All-In with Chamath, Jason, Sacks & Friedberg - E166: Mind-blowing AI Video: OpenAI launches Sora + Biden too old? Tucker/Putin interview & more

Starting point is 00:00:00 So how's Tequila? I tasted 10 samples the other day. One was heads and shoulders above the rest, which was a good sign. So now we're taking that and making it the new baseline, and I'm going to try 10 more samples and we're going to go from there. I think we're very close to having something excellent. And then I did a side-by-side taste test of the sample I like the best compared to Clasa Zool Ultra. And it was already better than Clasa Zool Ultra, which retails for like 3,000 a bottle.

Starting point is 00:00:31 Really? Yeah. Holy s***. So it's going to be better. V1's better than their final product is what you're saying. Yes. And that was not just your taste test, but like you and several people. It was me and two other guys who I trust. So we did it together.

Starting point is 00:00:43 Now, when you say trust, do you mean underlings or do you mean actually like... No, he means alcoholics. Where in your pay hierarchy are they? He recruited them at Alcoholics Anonymous in West Hollywood. Are they level two employees or level four employees? Well, one works for me and one's a consultant. I'll say both. Okay, are we over or under estimating the impact of the AI boom? Invite has been on an all-time heater. If don't know, its market cap is now 1.8 trillion for you Berg. This week, it surpassed Google and Amazon as the fourth most valuable company in the world.

Starting point is 00:01:37 There it is, folks. Right behind Saudi Aramco. 16 months ago, stock was trading about $112 a share. Since then, share price has gone up 6.5x on a big number. Shares went higher this week after it was reported that Nvidia plans to build custom AI chips with Amazon, Meta, Google, and Open AI. In other news, Financial Times reported Open AI

Starting point is 00:02:01 hit a $2 billion run rate for their reoccurring revenue. It's about $165 million a month. They think they can double that number in 2025. Tons of competition coming out if you didn't see Google rebranded. They're generous AI suite to Gemini and they're charging $20 a month for it. Then there was this bizarre Wall Street Journal headline that Sam was going to raise $7 trillion. That makes no sense. Maybe that was the TAM. We'll get into that. Freeberg, your thoughts on this ascension. Are we underestimating or overhyping AI?

Starting point is 00:02:35 I mean, it seems like the compute build out is underway. way. So this is going to continue for some time. I think the real question that keeps getting asked is, you know, when do you really see the tides recede and what's what's there? The compute build out is underway, but are we seeing application and productivity gains associated with the capability of that compute? Some would say yes, some would say no, but you've got to build out the infrastructure if you're going to assume that there's going to be these productivity gains in the application layer. And everyone's assuming they'll be there. So we need to meet the demand, which is almost like building out an entirely new internet. And so the core of AI is this matrix multiplication problem. And you need these chips that do that really efficiently. They're not traditional CPUs, which are general purpose chips, but they're chips that are very special

Starting point is 00:03:28 purpose for a particular set of applications that render the output of whatever model is being run. It's sort of like the internet. Like you could pretty much create a bogey of any number on how big this can get. At the same time, you're seeing some of the other players with different architectures and potentially that are going to be beneficiaries of this this can get. At the same time, you're seeing some of the other players with different architectures and potentially that are gonna be beneficiaries of this build out because there are participants in other parts of the data center for alternative solutions like ARM.

Starting point is 00:03:54 And I don't know if you saw this, but in just the last couple of weeks or last week or two, ARMS valuation doubled. It's come down a little bit since that big doubling. Today, ARM is sitting at 140 billion valuation. Last week, it got as high as 156. And remember, it was only last August. So if you guys remember, ARM was bought by SoftBank and the Vision Fund.

Starting point is 00:04:17 And then, I think 25% of ARM was held by the Vision Fund and 75% was owned by SoftBank. Last August, SoftBank held by the Vision Fund and 75% was owned by SoftBank. Last August, SoftBank bought from the Vision Fund the 25% that the Vision Fund owned at a valuation of 64 billion. But now SoftBank owns 90% of ARM, the last 10% trades publicly. So at $140 billion valuation, SoftBank's position in arm is $125 billion. And I think it really begs the question, did Masa have a masterful move here yet again? Because everyone said for years,

Starting point is 00:04:53 with all the bets this guy was making in the Vision Fund and some of the misguided bets he was making with SoftBank and the leverage he was applying on himself and SoftBank to deploy all this capital during the Zerp era. Everyone is saying, you know, this guy had a one hit, it was Alibaba and that was it. And clearly he doesn't know what he's doing. But now all of a sudden, his bet on AI was fairly prescient. And it's paying off pretty powerfully. He bought the whole business for 32 billion. And now he has a stake that's worth 125 billion seven years later.

Starting point is 00:05:26 Yeah, I mean, chipping a chair, right? Well, it's really begging the question. You only need one, the power law, right? When you're making a long-term investment, you can very easily look like a moron over the short term. And to your point, the power law, all it takes is one of them to work out and it can wipe out the losses on the rest of the portfolio. And we may be seeing Mossack with his whole AI vision story that he's been telling for seven years, we may see Masa clawing his way out of the hole. You only look like a moron to losers. Meaning when people were throwing shade at Masa, it wasn't anybody that's any good.

Starting point is 00:06:01 I didn't see headlines that said John Malone thinks Massa is a fraud, Warren Buffett thinks Massa is a fraud. Nobody was saying that because those guys know what the game is and the game is exactly what you said, J. Cal. You must always survive and you need to keep your wits about you and over time, if you're prepared and do enough good work, you'll get waves of good luck that amplify your hard work. Andusoleum is an example of an incredibly talented person that has found a way to survive, more than anything else. Waves of success will hit him. The people that complain are the ones that are sort of a little bit stuck on the sidelines and are more frustrated with their own impotence and inability to do anything. Now, on arms specifically, the thing that I would keep in mind is that those guys floated, I think about 15 million shares. So there's about 145, 150 million shares

Starting point is 00:06:58 outstanding, 90% owned by them. So there's about 10 or 15 million shares outstanding. And there's about 12 and a half million shares short going into the earnings report. And so the thing to remember is that there was almost an entire turn of the float that was short. So I don't know how much of this reaction was just an enormous short squeeze of people that were largely long other chip companies and so they thought they could short arm essentially as a spread trade to minimize volatility. But this is an example of where if you don't do this analysis properly, GameStop was another where you misjudge or you sub analytically look at the actual

Starting point is 00:07:41 share account and what's actually free floating, you can get caught on the wrong side and these things can be very violent. And to explain the float to folks, you can make a certain number of shares available to the public to trade. When you have a small number of those, correct, Chamath, available to the public, weird things can happen because there's not enough available to short. That's exactly right. And so that could have been the situation here with this run up. But I think the overall point of placing bets

Starting point is 00:08:10 and being a capital allocator is the important one to discuss here. Sax, what are your thoughts on all the crazy bets that masa made? We watched a lot of our companies or companies adjacent to our companies get massively overfunded. Some of them literally got drowned in capital, but then you only need to hit one and maybe win it all back.

Starting point is 00:08:29 What are your thoughts on this high alpha, you know, betting style of his? Look, I mean, he's a gambler and he is playing a power loss, so he only needs one really big return to basically make up for all the mistakes. And it seems like he's hit that. Once again, he did it with Alibaba too, right? Yeah, I mean, he's a major gambler. Most people would be a little bit more risk-averse. I don't think it was a great strategy to be pumping $500 million checks into what were effectively seed companies like they were doing with the Vision Fund.

Starting point is 00:09:01 However, obviously he made enough good bets that they're going to pay off that fund. Well, it's a good point, Sacks. I mean, none of the big... I probably need to be careful, because I'm not super familiar with the portfolio, but it doesn't seem like any of the big winners were those seed bets. He doesn't have any returns coming out of that investment strategy. DoorDash. DoorDash. Yeah. DoorDash was. Door-dash. Yeah.

Starting point is 00:09:26 Door-dash was not, like what point did they invest? Billion or $2 billion round was? Yeah, pretty important moment. We've heard at dinner, Jason and I at dinner, we've heard the waterfall from the softbank side and it sounds like it was an enormous number. That was definitely their investment. But it was a de-risked business. It was a scaling business.

Starting point is 00:09:45 It seems a little different than some of these companies that were fairly early on that got monster valuations and large chunks of capital and then struggled to find ways to deploy that capital, which led to unhealthy behavior. I think the thing you have to give them a lot of credit for is it's so easy to give up when the peanut gallery is chirping. And so the thing that you have to give him a lot of credit for is he has the ability to tune those people out. Now, he probably isn't even living in a world where any of those people that chirping even gets to him. And I think that that's a very important thing. But kudos to him. I mean, to be able

Starting point is 00:10:26 to tag something for 100 billion here, 70 billion there. I mean, keep swinging. And by the way, at the end of it all, what is it going to change for him? Absolutely nothing, except he'll have some incredible stories to tell about the vault that he took and the roller coaster ride he was on. And I think that's going to be the most valuable thing. He's going to be able to tell his grandkids these stories and their eyes will just be like, what? And his friends, you know, I mean, I would love to have a dinner with him.

Starting point is 00:10:54 I don't know him. Yeah, let's do it. Come on the pod, Masa, let's talk about it. I've only met him once by the, I have a great story to tell about Masa when I was at Facebook, I met him once. But anyways. Go ahead and tell it.

Starting point is 00:11:02 I mean, can you tell it? All I'm saying is I would love to have dinner with him because I just want to hear these stories of all, like up and down and up and down and amazing. I had two lunches with him. We had lunch one day, we had such a good time. He said, can we have lunch again tomorrow? How long are you in Tokyo?

Starting point is 00:11:17 I said, yeah. And I came back the next day and I had lunch with him twice. Oh, that's amazing. And it was great. Like talking two or three hour lunches where we're just talking about every web 2.0 company. This is in, you know, the 2009 Uber kind of Robinhood period.

Starting point is 00:11:31 And he was just fascinated by what was going on and all the disruption happening. DoorDash Series D, $1.4 billion post-2018. He did. Well, the question I was asking is like DoorDash was a lot like an arm. There's a point of view that the business has proven that there's a market that it can grow into that there's a management team that knows how to deploy capital versus a lot of these early stage bets where when they got too much money, they ambled about what they didn't amble about, they kind of incinerated

Starting point is 00:12:03 it incinerated because what do I do with this money? I don't yet have a machine or an engine that can grow with this money. And until the engine can handle the capital. Like the pizza thing. Like the pizza thing. Zoom pizza you're talking about. Yeah, I mean, if you give.

Starting point is 00:12:15 Well, there's dozens of them in that portfolio, right? Yes. If you don't have a business that can handle the gas you're putting in the tank, the engine's gonna blow up. The engine has to grow, it has the tank, the engine's going to blow up. The engine has to grow, it has to build, the volume has to build so that it can actually handle the fuel. And I think that's been part of the challenge. And I will just say, I've said this in the past, but there was an era in Silicon

Starting point is 00:12:35 Valley that started around 2010, 2009, kind of right after, right as, right as Web 2.0 was starting to venture into more traditional markets, meaning tech companies were becoming other companies. Kind of the mobile local era was kicking off. And there was a strategic concept that got popular in Silicon Valley on take the market, which is when you feel like you could be the winner, give the person all the chips and say, now go over bet and take the whole market because these are gonna be winner take all or these could be winner take most markets.

Starting point is 00:13:09 So get first mover advantage, here's more capital than you need. And I remember being pitched this when I was raising my Series B that I should raise more than I was trying to raise because I should use the extra capital to take the market. And then that mantra just became the de facto standard which is, oh, you have something that has something, it has some edge, it has some advantage,

Starting point is 00:13:28 it started to move in the market. Here's a ton of capital you don't really need. Now go take the market. And the reality is most of those businesses had absolutely no way of using that capital to quote, take any market to your point, or market was yet. Yeah, they, when you're in the product market phase, product market fit phase and you don't have the engine as you called it, how do you make the engine go faster? You're literally trying to take a bunch of car parts and then run a Formula One race. The car's not even track worthy yet. And Katerra, you know, not to pick on any companies, but I remember Katerra, which was

Starting point is 00:14:02 doing construction and they just thought they're going to take over the whole construction industry with this company. It raised like $900 million and I believe it's zero the whole way. You cannot put the money to use capital as a weapon maybe works if you're Uber, Lyft and DoorDash and you have customers and you can reduce the price. Well, you know, what's interesting is when you now look at all a bunch of these AI companies, every day, what you see is every round is a minimum of $100 million. But the dirty little secret is not that these companies have found product market fit or are scaling revenue massively. I'm not talking about open AI, I'm talking about these other long tail businesses.

Starting point is 00:14:42 The $100 million is largely going to compute. But as we know, and I think we'll talk about this next week when all these announcements are done, but you're about to see a one-tenth thing of the compute cost. And so what's interesting for those companies is they're gonna be left with a lot more money, but back to Friedberg's point,

Starting point is 00:15:00 they may be ambling about with too much money at that point. So today you raise $100 million because you need to spend 70 or 80 on compute. Tomorrow when you only need to spend seven or eight for the same amount of throughput, on one hand you could say, well, this is great. I have so much more money I can spend. But again, we've seen example after example where if you raise too much money when you don't need it, you will just run yourself into a brick wall. You'll over hire, you'll miss hire, you'll mis-hire, you'll mis-allocate,

Starting point is 00:15:27 and it just goes back to the same thing that we've said before, which is there's just not enough people that actually know how to run companies. Yeah, and it just becomes a huge distraction. Huge distraction. Did you see Saks today, Sora? Did you see Sora, controlled by OpenAI? This is breaking news right now.

Starting point is 00:15:40 Yeah, this is unbelievable. If you haven't seen it, Sora is the text video model from OpenAI. They've been talking about this. I guess this would compete with Staple Diffusion do video as well. Anyway, you give a prompt. I'll just read this one out loud. Beautiful snowy Tokyo city is bustling. The camera moves through the bustling city street following several people enjoying the beautiful snowy weather and shopping and nearby stalls. Gorgeous, Sakura petals are flying through the wind along with snowflakes and this, if you weren't studying it, would look like a major feature film or TV show.

Starting point is 00:16:21 Yes, Sacks? Yeah. I mean, it's unbelievable. I mean, it looks to me like 4k video I mean, I'm not sure it actually is 4k, but it looks pretty darn close Yeah, the rendering resolution can be whatever you want it to be right the fact that you can describe the The way that you want the camera to move So I'm gonna speculate on this you guys know I talked about this quite a while ago on how I

Starting point is 00:16:44 Think we're to be a prompt to video, meaning people are going to have personalized video games and personalized movie experiences and music eventually, where rather than everyone watch the same product made centrally by a producer, we'll all make our own product locally. I spent some time digging into this over the last year. And the big challenge was that the traditional approach for rendering video is you create three dimensional objects and then you have a rendering engine that renders those objects.

Starting point is 00:17:10 And then you have a system that defines where the camera goes and that's how you get the visual that you use to generate a 2D movie like this. And the best tool out there is Unreal Engine 5 which is made by Epic Games. I don't know if you guys have ever seen the demos of it, but I've seen it. Because that's what Star Wars uses with their virtual sets now when they did the Mandalorian. I think they're using the Unreal Engine or Unity.

Starting point is 00:17:32 They probably are. And then there's other tools. If you're in movie production, you'll use different stuff, but Unreal Engine is just so incredible. But it requires the placement and the rendering of 3D objects. So where do those objects go? And then the physics of the light moving off those 3D objects generated 2D video is pretty straightforward. That's been done for 20, 30 years. And so the density, the rate of improvement, the color contrast, et cetera has all improved,

Starting point is 00:17:58 made it look incredible. Now it's super photorealistic and create photorealistic video. But it still requires this concept of where are the 3D objects in 3D space. This doesn't do that. This was a trained model. So we don't know what's going on in the model.

Starting point is 00:18:12 So how would you train a model to do this without having a 3D space? Because clearly there's thousands of objects in that rendering. If you look at that video, thousands of little objects, the compute necessary to define each of those objects, place them in 3D space is practically impossible today. So this is being done through some model that starts to render all of these things together. So it is very likely my guess is that OpenAI used a tool like Unreal Engine 5 and generated tons and tons of video content, tagged it,

Starting point is 00:18:48 labeled it, and we're then able to use that to train this model that can, for whatever reason, that we don't understand, do this. Make the output. But what's interesting is that this output underneath it... You're referring to synthetic training data. Yeah, exactly. But what's amazing about this model is that underneath this,

Starting point is 00:19:11 this model on its own has rendered physics. So all of the rules of physics, all of the rules of motion, all of the rules of perspective, all of the rules of how objects sit upon one another next to each other, how fluids move. If you look at some of the other demos on this tool, you can actually see fluid moving.

Starting point is 00:19:28 It's rendering the movement of fluid or rendering the movement of hair. Those are like physics models that would typically be deterministically written, meaning that a programmer and engineer writes the physics and then the Unreal Engine renders the physics. In this case, the model figured out the physics and the model probably did it in such a reduced way

Starting point is 00:19:47 that you could use a reduced amount of compute to generate something that would otherwise take a ton of compute time. I mean, look at this. It's truly amazing. Nick, find the one of Golder's Trevers playing in the snow. This is way better than this one. But what's amazing is that the,

Starting point is 00:20:00 and by the way, if you're listening to this, I really recommend going on Twitter and typing at openAI, SORA, S-O-R-A, and looking at some of these demo videos. It's bonkers. And I think it really speaks to what's so incredible right now, which is that software is writing itself and it's replacing a lot of human determinism.

Starting point is 00:20:16 The way that humans think about constructing software is being completely redone with these learn models. This model learned physics on its own, renders this thing that looks like the only way we know how to do this today is to create 3D object models in 3D space and use tons of compute to render the light. To translate that from geek to people listening,

Starting point is 00:20:39 this is incredible because Pixar spent years, maybe a decade trying to figure out hair. I remember talking to Ed Catmull, and he told me hair was just so hard to get right with wind and lighting. They'd literally built the physics engine for years. Like maybe even a decade to make hair across the uncanny valley.

Starting point is 00:20:57 What you're saying here, Freberg, is somehow this language model, this image model, just outputs it. And it doesn't actually have a physics model, it just outputs it, correct? Yeah, it will. We don't know, but the model, there may be some determinism built into it. So I don't want to assume anything. But the general approach, determinism means you write the physics and you write the formula of the physics, so that the software can execute the physics

Starting point is 00:21:25 and render the thing. But in this case, it may very well be the case, like a lot of the other models that are being trained today, when you create a model that's trained, that it's being trained and on its own, it resolves to figure out how to do the physics. Is there a limit on the length of these Sora videos that you can generate? It's one minute right now. 60 seconds today. Obviously that'll come off at some point.

Starting point is 00:21:49 But by the way, if you can do 60 seconds, you can do two hours. Right. The problem that you have is, I mean, if we're talking about creating a movie is making edits. So I'm obviously having to use Sorya because it just came out today, but I've used Dolly, which is just their prompt image service. And I was designing the label for, or the bottle for the All-in tequila for you guys. And what I noticed is that it would spit out a bunch of ideas. And then I would take one and

Starting point is 00:22:18 then want to just make little changes. And I would just say, okay, keep this, but just change this one detail, it would give me a completely new image. So the AI doesn't realize the layers inherent in what it's producing. Somehow, it takes this prompt and generates a response. And if you give it that same prompt 100 times, it'll give you 100 different answers. And if you'd say, just modify this, this, or this, it can't do it. Can't reason. It can't take criticism. Well, it seems like on some level, it's unaware of the output that it's created.

Starting point is 00:22:51 Again, a human creating this in Photoshop would have a lot of layers. And every object in that image would have its own layer, and you could have a layer for text and just quickly modify the text. When I want to do something as simple as edit the text or change the font, again, it would give me a completely different image.

Starting point is 00:23:11 And I just wonder about these videos, if you want to create a movie, I think you're probably going to be stuck with like the, what they give you. And then maybe you can import that at some point into an Unreal Engine and then do work from there. The editing part is it doesn't exist yet. When you do text, it's easy And maybe you can import that at some point into an Unreal Engine and then do work from there. The editing part is it doesn't exist yet.

Starting point is 00:23:27 When you do text, it's easy because you just cut and paste it into your Grammarly or your Notion or whatever you use and you start editing. Here there's no exporting like you're saying to Final Cut Pro or something. I bet that when they turn this into an API that when you're working in Unreal Engine, you know, if you're like a VR designer or something like that or you're working in Unreal Engine, if you're a VR designer or something like that or you're a filmmaker, you could probably just get started with a prompt. That could be hugely time-saving if they can make that integration work. I think that's pretty interesting. I looked at this a lot over the last year. This was one of the biggest challenges is in order to have an interactive approach to

Starting point is 00:24:06 video production or video game production, you have to be able to say, we'll take that output that in. But like you said, the model doesn't distinguish the objects. It doesn't distinguish each of those little flowers or each of those little cherry blossoms or it doesn't even distinguish if there's two people walking down the road. The model doesn't have this concept of objects when it renders. And so the traditional model where you have objects in a 3D model that then get rendered into a video allows you to do those sorts of things. So what may end up happening is a fusion, and this is something we talked about

Starting point is 00:24:42 with Stephen Wolfram and others, that there are these models that are called compute models that do deterministic compute tasks. Then there are these AI trained models, where we don't really have a sense of how they work. But the fusion of the two will unlock a lot of opportunities, and that's very likely the next generation of models, is not just purely non-human intervened train models,

Starting point is 00:25:05 but the integration of those models with these deterministic models, with these compute models. And then you can start to do things, like instead of saying, hey, render this whole scene, you're saying render all the objects that would go in the scene, they get placed in an Unreal Engine.

Starting point is 00:25:19 And then the Unreal Engine outputs the video. And so that integration work, I think is the next big phase in AI model development. And that'll unlock like insane shit. Yeah, because right now you can't use this to create dialogue, like actors in a movie scene talking to each other and acting, especially like close ups of those actors with their facial expressions. I don't at least I don't see any examples like that.

Starting point is 00:25:44 The way humans want to have a creative process, it doesn't work. That's right. Yeah. It'll get there though. And if you put something like this out there to the public and said it's 20 bucks a month to do this or 50 bucks a month, you can have a lot of consumers who want to buy this product. So when I see this, I think people are going to pay for this. And then going back to NVIDIA and we're ARM. Okay, more infrastructure to your point, Freberg is like, what infrastructure do we need for everybody to have Pixar on their laptop

Starting point is 00:26:13 or on their phone? And people are willing to pay for these products. I don't know if you guys saw this, but there was another big breakthrough announced today with the new Gemini Pro 15. Can you just pull up Sundar's announcement on it? Yes, Sundar now has found the password to his Twitter handle. He's tweeting. Yeah. The reason I want to talk about this, if you just scroll down, so when you prompt an AI model, you put in a certain number of words into like an LLM model today and it spits words back out.

Starting point is 00:26:41 The more words you put into the model, the more compute intensive or challenging it is to do the compute work needed to render the output. So OpenAI, their GPT-4 turbo model has 128,000 tokens, which means about 128,000 words can be fed into the model to get an answer back out. So you could put like a whole essay or 100 pages of text and it will read a document for you. You can get a whole book and it could give you a summary in a couple of seconds. What Google just announced with Gemini 1.5 Pro

Starting point is 00:27:13 is a one million token context window, up to 10 million token context window in total. I don't know what's going on here because the problem is the way these models are kind of traditionally built is that that creates a nonlinear scaling and compute needs to be able to increase that context window like that. So there is some architectural work that's gone on to allow these models to scale up in a way that we did not think possible when these models first came out, which is crazy to think was only like 24 months ago that they started to get kind of looked at like this.

Starting point is 00:27:45 18 months maybe. Yeah, and so there's two kind of things that are happening. One is that these models are getting chopped up in a way that you can run small models in a highly trained way locally and you don't need a massive general purpose model. And so that's gonna make compute needs very small for very specific tasks. And the other one is that there's other architecture

Starting point is 00:28:04 that's happening in deploying the models that's allowing massive context windows like this. So it totally changes how scalable they are with the same number of chips or the same amount of computer or the same amount of power. So there are all these amazing Moore's law effects happening right now in AI technology development on the chip level, on the architectural level,

Starting point is 00:28:22 on how they're being built and how they're being deployed that completely changes the concept that I think most folks had when these first came out two years ago and the potential. So I think sky's still the limit. We don't really know how big this is going to get. But all of these efficiency gains mean that we can do so much more with so much less. And by the way, when you can do more with less, it doesn't mean you need less chips. It means you need a lot more chips, because the fact that you can do a lot more with much fewer chips means everyone's going to want to do it now. More people can afford to do it. So it unlocks the opportunity for compute. And so it really starts to rationalize the NVIDIA thesis that it could be worth $10 trillion, potentially. For people in the audience to understand what this context window means.

Starting point is 00:29:04 I'm sorry if I was too technical. No, no, no. I'm just, I always like to just give an example or two after you explain it. The context window, for example, you could upload the transcript of this podcast, right? And there were only certain services like Clawd maybe where you could put a PDF attachment, boom, you put it in there and say, hey, summarize this using your language model and using this content. Now you could be able to say, hey, take me every MrBeast video, take me, you know, take the top

Starting point is 00:29:30 10,000 videos on YouTube, pick the transcripts, summarize them for me, give some analysis on it. And that was only available to developers prior to these large context windows being open. And that's going to just open up a massive amount of application, right? The results are actually not that much better. There's these third-party service benchmarks. Lombada is probably the most often referred to, but what you see if you just look at, for example, all the GPTs, even as they increase the number of parameters in a model, the quality of that model doesn't necessarily increase with the rate of parameter increase. So you have this thing of a little bit of diminishing return, which is more a problem

Starting point is 00:30:10 of what we said before, which is eventually when you're scouring the open internet, it doesn't matter how fast or how big you scour the open internet. The open internet is a bounded space, and so you get the same answer. So all of these things are, they're interesting marketing wear, but I would just encourage us all to keep in mind that the shift is not necessarily these kinds of things. It's kind of like saying, you know, in a chip like, oh, wow, we built this chip on three nanometer. Okay. What does it mean? Well, no, I think the piece respectfully, you might be missing here is like your proprietary data

Starting point is 00:30:47 might not be in that language model. So by having this context window and you could add something that you have on your hard drive. That's not how it works. So my point is the context window is not correlated to the quality of the model outputs. Correct. But consumers and business users haven't been able to put their data into the models because they're not indexing. That has nothing to do with the context window. That existed when the context window was smaller. But that's what you think you do things like rag with.

Starting point is 00:31:13 Right. But most people don't have access to that. This is like consumers can now just take something off their heart and put it out there. I understand what I'm saying. Yeah. Rag is different than what this is. Okay. Like this is this, what you guys just spent all this time talking

Starting point is 00:31:25 about is equivalent to saying I built this chip with on a seven nanometer process or a three nanometer process. And what I'm saying is it is technically more burdensome as Friedberg said, it's technically much more sophisticated and complicated. But the translation to quality complicated, but the translation to quality in the consumer is not what that means. So a three nanometer chip is not two times better than a seven nanometer chip for the consumer. Similarly, a context window that's five times bigger than the one before it doesn't make a model five times better to the consumer. These are orthogonal ideas.

Starting point is 00:32:04 It's not to say that it isn't an important thing, but I would say that it's a reminder for me that we're in the early phases where there's a lot of hay that people can make. But it's important to look at these third-party benchmarks that try to sort through and sift through what matters and what doesn't matter. And one of the interesting things that third party benchmark services have figured out is that irrespective of the exponential growth of these things, like parameter size, quality is only growing linearly and now sublinearly.

Starting point is 00:32:39 So just an interesting point. I understand your point now. My point is, when you are a consumer of this and I've been talking to people trying to get their data into the context window to be able to ask a question, they're always like, how do I put more in there? How do I put more in there? And then these language models, because of the copyright issues, they're not able to upload Blade Runner and then say, hey, make me something. But I was able to, and just to give a very real example, I did a podcast around the Ray Kroc movie,

Starting point is 00:33:11 the founder that we were referencing earlier. I uploaded the screenplay, I found a PDF of the book, and I found two other essays about Ray Kroc, like HBS studies. And I said, give me a timeline of it. And I used something called Google Notebook, which has a big context window, and you can upload all this stuff. And that's where I'm seeing consumers and what these things are capable of vis-a-vis the context window. It just unleashes in people's minds so many applications that you can do.

Starting point is 00:33:37 There are two examples today that caught my eye that I think are worth bringing up. The first one is from Meta. Meta published this paper today, which was like pretty crazy. And essentially what they said is that for the realm of the software worker, the software engineer, what they basically built is this LLM tool that runs over Lama called TestGen. And it essentially does automated unit testing

Starting point is 00:34:03 to such a high degree of accuracy. So, you know, in the software development, if you want to spit out a product, you have to go through this thing where you have to functionally run unit tests and make sure the thing works as advertised. And this paper essentially now allows you to traverse a code base, understand it,

Starting point is 00:34:19 generate these unit tests with high accuracy. So where is this valuable? Think of, remember the software bugs in like the Boeing 737 MAX issue, J.Cal, where it turned out that it was just bad software. Tools like this now will be able to run unit tests where you will not be able to get that plane out the door unless all of these functional unit tests not only have been written, but run and have been passed successfully, and it'll all be done by bots, which means that you can't game that system.

Starting point is 00:34:51 So that's something today that- And it's the last thing developers get to is writing the unit tests, right? It's always like- Which is why there's all kinds of bugs and security holes in code. Now, I thought that that was a pretty large breakthrough, and I think we're gonna go through a bunch of fine

Starting point is 00:35:05 tunes on this that make it interesting. And then I saw this other thing, which caught my eye even more, which is this thing that Nat Friedman tweeted out, which is this thing called magic.dev. And what essentially it is, is like a coworker. And what they are claiming, and I don't know if it's true, is that now you can basically have this thing understand your style of code, and I don't know if it's true, is that now you can basically have this thing understand your style of code and actually be able to write code that is just as good

Starting point is 00:35:32 as the way you write code. So now it's not a co-pilot, but effectively a co-worker. And this is the first real example of what I've seen of a claim that basically says, hey, we can now be an add-on to your workforce. And this to me is just so gargantuan because if you look at the amount of OPEX inside of any company that sits inside of R&D, if you look at the amount of stock-based compensation, if you replace humans with bots, which is what this is, you're going to crush those things. SBC at the limit goes to zero because you don't have to give

Starting point is 00:36:09 stock to a bot, right? You have to give stock to people. And OPEX gets shrunk because now you just pay a license to magic.dev or I don't know how they're going to make money on this, but really, really, really fascinating stuff. It is a scary little- But there was another open source project. I think it's called MAGGI, M-G-I-E. I don't know if you saw that, Frieberg, but Apple has been working on an open source image project. And so you're kind of gonna see, I think,

Starting point is 00:36:38 in iOS 18 or the next iPhone 16, they're gonna have an image model on the phone. Jake, where is Apple in all of this? It's unbelievable. No, they're gonna have an image model on the phone. Where is Apple in all of this? It's unbelievable. No, they're, where are they? They are building an image model and you're gonna be able to talk to your phone.

Starting point is 00:36:54 They haven't announced anything. I think you're gonna see a chip on the next set of mobile devices. 100%. By Apple that will run models locally. Yep. And so this goes back to the point about how the hell is the government going to regulate AI models, which is the stupidest thing I've ever heard.

Starting point is 00:37:09 Well, not the stupidest, it's probably, you know, probably top 20. But the fact that they're going to like be able to be fully vertically designed, that they can have the hardware and the software and integrate all the way through to the application layer, they're going to have, I would imagine, incredible intuitive AI features built into all of their products that can run locally rather than all the other stuff that's going on where you've got to make a request on the internet and get the results back over the internet. It'll be pretty powerful. But obviously no data, right?

Starting point is 00:37:41 We don't know what they're doing. We're just speculating here. Well, no. I mean, you have breadcrumbs. When the breadcrumbs are, they have an image model and I just dropped in the hugging face of it. You can basically upload an image and just give it a text prompt of how to change the image.

Starting point is 00:37:53 So, you know, if Nick were to use this, he could upload a picture of you to my office and say, you know, give him five o'clock shadow, give him a mustache, whatever. Nick, will you do that real quick while we're talking? While you're doing that, can you bring up the video of the robots life in a cyberpunk setting? Yeah, it's beautiful.

Starting point is 00:38:11 Is this a Sora rendering? Yeah. This is Sora. So beautiful. So it's really cool. So, but here's the, the limitation. And this goes back to what me and Fira were talking about earlier. Okay.

Starting point is 00:38:20 So you've got these people in the background. Let's say they're trying to make them. The theater, the theater backwards, by the way, you can see the background. Let's say they're trying to make a movie. The theater backwards, by the way, you can see the human feet aren't correct. Sort of like a folly problem. Yeah, I mean, what's cool is that, okay, so those cars aren't moving. They're static. You got some movement of these background people, right? At least so they're kind of, they're the extras in a movie. But if you wanted to tell

Starting point is 00:38:44 Sora, this is just my guess that, okay, I want the people in the background to be doing this, it would render a whole different image. Like your robot might change too, right? Well, Saks, this is where your context window matters. So if you repeat the statement, if instead of writing and then iterating, if you just re-prompt it and your prompt got longer and longer and longer with the degrees of specificity you needed That's the way you use these models today and to your point what humans are looking for from a UX perspective is an iterative approach To rendering is an iterative approach

Starting point is 00:39:17 Which isn't feasible in a world where the this is all a matrix It's a three-dimensional matrix There's two dimensions of pixels, and then the third dimension is the next image and the next image and the next image. And so that matrix is re-rendered from scratch. It doesn't have a concept of what are the objects that I'm rendering and has a concept

Starting point is 00:39:37 of a matrix of pixels. And so it will re-render a matrix of pixels based on a redefined prompt. But what you're describing would require a very different model architecture than the way all of these trade models operate today. This is going to revolutionize pornography. I think it's the first play.

Starting point is 00:39:52 No, no, no, I'm not saying it as a joke. I think that's where you're going to see this first, because then all these issues, potential issues of underage people or exploited folks, it goes completely away. You're going to cut this. No, and then, you know, it'll completely away. You're gonna cut this. No, and, and, you know, it'll kill only fans. Yeah, I was gonna say. And the gambling is where every revolution starts.

Starting point is 00:40:11 That's where exactly that's where the web started. That's where the web started. That's where payments got refined. But I think that in pornography, you're going to see this basically destroy pornography and only fans. Well, I don't want to bring up something that's super offensive, but there was a certain pop music star who had a bunch of images just a couple of weeks ago. That were a generated deep fakes, right?

Starting point is 00:40:36 Yeah, there were a bunch of deep fakes of a pop star. I don't actually highlight the person's name because then it just I think can sense more of it. But. X did a really good job of blocking all of them, watermarking them and saying, you can't do this. And so this is like a whole new world. You take any person on the planet and make porn out of them that is realistic.

Starting point is 00:40:55 Well, I don't mean that. I just mean that you'll be able to make pornography in a way that is totally non-human involved, which is generally better, I would say, for all humans involved. What's great about the deep fakes is that if you have a sex tape come out, you can just say it's a deep fake. Totally. I was about to ask Chamath. What is the prompt you're going to use to make love to yourself tonight with the new Sorrow model? Chamath embraces Chamath. All I hope is I may just need to publish some data so that whatever deep fake gets some parts accurate.

Starting point is 00:41:27 This is Apple. Oh, short Apple stock. This is too, it's not very good. That's not really good. What is this model? This is an Apple model. It's called Maggie MGI. This is Apple's open source image model.

Starting point is 00:41:39 It's way behind. This looks like GPT 0.1. They got work to do, but it's open source. It's gonna go faster. It's very hard to make fine tune changes in these models or to get the result that you want. But that's fine. This is V0.9.

Starting point is 00:41:51 If you guys want to see a great fine tune, the Juggernaut XL fine tune, I would just say try it. It is a fine tune that does not allow bad looking people. The whole concept is only beautiful people. So it doesn't matter what your prompt is, but these people come out looking for the most incredibly good looking people I've ever seen. As if the standard wasn't already high enough with filters and everything else, but.

Starting point is 00:42:19 This is gonna be a revolutionary for independent film. I mean, this is obviously just tip of the iceberg, but the problem with an independent film right now is that the economic model literally doesn't work. It's too expensive to make an independent movie relative to the return. And so the independent movie business has almost dried up almost completely.

Starting point is 00:42:38 This is gonna revolutionize it because it'll bring the cost down close to zero. Now, I don't agree with Freeberg that everyone's gonna design their own entertainment because most people are lazy. No, I'm not saying design. Sex. The way you think about creative production processes is what's going to change. It's all going to reduce down to sitting down.

Starting point is 00:42:55 And it's like, when you ask your spouse or partner or whatever, what do you want to watch tonight and they answer something, that's something will then be delivered to you instantly. That's what's going to be so powerful. Well, you mean the AI is going to create it on the spot for you? It certainly will, but I think that there's a certain element of culture that gets integrated into personal AI. I mean, I don't think we have time for this, but I have a whole philosophy.

Starting point is 00:43:19 People still want curation. I mean, if you look at something like YouTube or really any user-generated content site, there are roughly 100 times more people who are passive than people who are active and actually create stuff. Whatever the ratio is, there's always a lot more passive viewers than there are creators. So there's, I'd say most of the content will be created by people who actually care enough to do it. Again, let's call it one or two percent of the population. And then of those, one percent might actually be really good at it.

Starting point is 00:43:48 Yeah. But here, here's where free burger thing has a really good point because I have been looking into this. Imagine if you took the soprano, something you and I love facts, and you just said, Hey, for each season, give me 10 more minutes per episode and give me like two characters or whatever. Now you, when you watch it the next time, you can say, just fill it in. I want every episode to be 90 minutes instead of 50 minutes. Or I've been doing this thing with my daughters.

Starting point is 00:44:14 We're into Star Wars and the Clone Wars, etc. People have been cutting shows like Andor or Rogue One, Clone Wars, the prequels, et cetera, and the Bad Batch, and they're putting in together like timelines and they're making their new versions of it by super cutting the different series that are filling things in. So you're gonna be able to say, hey, tell me the whole Star Wars saga

Starting point is 00:44:39 with a little more perspective from Obi-Wan, or give me a little more perspective from this person. And that's gonna just make these things like these franchises so much more watchable and deep and rich. Yeah. So this is my point, Sax, is I don't think it's about ground up personal media creation. I think that it's about the curation model changes. The creator or the central creative force comes up with a genre with a bunch of characters

Starting point is 00:45:05 like a Star Wars and general like arcs of stories and then you can go in and you can view it from any character's point of view. Imagine watching the Star Wars movie from Darth Vader's point of view. Imagine watching the Star Wars movie where you just stayed on Endor the whole time and you watch the news on the TV while you're hanging on the bar. That's your fantasy? You with the EWOX? Yeah.

Starting point is 00:45:29 So you're right that there's a great opportunity for some of these cinematic universes to kind of open up the creative assets and let the fan base do whatever they want with them or create these alternatives. I still think that it's that 1% of the viewership that actually cares enough to do that. The reason is because I think what you see with all these demos is that it's really easy to get the first 90%. It's really hard to get the next 9% and then the final 1%. To get to the level of…

Starting point is 00:46:01 Of course, yeah. To get it dialed in to the point, again, the first thing it gives you- But the benefits could outweigh those costs. And this is true in 3D video game playing. I don't know if you play Fortnite, but there's all sorts of stuff that you feel could be better. But the overall value of that experience far outweighs

Starting point is 00:46:18 the missing elements of it not being truly photorealistic. And I think that's where this stuff goes. It's ski week next week. Truly photorealistic and I think that's where the stuff goes. It's ski week next week. Mm-hmm and I've done this for All both of my older boys and I'm doing it now for my youngest boy who is four and a half almost five We are going to watch this entire week all of the Star Wars Oh, fantastic, and then I got a downloaded history feature movies all the movies Yeah from and I got an order the order future movies, all the movies. Yeah. From

Starting point is 00:46:45 and I got an order. The order was not what I thought. It's not as released, obviously. So you want to do timeline. So you want to have the prequels? I did that once and I will tell you it was super disappointing. Anandor Road 1, the Star Wars, the original sequel. Well, you're saying this order is not good. Here's what I was told. This is what was the internet was the most popular. You start with the Phantom Menace. Yeah. Then Attack of the Clones.

Starting point is 00:47:10 Then Revenge of the Sith. And do the Sith, yeah. Then Solo is optional. Optional, yeah. Rogue One optional. Yeah. Rogue One not optional. Then Four, Five and Six, obviously, a new hope.

Starting point is 00:47:20 That's when your kids will lose their mind. They'll be like, what is this? It's like, Empire Strikes Back, Return of the Dead. Four, is this? It's like, empire strikes back, return to the Jedi. Four five and six are too slow for kids. Yeah, that's the problem. They like the prequels. Seven, the Force Awakens, and eight, the Last Jedi, then nine, the Rise of Skywalker. Skip the last three. Yeah, the last year of garbage.

Starting point is 00:47:35 They fall asleep during four, five, six. Yeah, four, five, six are the best. The prequels are probably the most watchable. They're very, in retrospect, they're great, but there's also the Clone Wars, which is absolutely fantastic. I would sprinkle in some Clone Wars episodes. Nat and my daughters, I'm forcing them to sit with us for this entire...

Starting point is 00:47:53 Nat's gonna watch all this? No, she's ready to shoot herself in the face. Yeah, this is her worst nightmare. She and my daughters are like this. I put the over under on Nat sticking through maybe a hundred minutes of this. She's done, she's done. Amore, why do you poison the kids with this

Starting point is 00:48:07 and nerd the stuff? They're never going to get a girlfriend. You're totally using Fredrick Fellini. What is this? This is not a Fellini. This is a... How about that they watch something where the people make a love instead of the lights

Starting point is 00:48:17 they would cut people's hand off. Why are you watching this? Exactly. It's a no, there's no love and a joy. There's people with light swords. It's a no fun.'s a no love and a joy. There's people with light, light swords. It's a no fun. But to bridge the gap between your two vision sacks and Freeperks, just that's a point is so great.

Starting point is 00:48:36 Chumat and I will talk when we talk to each other for literally 20 minutes as Nat. We'll just have a conversation. But it's a conversation we're having. I don't know why, Chumat, that this deal has such a high interest rate on the convertible note. Why would you do that to me? I'm your friend. Who's going to be on the board

Starting point is 00:48:54 that this person looks like a dumb dumb? What's going on? I don't understand. Well, it's an independent seat, Chumat. You don't need to have a super smart person. This is just a different perspective. Is it the opposite of a white truffle. The white truffle is a delicious dish. A product that smells like a pool. But anyway, between

Starting point is 00:49:16 we're literally just talking. For our coming tonight. Are you making it for dinner or not? I'm not. I'm going to try to make it by dinner. I just have to give a keynote at a podcasting conference. Oh my God. Are you wait? Sorry. Are you making it for dinner or not? We need to- I'm gonna try to make it by dinner. I just have to give a keynote at a podcasting conference. Oh my God. Are you, wait, sorry, are you kidding me? No, I'm not kidding. You guys banned me from having advertising here.

Starting point is 00:49:33 I have to make cheddar. I got bills to pay. Just because there's an eight in front of the Uber stock price doesn't mean I can retire. Will you be there by 7 p.m. or not? I'm going to make it by 7, yes. Keep me in for whatever- So we are going to make it by 7, yes. Keep me in for whatever. So we are going to start dinner when you get there.

Starting point is 00:49:49 Perfect. I will not do David Sacks time. Okay. Thank you. But between Freberg and Dave, you know, Sacks you said it's like one or 2% of the audience. For, you know, show with a million viewers or 10 million viewers,

Starting point is 00:50:01 that could be tens of thousands of lunatics. And I don't know if you knew this, but you remember when Luke Skywalker showed up, spoiler alert, and the Mandalorian, everybody was like, oh, his young face does not skip the uncanny valley. This is why you got to watch the Mandalorian. So then some kid did his own AI re-rendering of Luke Skywalker, you know, after Return of the Jedi, but, you know, after he Parker, you know, after Return of the Jedi, but, you know, after he defeats the Emperor. And they then hired that kid to work at Disney and LucasArts. So what's happening is all these people who are making content for the Star Wars universe, they are going to be the next generation of creators.

Starting point is 00:50:37 So between a Mr. Beast way over here and LucasArts, there's going to be a new fill-in. And it's going to be all these great one-percenters making interesting s*** with IP that's owned by other organizations. I think it's a whole new paradigm for media and content. It's going to be so different. The automated stuff. That's customized for you. It's almost like what YouTube and Instagram did for user-generated content.

Starting point is 00:51:01 There's going to be this whole new model of AI-generated content. There's gonna be this whole new model of AI-generated content. The real winners are gonna be the technology platforms that bring these tools in a simple, intuitive way that to Sax's point doesn't challenge the user to do work, but makes their life feel easier and better and brings them a more rich experience than they're getting today from any other media source. And that's gonna be a game changer.

Starting point is 00:51:22 All right, lots going on in AI. I thought I'd bring up a really interesting story that happened just around stock options and employees and advice you're going to get generally speaking. Just tons of casts at the startup bolt. If you don't remember, that's a one click checkout startup. It was founded by a guy named Ryan Breslow. He's been on my other podcast this week in startups.

Starting point is 00:51:45 He went viral in 2022 after he called YC and Shrype like mob bosses and had this whole conspiracy theory of how they were trying to kill this company. Don't know if it's sure or not. But at its peak, Bolt was valued at $11 billion, Tramoth. And they're buying back shares at a $300 million valuation down 97% yada y Yadda. What makes this interesting was that in 2022, Breslow announced a new stock auction program for his

Starting point is 00:52:11 employees on Twitter. And he did this in a very bombastic lecturing kind of way to the entire industry saying that Bolt would offer loans to any employee to exercise their options early. We all know about these types of loans. From their balance sheet? That is the idea here, yes. And he called it the most employee-friendly plan possible and said that half of Bultz's 600-plus employees took the deal. He since deleted the entire thread. But at the time, a lot of VCs who'd been through this before explained to Ryan, this is a terrible idea.

Starting point is 00:52:43 Here's GGV's Jeff Richards, for what it's worth, almost every private company, so it finally did this in the 90s, was an absolute disaster. Employees spent years paying back loans for worth of stock tax bills, for merely exercising, et cetera. Yada, yada. And his now deleted tweet was, over half our employees chose this, plus I would strongly encourage my family and friends to choose this. But VC say it didn't work in the 90s, so it's a disaster. VC Twitter pumps the tweet. This is why VC-run companies are never able to make strides for employees.

Starting point is 00:53:11 Obviously all those options at 11 billion are worthless now. But sorry, they did this when they were worth 300 billion? 11 billion. And it was reported that at the same time in a new industry publication that Breslow was selling his shares in secondary. Breslow confirmed with that newsletter that he had sold 10 million and sources, anonymous sources, Yadiyana, take that forward. It's where it said he didn't tell the team he was doing that. Two investors also accused the company of misleading shareholders and raising capital on inflated metrics. SEC investigated but did not recommend any action.

Starting point is 00:53:51 Sex. Jamath, I don't know if either want to take this. This is really mechanical, but it does speak to what happens when things implode. Should employees be taking loans to buy these kind of stocks? Yeah. At a minimum, hopefully these loans are non-recourse. buy these kind of stocks? Yeah. At a minimum, hopefully these loans are non-recourse. And at the maximum, if they were recourse, but it looked like these guys were doing these kinds of shady things, they have to kind of forgive the loans and eat it. There's a reason why almost no one does these types of exercise loans anymore. I mean, whoever the VC was who pushed back was right. I mean, these things were common 20 something years ago. People stopped doing it. And the reason why is that, well, there are a couple of reasons. So the mechanics

Starting point is 00:54:30 of the loan are that the company loans you the money to pay down the exercise price, the strike price for the options. And then you're supposed to pay the company back at some future date, basically when you can sell the shares. And in effect, from the point of view of the balance sheet of the company, this was cashless because it would loan the exercise price to the employee who would then exercise and pay that money back to the company. So everyone's like, well, what's wrong with this? This just seems like simple mechanics where no one loses.

Starting point is 00:54:59 The employee gets to start the clock on their shares for long-term capital gains. That's why they would do it. The problem is that what people discovered is that if the company didn't work out and those shares became worthless, then the employee is still on the hook for the loan. If they don't pay the loan back, then there's a loan forgiveness issue. In other words, the forgiven amount of the loan or the defaulted amount of the loan becomes ordinary income. And so what happens is you end up having to recognize as income the loan that you never pay back. So you can lose. Furthermore, if there's spread at the time that you exercise between the strike price and the fair market value

Starting point is 00:55:41 of the shares, then although if it's the right kind of option, if it's an ISO, you can defer paying tax on that spread. However, people got whammyed by the AMT that that spread still counted for alternative minimum tax. So there were a lot of people during the first dot-com bubble who exercised thinking they can't lose because the market was always up and to the right. And then the company would go bust, and they would get hit with a big AMT, and then they would get hit with a loan forgiveness

Starting point is 00:56:08 issue. So that's why everyone stopped doing these things. Yeah. Yeah. I mean, really importantly, getting taxed on that spread, you owe that money no matter what. No matter what. No matter what. The IRS demands that money, and the California French tax tax board demands that money. So I just want to be very specific so people understand this. If the value of your company's gone up to $2 a share as a private company and your options are 10 cents a share, you pay 10 cents a share to get those shares, you owe tax on the $1.90 difference. And ultimately, if the company's now worth less than a dollar when you're finally able to sell or shuts down,

Starting point is 00:56:48 you actually have money, you have to pay to the IRS and French tax board, and you did not make enough money to cover the tax bill. The way a lot of these companies do this is they do a cashless early exercise or cashless exercise loan. You don't even have to put money up to pay the 10 cents a share, the company is just covering it for you. To Sax's point, you end up getting taxed for that later if you don't pay it back. So the whole thing creates a lot of tax obligations, and it's a very complicated structure and

Starting point is 00:57:14 system. And the reason options exist is so that people could buy their options and not have to pay taxes at the time that they receive them. Because if you just get shares in a company rather than options, the value of those shares is your tax bill, even if you can't sell the shares. Well, it's income. It's income. And so options were created as a way that you would have a strike.

Starting point is 00:57:35 And the strike was the fair market value. So you're actually not getting any value today. That's so you can avoid the tax bill. But now it leads to all these other tax loops. It's way too complicated for a rank and file employee. This is what it comes down to. Like I saw this with like senior executives trying to get like the top five positions, you know, a CFO or something.

Starting point is 00:57:52 The whole thing is to reduce your tax bill from 50% to 20%. And at the end of the day, you open up all of these other problems if you try and do that. Completely. One of the stupidest things about the way this was used is that they would give the exercise loan to employees who are leaving the company because they said that normally when you're a departing employee from a company, you have three months to exercise your options or you lose them. So they were saying that this would be a solution to that.

Starting point is 00:58:22 We're allowing the money to exercise. All they're doing is creating a huge tax problem for that former employee. And you're right, the average employee is not sophisticated enough to navigate all of these issues. It's not clear also why you'd want to create this complicated benefit for departing employees. It seems like if you're going to do this, you would want to do it for a key exec who's joining the company. That's the only context in which I've seen it, by the way. Yeah, same. So they were trying to solve a problem using this complicated device that really backfired,

Starting point is 00:58:55 but it's not even a problem that you should try and solve in that way. I mean, there's a much simpler solution, which is extend the period of time that employees have to exercise. If you don't want them to lose their option if they don't exercise within three months, give them 10 years. And there are a bunch of companies that have done that where they give you a lot longer to exercise the option. The trend I'm seeing with startups like early stage startups, seed stage startups, which are really indicative of what startups will do later on. Hiring people, cash basis, paying them hourly, outside the United States, not having to worry the United States, not having to worry about stock options, not having to worry about healthcare, just finding a global workforce and using

Starting point is 00:59:32 these third-party tools. There's a lot of third-party tools to manage employees in Portugal, or Manila, or Canada, or whatever, South America. And they're just saying, you know what? Stock options are going to be for like an elite group, the top 10% of the company. And then we're going to automate the rest of the jobs with AI and we're going to outsource and have hourly workers or full-time contractors outside the United States. It's the undeniable trend. I think that's terrible.

Starting point is 00:59:57 Why? That's throwing the baby out with the bathwater. One of the most magical things about Starps and Silicon Valley is that when it worked, everyone got rich. I mean, you have the story of the Google chef who made $100 million or the secretary of Microsoft who got to retire. It, you know, those are extreme examples. The graffiti artist at Facebook.

Starting point is 01:00:14 The graffiti artist. He didn't realize. What's his name? David? David Cho. But the fact of the matter is that Silicon Valley had a share of the wealth mentality where the rank and fall employees did participate in the ownership of the company and they got equity. And it was highly motivating or it is highly motivating for not just like lower level employees but mid-level employees and senior employees to basically get equity in the company.

Starting point is 01:00:36 That's one of the things that makes Silicon Valley company special or companies created it outside Silicon Valley but using using this. The methodology. The template. Yeah, the philosophy. So I think, you know, getting rid of options altogether is a terrible overreaction. No, what they're doing is more like, for the core team that's in Silicon Valley, options, but then like for work that is not considered as essential, you know, just hiring people offshore who don't come with that expectation.

Starting point is 01:01:01 Well, trying to get those people then to work nights and weekends the way that you might be if you're the owner of the company. They're not going to have an ownership mentality. Yeah, I agree. I mean, I guess. And they're going to get nine to five workers that way. And I think what people are starting to realize is like, maybe there's, but there's remote workers, a lot of people are doing nine to five work.

Starting point is 01:01:18 And maybe that like hardworking culture just doesn't exist in Silicon Valley like it used to. You may be able to find hardworking entrepreneurial like folks that don't necessarily speak English, that now with these AI tools, basically become some of your best folks. But there are many countries that don't value equity, don't have an understanding of it. And so, to Jason's point, it's almost more of a complication to try to give it. So that may be the balancing thing, SACs, that happens, which is that all these tools actually allow somebody in some country that speaks some language that's not English, but who can be completely committed, who becomes this

Starting point is 01:02:03 linchpin of a business and gets paid an extremely great salary in American terms that makes them rich in their country, get to the the same place maybe. Maybe. Yeah, I don't know. The infrastructure needs to be built for stock options in other countries because I don't know that that exists. Or just pay people more cash because a lot of folks have different. Again, stock options make sense when you have a differential in taxation between stock equity and taxation between stock equity and income. Capital issuance, yes. But in other places where you have a flat tax or no income tax whatsoever, what's the difference?

Starting point is 01:02:32 Yeah, if you're in Dubai paying 1%, you could just ship it, right? Ship it. I mean, you can always go back to a model where people vest shares rather than vest options. And those shares vest on a trigger of time and a liquidity event. And that way they can't exercise or they won't get taxed

Starting point is 01:02:51 prior to the liquidity event happening, but then they will have to pay ordinary income tax rates on their shares. Hold on, we're making it sound like exercising options is a bad thing. It can be a very good thing. I mean, if you're an early employee of a startup and the options are worth pennies and you can exercise for, I don't know, a few hundred dollars, then that's a great tax benefit because you start the clock ticking

Starting point is 01:03:16 on long-term capital gains treatment. And when you sell those shares, eventually, if there's a liquidity event, you get taxed at a capital gains rate, not an ordinary income rate. That's the tax benefit. That's why people want to be able to exercise their options in the first place. The problem is that as you join the company later and later, the strike price of the options goes up. Therefore, if you want to exercise, you're going to have to write a pretty big check, and so you're going to take a meaningful risk.

Starting point is 01:03:44 Some people do that, and that's fine. The trouble comes in when you try to get cute and go around taking that risk by saying, OK, well, the employee doesn't have to go out of pocket for their exercise price. We're going to loan them the money. Well, they thought that they had figured out a way to avoid taking that risk. But as it turns out, all you end up doing

Starting point is 01:04:02 is potentially incurring AMT and a loan forgiveness issue. So, there's no way around the fact that if you want to exercise your options to get the potential tax benefit of a lower tax rate, you have to also take the risk of losing the strike price, that check that you write into the company. That's a fair trade, right? If you want the potential benefit, you take the potential risk. But that doesn't mean that you write into the company. That's a fair trade, right? If you want the potential benefit, you take the potential risk.

Starting point is 01:04:27 But that doesn't mean that you should never exercise. There's a lot of cases. Again, I think if you're early at a company, you should exercise. Yeah, low thousands of dollars, low hundreds of dollars, go for it. There's all kinds of ways where when the basis is extremely low,

Starting point is 01:04:41 it's nominally not a lot of money. So you can take the risk. But when you start talking about tens of thousands or hundreds of thousands of dollars or millions of dollars and then using loans and leverage and- You got the risk of ruin coming out. Bad news bears all the way around. No bueno.

Starting point is 01:04:57 All right, Sax, here's your red meat. Did you see the poll about Biden's age and the unfavorable percentage of people who think he is too old. How can I not see that? I think the most important thing that we should talk about is that President Biden has decided to not go through a cognitive test as part of his annual physical. It's the first time it's ever happened. Joe Biden now 81 years old, 82 at the start of his second term if he wins. He'll be 86 at the end, making him by far the oldest president ever. Trump is 77. He would be 78.5

Starting point is 01:05:32 when he gets his second term. If he won, 82.5 at the end of his term. Here's a histogram of age of presidents. These are the oldest. Just to give you a, everybody obviously refers to Reagan as the oldest president prior to this. He was a spry 69 at the start of his presidency and by the end he was 77, which is younger obviously than Biden and Trump today. So, sacks, thoughts or schmoth thoughts? Let's just say that we've had a bunch of these issues over the last few years. President Trump didn't disclose his tax returns. Is that a huge issue?

Starting point is 01:06:13 I think people made it to be a huge issue, but it's more of an issue of judgment. But I don't think it fundamentally compromises his ability to leave the country. You had a different issue, not with the President, but with the current Defense Secretary who had prostate cancer. The disclosures were, let's just say, somewhat suboptimal. He had a UTI. He got emergency admitted to the hospital. He just had another acute issue. And those disclosures weren't good.

Starting point is 01:06:49 But you're talking about an acute kind of a thing where if you're incapacitated, there's a chain of command that immediately kicks in. Those are a class of issue that I think people can find things that are wrong with, probably correlated to one's political affiliation. The other side probably cares more than the side that the leader is on. But I think this issue is a really big one. And I posted this clip of KJP basically saying nothing to see here, move on. And the first comment was Elon, which I think nailed it. He said, a basic cognitive test should not be something that someone who controls nuclear strikes is

Starting point is 01:07:30 allowed to skip. And I think that that is part of the fundamental issue that I have with what they decided to do here, which is that it just massively increases the risk that you could have somebody that was fundamentally unelected running and making decisions. And I think that is a huge issue. And it's an enormous reason why for me, this was sort of the straw that broke the camel's back and why I just absolutely cannot vote for Biden anymore. I was trying to find a lot of good reasons to support him. Stability,

Starting point is 01:08:10 normalcy, all of this stuff. But this is not what stability looks like. And I go again back to this very simple thing, a cognitive test for somebody that can control the ability for us to go to war or for us to completely eviscerate entire populations through weaponry that he and he alone controls should be something that is just mandatory. You can't skip it. This is not a thing where it's a nice to have. I think it's a must have. And in the absence of it, I think it compromises his ability to be a legitimate choice. And we do have a minimum age. Sacks and what Shumat is saying is what the majority of Americans are saying. ABC News ran a poll, 86% of Americans across both parties think Biden is too old to be president.

Starting point is 01:08:58 59% said both Biden and Trump were too old. You said on a previous episode, Sacks, that you thought the public should decide not, and that doesn't need to be a cognitive test. Are you sticking with that, or do you think you're going to maybe move to Chimac's position? And mine, cognitive test should be mandatory to be present. Well, I think it's a tell that they won't take the cognitive test because they're worried that he might fail. Just like it was a tell that they refused to do the Super Bowl interview, which the president always does. That's the most softball interview that Biden could possibly have. And they refused to do it, obviously, because his aides and advisors are nervous

Starting point is 01:09:34 about how that might go. We had the Her Report come out where a special counsel investigated the classified documents case for Biden said that we can't prosecute this guy. He'll be too sympathetic, a defendant, because he's manifestly senile and he'll come across as an old man who can't remember what happened. So that's why they decided not to prosecute him. The Babylon Bee had a hilarious headline or take on this, which was, man deemed too senile to stand for trial, still fit to run country. That's the situation we're in. He can't stand for trial, but he trial still fit to run country. That's the situation we're in.

Starting point is 01:10:05 He can't stand for trial, but he's still running the country. Yeah. And the thing that was most damning about the her report was not just what the special counsel wrote, but it was Biden's reaction to it. Apparently he demanded that he wanted to go out and do a press conference that very day

Starting point is 01:10:23 to refute the idea that his memory was bad or that he was senile. And he then did this press conference and it completely backfired. He came across as kind of an old man shaking his fists, yelling, get off my lawn. I mean, that was basically the vibe that he gave to the press. And then the thing that he got wrong was he confused Egypt from Mexico in regards to the whole crisis in Gaza. So it would have been one thing if it was just her saying that Biden was

Starting point is 01:10:55 senile, but then Biden himself came out and seemed to confirm it by making these mistakes and gaffes. So they know they have a problem. So to my original question, would you be in favor and will you change your position here that we should have cognitive tests for the presidency of the United States? Yes, I think that the real issue is that Biden would fail such a test. I mean, that's the problem is that he is cognitively impaired.

Starting point is 01:11:19 And the thing to realize about these sorts of conditions is they're not static. There's a trajectory to them. So in the same way that Biden is manifestly worse than he was a year ago or three years ago. Yeah, when it's obviously sharper. Yeah. Whatever this condition is, it's going to be worse. Okay. I wouldn't ask you at third time to answer the question, but you're choosing not to answer the question. So when you say that, should the president take a cognitive test?

Starting point is 01:11:47 Sure, he should take a cognitive test. Should it be the law of the land? No, because... Just like we have a 35-year minimum age. I'm just asking you to be specific. You could make him take a cognitive test, but the point is that, let's say the doctor says, yeah, he's cognitively impaired. Is that going to bar someone from running for office constitutionally?

Starting point is 01:12:04 No, that's not going to bar someone from running for office constitutionally? No, that's not going to be part of the constitutional requirements. You have to pass a constitutional amendment. Yes. Would it be a good idea for someone to take a cognitive test part of their physical to be president? Sure. But is that going to be a constitutional requirement? No, you can't have some doctors say. By the way, that's my whole point. Like you could take a physical Bill Clinton did that and people used to joke about his cholesterol levels, and he would go for a jog and stop at a McDonald's. So I'm not saying by any means

Starting point is 01:12:31 that the results should bar you from the ability to run. It should still be up to the voters. But just like we would make sure that acute or chronic health conditions were well understood, right? The idea that this entire body of judgment, which is around your brain, around the judgment of the President of the United States, to basically say, no, we're good here, we can skip it, I think that that's really dangerous. And it's part and parcel of a systematic set of behaving now by the Democratic Party,

Starting point is 01:13:03 which I think is really not where they want to be. So the only person that's really stood up to all of this is Dean Phillips. But he is being prevented and railroaded from even being able to put that issue on the table so that the voters can decide. My fundamental view is the voters should decide, but all of these tests should be done and skipping them is a form of a tell, as David said. And I think that this is the most important tell that we've been given about the amount of

Starting point is 01:13:31 cognitive decline that he suffered. And John Stewart, by the way, had the funniest version of this. John Stewart's essentially monologue was like, hold on, everybody is out here giving sound bites that say he is a chess grandmaster in private, but then he shows up in public and it looks like he can't even play checkers. Yeah, Freiburg. Let me jump to you there. You shared the clip with us. What are your thoughts on this whole issue? Cognitive tests? I don't think a cognitive test should be the law,

Starting point is 01:13:57 because you're starting to get into edge cases where you'll create lots of different requirements. Like, what's the strategic test and you know what's the under pressure test and there's obviously a lot of ways that folks can game and challenge and create new systems for a new criteria. The system of democracy however is meant to solve these problems. The system of democracy is meant to allow individual voters to say we judge that someone is not equipped or prove us wrong, which is what the voters are saying and doing right now based on the polling data.

Starting point is 01:14:30 The majority of voters in the United States are saying we do not think that this individual is equipped to be president. Rather than respond to that with a cognitive test, we are stuck with a single candidate. And I think it speaks more to the problem of the Democratic caucus and how the electoral system works in the United States today, where the insiders get to decide who the nominee is for the party. And those insiders are self-dealt. They are getting benefits by putting someone in the seat for next term

Starting point is 01:15:01 because that person is in the seat this term and is approving things that they want this term. And so it feels very corrupt and it feels very unfair and very undemocratic. I think it leads to either a sense that the individual voters rise up and say we want a third party. Because the way that this two party system works in the way that the caucus system works isn't fair. two-party system works and the way that the caucus system works isn't fair. Or we end up seeing a really unfortunate outcome where you have a similar sort of like January 6th type event where folks are just fed up with the whole system and don't trust it. And if the citizens lose faith in democracy, we're in peril. But as John Stewart said in his monologue, it is the responsibility of the citizens

Starting point is 01:15:42 of this country to step up and not lose faith, but to take action and to resolve to a solution. We have the power, we have the authority as voters. And if enough of us get together and say there should be a third party, or we do not want this individual to be the candidate, something will change rather than just resolve to letting the insiders set the terms of the caucus. Third party is seeming more and more viable. As we've talked about here, people forget the case of Ross Perot getting 19%. RFK looking pretty favorable and the third party candidate, something, I think the two

Starting point is 01:16:17 parties dismiss all the time, but it is completely possible. So maybe this is the time that this is the breakout season for it. As SACS alluded to the HR report also came out, it was released, Special Counsel Robert Herve, Republican and Trump-appointed AG declined to prosecute Biden because he feared they couldn't reach the standard of reasonable doubt, as SACS pointed out. And I'll just quote from the report, we conclude that the evidence does not establish Mr. Biden's guilt beyond a reasonable doubt, as Saxe pointed out. And I'll just quote from the report, we conclude that the evidence does not establish Mr. Biden's guilt beyond a reasonable doubt. They also said he was an elderly man with a poor memory,

Starting point is 01:16:55 or that's how a jury would view Biden. Democrats felt this was partisan, obviously, and then pointed out a bunch of times that Trump has misstated people's names or been confused. Is there any correlation here between the two candidates in your mind? Chamath is Trump right behind Biden in terms of this

Starting point is 01:17:16 and is he too old to run as well? And do you think the gaffes that he's made are comparable? I think that he looks much younger and spritelier than Biden does, to be totally honest. Yeah, and look at the schedule he maintains. This is nothing like Biden's. I mean, look, Democrats are trying to both sides the issue because it's their only choice. They're stuck with a candidate who's an obvious decline. And the problem for Democrats wasn't just the her report, which like you said, J.K. Al, they can dismiss as partisan because they control the media. The problem is that Biden himself demanded to go out in front of a press conference to

Starting point is 01:17:53 refute the her report, and he ended up confirming it. And the people of the United States can just look at Joe Biden and every time he talks, no matter how much they try to hide him, when he does speak, the American people are left with the impression that this is somebody who is invisible to decline. Trump, although he does mistake a word or two here and there, does not give that impression. Trump maintains a vigorous schedule. Not only is he running a presidential campaign, he's battling, he's in court every other day fighting all this lawfare. He is willing to give interviews.

Starting point is 01:18:23 In fact, he barely turns down a press interview. And most importantly, he's willing to do a hostile interview. He's willing to step into the lion's den. He's willing to go on CNN to those town halls and basically battle with these reporters. I think that's your best point. Whereas Biden won't even sit down for the Super Bowl interview, which is as much of a-

Starting point is 01:18:42 Softball. Softball interview as you're ever gonna get. Yeah, yeah. No, no. I mean, that's your that's your best point. I think who's who's the test Israeli who does a two or three, if you can't do a two or three hour interview, I don't think you could be. Check out who do you think is going to run the country in the second term if Biden were to win? You know, that that is the question. I think it's Biden. No, the staff runs it. Listen, this will be a regent president where the presidency becomes an office instead of

Starting point is 01:19:07 a person and it's run by powerful ministers, like in some sort of European system. That's what we'll get. Or happened under Reagan. And the fact of the matter is... Or Sax has happened under Reagan. Only in the last couple of years of Reagan... Exactly what happened in Reagan. The senility started to...

Starting point is 01:19:24 Or not senility, he had Alzheimer's and it really, I think, started to become a factor in the last couple of years. It was the last two years. Yeah. But the first six years were very strong. 25% of his presidency, who was running the country is the question, yeah. It's a valid question. Do you think there's a difference to your account between 25% and 50%?

Starting point is 01:19:42 No, no. I think it's like we only have, I'm just looking for other corollaries where this happened and what happened. Who is? I mean, this isn't a corollary exactly because when he ran, when Reagan ran for a second term, he was cognitively sharp. It was true that he was diagnosed with early onset Alzheimer's in the second year of his second term. And then that was not properly disclosed to Americans. That was just, it was just the beginning in the last two years. If you look at, if you look at the 1984 campaign, the Morning in America campaign, Reagan still did debates.

Starting point is 01:20:14 He was still sharp on his feet. He was debating Mondale, remember? Yeah. He gave speeches all the time. He maintained a vigorous schedule. There was no evidence of there being a problem. My only point here, Chumaf, is like, does the public has a right to know when these things happen? And this seems to have happened a couple of times in history.

Starting point is 01:20:31 Well, so I would take Friedberg's side. I'm not sure that the public, you could say irrespective of whether the public has a right to know the public has a right to judge. And I think in order to judge, you have to make yourself available so that you can actually see it in front of your own eyes or hear it or listen to it or watch it or what have you. And that's the second problem that I think we're starting to see, which is it is so controlled. How we get to interact with our leader. And I think that should give people some pause so that they ask themselves, why would this happen? And I think that that's worth internalizing here.

Starting point is 01:21:12 Freberg, would you vote for a presidential candidate who does not debate or who does not subject himself to serious, strenuous, confrontational, adversarial interviews, those two things? Are those two things. Are those two things a requirement for you to vote for somebody? I don't know how much that matters anymore. The problem with the two-party system is you vote for your party. No, I know, but to you. If like a Trump, a Biden, they just refuse to do it, because we're getting to the point where maybe they're just going to refuse to actually Biden or Trump. Trump has refused to do any debates. So maybe they're just both gonna refuse to debate.

Starting point is 01:21:47 Would you vote for a candidate if they refuse to debate? Is my question to you, Freebird? I mean, I'm just in a very different mindset on this stuff. I'm not excited to vote for a candidate but it's not making their priority to fix the fiscal problem with the U.S. All right, so you're back to that topic. Yeah.

Starting point is 01:22:06 It's not that topic. It's like, for me, it's like there's a car driving towards a wall, and you've got your foot on the gas pedal. It's like, which guy do you want to keep the foot on the gas pedal? I don't care. Like, we got to take the foot off the gas pedal. That's the point. You perceive there's a difference between the two in spending?

Starting point is 01:22:21 No. You're talking, OK, so you're voting for a third party candidate that would lean towards. Chamath, would you vote for someone who would... The third party candidate can't win in the system. Well, I mean, they can't until they can, right? Until they do. So we'll see. Chamath, would you vote for a candidate who didn't debate or subject themselves to a rigorous adversarial interview? Not unless I wanted to shadow government. Okay. Sack, same question to you.

Starting point is 01:22:47 Jason, you're acting as if we need to have all of these tests because we don't know whether Biden has a cognitive problem or not. We know. Well, I was including Trump in this. I'm including Trump in this, like the debate issue. Well, I think we also know about Trump. Trump maintains a vigorous enough schedule.

Starting point is 01:23:02 He takes enough difficult interviews. He does enough speeches. What about the debate part? That's the one I'm curious. If he refuses to debate, would you, would you still be willing to vote for him, you know, or any candidate? You're acting like we need to judge this question based on proxies for the real issue. When the real issue is that we know one of these candidates has basically dementia. He's invisible decline. I'm not asking you this about Biden. I'm asking you in general, because we're talking about norms.

Starting point is 01:23:30 One of the norms of, you know, releasing your taxes. I'm not asking you about Biden. I'm asking you about presidential norms. I think you're changing the subject from the core substantive issue. We have already all agreed that Biden is in cognitive decline. I'm asking you another question. I'm opening up the aperture as the moderator here, and I'm asking you to address another question. I think Canada should debate, period. Okay. Canada should debate. That's what I'm asking you another question. I'm opening up the aperture as the moderator here, and I'm asking you to address another question. I think Canada should debate, period.

Starting point is 01:23:48 Okay. That's what I'm asking. I don't know why you're going back and telling me what I think. Because I think that the tactic of Democrats, the mainstream media right now is that they can't, there's no way for them to paper over or deny the visible reality of Biden's decline. So they're trying to muddy up the waters. They're trying to claim, well, Trump is old too, or that Trump refused to debate too. They're trying to both sides the issue. I think we all know that Biden has a problem that Trump does not have.

Starting point is 01:24:16 Now, I think that Chamath is also right that there's a lot of Democrats who are comfortable voting for a shadow government. They're fine with the presidency being a figurehead or a rubber stamp. And I think the reason why they're fine with it is because Democrats basically control most of our ruling institutions, really all of them. I don't think you can name one major institution run by Republicans. And they don't need a president to do anything other than be a rubber stamp. Republicans are looking for something different.

Starting point is 01:24:45 Republicans need a president who's willing to push back on the permanent bureaucracy in Washington, push back on the deep state or the State Department creating new wars. They want someone to push back on Wall Street. They want someone to push back on all these institutions. Republicans are looking for a Tribune of the Plobs, basically, to push back on this senatorial

Starting point is 01:25:07 class that runs Washington for their own benefit. Democrats are different. Democrats are the ruling elite and they're fine with the president basically just being a figurehead who will sign their legislation. Does he drop out Chimac? Or veto bills they don't like. Does he drop out Chimac at this point? Is this the moment we're going to look back on and say this is the peak when that 86% Does he drop out Chimac? Or veto bills they don't like? Does he drop out Chimac at this point?

Starting point is 01:25:25 Is this the moment we're going to look back on and say, this is the peak when that 86% poll comes out and all this negative press? Do you think Biden is, there's an exit ramp here? And do you think there'll be a different candidate fielded by the Democrats? No, this is their way of saying we're going for it. Okay. Freeberg, you have any thoughts on that? You think they'll make a switch? I'm fighting?

Starting point is 01:25:47 Yeah. I think there's a chance. I think there's a chance. Last week I had a few conversations that led me to think that there are not super influential people in the party, but people that are in the party that have connections to people of influence in the party. I'd love to hear tomorrow's conversations you may have had around this stuff too, but people are not happy in the party.

Starting point is 01:26:08 Yeah. They're very, like very much unhappy. And everyone would love to see someone else. Now the assumption is Gavin is going to be shoved in that seat and that's also a losing proposition. So if you shove Gavin in the seat, you're in a worse place than you are with fighting in the seat with respect to your shot at winning. And it's a little late now, but I still think that there's a chance. Sacks, what do you think? Biden drops out?

Starting point is 01:26:30 First of all, the only reason these people aren't happy is because they think that Biden's problems have become so manifest that it might cost them the election. That's what they're worried about. They don't care about the fact that the Biden presidency will be run by staffers. As long as those staffers will basically do what they want, sign their legislation or veto the role of the state. So Willie Dropout is the question we're asking you. Will he drop out? No, he's already said he won't.

Starting point is 01:26:51 Look, the problem that people in the Democratic Party have who have this concern about Biden losing the election because of this cognitive issue is that there is no mechanism to replace a candidate who has won all the necessary primary votes against his will. Biden has said he's going to be the nominee. He has no desire to drop out. So unless he changes his mind or there's some act of God, he's going to be the nominee. The time for Democrats to make this change was a year ago. It required mounting a primary challenge to Biden the way that Dean Phillips has done. The problem is that the Democratic Party elders and the powerful people in the party said, we're going with Biden. And so no one wanted to run against him. And they basically set up the primary calendar so that Biden would win. And he is

Starting point is 01:27:40 going to win. He'll have all of the primary votes he needs locked up by the end of March. And Dean Phillips is not going to be able to basically stop him. So there is no mechanism to remove Biden. He's going to be the candidate, you know, barring active God unless he can be persuaded to step down. So it's not going to happen. What do you think about this new third party effort in DC? No label. Have you heard about it?

Starting point is 01:28:03 Have you been pitched it? I've heard of it. I haven't been pitched it. Cham labels. Have you heard about it? Have you been pitched it? I've heard of it. I've been pitched it. Shumat, have you been pitched it? I host a dinner at my house with some folks about it. And? Yeah. I mean, I think like it could be interesting. I think that the... Is there room for a third party in the country, you think?

Starting point is 01:28:18 Yes. And I think that there is a very reasonable chance. And I would put reasonable somewhere between 30 and 50 percent, that this third party gets created after the presidential election. And that is one of the very likely outcomes of RFK's candidacy, because it is an infrastructure that will have gotten on presidential ballots in 50 states. And it's an infrastructure that if people are willing to fund, specifically no labels and other people, I think the artifact could be a third party. And if RFK can get 30 plus percent support, which in some states I think he will. I think that there's a decent chance that would be an enormous outcome. Obviously, the most disruptive outcome for RFK

Starting point is 01:29:12 would be that he won the presidency. But I'm just saying that a very powerful outcome that has huge longitudinal benefits to America would be that his candidacy essentially is the America would be that his candidacy essentially is the, is the founding story of a third party. Yeah. And that was the shame of what happened with Perot. I think that there was a chance that Perot could have done that and he must have been under just an enormous amount of pressure. I can't even imagine what he must have dealt with. But that could have been the artifact back then, but it definitely can be the artifact

Starting point is 01:29:42 today. So, we'll see. They haven't announced either. And there's no timeline for them announcing. They've asked to come on this program many times to just talk about the concept. I think like they want to have the executive director on. No labels?

Starting point is 01:29:58 Yeah, they've asked over the years. I don't love, yeah. And I was like, well, maybe when you pick a candidate, that would be a better time than just talking about it in the abstract. I think it's a great idea. I think that's what Americans want. So maybe we'll get to- Guys, the election's in nine months.

Starting point is 01:30:12 We're running out of time. I mean, it's entirely too late to be talking about new candidates who aren't even in the race. Not going to happen. I mean, this whole guy will do some things of fantasy. Even if Biden were to see the light and step down, be pressured to do that. Kamala Harris just said, I'm ready to serve. She wants to be president. And even though she's not seen out, she's actually even more unpopular than

Starting point is 01:30:36 Biden. So you have that huge problem in the Democratic Party that even if somehow they could prevail on Biden to step down, now you have Kamala Harris ready to serve. So how do you pass over her? He's not stepping down. He didn't go through all of this craziness this past week to step down. They didn't devade the cognitive test for him to step down. They're not doing all of that. They're not keeping away from the media so that he can step down. None of that is happening. They're not having people come out with the sound bites about how he's got mastery of everything in private so that he can step down. He's running, Donald Trump is running, and RFK is running. Those will be the three people on the ballot in November of 2024. Biden's staff are the absolute last people who would ever pressure him to step down.

Starting point is 01:31:21 Why? Because they'd be out of a job. I mean, from the staff's point of view, having a weak president who basically they administer. It's not just a job. It's like you allocate the future as the president of the United States. You decide. It's the best situation possible for a staffer is to have a president who is borderline and capacitated

Starting point is 01:31:42 and you get to just do whatever you want. You are the president. Yeah. Jake, I'll give us the rundown of the Tucker Putin thing. What do you think? Just as a programming note, it came out, it dropped right after we taped. We would have covered it. Obviously, we're not covering it for a reason. I give him a B on it. Could have been better, but it wasn't bad.

Starting point is 01:31:58 All things considered. I don't think any journalist is ever going to be able to trap Putin or get good information out of him or any of those things. And if you have somebody like Tucker, who is obviously very sympathetic to Russia and who believes that the West forced Putin to enthray Ukraine, you're not going to get a really great interview. I did think he had a great moment where he asked for the Wall Street Journal reporter back at that moment to take back with him. He did a lot of softball questions.

Starting point is 01:32:29 He asked 43 questions during the interview. About 15 of them were kind of softballs and he had about six fastballs. But he lost control over the interview very early, obviously, if you watched it. And that's just kind of like losing control. I'm not asking for like a... You're like Chris Collins with you using I'm not asking for like a you're like Chris Collins with you. I'm not asking for a technical analysis of the play. I'm asking you what did you think of the interview? What did you take away from it?

Starting point is 01:32:52 What did you think going in nothing and was there a Delta and a change going out just a normal? No, because I've watched the other interviews. I watched Megan Kelly as I watched NBC's he's done. I did a research on and he's done about nine interviews in the last 10 years. So it's not like this was anything new. And when you watch the other ones, it's just Putin spinning and pontificating and nothing gets accomplished. He doesn't answer hard questions. So I had six questions. I said he should ask him. He did ask two of them. But he didn't ask the other really hard questions I had. And so, you know, he's not, I wouldn't say Tucker is like the useful idiot like Hillary Clinton said, but he is

Starting point is 01:33:33 biased and he didn't ask enough hard questions. I would have asked three or four harder questions, but you're not going to get a lot out of Putin. This guy's like a KGB stasi trained manipulator of media. It's his speciality. I had two really interesting takeaways. The first was, if you had wanted to see some crazy madman, you actually left that interview thinking, okay, this is a person that's leading a nation that has a deep historical context

Starting point is 01:34:01 that goes back to basically the dawn of Christianity, of which he has a pretty deep grasp of. It seems that his decisions are rooted in a multi-thousand-year history. I didn't know that, and that was an interesting takeaway for me. That was a broad strategic takeaway. He was a little professorial, he was a little historical and all of that to me Made it harder for me to leave that interview thinking that he was a crazy person. In fact, it's more like he's a bit of a methodical Thinker I guess the second is much more tactical and I thought super salacious and I wish Tucker would have dug into it

Starting point is 01:34:42 Which is that in 1999 when he was meeting Bill Clinton, he asked Bill Clinton, can we join NATO? And Bill Clinton said to him, yes, and let's go hash out the details over dinner. And then that night they have dinner and Clinton says my team says no. And to me, when I looked at the arc of that interview, that was one of these really unique moments where it explains to me so much, which is a country that's birthing a democracy where Putin transitioning from Yeltsin had to make a lot of very important difficult decisions. The idea that he would have made an entreaty to Clinton to say, can we join NATO? And then to be told yes, and then rebuffed, I suspect has an underlying amount of emotion that explains a lot of what's happened since.

Starting point is 01:35:37 And I think that that should have been explored much, much more. I think they glossed over it and they went on, but it was a really important moment. Those were my two big takeaways from that interview. Did you watch your free bird? Any thoughts? I don't understand. I think when he said that point, he was talking in the theoretical, not in the I'd like to join NATO, because the intention of NATO was to create a unified defense against the Russian armament, which is the most significant besides the US. And at that point, before China's rise ahead of China. So I think it doesn't make sense to be like, hey, there's two sides of this defense system. Let's unify the two sides of the defense system.

Starting point is 01:36:19 It literally is a nonsensical proposition. That's true. 1999. That's totally not true. What was the other side? 1999 was where we've tore this whole thing down. It's no longer the Soviet Union. Right. So what is NATO?

Starting point is 01:36:34 It's Russia. We're going to democracy. It's probably just an organization that looks like any other organization, like ASEAN. What's ASEAN? Well, ASEAN is an organization. Could they have military defenses? Supposedly, it's but it's a grab bag of countries. What's the brits? It's another grab bag of this is a defense alliance. This is an economic alliance. But in that moment, the justification for

Starting point is 01:36:56 NATO was the least powerful it said had ever been. So in some ways, joining NATO would have been akin to dismantling NATO and saying, we don't need this anymore. That's the point. Like why would he say, why would the US and the Western Europe allies say, let's dismantle NATO? He did. That's effectively what they would be doing. The historical context of that moment is important. He did it at the moment where they were transitioning to a democracy.

Starting point is 01:37:16 I don't know. It's like saying, let's get rid of the defense system. When Russia was transforming into a democracy? Well, when the USSR was breaking down and transitioning to a democracy. Yeah. How did that democracy go? If there was massive disarmament in Russia. The question is what would have happened had they said yes and Clinton took a different

Starting point is 01:37:31 path. All I'm saying is guys, without prejudging it, that was I think a very important context that is not understood in history. I wouldn't dismiss it. No, no, I certainly, I think everybody raised her eyes, like, really, that happened. What did you think of that moment? And also Clinton, who is so steeped in history and policy, is not somebody that would say something like that in an uncalculated way only to pull back.

Starting point is 01:37:58 That does not seem, and I know Bill Clinton, that is not who he is. So just in that context, he is a very thoughtful person. So he would have said that thinking, wow, this makes a lot of sense on many dimensions. And again, the concept was it was kind of like, let's sit down for dinner and figure out the details. And it's like, my team says no. And of course the team would say no,

Starting point is 01:38:20 because it's like, well, how are we gonna sell it? We haven't heard from Clinton, you know, confirming this or how it was structured. This doesn't make, guys, it sounds like, well, how are we going to sell? We haven't heard from Clinton, you know, confirming this or how it was structured. It doesn't make, guys, it sounds like it was theoretical. That was my interpretation. It just feels like a weird. He said it and kind of shocked Clinton. He's like, let me look into that.

Starting point is 01:38:35 That's crazy. What did you think of that moment, Sacks? And then overall? Well, Jason, the fact that Putin sought to join NATO or at least made that offer is a well-known, well-documented historical fact. This is definitely not the first time this has been raised. More generally, I think what you heard in that interview once you got past the sort

Starting point is 01:38:54 of the ancient history lecture is that Putin, when he first came to power, sought cordial relations with the US and with American presidents. And he was rebuffed. His attempt to join NATO was rebuffed. More generally, the US reneged on his promise to Gorbachev not to expand NATO, one inch eastward. And instead, we began multiple waves of NATO expansion. And I think it's very important to understand that you don't need to believe Putin on this or trust Putin. American diplomats were saying at the time what the ramifications of this would be. And I just want to put two data points in evidence. One is George Kennan, who was the father of the

Starting point is 01:39:37 containment doctrine during the Cold War. He was our most respected Cold War diplomat. Said in the late 90s when they were first debating on NATO expansion, he said that, quote, expanding NATO would be the most fateful air of American policy in the entire post-Cold War era. So think about it. This is somebody who's been around since the 1940s. He was our chief diplomat and defined our containment policy towards the Soviet Union. And he said that expanding NATO would be the most fateful era of American foreign policy.

Starting point is 01:40:08 And he said that a decision like that would inflame the nationalist, anti-western and militaristic tendencies in Russian opinion. It would have an adverse effect on the development of Russian democracy. And it would restore the atmosphere of the Cold War. So this is somebody who really knew what he was talking about and warned us not to go down this path. And then in 2008, second data point is that Bill Burns, who was our ambassador to Moscow, who is now Joe Biden's own CIA director, wrote a memo to Connolly's arise, who was then Secretary of State called,

Starting point is 01:40:39 yeah, means, yeah. And what he said in that memo is that NATO expansion to Ukraine specifically is the brightest of all red lines for the entire Russian elite, not just Putin. In other words, the idea of bringing Ukraine into NATO was an idea that was rejected not just by Putin or by hardliners, but even by liberal reformers inside of Russia. And nevertheless, we persisted in this policy. And so I think what you hear in that interview are a lot of points by Putin around how he sought good relations with the West. But what was our reaction to him?

Starting point is 01:41:17 Pressure, pressure, pressure. We supported the Maidanku in 2014. We tried to expand NATO into his backyard on his most vulnerable border. And then finally, we supported these hard right, ultra nationalist neo-Nazi elements in Ukraine. Now, whether or not you believe everything that Putin said, my takeaway is that this was a rational actor. This was not a madman. This is somebody who we could have negotiated with. And in fact, there was still an opportunity before this war to prevent the war by taking NATO

Starting point is 01:41:51 expansion off the table. We refused to do that. And even today, there was this new press story that in the wake of this interview, the Biden administration still rejects entering negotiations with Russia, even though Putin held out that olive branch in that interview. So, you know, again, it's just very sad how we have conducted American-Russian relations over the last 25 years. We turned what could have been an ally into an enemy and proven George Kennan correct. I think this has been the most faithful air of American policy in the last 30 years. All right, what an amazing episodes has been. I think we talked about Tucker and Putin enough.

Starting point is 01:42:32 Love you boys. For the Sultan of Science, the dictator, and the Rain Man. I am the world's greatest moderator. We'll see you next time. Bye bye. Bye bye. We'll let your winners ride. Rain Man, David Sack. See you next time, bye bye! What you wanna try? What you wanna try? Besties are gone Let's go 13

Starting point is 01:43:07 That is my dog taking a huddle of shit Or I'll wait for him Wait at all Oh man My huddle of shit will meet me at once He should all just get a room and just have one big huge orgy Cause they're all just useless It's like this sexual tension that they just need to release somehow What? You're about to be

Starting point is 01:43:23 What? You're about to be You're a bee Be? What? You're a bee. What? You're a bee. You're a bee. What? We need to get Mercy's arm back. I'm going all in. I'm going all in.

All-In with Chamath, Jason, Sacks & Friedberg - E166: Mind-blowing AI Video: OpenAI launches Sora + Biden too old? Tucker/Putin interview & more

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.