Inside the Iran War and the Pentagon's Feud with Anthropic with Under Secretary of War Emil Michael

Key Takeaway

This episode reveals the Pentagon's revolutionary approach to modern warfare through unmanned systems and AI. The most actionable insight: Success in complex operations now depends on relaxing restrictive rules of engagement while leveraging overwhelming technological superiority. As Under Secretary Emil Michael explains, the shift from bureaucratic combat constraints to 'use your judgment within red lines' enabled operations like Venezuela's leadership extraction with zero casualties—a stark contrast to decades of constrained military action.

Episode Overview

Emil Michael, Under Secretary of Defense for Research and Engineering, provides unprecedented insight into the Trump administration's military strategy. The discussion covers Operation Epic Fury against Iran, the Venezuela operation, and the future of autonomous warfare. Michael reveals how relaxed rules of engagement, combined with advanced drone technology and AI systems, are fundamentally changing military operations. The conversation explores the development of low-cost unmanned combat systems, the Lucas drone program, and how creating leverage through Venezuela and Iran operations positions the U.S. for critical negotiations with China. Key themes include the shift from boots-on-ground conflicts to precision drone warfare, the military's experiential advantage over adversaries like China, and the ethical considerations of AI-enabled autonomous weapons systems.

Full Transcript

Transcript of Inside the Iran War and the Pentagon's Feud with Anthropic with Under Secretary of War Emil Michael from All-In Podcast. Auto-generated from episode audio; may contain minor errors.

All right everybody, emergency podcast time. Episode 263 of All-In. We have Emil Michael, the under secretary of war for research and engineering working directly for Pete Hexa. We had to get this out to you on Thursday night because it is an emergency pod. One of my old besties. Emil Michael is here. Emil and I uh were part of team Uber back in the day. He was Travis's right-hand man. Some might say fixer. And Emil Michael is now the under secretary for war here in the United States, serving his country like our bestie David Sachs.

Welcome to the program for the first time. Neil Michael, how you doing, brother? brother? brother? I'm doing good. Uh I hope it was more than a fixer, but you know, raising 20 billion fixer. I mean, you got it done. You got it done. The hardest. He would give you the hardest things. Yeah. Just That's right. Fair enough. If it was hard, and that's what a fixer is. is. is. An operational axe. That's what they call them. call them. call them. All right. Sure. Uh, in Brooklyn, we call them fixers.

With us again, a rain maker. There's that, too. Making it happen. With us again. Chim Polyhapatia. How are you, brother? Great. Great. Great. Yeah. Look at that smile. What do you got going on? You got some pokers in the fire. fire. fire. Okay. Okay. Okay. I'm not going to say in the coming weeks, I think some news is going to drop. That's my prediction. I don't have any. any. any. Are you loving tweet mogging that's been going on this week? So good. So good. Oh my god.

So good. So good. So good. He's looks maxing by default, but he's been mogging been mogging been mogging the Gooners. the Gooners. the Gooners. Yeah. So funny. What was your favorite? The one I sent you this morning that you said. What did you say? So funny. Are you collecting your losses? Tax harvesting. harvesting. harvesting. What did you say? Oh my god. Chimat said uh Oh my god. It was just like Yes, I did. Yes. Someone said something to Chabat. He's like dropped in. Why is everyone so mad at Jamoth?

All he did was lose billions in retail investors money by proep one page spaxs. It's not like he then told them to enjoy their capital losses or anything. Give the man a break. Jama's response. Yes, I did. All right. Piling on is your sultan of science. Everybody's favorite. Had a great great great some great science that he brought to the show last week. Freedberg, how are you doing? you doing? you doing? Oh, yeah. I've been traveling this week back at home. All right. Sax is out today.

He's very busy on Capitol Hill. We'll talk about what he's up to next week. Let's go. Come on. Let's go. Let's go. Let's go. Go, Jason. All right. The US and Israel launched a joint attack on Iran on Saturday. Today is day six of Operation Epic Fury. Iran Supreme Leader Ali Hameni was killed within hours of the operation. 40 senior officials have also been killed. Death toll so far. About a thousand people according to reports. Tragically, six US Army Reserve soldiers were killed following a drone strike on a base in Kuwait.

A US submarine sank an Iranian ship off the coast of Sri Lanka. This is the first torpedo kill since World War II. Why were at war been a bit of a moving target in a debate. First explanation from Rubio. He said Israel was going to attack and the US had no choice but to participate. Later walked that back. Trump made it clear this is not a regime change effort, but we're doing this to stop terrorism and the development of ICBMs by obviously a pretty crazy group of individuals and obviously nuclear bombs which we blew up a couple weeks ago.

Trump also mentioned the people of Iran should seize the moment quote and take their country back. Pegsth believe is sure boss meal said quote this is not a so-called regime change war but the regime sure did change and the world is better off for it so here's an interesting poly market right now US forces enter Iran this is boots on the ground by the end of March 40% chance by the end of the year 59% chance so the idea that we're not going to have boots on the ground the sharps on poly market believe we will will the Iranian regime fall by June 30th 39% chance according poly market and by the end of the year 51% chance so Emil I guess there are two questions people really want to know I'll leave off why we're doing this I think President Trump has been pretty clear now but how long is this going to take is the one question and are we going to have to have boots on the ground maybe what is success here um I think the the president tal talked about this is a weeks not months kind of operation and it's aimed at essentially disarming the the regime uh or the country from uh in such a way that they can't supply Hezbollah, Hamas, um Muslim Brotherhood, all the kind of terror groups that get sponsored by weapons and money from Iran, not to mention the nuclear bit.

And that's why you see from the reporting they're going after the depots the the you know we went after nuclear sites before they're a prodigious drone maker. These like huge one-way attack drones that can go hund you know hundreds and hundreds of miles. Um lots of ballistic missiles uh that are aimed at every country in the Middle East as you've seen they've attacked them. So them. So them. So I think that's one. In terms of boots on the ground, there's no scenario where we have some protracted boots on the ground Afghanistan, Iraq 2 like scenario.

Freeberg, your thoughts on this war. Obviously, a lot of people voted for Trump in order to have the peace dividend that he was in his first term, absolutely the peace president. And now here we are. Eight countries have been bombed and we've had two leaders deposed and one of those two have been killed. Your thoughts, Freeberg? I think the president and the administration have probably the biggest meetings of the term coming up in China in April. My estimation based on the conversations and the comments made by the president before he came into office and since he's been in office is that finding a grand bargain or a deal with China is probably one of his top priorities.

And if you think about the importance of that, is the US going to wade into a giant global conflict led by a US China rift or is the US going to find some grand bargain? I think he would probably have a preference for the grand bargain. And that being the case, I think you could look at the in the context of Maduro and the actions in Iran as creating maximal leverage going into those negotiations that the reason for that free bird 90% of the oil that comes out of Iran goes to China and there's been a long developing and developed relationship between Maduro's government and China and these are big economic drivers or support the economic driving in China.

So creating leverage by having significant influence or damage or destruction to those supply chains for China gives the United States footing to be able to negotiate a better deal for America. I would imagine that the president's intention here isn't to go and decide who should be in charge and drive regime change and end in a multi-year conflict with Iran. But ultimately, if there's some transaction with China that gets everyone out of this and puts the US on a strong footing where American businesses can sell into China, which is very challenging as everyone knows today.

And there's parity, regulatory par, economic and trade parity between the US and China. there's a point of view on what happens with Taiwan and availability of key technologies like semiconductors. I think it could be a win-win and I think that a deal with China could be the crowning achievement of this administration particularly going into the midterms. So the timing is right and I think that's probably a core part of the motivation here. Chimath, your thoughts on this action and why we're doing it. You've heard obviously the president has his position.

We're not doing regime change. It's a secondary effect obviously, but we want to stop those ICBMs and nuclear bombs from being developed and we want to stop terrorism. Additionally, Freeberg says, "Hey, we're framing this great, you know, discussion we're going to have with she and China and oil is part of that." Where where do you think you stand on all this? I'll build on both what Emil said and what Freeberg said. I don't think this is about regime change and I don't think it's about a local regional conflict.

I think if you take a step back and zoom out, the most important thing that we did in the last 3 months was by taking out Maduro and by taking out the Iranian leadership, we have created enormous leverage as Freedberg said with China. Now, why is that important? Because I think all of this centers around that geopolitical discussion. Last night, something important happened, which is that the official Chinese Chinese Chinese bureaucracy posted what their GDP targets were, and it was shocking to anybody reading it because what we saw was that they guided to a range of 4.5 to 5%.

to 5%. to 5%. which if you look at the historical context of that growth is the lowest that it has ever been in about 30 years. So three decades. So before they entered the WTO the WTO the WTO and the question that one should ask yourself is when a country that's growing at 8 9 and 10% start to grow at half that rate yet have double the number of people and double the GDP what happens? you already have incredibly high domestic unemployment, especially youth unemployment. youth unemployment.

youth unemployment. Does it become more or less chaotic? And I think the historical artifacts of every other country would show that it will become more chaotic. If you have that as a starting point, what is it in China's best interest to do? And I think it becomes obvious that the right thing to do would be to invade Taiwan. Why? because you start to create a sinkhole that occupies your people, that occupies resources, that can get domestic production up and running, that can start to generate a war machine.

And you see the economic impact of war machines in any country during any conflict. And if I had to guess, just to build on what Emil said, the president saw that and I think what they did can be summarized in this chart which I sent to Nick. So if your goal is to prevent war with China, which is a massive global conflict, which could be nuclear, which could be cataclysmic, how would you do it? And this chart paints one way to do it. If you look at the conditions inside of the Chinese economy, economy, economy, the most interesting takeaway is that they are enormously dependent on imported oil.

So about 20% of their economy, but it's not 20% of their economy because it's 100% of these critical things that create GDP, logistics, transportation, aviation, feed stock inputs. And of that 19% about a fifth of it comes exclusively from Iran and Venezuela. And now all of that is off the table. So if you take that and then you see what Steve Whitoff and Jared Kushner and Josh Greenbond have been doing, which is trying to get a deal done in Russia, and you put all of these things together, because by the way, if you add Russia into that mix, it's about 40% of China's oil, not only do you red dollarize, not only do you stop the funneling of all of these illicit oil funds to creating chaos all around the world, but you hem in China going into a massive moment at the end of March, beginning of April, where as Freeberg said really astutely, there is the potential for a grand bargain and I think that secures global safety in that that is a huge thing for America.

America. America. Emil, how much does this have to do with China? China? China? I think you know my instinct is and I'm not speaking for the administration on this is that's a second order benefit to some of these things like the um you know and you said eight eight conflicts there have not been eight conflicts there is like we inherited Gaza we inherited Russia Ukraine um Venezuela was its own operation and then you could sort of attach to it the drug boats that were coming out of that as like one big operation operation operation um and then the Houthies was just Biden was ignoring the Houthies.

They were just shooting at our ships. So that was like very limited in terms of like stop shooting our ships. We need freedom of the seas and that wasn't sort of a, you know, so that's something any president should be doing generally. I think um Iran being the one, you know, material conflict outside of Venezuela. So it's not it's not that many. And and how long did Venezuela last? It was one raid. one. one. one. I guess that's a really important few hours. This is this is an important note I think for you Emil to sort of uh I've explained to us there's a new approach here with regard to the these actions which is no boots on the ground and we seem to uh and and you of course have better information than anybody else does.

I don't think anybody would have known Venezuela would have gone as well as it did and so far and listen we got a long way to go with Iran. This has gone very well as as well. So explain to us what you know and what you the president and HGV know that we don't that makes these two operations go so smoothly. What what is it then? There's obviously some new technology here in in the case of what happened in Venezuela. Yeah. Bes besides the discombobulator, what we've got is a very well-trained military.

Like the the global war and terror was disaster in so many respects, but the people now who are fighting that are generals now. And so they've learned a lot of lessons. And you compare that to the Chinese military. They don't have a lot of experience. In fact, the the decapitation they did in the Chinese military, the one guy they took out was the one guy who had experience in Vietnam. So, they don't have conflict experience, and that matters because you understand going in what are the things that could go wrong.

Um, and then you you have incredible technology, space, air, land, sea, cyber, um, all kinds of effects that you could bring together. And so you imagine uh a hundred guys goes into the most fortified compound in Venezuela where the president is, you know, take him and his wife out safely and are out with no KAS. Incredible. Incredible. Incredible. I mean, it's just incredible, right? So stunning. stunning. stunning. Yeah. So, and they they these things these war games have been on the on the shelf for a long time.

Every every scenario has been planned for years ahead of time. Midnight hammer in Iran was planned years ahead of time in terms of how would you do it if you were going to do it. Um, and then you keep refreshing the tactics, tactics, techniques, and procedures and you're updating them. So, we have a very sophisticated way of of doing these things to minimize loss of life and maximize success. Can I ask a question? I don't want to I don't want to derail this conversation, but is the discombobulator real?

Like, what can you say about the discombobul? I completely I was like obsessed with this when I saw it on X. I was like, "What is this thing?" I mean, I need it in my house. Like, I just want to push a button of all these my kids. And that's just for when Helm Youth shows up. shows up. shows up. Oh my god. Not meant for your kids or if they're behaving badly. No, it's can't talk about it. about it. about it. Emil, do you think we would have been able to pull off that mission as successfully as we did 5 years ago, 10 years ago?

Has the technology improved that quickly that this is not something that's been possible historically? And how does that change the the pacing and the face of war for the next couple of years? I'd say no. It wasn't only a technology maturation from five years ago. It's the uh rules of engagement. The rules of engagement that we used to have uh there was some I mean if you read about them some of them were insane like if in Afghanistan if the guy had a small gun you had to have a small gun and you know there was this parody in weird ways.

weird ways. weird ways. And when you're like well but is the objective to have like a fair fight or an unfair fight? Um, well, if you're on our side, you want it to be unfair. So, the rules of engagement were relaxed to be be be Who writes those, Emil? Who sits in an office and says you can't shoot back if a combatant is shooting at you if you aren't matched gun forgun? Yeah. I mean, who writes that crazy policies that are written into military department? And that's why when Secretary Hicks talks about um this kind of thing and what was happening with him when he was in Afghanistan, if you ever read his book in Iraq, he's like the rules of engagement were so punishing that we were we were at risk all the time cuz you had to have like a legal understanding of what was happening in every minute in the battlefield as opposed to well your job is to you know take out these guys and protect these guys.

Here's your munitions. here's like the the the red lines and then like in the middle of that go use your judgment your commanding officer use your judgment on how to win and we kind of gotten back to that use your judgment push responsibility field still have your red lines but other than that the objective is the objective it's more of a colon Powell approach it's like go all in have a clear objective come out use overwhelming force and we were not doing that for the last four years and then going back to the the face of war going forward forward.

My understanding is that there have been more drones deployed by the United States this past week than we've done in the history of military activity. Is that right? And like how does that really change things going forward here? It it changes it big. Well, so so the Predator drone was the first big drone program like 1015 years ago. It was this big honken drone. Um and then if you remember Obama would take out some of these al-Qaeda leaders with drones on their balcony and things like that.

Uh I think we uh President Trump took out Sulammani with a drone near his car. That was the beginning. And then Iraq uh sorry the Russia uh Ukraine war happened where it's like drone on drone. 70% of the the casualties are for drone but because of drones. So um drone on drone warfare, robot on robot warfare, those things are the future for sure, right? And that's why companies like Ander are companies like Anderoll is because they're making unmanned systems. A and this has been something you've specifically been very focused on and you tweeted today a little bit about a competition.

We'll play a little video here. And this Lucas lowcost unmanned combat attack systems. It used to take a lot of time. It certainly wasn't startup time to get new product into the channel for our military to use. Explain what program you're running here. Feels like the DARPA self-driving challenge all over again and what these drones cost. I know there's a company making them for I think $35,000. Am I correct? I mean the the small drones like I'm holding right there and that are way cheaper than that.

The Lucas oneway attack drone which can go 5 6 700 miles at the speed of an airplane carry a big warhead. Those are like 50 $80,000 $80,000 $80,000 depending on what kind of equipment you put on it. But the we've have put on you put on it. But the we've have a drone dominance program and the real and we basically have to build an arsenal for for drones. Now are we likely to have a territorial conflict like Russia Ukraine with Canada and Mexico? No. But but we do want to take out drug drones at the border and we want but long one-way attack drones are important for you know any kind of major conflict like you're seeing in Iran.

but also to protect military bases for America 250 World Cup uh Olympics in 28 like there's other there's a lot more uses of drones for surveillance not just for you know for combat there you're showing drones that are sort of human operated but how much of this should basically be AI so that it's just some computer vision and again back to what you said before a model understands the rules and the red lines but otherwise is be on task and accomplish your mission. How much of it is one versus the other?

I mean, it I believe that a sophisticated drone war is going to be drone swarms controlled by AI to some degree or another, right? To what degree the control matters? Like for example, drones have decoys. They could spit out, you know, they could dazzle. They could put out things. So, how do you discriminate what's a drone and how to hit it? You know, you could use AI for that because it's learned, you know, how to do automatic target recognition, for example. Um, and then also could it identify a person and that and and does that make it safer?

So, it's going after actually someone you want to get and not someone you don't want to get. Um, so there's a lot of uses for AI at the edge, if you will. Um, in the future here, the the Ukrainians and Russians do something called like a kill box where they lose comms because it's jammed for this drone and then it just starts going in a box and looking for, you know, a the person they're trying to get and they're trying they're starting to use AI to do that.

Wow. Wow. Wow. And China has this uh ability already probably times some magnitude. Yeah. They have drone swarms because they can they can force the companies that make them, not just DJI, to interoperate. So interoperating drones called heterogeneous autonomy, right? You take different kinds of drones and how they communicate with one another and then make sure they're not going after the same target is like a pretty complex thing that they're definitely working on. on. on. And let's talk uh about the fidelity of these. Obviously, AI is a new technology.

They it can make mistakes. Anybody who uses it on a day-to-day basis might experience a hallucination. How confident are you in the AI Ukraine and Russia conflict? They obviously are not going to be as thoughtful maybe as we are in putting this together. They're in a hot war right now. But we as the United States have to be very thoughtful about this. So, how confident are you that this isn't going to make a mistake? I think that's the key to a lot of this debate. and and when will it be you know perfect defined as much better and I guess this dovetales with the self-driving self-driving self-driving you know thoughts it has to be a magnitude better than a human so when will this be a magnitude more accurate than you know when we have uh make a mistake as a as a military and we kill a civilian civilian civilian yeah no it's it's a good question and um I don't know when that moment hits that FSD moment where it get kind of gets better certainly not there and you wouldn't want to take huge risk with that in like you know there there's a gradation of when you would use that and what kind of risk you were trying to take or not.

If you were trying to take out a drone using AI using a like a laser or something you'd be pretty like okay making mistakes because you just missed the drone you know like whatever with a with a with the laser laser goes off it's all over. Um if you were doing something more sophisticated in a population area have densely populated area you'd take less risk. So, we're developing procedures, tactics for each scenario. And this is part of the debate I had with anthropic, which is we need AI for things like Golden Dome.

Chinese hypersonic missile comes up. You've got 90 seconds before it separates and all kinds of decoys and you don't know where the actual payload is and you want to get it hit it from space. and a human can't doesn't have the reaction time, doesn't have the may not be able to discriminate with their own eyes what they're going after. That's a pretty, you know, lowrisk thing because it's in space and you're just trying to hit something that's trying to hit you. So, I think in the next 10 years, you're going to see a lot of these applications develop AI to one degree or another so long as we think it's safe and it's not going to do the, you know, make mistakes.

Before we get on to the anthropic discussion, and we really appreciate you coming here and my lord, this has been so informative. So thank you Neil for coming here and explaining to the American public and to us what you're working on. It really makes us uh I think speak for everybody really confident in what you're doing and it's so great that you've you know left the private sector to do this. What I would say just very quickly Emil is I think that not enough people understand that the American military has had to fight with one hand tied behind their back.

Just that little insight that you just gave about Afghanistan Afghanistan Afghanistan to me seems so scary because the men and women that sign up for the American military. They're doing this to fight on behalf of this country. They deserve a lot more than being sent there and all of a sudden being given this rule book and say, "Do your best." And it's like, "Oh, wait. You violated 19 rules trying to protect America. Do your job." That's insane. insane. insane. Let's just Let's just Let's just It's really insane in some cases.

I I my my belief is that's what the frustration for those soldiers who were out there in those wars had more than anything. There was the broader frustration what are we doing here and then the secondary frustration is while I'm here why can't I do my job? Yeah. Is there is there much of a debate internally and sorry Jake before we move forward on this regarding this idea of full autonomy in military action? I don't want to speak ahead to the anthropic point, but it was something that the media seemed to say was part of Daario's concern is that when you press the button and hand over complete autonomy and there's a kill action that you're now giving to a robot or to some autonomous system, do we then kind of have a moral issue at hand?

And is that something that's kind of debated or discussed? And is that the right way to think about the framing of what goes on? on? on? I mean, we're not even close to there yet, right? where like this the systems are not we we wouldn't feel that a system uh that would have sort of like real risk for a civilian is ready to launch yet. So we're not even debating that. We're just trying to get basic autonomy in drones, basic autonomy in underwater unmanned vehicles, basic autonomy that, you know, you've heard of this collaborative aircraft that fly along with a the jetcraft so that it has more firepower, but it's still tethered to what the jet does.

So, we're incredible. Yeah. incredible. Yeah. incredible. Yeah. Yeah. So, we're just at the very beginning of this stuff, but for Golden Dome's a good example of like, yeah, who can oppose that? Like, it's the only way to get out a threat like that. Um, so who could oppose if you have a military base and you have a bunch of soldiers sleeping that you have a laser that can take down drones autonomously on that? So there's it's it's pretty scenario by scenario, but I don't we're not having a lot of debate because the Skynet thing is so not a realistic thing at this moment, right?

Except if one thing I did tell the anthropic guys, I was like, you know, or I'd tell any company, your models are getting stolen by the Chinese. They're going to unguard rail them and use them against us. And then you want our models to be less capable against your models. It's sort of they're not going to be thoughtful. In other words, they're going to go for it. And you know, if we just benchmark this against where we were at, you know, but 101 15 years ago, there was the Wikileak of collateral murder, I think they called it, where we tragically had an Apache take out some journalists.

And this technology even applied today probably would have avoided that in my mind. Yeah. Like we have enough that when you're targeting not drones but you know people on the ground with an Apache this would have probably avoided that. Yeah. Or or you know the Kuwaiti aircraft hitting you know an American aircraft making a mistake because it doesn't have the identification. I mean it's the same self-driving argument to a degree. like self-driving could save lives even though it's scary to look at a car without a human behind the wheel but there's tons of scenarios where it's a way better safer option more precise um than the alternative all right before we move on to the Dario thing and anthropic and that brew haha there was one piece that we haven't addressed with this interaction Freeberg Chimath which is uh the Israeli government and their desire to take out this regime And us according to Tucker Carlson and a large contingent of the MAGA base they feel that we are captured by this group.

Does Israel have too much influence over the United States with regard to these actions in the Middle East? This is you know a big debate within the party within the Republican party within the MAGA constituent. Hey we number one we don't want these wars. Number two is Israel driving this thing to the point of Rubio's quotes that hey, we're doing this because Israel is going anyway. I think we should address it here. Not that I have a personal stake in this. I'll give my personal opinion at the end.

I don't think the president is captured by Israel in the least. I think he decides what is in the best interest of the United States. And if Israel can be a part of that, then they're a part of it. And look, let's be clear, they're incredibly capable. And so in something like this, to be able to incorporate the intelligence of MSAD, what you're seeing today in this operation Epic Fury, we're four days in, Iran has been 90% depleted of all of their munitions. It looks like they're just firing no more missiles out from Iran to anywhere else.

There's fleets of drones and planes just waiting. Everybody knew where the Iranians were. It's great that when we make a decision on something that we need to do, we can rely on our allies. I think the opposite question should also be asked like what was the UK doing? Why is Spain pontificating? Why was Europe taking the weekend off before they could even issue a statement? Why don't you ask that question? question? question? Yeah. No, it's equally valid question. You know, uh Freeberg, do you want to get in on this or no?

No. No. No. I'm a Jew. No one's going to care what I have to say. They're either going to they're either going to be like totally like or they're going to say this guy's a Jew. We shouldn't listen to him. So, like let's move on. Go ahead. Yeah. Yeah. Yeah. Emil, any thoughts on on this? I do want to know from Emil though like you know is this Iron Dome working this laser in Israel system is this operational and if so is there any success metrics you can share around it I mean I think that the golden sorry the golden iron beam was the first generation of of the Israeli air air defense thing and then they're build building Iron Beam and and I think it's still earlyish but yeah it works they're they're a technologically sophisticated country that's very small that has like a reason to invest in these things and they have a lot of smart people to do them.

So I think I think it's good. But does it primarily work on rockets? And I guess I just want to understand the logical evolution of this because in the 80s and 90s there was a lot of conversation about space-based lasers that could shoot ICBMs out of the sky to avoid, you know, global nuclear war and we could always take out every nuclear warhead delivered on an ICBM. Is that technology feasible? Is there a place in the near future where we could see basically maximal global deterrence using these systems, either groundbased or space-based to take out hypersonic missiles?

missiles? missiles? I think I think the the harder but more valuable problem to solve would be the space-based way of doing it because then um you could get at any kind of almost any kind of threat that hits space, but you still need a ground layer because there's cruise missiles that could come at you, there's drones and so on. to so we call them multi-layers like how do you get every kind of weapon you how do you get every kind of weapon at every layer but you know directed energy lasers as they get more powerful you could take on a bigger weapon farther away right so those uh so those technologies as that as they improve it gets more and more capable and I think all these defense systems uh are going to get more and more capable to get more and more of a variety of weapons at farther farther standoff which is what want you want it to you don't want to shoot it when it's right over Tel Aviv.

You want to shoot it, you know, when it's still over their their land ideally. Are the laser interceptors in the field today. There's reports that they are. I I think there's some I think they've demonstrated some of them. Got it. And and is this our technology or Israel's technology? Because President Trump said, "Hey, that's actually our technology." Is there any insight there? insight there? insight there? We we have collaborations with Israel on some of this stuff. They have their own. We have our own. Um, so it's not this is uh but they're good at tech, we're good at tech.

There's certain there's certain ways you get part of our system and part of their system because it's like a he it's a quickly evolving part of of science right now. How do you cohhere beams of light to like get distance? How to use high-owered microwave to like just drop drones in their tracks? Um there's lots of different ways to get at some of these things. Um and and yeah, a lot of it's ours. uh and a lot of and some of it's theirs. Yeah. And uh to to the earlier question, you know, I I am pro-regime change if it can be done thoughtfully and obviously isolating a dictator, that's the best thing you can do.

We've done that successfully with, you know, Putin, Kim Jong-un, etc. Keep diplomacy up. But if there is a moment in time where you could free the people of Iran after 50 years of being subjugated by these lunatics and dictators, I'm all for it. And I actually trust President Trump to make that decision. I know this may sound crazy. People think like I'm a libtart or something because of the way my besties frame me on this program, which is completely inaccurate. I'm an independent. independent. independent. You are.

You are. You are. I actually I'm completely independent and I am just based on my voting and I'm not on either one of these sides. I am pro President Trump and I trust his judgment. I think he has more information than us. I think you have more information. I actually trust you guys to do it thoughtfully and there obviously was a window here. Israel can have their own, you know, motivation. That could be the China motivation, but there's also spreading democracy, which might be the least of people's concerns here, but that's on the top of my list.

I would like to see the people of Iran free. Just to build on your point, Jason, the thing that Emil said before, which I think is important as well, is we have an enormous amount of learnings about what happened in Iraq. Yeah. We also have a ton of learnings between the Iran Iraq war and a ton of learnings in 53 when US and the British deposed Mosad in the or at least foremented that and put the sha and then the sha was booted up. up. up.

Yeah. Yeah. Yeah. If you take those three chapters in Iranian history or that regional history, there's a ton to learn. And to your point, there is a way to affect what we need to do without creating some 20-year forever war. There was an incredible tweet. I don't know if you guys saw this. Somebody said, "So every war doesn't have to be three decades and trillions of dollars to your friends in Virginia, Maryland, and DC. Did you guys see that tweet?" It's true. These things can be one and done in and out.

And if President Trump succeeds here, I just want to also give him some flowers here. The people of Venezuela and the people of Iran being free represent about 5% of the people in the world living under an autocracy, under a dictator. If those both flip back to democracies, he'll have done more for the spread of democracy than any president for many decades, perhaps in our lifetime. This would be incredibly noble. Incredibly noble, incredibly just. And just. And just. And would you in the human rights set want him to get the Nobel then?

Absolutely. Give him all the Nobels. Like literally if you can free people, all of them. Give him every prize. Give him an Oscar. Physics, chemistry, Physics, chemistry, Physics, chemistry, he can have everything. Physics, philosophy. Physics, philosophy. Physics, philosophy. Jay Cal's an independent. When's the last time you voted for a Republican presidential candidate? Just curious. Um, Um, Um, yeah. yeah. yeah. Say it. Say it. No, no, no, no. Um, Montdale. Montdale. Montdale. No, no, I didn't. I would have voted for, if I was of age, I would have voted for um I wouldn't have voted for the Bushes.

I voted for the moderates. Um, uh, uh, obviously Clinton and Obama. Oh, we're playing the would have, should have game. have game. have game. I would have voted for Reagan in I would have bought Nidia at $4. Well, no. And I I didn't vote for Kamla, so I'll leave it at that. But I voted probably probably probably at that. Why don't you say that you voted for President Trump? Just say you voted for President Trump. I don't want to complicate things, but you did. So, just say it.

I didn't vote for Kla. I'll leave it at that. All right. It's so weird that you that you'll say you're a moderate, but you won't say that you voted for President Trump. I am supporting President Trump in about 60 70% of what he does. Uh, let's leave it at that. Three, two. All right. Let's talk economic talk economic talk economic impact of oil and insurance. Oil has rose to $84 a barrel Wednesday straightfor straightfor straightfor basically a standstill at this point. Here's the clip. You can see the traffic slowing down and then hey, some of the dots are even going away.

That could be uh ships were taking out. Unless the straight opens, 3.3 million barrels of daily production would be lost early next week. And then there's insurance companies. They've all cancelled cancelled cancelled the war risk coverage of vessels in the Gulf effective March 5th. Super tanker traffic dropped 94% within the first 48 hours. Trump said the US would provide political risk insurance for all maritime trade through the Gulf, especially energy. Freeberg, your thoughts on the economic second order effects that we're starting to experience here and over the next four weeks could be um you know intense and acute.

acute. acute. The modern insurance market emerged specifically to solve the risks of maritime trade. So in the 17th century, Lloyds of London, which was a coffee shop in London, where all the maritime traders would get together and they talk about, hey, what's the safest route so pirates don't get our ship and so you don't run into weather. That's where they would kind of have these conversations and eventually they started underwriting the risks of the shipping uh routes and giving each other guarantees. They said, "Hey, if you make this route, great.

You pay me a certain amount and if you don't make the route, I'll pay you the loft value." And that's how Lloyds of London, which is the kind of world's biggest reinsurance market, started today. Lloyds of London has 78 what are called syndicate members. And these are kind of these pools of reinsurance that underwrite big crazy risks like maritime insurance for folks that are moving oil tankers through the straight of Hermuz, which the IRGC just announced they're shutting down. When the IRGC announced that they were shutting down the straight of Hermuz, there's a significant risk of all the mines going in the straight and the ships getting attacked and blown up.

So loss of value. The insurance premium spiked initially from a quarter% so 0.25% of the value of the ship to 1.25%. So it went up by like 5x and so folks had to pay a lot more of the value of their ship in order to continue the routes and get guarantees that they'll make it through. And then all of the markets started to shut down. So once the conflict got heavier, everyone said, "Let's shut this thing down." And that's a obviously a massive risk to energy prices globally, which drives inflation and puts US economic security at risk.

And so this is a brilliant move. I would say the US government stepped in with the US International Development Finance Corporation, which was actually funny enough started a couple of years ago like in 2019 or something like that as a kind of output of one of the agencies that provided credit from USAD. much talked about USA ID. And so they're they're leveraging the credit capacity of this old US ID agency to go out and say to all the shipping companies, hey, we'll give you insurance on your routes.

And the reason they need it is the shipping companies are levered. They take on debt to buy the ships. And the debtors require that they have insurance or else they're not allowed to take the routes because the debtors are ultimately going to be out the money. And so the shipping companies themselves need to have insurance. And so this provides a market that has now gone away. Very smart. And ultimately a lot of people are saying this could actually reshore or onshore maritime insurance back to the United States and create an entirely new insurance industry here in the US that has historically been served almost exclusively by European syndicates and European partners.

And it actually creates a big economic opportunity as this war dies down for American insurance companies and American brokers to basically be the underwriters and the guarantors of this sort of insurance and create a new industry. So that's super super interesting kind of side story on what's going on here. All right, some breaking news here folks via Bloomberg. The Pentagon has formally notified Anthropic that it's been deemed a supply chain risk. This has never happened to an American company. It has happened to Russian companies. uh and Chinese companies Huawei and for background the department of war cancelled Anthropic $200 million contract on Friday and said they would do this.

The dispute came down to two clauses according to sources and we have one of the principles here. So we will hear directly from him in a moment. Anthropic had two concerns. Number one, fully autonomous weapons aka murderbots. As we previously discussed, Daario didn't feel that their technology was reliable yet and wanted some assurances. The second thing Anthropic said was uh they were concerned about mass surveillance of Americans because they believe this technology is uniquely powerful and uh it's can do things beyond what a series of webcams or a network of 7-Eleven cameras can do.

Pentagon said they wanted all lawful use. Dario, you're welcome to come on the program next week or any time to give your side of the story, but this week we have Emil. Emil, your thoughts and explain to us what happened here and how this broke down. It's worth a little history, short history. So, history. So, history. So, if you remember the Biden executive order on AI, which was this crazy executive order that limited the amount of compute any model company could do and was essentially grandfathered in a few a small number of AI companies that they were going to designate the winners and everyone else was out so they could have more control on what they did.

Um, Anthropic was one of those winners. Um, and then they were smart. act as a good sales strategy to sell in to the most sensitive parts of the US government like all of our combatant commands sent central command that's doing the Iran fight now the Indoaccom command which is sort of responsible for China several of the intelligence agencies and they did forward deployed engineers palunteer style so they're very got very sticky um to the workflows and all that and so I came in and I got the AI portfolio for department in August and I said, I just want to see the contracts.

You know, the old lawyer in me and I looked at contracts. I was like, holy cow, they say you can't use them for you can't use them to plan a a kinetic strike. You can't use their AI model to move a satellite. You can't There was a a 20 page. page. page. You can't do a war game scenario with it. it. it. You could do a scenario, but you can't like let's suppose you're writing a plan saying like if this happens, here's what we would do.

and it might involve a kinetic strike which causes harm to a human. So like, well, what do you think these folks do? You know, we use the Department of War. This is what we do. And so I said, okay, well, I've got to number one, have direct relationships with these companies, not just through Palunteer, because I want to use it more broadly. And then number two, I need to have the terms of service be rational relative to our mission set. So we started these negotiations and and took three months and I had to sort of give them scenarios about like this Chinese hypersonic missile example.

They're like, "Okay, we'll give you an exception for that." Well, how about this drone swarm? We'll give you an exception for that. And I was like, "The exceptions doesn't work. I I can't predict for the next 20 years what all the things we might do use AI for." Um, and so so all lawful use seems like a good thing. If Congress wants to act, great. We have our own internal policies like we'll follow them. We're not knuckle draggers here. We want we don't want to hurt people unnecessarily.

So, you know, it's our province to decide how we fight and win wars um so long as they're lawful. And I think at some point it turned into a PR game for them because they were not going to win this intellectual battle of well, we're going to stop you. we're going to use our judgment because we think Congress is behind and impose it on the US military. And it became this like let's find the issues that are most inflammatory, robot weapons and mass surveillance. I mean, like we're the Department of War.

We're not the FBI. We're not Homeland Security. We're not You're not allowed to legally spy on Americans. Americans. Americans. Yeah. You're not you're not. So it's so so you're like and then what it came down to on that issue just as an anecdote is they didn't want us to bulk collect public information on people using their AI system and they wrote it in a way that I was like so you're telling me before we got to bulk collect if someone types in you know Shimat's at LinkedIn it's I'm using public available information that I would be violating your terms of service like yeah well okay let's rewrite it.

was months of this like stuff. Um, which which was sort of interminable and then the trigger point was after the Maduro raid, one of their execs called Palanteer who we buy ourselves through and asked them uh was our software used in that raid which is by the way classified information anyway. So we're trying to get classified information and implying that if there was used in that raid that that might violate their terms of service. So they wanted to enforce, this is very important here. Yeah. They wanted to enforce their terms of service.

They went behind your back to try to collect information to then maybe pull your license for their technology. technology. technology. But you know, and it wasn't by behind my back. I don't want to accuse them of that. Palunteer is the prime contractor this sub. Um, but it raised enough alarm with Palenteer who's got a trusted relationship with the department to tell me and I'm like, "Holy, what if this software went down, some guard rail kicked up, some refusal happened for the next fight like this one and we left our people at risk and I had so I went to Secretary Hath.

said this would happen. And that was like a wo moment for the whole leadership at the Pentagon that we're potentially so dependent on a software provider without another alternative that has the right or ability to do to not only shut it off, maybe it's a rogue developer who could poison the model to make it not do what you want uh at the time or sort of trick you because you have to trick it. I mean all these things that we know we were about models or hallucinate purposefully or do or not follow instructions like some insider threat stuff.

So then that culminated in the Tuesday kind of dramatic meeting with Hexath and Secretary Hexath and me and and Daario um with the Friday deadline that that got blown and I never thought they really wanted to make it. M is is the model entirely hosted by Anthropic or just explain to us technically does this sit in a cloud that Palunteer runs for you guys? Um is there really technically a way that employees at Anthropic could kind of interfere intervene in the use of the model? Yeah.

So they put their model in AWS GovCloud GovCloud GovCloud GovCloud. Yeah. GovCloud. Yeah. GovCloud. Yeah. And then Palunteer serves it from there and they refresh it. They held the control plane for the model. So, so yeah, yeah, yeah, they can change the model weights if they want. They can do whatever they want. want. want. Yeah. Yeah. Yeah. The insight into this thing is unbelievable. Not just governments, but now if you're running a company, the reality is that what anthropics showed, which by the way is their right at some level, is that they are going to have a political perspective and a set of terms that reflect their philosophy and that that philosophy can change on a dime.

But what the government did was also completely reasonable, which is we can't rely on you if you're going to be completely unreliable and disallow things that are reasonable. I'll give you a different example to make the point. There's a state that wants to run some healthcare program, but they're a prolife state. prolife state. prolife state. You can't conduct abortions in that state. Does that mean that the anthropic engineers can decide, you know what, we're pro-choice, so we're going to change the access model and the capability of that model inside of that state.

Is that allowed? Should that be allowed? At one level, you'd say, "This is a private company. They're allowed to choose." But what that really means is for the government, for all the states, for any city, for every company, you cannot choose to only use one of these things because it is just a matter of time until some person inside of one of these companies goes on some lunatic moral tirade and then jeopardizes your business against something that is nothing about law, but is everything about subjectivity.

That is the huge thing that this thing tore open this weekend. So if you're not figuring out how to be multimodel and agnostic across these models, you're taking on enormous business risk after Friday because you can't tolerate that these folks will do that. It's too critical of a technology. By the way, this is deplatforming all over again. Remember what happened when you didn't like what was said? Now all of a sudden you were deplatformed. This is that times a thousand because this is not about posting on social media.

This is about using fundamental technology to either advantage or disadvantage your business. Emil. business. Emil. business. Emil. Yeah. I mean, I think I described it the other way the other day as these c the leaders of these companies say they're going to cause 50% white collar unemployment. This is as powerful as a nuclear bomb. You it's like 50,000 geniuses in a data center. So you could have a small country coers the world into its whatever. So you're like, "Holy cow." All right. So this is a general substrate of intelligence of technology that's applicable to a lot of things.

Very generalized. It's not like workday like HR software we could just use a competitor. This is going to be part of our everyday life in so many different ways and the controlling the like what whether it has a moral conscience. I mean anthropic has its own constitution. It has its own soul. It's not the US constitution. So you're subject to that plus whatever whims and how that changes. And that's a scary thought for for Americans generally. Um and I think that did come through a little bit today.

And in the coming years it's going to be a bigger and bigger deal. So take us through OpenAI software, Gemini software and Gro software. Have they push back on any use or are they like Dell or Apple? They sell you a computer and you have the computer and you can use it as you will. Have any of those given you any push back? So Grock's all in for all awful use cases across all classified and unclassified networks as you'd expect because and you know Elon's truth seeking.

We want truth and Department of War. We don't want ideology ideology ideology because ideology will mess with operational decisions like you you don't want anyone to anything to be fake or tilted. tilted. tilted. We're we're surgeing Google and we have them we have Google for all lawful use cases on on classified networks and we're trying to move them to classified networks. are just they have to build out infrastructure because the stuff's complicated. So they're in compliance in terms of what you're looking for as a partner.

And then And then And then I guess the last one is OpenAI and Sam seems to be just characteristically playing both sides a bit trying to his credit um I called him and said I need a solution if this thing goes sideways. I need multiple solutions. I'd like you to be one of them. And he's like okay well what can I do for the country? is like, I need to get you up running as soon as I can. And he was he was trying to protect anthropic to his credit.

He was like, don't do don't call him a supply chain risk. That's bad for the industry. Let me maybe I can negotiate terms that they'll find acceptable. Uh but he's in the middle because they're they compete for the same researchers. So, a lot of this comes down to this thousand researchers like baseball players that get traded between these companies. Moneyball. Yeah. These are the best of the best. It's a very moneyballish sort of thing and there's not that many of them and you lose 20% of them and all a sudden, you know, they launched Claude Code before you launched Codeex or something like that and then the numbers changed pretty dramatically.

So, he was being a real patriot um to his credit and trying to him, you know, help anthropic while they were trashing him and recruiting from his company. And I I am not biased. I just I want all of them. I want to give them all the same exact terms uh because I need redundancy. I want to see if they diverge or not or did they if they converge maybe I only need two over time but we don't know it's too early but why why keep them in the mix?

So if there's clearly like a difference of operations and philosophy and how they want to run their business and there's other models is is their model particularly good at particular applications that make it important to keep it in the mix given that there are three or four other kind of alternatives here. here. here. Anthropic you mean? Yeah. Oh well because number the number one reason we were having this conversation at all was because they were deeply embedded. So now I have to unentangle them and the other companies have not gone as heavy enterprise enterprise sales forward deployed engineers government business.

So they're have to catch up not on necessarily the capability of the model but just how do you serve the government the Bible is just way ahead on that right right right but the models themselves you don't think are uniquely advantaged or do you have a view on that at this point? I don't have a view on that. I I don't think they're, you know, I mean, certainly cloud code was was innovative and ahead. That's true. Um, but I do I believe in 12 months Codeex is not going to be close.

I think it will be. I think you're right. There's an asmmptoing that's happening. If you just look at the like the confidence interval on how overperforming or underperformance some of the leading models are, the error bars are shrinking, right? the confidence intervals like these things are all kind of becoming the same eventually they're all getting access to enough power enough compute they're generating similar results it turns out which I think you would expect so even more important that you have a complexion of models the other thing Emil I don't know if you saw this but they posted about the revenue ramp of anthropic and well I have a small software company called 8090 and I asked the team.

Let's go look at our opex. I posted it because I was so shocked at these numbers. Our costs have more than tripled since November of 25. Between the inference cost that we pay AWS, which is ginormous, between our cost with cursor, between anthropic, we are just spending millions. millions. millions. So now more per unit and more more in aggregate aggregate aggregate both. But the problem is that my costs are going up 3x every three months. My revenues are not token use is very addicting. Yeah. And by the way, because everybody has gotten infatuated with what we call these Ralph Wiggum loops, like just like send the thing off and like it'll just go figure something out.

A, it never figures anything out, and B, you just get this ginormous bill from Cursor. So, one of the things we had to do was just, we had to say, guys, you got to deprecate cursor because you're just wrapping cloud code and charging us way too much for these tokens. But I don't know if you're seeing any of this thing where like the tool usage, it's so great to use these tools. Let's be honest, it's super fun. It's like you feel like a genius, a genius, a genius, but then the ROI of these tools are really important.

I'm not sure that that's as much of an issue for you or not in in it will be it. It will be for sure. for sure. for sure. As people find more and more use cases, the use cases get more sophisticated. So the next marginal thing you have it do is likely to be harder and therefore be more consumptive. Right. Right. Right. Right. Let me just ask Emil, the important question that I think triggered a lot of the news this week is why then designate them a supply chain risk?

Why not just abandon them, move on, use the other vendors? Like why take this kind of punitive action? punitive action? punitive action? Yeah. So I I don't view it as punitive and I'll tell you why. It's if their model has this policy bias, let's call it, based on their constitution, their culture, their people and so on. I don't want Loheed Martin using their model to design weapons for me. I don't want the people who are designing the things that go into the the componentry to come to me because if that po if you believe the risk of poisoning threat yes it can enter into any part of the defense enterprise enterprise enterprise but it's just the defense enterprise so Boeing wants to use anthropic to build commercial jets have at it Boeing wants to use it to build fighter jets I can't have that because I don't trust what the outputs may be because they're so wedded to their own policy preferences.

I guess a dovetail to that is why couldn't this have been handled quietly? Is this anthropic who made this a public spat or was it the administration that made it a public spat or two to tango? I mean, they have a very good sophisticated press operation and like really good and painting us as doing mass surveillance where where where their issue was like some commercial database thing that someone else could buy. They didn't want us to buy to use it, which I'm not even sure we buy them except to do recruiting for soldiers.

And you know, we run schools, hospitals, we do a lot of things at DoD. We don't just fight wars. and um and the the way they were able to characterize these two things which are genuinely scary to people but were not the real issues. Um it was really the you worry I worried about them shutting off our system at a moment of need or them messing with our system in motar came to mind is if they are selling you batteries and you need to use the batteries or the laptops however you need to use them lawfully okay that should be enough for them unless they are peacenicks and they don't want to be involved in selling weapons which by the way was Google's position for many years they just didn't want to be involved in it because to your point they want to recruit talent that is also aligned with that.

So there's just seems to be maybe this isn't the right partner for the Department of War. Yeah, you should if you if you don't want your stuff to be used for department war stuff, you shouldn't be selling to the Department of War. Pretty sure it's in the name. It's in the name. the name. the name. Well, and then also I have to say when you know you said, "Hey, we don't know what how we're going to use this thing." Like immediately came to mind was like 911.

you you have to go check with them, you know, if you find out there's another 911 unique, you know, black swan event that's going to occur and you have to go clear it with them. Like you That's That's That's That was literally the comment. That was literally the comment when I was Yeah. So I was in a room of 20 people. So this is not undeniable if everyone want Daria wants to deny it. And I was giving these scenarios, these Golden Dome scenarios and so on.

And he's like, "Just call me if you need another exception." And you know, I'm like, but what if the balloon's going up at that moment and it's like a decisive action we have to take. I'm not going to call you to do something. It's like not rational. And rational. And rational. And yes, yes, yes, uh so it that was another holy cow moment of like how they think about it. That just means that what he wants to be is the secretary of war. That's right. That's right.

That's right. He wants to be the the god king there, I guess. Yeah. guess. Yeah. guess. Yeah. You can't do that. The thing that shocks me, Emil, I don't know. you maybe you can't say anything but guys you can comment on this. It's clear that Anthropic just lost all the Republicans but I think that if they think that they have the Democrats that's fleeting as well because I think progressive Democrats fundamentally just hate Silicon Valley and technology and so there's no way they're going to let some god king over here that they don't control either.

And so in both ways, I think they accidentally may have pissed off every constituent. The longer term fallout amongst them and progressives will come home to roost because as the progressives want more control and these guys push back on them, they're just going to fall into the same situation. Yeah. I mean, it's an interesting perspective. I think if you don't want to be involved in war that you're right, I think you mentioned this like three times, Jimoth. times, Jimoth. times, Jimoth. Don't sell bullets if you don't want to be in but you can't call Smith and Wesson and say can I The other thing is what the hell was the senior management and the board talking about over these last few days because to me it would have sounded insane.

So then the question is were people just so breathless to buy this revenue curve? What is the board doing? What is the senior management really doing? What do you change guys? What do you think you would tell them if you were sitting inside of the board of Enthrop if you're an investor, you're on the board, what do you say to Daario when he says, "Hey, I need to dictate to Emil and Hexth how they use my tool and everybody else is just saying lawful use as the standard." What's your coaching advice?

advice? advice? Well, it's also a very unusual circumstance because I don't think any business in history has grown as fast as they have in the last 90 days. So, they've added what was it? 6 billion of ARR. ARR. ARR. Yeah. in a month or something. I mean, that's absurd. Like, I mean, absurd. It's absurd. It's a great product. Open Claw has driven a lot of this. this. this. If you're on the board, you're closing your eyes. Yeah. You're shutting the up. You're just shutting the up cuz something's working.

working. working. You're actually You're actually You're actually I think he's off doing his thing and they're going to let him do it. And I don't think that company's worth 350 billion anymore. billion anymore. billion anymore. God knows what it's worth. Oh. Oh, that's interesting. Where do you If you get put a block of stock right now, where do you put a bid in? I'll tell you where I Oh my god. I had I had this conversation at dinner two nights ago. It's like you have to pick between OpenAI at their current mark, current mark, current mark, anthropic at their current mark, or Google.

And it's either multiple from here or net market value creation from here because those are actually two very different conversations. different conversations. different conversations. Explain the difference. I think the net market valuation because Google's already worth three trillion. So if they double, they've added three trillion, but I think Google is the bet. I think Google is the market value creator bet. But I think anthropic is the multiple bet. I think anthropic is a trillion five market cap at the end of the day. the day. the day.

Unless this blows them up, you're still buying the 5x versus the 3x kind of thing. You'd buy the 5x instead of the 2x. But if you get put a block of stock now, do you buy it at the last post or do you buy it at a discount or do you just say, "Ah, I just buy it at the last post." Anthropic is worth a lot more than 350. That's for sure. I I that it's undervalued compared to chat. chat. chat. They just added six billion in the last month.

And I will tell you anecdotally, anecdotally, anecdotally, anecdotally, I am everyone I talk to is on co-work. Everyone is like gone deep on this. Everyone's amazed and shocked and actively using it. And everyone's saying the same thing, which is anthropic, may actually be fulfilling the promise of AI. I will also say that it's only going to take 90 days for Google to flip on a virtual version of co-work. And once Google like has this integrated with G Suite and you have a virtual hosted version of co-work sweeps the market with this same competitor.

But right now Coowwork is such an incredible product and everyone's saying the same thing. It's like giving Elon giving truth to AI. Elon said something with respect to Grock which was that he expects it to exceed all of these coding models probably in the May spin but for sure by June. So to your point free like what like I guess my question guys to you is like what happens okay what do you guys do em what do you do when all the models asmtote let's just say by October of this year let's just say I can guarantee you just for the thought exercise by October all the models are the same do you just take a complexion of them all and say great we're going to build some governance layer around it and now we're indifferent or indifferent or indifferent or what do you do I would love to be indifferent because then I could compete on price, right?

And then then I have and then I have one one main and one redundant or two mains and I'd need at least two. Yeah. Yeah. Yeah. Anthropic's not going to be one of them if they continue sort of with their their sort of posture. So then it would be three. And if one gets wobbly from a policy scenario too because they all, you know, except for Elon's is based in San Francisco and has that that vibe to it. So, uh, you kind of want to have two or three at any given time.

And yeah, then I then you price compete them. I do think Google has a long-term strategic advantage, not because of not only because of their consumer thing, but because they have their own cloud. So, between them, they don't have the margin on top of the cloud that Anthropical have to pass on. So, it's an interesting economic uh uh proposition from them. And just to build on your point, Freedberg, after you finish your uh insightful comments here, pull this up, Nick. Almost on quue, Freedberg. You're such an oracle.

Here is the announcement from Google. Google Workspace is now integrated for agents and 40 agent skills were included today. Emilio, you've been great today. Super honest. Daario's uh position. I'm going to give you some fast balls here. Daario says, "The real reason the Pentagon and Trump admin do not like us is that we haven't donated to Trump. While Open AI Greg have donated a lot, here's Claude's answer to that claim." Here's nine companies and their activities with the administration from the inauguration to attending the inauguration to the White House CEO dinner to the Melania documentary.

If you go through and you look at these nine companies, Microsoft, Apple, Tim Apple, Nvidia, Amazon, they have all participated. There's one company that hasn't participated and that's Anthropic. Are is Anthropic being singled out because they are not genulecting and because they're not paying the cover charge. People say this administration is pay for play. That's the accusation he's making. I'd say maybe there's a cover charge. Nobody likes to pay it, but the other companies have. What do you think here? here? here? I mean, it's literally one of the dumbest things I've ever heard.

I I truly just because I'm like, I'm in the Department of War. I need to win wars. If you help me win wars and I don't have to waste time transitioning you out, I'm that makes me thrilled. Um, and it sort of it's a criticism on me because it's not like Trump, President Trump dipped in and he's like, "Hey, Emil, by the way, those guys didn't get any money. you can't use them anymore. I mean, obviously, it's sort of like like invention in his own mind.

It's like I don't know if people sleep at night if those thoughts get in there. Um and and I was trying to work with them. Why would I spend three months trying to negotiate with them to get to a simple standard if I would have just said, "Okay, guys, you're out. Bye." So, I I think it's just some internal psychosis. That's the only way I can explain that. explain that. explain that. Okay. It could be on Dario that he's antagonistic to the administration both with respect to how he operates commercially and it's also reflected in the fact that he doesn't want to support the administration.

the administration. the administration. I have a different theory. I think that they have a massive instance of co-work internally that helps them come up with business strategy. And I bet you there's like some element of AI that says, "Yeah, you should do it. Do it. It just makes sense. sense. sense. Zig where they zag and get more press." And so now there's some some cladbot telling them to basically tell the department of war to pound sand. It's gonna turn out to be the stupidest decision. decision.

decision. Listen, if I was chairman of the board of that company, I pull Dario aside and I'd say, "Listen, you're obviously a genius. We obviously have the best tool in town. This is not a battle you can win and it makes no sense. You're going to come across as not being patriotic." And Tim Cook is showing up for the Melania premiere. Would it kill you to support the president? Would he kill you to show up? Look what happened when Biden Biden Look what happened when Biden excluded Elon that ankled him.

Show up for the president. Show up for America and be a patriot. You don't have to donate, but be a patriot and show up for the dinners. the dinners. the dinners. That's terrible advice. Here's my advice. advice. advice. Okay, here's your advice. Okay. Hey Dario, call a meal back right now and say, "You know what? Sorry, weed up. We're gonna own this and we're going to put out a press release that says we support our customers use of our models to do everything and anything that's lawful.

Number one, and number two, that our terms of service are written in stone and that you can expect solidity and reliability from us. And this was just a misstep. Camille, how do you respond? I mean, I would say that's what I've always wanted. I need a reliable, steady partner that gives me something that'll work with me on autonomous because someday it'll be real and we're starting to see earlier versions of that and I need someone who's not going to wig out in the middle and we're just at the early stages and it's rational.

But then, then, then, you know, you called President Trump in your 5,000word essay on Friday a wannabe dictator. dictator. dictator. You're going to have to apologize to more people than just me. Yeah, maybe time to rewrite the position here. Uh, let let's just say Kumbaya, everybody. Kumbaya, we solved the problem. And look who's on the line. Surprise guest. Daario's here. I thought I would surprise everybody. Nick, pull Dario up. No, he's not here. What's your view on how the industrial supply chain for hardware components and systems is coming along in the United States?

Because my understanding is we're trying to reduce dependency on Chinese manufactured components. Where are we with respect to where we need to get to in the US manufacturing supply chain? chain? chain? We are early days. Um critical minerals you see you've seen the action around that. Um you'll start to see so I have the office of strategic capital which has 200 billion in lending authority. And what we're trying to do is is it's like a treasuries plus 100 bips loan to companies, show them that the department needs their solid rocket motors, their batteries, their fiberglass, like all the things that we that we're heavily dependent on for our defense industrial base that are completely outsourced to China and domesticate them here.

Um, and we've got uh a bunch of great people running it. So, but but it's early days. is going to take for the rest of the term to get um I think we'll get critical minerals done before the rest of the term where where we have the access to what we need to from US or allied countries. Um but from batteries is like the next problem I'm trying to solve. For example, batteries are totally outsourced both technologically and from lithium to China. Um, and there's like, you know, kind of call it 20 critical things.

If I could get to all of them at some level, but then it'll take a few years for them to like build plants and do that stuff. But there there it's it's very important. I hope whatever administration comes next continues it because I'm all free market, but but we outsource so much that um, you know, it crippled sort of the the kind of the assembly part of putting all these things together. Do we have a munitions risk right now given the conflict that we're involved in?

We don't have a munitions risk, but um we do need to plus up because the Europeans are taking a long time to contribute like Ukraine. Russia has consumed a lot of munitions from like all over the world and then uh obviously these conflicts we've been in and um we need to have like the next generation we're still there's still a large degree we're fighting with 1980 cold war weapons right and not modern weapons and so we need to plus up those things that to to regenerate them I mean our nuclear missiles are 50 years old some of the planes are 40 years old so all has to be renewed.

renewed. renewed. Do you think um just speak to the venture capitalists in the audience? Are we in the early stages of this kind of defense tech boom? Is defense tech wellunded at this point or is it kind of too hypy and bubbly and that's not really the issue? It's not about funding the companies. It's about funding some of the further upstream uh issues that we're facing. What's what's your view on where we are there? There's more defense tech venture capital than ever by you know 3x more than last year.

So, you know, it it's growing. What I need to do and what the department needs to do is have some of these companies win big contracts quick like whether you know and sure um uh Seronic sure like bunch of these companies so that more money flows in more entrepreneurs do it and I could buy more because genuinely I do think warfare is going from big car carrier ships that cost20 billion dollars and a decade and a half to build to mass traitable traitable traitable lowcost um things and that's what these new these new entrance can do.

So we need those to succeed so that the flywheel goes with venture capital money entrepreneurs capabilities entrepreneurs capabilities entrepreneurs capabilities in that sense and what I've heard as kind of the explainer for this is we're moving from the old primes to the new primes that there's going to be a small set of big winners and then obviously lots of seconds and and subs and whatnot. Is that really how this market's going to evolve? So, are we going to end up with Andrew, Palanteer, and maybe three or four others, and that's where most of the value is going to acrue from a market perspective?

I mean, Andrew and Palanteer want that, and I joke with them all the time about it, but I I want I definitely want at least a second layer that's innovative and trying to disrupt the first layer all the time. I met a mom and pop like wholly owned company that that makes these missiles called Rams that are we really sell and send send to Ukraine and they do it with like 30 people and they can do a thousand a year because they've designed a manufacturer and it's awesome.

So I want companies like that to continue innovating maybe and then b buys them but the the one of the reasons the primes are such a small number it's not the only but it's one is they learn how to contract with the government. They learned how to go through the bureaucracy and that became a competitive advantage. I'm trying to take that competitive advantage away. That's a really important point. How do you disassemble all that bureaucracy so that product innovation can actually get to you? to you?

to you? Yeah. So we we did a big So part of it comes down to requirements reform. What used to happen is people like oh we need a new fighter jet. So, Army, Navy, Air Force put in the requirements and were you know it would we needed to be stealthy to hold a missile to hold four humans and you know it became this unbuildable thing but the contractor didn't care because they're getting paid cost plus so like sure I'll fulfill your requirements two years from now you're like that was never engineered properly it'll be another few years late and a couple more billion dollars so we're trying to change that to I tell you my common operational problem.

I need a bunch of missiles that go 500 miles or more that have this kind of blast. Come to me with solutions, as little requirements as possible on that side. And on the contract piece, trying to get to as close to commercial contracts as possible. And this is going to take, and this is where the startups are so good, they'll do fixed cost pricing. They'll do, you know, pay you don't pay me as much if I deliver late. You pay me more if I deliver early.

It's very disruptive to the existing system. Yeah. system. Yeah. system. Yeah. Super disruptive. But that's that's what I'm I'm like waking up every day trying to do. to do. to do. So you could put out as something saying, "Hey, the straight of horses is super important. We need to keep it open. We need these type of devices to keep it open." But come to us with your ideas and let them be creative entrepreneurs as opposed to, you know, just trying to goose the profits. Yeah. It's really brilliant.

Yeah. Yeah. Yeah. Emil, you also oversee DARPA. Yeah. Yeah. DARPA is the father of the modern internet and it's created a lot of really critical technologies. Can you talk about what's going on in there? Are there interesting things that you think our audience should know about that you're trying to push forward? I mean there's so it's probably my favorite part of of my my office is like because there that's where you it's sort of like it's still a very honored profession to be part of DARPA.

like you know being a being in government service for a long time is sort of reduced in its stature since the Manhattan project now because now now if you're a great ass you know uh someone who wants to do rockets and stuff you go to SpaceX DARPA still has the best of the best and so the most creative ideas happen there one of the things that they're working on that's public is they're trying to use biology to synthesize critical minerals so so how do you so how can you just pull them out of ground use biology to do it so you don't need to do all this crazy messy dirty refining that would like change the game big time on our ability to get the critical minerals we need faster and leaprog the Chinese in terms of tech.

Um, so they're doing a lot of that kind of stuff. They're deep in cyber cyber attacks are are the next huge threat with AI, right? The what what we saw with the creating all these agents to attack systems that anthropic happened to them. Um, so they're they're they're working on that's there's not a ton I can talk about kind of DARPA because it's so it's so classified, but those are a couple examples for you. All right, speaking of classified, uh, just two quick questions before we wrap here.

Are there aliens? And what are you going to tell us? And number two, uh, in all seriousness, I I'm curious, what have you learned about China and where they're at and the threat there and our ability to counter it? like give us some idea of where we're at as a country cuz we hear a lot of hyperbolic stuff. They're building this incredible mobile small navy. They've got hypersonics. They're just way ahead of us. You know, we hear these things. But realistically, are we competitive? Um I fought Well, I'll answer your first question, which I fought for the alien portfolio.

I didn't get it. Work to do more work to do. All the guys on my team were like, "Dude, you got to get this for us. Please talk to the secretary. We want to do this." do this." do this." But I but I I was like, you as long as I had 100% access to everything, I would do it because that would be it would be amazing, right? amazing, right? amazing, right? Sabers would be a game changer. Um but on the second one, uh it is true that Chinese have had the greatest military buildup in world history in the last 15 years.

and we're asleep at the wheel to some degree because we're focused on global war and terror. So, they've advanced without sort of us thinking about threat. That being said, our operational expertise and our space, like we have some sophisticated stuff, you know, our subs, our space layer, um we still have the best stuff in the world that does, you know, but but we have to make sure that gap doesn't narrow, narrow, narrow, right? We can't be complacent. We should sleep well at night knowing you're there.

Yeah. there. Yeah. there. Yeah. Knowing President Trump's allocating money towards this and he's decisive in his actions. But we cannot be complacent trying to I feel like this week was a true reminder of how fortunate we are to have the defense that we have for the United States. When you look at what happened in Dubai and in Doha and in Tel Aviv and you see how people in their residential homes are getting attacked and bombed, you realize just how fortunate we are to have all of the layers of protection that we have by our government.

And I've actually come around to this quite a lot. I'm a true kind of arguably libertarian at heart, small government, but the one thing that I've realized is so critical for us to have the freedom to do all the things we want to do is defense. And so I think it's an amazing institution, very valuable to the United States. Emil, thank you for what you do. Yeah, thank you. Really appreciate you coming on and being so candid and thoughtful and insightful. This has been a fun amazing episode.

We'll see you next time. Byebye. Love you, boys. Byebye. Let your winners ride. We open sourced it to the fans and they've just gone crazy with it. Love you. Queen of yours. Besties are gone. That is my dog taking your driveway. Oh man. Myasher will eat me. We should all just get a room and just have one big huge orgy cuz they're all just useless. It's like this like sexual tension that you just need to release somehow. Your feet. Your feet. We need to get merch.

I'm going all in.