Can the AI Industry Regulate Itself? Stripe Wants PayPal, China Catches Up, NY Bans Datacenters

[00:00:00] Speaker 1: all right everybody welcome back to the world's greatest podcast the number one podcast your favorite podcast the all in podcast i'm jason kalakennis the world's greatest moderator with [00:00:09] Speaker 2: me of course chamath palihapetite the great great great great great great great great great grandchild jason was of a hooker and you saw that prisoner and a purse snatcher this is this comes from like [00:00:26] Speaker 1: a history of uh france some history uh said they let you out this was this was the deal in 1719 sacks if you're a prisoner in a in paris you were offered your freedom on the condition that you marry a prostitute and move to the great state of louisiana what are you saying it's actually taking the deal [00:00:47] Speaker 2: it explains a certain of your proclivities jacal i i thought you were asking me to see if they would extend the rule for you no i'm saying that you're great great great great great great [00:00:58] Speaker 3: grandmother i'm not i'm greek that's what i'm saying very explicitly we never spent time in a prison [00:01:05] Speaker 1: also of course david freeberg is here how you doing brother living the dream yeah good to be back missed [00:01:11] Speaker 4: you guys last week how was brad how did he fill in that was great yeah yeah he was trump account victory [00:01:17] Speaker 1: lap he had a little victory lap we played chariots of fire and uh how was your special time at blank and your time next week at blank thanks for thanks for having me on your show jaco all right we got a full docket today uh lots of stories let's start with uh deep minds demis hasabis just dropped an ai regulation proposal and it's um it's pretty popular with the boys in an x article demis called for a us-led international ai standards body proposal is modeled after finra the financial industry regulatory authority that's a self-regulatory body and this would be federally overseen but industry funded and run by independent technological experts frontier labs would submit their models 30 days before release uh and it would be voluntary initially then mandatory at some point the models would be assessed on risk to cyber security national security biological threats and other high-risk domains benchmarks would be updated quarterly and the body can coordinate a slowdown in development if the situation demands and i guess that would be if uh there was a cyber risk etc looks like uh on the positive side we have elon who said it was thoughtful sam and open ai jack clark at anthropic sundar satya jack dorsey from block the carlson brothers so freeberg um uh freeberg your thoughts on [00:02:58] Speaker 2: oh wow way to read it way to really uh put in the effort today go ahead jason good good [00:03:03] Speaker 1: just pass it to me i'll take care of it let me let me what do you want me to do oh my god what an incredible topic give me the mic all right here let me do it you want me to do it right three [00:03:11] Speaker 4: some of us actually care about this topic let's go okay yeah you care about okay here we go three [00:03:15] Speaker 1: two here's a clip of me calling it on the all-in podcast first the whole industry is gonna need to be regulated and i think the industry needs to regulate themselves that's the key to this we need to have a set of tests that google microsoft amazon all agree to elon hey these are the things we should test and they should self-certify each model before asking the government which doesn't understand the models to certify them the industry should have an industry certification like they do for countless other things i've talked about the mpaa and the video game industry we should just self-certify it's the simplest thing in the world to do and then we could release the models ourselves without the government getting involved free break would you like to congratulate me on nailing it [00:04:00] Speaker 2: again well first of all first of all i thought that demis's proposal was really smart and thoughtful now that i know that you may have shared the same thought i think we should just do something different [00:04:11] Speaker 3: i can't win sacks even when i nail it i hit a half court shot tomorrow it's like move the net [00:04:16] Speaker 4: move the net i think it's worth putting a little definition around this proposal which is to form an sro self-regulatory organization because they're not purely independent sros like finra and the national futures association they exist in the financial markets and they were created to allow the financial institutions to set their regulatory rules how they check each other how they make sure that everyone is being safe because they're obviously all trading risk with one another so the industry doesn't want to have exposure and they certainly don't want to have things get slowed down because that would make the markets inefficient so the analogy with ai is pretty appropriate here which is that there are many players in the industry they are all trying to progress ai technology and no one wants to have a single regulatory body that comes in from the government or outside that says here are the tests you guys have to pass with your models in order for them to be appropriate as we saw in california when california tried to pass ai legislation i think it was about a year year and a half ago none of what they wrote even made sense at the time but fast forward a year none of those kind of rules and requirements actually map to the technology of the day so the purpose of an sro like finra and nfa is they can adjust how tests are being run who is actually running the test and make sure the right experts are involved in doing this independent experts that is to do the testing with federal government oversight but not control so in the case of finra nfa they report up ultimately to senate committee and house committee that gives those committees oversight of those governing bodies that are supposed to be doing the work to make sure that they're doing their friggin jobs so the sro concept would be that experts could be brought in from industry that know how to assess models for things like cyber risk for things like bio risk for things like weapons risk social manipulation etc etc that independent body can get voted on can get changed over time and because they actually have expertise in running software valves and running tests like this they can operate at a faster pace than setting up a new government agency so it's it's kind of a very elegant solution and i think it's why everyone to your point jay cal and i i'll say this is right the industry recognizes that there needs to be some degree of oversight and checkpoints here and i think that this could actually solve that problem so that's why i think everyone's kind of climbing on board with it because it doesn't actually hand stuff over to the government it says hey we're going to get the right people to take a look at these things and the government is going to have oversight ultimately did anthropic and open ai have a point of view they both signed up to it i don't think dario directly but dario's president gave his thumbs up and then i think sam gave his thumbs up which means they're on board [00:07:01] Speaker 1: sax is this the best of the uh possibilities in your mind uh is the industry regulating itself after they have now provoked governments around the world to be so concerned about this issue [00:07:16] Speaker 5: yeah and i you know i talked to demos about this and this may surprise people but i told him that i could potentially get on board with this speaking just for myself not on behalf of anyone in the government because i thought that an sro again a self-regulatory approach would be infinitely better than creating a new government agency that i think would rapidly become a dmv for ai dario calls it an faa for ai the government does not have the expertise to evaluate ai models the criteria are changing too rapidly you're gonna very rapidly end up with a queue where all the models would be waiting to get tested and it would start with a month-long delay would end up being many months and we would just lose the ai race so i think an sro approach would be infinitely better than that if it was done right and i outlined for demis five criteria or conditions that i thought were really important to in order to make this work and if i could i'll just yeah through them please all right so number one i think the sro has to have broad representation from within the industry the ai industry it has to include startups and open source it can't just be the three biggest labs you know can't just be the fix can't be in right yeah exactly and that's precisely to avoid the problem of regulatory capture right if you have a diverse enough group of interest being represented it's much harder for this to turn into red capture so for example i think if you had jensen elon zuck and maybe mira because she just launched a very interesting open way platform that's based on thinking machines yeah yes exactly then that i think would address the red capture problem to a large degree so that's number one number two is i think that this body should only be reviewing frontier models meaning the true frontier the models that really represent an advance in the state of the art of artificial intelligence and models below this level should not be held up from getting to market and i do think that is a big risk under regulations is that the leaders in the market use this as a way to tie up lesser models and there's no reason if a model is not at the frontier why hold [00:09:28] Speaker 1: it up okay so they have to be in maybe the top 10 performers top 20 performers on the benchmark [00:09:33] Speaker 5: well i think i think when they benchmark on key dimensions of intelligence they have to represent an increase above where the current state of the art is if it's not a step change then how are you dealing with some new incremental risk right i mean this is all about dealing with some sort of incremental catastrophic risk that could be introduced by some new step change in intelligence and that brings me to number three which is i think this body should be dealing with catastrophic risk only and to my knowledge those right now are cyber and cbrn meaning it's you know chemical biological radiological nuclear so it should not be things for example like disinformation or microaggressions this should not become a speech regulator you know or just you know things that seem kind of trivial the only reason to have this is for truly catastrophic risk so that's number three number four and devis mentioned this in his post is that i think it should be voluntary first this new organization should prove it works before it gets legally enshrined and becomes mandatory and then number five is this should be a substitute for a new regulatory agency if it's just additive then it defeats the purpose and there's no real reason to support it so again i think this has to be a substitute not an addition to a bunch of new regulatory structures so i think if you did those five things i think this becomes much more palatable and demis said i mean he didn't put all these points in his blog post but he did say to me that he was basically he thought those were good ideas so i think if those notes were adopted this is something that we could potentially get on board with that doesn't mean i don't still have concerns i'm quite concerned for example that you know i think dario has expressed support for this however i think this is just an opening bid for anthropic meaning they'll take this thank you very much this is more regulation than we have today but that won't be the end of it right this will just be the stepping stone to get what dario has now called for many times which is the faa for ai and if i could let me just as a final point i just want to explain what the faa does because people need to understand you know faa for ai sounds really nice but actually it's a really extreme proposal what the faa does among other things is approve new airplane designs okay and specifically it requires what's called a type certification for any new aircraft design or major changes and for an entirely new aircraft design it takes five to nine years to get the certification and if you merely want to amend a certificate i guess for you know major changes or i'm not even sure how major the changes need to be it takes three to five years so the boeing 737 max for example took about five years so this is permission-based regulation there's no approval no flying commercially it's safety first look that might make sense in the case of preventing plane crashes but when you're talking about ai models you're talking about replacing a system that is releasing new versions every couple of months with one that is potentially fully under the control of government fully government approved everything has to be certified and you could expect the timeline to go from months to years again i think we'll just simply lose the ai race if that happens because china's not going to abide by those rules so just to sum up if my choices are between faa for ai or what i would call the dmv for ai i would much rather go for demis's sro for ai the self-regulatory approach but we really have to keep it honest and pure because again otherwise it'll just be the opening bid in a coming new wave of regulation and it will be the vehicle for massive regulatory capture and to your point it can't restrict open source yeah can't restrict [00:13:23] Speaker 4: open source i think that's so important because all of these other efforts require money that you have to spend which is always where regulatory capture happens and you have to enable startups and open source [00:13:33] Speaker 1: to compete effectively chamath any thoughts on this new self-governing body i think it's really [00:13:39] Speaker 2: important and i hope it happens quickly the thing we have to keep in mind is there's going to be a torrent of money that's going to try to influence both sides of the political aisle to regulate this in a way that creates some form of regulatory capture we just don't know what and so the faster we avoid that off-ramp by actually establishing a set of rules and superseding the need for federal oversight is a really important thing now at the end of the day you still have federal oversight in some ways because you still have commerce that plays a huge role in these standards you still have the doj so it's not as if it's going to be a wild west but what it prevents is a handful of actors using their balance sheets and their capital to essentially pull the ladder up and i think if that happens we're in a really bad place so i think demis's proposal makes a ton of sense and we should just get on with [00:14:39] Speaker 5: it all right yes but provided i mean again just provided that i think we we make sure that i mean look in my view there are five conditions but i think we do have to make sure it's pure even in the finner example that's the analogy that demis used was that we should set this up in the same way that that finra set up finra does report in ultimately to the government or reports into the sec and so you know if we are going to accept this new sro where is it going to report to in the government there's going to be a huge food fight over that and it will then be subject to political pressure the software industry has never been regulated in that way we do not have a dedicated regulator i think you're right [00:15:20] Speaker 2: but those those issues are important but my point is hax i'm just saying these things are never ideal but if the choices are we kill open source and we ladder pull the entire market so there's a duopoly or there's this i'd say this for sure and that's and that's that's the crux of my argument is it's [00:15:40] Speaker 5: definitely the lesser of two evils i'm not sure those are the only two choices but increasingly there's no question that the pressure is coming to regulate ai more and more and frankly this all goes back to anthropics government they poke the tiger they poke the tiger yeah well it's it's more than that they're funding the money for the tiger yeah i want to give an update on that actually i would [00:16:02] Speaker 1: say poking the tiger of like the american public getting really freaked out and then the government [00:16:07] Speaker 5: totally yeah totally and there's a couple of data points on that actually i just want to give a quick update so in october of last year i tweeted that anthropic is running a sophisticated regulatory capture strategy based on fear mongering and everyone kind of went crazy over this this was again like a very hot take or spicy take at the time back then people thought that i was beating up on a little startup now i think everyone can kind of see the truth which is look this is not a little startup they already have a trillion dollar market cap valuation gavin baker thinks it'll be at three trillion after the ipo this is actually one of the biggest of the big tech companies and they are i think by pretty much every criteria including revenue the leading ai company so i think people can see now that they have enormous resources and they're putting those resources behind an effort to like chamath you said pull up the ladder and it's classic regulatory capture and there was an article in politico just the other day it's called inside anthropic state-by-state plan to ratchet up ai rules and what it says is quote ai giant anthropic is pursuing a strategy of one upmanship that encourages states to impose increasingly tougher ai guardrails rather than a line around a single set of regulations so the basic idea is that they get a set of regulations passed in one state like california's sb-53 and that was then supposed to be the model at least for all the blue states but then with each new state they actually make the regulations more and more strict more and more all-encompassing so there's not actually a stable equilibrium what they're trying to do is drive each incremental state to more and more regulations and so this is actually an article explaining that they're doing the opposite of trying to create what we wanted which was a single national framework they actually want the patchwork because they're using again the pressure they're creating at the state level to impose more and more regulations and again what i said last year was that anthropic was principally responsible for the state regulatory frenzy that is damaging the startup ecosystem again everyone went crazy at the time i think now there's plenty of evidence showing this is their agenda [00:18:15] Speaker 1: and um and by the way they're going to win that because states have great sovereignty rights and like we're seeing what's self-driving the states are going to decide it's not going to be a federal mandate the states get to decide just the nature of the u.s the reason why they're going to they're going to win on that in a couple of states right sex just realistically they've won in a bunch of [00:18:32] Speaker 5: states they already won in california and illinois and new york and i mean they're winning in all the blue states and maybe even some red states but look ultimately the reason why anthropic's arguments are finding purchase is because when you go to the government and say please regulate me you know you should have more power there is hardly anyone in government who will ever say oh no no no we're not qualified like we don't want government yeah there are very few people who are principled that way and most people in the government will say thank you very much what else can we take and this is the mistake that i think a lot of people in the tech industry are making is they think that they can just buy off politicians of the political system by making concessions no that will just lead to a ratcheting up of the pressure the government will be happy to take this and then come back for more and more and more until it's fully under government control so at some point i think these companies are gonna have to grow a spine and fight and decide where they're willing to draw a line and if demis's sro is the line if they're saying okay we think this is the right solution and we're gonna fight here and this has to be it and in exchange for this we need preemption and we need you know other things written into law that make sure this is where the line is then i think it can work but i think if you're just kind of offering it up for free and all these companies are just gonna say oh yeah regulates give us the sro that will not be the end of it that will just be the opening bid and the government will come back to take more and more [00:19:58] Speaker 1: and more yeah all right let's keep moving through the docket here stripe which is still a private company much to the chagrin of many of the shareholders i think uh now as they go into the [00:20:07] Speaker 3: second day yes i mean i'm gonna i'm in a couple of funds that have large positions like go public boys [00:20:16] Speaker 1: they are bidding bidding 53 billion for your alma mater david sacks paypal which is a public company stripe and the private equity fund advent are jointly offering to acquire paypal for about 60 bucks a share which is a small premium most people think it'll go for more like 70 a share paypal stock [00:20:37] Speaker 2: jumping on the news obviously and were you able to get to the bottom of this that was it just stripe an advent because then somebody else reported that it was also block yes block is coming in as well it's so confusing every other media source is like they're all over the place on this yeah no [00:20:55] Speaker 1: it's i think it's because it was a breaking story and maybe they were trying to keep it quiet it's a huge deal though if if block is a part of it versus if they're not i think yes and block formerly known as square is jack dorsey's uh payment company one of the few entrepreneurs to ever create uh two deck records in our industry and uh they're contributing 17 billion in equity in the combined offer how they um chop up what's inside of paypal would be the big question obviously they own you know a number of different brands including venmo in addition to paypal that might go really well with the i'm just taking a guess here with the block assets stripe owns bridge that's their stablecoin infrastructure company they acquired for a billion dollars in 2025 paypal has psi usd which is already in circulation that's their stablecoin so stablecoins are part of this but the biggest thing is paypal is still a juggernaut sacks 439 million consumer accounts you did something right there 25 years ago [00:21:59] Speaker 5: it's still the test of time amazing it really isn't amazing that it's still that strong yeah it's weird when brands keep going for that long but the problem is that the product is getting very long in the tooth i think it's only growing seven percent a year which is a lot on the base that you know it's grown to it's a big base but the product has become somewhat obsolete and in a way it's a legacy product i'd be curious to hear from the stripe guys how they would fix that because i think that's a very hard problem to fix maybe they wouldn't maybe they would just run it more efficiently and kind of milk it i think there's a different question kind of do a private equity play [00:22:35] Speaker 2: the different question i think the interesting question to ask is what is the only kind of baby that advent and stripe and block could have together and i think there's one which is you are creating a competitor to visa and mastercard because you now have upwards of six or seven hundred million accounts you have massive stablecoin infrastructure you have all of the risk management infrastructure that stripe has built over the last 15 or 20 years the big critique of stripes business model early on was they had to build so many value-added services because everybody always thought the take that they could make as a middleman sitting on top of the traditional rails would effectively get competed away now to their credit they've done such a good job that that hasn't happened but i think what it means now is you can vertically integrate and go soup to nuts that is probably the most obvious thing to make out of it so that now stripe gets access to an ultra low cost set of payment rails literally like to zero brings it everywhere all over the world so does block advent can pour money into it so it's quite powerful if it [00:23:55] Speaker 1: comes together rubber what does this say about private market companies at scale and stripe potentially never going public i mean how does a private equity firm get their return on this investment in two three four years do they wind up selling more of it to stripe what are your thoughts here on the structure and capital market implications here i think there's going to be more of these kinds of [00:24:19] Speaker 4: deals if you look at ryan cohen's bid for ebay i think it's probably a second dot on a line that i think is emerging which is folks that are call it ai native are looking at call it first generation digital native businesses that have become mature and old and stale and aren't run by the founders anymore and have not yet realized the opportunities with ai have not yet realized their potential or overspending in a lot of ways and when you take a look at those businesses as a modern day ai operator you're like what the hell this thing is so under uh utilized they're not using their network well they're not operating well they're overspending they're not using ai well and there's a set of opportunities that become quite obvious and i think the capital markets as we've seen with like josh kushner's roll up of accounting firms and general catalyst has a project like this where you can kind of use capital to go buy you know in those cases traditional services businesses and aiify them i think this is part of a line of maybe looking at traditional digital businesses and aiifying them and there's a long list of these there's a couple dozen of them so i think if you looked at the public markets and you said hey where are all these kind of software companies network businesses that emerge in the early part of the internet or even in the more recent part of the internet aren't run by their founders anymore have stalled out there's a massive opportunity now the question as a capital provider is who do you partner with to go and execute that operational revival of that business you're not going to go hire some mckinsey consultant to do that work for you it's got to be the best of the best it's got to be the right players in the business so i think ryan cohen has proved his mettle obviously with some of the things that he's done with chewy and gamestop and that's obviously debatable i spent some time interviewing him to understand his this was on the all in [00:26:20] Speaker 1: interview program you can go to our channel and find it there it's last month thanks for the plug [00:26:24] Speaker 4: and obviously when it comes to payments who better than stripe yeah and maybe jack dorsey plays a role here and and by the way i think because capital i mean if you think about that 17 billion dollar equity contribution what that technically means is stripe is selling and block is selling 17 billion dollars of equity to the cash investors that cash is then going to buy a paypal therefore stripe and block end up owning a piece of paypal the private equity investors own a piece of block and stripe and what is not clear in the deal docs that were published because i don't think it's relevant to the public markets is who's actually going to operate paypal post clothes and my bet would be that they're going to hand it over to the stripe guys and say you guys i think that's clear yeah [00:27:13] Speaker 1: because they are the most qualified and they will have the biggest stake in it uh you're so i think [00:27:17] Speaker 4: so i i will make a prediction i think that ebay and paypal are probably the beginning of a wave of mega deals of call it flaccid you know digital businesses you have too much attention that can be revived okay with the blue chew of capital and the right operator again i think that there's probably a big a big wave of [00:27:38] Speaker 2: this to come the other thing is this is probably not the final clearing price i think the price is probably another 10 to 15 percent higher from here and and i will say that there's a certain individual that must look very closely at putting in a competitive bid oh a certain individual who may [00:28:02] Speaker 1: may have his fingerprints on the original paypal who might also have four or five trillion dollars in market cap to play with who also made a 60 billion dollar acquisition recently we don't have inside information here to your point freeberg correct this is becoming a playbook there's a company called bending spoons that just went public they bought a bunch of non-founder led assets aol for 1.4 billion vimeo for 1.4 billion we transfer event bright bright code ever no time with him i was just hemming with [00:28:35] Speaker 4: him he's awesome i've hung out with this guy this guy is an absolute friggin operational killer he in italy he bought evernote yeah yeah he runs the whole thing from milan he bought evernote and he just goes in and he diagnoses these businesses he's like how are they being over where are you overspending where are you underspending what are you doing wrong with the product and what are you doing wrong with marketing and he just friggin fixes it and he's just a killer and he's taken all of these what were called web 2.0 businesses and he's revitalized them rolled them up [00:29:03] Speaker 1: and printing cash out of them and lowers the cost to run them and that's the other big thing he's putting young ai he's using young ai first executives from what i'm totally it's a great call out jacal like bending [00:29:14] Speaker 4: spoons is the roll-up of this sort of strategy but for these mega deals i think there's more of them [00:29:18] Speaker 1: to come i will say uh you know the the higher order bit here which we talked about for a couple years was venture capital was on the ropes for a couple of years under the wrath of lena khan and then once trump got elected all the executives working in corporate development said hey looks like mna's back on the menu and now we're seeing deal after deal after deal get consummated people are no longer scared of doing deals uber just bought delivery hero today uh that's going to like jump their revenue by 20 yeah and that's going to jump their revenue by like they're getting diluted 10 it's going to jump their revenue 24 or something crazy like that and this is going to be i think the big story the next couple of years and all this liquidity talking to lps and family offices which i do on a regular basis they're all like hey when's your next fund hey when's the next deal because now people are believing in venture because of the spacex distributions and all this mna and we have four or five companies that got bought since donald trump was elected president thank you my president donald j trump for putting mna back on the menu sacks mna back on the menu why didn't you make a bit sacks for paypal been there done that been there done it okay no but look you have to have [00:30:33] Speaker 2: synergies there was a moment this is like 15 years ago where they asked sacks to go back and be the [00:30:39] Speaker 1: ceo that was right i remember that at the poker game he and i immediately flew to vegas and spent [00:30:44] Speaker 5: the weekend there to think about it like you know what i wasn't no they didn't ask me to uh you considered i was well no i never got the offer but it was down to like final two or something and it was between me and someone else and actually they ended up going with some you know like traditional like credit card executive and to be honest that's why paypal has stagnated is that as soon as it was acquired back in 2002 they basically blew out like all the founders all the founding dna and it was just kind of run by you know consulting types you got to remember at that time it was acquired by ebay and meg whitman had worked at procter and gamble and disney and she spent like eight years at bain and it was like a very corporate mindset i mean among all the internet companies of that era it was definitely the most corporatist and they saw the founders the founding generation at paypal is just a problem just a bunch of like cowboys they couldn't control they made no effort to retain them and i think they were kind of relieved when they all left and then that's what created the paypal mafia was that you know normally in an acquisition you'd lock up all the talent but in this case they locked [00:31:57] Speaker 3: them out they're like these guys are too hard to manage change the keys i've said for a long time [00:32:02] Speaker 5: it's a misnomer to call it the paypal mafia it's really the paypal diaspora totally our homeland was taken over and they burned our temple and then kicked everybody out yeah and that's why the whole paypal mafia got started with all those companies but as a result of that for for decades i'm not saying it was a victim look when you when you acquire a company you get to decide what to do with that asset total so i mean that was just the reality but it's not like you know i don't think anyone was bitter about it they're all like okay this gives us the capital to go i'll do the next thing we want to [00:32:33] Speaker 1: do well the new ceo by the way enrique is really aces uh i've met him before and they're doing a great job um apparently which is why they probably got these offers because they've been tightening [00:32:43] Speaker 5: that business up for the last couple years well no the reason they got these offers is the market cap is down to you know it was down in the what like 30 something billion i mean this is a company that was worth 200 billion wasn't it roughly 322 i think was the peak and before this offer it was down to what 30 to 40 billion yeah so the reason why it's attracting offers is it's so beaten up and so now the question is can anyone else do something with it sacks to your comment about you've got to have [00:33:12] Speaker 4: synergies doesn't it seem to be the case that in this era the the core synergy that any great operator can bring to the table in this sort of a scenario is ai like you can leverage whether it be in this business or others you can leverage tools that drive automation that drive product development that drive improvements and efficiencies across the organization that make the product actually better for the user etc etc that simply potentially obviously being well implemented well look i think you have to have a [00:33:39] Speaker 5: product vision of how you would use ai to make the whole user experience better and yes you're right that you could just use ai to drive efficiencies and that will improve your profitability and earnings and so on a financial level you could make the acquisition work but it seems to me that the existential issue for paypal is that you're dealing with a product that's 25 years old i mean it's the same thing that we created back you know like 27 years ago i mean it's changed a little bit but not that much and the problem is that that that interaction model is legacy and so unless you've got a vision of how to resuscitate it and rejuvenate that that product i think yeah it could be a good financial play maybe i think they're buying the accounts yeah yeah yeah what you're saying is interesting because with stripe i mean this is the advantage that stripe has is that they have a ton of merchants right so they've they've become the preferred mechanism for merchants to basically accept payments via apis and i think they're doing about 2 trillion a year of annual transaction volume i think paypal is doing 1.7 so actually stripe is a little bigger than paypal now but the thing that paypal has that stripe doesn't really have is the consumer relationship so you know over 400 million active consumer accounts so you're right chamath that if if somehow you could combine the merchant relationships with all those consumer accounts then bypass the credit card networks because there'd be a lot in theory there could be a lot more on us transactions exactly and that's where the value is paypal already owns [00:35:19] Speaker 2: braintree so now you have stripe and braintree that effectively were competitors that won't be and then what block gives you is an entire point of sale infrastructure and you get the cash app so you put it all together and i think it's a it's a shot across the bow for visa and mastercard [00:35:36] Speaker 1: braintree is the other one that i think you just mentioned there chamath that's important because that is a very strong business that you don't even know that paypal owns venmo is also that speaks to a lot of young people so you kind of get in two generations you're getting gen x and millennials uh a lot of bank for your luck there yeah it's what sac said is true they have enough of these things to go [00:35:56] Speaker 2: end to end on their own rails that is a very yeah the question is whether you can package it all [00:36:03] Speaker 5: together in a way that the consumer will actually choose because it's one thing to say well we take the merchant relationships of stripe and the consumer relationships of paypal no you don't do that you [00:36:13] Speaker 2: what if the consumer doesn't want that no you don't do that i think what you do is you go to places like all of the merchants that use stripe and say we'll give you a three or four or five percent discount and they'll be like okay and so you'll see these prices that just you know fall everywhere like imagine if shopify was like to all their merchants okay you have two choices the old way or the new way the new way you put another two or three or four percent in your pocket of course they're [00:36:39] Speaker 1: going to pick the new one well and this is the paradox of like modern m a you know if you look at protecting the consumer this will ultimately be great for the consumers this is going to lower [00:36:48] Speaker 2: the prices on it they're not buying this too okay you're saying something really interesting it is so good for consumers if this were to happen this is the exact reason why if this had happened two years ago yeah this would have been the antitrust equivalent of a colorectal exam i mean god you would not even get one step close to doing this deal two years ago well that's that's really [00:37:15] Speaker 5: interesting actually i mean the key question with antitrust is how do you define the market and so if you define the market as you know apis for merchants then jcal it would be stripe versus braintree and then the government would say well that's you can't consolidate a share however if the real market is visa mastercard that's the ultimate duopoly and if paypal can add competition to that market which is infinitely larger than apis exactly then it's actually pro-competitive so how you define the market determines whether it's competitive or pro-competitive and those guys are smart enough and [00:37:49] Speaker 2: they've read enough books where they won't this one up all right let's get to the next topic somebody [00:37:54] Speaker 1: else is suing open ai this time it's apple on july 10th apple filed a 41 page lawsuit against open ai over alleged alleged stolen trade secrets apple says open ai stole their ip to develop their consumer hardware device remember we had um sarah fryer at liquidity and i uh probed her on this new device and she said it was very human and lovable she gave us a little bit of the goods well it turns out apple is alleging that maybe this is partially their ip tang tan apple's former vp of iphone design is open ai's chief hardware officer he allegedly directed apple job candidates interviewing at open ai to bring quote actual parts to interviews to quote show and tell in the interviews chang lu former apple senior technical engineer sent this text message to a still employed apple colleague quote lol i found out i can access the network storage so funny during all of this open ai has poached over 400 apple employees over the last year or two big numbers of poaching apple and tim cook have seen enough chamath tim cook greenlit this as insane as this is sam altman has found a way found a way to screw yet another party screwed elon his first benefactor chamath if you remember correctly the default for iphone ai was supposed to be chat gpt so they took this relationship sam took this relationship where he got to be the default on the most important platform for ai the iphone and now it's wound up in a massive lawsuit what are your [00:39:47] Speaker 2: thoughts on this i haven't really seen apple act very litigiously in 25 years in silicon valley so that's obviously a concerning data point for open ai they're very reactive more than they are proactive on these things so there must have been something that really really upset them egregious yeah so i don't know it's going to take a court to sort this out i don't really want to gossip because like who knows what's actually going on and who said what and blah blah blah but nobody should be stealing things from their former employer nobody obvious you're just not allowed it's just obvious these people are very very smart and they're very successful and you know that's why open ai probably wanted them and that's why they wanted them you know and you come to them with the collective wisdom of what you've accumulated and i think that's sufficient you don't need to especially as a senior person do this so i just hope that this stuff isn't true because i think i don't think that sam or sarah or anybody else there are trying to induce this to happen i don't [00:40:55] Speaker 1: think so yeah i doubt they induced it but i do believe that it's true or apple wouldn't have brought it sax when we look at this maybe you could open the um aperture here if you want or you can just go very detailed but the nature of we have a free market we don't have non-competes in california generally speaking you can just employment at will go where you want but we have had instances you know waymo famously uh you know brought some ip to uber when they did travis and the team said leave the building your job is rescinded you don't get to bring that information here in this case it seems maybe they didn't induce it but it occurred for some period of time so take us through big picture what you think is going on here and what it means for the industry [00:41:45] Speaker 5: well like jama said i have no idea what's going on here i mean these this is a lawsuit the facts are all alleged we don't know it's going to be adjudicated so i really don't want to opine on what happened here but if people want to know a very simple rule of thumb for how to avoid these types of disputes it's just when an employee leaves their previous company and joins the new company just don't take anything with you the only thing you can bring to your new job is what's in your head your memories your memories that's fine whatever is in your head you're allowed to take but never leave with anything else no thumb drives no cd rods no documents no nothing just what's in your head is [00:42:25] Speaker 1: okay that's it freeberg any thoughts here on just the number of lawsuits that seem to be piling up over [00:42:36] Speaker 6: at open ai bad luck a couple dots make a line i guess okay there you go very well said a couple of [00:42:46] Speaker 1: dots make a line okay spacex had a data leak this week they launched grok build in public beta at the end of may the newest coding model grok 4.5 powers grok build i've been playing with it it's extraordinary it's a coding tool that works inside of cursor uh spacex previously told users chamath nothing from your code base is transmitted to xai servers during a session but what actually was happening is every time a developer or according to reports used grok build the tool was sending their entire code base to spacex cloud servers without alerting the users not just the files that were needed to do that specific coding task just everything passwords api keys could have got pulled up there all the uh change logs etc uh the privacy setting was supposed to stop this but it didn't work spacex quietly disabled the upload on july 13th by flipping a switch on their servers elon musk friend of the pod promised on x that all previously uploaded data has been deleted i guess uh and in response spacex open source rock build that's their harness so that's another open source win or win for the open source community and ai sovereignty you got any kind of thoughts on this obviously this was not intentional but trust is important uh with these models as we've been talking about for the last couple of months [00:44:08] Speaker 2: here on the all in podcast i would actually connect this to my comments on cnbc earlier this week which built on top of alex carp's comments the week before privacy in ai is very fragile and it's very brittle and this is despite the best efforts of great businesses like you know you may not like elon for personality quirks but he is incredibly trustworthy he's overly transparent and so to their credit they shut it off immediately but my takeaway is that there are all kinds of non-obvious data leak vectors lurking in ai and so if you think that you're going to flip a zdr switch zero data retention which is the magic term that the industry uses to tell you that everything's going to be okay i think the answer and the message should be it's not going to be okay because you can't guarantee any of it so the model companies when they give you these zero data retention policies are probably trying their best but i think the reality is you are leaking information where you don't know it and they despite their best efforts may still have trapdoors that they don't even know about until it's figured out by somebody else like in this example so all of this speaks to you have to have a stratified ecosystem you have to have third parties now look that's very biased for me because it's in part what we do for large enterprises at 80 90 when we implement our software factory but the reason why it's working so well is this exact reason you need an independent third party layer to interface to these models to manage this exposure because there are [00:45:51] Speaker 5: trap doors everywhere and that's what sachi just said in a really interesting blog post did you guys see that yeah i thought that was excellent the reverse information paradox yeah that's exactly the the takeaway that he left with he was building on alex carp's supposed crash out you know the point that carp made about how enterprises who have technical ability want control over their compute models weights data and alpha but he he went further with that idea i mean he started with carp's idea but then he kind of provided a recipe a roadmap for how enterprises should operationalize that and what he says is that enterprises they have to establish a real trust boundary with private evals proprietary learning loops inside the tenant decoupled orchestration and the explicit right to fine-tune their own outputs so he kind of goes through a litany of fairly technical things that enterprises should do in order to achieve the operational control that carp was saying that enterprises really want over their ai compute models and data their alpha so it's really interesting i think now there's you know a virtual almost like college dorm session going on between the leaders of these companies who are brainstorming some of these concepts and now extending them right and what's happening is you're starting to see the formation of not really an alliance but like an ecosystem that is trying to create alternatives to you know a monolithic closed model stack which is where anthropic and to some extent open ai want to go is they want you to be locked in to their to their stack right their models their harness they control the data all you know all of that and now you're starting to see all these different companies and [00:47:41] Speaker 2: and you pay a huge premium for the privilege for them to do it which is even more insane so i i saw this data and nick maybe you can find this companion clip the companion clip i'd like you to find is eric gleiman who's the ceo of ramp was on squawk box i think today talking about a new feature where you can manage the token maxing of your employees through your ramp card but the data that i saw was that a million tokens on fable is about sacks 56 bucks a million from seoul is about 26 bucks which is the same as claud 48 a million input tokens from on grok is about a dollar 50. okay zux is about a dollar 50. elon's about a dollar and the chinese models are 50 cents wow so on top of the whole data sovereignty bleeding your alpha way can you imagine that you're paying 56 bucks as well per million input for that risk that is [00:48:42] Speaker 1: insanity i'm using perplexity computer and they started supporting grok and they already support glm52 so when you're like using claude or opening eye you can only use their model so i started effing with the different models and i gave it all the same basically prd and i said i want to make a podcast player that deep links so like if we were talking about i don't know mythos it would play me all the me so meet those clips across all the different tech and business podcasts but make it into one stream and i was like this would be like really helpful for me for prepping for the show and just be interesting i did it it took a couple of hours it cost 11 on the new grok it was hilarious how cheap it was and then adding to this i don't know if you saw sorry did you try to do it on fable to see how [00:49:29] Speaker 2: much more expensive i didn't i didn't because i was out of fable credits on my 200 account so you know look at this clip here nick play the clip from eric glenn that's kind of interesting we're thrilled to [00:49:40] Speaker 7: be launching token spend management today it's available to ramp and non-ramp customers and he's exactly right over the last year i looked at the stats this morning token spend among ramp customers has grown by 21 times 21 times 21 times not 21 we're talking about 21 times that's exactly right so being off by a few pennies as a cfo uh actually might be quite nice right at the rate it's going it might be several dollars and and look like i think that for uh many cfos they're often very surprised by the bill because what the ai companies have functionally set up is you have a tab you can spend as much as as you want it's very hard for cfos to see proactively what people are spending on and every time they're introducing new models the rates often go up and so there's very misaligned incentives so part of what we're trying to do is make it easy for cfos to see the spend understand the spend and control [00:50:32] Speaker 2: it thanks nick he's saying something so important there because if your engineers are going off randomly in an unguided system and then just ripping through a million tokens at 56 bucks what he's talking about is the eventual downstream impact to earnings and that eventually a bunch of these public market cfos are going to show up to wall street and they will have missed earnings because they're opex at some point if things are 21 xing every few months somebody's going to miss a quarter i don't know who but somebody and it's not just going to be you know i was speculating it'll be a few pennies here or there which they'll have to say is because of token spend he's saying it could be as much as dollars at this rate which also could be the case i think the point that we're all trying to make is unless you get a control of this and you can directly say how much money you're making this is a bridge to nowhere [00:51:25] Speaker 1: it is a money burning furnace the good news is this is all creating a massive market opportunity sacks bit tensor subnets glm52 hosting grok 4.5 now inkling inkling mirror mirati's new model mirrors inkling everybody's now saying hey wait a second i can give you a better deal [00:51:47] Speaker 2: you're paying two bucks i can get you one buck this is no no people are paying between 26 and 56 bucks [00:51:53] Speaker 5: they should be paying 50 cents exactly well you know and the inkling announcement was kind of interesting because i think the value prop there is she's explicitly saying that look we're not frontier intelligence we're just under that but we're a platform for fine tuning these open models which are much much cheaper and then you can achieve the result you want based on fine tuning and so that's really interesting yeah and but you know these open models won't be around for very long if anthropic has its way there's a reason they want to stop it's [00:52:28] Speaker 2: just they have such a monopoly of course you're you're selling most of the product for 50 cents per million tokens when they're selling theirs for 56 bucks of course you don't want that to happen [00:52:39] Speaker 5: of course you want them you want to try to stop it but that being said they're still growing like crazy just to be clear i mean yes you know you are seeing this explosion of interesting things happening with open models like you said you know the latest crock build is open thinking machines open and so forth and so on but still nemo i mean they're growing they're still the industry leader in terms of revenue growth so these things are happening side by side and i would i think that [00:53:05] Speaker 2: the interesting thing is eric would not have released this ramp product unless cfos were like i can't control the spend yes and then he's like well here let me build it for you and then if enough cfos essentially turn that feature on and start to rate limit how it's spent because maybe they're not getting the roi and the engineer doesn't care about roi the engineer's like i want to use the latest greatest model yeah and maybe you don't need it maybe mirror is right and for 95 of the tasks you should be at one level lower especially when it costs one one hundredth of the cost but the engineer will never make that trade-off because they'll never want to think about it you're right and also they're not tied to the money the cfo is tied to the money and the engineer wants to go on an exploration on using the latest greatest thing yeah and until those things have a record yeah if [00:53:53] Speaker 1: you're booking your travel you're like you don't even see the price you're like yeah just put me in business class put me in a nice hotel and like the travel department handles that you're saying [00:54:00] Speaker 2: something really interesting what percentage if you had to guess of fable five prompts are just [00:54:06] Speaker 1: average machigana that should be running 98 yeah 98 yeah i i was using it for stupid stuff that i could be using quen for um i think this is my like micro prediction here mark german who's like the most in the know guy when it comes to apple he says and you know we've got this new ceo coming in for um uh yeah and he is a hardware engineer m7 ultra uh because m we're on m5 chips now you can get like you know 256 512 gigs of ram he says m7 ultra is going to support as much as 1.5 terabytes that's double what they're already supporting so if you think about uh frontier models like the last generation this is like an opus level model running on your mac studio you guys all use mac studios you're rich venture capitalists whatever you're like yeah i'll take a four or five thousand dollar computer this is going to change everything you're going to have employers go oh i can just run you know 90 of my workloads 99 of the workouts on the local um mac studio i think apple is a screaming buy right now uh and i that's not financial advice but my lord that company could just run the table on ai if they get [00:55:22] Speaker 3: this right all right apple yes because i they're going to make such a fortune you got to just let [00:55:30] Speaker 1: them move on let me explain it's just like the iphone everybody laughed at the iphone people over they did not really when the first iphone came out many people not true that was it that's true was the big one you're gonna i can still hear him laughing no if you think about how they make money off of hardware off of their devices they will put so much downward pressure on claude and open ai by just putting local models and supporting them with this memory architecture it's going to be wild when people have unlimited tokens on their desk i don't know i'm telling you i don't [00:56:06] Speaker 2: know if you guys uh saw this but um there's a very large solar company called sunrun they just announced this week that they're making distributed data center blocks that you can put in your house another company that did it is a company called span that partnered with nvidia so to your point jason you're seeing this fragmentation and distribution of edge compute which i think is a theme definitely a theme well it's also chasing energy right from off like if [00:56:35] Speaker 1: you've got some solar if you've got excess battery power hey we power up your batteries at night [00:56:40] Speaker 2: cheaply i think i told you this last week we are so massively short electrons by 2050 the united states of america will be two and a half california's worth of energy in deficit 2.5 california's the fourth largest economy in the world we will be short 2.5 x of all of the energy consumed by california by 2050. this week there was an auction by this huge utility called pgm which serves pennsylvania new jersey maryland you know 13 states and that auction is where they publish a forward curve and say hey listen guys here's my forecasted load and here's how much energy i need and people sign up to essentially get paid a guaranteed rate every day so that they have to fork over the energy in the future kind of like a forward option they needed like seven or eight gigawatts they had 156 megawatts or something show up we are in such a bad place right now on electrons and electricity prices did you see what our boy did this week we need we need so this is behind the meter which is different and he elon needed to do this by the way just so you know because there's an issue in memphis where he was very clever about how he was able to get colossus off the ground that regulatory explain this it's not well when you try to power a data center typically you have what's called grid power so you go to the utility in the area and you say hey please run me a line off of that main transmission line and that's how you power your data center when that runs out or is so backlogged you have to do what's called behind the meter which means on your own property that you own you build something for yourself now there's a problem with that you would think well that's smart yes but like in everything in america there's regulation on top of regulation on top of regulation and one of the most complicated regulatory schemes that you have to overcome is clean air permitting so even if you say you're going to do behind the meter then you're like well what can i do solar you can do but it takes too much space for most places batteries you can do but you need to generate the electricity in the first place so people use that gas so elon cleverly bought a ton of 18 wheeler [00:59:05] Speaker 3: like engines basically he bought the company that makes all this mobile turbines and then just and then [00:59:12] Speaker 2: just you know pin them to the ground and ran it and you know those are personal use essentially and so they came under the clean air permitting requirements but then when you act as a block you could make the claim that it doesn't now there are new solutions like bloom energy which allows you to have huge installations and still fall under the the the personal use clean air permit and so for all of elon's future capacity he needed to have this in place so that he gets the clean air permits and he's able to have a clean run of sight to continue to build domestic data centers okay anyways there's your little ted talk on energy but uh we are in a bad place guys and [00:59:52] Speaker 1: it's only getting worse speaking of um data center sacks everybody's favorite socialist governor kathy hochel in uh the great state of new york my hometown powered by fossil fuels they drive up [01:00:07] Speaker 8: our carbon footprint they occupy massive amounts of land potentially displacing agricultural space and open spaces the bottom line is progress shouldn't arrive on a higher utility bill deleted water supply or noise pollution so we have no choice but to address these challenges created by these massive facilities that is why today i'll be signing the nation's first ever statewide moratorium on hyper [01:00:35] Speaker 5: scale data centers everything she's saying there is a false accusation uh on the data center so let's just go one by one so she's saying yeah that they eat up all of the power well yeah i mean look if you connect to the grid without producing more power and you force data centers to compete with you know residential rate payers then yeah you could drive up utility prices however if you do what jama said and let them build behind the meter then they bring their own power and that's what the president has advocated for since the beginning of his administration is let the ai companies become power companies so that is the way to solve the energy problem or the utility problem then she's talking about you know eating up land the reality is these data centers are a model of land use efficiency we have a ton of land in this country obviously you can find places where there is enough open land to build a data center the economic impact and value of a data center relative to the land use again is one of the best rois there is the supposed noise pollution that's largely made up that can be dealt with you obviously don't want to put these things right next to a residential area but create a little bit of distance and it's fine the whole water consumption thing is largely a hoax the the modern data centers recirculate the water flows loop systems yeah and i think there was a study that showed that a typical data center uses the same amount of water as two and a half in and out burgers so internet burger chains [01:02:03] Speaker 1: i mean just go after the almonds if you're concerned about water people there's yeah or golf courses i mean [01:02:08] Speaker 5: there's many you know there's many uses of water that are way more wasteful so when you compare economic impact to all these different things data centers are like honestly one of the best things we could [01:02:20] Speaker 2: be building as a nation but and sacks there's all these taxes and incremental revenues did you see the article where i think it was in north dakota or something where like teachers were getting like 30 and 40 000 bonuses from all the tax revenue that was coming in there's all these upsides that's right [01:02:38] Speaker 5: they generate a lot of tax revenue they've created a blue collar construction boom it's not true that there's no jobs once they're built that you do have ongoing jobs there and then oh one final thing just on the the point that hochel is making she said it created a lot of pollution natural gas which is how most these data centers are are powered is one of the most clean burning sources of power that we have 100 these data centers become the scapegoat for all the angst that people have about ai and it's kind of become this very clumsy way of trying to throw a wrench in the gears of innovation and just [01:03:13] Speaker 1: kind of slow the whole thing all i have to say is welcome to texas we got plenty of land here and for now so stupid about her proposal and her talk aside from the things she got completely factually incorrect is new york state is like 80 underdeveloped drive upstate folks you're thinking of new york city yes new york city's packed you go upstate it's literally 70 to 80 of the land in new york state is undeveloped there's so much land it's ridiculous new york is giant it's giant [01:03:50] Speaker 2: on this topic this week i just want to give a shout out to senator dave mccormick he had a defense and innovation summit in uh carlisle pennsylvania at the army war college which a bunch of us went to potus came gave a speech had a ceo round table a lot of defense companies ceos etc but chris wright was there sax and my guy he's great and chris mentioned this in insane story he said you know there is a lot of common funding because dina powell asked this question on stage and he said there's a lot of common funding patterns of these people that are protesting um the data centers and he said you can actually trace it back to the same people that in a different era were protesting fracking and so he was saying like it's these are all just hobby horses that they use to raise money have a job they're like professionally paid protesters they kind of just show up out of nowhere i didn't realize that there was such a commonality but they're the same people [01:04:52] Speaker 5: the thing that i just can't understand for the life of me is why anthropic is still funding these groups that want to put the kibosh on new data center construction there's one called public first where dario just gave his first seven figure contribution and then a bunch of other employees that anthropic gave it and you know all these groups are trying to slow down ai development with new regulations and making it harder to build new data centers and at a certain point you just have to wonder i mean is this regulatory capture or they just kind of lost the plot because the number one thing's slowing down the growth of anthropics revenue it's not demand i think it's the availability of compute and data centers and so you're just kind of wondering like what is the point of all of this it's so true i was talking to someone in politics about this and the theory that they had is well the democrats aren't gonna pause the data centers forever they're gonna pause them until they feel like they're in enough control that they can dictate all the rules and so in other words they're calling this a moratorium and i think it does mean that the data centers are going to stop but eventually they're going to be in a position to say okay here are our terms if you want to turn these things back on right you want to lift the moratorium and then that's when we get this you know big government democrat defined ai regime and you know that it's going to consist of a new regulatory agency and new speech controls the whole trust and safety agenda from social media will be ported over that's this was this one person i was talking to this is what he was speculating is a real agenda is that eventually once trump is no longer president or in some future democratic administration they will eventually lift the moratorium but on their terms now i think that's a really dangerous thing to do because you know trump is president for another two years and then no one knows what's going to happen after that and even if you lift the moratorium in say two and a half or three years it's going to take a couple of years for those projects to even ramp back up so when you start talking about a moratorium on data centers it's not like us a few month pause it's probably a good five years at least before you know you can get another data center switched on in the state of new [01:07:09] Speaker 2: york just so you know how bad it's gotten there's a curve that you can use to price data center assets and i think you guys know this but i have this portfolio of these assets that myself and my partner nita have accumulated and what's so interesting is when we talk to all of the hyperscalers about giving us a price because we're trying to figure out whether we should keep it or build it or just sell it the most incredible thing is how extreme the price is at the front end of the curve when you have verifiable energizable power today and the reason is exactly everything that you're saying sax which is that when you look out into the future you know we've said this before but it's about 40 of all these projects are getting mothballed and stopped and so it's creating this massive deficit of available energy to actually drive the use of ai so to the extent that you actually want you know drug discovery or you want cancer diagnoses or you want better health care or better legal advice we may actually not be able to service it based on all of the demand that exists because the power isn't there the energy isn't there and the reason why that's not there is because folks are just kind of reflexively protesting something that they don't completely understand clearly so i think it's a [01:08:26] Speaker 1: really it's a really big problem i mean we're gonna have gpus chasing energy like where's their energy and just drive the gpus there is what's going to happen right let me add one layer to it which is [01:08:36] Speaker 5: they're not only trying to stop data centers from being built in the us they're trying to stop data centers from being built internationally in our friends allies and partner countries and the way they're doing that is the same political forces that are stopping data centers are also behind all these new export controls on chips so they want to make it harder and harder to export chips to more and more countries including our friends and allies and so there's not going to be data centers here there's not going to be data centers in our allies i mean where are we going to put these things yeah [01:09:05] Speaker 2: i mean some of those allies have unlimited energy middle east like if you want some data centers well what's funny jason is you know we did a bunch of middle east data center stuff and then it's kind of stopped meaning like there wasn't this growth that i thought would happen because it's a very conveniently placed geography it's the middle east for a reason and so yeah you know you can serve four billion people very quickly in under 200 milliseconds from there instead what happened was there was this explosion in asia and specifically in australia which kind of surprised me because i would have thought that those folks are a little bit even further out on the dsa you know far left i thought these things would not have happened but they they were able to get big deals done so in this weird way you have all of these other countries kind of running to try to embrace this stuff quickly they've done a decent job they're doing stuff to sort of like displace some of the energy that that is needed in the us but the problem is we need to have enough surplus here because this is where most of the [01:10:07] Speaker 1: commerce is going to get created that really that i think these are these are luxury regulations like you can afford if you're new york state or california to be like you know what we don't need this this is a luxury for us to have an extra data center but if you're australia you might really need [01:10:20] Speaker 3: the money if you're texas you might really want the money so this is what's crazy like virtue signaling [01:10:26] Speaker 2: only goes so far until your debt to gdp is high enough and or your productivity is low enough and or your foreign direct investment is low enough where you're like yeah all right you know what screw all that we're just going to build a data center but the the other thing is if you saw what happened this week the uae now is able to import the best in class leading chips and so to your point jason i think it restarts the cycle where you have to look very carefully at the middle east because it's a very attractive place to build these things and by the way i don't know if you saw the the you know [01:10:54] Speaker 1: even if you just if you think about fiber and the milliseconds as you're talking about yes you can get to the 4 billion people but i don't know if you saw the the giant starlink versions now they make like a really big version i think it's actually got like one of the enterprise versions but there's like an even bigger enterprise version and they can bundle them together and you're starting to get to like 10 gig 20 gig setups so that means you can start putting these things almost anywhere which gets also like [01:11:21] Speaker 2: adds another wrinkle can we see your clip the thing that you were mentioning before this is not to your [01:11:27] Speaker 4: point as prevalent in the middle east where you have monarchies and governments that aren't ruled by democracy but in democracies we see this anti-data center movement taking hold this chart is something that for me always kind of played a role in my understanding of where the incredible anti-gmo sentiment came about in the united states this is great russia today this russian media outlet launched in the u.s in 2010 they were kicked out of the u.s by biden in 2022 and you can see that prior to russia today existing in the u.s there was no anti-gmo sentiment gmos were around since 1996 that's when they first had their big commercial launch in the u.s and were pretty prevalent for you know 14 plus years before everyone started to think gmos are bad we got to get rid of gmos and you could ask people a hundred different ways very pointedly and specifically about the facts on the matter and the science of gmos and all this sort of stuff but everyone always had a reason why they didn't want them similar to what we're hearing now with ai and data centers and it turns out that if you track back all of the media that had all this anti-gmo sentiment that ultimately got picked up by the mom bloggers that ultimately got put into social media feeds that ultimately everyone just accepted as truth a lot of it originated in this russian media push that happened around this era and you can actually see this on the google trend data that shows gmo and it's kind of right up and then as russia today started to get cut by different media outlets and people stopped retweeting them and stopped reflecting them and stopped writing articles that followed russia today the anti-gmo sentiment declined in the u.s and i think you can see this going back decades you know there's this effort that the kgb kind of designed during the cold war called directed measures which was really meant to try and create an influence campaign through affecting media so putting this kind of propaganda out through foreign media particularly targeted western democracies and you know you could argue that maybe you could trace back what happened in germany with nuclear energy as being kind of similarly originated but there have been a series of these pushes that seem nonsensical if you're fairly rational and can have an actually objective debate about the scientific merit the economic merit the benefits of these technologies but for some reason what we call the activist community become heightened to them say that we've got to get rid of them and everyone's got these different unfounded scientifically unfounded reasons why they want to get rid of them and you're like wait a second how did we end up in this place that we're literally handicapping ourselves and i think we're seeing something similar happening with data centers in the u.s today the funding of the ngos as they're being called the media that's supporting this the retweeting of the media and then you ask people there's a poll that came out today something north of 50 percent of americans believe that data centers increase the cost of water and electricity even if the data center is fully recycling the water and they're producing their own electricity there's still this kind of repugnant reaction to the data center and so there has been this like deeply sown psychological shift that's happened in the united states and and you know people have these well i hate the rich i hate tech i hate ai i don't want any of this stuff i don't want any of this stuff but where's it all come from i do worry that there's some degree of kind of call it foreign you know influence influence i don't love the word influence because everyone kind of everyone captures it up but there is some degree of this like yeah well i would say there's there's foreign interest let's let's call it that no i think [01:15:04] Speaker 5: it's more than that they're just one month ago just one month ago open ai published a blog post called prc linked influence operations are targeting ai debates in the u.s and politico covered this and a lot of other sites covered this basically what they are saying and in fact many people are saying is that china is behind a lot of these influence campaigns to shape u.s attitudes on ai data centers [01:15:30] Speaker 2: it makes sense it makes a lot of sense yeah and there's going to be a congressional investigation [01:15:35] Speaker 5: of this it does make sense because it is in their interest right yeah if they can stop us from building this necessary infrastructure then that's a way for china to win the ai race if they can [01:15:46] Speaker 2: the market if they can incentivize anthropic to you know pull the ladder up if they can kill open source in the united states and constrain demand or the optionality and choice of lower cheaper models think about that for a second at 56 per million input tokens i mean versus 50 cents for the rest of the world all of a sudden it doesn't take a company that's much much worse than you to beat you when your cost is 50 to 100 x more right that's just the math the math ain't mapping you know it's sacha [01:16:23] Speaker 5: made the point that these enterprises are not just paying for ai with money they're paying again by feeding those frontier models or proprietary knowledge right and all their their alpha so it's like a double whammy it's like it's more expensive and you're potentially mortgaging your future look let's be [01:16:41] Speaker 2: honest it is obvious where foreign governments have an enormous incentive to try to manipulate and influence the comings and goings in america i think we should just acknowledge that the idea that that doesn't happen is very naive now the question is we have to be able to call it out and put our finger on it because otherwise what is clearly happening is that there's a lot of americans that will just fall for this and they will not think from first principles we have a huge we have a huge [01:17:09] Speaker 5: moral panic going on with respect to ai look when you talk about catastrophes that could result from ai what are we talking about we're talking about things that might happen in the future nothing resembling this has happened yet you know even the cyber risks that everyone's been talking about job loss or job loss it's like none of it's turned out to be true we haven't seen any of it so far but we're on the threshold i think of destroying the crown jewel of our economy which is the system of free market innovation that we have this culture of rapid iteration of anyone with a good idea can go raise risk capital and start their idea start their company and we're on the verge you know now we're talking i think about how far the overton window has moved where we're actually saying that creating a finra for our industry might be better than all the alternatives finra is a bunch of stock brokers writing rules and when's the last time there was ever any innovation in that sector i mean i guess robin hood made trading free that was it that was a big one yeah that was it okay but that's not real innovation okay that's like an innovation with respect to a pricing model and we're actually saying that that might be the least bad alternative is having the equivalent of a bunch of stock brokers creating new rules that all these ai companies are not gonna have to abide by it's crazy we are gonna we are gonna throw away the lead that we have in this and by the way kimi k3 just came out and people are saying it's it's now right up there it's very very close to the frontier we may have months on china if that and we're gonna create all these crazy rules and new regulatory bodies for risks that have not manifested yet [01:18:48] Speaker 1: it's worth monitoring the situation but it's not worth panicking like you should monitor the situation with self-driving cars and job loss china's certainly doing that they just stopped giving out permits for self-driving cars as an example because it's going so well and they're losing jobs and there are people who are getting there's a little civil unrest so they just said we're gonna make self-driving cars um licensed and so they're not giving out any more license moratorium on license for now it's worth watching mythos and if it could hack your system palo alto network's checking it out other people checking it it's all worth monitoring but yes there's no disaster here today because of ai nothing's jumping out of your chat gpt window you know the worst case scenario is you blow out some tokens [01:19:29] Speaker 5: you know okay great that that's that's the biggest there's only a handful of companies that are even at the frontier and they all have safety testing and red teaming and all the rest they're doing a good job yeah they're doing a good thing stop that i'm just questioning whether we need some vast [01:19:44] Speaker 1: regulatory apparatus now to start doing it's certainly premature and we did this because of science fiction and dario saying all jobs are going away i mean that that that was the most ridiculous thing when he said it's like he's panicked that it's going to be 80 or 90 jobs in 2026 what was his claim i nick get the [01:20:02] Speaker 5: exact claim i think he said 50 percent of jobs he said with it he said 50 of entry-level knowledge worker jobs are going away within one to five years that was one year ago so it's a little ridiculous [01:20:14] Speaker 1: yeah i mean it's but people don't even know how to use the tools yet he's been in a state of panic [01:20:19] Speaker 5: since gpt2 yes yes i remember they wanted they wanted to have uh regulatory approval for models that use 10 to the 25th flops right and every single ai model is like well past that threshold now and we haven't seen any of the the harm look they thought that 10 to the 25th flops would be enough compute to create you know the terminator you know to create skynet no offense freeberg but [01:20:48] Speaker 1: one guy's panic attacks one guy's anxiety condition might have shaped the whole course of history here like does dario have like i'm not making light of it but does he have an anxiety issue where he's like overly concerned about this stuff or is it just delusions of grandeur come on the pod dario invites open come hang out i'm sure he'd love to come on the pod after you just accused [01:21:08] Speaker 5: him of having a panic attack but i mean he seems like he's in a perpetual one no listen it could be psychological but i actually think that there's a strategy that makes a lot of sense and it's a very simple straightforward strategy number one brand yourself as a safe ai company number two ban unsafe ai three profit yeah there you go that's the strategy kind of brilliant all right everybody [01:21:34] Speaker 1: go to allin.com events and sign up for the all in summit in september scholarships are open let's do a quick amazing deep robust science corner with our boy david friedberg before we get into the science [01:21:50] Speaker 4: corner i'm going to give a shout out to ronnie dog for adoption i love family dog rescue in sonoma check out his instagram link god here he goes in the description this dog needs a home he was fostered and he lost the foster home someone come and grab him he's awesome all right let's get into [01:22:07] Speaker 3: this is what we're doing he's trying to try to get more cue points that dog looks delicious [01:22:17] Speaker 5: you don't live in sri lanka anymore jama [01:22:25] Speaker 3: how do you marinate that dog in sri lanka do what you got to do in sri lanka is it just salt [01:22:29] Speaker 2: and pepper free burger or do you like something else you know just a little salt and pepper our marinade do you use beau jolais nouveau oh do you do you like do you like a little yogurt and garam masala maybe do a little okay okay spicy do you guys want to talk about reversing aging [01:22:44] Speaker 4: yes i want to talk about but i got a drop all right guys i gotta go too i gotta go to the apple tower science corner all right so jamoth you can drop two if you want i'll cover science corner solo so in the past we've talked about yamanaka factors which are these proteins that can go into cells and reverse the aging of the cell and the cell starts to act young again pretty amazing and uh there's a lot of advancement happening on that front but this paper that came out just this week that everyone's kind of going crazy about was put out jointly by calico which is google's kind of you know age reversal startup that's super secretive that they're not allowed to talk about in partnership with a group called revel pharma and what they focused on was what's called the extracellular matrix the parts outside of the cell that age and and what does aging actually look like outside of the cell well over time sugars and fats bind to proteins in the area between our cells and they accumulate they don't get cleaned off and as they accumulate they don't get cleaned off they make it harder for your body to clean out that area to maintain that area it causes stickiness it causes binding and that reduces mobility and ultimately leads to things like wrinkles in our skin makes it harder for our joints is that what visceral fat is no it's called glycation and so it's the binding of sugar and fat to the proteins that sit in between the cells exactly and so it's that whole gunky area in between the cells that when you're young works well everything's smooth the proteins get replaced if they break down and as you get older sugars and fats kind of stick to these proteins block them up and as they get blocked up your body can't repair them it can't clean them and more importantly it changes the structure and the shape of those proteins so things like collagen that are far apart stick together and that causes things like wrinkles and that causes immobility and it also causes inflammation because then those proteins kind of look different than they're supposed to and your body starts to attack them and that activates inflammation and that's why we get one of the reasons why we get more and more inflammation as we get older and so one of the key what are called advanced glycation end products that's the term for these things is called cml cml is kind of the predominant molecule that gets formed in this extracellular matrix that's driving aging and nothing breaks it down so these scientists set out to try and create an enzyme an enzyme is a protein that breaks something down um that can break down cml and remember a protein is just a series of amino acids and those amino acids are programmed by dna so you can put three letters of dna to make an amino acid so you can literally just print dna and then put it in a bacteria to print proteins and then test those proteins to see what they do that's the the modern kind of era of kind of protein synthesis and protein testing and so these guys kind of went out and they took the target which is cml and tried to figure out okay how do we actually degrade cml clear that extracellular matrix and reverse aging and they started with alpha fold and they used alpha fold to find a protein that could bind to cml and activate an enzymatic or process it would break it down and then they took that protein from alpha fold that comes out of a bacteria they produced it they started to test it and then they started to find some of the binders or the parts of that protein that they could make better and they used you know dna programming to change it and they made hundreds and then thousands of variants of it to measure activity which is how good is it at breaking down the cml and they did this recursively five different cycles and then eventually they tested it once they'd kind of gotten it breaking down the cml really well in a test tube they started to test it on the proteins that we would find in our body casein collagen retinal proteins which are in your eye hemoglobin and they were able to get rid of 52 to 97 percent of the cml just degraded away and then they um they found several sites where they were able to degrade over 90 percent and then they took actual human skin from elderly patients that had donated their skin and they put this enzyme onto that skin and they were able to eliminate 55 percent of the cml on the skin which basically reversed the skin's age down to the age of a 31 year old this is from greater than 70 year old patients just by putting this enzyme on the skin and so it's kind of a groundbreaking demonstration of combination of alpha fold what's called directed evolution where you change the order of the dna that changes the structure of the protein to test different proteins do high throughput screening and ultimately make a novel protein that doesn't exist in nature today that can do something pretty profound for human health and now the next set of questions is okay well great this enzyme is awesome how are we going to get it into our bodies are we going to get it into that extracellular matrix is it going to be a cream is it going to be a shot a supplement could we eventually take an rna shot that makes the protein inside of our body and starts to do the degradation from within a lot of questions kind of still to be answered but it really i think lights a great path forward amazing for these novel therapies that we're developing it's awesome i mean dude like amazing you know all my i got all these joint pains in my hip and my shoulder now like everything you can feel [01:28:06] Speaker 2: yourself getting older well that's all i will tell you this right now that will not be the first market the first market will be cosmetic and cosmetic skin yeah it will be a trillion dollar market if you can [01:28:17] Speaker 4: create a queen dude if you could put this enzyme literally on your skin and on your face as a cream [01:28:22] Speaker 2: yeah game over it's a it's a that that alone is two trillion dollars but i mean dude ai let's just [01:28:29] Speaker 4: talk about applications of ai why it's actually awesome that everyone should be able to agree on and you can't be convinced by some foreign psyop this is awesome i mean this was alpha fold it's amazing used to discover this thing and evolve it and drive this outcome everyone can benefit from it it's just so profound that we have this pool at our disposal in this day and age i think it's pretty awesome anyway thanks for sticking around for science corner guys i love you all right bro love you too [01:28:56] Speaker 5: we'll let your winners ride rain man david sac we open source it to the fans and they've just gone crazy we should all just get a room and just have it one big huge orgy because they're all just useless it's like this like sexual tension but they just need to release somehow [01:29:20] Speaker 9: wet your feet [01:29:34] Speaker 3: we need to get we need to get back