they're going to make blackwell chips in the US, you know, it's hard to judge whether, it's hard to understand how real it is when, when, you know, we know that people get excited about, oh, we're going to produce $500 billion of, of blackwell chips in the US in the next five years. I think is what they were saying, which sounds amazing, but in this current dynamic, when there's so many, so many different conflicts and

• 2:03:37Jordi Hays?

  so much on the line, it's hard to know what's marketing and what's like actual, you know, you know.

• 2:03:44Jordan Schneider?

  Yeah, it's a, it's a good question. My, my rule of thumb is like, you can't lie to the SEC. So just like, wait for the filings. But look, there, everyone's, everyone's trying to figure out how to get on this guy's good side. And maybe this is something that might work. So, uh, you know, I like, it's, it's, it's an interesting sort of like policy trade off. Like, would we rather have cheaper AI hardware that like Microsoft and Amazon can buy? Would we rather have it be in the US? I mean, like if it, if, if the sort of pressure is forcing more stuff to be built in America, like there are pluses and negatives.

• 2:04:26Jordan Schneider?

  From that, especially if we're doing like accelerated timelines and like the prices are going up. And I think this is applies to TSMC as much as much as it does lots of other industries. So look like they're like they're more pot committed than almost any other, any other company in the world. And they don't really have an out for, for this. So they're gonna do everything they can to, you know, make, make Arizona work and make the relationship with this administration in this country more broadly work. But I'm almost more concerned about the other, the other companies who don't have as much money to burn. And, you know, have other options when it comes to setting up manufacturing plants and finding kind of like end,

• 2:05:06Jordan Schneider?

  you know, and end users to sell to that are just gonna look at what they're seeing now and like, nah, we can, we can, we can open that up that playbook again and see, see what else is, what other countries and locales are on the agenda.

• 2:05:20Jordi Hays?

  All right. Well, fantastic.

• 2:05:22John Coogan?

  Having you spirited debate. We'll figure this out. We're, we're built different. America's gonna be fine. Don't worry about it. Okay. Another thousand year reign. It's all good. Just relax. Just, just put out great podcasts. Cash in while you can, since China's in the news, tell people where they can find China Talk. Give the pitch.

• 2:05:44Jordi Hays?

  China talk.

• 2:05:45John Coogan?

  China talk media.

• 2:05:46Jordi Hays?

  China talk.

• 2:05:46Jordan Schneider?

  China talk media. Go to China talk. One word, your favorite podcast app.

• 2:05:50John Coogan?

  Yes.

• 2:05:51Jordan Schneider?

  I promise you, I'm not that negative most of the time. It's like 80, 20 good vibes.

• 2:05:55John Coogan?

  There's some great stuff on there and we appreciate you coming by. Yeah. Activate golden retriever mode. Be a little bit more positive and.

• 2:06:05Jordi Hays?

  All right. We have another guest. We have another guest.

• 2:06:08John Coogan?

  No, no, no, that is not family friendly. Get out of here. We'll talk to you soon. Thanks for stopping by, Jordan.

• 2:06:14Jordi Hays?

  Bye, Jordan.

• 2:06:15John Coogan?

  This is great.

• 2:06:15Jordi Hays?

  I missed, I missed that completely.

• 2:06:18John Coogan?

  Uh, yeah, he did a, he did a little, uh, little squirt gun to the head.

• 2:06:23Jordi Hays?

  Oh.

• 2:06:23John Coogan?

  Not good.

• 2:06:24Jordi Hays?

  Never.

• 2:06:24John Coogan?

  Not, not family friendly on this show. Anyway.

• 2:06:27Jordi Hays?

  I'm gonna hit the sound effect.

• 2:06:28John Coogan?

  We got, we got Aaron Gin coming in the studio. He's written some absolutely banger takes about China GPUs. He's been called the GPU whisperer and there's a fascinating article I want him to break down for us. He wrote this in January 22nd of this year. It's time to build America's cyber nuke. We desperately need a deterrent to stop wars before they start. I want to hear him explain it. Aaron, welcome to the show. How are you doing?

• 2:06:54Aaron Ginn?

  Hey, doing well. Can you hear me all right?

• 2:06:56John Coogan?

  Yeah, yeah, we can hear you fine. Would you just give us a little walkthrough of your background, what you do, how you got to the place you are in today?

• 2:07:06Aaron Ginn?

  Um, that's a good question. As you know, say like the Lord works in mysterious ways. So we actually started this project, it's my fourth company. We started this project actually as a help you leave the cloud, don't be canceled. And so we found out the data centers didn't have like a software stack to help to monetize customers. So they didn't, they, you know, they basically they were mentioned like you're a merchant selling t-shirts and Shopify didn't exist. And so then we started building this and then when the GPU cra started, the data centers were like, we need something to run this stuff. And then we were there. And so we started that four years ago. And so like I can, I can, we never had the right customer in mind. But in terms of like a lot of the other stuff that happened with the space,

• 2:07:49Aaron Ginn?

  I, it just had this really nice merriment of like, I've been working in public policy for over a decade as well. I have a foundation in DC, Public Policy Tank. And I've also been like doing like political stuff on the side. And then it just so happens that like AI is the fastest, you know, regulation in Silicon Valley history. And people view it as if, you know, it's regulated under missile technology law. That's how it's regulated right now. So, so people in DC literally view the Jensen as selling weapons of mass destruction to other countries. And so that's why they use the word diffusion, proliferation, right? Those are nuclear weapons words. So those are, this is not a, this is not like in, in terms of politicians, they don't view this as if you're selling this fun little gaming gear to, to, to different countries.

• 2:08:31Aaron Ginn?

  So, so yeah, so that's how we got into it. And, you know, now we're in, I think, over a dozen countries. We are at 50 data center or something like that, doing hundreds of millions of dollars a year transactions. So,

• 2:08:44Aaron Ginn?

  so yeah, so we think GPUs are going to be everywhere and kind of reached that escape velocity. There's not really much the US government can do about it at this point.

• 2:08:51Jordi Hays?

  Yeah. How did you react to the new Nvidia deal that got announced in the last week? Did you know another two, another $2 billion chips of chips to China? You think it's just

• 2:09:04Aaron Ginn?

  Oh, you mean the H200, they're talking about the the reshoring thing with TSMC and Foxconn? Which one?

• 2:09:09Jordi Hays?

  The first, the first part.

• 2:09:10Aaron Ginn?

  Oh, yeah, the, well, I mean, I, well, I think it's positive, uh, be- because I, I think that the approach that Americans have to understand is that the way that China, uh, and so like I'm, I'm a Chinese exile, my family fled, come to China, we fought for, uh, the KMT and uh, during the Cultural Revolution, half of my whole family got murdered in China and so fled to Taiwan and then here. So, you know, I'm, I'm a, I'm a hawk of all hawks, uh, and then my foundation also broke the story. If you remember the Chinese, Chinese government buying land or the military bases, so like my, my, my policy foundation, like, uh, broke that story. So, um, and like, I, I was telling John that, uh, all like a bunch of like Chinese ambassadors blocked me on Twitter and

• 2:09:50Aaron Ginn?

  because I was like harping on, it came from a lab, it came from a lab, like, sort of, sort of thing, uh, and, and, but anyways, like the, I think that the Americans like, uh, like to think the world works as if Western kind of frameworks and philosophy. And, and a lot of, if you like the history of Chinese and the way that they have accelerated their, uh, innovation curve, which is by the way, like not, we, we sort of treat that in post Nixon era kind of frameworks is like how they, we got schooled. The pattern, the pattern of China has always been to steal technology from other people. And, uh, and so if you look at even how they got the first nuclear weapon, so the way that they got that, and this is just, just a quick side story, because I think it's helpful for, for, uh, the West to understand just how, how they work.

• 2:10:35Aaron Ginn?

  So, uh, if you remember, uh, Eisenhower was asked, would we ever use a nuclear weapon against China to defend Taiwan? And that actually whole story was planted by the Chinese. Because China was trying a Mao at the time. Mao was so crazy that even Stalin was guy, Stalin was like, that dude is fricking nuts and he kills his own people at too much, right? It's like, he was way too far. And, you know, I just do a couple million, he's doing tens of millions, right? So, so Stalin was like, absolutely not, we're never getting any nuclear weapons, ever, right? Because you're crazy. And, and so the Chinese basically invented this narrative, this story, planted in DC, uh, created this line within the State Department that like, well, they couldn't invade Taiwan. And so then got to the media and then I was asked and then the news posted and he said,

• 2:11:20Aaron Ginn?

  yes, we would use a nuclear weapon to defend Taiwan. So then what Mao does, he goes back to Stalin and goes, hey, do you want to have America on your borders? And Stalin was, no, I don't want that, but I don't want to give you nukes. So what I'll do is I'll send Russian scientists to China to just co-develop a nuclear reactor with you, but just don't take my secrets, right? Then five years later, they have a nuclear weapon, right? So they've done that with nuclear submarines. They did that with fighter jets. They did that with SAMs. They did that with aircraft technology. So this is just like a long line of history of like how they kind of work as like a country. So but when you're in an environment when they have 10 times the number of engineers that we do, they have a relatively centrally

• 2:12:04Aaron Ginn?

  organized government that can execute big initiatives, but it's still a highly federalized government. So it's in Shanghai province and Chongqing province, the governors kind of like all work separately, like in America, like they're all they're hyper federalized. But generally they come up with these like kind of big initiatives, big plans. And so when it comes to like GPUs, we have to realize that they are very much closer than we think. Like, like the reason why iPhones are built there is because it's so technically complex to build an iPhone that we can't do that anywhere else. It's not because it's cheap. The cheapest place to build things is Mexico, like it was just by labor hours, but Mexico doesn't have the technical ability to doing that. And so when we have the situation with

• 2:12:45Aaron Ginn?

  GPUs, they have to understand that that it's not just like we can actually protect this technology for that long. The actual modes around the information asymmetry that we have as a nation towards China on the advancement of chips is much smaller than than we think. And I think it's like under 12 months. So if you think they're like five years away, I can be sympathetic to the upwards controls, but if they're under a year, the goal is to win. The goal is to reach escape blocks, like up on Hartmut, right? They brought everyone to Los Alamos not to be secretive is because we had to win, we had to be first, because whoever's first defined the entire era of what nuclear weapons became. And so that and then we actually, by the way, cut off all of our allies too. We took the mathematicians

• 2:13:28Aaron Ginn?

  from Britain. We said, hey, yeah, we'll share everything. And then we made the nuke and then we cut them off. And then they went to go to build their own nuke. So it's kind of the same situation where Building GPUs is actually much easier than the US government thinks, which is why Amazon's doing it, Microsoft's doing it, Facebook's doing it, Broadcom's now a turn into our company. And the second is that their actual ability on the foundry side is much, is more like a year or two behind. So in that scenario, it becomes where we need to distribute our technology, like a Boeing asset, to as many places in the world that wants to take it. Because then that becomes our footprint that we control, that we can continually express and influence the other country. Otherwise Huawei is going to show up and is going to be like, hey, my thing is like,

• 2:14:13Aaron Ginn?

  you know, 80% is good, but it's cheap and I'm not going to cut you off from the most important technology wave in, you know, in the next 10, 15, 10 years. And that's a pretty compelling argument if you think you're another country. And, and so that, that's why I think this reorientation has to happen around where we actually are as a country in terms of how far we are ahead. But also we can take advantage of that because the stuff is like quite easy to deploy compared to like CPU infrastructure and as well as the world wants it. And, and the, the most recent controls are a little bit dishonest because if you, if you go look at the January 15 ruling, ruling, it, it adds Greenland

• 2:14:52Aaron Ginn?

  and Portugal and Poland and Finland and adds Greece and it adds basically everywhere in the world, but 19 countries. So do we really think that Greenland is going to diffuse GPUs to China? No, it's because they have cheap power, right? So it's turned into this like protectionism thing where we're like, we have to protect our companies and like, wait a minute, like I thought this was about China, like, so now we're like doing this to like protect and like isolate. And so one reason why we, we have lost the LLM race on the open source side is because, because we've done stuff like that. And, and I, I think that's putting us again, another disadvantage about another advantage for Huawei. Cause Huawei can be like, hey, I had the leading open source models, China does, it's, it's unquestionable. And now I have a chip that's designed for it.

• 2:15:36Aaron Ginn?

  So like we're putting ourselves in kind of a really difficult position and also a difficult position for Nvidia, because reality is like this is the goal where we have to achieve escape velocity first, like with a nuclear weapon, not like we can hold off this wall and like play these games with countries and just slow them down. In reality, it's like, we just need to win. We need to stop like messing around and trying to do these kind of stupid games.

• 2:15:58Jordi Hays?

  Can you give a hyper abridged version of your, your version of AI 2027? Like, what is hitting escape velocity look like? Kind of like a, a potentially like a white pill? Like, what does winning look like?

• 2:16:12Aaron Ginn?

  Uh, I think America should have the largest GPU cluster in the world as a deterrent. That's what I mean by the nuke button. And that's a game of deregulating energy. They're kind of like the other things that I think are widely accepted. Like, to me, it's all energy should be acceptable. We can build on federal land. All that stuff's great. And we actually need, we need to reshore semis. But I think the way you reshore semis is not randomly tariffing stuff and then providing exemptions when you have a lobbyist that is convincing enough to go to the White House. I thought, I thought we were supposed to be opposed to that as a, but it's not now. So, uh, so we should focus on deregulation and then subsidizing actual development here. Those and giving tax breaks for people to use the Intel foundry or TSMC's foundry to like, like reshore. But, so I think it's

• 2:16:56Aaron Ginn?

  building large GPU cluster in the world. I think it's being the production house for all advanced semiconductor work. But then also having like, so way I'd use that as like a new Monroe Doctrine, that America is not going to rebuild the supply chain for fans and servers or fiber optic cables or anything like that. Like all that stuff, even that is not in China, because China is too expensive to build there. So that's why they put it in Thailand and Malaysia and these other countries. But we can put that in like in Mexico. We can put that, maybe, you know, we're outsourcing prisoners to El Salvador. Maybe we see if they can build fiber optic cables too. So like, we can, we can have a new Monroe Doctrine of like reshoring everything within this hemisphere. And I think that's more of like a reasonable and also quite more achievable task than

• 2:17:40Aaron Ginn?

  just saying everything has to come back into America. And then, and then the, the next part. Relates to open source where we have to just get better at this and we haven't gotten better. I believe because of protectionist measures that were mostly secondary effects. Don't think they were primary operating for that thing, just kind of more of a secondary outcome. But that's going to be how this space wins. It's it's going to be a myriad of models, models being used for wide different purposes, models that are highly specialized. And then kind of a separation between like platform as a service companies, helping run comp models and the infrastructure. And so the infrastructure part, we can't actually win at because we're generally like good at, we're good at. Turning the face, we're good at energy, but we're not good at power, if that makes sense.

• 2:18:24Aaron Ginn?

  But really good at like finding stuff and exploiting it out of the ground or or building different types of energy frameworks. We're not really good at power and and I think that that's where the rest of the world.

• 2:18:35Jordi Hays?

  And power you're defining as like converting that energy source into a, you know, basically transferring that energy into chips, right? And like into the actual, you know, cluster effectively.

• 2:18:46Aaron Ginn?

  Yeah, yeah, but yeah, because you think that like power in our in our country is deregulated and mostly deregulated, say it's highly federalized. So so just because the federal government says you should build power plants, doesn't mean Virginia is going to do it, right? And and that's designed to protect our rights as as a nation, it's designed to protect the rights of a state. But the state ultimately is in charge of these things and has. There's the reason why anything that's not enumerated in the constitution is given to the states. It's because the enumerated powers is designed to protect the states from big actions down as a dual of these things. And that's what's created actually a very stable political environment. And I do think I'm opposed to terrorists in general, but I think people are kind of overreacting.

• 2:19:29Aaron Ginn?

  They think that it's the end of the world and everything's going to be done. I was like, if America is that fragile, like a lot of bad stuff is is going to happen either way. Because it's just not going to be one person that's going to take down our system. Because, you know, I not voted for Trump, but and I don't believe that just from a ideological perspective. But also just the nature of our country, if you look at the history of our country, it's been through worse. And it'll survive because of the system and our ethos that we've built. So so when it comes to like this situation, I think it's, I'll quote a, I'll butcher a quote because he's way better than me, but. Um, I there was a, there was a prime minister in England who used to say that I

• 2:20:10Aaron Ginn?

  and did America is not good primary actor, but an excellent secondary actor. It wins secondary, never wins primary. And, and it's because we don't generally rise to the task because in front of us, we kind of like, go play around Netflix and kind of like mess around for a while and like spend money on energy that doesn't work and you know, kind of basically BSing. And all of a sudden something happens and there were like, we gotta go to the gym. We have to win and we're gonna win, we're gonna be freaking ruthless, right? And, and then we like show up, right? And, and the rest of the world's like, hey, pay attention, pay attention. And we're like, why? Like, there's a new episode of, you know, Love on the Spectrum. So that's what I should, you know, like, and, and, and so, so I think that that's what's

• 2:20:53Jordi Hays?

  Well, I think the interesting, the interesting thing right now is, is, and I'd be curious to get your take here. We, we had Jordan from China talk on just earlier. And I was asking him, I was like, do the Chinese laugh at us that we don't ban TikTok and DJI and Unitree and all these companies that are just obvious national security threats that like you could just end? And it would be controversial, but you know, it's hard to argue. It's, it's genuinely hard to argue in, in favor of allowing these companies to operate here when they wouldn't allow the same companies to operate. I, I want to kind of unpack something, uh, uh, one thing. My sense is that you have a much greater fear of a US adversary like China with superintelligence,

• 2:21:38Jordi Hays?

  with the biggest cluster in the world than superintelligence by itself, right? So like you're, is it, is it true that you're sort of like P doom involves, you know, China winning the AI race and then, you know, using that to exert, you know, power and influence over us and the rest of the world?

• 2:21:57Aaron Ginn?

  It's more of a, it's more like losing soft power of relevancy. I think of it as a, let's think maybe like a metaphor to help like, so let's think about airplanes. So Boeing is a national security asset, right? It exists at the pleasure of the US government. And so it's not, you know, obviously we don't own it, right? But it's clearly if something happened, we would do something. So same with like Swift, right? Same with the US dollar. That's why the bond stuff is the most concerning out of the tariff dramas, the behavior on long-term bonds. Basically, the US liquidity is declining, which is like a very scary kind of thing because we are the default reserve currency. And being pegged with the dollar.

• 2:22:40Aaron Ginn?

  And so the social influence is what creates wealth for America. That being the police of the world doesn't mean, just like where y'all live and where I live, the police aren't here in my house right now. But it's the fact of like they run it. And when we run the free world, everyone gets wealthier, we get more powerful and more meaningful. And we can continue to bring people out of poverty, introduce human rights, all these like great things that I think God has chosen America to be a representation of to the world. And so I view more like, like China is not a kinetic country. And it has kinetic abilities, totally true. But the most meaningful war that China's ever fought is the Indo-Sino war, was a couple thousand people. That's it, in the history of their country.

• 2:23:23Aaron Ginn?

  And they've got proxies, that's true. Not at the scale of Iran, but you obviously know Korea is the biggest proxy and they played a little bit in Southeast Asia. But they're pretty racist as a country, so they don't really consider all the Asians equal. So it's just more who's on the border. Like China is mostly CCP, is mostly interested in preservation and insulation. But that's what they're interested in. And, and, and so because we express a memetic desire to be expansionist, because fundamentally the Western philosophy is expansionist. This is based on Judeo-Christian frameworks about being evangelical and being free orientation. I think it's also what humans are designed to be freely in commerce with each other.

• 2:24:04Aaron Ginn?

  That presents an adversarial view to China. But fundamentally, China, like, like, I'll give you another very, very specific example too. Like the number of amphibian shipping vessels to actually take people from mainland to Taiwan. They have around twenty, twenty or thirty. They're actually capable of crossing that. So if they're planning on invading, you don't do twenty or thirty, right? And the number of military you need is actually

• 2:24:30Jordi Hays?

  Hasn't Palmer talked about, you know,

• 2:24:32John Coogan?

  Yes, even commercial ships are outfitted to serve the purpose of an invasion.

• 2:24:38Aaron Ginn?

  But again, that's asymmetric. So China thinks asymmetrically. They don't think, they think in a manner of, how do I get something to happen towards my favor without ever having to fight a bullet? That has been their entire foreign policy since existing, like the Stalin example, how they got submarines, how they got fifth gen fighters, like how they actually infiltrate Silicon Valley. Like, like they're everywhere in Silicon Valley. That's totally true. They've taken RP. Was that asymmetric or was that symmetric? Asymmetric. Like, so that's the way they think about the world. And so, for example, like Xi had took out Hu Jintao, right, publicly? Why? It's because the way that CCP works is like when it's confronted with a significant adversarial problem, like, like outside of the country.

• 2:25:21Aaron Ginn?

  What typically happens is they replace the president or the premier. And so Hu Jintao was the most logical person to actually come and replace Xi. So he sidelined him. If you look at also, there are some, all of a sudden, there's a bunch of people in the central committee, in the standing committee that have disappeared now. They have gone somewhere. It's because if the history of the CCP is that when it's confronted with a challenge, like Tiananmen Square, someone, all of a sudden, that person just disappears. They get sidelined in the standing committee. And, and, and that is the pattern of how the, the, because it's interesting in the preservation of its party. Does a war increase the likelihood of preservation or decrease like, like it decreases? Like, every war does that. Because you know who's going to win?

• 2:26:05Aaron Ginn?

  So, so they'd rather play asymmetrically because it's more of an assurance that they are going to win. Because we as a country are never good at that. Asymmetric takes advantage of our Western ideas. So I

• 2:26:17Jordi Hays?

  How do you think about American soft power in the context of, you know, the, the two highest profile consumer AI products? That I think are top of mind right now are Manus. And I'm saying that in a very American Manus, Manus, and uh Manus and Date Seek.

• 2:26:37Aaron Ginn?

  Date Seek.

• 2:26:38Jordi Hays?

  Uh, and, and you know, we had Tyler Cowen on the show yesterday and he was basically saying, you know, you know, these companies are basically trained on Western models and by nature of that, they have the sort of Western thought is baked into them and that's some form of soft, you know, soft power for the West.

• 2:26:57Aaron Ginn?

  But I, I just don't want, to go back to the Boeing example, I don't want France to have Huawei gear. I want it to be Nvidia gear because that's an expression of America. So that, that's what I want. And, and, and that, that's, that's the mitigation thing of like, if, if we allow them to continue to asymmetrically take over the world through the, like a new Belt and Road Initiative, the first one failed. It, it, because they, because they couldn't actually fund it as a, as a society and to deliver their products was actually pretty bad.

• 2:27:27Jordi Hays?

  You mean like, you mean like roads that, roads that are, you know, basically cracked in half and like dams that don't work? Yeah.

• 2:27:35John Coogan?

  Belts that would fall apart when you try to pull up your pants.

• 2:27:38Aaron Ginn?

  And, and it's everywhere in Africa. If you talk to, like, I've been to Africa, you can see some stuff behind me from Africa. Like you talk to them, there's, there's, there's cars there with Chinese letters and stuff and they, everyone in Africa says it's garbage stuff that they had to fix locally. So it just, it just was a failed experiment, but they're, they're generally very good at uh this kind of focused manufacturing to then export to create, to create asymmetric influence. Uh, like that, that's their goal. And, and I'm more, I'm more interested in how that sort of relates to AI, how a footprint of Huawei, similar as it responded with, with uh ZTE, that how that would negatively impact our ability to influence foreign policy in Europe or in South America or Africa. Like that, that's more of my concern, not that they're going to invade Taiwan.

• 2:28:23Aaron Ginn?

  I just think that that's like a very American, Western way of looking at the situation when the Pentagon says that it would take the entire. People's People's Republic Army to to take like the entire not not not eighty percent a hundred and twenty percent, including reserve, to run Taiwan if they actually made it. Or would it be easier just to have a Manchurian candidate?

• 2:28:44Aaron Ginn?

  Manchurian candidate, like like it's like like flood the airways with like fake AI, you know, stuff into Taiwan and try to flip a party. There is an entire party dedicated to closer relationships in Taiwan, in the Taiwan Parliament. So why would they invade? Like it's just an American way of responding because it's how we respond. When like someone's like, hey, they punch us, we're like, hey, I want to fricking watch, you know, launch missiles from a frigate and like destroy your country, right? That's like we, the way we think about the world. It it and it doesn't mean that, like, I'm again, I'm a hawk on China. It it is like, what is the enemy? And and I think we are appealing to the enemy, put these export controls and regulating AI, trying to do these proliferation diffusion diffusion rules, treating AI as if it's a weapon

• 2:29:23Aaron Ginn?

  and regulating as such, that enables the man of some the deep seek to to like to like to be prolific, right? I mean, so that's why we're not doing open sources because all these like regulation stuff is happening on on in the West. And China's like, whatever, we'll just diffuse the model and like, you know, everyone go to town, right? Uh, that we won the internet because we are free and open. China's winning AI because it's free and open, not because they care about that.

• 2:29:49John Coogan?

  Well, Mark Zuckerberg wrote like a word, he's he's trying with Lama four. It's been a mixed reaction, but he is trying.

• 2:29:55Speaker 02

  Mixed.

• 2:29:56Jordi Hays?

  What?

• 2:29:56Speaker 02

  Yeah, yeah, yeah.

• 2:29:57Jordi Hays?

  Can you talk about, you know, something I find fascinating is the companies that feel extremely significant right now to US national security, Huawei, you know, the TikToks, Unitree, DJI, they're all private, right? And I'm assuming that that's like, you know, there there's various reasons you'd want to be private. One is they can access plenty of capital, but another obvious reason is that if you don't, all your metrics can be made up. You can be doing all these things. You can be taking all the state funding, right? Like you can just basically directly serve the state in a way that it just becomes much harder. Do you expect companies, you know, not not financial advice or anything like that, but

• 2:30:39Jordi Hays?

  do you expect companies like, you know, Huawei and and DJI and Unitree, all these critical companies to just stay private forever?

• 2:30:47Aaron Ginn?

  Uh, like, sure, I mean, I, I think of it as, again, going back to like, China is such a massive country, it's very federalized. So, think of it as, the Chinese people are very different with CCP clearly. And, and so when China has something that's very successful, like a deep sea phenomena, what happens is that the CCP co-opted. But everything up to that point is China, like the Chinese people. Like, they, they, because we, we, you know, speaking for my dad, Chinese, like, they, like, they're very industrious. Uh, they're very driven, uh, people, it's just part of the mindset. But also, you're very skeptical, it's a very, actually, low-trust society. Uh, similar to like India and some other, uh, Asian countries. And so, like, you know, my dad's in CDs, he doesn't like stock market, like, you know, he doesn't trust banks and stuff like that.

• 2:31:32Aaron Ginn?

  It's just kind of like his natural, like, kind of like framework of the world. And, and yeah, yeah, and so, so, but, but the desire to be industrious is like, it's innate to the, the kind of orientation around, uh, what it means to have a Chinese philosophy. And, and so when the CCP adopts stuff like that, it's like, to get to the next level as a company, you have to get joined in the communist state apparatus. And so everyone who's like a big company is co-opted in. But to say that, and, and this is where it's different than, um, like Lenin's style communism. Is like, is like, they, they, Mao adopted, I mean, a hundred percent opposed communism, but you gotta be fair about what actually happened. Like Mao took that as an authoritarian concept and just pressed it down on the people.

• 2:32:13Aaron Ginn?

  Like, it, it, it's not a, they're not purist in any sense, they're, they're, they're almost like, a bit like rationalists. Like, they, because they, they, like, they want to be powerful and they want to stay in power. And so if the ideology has to change, it will change. Um, and, and so that's where they let many of these successful companies in China that are, you know, okay, as New York Times says, flooding the European markets of cheap goods now, it's like, well, they're flooding our markets of cheap goods. Many of those are done by just Chinese entrepreneurs, like, like, they, they, no state interaction. But anything that's extenuating beyond the state and a meaningful national security, like an industry that is really national security, like, the CCP is utterly in control of that. Um, but, yeah, you gotta, you gotta understand the, the ideology, the, like, where it came from.

• 2:32:57Aaron Ginn?

  Then understand the ideological framework of like, where they want to go with it, rather than treating it as if... But I personally don't believe, for example, that China's interested in spreading communism. And and they don't have a common turn like Soviet Union did to spread communism. Like, they're interested in preservation. And and so that is not a type of a country where you're like, you know, that they're gonna go to war with any chance they get. In fact, they're very hesitate, they're very hesitant to war. Um, and if you read a book, you read a book about like a history about China, there's a common pattern in history of China, which is self implosion. They've done it like four times. Um, so like, they also know that too. Like, it just ends up being where like, so, you know, ah, it's all kind of falls apart, right?

• 2:33:42Aaron Ginn?

  And, uh, and I I love a book, uh, by, it's by Rodney Starnes. He said that, um, China invented gunpowder at the same time as as Europe did. And China put it in, uh, in fireworks to scare off, uh, ghosts. And Europeans put it in a barrel to shoot a bullet. Right? And so so that that it tells you like very industrious, very, you know, um, driven in terms of ethos. But it doesn't always land a plane. And that and that's what I'm leaning into is like, yeah, Huawei will make something cheap. We'll make something alternative to Nvidia. But like, let's like not give them the rope where they're like, you know, America's opposed to proliferation, as opposed to exports, as opposed to open source.

• 2:34:25Aaron Ginn?

  It's like, like you're giving them all the the fuel to be like, come to China, we'll give you AI, even though it's not as good.

• 2:34:31John Coogan?

  Yeah, that that idea of like memetics, memetic rivalry in geopolitics is fascinating to me. Because I don't know if you've read Wang Huning's America's, America Against America. But it was this book that basically, uh, they sent an emissary to the United States. He looks around and he determines that America will implode. And it's it's clearly like their own anxieties about implosion, uh, you know, writ onto the American story. Uh, but America is undefeated and we're not going to implode. The last thing that will happen.

• 2:35:02Aaron Ginn?

  Yeah, it's a it's a close, I think it's closest thing to heaven. Like, you know, it's a great, it's an awesome. My family loves being here and it has been an immense blessing. My grandpa came here with nothing.

• 2:35:12John Coogan?

  Well, this interview has also been the closest thing to heaven. It's been fantastic.

• 2:35:17Jordi Hays?

  Do you have a hard stop?

• 2:35:18John Coogan?

  Do you have a hard stop?

• 2:35:19Aaron Ginn?

  No, I don't. Yeah.

• 2:35:20Jordi Hays?

  Okay, I got a couple more questions. One, what does having the largest cluster, right? This like supercomputer, you know, super weapon and in some ways, what does that actually look like in practice? Is it run by, you know, who who sort of operates it? Is it a network of clusters? What does that actually look like in your view?

• 2:35:44Aaron Ginn?

  Yeah, I would say it'd be run by term of energy, a combination of the NIST. It'd be deployed in a place that's undisclosed and it's used as mostly as training in our own side. Was in our own military on like advancing their own capabilities of understanding what LLMs can do, understanding like how compute can work at scale because like LLMs are again, super cool. We all use them every day, but it's really the paralyzed computing that it changes the way which warfare works. And that when you have the ability to scale that amount of computing power at a single moment, it makes all types of, which mostly is targeted asymmetric sort of attacks on us.

• 2:36:23Aaron Ginn?

  We have to be able to understand like what that actually means at that scale. And so it's not, it's not Stargate that's clearly for OpenAI. It's not like the DoDsec should like email Sam like, hey, can I, can I borrow this for, you know, like, it has to be something that we own, we control, that is like, is part of the people's power. And and the point of that also is a deterrent thing that if you, people will do something bad with AI that is inescapable. It's part of the fallen nature of humanity that we take great things and we apply maladaptive adjustments to it. And and so we have to just be prepared for that. And and what that attack means, I don't think we fully understand yet. We have theories around it.

• 2:37:05Aaron Ginn?

  But I believe that it's going to be some form of attack on our infrastructure that's not designed to handle this form of sort of computing power targeted at us. So it's mostly the use of the deterrent. Um, and it also kind of show our footprint isn't like we are going to be the best at this. Uh, and you're taking a small slice of the, uh, how, how, how the budget can be five trillion. Just to like, say that we're investing this as a country.

• 2:37:30Jordi Hays?

  F thirty five, F thirty five cost about a trillion.

• 2:37:33John Coogan?

  One trillion investment by the United States. Uh, lot less to copy it, actually. Turns out we use to write off all the R and D costs. It's actually a pretty great plane.

• 2:37:43Aaron Ginn?

  Yeah, I, I, I was like, that's seriously, it's if you lean into, going back to the bad Mises thing, and I know you like Gerard. So like, i- i- it's like, it's like, we just lean into so much of like, what China's really, China's really good at. Like, why are we shocked that deep sea captain? Like, literally, like, like, how, look at T machine, look at, like, you said, fire jet, like.

• 2:37:59John Coogan?

  The rate of going one to many, that's what China does best.

• 2:38:03Aaron Ginn?

  Yeah, so, so like, we have to do what we're really good at, right?

• 2:38:04Jordi Hays?

  Yeah, it's actually two trillion, two trillion. You.

• 2:38:07Aaron Ginn?

  Two trillion, wow, geez.

• 2:38:08Jordi Hays?

  Um, uh, I guess on this, one question I have is, uh, again, because this conversation is top of mind. Uh, but Tyler Cowen yesterday was, was very excited about AGI coming in the next couple of days. We don't know exactly what he meant.

• 2:38:24John Coogan?

  Fastest timeline possible.

• 2:38:25Jordi Hays?

  Fastest, fastest timeline, uh, extremely, extremely, uh, AGI.

• 2:38:30John Coogan?

  Well, it's a social network, OpenAI is launching a social network, maybe that's AGI.

• 2:38:32Jordi Hays?

  Yeah, that might be it. But I, I wanna, I, I, like, this conversation's been, uh, tremendously fascinating. I'd love to get sort of your personal definition, how you look at, you know, AGI? And then what your, what your timelines look like, uh, around it.

• 2:38:50Aaron Ginn?

  Um, so I can answer this differently, but I think it's more, uh, honest is that if you don't know what you're looking for from a, uh, primathea perspective, you don't know how to measure it. So how do you measure if someone's intelligent?

• 2:39:09Aaron Ginn?

  Is it SAT? Is it? I mean, is it? Is it? Do they make money? Is it that they're wise?

• 2:39:13Jordi Hays?

  Crack jokes.

• 2:39:14Aaron Ginn?

  People, yeah, the funny, right? And and I think that's where the AGI problem hits a wall, which is like, what am I even measuring against? Like, when when it happens, when every single one of those tests, which are, by the way, just randomly picked out of a hat, and the like eight, like it only met 100% across, and it still doesn't fully work. What do we do? Right? And and I'm that that's the fundamental anthropomorphic question, is which is the metaphysical question of like, this is why it's so fun. I have a background in philosophy and theology. It's like, what does it mean to be a person? What does it mean to actually represent intelligence? And many people who put push ASI AGI, they have a very piss poor understanding, like they didn't read Locke. They don't they don't know who Descartes is. They don't.

• 2:40:00Aaron Ginn?

  Rousseau is a stranger, like they've read some Nietzsche because it's cool in high school, but there's very little understanding about the the longevity and the history of what we have valued as a just a social creature and the evolution of our of our of our culture to say like, what is meaning and purpose and intelligence? And even the epistemology of there's a difference between information, data, numbers and knowledge. Like all those from a pistemological perspective are completely different things, right? Like knowledge is a discrimination of information. Data is a series of numbers. And and if you look at people pushing AGI and ASI, they typically, one, have a very low view of humanity.

• 2:40:41Aaron Ginn?

  Like their their anthropology is like, we're robots, we're a reductionist thing, like we're all biology and and which is like kind of been rejected since the new FPS have fallen aside. And they kind of have like have all those presuppositions built into it. Versus a person like me, who's like, I'm a I'm a evangelical Christian, like I don't have that view of humans. I think that there is an immaterial part of our nature. Uh, numbers are immaterial. Data is numbers. Like, it's pretty logical to believe that like we are ourselves an immaterial. There's something about it. Therefore, I can't actually put it in bits and bytes. So AGI and ASI, I think, is a trope to kind of make an interesting marketing angle.

• 2:41:20Jordi Hays?

  The other thing is, yeah, it's it's marketing and there's there's conflicts and it's hard to find somebody that works in AI. You know, that that obviously is intelligent on, you know, however you want to look at it, that doesn't have at least a $10 million, you know, position riding on AGI marketing, you know, like this, this sort of like, it's almost here, like it's coming type of thing. And so that, that's why I was.

• 2:41:43Aaron Ginn?

  It's not. But like, I just don't believe, it doesn't mean it's not going to be valuable. That's the confusion is that if you create this trope, this red herring, that's not going to be there, you then false flag, build a bubble and it's bad for everybody. I think, I think Ellen's is a, as Founder's Fund would say, is that I have a Star Wars view of the world, not a Star Trek view of the world. And that the technology is a, is a positive adaption of the human capability to extend its arm further, and it only helps humans become more human things. And, and so all of the AGI ASI talk, it's really built on presuppositions of a negative view, a negative anthropology, that is not only been disproven over and over again philosophically and theologically, but it just doesn't bear itself in the science.

• 2:42:28Aaron Ginn?

  Like it, the mind itself is, as an example, you can go back in the 80s and 70s and 50s, there are like, the mind is this, we have fully discovered what the mind is. And then 10 years later, it's like, we don't know what the mind is. Like it continues to expand. And, and I think that relates to, unless you can actually pinpoint and understand what intelligence is on the anthropology side, you're not going to be able to ever measure AGI or have any ASI.

• 2:42:52John Coogan?

  Interesting. Anything else, Jordy?

• 2:42:55Jordi Hays?

  Oh, I'd love to keep going for another hour, but we'll have you back on again soon. This was great.

• 2:43:00John Coogan?

  This is fantastic.

• 2:43:01Aaron Ginn?

  Yeah.

• 2:43:01John Coogan?

  I'm sure we can go way deeper.

• 2:43:03Aaron Ginn?

  I appreciate it.

• 2:43:03Jordi Hays?

  Yeah, this was really fun. Thanks for coming on.

• 2:43:05John Coogan?

  Yeah, we'll talk to you soon.

• 2:43:07Aaron Ginn?

  Yeah. Bye.

• 2:43:08John Coogan?

  That's great. Well, let's rips through some timeline. This might be a world, world record for number of size gongs this, this show. Let's hear it.

• 2:43:20John Coogan?

  Not quite size gong, but close. There's some good sound effects. The soundboard's back in business, folks.

• 2:43:27Jordi Hays?

  Brought to you by, brought to you by our very own Ben. Ben personally recorded these sound effects.

• 2:43:31John Coogan?

  It is his voice.

• 2:43:32Jordi Hays?

  It's his voice.

• 2:43:38John Coogan?

  Well, speaking of founder mode, Sam Altman was in founder's mode yesterday when founder mode yesterday when it broke that OpenAI is exploring a social network arena with AI features. Can't imagine, it's probably going to be absolutely flooded with Studio Ghibli fixtures. But what is your take on the OpenAI social network? Will you be, they're trying to rival Elon Musk's X, The Verge reports. And on one hand, makes a ton of sense to get more distribution, more time in the app, means more use of the LLM.

• 2:44:16Jordi Hays?

  I understand Sam and the OpenAI team wanting network effects. I feel, it feels potentially like a huge distraction to try to go compete in consumer social, which we've just seen time and time again. Yes, they have massive distribution. They're on the home screen of hundreds of millions of people. They have, you know, in the same, the wild thing is, I don't know how many, how many X weekly active users are there?

• 2:44:44John Coogan?

  I think it's, I think it's actually around the same size, like 500 million or something like that.

• 2:44:47Jordi Hays?

  Yeah. So X has the same advantage in terms of launching a foundation model, you know, consumer app as, in many ways as OpenAI does, having, building a social network. I just think it's, LLM seem to be more intuitive to build because you have this sort of black box, the model, and then you have this like easy interface on top versus a social network, which is like, how are you going to seed it, right? Seeding it with 500 million weekly actives from...

• 2:45:15John Coogan?

  Look at the lesson of Google Circles. Like, Google had a billion people using Google every single day to search for things. People did not necessarily want to share their search results into Google Circles. It was this Facebook copycat, it never took off. And Google had every advantage in that race against Facebook when they launched that product, I think in 2010.

• 2:45:37John Coogan?

  The flip side is, I know a lot of people that run great deep research reports. I would, I would probably follow, follow Tyler Cowen on the OpenAI social network. And when he finds a really great deep research report, he's spent 10 minutes waiting for that to come back. And he's put out a deep research report. If he were able to, with one click, hey, make this one public. This is an interesting finding. Or some of the OpenAI friends we talked to who said that they do deep research reports on just what towels I should buy. All right. That was one of the examples, or what, what refrigerator should I buy? Instead of needing to wait the 10 minutes, it's already in my feed. And it's also this curation and discovery of, I'm scrolling and I see Aiden posts. Hey, there's this deep research report on washing machines. I might just click into that.

• 2:46:22Jordi Hays?

  I like the idea of building a social feed into the existing product. Because I would love to, if you have the opportunity to prompt something, find something interesting, share it to a feed.

• 2:46:33John Coogan?

  Yep.

• 2:46:34Jordi Hays?

  That's very interesting.

• 2:46:34John Coogan?

  Yep.

• 2:46:35Jordi Hays?

  I don't like the idea of trying to then build this sort of competing social network with its own.

• 2:46:42John Coogan?

  I agree.

• 2:46:43Jordi Hays?

  Like new, you know, are we sharing, what are we sharing there? Is it, if it, if it's funny, if it's, it's a social feed built on top of the app.

• 2:46:52John Coogan?

  Yep.

• 2:46:52Jordi Hays?

  That, again.

• 2:46:53John Coogan?

  That feels odd. But at the same time, like, right now, the flow is you go into OpenAI ChatGPT. You figure out that Studio Ghibli style is a great prompt for any image you upload. And then you screenshot that and post it on X and say, here's the prompt. Midjourney kind of hacked that by creating the Discord. So you can see what other people in the Midjourney Discord are prompting. You can copy paste it, change one word. All of a sudden, it's a cyberpunk dog instead of a cyberpunk cat. And that gets you started on the flow of prompting Midjourney. I could see that being kind of interesting.

• 2:47:26Jordi Hays?

  Yeah.

• 2:47:26John Coogan?

  But yeah, it'll be very interesting on how this actually gets integrated. But there's already a share button on every ChatGPT chat.

• 2:47:35Jordi Hays?

  Yeah.

• 2:47:35John Coogan?

  Interaction. And I do share them with people sometimes. Hey, I, I, for, for the show, I, I turn this into, you know, some bullet points. Share it with you, you can go right in, you could keep, continue prompting. I think that there's something there. But it could also.

• 2:47:50Jordi Hays?

  Going and purely just trying to beat Elon Musk because you're annoyed that he's suing you.

• 2:47:54John Coogan?

  Yes.

• 2:47:55Jordi Hays?

  Is, seems like.

• 2:47:56John Coogan?

  It could just be like a shot across the bow.

• 2:47:58Jordi Hays?

  Yeah, hopefully there's something deeper there because I actually think it's much easier for X to build.

• 2:48:02John Coogan?

  Yep.

• 2:48:03Jordi Hays?

  An LLM.

• 2:48:04John Coogan?

  Yes.

• 2:48:05Jordi Hays?

  And chat, chatbot?

• 2:48:06John Coogan?

  Yes.

• 2:48:06Jordi Hays?

  Than it is for OpenAI to build a thriving independent social network.

• 2:48:10John Coogan?

  And even though they have the app installed everywhere, it does, like, there is a set amount of time on an app. There's only a set amount of screen real estate for a button. You know, Elon in the X app puts the Grok button down at the bottom by default, but there's only really six slots for there. So if you're putting that Grok button there, that you're taking away from a different feed or messages or notifications, other stuff, there's trade offs here. It could also just turn into an Instagram club where people are just sharing endless Studio Gibblys, ultimately just flexing on each other. And the best way to flex is with a Patek Philippe Nautilus that's from Bezel. Go to getbezel.com. Look at this.

• 2:48:47Jordi Hays?

  Boom.

• 2:48:47John Coogan?

  With the Tiffany dial on the Nautilus. You take a picture of that. Yeah, you buy, you buy a Patek, you throw it through Studio Ghibli filter. It's no longer cringe. You're no longer flexing. You throw it on the OpenAI social network. It's brother behavior. Go to getbezel.com. Anyway. Notion Mail, similar AI company, launching a social network. Now Notion's launching an email service.

• 2:49:12Jordi Hays?

  Management launching email.

• 2:49:14John Coogan?

  We've been talking about this. I was saying I want someone to build a new email client from the ground up with AI at the forefront of that. Because I've been very dissatisfied with the Gemini experience in Gmail. Even just my Gmail experience, I have like four different inboxes now. It's not really filtering stuff.

• 2:49:31Jordi Hays?

  Notion was super quick to launch integrated LLMs within the product.

• 2:49:36John Coogan?

  Which makes a ton of sense on the core product, but then I think that they might be in enough of a founder mode, enough capital in engineering to actually roll this out and make this great. So I will definitely be trying this when it becomes generally available. It might be generally available now.

• 2:49:49Jordi Hays?

  Yeah, and it's an interesting concept. So in the marketing launch email, it says, the inbox that thinks like you. One fascinating thing about Notion is if you're actively using it for project management, life management, business, it has so much context on everything.

• 2:50:06John Coogan?

  Yep.

• 2:50:06Jordi Hays?

  In your life, right?

• 2:50:07John Coogan?

  And that's the scary thing to me because. Like if Google catches up, I have way more data stuffed in Google in Sheets and Docs and Drive. And I don't want to port everything over to Notion because I'm not a Notion daily user.

• 2:50:20Jordi Hays?

  But Notion potentially is a, is a better data source.

• 2:50:24John Coogan?

  If you're a Notion user.

• 2:50:26Jordi Hays?

  If you're a core Notion user.

• 2:50:28John Coogan?

  Totally, totally.

• 2:50:28Jordi Hays?

  So it's an extending feature.

• 2:50:30John Coogan?

  A hundred percent. If you're a builder, I know people that build their whole life on Notion. They have different workflows for every single project. They're all in on Notion. This is going to be a fantastic experience for them. For me, I'm kind of stuck because I'm like locked into Google's ecosystem. I want them to catch up. They're not really doing it.

• 2:50:44Jordi Hays?

  Well, Notion's tool is integrated into.

• 2:50:47John Coogan?

  Gmail right now.

• 2:50:48Jordi Hays?

  With Gmail.

• 2:50:48John Coogan?

  Yeah. So it sits on top of that at least. But I would love to just be able to have my email be processed for me while I'm sleeping on my 8sleeve. So go to 8sleeve.com slash DBPN. Five year warranty, 30 night, 30 night risk-free trial.

• 2:51:01Jordi Hays?

  I'm not gonna lie.

• 2:51:01John Coogan?

  Free returns, free shipping. I, I, I hope I did well because I think I dialed it in. I got to that every day.

• 2:51:07Jordi Hays?

  I had a brutal night.

• 2:51:09John Coogan?

  99. Let's go.

• 2:51:12Jordi Hays?

  There we go.

• 2:51:12John Coogan?

  99. I figured out the routine. I dialed it in. I was like, I'm falling asleep within 30 minutes of the average of the last three days, the rolling average. That's their algorithm. Seven and a half hours of sleep.

• 2:51:21Jordi Hays?

  And autopilot cooked.

• 2:51:22John Coogan?

  Autopilot cooked. I felt great. I feel great today. Nothing like going into a three hour show with a 99 on the 8sleeve score. So go get it.

• 2:51:31Jordi Hays?

  Big numbers. Go do it.

• 2:51:34John Coogan?

  Anyway, I hope you enjoyed our deep dive on China. If you're looking to follow more of the breaking news with China, please go to Polymarket. They have a bunch of great, great markets about what's going on with the Chinese economy, what's going on geopolitically, what's going on with tariffs. You can check it all out at polymarket.com. Anyway, you have to do two pilgrimages in your twenties, going to Japan, going to Switzerland. Neither of those I did in my twenties, but what do you think? Is, are those worthwhile pilgrimages? Have you been to Japan?

• 2:52:05Jordi Hays?

  I've not been to Japan, but I'm still in my twenties.

• 2:52:08John Coogan?

  But you were in Switzerland like four months ago.

• 2:52:09Jordi Hays?

  I have been to Switzerland a bunch. It's my favorite country. That's not the US.

• 2:52:15John Coogan?

  Yeah.

• 2:52:16Jordi Hays?

  By a long shot. It's just, it's a perfect country.

• 2:52:19John Coogan?

  Yeah.

• 2:52:20Jordi Hays?

  It really is. It feels like being, the entire country feels like being on a golf cart.

• 2:52:25John Coogan?

  Yeah.

• 2:52:26Jordi Hays?

  A golf course.

• 2:52:29John Coogan?

  Well, Sam Ross sharing some big news from numeral tax. Q1 was a big year, was a big one here.

• 2:52:34Jordi Hays?

  Boom.

• 2:52:35John Coogan?

  Big in terms of revenue, customers, filings, our team, and of course, pieces of mail received by our virtual inboxes. Here are just a few of the highlights. They three axed their number of customers in Q1 versus Q1 last year. The sales team is crushing quota. They hired 22 new numerals, which is what they call themselves. They opened a new HQ in SF. They announced the series A by Benchmark and they rolled the dice at Shop Talk and they sponsored the world's number one show, TBPN. Thank you for sponsoring us, numeral.

• 2:53:04Jordi Hays?

  Thank you, gentlemen.

• 2:53:04John Coogan?

  And if you are.

• 2:53:06Jordi Hays?

  You guys numeral.

• 2:53:07John Coogan?

  If you have sales tax, put it on autopilot, head over to numeral HQ, spend less than five minutes per month on sales tax compliance.

• 2:53:13Jordi Hays?

  Just do it.

• 2:53:14John Coogan?

  Just do it. This was a funny post by Sam Altman. He says, "Be you, working HFT, shaving nanoseconds off latency or extracting bips from models have existential dread. See this tweet. Wonder if your skills could be better used making AGI. Apply to attend this party. Meet the OpenAI team. Build AGI." And so he's trying to recruit high-frequency traders. Maybe he saw what happened with DeepSeek because they were a bunch of high-frequency guys, right? A bunch of quants. Said, "Hey, time to optimize the models. Let's get our inference costs down." And now he's going to try and pull some people from Jane Street. Jane Street has a monopoly on Dwar Cash Patel ads, apparently, but not for long. Sam's got to buy some. He's got to pay up, get Dwar Cash to start running some job ads because

• 2:53:59John Coogan?

  it's one of the few shows I've ever seen Jane Street advertise on, but it's pretty, pretty, it's working pretty well, I guess. But yeah, this is interesting that the, that the, the next challenge in AI will be, you know, these inference optimizations. The GPUs are melting. We've heard this. The products are growing. They have the product developers. They're in San Francisco. I'm sure they're pulling in plenty of those people.

• 2:54:22Jordi Hays?

  And if you love OpenAI, just take a, take a breather on Ghibli photos. We know you're still doing them. Take a two day break.

• 2:54:31John Coogan?

  Take a two day break.

• 2:54:32Jordi Hays?

  Get some breathing room.

• 2:54:33John Coogan?

  Go rent a Wander.

• 2:54:34Jordi Hays?

  Till they can get some.

• 2:54:34John Coogan?

  Find your happy place.

• 2:54:35Jordi Hays?

  Find your happy place. Find your happy place.

• 2:54:39John Coogan?

  Find your happy place. Book a Wander with inspiring views, hotel grading. Overnight success. Dreamy beds, top tier cleaning and 24/7 concierge service. It's a vacation home, but better.

• 2:54:49Jordi Hays?

  Wander really is an overnight success.

• 2:54:51John Coogan?

  It is because when you go there.

• 2:54:52Jordi Hays?

  When you stay there.

• 2:54:53John Coogan?

  You spend the overnight and you become a success.

• 2:54:55Jordi Hays?

  Yes.

• 2:54:56John Coogan?

  Yes.

• 2:54:56Jordi Hays?

  And every night is a success at Wander.

• 2:54:59John Coogan?

  Um.

• 2:55:00Jordi Hays?

  This stuff on, this stuff on Meta with the FTC is just wild. So.

• 2:55:04John Coogan?

  Yeah, break this down.

• 2:55:05Jordi Hays?

  Meta is in a battle with the FTC and they basically are claiming we're indistinguishable from any other app, which Sheil says is correct. And they pulls a document that they're using TikTok, Instagram reels, YouTube shorts.

• 2:55:20John Coogan?

  We can't have an monopoly. It's a commodity.

• 2:55:22Jordi Hays?

  Yeah.

• 2:55:22John Coogan?

  You can't have an monopoly on oil.

• 2:55:23Jordi Hays?

  Everybody's got a short form video feed.

• 2:55:25John Coogan?

  Yep.

• 2:55:25Jordi Hays?

  Uh, and it's true. Uh.

• 2:55:28John Coogan?

  Convergence across apps.

• 2:55:29Jordi Hays?

  Yeah, just got there. Um, kind of mugging Snapchat by not even.

• 2:55:33John Coogan?

  Including them.

• 2:55:34Jordi Hays?

  Yeah.

• 2:55:34John Coogan?

  But yeah, I mean, it really has been.

• 2:55:36Jordi Hays?

  They include a snap in some other.

• 2:55:37John Coogan?

  There's a, I mean, there's a best practice for building a social app now. I'm sure OpenAI has taken notes if they want to go this direction. Vertical videos, algorithmic feeds, likes, comments, shares, inboxes and messages. And then you add long form, short form monetization, comments and show notes and all these different stuff. And, uh, all these different competitors, TikTok, Instagram reels, shorts, they've all kind of done the best practice across everything. And the platforms have become pretty commoditized, which is one of the big reasons why, uh, people shouldn't be complaining about TikTok potentially going out of the app store because the TikTokers will be able to pop over to Instagram reels, YouTube shorts, go viral with the same content and have a similarly sized business very quickly. So I think when you hear the stories of like businesses are built on TikTok, they will be destroyed.

• 2:56:21John Coogan?

  It's like realistically, most businesses are on all three.

• 2:56:25Jordi Hays?

  It's taken us so long to ban.

• 2:56:27John Coogan?

  And they'll make, and they'll move over.

• 2:56:28Jordi Hays?

  You had time to reduce platform dependency.

• 2:56:31John Coogan?

  Yeah. But if you think they're going to win this case, if you think they're going to lose the case, why don't you go get some exposure on public.com to Meta stock, investing for those who take it seriously.

• 2:56:40Jordi Hays?

  Not financial advice.

• 2:56:41John Coogan?

  Not financial advice. I'm saying you can just do whatever you want.

• 2:56:44Jordi Hays?

  That public is a platform with multi-asset investing.

• 2:56:47John Coogan?

  Yes.

• 2:56:48Jordi Hays?

  Industry-leading yields.

• 2:56:49John Coogan?

  Yes.

• 2:56:49Jordi Hays?

  And there's millions of happy users.

• 2:56:51John Coogan?

  Yes.

• 2:56:51Jordi Hays?

  So.

• 2:56:53John Coogan?

  But speaking of investing, Kyle Harrison quote tweet, someone says, is backing competitive companies allowed now in venture? And shows what's going on at the foundation model level. Sequoia is in four foundation models.

• 2:57:08Jordi Hays?

  Thinking machines.

• 2:57:09John Coogan?

  OpenAI, Thinking Machines, XAI, and SSI. Lightspeed's in four, Index is in two, Tiger's in two, Co2's in two, Andreessen's in five? Five. OpenAI, Thinking Machines, XAI, Mistral, and SSI. Wow.

• 2:57:25Jordi Hays?

  It's a party. It's a party. We got.

• 2:57:29John Coogan?

  It's a party.

• 2:57:29Jordi Hays?

  Six-way party rounds before GTA VI.

• 2:57:33John Coogan?

  It is, it is odd. Like if the model layer's commoditizing, maybe you just want to buy all the commodities up. Buy, buy, buy all the big oil companies, I guess. But maybe they wind up going different directions and OpenAI becomes a social network and Thinking Machines becomes a, I don't know, like B2B SaaS company or something. Who knows?

• 2:57:53Jordi Hays?

  This next post is amazing from MKBHD.

• 2:57:57John Coogan?

  Yep.

• 2:57:57Jordi Hays?

  He is talking about nominative determinism, which we are big fans of on this show.

• 2:58:02John Coogan?

  Love to see it spreading.

• 2:58:02Jordi Hays?

  CEO of Nintendo America, Doug Bowser. Great, great name, strong name. Fastest sprinter of all time, Usain Bolt. COO of Starbucks is Roseland Brewer.

• 2:58:15John Coogan?

  Yep.

• 2:58:15Jordi Hays?

  World record chili pepper breeder is Ed Curry. CEO of Capital One Bank is Richard Fairbank.

• 2:58:22John Coogan?

  Fairbank.

• 2:58:23Jordi Hays?

  BBC weather meteorologist, Sarah Blizzard.

• 2:58:26John Coogan?

  Yep. Underrated is the nominative determinism that people kind of impose upon themselves. Like when I grew up, there was a weatherman named Dallas Rains.

• 2:58:38John Coogan?

  And he named his kids after cities. So it was like Austin Rains was his son. And I forget there was another-

• 2:58:44Jordi Hays?

  That son is now the mayor of Austin.

• 2:58:46John Coogan?

  Yeah, or weatherman, or weatherman.

• 2:58:48Jordi Hays?

  Fake news.

• 2:58:49John Coogan?

  So you can, you can keep your, your kids in the family business by giving them a name that will determine their future potentially. But now I'm gonna deserve some so much fun. Anyway, let's move on to Gavin Baker. He says savage that former Meta AI researchers are explicitly noting on their resumes, they had nothing to do with Lama four. There's a member of technical staff over at OpenAI, joined February 2025 on reinforcement learning frontier research and post-training. And previously, this scientist was at Meta doing AI research and says that they were working on generative AI. Lama two, Lama three have not been involved in Lama four at all. Interesting. I mean, there's been a lot of debate over like, is Lama four oversold?

• 2:59:32John Coogan?

  Is it really that as bad as people say? But this is another data point of like, oh, maybe it's a little bit rough over there. But Zuck's in founder mode. I think he will figure something out. Don't bet against him. Let's go to Amy Wu. She says founder secondaries at the Series A are becoming the norm again. We are back to 2021 fundraising heat.

• 2:59:55John Coogan?

  I thought you were gonna go size gong on that, went with founder mode.

• 2:59:57Jordi Hays?

  We actually don't have size gong on here yet.

• 2:59:59John Coogan?

  We don't, we don't. Well, size gong for all the Series A secondaries that are happening.

• 3:00:02Jordi Hays?

  I just think this is one of those things that's controversial, but never default bad. I think it just comes down to sizing and attraction.

• 3:00:13John Coogan?

  Yep.

• 3:00:13Jordi Hays?

  Um, I don't think there's anything wrong with founders

• 3:00:17John Coogan?

  Yeah.

• 3:00:18Jordi Hays?

  selling a few hundred grand of secondary.

• 3:00:20John Coogan?

  I mean, there are, there are plenty of founders.

• 3:00:22Jordi Hays?

  It's not gonna change how they approach the business. It doesn't, it's not like they're retiring. I think some, you know, when we did in 2021, the secondaries that were happening were on another level. Where it was, you know, a founder selling 50 to 200 million dollars of secondary. And it's like, okay, that's like an extremely material exit.

• 3:00:44John Coogan?

  Yep.

• 3:00:44Jordi Hays?

  And they're gonna- By default, being a very different mindset after that point.

• 3:00:49John Coogan?

  I mean, the the CoreWeave guys sold, I think, like a hundred million or more. I think like eight or nine figures of secondary before the IPO. CoreWeave's still trading at forty bucks a share, like eighteen billion dollar company, like seems pretty stable. It hasn't sold off like crazy.

• 3:01:06Jordi Hays?

  But it's, no, John, my dear John, it's down.

• 3:01:13John Coogan?

  I thought it was up and then down. I went lifetime, CoreWeave.

• 3:01:18Jordi Hays?

  Oh, okay. Sorry, sorry, sorry. I was looking. Yeah, yeah.

• 3:01:20John Coogan?

  No, no, it's down seven percent today. Like, it's not, it's not having a good day, but but if you look at the year, it priced at forty.

• 3:01:26Jordi Hays?

  I was confused.

• 3:01:27John Coogan?

  Sixty and then it's down at forty. Like, it's like, kind of in the trading range. It doesn't feel like a spack. It's like, oh, it's down eighty percent.

• 3:01:34Jordi Hays?

  Meant to be priced at around.

• 3:01:35John Coogan?

  Sixty. People were saying it was going to be a thirty billion dollar company. It's a nineteen billion dollar company. But that doesn't sound, but that doesn't reek like, oh, the secondary, like, poison this. Like, they're not taking it seriously. Like, I don't know, at least not yet. We'll see what happens. But I mean, the other thing is that, like, there are founders who are clearly doing their life's work. They're, you know, years into building the business. It's very serious business, makes revenues, even maybe some profit, and they come out to do a series A later. And then, yeah, there is some secondary, but for life, for lifestyle reasons, maybe they have kids, maybe they need to buy a house. Like, there's a bunch of different reasons why, if you don't have a high salary, great credit as a founder, like, you might need some secondary to pay for that. So, mixed bag, all depends on the circumstance, but congratulations if you sold a bunch of secondary.

• 3:02:19John Coogan?

  Signal says, every visual medium from concept art to fashion design to advertising to architecture is now downstream of text prompts. Remarkable. Yeah, it's true. This is just a good point.

• 3:02:30Jordi Hays?

  Been using, uh, Weissman using ChatGPT to, like, imagine, uh, interior design stuff around the house. It's like, it's not perfect, but it's doing maybe seventy percent of what you would hire an interior designer to do in the early stages. Right? Everything other than sourcing.

• 3:02:51John Coogan?

  Yeah. Ryan Peterson sent me a, like, a meta poster, which was, uh, He generated a Flexport poster ad for every single city that they operate in. So he had like 50 posters. That would be extremely complex to make. Then he put them all on one poster. So it's this big like poster that you can print out and show all of Flexport's like footprint. And then he just liked the prompt, so he made me one. And he just sent me one for Lucy, which was really cool. And he was like, oh yeah, you can just print this out. Like, don't go bigger than 18 by 24, but it'll look great. And I was like, thanks, man. That's great. Very fun. Anyway, should we do the SBIR stuff that you were you were getting texts about? Big changes in the pipe for the SBIR STTR program. All Air Force topics in the current batch just got removed.

• 3:03:37John Coogan?

  So there was an email from DOD SBIR topic removals, and you had some extra context about this. Of course, SBIRs are the small business deals that happen pre-program record for defense tech companies. You get a little bit of money from the DOD, but it's not it's not a sustainable source of revenue. But it's a great way to fund the business in the short term, prove that there's at least some demand to get through.

• 3:04:01Jordi Hays?

  So I followed up with Adam.

• 3:04:03John Coogan?

  Yeah.

• 3:04:04Jordi Hays?

  I'm gonna butcher.

• 3:04:05John Coogan?

  Wallenowski.

• 3:04:06Jordi Hays?

  Wall.

• 3:04:06John Coogan?

  Wallenowski.

• 3:04:07Jordi Hays?

  Wallen, Wallenowski. Sorry, Adam. I was formerly at Anduril, Nvidia and Yale. He's now over at Fid Labs.

• 3:04:17Jordi Hays?

  And he says, yeah, there are four major releases of cyber topics per year. And the second one for 2025 was due to begin accepting proposals next week. The two big agencies in that solicitation were Navy and Army, sorry, Navy and Air Force. Then the cyber update email announced around 1pm yesterday that all currently posted Air Force topics are being removed and no longer eligible for proposals. And that ends up being significant because in total, that would have amounted to around $135 million of awards, which would have gone in some part to early-stage defense tech founders. So and there's also follow-on awards. So that that could be another 200 million in cyber awards that were canceled.

• 3:05:01Jordi Hays?

  So anyways, there's reform happening around cyber and just general changes to the acquisition process. And so thank you to Adam for flagging this.

• 3:05:12John Coogan?

  Yeah, that's very interesting. Well, we have Delian coming on the show Thursday. We have Shom Sankar from Palantir coming on the show Thursday, and I'm sure we'll stack a whole bunch of other interesting folks. So we should dig into that topic more on Thursday.

• 3:05:25Jordi Hays?

  Let's do it.

• 3:05:25John Coogan?

  But other than that, I think we're good to wrap up. Thank you, everyone who tuned in and listened to this show. We really appreciate you. We're having a lot of fun with this and just trying to up the quality by just 5, 10, 100% every single day, compounding.

• 3:05:40Jordi Hays?

  Compounding, compounding, compounding.

• 3:05:42John Coogan?

  This is the most powerful force in the world.

• 3:05:44Jordi Hays?

  It would not be possible without

• 3:05:45John Coogan?

  Our sponsors.

• 3:05:46Jordi Hays?

  The, you know, we, we've, you know, John has been very upfront. This is corporation.

• 3:05:51John Coogan?

  Yes. This is corporate media.

• 3:05:53Jordi Hays?

  Corporate media. So thank you to Ramp, Public, Polymarket, Aidsleep, Wander, Bezel, Numeral, and AdQuick. You guys are fantastic and.

• 3:06:02John Coogan?

  Go support them.

• 3:06:03Jordi Hays?

  Go support them.

• 3:06:04John Coogan?

  And we will see you tomorrow.

• 3:06:06Jordi Hays?

  Looking forward to it. Cheers.

• 3:06:07John Coogan?

  Bye.