The Fight Over Open Source AI, Anthropic's $1.5B Payout, NYC Socialists: Evictions = Violence?

All right, everybody. Welcome back. All right, everybody. Welcome back. Episode 282 of the world's greatest Episode 282 of the world's greatest Episode 282 of the world's greatest podcast. podcast. podcast. It's your podcasters's favorite podcast. It's your podcasters's favorite podcast. It's your podcasters's favorite podcast. It's your mom's favorite podcast. It's It's your mom's favorite podcast. It's It's your mom's favorite podcast. It's the All-In podcast. With me again, David the All-In podcast. With me again, David the All-In podcast. With me again, David Sax up to you, David Freeberg. It was a Sax up to you, David Freeberg. It was a Sax up to you, David Freeberg. It was a big week. It was a big week. Uh the big week. It was a big week. Uh the big week. It was a big week. Uh the continuing number one story in the world continuing number one story in the world continuing number one story in the world is Kimmy K3. It's sparked a debate about is Kimmy K3. It's sparked a debate about is Kimmy K3. It's sparked a debate about banning Chinese open-source models here banning Chinese open-source models here banning Chinese open-source models here in the United States and it's gone all in the United States and it's gone all in the United States and it's gone all the way to the White House last Friday. the way to the White House last Friday. the way to the White House last Friday. We talked about it here. China's We talked about it here. China's We talked about it here. China's Moonshot AI released Kimmy K3 open Moonshot AI released Kimmy K3 open Moonshot AI released Kimmy K3 open source model. Obviously performance on source model. Obviously performance on source model. Obviously performance on par on par not 6 months behind not 12 par on par not 6 months behind not 12 par on par not 6 months behind not 12 months behind but now on par with models months behind but now on par with models months behind but now on par with models like Opus 4.8 and GPT 5.6 six, which in like Opus 4.8 and GPT 5.6 six, which in like Opus 4.8 and GPT 5.6 six, which in and of itself is extraordinary, but and of itself is extraordinary, but and of itself is extraordinary, but about 50% cheaper and uh this has about 50% cheaper and uh this has about 50% cheaper and uh this has created a bit of a panic similar to the created a bit of a panic similar to the created a bit of a panic similar to the Deep Seek moment that we had here back Deep Seek moment that we had here back Deep Seek moment that we had here back in early 2025. in early 2025. in early 2025. The White House, David Saxs, has gotten The White House, David Saxs, has gotten The White House, David Saxs, has gotten involved. Michael Katzio, friend of the involved. Michael Katzio, friend of the involved. Michael Katzio, friend of the show, said, quote, "We have information show, said, quote, "We have information show, said, quote, "We have information that Moonshot AI distilled anthropics that Moonshot AI distilled anthropics that Moonshot AI distilled anthropics fable for the development of its K3 fable for the development of its K3 fable for the development of its K3 model. Here's how the Trump model. Here's how the Trump model. Here's how the Trump administration has reacted so far. administration has reacted so far. administration has reacted so far. Monday, Axios reported the White House Monday, Axios reported the White House Monday, Axios reported the White House was considering banning Chinese open was considering banning Chinese open was considering banning Chinese open source models. A couple of weeks ago, source models. A couple of weeks ago, source models. A couple of weeks ago, David, I I think it was three weeks ago, David, I I think it was three weeks ago, David, I I think it was three weeks ago, I I gave that to you as a hypothetical, I I gave that to you as a hypothetical, I I gave that to you as a hypothetical, and here we are. On Wednesday, Wired and here we are. On Wednesday, Wired and here we are. On Wednesday, Wired reported that Howard Letic, reported that Howard Letic, reported that Howard Letic, friend of the show, does not want to ban friend of the show, does not want to ban friend of the show, does not want to ban Chinese models. So apparently palace Chinese models. So apparently palace Chinese models. So apparently palace intrigue there might be different intrigue there might be different intrigue there might be different opinions inside Trump's white house and opinions inside Trump's white house and opinions inside Trump's white house and instead they want to incentivize more US instead they want to incentivize more US instead they want to incentivize more US frontier labs to develop better open frontier labs to develop better open frontier labs to develop better open source models. Poly market says 45% source models. Poly market says 45% source models. Poly market says 45% chance US government bans an open source chance US government bans an open source chance US government bans an open source model in 2026. Uh that was a brand new model in 2026. Uh that was a brand new model in 2026. Uh that was a brand new market started just it was at 22% a market started just it was at 22% a market started just it was at 22% a couple days ago. Saxs um you called it couple days ago. Saxs um you called it couple days ago. Saxs um you called it two months ago. Our first victory fap of two months ago. Our first victory fap of two months ago. Our first victory fap of the episode. I think where it's all the episode. I think where it's all the episode. I think where it's all leading to is an effort to ban leading to is an effort to ban leading to is an effort to ban opensource models. There's a lot of opensource models. There's a lot of opensource models. There's a lot of breadcrumbs leading here. If you look at breadcrumbs leading here. If you look at breadcrumbs leading here. If you look at a lot of the rhetoric around how models a lot of the rhetoric around how models a lot of the rhetoric around how models need to have guard rails and that with need to have guard rails and that with need to have guard rails and that with open source models, the guardrails can open source models, the guardrails can open source models, the guardrails can be removed and therefore they're be removed and therefore they're be removed and therefore they're dangerous. You see this rhetoric already dangerous. You see this rhetoric already dangerous. You see this rhetoric already in Anthropics blog posts. Any threat in Anthropics blog posts. Any threat in Anthropics blog posts. Any threat that they describe, they kind of go out that they describe, they kind of go out that they describe, they kind of go out of their way to take that shot at open of their way to take that shot at open of their way to take that shot at open source models. I think again they're source models. I think again they're source models. I think again they're trying to create ideas or put predicate trying to create ideas or put predicate trying to create ideas or put predicate facts in the public record to justify an facts in the public record to justify an facts in the public record to justify an action later on. I think it's just a action later on. I think it's just a action later on. I think it's just a matter of time before they feel like matter of time before they feel like matter of time before they feel like they're at a position where maybe they they're at a position where maybe they they're at a position where maybe they can push for that type of ban directly. can push for that type of ban directly. can push for that type of ban directly. >> All right, there it is. Sachs, >> All right, there it is. Sachs, >> All right, there it is. Sachs, what's going on at the White House? What what's going on at the White House? What what's going on at the White House? What is the administration's position here? is the administration's position here? is the administration's position here? Why are we getting multiple? Is the Why are we getting multiple? Is the Why are we getting multiple? Is the White House testing and and probing to White House testing and and probing to White House testing and and probing to figure out what their position is here figure out what their position is here figure out what their position is here or is it just this is a super dynamic or is it just this is a super dynamic or is it just this is a super dynamic situation? What's going on? situation? What's going on? situation? What's going on? >> Well, look, I mean, I have it on good >> Well, look, I mean, I have it on good >> Well, look, I mean, I have it on good authority that there is no decision by authority that there is no decision by authority that there is no decision by the White House to ban open- source the White House to ban open- source the White House to ban open- source models and I think they want that known. models and I think they want that known. models and I think they want that known. I think there's an ongoing conversation I think there's an ongoing conversation I think there's an ongoing conversation happening around what to do about happening around what to do about happening around what to do about Chinese distillation and we should talk Chinese distillation and we should talk Chinese distillation and we should talk about that. But no decision has been about that. But no decision has been about that. But no decision has been made and the president listens to a made and the president listens to a made and the president listens to a course of voices. He wants to get advice course of voices. He wants to get advice course of voices. He wants to get advice from as many people as possible. And I'm from as many people as possible. And I'm from as many people as possible. And I'm confident that if everybody weighs in confident that if everybody weighs in confident that if everybody weighs in that the president will make the right that the president will make the right that the president will make the right decision as he always has with these decision as he always has with these decision as he always has with these tech issues. I think his instincts have tech issues. I think his instincts have tech issues. I think his instincts have been absolutely impeccable on this and been absolutely impeccable on this and been absolutely impeccable on this and he's always supported a let's say he's always supported a let's say he's always supported a let's say lighter regulation more open approach lighter regulation more open approach lighter regulation more open approach and that's why I think the and that's why I think the and that's why I think the [clears throat] US is winning the AI [clears throat] US is winning the AI [clears throat] US is winning the AI race. So I think that's kind of where race. So I think that's kind of where race. So I think that's kind of where where things stand. Um where things stand. Um where things stand. Um >> where do you stand? Where do you stand >> where do you stand? Where do you stand >> where do you stand? Where do you stand Sax? That's what everybody wants to Sax? That's what everybody wants to Sax? That's what everybody wants to know. know. know. >> Yeah, I think it's important for me to >> Yeah, I think it's important for me to >> Yeah, I think it's important for me to make my opinion known in the spirit of make my opinion known in the spirit of make my opinion known in the spirit of again contributing my voice so the again contributing my voice so the again contributing my voice so the president hears all perspectives and president hears all perspectives and president hears all perspectives and then can make the best decision. Look, I then can make the best decision. Look, I then can make the best decision. Look, I think it would be a tragic mistake if think it would be a tragic mistake if think it would be a tragic mistake if the government were to take action the government were to take action the government were to take action against the open source ecosystem. That against the open source ecosystem. That against the open source ecosystem. That would do nothing but hurt America's would do nothing but hurt America's would do nothing but hurt America's position in this AI race. It would position in this AI race. It would position in this AI race. It would backfire badly. And I think that the key backfire badly. And I think that the key backfire badly. And I think that the key point here is that regardless of what point here is that regardless of what point here is that regardless of what you think about distillation, you cannot you think about distillation, you cannot you think about distillation, you cannot punish American developers for it. So, punish American developers for it. So, punish American developers for it. So, you know, you can't say that American you know, you can't say that American you know, you can't say that American companies and American developers can't companies and American developers can't companies and American developers can't use Chinese contributions to the public use Chinese contributions to the public use Chinese contributions to the public domain. That's just cutting off our nose domain. That's just cutting off our nose domain. That's just cutting off our nose to spite our face. I mean, obviously, to spite our face. I mean, obviously, to spite our face. I mean, obviously, >> American companies have to be able to >> American companies have to be able to >> American companies have to be able to use everything that's in the public use everything that's in the public use everything that's in the public domain because the rest of the world domain because the rest of the world domain because the rest of the world will be using those things. And let me will be using those things. And let me will be using those things. And let me just say, I've said for a while that just say, I've said for a while that just say, I've said for a while that Anthropic is guilty of regulatory Anthropic is guilty of regulatory Anthropic is guilty of regulatory capture, of attempts to seek government capture, of attempts to seek government capture, of attempts to seek government protection. This is a company that is protection. This is a company that is protection. This is a company that is the fastest growing tech company at the fastest growing tech company at the fastest growing tech company at scale in history. They started the year scale in history. They started the year scale in history. They started the year at 10 billion of ARR. They're now over at 10 billion of ARR. They're now over at 10 billion of ARR. They're now over 70 billion of ARR. This is not a company 70 billion of ARR. This is not a company 70 billion of ARR. This is not a company that needs government protection. This that needs government protection. This that needs government protection. This is not a company that is under threat is not a company that is under threat is not a company that is under threat from competitors or or whether they're from competitors or or whether they're from competitors or or whether they're Chinese or otherwise. And yet they have Chinese or otherwise. And yet they have Chinese or otherwise. And yet they have been very successful at trying to panic been very successful at trying to panic been very successful at trying to panic everybody into thinking that they need everybody into thinking that they need everybody into thinking that they need some sort of government protection. And some sort of government protection. And some sort of government protection. And the tell on this, the way that you know the tell on this, the way that you know the tell on this, the way that you know that this whole distillation thing is that this whole distillation thing is that this whole distillation thing is fake is because if stopping distillation fake is because if stopping distillation fake is because if stopping distillation was their primary objective, Anthropic was their primary objective, Anthropic was their primary objective, Anthropic would push to ban Chinese access to would push to ban Chinese access to would push to ban Chinese access to American models, not American access to American models, not American access to American models, not American access to Chinese models. Chinese models. Chinese models. >> Yes, they could. And that is that is >> Yes, they could. And that is that is >> Yes, they could. And that is that is achievable. They could block it. So achievable. They could block it. So achievable. They could block it. So >> they're the ones in the best position to >> they're the ones in the best position to >> they're the ones in the best position to block it. If distillation, if industrial block it. If distillation, if industrial block it. If distillation, if industrial scale distillation is a national scale distillation is a national scale distillation is a national security threat, they're the ones who security threat, they're the ones who security threat, they're the ones who need to stop it because that is the need to stop it because that is the need to stop it because that is the place where distillation occurs. You place where distillation occurs. You place where distillation occurs. You have to stop it at the source. Once you have to stop it at the source. Once you have to stop it at the source. Once you allow Chinese companies to distill, the allow Chinese companies to distill, the allow Chinese companies to distill, the horse is out of the barn. horse is out of the barn. horse is out of the barn. >> Yeah. >> Yeah. >> Yeah. >> And the reality is that I think that >> And the reality is that I think that >> And the reality is that I think that what's happening here is that in their what's happening here is that in their what's happening here is that in their lust for growth, Anthropic has done a lust for growth, Anthropic has done a lust for growth, Anthropic has done a very poor job at stopping distillation. very poor job at stopping distillation. very poor job at stopping distillation. I mean they're saying that distillation I mean they're saying that distillation I mean they're saying that distillation is occurring at industrial scale. Okay, is occurring at industrial scale. Okay, is occurring at industrial scale. Okay, if it's industrial scale, it must be if it's industrial scale, it must be if it's industrial scale, it must be pretty obvious to see. So is waves of pretty obvious to see. So is waves of pretty obvious to see. So is waves of accounts being created by students accounts being created by students accounts being created by students rolled up and sold on the dark web, you rolled up and sold on the dark web, you rolled up and sold on the dark web, you know, in those kind of channels. So you know, in those kind of channels. So you know, in those kind of channels. So you got people in Manila, in the got people in Manila, in the got people in Manila, in the Philippines, I understand, and India Philippines, I understand, and India Philippines, I understand, and India signing up for all those accounts and signing up for all those accounts and signing up for all those accounts and then sending them to the dark web and then sending them to the dark web and then sending them to the dark web and selling them using IP addresses from selling them using IP addresses from selling them using IP addresses from America. Yeah. So that that's how it America. Yeah. So that that's how it America. Yeah. So that that's how it occurs. But the more the more industrial occurs. But the more the more industrial occurs. But the more the more industrial scale it is, the more obvious it is to scale it is, the more obvious it is to scale it is, the more obvious it is to see. And Tamatha has been saying for a see. And Tamatha has been saying for a see. And Tamatha has been saying for a while, why don't you KYC your customers? while, why don't you KYC your customers? while, why don't you KYC your customers? Well, they know that if they KYC their Well, they know that if they KYC their Well, they know that if they KYC their customers, it'll slow their growth. So customers, it'll slow their growth. So customers, it'll slow their growth. So instead, what they're saying is, hey, instead, what they're saying is, hey, instead, what they're saying is, hey, ban our competitors. Well, ban our competitors. Well, ban our competitors. Well, >> that's ridiculous. I mean, they're in >> that's ridiculous. I mean, they're in >> that's ridiculous. I mean, they're in the best position to stop the the best position to stop the the best position to stop the distillation. I think that they're distillation. I think that they're distillation. I think that they're negligent about doing that. or I mean if negligent about doing that. or I mean if negligent about doing that. or I mean if they really think it's that big a they really think it's that big a they really think it's that big a threat, they should use a few points of threat, they should use a few points of threat, they should use a few points of their 90% gross margins to do that. What their 90% gross margins to do that. What their 90% gross margins to do that. What you don't do is then say that American you don't do is then say that American you don't do is then say that American developers cannot use everything that's developers cannot use everything that's developers cannot use everything that's in the public domain. So it seems it in the public domain. So it seems it in the public domain. So it seems it seems to me that this debate is all seems to me that this debate is all seems to me that this debate is all backwards that the question should be on backwards that the question should be on backwards that the question should be on Anthropic to explain why it's doing such Anthropic to explain why it's doing such Anthropic to explain why it's doing such a bad job, not on the whole American a bad job, not on the whole American a bad job, not on the whole American open source ecosystem to be punished for open source ecosystem to be punished for open source ecosystem to be punished for Anthropic's failure. All right, Freberg, Anthropic's failure. All right, Freberg, Anthropic's failure. All right, Freberg, I have a really good question for you, I have a really good question for you, I have a really good question for you, but before we do that, Shimath, can you but before we do that, Shimath, can you but before we do that, Shimath, can you give me give me give me maybe a little bit of what you're maybe a little bit of what you're maybe a little bit of what you're hearing on your sales calls for 8090? hearing on your sales calls for 8090? hearing on your sales calls for 8090? You're talking to enterprises. They're You're talking to enterprises. They're You're talking to enterprises. They're hearing all these reports, whether it's hearing all these reports, whether it's hearing all these reports, whether it's you, Daario, this pod, other places you, Daario, this pod, other places you, Daario, this pod, other places talking about, hey, open source is talking about, hey, open source is talking about, hey, open source is ready. This is the moment. Get control, ready. This is the moment. Get control, ready. This is the moment. Get control, AI sovereignty, etc. They must be AI sovereignty, etc. They must be AI sovereignty, etc. They must be calling you up and saying, hey, okay, calling you up and saying, hey, okay, calling you up and saying, hey, okay, we're ready. Like, how do we get these we're ready. Like, how do we get these we're ready. Like, how do we get these things on prem? How do we do it? So things on prem? How do we do it? So things on prem? How do we do it? So what's the what's happening on those what's the what's happening on those what's the what's happening on those calls you're doing with the enterprise calls you're doing with the enterprise calls you're doing with the enterprise and then can you maybe give people an and then can you maybe give people an and then can you maybe give people an idea of what distillation is just and idea of what distillation is just and idea of what distillation is just and and why it's so important here. and why it's so important here. and why it's so important here. >> Let's start with the second thing. >> Let's start with the second thing. >> Let's start with the second thing. Distillation Distillation Distillation is when you is when you is when you fire up a model and you ask it a fire up a model and you ask it a fire up a model and you ask it a question and you observe it and you take question and you observe it and you take question and you observe it and you take its output and you use that in training its output and you use that in training its output and you use that in training of your own model. Now multiply that of your own model. Now multiply that of your own model. Now multiply that behavior by tens of millions behavior by tens of millions behavior by tens of millions and what you exfiltrate is essentially and what you exfiltrate is essentially and what you exfiltrate is essentially trillions of questions and answers. trillions of questions and answers. trillions of questions and answers. And Sax is right. If you really care And Sax is right. If you really care And Sax is right. If you really care about distillation, about distillation, about distillation, you implement KYC. You force people to you implement KYC. You force people to you implement KYC. You force people to make an account, not just with a make an account, not just with a make an account, not just with a username and a password, but with some username and a password, but with some username and a password, but with some form of identification, form of identification, form of identification, maybe with a bounded credit card. maybe with a bounded credit card. maybe with a bounded credit card. [snorts] There's all kinds of steps that [snorts] There's all kinds of steps that [snorts] There's all kinds of steps that you can take that would frankly slow you can take that would frankly slow you can take that would frankly slow things down in terms of revenue things down in terms of revenue things down in terms of revenue traction, but would solve the traction, but would solve the traction, but would solve the distillation problem on its face. So, distillation problem on its face. So, distillation problem on its face. So, that isn't really a thing. It's a bit of that isn't really a thing. It's a bit of that isn't really a thing. It's a bit of a red herring. The other thing on a red herring. The other thing on a red herring. The other thing on distillation is everybody has at some distillation is everybody has at some distillation is everybody has at some point distilled. The question is who is point distilled. The question is who is point distilled. The question is who is distilling from whom? And it looks like distilling from whom? And it looks like distilling from whom? And it looks like that funny meme where there's like nine that funny meme where there's like nine that funny meme where there's like nine Spider-Man all pointing at each other. Spider-Man all pointing at each other. Spider-Man all pointing at each other. That's what this is because Anthropic That's what this is because Anthropic That's what this is because Anthropic has distilled from all of these has distilled from all of these has distilled from all of these publishers. They just pay a $ 1.5 publishers. They just pay a $ 1.5 publishers. They just pay a $ 1.5 billion fine. Apparently, Open AI billion fine. Apparently, Open AI billion fine. Apparently, Open AI distilled from the New York Times. distilled from the New York Times. distilled from the New York Times. There's still an ongoing lawsuit. the There's still an ongoing lawsuit. the There's still an ongoing lawsuit. the Chinese labs have distilled from Chinese labs have distilled from Chinese labs have distilled from anthropic. anthropic. anthropic. >> It's wholesale stealing everywhere. >> It's wholesale stealing everywhere. >> It's wholesale stealing everywhere. Yeah. Yeah. Yeah. >> Well, I don't want to call it stealing >> Well, I don't want to call it stealing >> Well, I don't want to call it stealing because it's not clear who actually owns because it's not clear who actually owns because it's not clear who actually owns the copyright in the first place. But the copyright in the first place. But the copyright in the first place. But here should be the important here should be the important here should be the important observation. observation. observation. These models are getting commoditized These models are getting commoditized These models are getting commoditized much faster than anybody thought. much faster than anybody thought. much faster than anybody thought. And how do we know this? Because there And how do we know this? Because there And how do we know this? Because there is no meaningful sustained advantage is no meaningful sustained advantage is no meaningful sustained advantage once a model publishes their performance once a model publishes their performance once a model publishes their performance criteria. What you see is literally criteria. What you see is literally criteria. What you see is literally within weeks other models some open some within weeks other models some open some within weeks other models some open some closed some open weight who are able to closed some open weight who are able to closed some open weight who are able to match and in some cases exceed the match and in some cases exceed the match and in some cases exceed the performance. So I think what's happening performance. So I think what's happening performance. So I think what's happening here is a handful of American companies here is a handful of American companies here is a handful of American companies have realized whoa this value that we have realized whoa this value that we have realized whoa this value that we are seeing today may not be sustainable are seeing today may not be sustainable are seeing today may not be sustainable in a 5 and 10 year period and when you in a 5 and 10 year period and when you in a 5 and 10 year period and when you go and present a business model to Wall go and present a business model to Wall go and present a business model to Wall Street you need to have that certainty Street you need to have that certainty Street you need to have that certainty otherwise it impacts your valuation and otherwise it impacts your valuation and otherwise it impacts your valuation and so I think a lot of what's happening so I think a lot of what's happening so I think a lot of what's happening right now Jason is a valuation right now Jason is a valuation right now Jason is a valuation preservation game by the closed frontier preservation game by the closed frontier preservation game by the closed frontier labs because if you actually understood labs because if you actually understood labs because if you actually understood how commoditized these things are how commoditized these things are how commoditized these things are becoming and the velocity at which it's becoming and the velocity at which it's becoming and the velocity at which it's happening. You see that the real happening. You see that the real happening. You see that the real business model is not in the business model is not in the business model is not in the foundational model anymore. It's at the foundational model anymore. It's at the foundational model anymore. It's at the application layer above and it's in the application layer above and it's in the application layer above and it's in the infrastructure below whether that's the infrastructure below whether that's the infrastructure below whether that's the cloud or whether that's chips. And so I cloud or whether that's chips. And so I cloud or whether that's chips. And so I think in the absence of regulatory think in the absence of regulatory think in the absence of regulatory intervention and in the absence of the intervention and in the absence of the intervention and in the absence of the United States government stepping in to United States government stepping in to United States government stepping in to put their thumb on the scale, what will put their thumb on the scale, what will put their thumb on the scale, what will happen is that as people learn about how happen is that as people learn about how happen is that as people learn about how value is changing, they're going to put value is changing, they're going to put value is changing, they're going to put more value in the application layer and more value in the application layer and more value in the application layer and more value in the infrastructure layer. more value in the infrastructure layer. more value in the infrastructure layer. That is bad for closed frontier labs, That is bad for closed frontier labs, That is bad for closed frontier labs, especially when they're mispriced 25 to especially when they're mispriced 25 to especially when they're mispriced 25 to 50x the open alternative. And so this is 50x the open alternative. And so this is 50x the open alternative. And so this is an attempt to stop a competitor that is an attempt to stop a competitor that is an attempt to stop a competitor that is of the same quality but just much of the same quality but just much of the same quality but just much cheaper. Now there's another important cheaper. Now there's another important cheaper. Now there's another important thing here which is if the United States thing here which is if the United States thing here which is if the United States government intervenes it will tank the government intervenes it will tank the government intervenes it will tank the stock market. stock market. stock market. >> Okay? >> Okay? >> Okay? >> Period. Not debatable. Now you can >> Period. Not debatable. Now you can >> Period. Not debatable. Now you can debate which companies get tanked and we debate which companies get tanked and we debate which companies get tanked and we we can probably play that scenario out. we can probably play that scenario out. we can probably play that scenario out. But for example, if they said no more But for example, if they said no more But for example, if they said no more open source, American companies cannot open source, American companies cannot open source, American companies cannot use open source. Okay, let's just take use open source. Okay, let's just take use open source. Okay, let's just take at it from a stock perspective. Let's at it from a stock perspective. Let's at it from a stock perspective. Let's take an average normal company, take an average normal company, take an average normal company, Coca-Cola. Hey, Coca-Cola, you're trying Coca-Cola. Hey, Coca-Cola, you're trying Coca-Cola. Hey, Coca-Cola, you're trying to use AI to improve your business. You to use AI to improve your business. You to use AI to improve your business. You know what? You can only use these two know what? You can only use these two know what? You can only use these two options. And those things cost 50 to 100 options. And those things cost 50 to 100 options. And those things cost 50 to 100 times more than your other best times more than your other best times more than your other best alternative that you may use otherwise. alternative that you may use otherwise. alternative that you may use otherwise. that will eventually show up in your that will eventually show up in your that will eventually show up in your costs because AI is supposed to be this costs because AI is supposed to be this costs because AI is supposed to be this incredible thing that just kind of incredible thing that just kind of incredible thing that just kind of solves every problem and does everything solves every problem and does everything solves every problem and does everything for you. And so this incredibly for you. And so this incredibly for you. And so this incredibly important input into your cost model is important input into your cost model is important input into your cost model is now orders of magnitude multiples now orders of magnitude multiples now orders of magnitude multiples greater than your competitors that are greater than your competitors that are greater than your competitors that are outside the United States simply because outside the United States simply because outside the United States simply because you're in the United States. So what you're in the United States. So what you're in the United States. So what would the capital markets do? They're would the capital markets do? They're would the capital markets do? They're going to say, "Wow, you have a crazy going to say, "Wow, you have a crazy going to say, "Wow, you have a crazy cost structure. This doesn't make sense. cost structure. This doesn't make sense. cost structure. This doesn't make sense. you're forced to absorb costs that you're forced to absorb costs that you're forced to absorb costs that aren't rational nor market driven. So aren't rational nor market driven. So aren't rational nor market driven. So then Coca-Cola has to get rerated. But then Coca-Cola has to get rerated. But then Coca-Cola has to get rerated. But then you look at the people who are then you look at the people who are then you look at the people who are selling those tokens and this is where selling those tokens and this is where selling those tokens and this is where anthropic and open AAI need to anthropic and open AAI need to anthropic and open AAI need to understand. If the government comes in understand. If the government comes in understand. If the government comes in and actually tells you that there's no and actually tells you that there's no and actually tells you that there's no open source, their valuation will open source, their valuation will open source, their valuation will crater. Why? Because all of that revenue crater. Why? Because all of that revenue crater. Why? Because all of that revenue is artificially being propped up. is artificially being propped up. is artificially being propped up. >> It's not being driven by market demand >> It's not being driven by market demand >> It's not being driven by market demand where you're being forced to compete. where you're being forced to compete. where you're being forced to compete. It's because of regulatory capture where It's because of regulatory capture where It's because of regulatory capture where you now get an artificial constraint, you now get an artificial constraint, you now get an artificial constraint, but it only works in one market. And so but it only works in one market. And so but it only works in one market. And so anyways, all roads lead to market chaos. anyways, all roads lead to market chaos. anyways, all roads lead to market chaos. >> Love it. Yeah. >> Love it. Yeah. >> Love it. Yeah. >> If anybody gets involved, so we should >> If anybody gets involved, so we should >> If anybody gets involved, so we should just not get involved. What it sounds just not get involved. What it sounds just not get involved. What it sounds like is you're saying that American like is you're saying that American like is you're saying that American enterprises will pay a token tax if the enterprises will pay a token tax if the enterprises will pay a token tax if the government gives anthropic and open AI a government gives anthropic and open AI a government gives anthropic and open AI a government enforced duopoly government enforced duopoly government enforced duopoly >> and enterprises are no longer free to >> and enterprises are no longer free to >> and enterprises are no longer free to use open source like the rest of the use open source like the rest of the use open source like the rest of the world. Yes. world. Yes. world. Yes. >> Yeah. The markets with the cap. >> Yeah. The markets with the cap. >> Yeah. The markets with the cap. >> We will put ourselves on an island. >> We will put ourselves on an island. >> We will put ourselves on an island. Yeah. Yeah. Yeah. >> We'll be on an island of overly >> We'll be on an island of overly >> We'll be on an island of overly expensive AI. expensive AI. expensive AI. >> You can have CocaCola or Pepsi or >> You can have CocaCola or Pepsi or >> You can have CocaCola or Pepsi or Coca-Cola or Pepsi. Coca-Cola or Pepsi. Coca-Cola or Pepsi. >> Yeah. Well, it's not your beverage >> Yeah. Well, it's not your beverage >> Yeah. Well, it's not your beverage choices. You have two beverage choices, choices. You have two beverage choices, choices. You have two beverage choices, but they cost 50 times more than Coke but they cost 50 times more than Coke but they cost 50 times more than Coke outside of America. This is the point. outside of America. This is the point. outside of America. This is the point. We already have Coke everywhere. So, We already have Coke everywhere. So, We already have Coke everywhere. So, >> you can buy 50 cent coke or $50 Coke. >> you can buy 50 cent coke or $50 Coke. >> you can buy 50 cent coke or $50 Coke. Why would you buy $50 Coke when you can Why would you buy $50 Coke when you can Why would you buy $50 Coke when you can buy 50 cent coke? buy 50 cent coke? buy 50 cent coke? >> Yeah. >> Yeah. >> Yeah. >> All right. Let's get Let me get free >> All right. Let's get Let me get free >> All right. Let's get Let me get free here. Yeah. here. Yeah. here. Yeah. >> Okay. I was going to say just just just >> Okay. I was going to say just just just >> Okay. I was going to say just just just one thing on this. This goes back to my one thing on this. This goes back to my one thing on this. This goes back to my point of these proposals to ban open point of these proposals to ban open point of these proposals to ban open source that are coming from anthropic. source that are coming from anthropic. source that are coming from anthropic. They don't solve the distillation They don't solve the distillation They don't solve the distillation problem. If dissolation is a problem, problem. If dissolation is a problem, problem. If dissolation is a problem, you have to stop it at the source. In you have to stop it at the source. In you have to stop it at the source. In other words, if you want to ban open other words, if you want to ban open other words, if you want to ban open source in America, the rest of the world source in America, the rest of the world source in America, the rest of the world will still be using Chinese open models. will still be using Chinese open models. will still be using Chinese open models. We want to solve that problem. We want to solve that problem. We want to solve that problem. >> Yes. And that means they'll get the data >> Yes. And that means they'll get the data >> Yes. And that means they'll get the data and they'll get the reinforcement and they'll get the reinforcement and they'll get the reinforcement learning and then we lose the AI race learning and then we lose the AI race learning and then we lose the AI race guaranteed. Freedberg, guaranteed. Freedberg, guaranteed. Freedberg, let's take it from a Graham Allison and let's take it from a Graham Allison and let's take it from a Graham Allison and level up the discussion here. Would be level up the discussion here. Would be level up the discussion here. Would be quite provocative to ban the Chinese quite provocative to ban the Chinese quite provocative to ban the Chinese models. How does Xi Jinping respond to models. How does Xi Jinping respond to models. How does Xi Jinping respond to that? How does the CCP respond to that? that? How does the CCP respond to that? that? How does the CCP respond to that? This is a crazy chessboard. It would This is a crazy chessboard. It would This is a crazy chessboard. It would seem like a pretty escalatory and we'll seem like a pretty escalatory and we'll seem like a pretty escalatory and we'll be going up the ladder. Yeah, Freeberg. be going up the ladder. Yeah, Freeberg. be going up the ladder. Yeah, Freeberg. >> Yeah, I look I don't I don't think it's >> Yeah, I look I don't I don't think it's >> Yeah, I look I don't I don't think it's as relevant that the open source model as relevant that the open source model as relevant that the open source model is published by China yet that there may is published by China yet that there may is published by China yet that there may be security risks, but those can be be security risks, but those can be be security risks, but those can be estimated and addressed. I think on the estimated and addressed. I think on the estimated and addressed. I think on the three things that are worth highlighting three things that are worth highlighting three things that are worth highlighting on this this issue, I'm I'm very much on this this issue, I'm I'm very much on this this issue, I'm I'm very much aligned with Sax and Chim and I think aligned with Sax and Chim and I think aligned with Sax and Chim and I think the three things are really around the three things are really around the three things are really around distillation. And I don't think distillation. And I don't think distillation. And I don't think distillation distillation distillation is just about AI. You know, distillation is just about AI. You know, distillation is just about AI. You know, distillation is a process whereby you look at the end is a process whereby you look at the end is a process whereby you look at the end product that someone else has produced product that someone else has produced product that someone else has produced in thinking about and learning about how in thinking about and learning about how in thinking about and learning about how to engineer your product. It is a common to engineer your product. It is a common to engineer your product. It is a common technique that is used across every technique that is used across every technique that is used across every product category in every industry. One product category in every industry. One product category in every industry. One car maker will look at how the other car car maker will look at how the other car car maker will look at how the other car maker's car operates and they will use maker's car operates and they will use maker's car operates and they will use that to help them design a better car. that to help them design a better car. that to help them design a better car. You know, at Google in the early days, You know, at Google in the early days, You know, at Google in the early days, we would submit millions of search we would submit millions of search we would submit millions of search queries to Yahoo and Microsoft search queries to Yahoo and Microsoft search queries to Yahoo and Microsoft search engines to see what the result sets were engines to see what the result sets were engines to see what the result sets were and we would compare our results against and we would compare our results against and we would compare our results against their results as a way of improving our their results as a way of improving our their results as a way of improving our search engine rankings and our search engine rankings and our search engine rankings and our algorithm. It was a very common algorithm. It was a very common algorithm. It was a very common technique. It doesn't mean we were technique. It doesn't mean we were technique. It doesn't mean we were stealing their algorithm. We didn't go stealing their algorithm. We didn't go stealing their algorithm. We didn't go into their servers and steal their into their servers and steal their into their servers and steal their software. We looked at the output of software. We looked at the output of software. We looked at the output of their software and use that to improve their software and use that to improve their software and use that to improve our software. our software. our software. >> It was called benchmarking, right? It >> It was called benchmarking, right? It >> It was called benchmarking, right? It was benchmark. You can call it there's was benchmark. You can call it there's was benchmark. You can call it there's been a million terms. Exactly. Right. been a million terms. Exactly. Right. been a million terms. Exactly. Right. And so I don't think that this matters And so I don't think that this matters And so I don't think that this matters as much. I think the question around as much. I think the question around as much. I think the question around copyright infringement or IP copyright infringement or IP copyright infringement or IP infringement infringement infringement >> Sax is right. There's a terms of service >> Sax is right. There's a terms of service >> Sax is right. There's a terms of service question here, but that's on the service question here, but that's on the service question here, but that's on the service providers to fix the terms of service providers to fix the terms of service providers to fix the terms of service blocking people from doing this if they blocking people from doing this if they blocking people from doing this if they so chose. so chose. so chose. >> But the copyright argument, the IP >> But the copyright argument, the IP >> But the copyright argument, the IP argument is really about did they steal argument is really about did they steal argument is really about did they steal the software? They didn't steal the the software? They didn't steal the the software? They didn't steal the software and they just looked at the software and they just looked at the software and they just looked at the output. output. output. >> That's not IP infringement. That's not >> That's not IP infringement. That's not >> That's not IP infringement. That's not copyright infringement in the classical copyright infringement in the classical copyright infringement in the classical sense. And so I do think from a sense. And so I do think from a sense. And so I do think from a distillation IP argument perspective, distillation IP argument perspective, distillation IP argument perspective, it's the output, not the process that it's the output, not the process that it's the output, not the process that matters. So the question is, are they matters. So the question is, are they matters. So the question is, are they taking copies of copyrighted software taking copies of copyrighted software taking copies of copyrighted software and using it or are they looking at the and using it or are they looking at the and using it or are they looking at the output? And so I think output not output? And so I think output not output? And so I think output not process of engineering is what you process of engineering is what you process of engineering is what you really need to assess here. really need to assess here. really need to assess here. >> Can I insert something free? comment on >> Can I insert something free? comment on >> Can I insert something free? comment on it is I think a lot of people in the it is I think a lot of people in the it is I think a lot of people in the let's say policym community don't let's say policym community don't let's say policym community don't understand this distinction but I think understand this distinction but I think understand this distinction but I think everybody in tech does and I think it's everybody in tech does and I think it's everybody in tech does and I think it's a big part of why there's a disconnect a big part of why there's a disconnect a big part of why there's a disconnect on this is there's a huge difference on this is there's a huge difference on this is there's a huge difference between model weights and outputs right between model weights and outputs right between model weights and outputs right so the weights are the it's the file of so the weights are the it's the file of so the weights are the it's the file of numbers it's the numerical parameters in numbers it's the numerical parameters in numbers it's the numerical parameters in the software code that's the code the software code that's the code the software code that's the code >> that's the software that's the code and >> that's the software that's the code and >> that's the software that's the code and if Chinese companies were to steal if Chinese companies were to steal if Chinese companies were to steal >> weights proprietary weights from anthrop >> weights proprietary weights from anthrop >> weights proprietary weights from anthrop ropic or open AI that would be theft. ropic or open AI that would be theft. ropic or open AI that would be theft. Okay, but that's not what we're talking Okay, but that's not what we're talking Okay, but that's not what we're talking about here because no one's accused about here because no one's accused about here because no one's accused that. What we're talking about here is that. What we're talking about here is that. What we're talking about here is taking model outputs and then trying to taking model outputs and then trying to taking model outputs and then trying to learn from them and learn from them and learn from them and >> using other people's software to learn. >> using other people's software to learn. >> using other people's software to learn. >> Yes. And it's exactly the situation you >> Yes. And it's exactly the situation you >> Yes. And it's exactly the situation you said with like the the Google searches said with like the the Google searches said with like the the Google searches or whatever. And here's the thing that's or whatever. And here's the thing that's or whatever. And here's the thing that's so hypocritical is that OpenAI and so hypocritical is that OpenAI and so hypocritical is that OpenAI and Anthropic have both argued that they are Anthropic have both argued that they are Anthropic have both argued that they are free to train on all the world's output free to train on all the world's output free to train on all the world's output regardless of whether the creator wants regardless of whether the creator wants regardless of whether the creator wants them to or not. them to or not. them to or not. >> That's right. >> That's right. >> That's right. >> That is their current position. That's >> That is their current position. That's >> That is their current position. That's like Chimath mentioned the New York like Chimath mentioned the New York like Chimath mentioned the New York Times lawsuit. The New York Times is Times lawsuit. The New York Times is Times lawsuit. The New York Times is suing suing OpenAI right now suing suing OpenAI right now suing suing OpenAI right now >> for going onto the New York Times >> for going onto the New York Times >> for going onto the New York Times website in violation of the New York website in violation of the New York website in violation of the New York Times terms of service, scraping all the Times terms of service, scraping all the Times terms of service, scraping all the information and training on it. information and training on it. information and training on it. >> And Open AI's argument is look, we're >> And Open AI's argument is look, we're >> And Open AI's argument is look, we're not stealing anything. We're taking the not stealing anything. We're taking the not stealing anything. We're taking the output of the New York Times and we are output of the New York Times and we are output of the New York Times and we are deriving our own model weights. And that deriving our own model weights. And that deriving our own model weights. And that is exactly what these Chinese models are is exactly what these Chinese models are is exactly what these Chinese models are doing is is they are taking the output doing is is they are taking the output doing is is they are taking the output of American models and then they're of American models and then they're of American models and then they're deriving their own weights. They're deriving their own weights. They're deriving their own weights. They're learning from it. learning from it. learning from it. >> Yeah. And so the accusation though, just >> Yeah. And so the accusation though, just >> Yeah. And so the accusation though, just so we're clear here, is that so we're clear here, is that so we're clear here, is that >> there's ethical issues around the >> there's ethical issues around the >> there's ethical issues around the industrial scale covert breaking of industrial scale covert breaking of industrial scale covert breaking of terms of service. That's what the White terms of service. That's what the White terms of service. That's what the White House has been terms of service as well. House has been terms of service as well. House has been terms of service as well. So just so people understand like there So just so people understand like there So just so people understand like there is a bit of recognition of that. is a bit of recognition of that. is a bit of recognition of that. >> Look, let me let me be clear that I'm >> Look, let me let me be clear that I'm >> Look, let me let me be clear that I'm not defending China in this. In fact, not defending China in this. In fact, not defending China in this. In fact, you know, look at my my bonafides. I was you know, look at my my bonafides. I was you know, look at my my bonafides. I was the first administration official to the first administration official to the first administration official to even talk about distillation. I did it even talk about distillation. I did it even talk about distillation. I did it in January of 2025 when deep sea came in January of 2025 when deep sea came in January of 2025 when deep sea came out. I went on Laura Ingram and I think out. I went on Laura Ingram and I think out. I went on Laura Ingram and I think I was probably the first person in the I was probably the first person in the I was probably the first person in the government to even explain this concept government to even explain this concept government to even explain this concept publicly to people and moreover, you publicly to people and moreover, you publicly to people and moreover, you know, I was a co-author of the winning know, I was a co-author of the winning know, I was a co-author of the winning the AI race report in which the whole the AI race report in which the whole the AI race report in which the whole premise of it was that we want to win. premise of it was that we want to win. premise of it was that we want to win. We want to beat China. So, you know, I'm We want to beat China. So, you know, I'm We want to beat China. So, you know, I'm definitely not someone in this camp that definitely not someone in this camp that definitely not someone in this camp that doesn't want the US to win. I want the doesn't want the US to win. I want the doesn't want the US to win. I want the US to win. The question is how. And if US to win. The question is how. And if US to win. The question is how. And if we shoot ourselves in the foot by we shoot ourselves in the foot by we shoot ourselves in the foot by banning open source, which is to say not banning open source, which is to say not banning open source, which is to say not letting all of our American companies letting all of our American companies letting all of our American companies take advantage of open source when the take advantage of open source when the take advantage of open source when the rest of the world is able to, then that rest of the world is able to, then that rest of the world is able to, then that is a huge problem. Now, I'm fine with is a huge problem. Now, I'm fine with is a huge problem. Now, I'm fine with Anthropic and Open AI enforcing their Anthropic and Open AI enforcing their Anthropic and Open AI enforcing their terms of service. They need to do a terms of service. They need to do a terms of service. They need to do a better job, stop the distillation from better job, stop the distillation from better job, stop the distillation from occurring in the first place. If there occurring in the first place. If there occurring in the first place. If there are things that the government can do to are things that the government can do to are things that the government can do to help them, okay, but I'm not sure what help them, okay, but I'm not sure what help them, okay, but I'm not sure what those things are. What needs to happen those things are. What needs to happen those things are. What needs to happen is those companies need to do a better is those companies need to do a better is those companies need to do a better job enforcing their terms of service. job enforcing their terms of service. job enforcing their terms of service. >> Yes. >> Yes. >> Yes. >> Okay. Now, Freeberg, you had you I think >> Okay. Now, Freeberg, you had you I think >> Okay. Now, Freeberg, you had you I think you said you had three points to make. I you said you had three points to make. I you said you had three points to make. I think you made one. I want to get the think you made one. I want to get the think you made one. I want to get the other two out of you. other two out of you. other two out of you. >> Yeah. So, the other one was just on the >> Yeah. So, the other one was just on the >> Yeah. So, the other one was just on the free speech argument, which is look, free speech argument, which is look, free speech argument, which is look, what is an open-source model? And I what is an open-source model? And I what is an open-source model? And I think the audience needs to understand think the audience needs to understand think the audience needs to understand this if you're not from the software this if you're not from the software this if you're not from the software industry, but open source is a industry, but open source is a industry, but open source is a downloadable package of software. You downloadable package of software. You downloadable package of software. You can think about it as downloading a a can think about it as downloading a a can think about it as downloading a a text, a book. You just got all the code. text, a book. You just got all the code. text, a book. You just got all the code. Once you get the code, you've got it on Once you get the code, you've got it on Once you get the code, you've got it on your computer. You don't have to be your computer. You don't have to be your computer. You don't have to be connected to the internet. You can just connected to the internet. You can just connected to the internet. You can just run it and use it. And I think part of run it and use it. And I think part of run it and use it. And I think part of the challenge that's going to be faced the challenge that's going to be faced the challenge that's going to be faced here, if there is any attempt at here, if there is any attempt at here, if there is any attempt at restricting open source, it's going to restricting open source, it's going to restricting open source, it's going to open a can of worms on how do you open a can of worms on how do you open a can of worms on how do you actually enforce restrictions on open actually enforce restrictions on open actually enforce restrictions on open source because you're basically telling source because you're basically telling source because you're basically telling people once they've downloaded and people once they've downloaded and people once they've downloaded and gotten a copy of this free publicly gotten a copy of this free publicly gotten a copy of this free publicly available software, they're not allowed available software, they're not allowed available software, they're not allowed to use it. And that becomes a real to use it. And that becomes a real to use it. And that becomes a real challenge. I don't think we have a lot challenge. I don't think we have a lot challenge. I don't think we have a lot of great precedent for that. It's going of great precedent for that. It's going of great precedent for that. It's going to be very ugly to try and stop open to be very ugly to try and stop open to be very ugly to try and stop open source. I do think there's a question on source. I do think there's a question on source. I do think there's a question on like copyright action but if there is like copyright action but if there is like copyright action but if there is there's a legal due process to go there's a legal due process to go there's a legal due process to go through to make that case and stop that through to make that case and stop that through to make that case and stop that open source from being available and open source from being available and open source from being available and then my third point is just open source then my third point is just open source then my third point is just open source is better for the world to Chimath's is better for the world to Chimath's is better for the world to Chimath's point this is 100 times cheaper that is point this is 100 times cheaper that is point this is 100 times cheaper that is better for the industry for enterprise better for the industry for enterprise better for the industry for enterprise the beneficiaries are going to be the the beneficiaries are going to be the the beneficiaries are going to be the economy the consumer fundamentally if economy the consumer fundamentally if economy the consumer fundamentally if you look back on the internet in the you look back on the internet in the you look back on the internet in the early days Netscape made a proprietary early days Netscape made a proprietary early days Netscape made a proprietary browser and a proprietary server browser and a proprietary server browser and a proprietary server software, the Netscape software, and software, the Netscape software, and software, the Netscape software, and that they went public, and they were the that they went public, and they were the that they went public, and they were the first to do this, and it was super it first to do this, and it was super it first to do this, and it was super it was super valuable and profitable. That was super valuable and profitable. That was super valuable and profitable. That company ended up getting crushed because company ended up getting crushed because company ended up getting crushed because of open- source. The Mozilla Foundation of open- source. The Mozilla Foundation of open- source. The Mozilla Foundation was formed to create an open-source web was formed to create an open-source web was formed to create an open-source web browser called Firefox, and then Google browser called Firefox, and then Google browser called Firefox, and then Google ended up hiring everyone and made it ended up hiring everyone and made it ended up hiring everyone and made it Chrome, but it was still open source. Chrome, but it was still open source. Chrome, but it was still open source. The Apache Foundation set up the first The Apache Foundation set up the first The Apache Foundation set up the first HTTP server as an open-source product. HTTP server as an open-source product. HTTP server as an open-source product. Rather than having to pay Netscape or Rather than having to pay Netscape or Rather than having to pay Netscape or Microsoft or Oracle for their server Microsoft or Oracle for their server Microsoft or Oracle for their server software, anyone with a computer could software, anyone with a computer could software, anyone with a computer could download the Apache software and make a download the Apache software and make a download the Apache software and make a web server and be on the internet and web server and be on the internet and web server and be on the internet and create a website. And what ended up create a website. And what ended up create a website. And what ended up happening is the value acrewed to the happening is the value acrewed to the happening is the value acrewed to the internet. It didn't acrue to the small internet. It didn't acrue to the small internet. It didn't acrue to the small number of software providers that number of software providers that number of software providers that controlled the gate and the portal of controlled the gate and the portal of controlled the gate and the portal of the internet. Basically, everything got the internet. Basically, everything got the internet. Basically, everything got open sourced and Google took off and open sourced and Google took off and open sourced and Google took off and eBay took off and Etsy and Amazon and eBay took off and Etsy and Amazon and eBay took off and Etsy and Amazon and all the millions of small websites and all the millions of small websites and all the millions of small websites and all the millions of small businesses and all the millions of small businesses and all the millions of small businesses and everyone that benefited from an openly everyone that benefited from an openly everyone that benefited from an openly accessible open-sourced internet. If the accessible open-sourced internet. If the accessible open-sourced internet. If the internet was closed and there was internet was closed and there was internet was closed and there was proprietary software gates and portals proprietary software gates and portals proprietary software gates and portals throughout the internet that everyone throughout the internet that everyone throughout the internet that everyone had to pay to get through, the internet had to pay to get through, the internet had to pay to get through, the internet would not have taken off and the economy would not have taken off and the economy would not have taken off and the economy wouldn't have grown and all these jobs wouldn't have grown and all these jobs wouldn't have grown and all these jobs would have been called AOL and Coffee would have been called AOL and Coffee would have been called AOL and Coffee Serve like and now now when we look at Serve like and now now when we look at Serve like and now now when we look at this analogy, the analogy here is if this analogy, the analogy here is if this analogy, the analogy here is if open-source AI takes off, then all the open-source AI takes off, then all the open-source AI takes off, then all the worries that Bernie Sanders and worries that Bernie Sanders and worries that Bernie Sanders and Elizabeth Warren and all the socialists Elizabeth Warren and all the socialists Elizabeth Warren and all the socialists are harping and larking about are not are harping and larking about are not are harping and larking about are not going to be the case anymore because going to be the case anymore because going to be the case anymore because you're not going to see all the value of you're not going to see all the value of you're not going to see all the value of AI acrue to two or three or four AI acrue to two or three or four AI acrue to two or three or four companies and their small group of companies and their small group of companies and their small group of billionaire shareholders. What will billionaire shareholders. What will billionaire shareholders. What will happen is AI proliferates and a million happen is AI proliferates and a million happen is AI proliferates and a million AI integrated enterprises all over the AI integrated enterprises all over the AI integrated enterprises all over the world will benefit. Everyone will world will benefit. Everyone will world will benefit. Everyone will benefit. The economy will grow, jobs benefit. The economy will grow, jobs benefit. The economy will grow, jobs will be created and AI becomes a power will be created and AI becomes a power will be created and AI becomes a power for good for creating an open economy. for good for creating an open economy. for good for creating an open economy. So the I know that some people that are So the I know that some people that are So the I know that some people that are listening to this in the government and listening to this in the government and listening to this in the government and that are on the other side are going to that are on the other side are going to that are on the other side are going to say but but but Chinese open source say but but but Chinese open source say but but but Chinese open source versus American open source let it all versus American open source let it all versus American open source let it all proliferate. And frankly if the Chinese proliferate. And frankly if the Chinese proliferate. And frankly if the Chinese are violating copyrights, stealing are violating copyrights, stealing are violating copyrights, stealing software, go after them for that. Put in software, go after them for that. Put in software, go after them for that. Put in place trade sanctions. Do all the you place trade sanctions. Do all the you place trade sanctions. Do all the you can do to stop that from happening. But can do to stop that from happening. But can do to stop that from happening. But fundamentally open- source AI will fundamentally open- source AI will fundamentally open- source AI will transform the global economy and it will transform the global economy and it will transform the global economy and it will ensure that the economic value of AI ensure that the economic value of AI ensure that the economic value of AI will diffuse to everyone and not be held will diffuse to everyone and not be held will diffuse to everyone and not be held captive by a small number. Why the 1% captive by a small number. Why the 1% captive by a small number. Why the 1% that controls open source if they have that controls open source if they have that controls open source if they have it the oligarchs are going to get their it the oligarchs are going to get their it the oligarchs are going to get their clocks rung and we don't need to have a clocks rung and we don't need to have a clocks rung and we don't need to have a wealth tax. Chamathy we're going to add wealth tax. Chamathy we're going to add wealth tax. Chamathy we're going to add to this. to this. to this. >> We have to acknowledge that it's >> We have to acknowledge that it's >> We have to acknowledge that it's incredible how fast the value capture at incredible how fast the value capture at incredible how fast the value capture at this segment of the market has basically this segment of the market has basically this segment of the market has basically evaporated. I've never seen it in my 25 evaporated. I've never seen it in my 25 evaporated. I've never seen it in my 25 years in Silicon Valley where a sector years in Silicon Valley where a sector years in Silicon Valley where a sector of the economy can absorb hundreds and of the economy can absorb hundreds and of the economy can absorb hundreds and hundreds of billions of dollars hundreds of billions of dollars hundreds of billions of dollars and then you think that there's going to and then you think that there's going to and then you think that there's going to be economic pricing power many decades be economic pricing power many decades be economic pricing power many decades into the future and it effectively into the future and it effectively into the future and it effectively evaporates in months. Months. evaporates in months. Months. evaporates in months. Months. >> It took off in months. Remember remember >> It took off in months. Remember remember >> It took off in months. Remember remember and it's evaporated in months. and it's evaporated in months. and it's evaporated in months. >> No, I got this is an area where I >> No, I got this is an area where I >> No, I got this is an area where I disagree with you guys. disagree with you guys. disagree with you guys. >> Evaporate is strong term. It it does >> Evaporate is strong term. It it does >> Evaporate is strong term. It it does look like it could slow down or it could look like it could slow down or it could look like it could slow down or it could or or it could plateau. or or it could plateau. or or it could plateau. >> Go ahead, Sax. Make your argument and >> Go ahead, Sax. Make your argument and >> Go ahead, Sax. Make your argument and I'll give you my argument. I'll give you my argument. I'll give you my argument. >> Yeah, but let me pull up the anthropic >> Yeah, but let me pull up the anthropic >> Yeah, but let me pull up the anthropic revenue chart before you go there, Saxs, revenue chart before you go there, Saxs, revenue chart before you go there, Saxs, because we can this will help mitigate because we can this will help mitigate because we can this will help mitigate it here and educate the audience. So, as it here and educate the audience. So, as it here and educate the audience. So, as you can see here, we got a little bit of you can see here, we got a little bit of you can see here, we got a little bit of a stall in anthropics revenue uh in the a stall in anthropics revenue uh in the a stall in anthropics revenue uh in the last couple of months. And it seems and last couple of months. And it seems and last couple of months. And it seems and and this is third party tracking. and this is third party tracking. and this is third party tracking. So it's it's not perfect data, but we do So it's it's not perfect data, but we do So it's it's not perfect data, but we do see that this is a a clear headwind. And see that this is a a clear headwind. And see that this is a a clear headwind. And then do you have the second chart I had? then do you have the second chart I had? then do you have the second chart I had? Um I talked on the pod just uh it was Um I talked on the pod just uh it was Um I talked on the pod just uh it was last week or the week before when we're last week or the week before when we're last week or the week before when we're having the discussion about open source having the discussion about open source having the discussion about open source and like I think it was um Brad and like I think it was um Brad and like I think it was um Brad Gersonner uh from alimter was talking Gersonner uh from alimter was talking Gersonner uh from alimter was talking about hey tokens are still growing. Well about hey tokens are still growing. Well about hey tokens are still growing. Well there are routers that track open there are routers that track open there are routers that track open router. the better an open source model router. the better an open source model router. the better an open source model does and the easier it is to implement does and the easier it is to implement does and the easier it is to implement on your own servers and take it in-house on your own servers and take it in-house on your own servers and take it in-house etc. Those are dark tokens. They're not etc. Those are dark tokens. They're not etc. Those are dark tokens. They're not recorded recorded recorded and you're not going to see them show up and you're not going to see them show up and you're not going to see them show up on a revenue chart anywhere because on a revenue chart anywhere because on a revenue chart anywhere because they're free essentially. You just need they're free essentially. You just need they're free essentially. You just need to have servers and energy to to do to have servers and energy to to do to have servers and energy to to do them. And here you see that now well them. And here you see that now well them. And here you see that now well over 50% and um a lot of these are over 50% and um a lot of these are over 50% and um a lot of these are coming from Chinese. coming from Chinese. coming from Chinese. >> By the way, Sax, I want to be clear >> By the way, Sax, I want to be clear >> By the way, Sax, I want to be clear before you give the counter. I'm not before you give the counter. I'm not before you give the counter. I'm not saying that these companies won't make saying that these companies won't make saying that these companies won't make money. That's not what I'm saying. money. That's not what I'm saying. money. That's not what I'm saying. But what I am saying is that markets are But what I am saying is that markets are But what I am saying is that markets are very savvy in looking through current very savvy in looking through current very savvy in looking through current earnings and asking a very specific earnings and asking a very specific earnings and asking a very specific question which is what does this revenue question which is what does this revenue question which is what does this revenue look like 10 years from now? Does it go look like 10 years from now? Does it go look like 10 years from now? Does it go up? Does it go down? Is there more up? Does it go down? Is there more up? Does it go down? Is there more competition or is there less competition or is there less competition or is there less competition? Is it effectively competition? Is it effectively competition? Is it effectively monopolistic or is it more of a monopolistic or is it more of a monopolistic or is it more of a commodity? If it's a commodity, how many commodity? If it's a commodity, how many commodity? If it's a commodity, how many people can price this good? At what people can price this good? At what people can price this good? At what price is the market clearing price of price is the market clearing price of price is the market clearing price of that good in 10 years? And all I'm that good in 10 years? And all I'm that good in 10 years? And all I'm saying is normally those variables get saying is normally those variables get saying is normally those variables get exposed. Those cards get turned over exposed. Those cards get turned over exposed. Those cards get turned over relatively slowly. And so you have 5 10 relatively slowly. And so you have 5 10 relatively slowly. And so you have 5 10 year cycles to transition from being an year cycles to transition from being an year cycles to transition from being an exclusive provider of a good to exclusive provider of a good to exclusive provider of a good to effectively a commodity provider of a effectively a commodity provider of a effectively a commodity provider of a good. And all I'm observing is it's so good. And all I'm observing is it's so good. And all I'm observing is it's so unique that only technology could create unique that only technology could create unique that only technology could create a market where that cycle could get a market where that cycle could get a market where that cycle could get compressed into a few years because it compressed into a few years because it compressed into a few years because it is very hard if you're an allocator of is very hard if you're an allocator of is very hard if you're an allocator of money to sit there and look at this data money to sit there and look at this data money to sit there and look at this data and not wonder to yourself why it's not and not wonder to yourself why it's not and not wonder to yourself why it's not a commodity in 5 to 7 to 10 years. And a commodity in 5 to 7 to 10 years. And a commodity in 5 to 7 to 10 years. And when when they get to that conclusion, when when they get to that conclusion, when when they get to that conclusion, which every capital allocator will which every capital allocator will which every capital allocator will because it'll be pretty negligent to because it'll be pretty negligent to because it'll be pretty negligent to not, not, not, it's very hard to assign huge future it's very hard to assign huge future it's very hard to assign huge future premiums. And where the real money is premiums. And where the real money is premiums. And where the real money is going, by the way, and we saw it in going, by the way, and we saw it in going, by the way, and we saw it in Google's earnings, which I'm sure we'll Google's earnings, which I'm sure we'll Google's earnings, which I'm sure we'll talk about, it's going to the cloud. talk about, it's going to the cloud. talk about, it's going to the cloud. It's going to the infrastructure. So, by It's going to the infrastructure. So, by It's going to the infrastructure. So, by the way, there's another cohort of the way, there's another cohort of the way, there's another cohort of people that don't want to see the end of people that don't want to see the end of people that don't want to see the end of open source because they want to serve open source because they want to serve open source because they want to serve the cheapest models possible because the cheapest models possible because the cheapest models possible because they know that's where all the margin they know that's where all the margin they know that's where all the margin capture is. capture is. capture is. >> What's your Where's this going, Sax? Is >> What's your Where's this going, Sax? Is >> What's your Where's this going, Sax? Is it both open? We're going to just see a it both open? We're going to just see a it both open? We're going to just see a proliferation. I mean as far as I'm proliferation. I mean as far as I'm proliferation. I mean as far as I'm concerned there is an unlimited appetite concerned there is an unlimited appetite concerned there is an unlimited appetite for ondemand intelligence and there's for ondemand intelligence and there's for ondemand intelligence and there's going to be I don't think there's an going to be I don't think there's an going to be I don't think there's an upper bound for how much intelligence upper bound for how much intelligence upper bound for how much intelligence you can tap as long as it's continues to you can tap as long as it's continues to you can tap as long as it's continues to get be better which then the thesis get be better which then the thesis get be better which then the thesis would be yeah it's a commodity and the would be yeah it's a commodity and the would be yeah it's a commodity and the prices keep going down but consumption prices keep going down but consumption prices keep going down but consumption keeps going up. What's your thoughts on keeps going up. What's your thoughts on keeps going up. What's your thoughts on you have to assume that this is exactly you have to assume that this is exactly you have to assume that this is exactly the example that you guys used. It's a the example that you guys used. It's a the example that you guys used. It's a web browser and in a web browser it's a web browser and in a web browser it's a web browser and in a web browser it's a mechanism to get to a place and so the mechanism to get to a place and so the mechanism to get to a place and so the apps that are actually the places are apps that are actually the places are apps that are actually the places are where the value is captured and I think where the value is captured and I think where the value is captured and I think if you assume for a second that if you assume for a second that if you assume for a second that intelligence becomes completely intelligence becomes completely intelligence becomes completely ubiquitous. It's widely available. The ubiquitous. It's widely available. The ubiquitous. It's widely available. The marginal cost of it is effectively zero. marginal cost of it is effectively zero. marginal cost of it is effectively zero. The energy to generate it is effectively The energy to generate it is effectively The energy to generate it is effectively zero which I think is an accurate zero which I think is an accurate zero which I think is an accurate assumption. It's very hard to make the assumption. It's very hard to make the assumption. It's very hard to make the case of why this isn't like the browser case of why this isn't like the browser case of why this isn't like the browser >> and it becomes just gets subsumed into >> and it becomes just gets subsumed into >> and it becomes just gets subsumed into the Amazon web services cloud the Amazon web services cloud the Amazon web services cloud businesses, Elon's web service, etc. Sax businesses, Elon's web service, etc. Sax businesses, Elon's web service, etc. Sax where do you think this is going? Then where do you think this is going? Then where do you think this is going? Then we're going to go to our second story we're going to go to our second story we're going to go to our second story which is the IP story. Third story is which is the IP story. Third story is which is the IP story. Third story is going to be the markets and Google going to be the markets and Google going to be the markets and Google specifically and Tesla and SpaceX. specifically and Tesla and SpaceX. specifically and Tesla and SpaceX. >> Look, there's been a lot of violent >> Look, there's been a lot of violent >> Look, there's been a lot of violent agreement on this show so far. So, let agreement on this show so far. So, let agreement on this show so far. So, let me just make the counterargument. I me just make the counterargument. I me just make the counterargument. I think that both open source and closed think that both open source and closed think that both open source and closed source will be big winners in this. I source will be big winners in this. I source will be big winners in this. I think the market is huge and they each think the market is huge and they each think the market is huge and they each serve their purpose. What happened is serve their purpose. What happened is serve their purpose. What happened is with the introduction of committee K3, with the introduction of committee K3, with the introduction of committee K3, there was a little bit of a panic in there was a little bit of a panic in there was a little bit of a panic in which everybody said, "Oh my god, all which everybody said, "Oh my god, all which everybody said, "Oh my god, all the Chinese models have caught up and the Chinese models have caught up and the Chinese models have caught up and they're giving them away for free and they're giving them away for free and they're giving them away for free and they're going to destroy our leading they're going to destroy our leading they're going to destroy our leading American frontier labs and Anthropic and American frontier labs and Anthropic and American frontier labs and Anthropic and Open AI are running around saying, Open AI are running around saying, Open AI are running around saying, listen, we can't continue to invest listen, we can't continue to invest listen, we can't continue to invest billions of dollars if Chinese companies billions of dollars if Chinese companies billions of dollars if Chinese companies can just steal our weights." Right? So can just steal our weights." Right? So can just steal our weights." Right? So that's the argument that they're making that's the argument that they're making that's the argument that they're making that government officials are responding that government officials are responding that government officials are responding to. The truth of the matter is that look to. The truth of the matter is that look to. The truth of the matter is that look when Kimmy K3 first launched I was when Kimmy K3 first launched I was when Kimmy K3 first launched I was concerned about it because I was like oh concerned about it because I was like oh concerned about it because I was like oh has China caught up are they now able to has China caught up are they now able to has China caught up are they now able to produce a much cheaper Frontier model. produce a much cheaper Frontier model. produce a much cheaper Frontier model. Then the details started coming out. So Then the details started coming out. So Then the details started coming out. So Ben Thompson on his blog went through Ben Thompson on his blog went through Ben Thompson on his blog went through some of the cost numbers and it turns some of the cost numbers and it turns some of the cost numbers and it turns out that Kimmy K3 is not that much out that Kimmy K3 is not that much out that Kimmy K3 is not that much cheaper to run. There's not a cheaper to run. There's not a cheaper to run. There's not a significant cost advantage to it. So significant cost advantage to it. So significant cost advantage to it. So that was that's point number one. Point that was that's point number one. Point that was that's point number one. Point number two is that China has not caught number two is that China has not caught number two is that China has not caught up. It's true that Kimmy K3 scored up. It's true that Kimmy K3 scored up. It's true that Kimmy K3 scored really well on the arena battleground really well on the arena battleground really well on the arena battleground for front-end coding for web for front-end coding for web for front-end coding for web development, but that's just one test. development, but that's just one test. development, but that's just one test. That's just one dimension. There are That's just one dimension. There are That's just one dimension. There are areas where it scores really well, but areas where it scores really well, but areas where it scores really well, but there's lots of other areas where it there's lots of other areas where it there's lots of other areas where it doesn't score that well. So, it is not a doesn't score that well. So, it is not a doesn't score that well. So, it is not a clear advance or a clear catch-up to the clear advance or a clear catch-up to the clear advance or a clear catch-up to the leading American models. Moreover, you leading American models. Moreover, you leading American models. Moreover, you still have stuff in the labs by still have stuff in the labs by still have stuff in the labs by Anthropic and Open AAI that is way ahead Anthropic and Open AAI that is way ahead Anthropic and Open AAI that is way ahead of this and the reports are that Sam is of this and the reports are that Sam is of this and the reports are that Sam is going to Washington over the next week going to Washington over the next week going to Washington over the next week to go talk about GPT 6.0 which is to go talk about GPT 6.0 which is to go talk about GPT 6.0 which is blowing the doors off. So, I don't blowing the doors off. So, I don't blowing the doors off. So, I don't believe that China has really caught up. believe that China has really caught up. believe that China has really caught up. I think there's I think there's I think there's >> Sam's going to go see daddy and what is >> Sam's going to go see daddy and what is >> Sam's going to go see daddy and what is he going to ask for? I think there's he going to ask for? I think there's he going to ask for? I think there's incredible unreleased models in the incredible unreleased models in the incredible unreleased models in the pipeline and we need to let our horses pipeline and we need to let our horses pipeline and we need to let our horses run here and not slow them down with a run here and not slow them down with a run here and not slow them down with a bunch of unnecessary hoops and if we do bunch of unnecessary hoops and if we do bunch of unnecessary hoops and if we do that I think we're going to be just that I think we're going to be just that I think we're going to be just fine. I don't believe that China has fine. I don't believe that China has fine. I don't believe that China has caught up. I still think we are 6 months caught up. I still think we are 6 months caught up. I still think we are 6 months ahead. And then just the final point on ahead. And then just the final point on ahead. And then just the final point on this if you look at revenue which is the this if you look at revenue which is the this if you look at revenue which is the test of real usage in the real world test of real usage in the real world test of real usage in the real world anthropic and open AI are blowing the anthropic and open AI are blowing the anthropic and open AI are blowing the doors off. They are by far the fastest doors off. They are by far the fastest doors off. They are by far the fastest growing tech companies at scale that growing tech companies at scale that growing tech companies at scale that we've ever seen. Jason, you showed this we've ever seen. Jason, you showed this we've ever seen. Jason, you showed this chart that supposedly shows a hiccup in chart that supposedly shows a hiccup in chart that supposedly shows a hiccup in anthropic. Listen, their internal anthropic. Listen, their internal anthropic. Listen, their internal forecast was to 10x this year from 10 to forecast was to 10x this year from 10 to forecast was to 10x this year from 10 to 100. We're in the middle of the year. 100. We're in the middle of the year. 100. We're in the middle of the year. They're already over 70 billion of ARR. They're already over 70 billion of ARR. They're already over 70 billion of ARR. They're easily going to get to 100 They're easily going to get to 100 They're easily going to get to 100 billion. And we don't really know what billion. And we don't really know what billion. And we don't really know what this little blip is here. I think one this little blip is here. I think one this little blip is here. I think one thing it might be is that open AAI, if thing it might be is that open AAI, if thing it might be is that open AAI, if you superimpose the OpenAI chart on you superimpose the OpenAI chart on you superimpose the OpenAI chart on this, they have reacelerated over the this, they have reacelerated over the this, they have reacelerated over the past month. So I think that if you were past month. So I think that if you were past month. So I think that if you were to add Open AI, to add Open AI, to add Open AI, >> Codex is excellent. Codex is >> Codex is excellent. Codex is >> Codex is excellent. Codex is >> Codex is excellent and I think they're >> Codex is excellent and I think they're >> Codex is excellent and I think they're taking a little bit of share and Sam is taking a little bit of share and Sam is taking a little bit of share and Sam is out there tweeting that we've got our out there tweeting that we've got our out there tweeting that we've got our mojo back and they're taking their mojo back and they're taking their mojo back and they're taking their forecast up. I think they were expecting forecast up. I think they were expecting forecast up. I think they were expecting to end the year at 60 billion of ARR and to end the year at 60 billion of ARR and to end the year at 60 billion of ARR and I think they're forecasting more like 75 I think they're forecasting more like 75 I think they're forecasting more like 75 billion of exit ARR. So my guess is that billion of exit ARR. So my guess is that billion of exit ARR. So my guess is that if you were to superimpose open AI and if you were to superimpose open AI and if you were to superimpose open AI and anthropic and looked at them together anthropic and looked at them together anthropic and looked at them together and you were basically just to say that and you were basically just to say that and you were basically just to say that you know let's call it the frontier you know let's call it the frontier you know let's call it the frontier model duopoly in the US you do not see model duopoly in the US you do not see model duopoly in the US you do not see any slowdown you don't see any blip any slowdown you don't see any blip any slowdown you don't see any blip they're taking their forecasts up and they're taking their forecasts up and they're taking their forecasts up and the reality is that if distillation is the reality is that if distillation is the reality is that if distillation is going on it's been a thing for you know going on it's been a thing for you know going on it's been a thing for you know again I pointed it out back in January again I pointed it out back in January again I pointed it out back in January of 2025 with deep seat so it's been a of 2025 with deep seat so it's been a of 2025 with deep seat so it's been a thing this entire time that they've been thing this entire time that they've been thing this entire time that they've been growing exponentially so I just don't growing exponentially so I just don't growing exponentially so I just don't believe that these guys are actually believe that these guys are actually believe that these guys are actually suffering in any way. I don't think they suffering in any way. I don't think they suffering in any way. I don't think they need government protection. I think need government protection. I think need government protection. I think they're growing exponentially still. they're growing exponentially still. they're growing exponentially still. This is a little bit of a case of um you This is a little bit of a case of um you This is a little bit of a case of um you know what do you call it uh in know what do you call it uh in know what do you call it uh in basketball when a player flops you know basketball when a player flops you know basketball when a player flops you know that you did a foul flop or whatever. that you did a foul flop or whatever. that you did a foul flop or whatever. >> Yeah. It's a flop. Yeah. >> Yeah. It's a flop. Yeah. >> Yeah. It's a flop. Yeah. >> Well, or you you basically act super >> Well, or you you basically act super >> Well, or you you basically act super dramatic after a foul in order to draw dramatic after a foul in order to draw dramatic after a foul in order to draw the charge. You're foul baiting when the charge. You're foul baiting when the charge. You're foul baiting when you're trying to get a foul and then you're trying to get a foul and then you're trying to get a foul and then you're flopping which is just making you're flopping which is just making you're flopping which is just making like an exaggerated thing like LeBron like an exaggerated thing like LeBron like an exaggerated thing like LeBron does does does >> and that's exa Yes. It's a LeBron >> and that's exa Yes. It's a LeBron >> and that's exa Yes. It's a LeBron >> it's a flare flop, you know, whereop >> it's a flare flop, you know, whereop >> it's a flare flop, you know, whereop these guys are trying to they're trying these guys are trying to they're trying these guys are trying to they're trying to draw the foul. They're trying to get to draw the foul. They're trying to get to draw the foul. They're trying to get the government to intervene. Now, why the government to intervene. Now, why the government to intervene. Now, why are they doing this? Because they're in are they doing this? Because they're in are they doing this? Because they're in the middle of road shows right now. And the middle of road shows right now. And the middle of road shows right now. And Chamas, to your point, I do think they Chamas, to your point, I do think they Chamas, to your point, I do think they get the legitimate question about why get the legitimate question about why get the legitimate question about why won't you be commoditized over time by won't you be commoditized over time by won't you be commoditized over time by open source? And by far the best open source? And by far the best open source? And by far the best response to that would be that if they response to that would be that if they response to that would be that if they can lure the government into giving them can lure the government into giving them can lure the government into giving them a government protected duopoly, then a government protected duopoly, then a government protected duopoly, then that would be incredible. that would be incredible. that would be incredible. >> The best answer is what you gave and >> The best answer is what you gave and >> The best answer is what you gave and anthropic and open AAI should own this anthropic and open AAI should own this anthropic and open AAI should own this because they're good at it, which is because they're good at it, which is because they're good at it, which is they're going to go up the stack to the they're going to go up the stack to the they're going to go up the stack to the application layer. application layer. application layer. >> Well, they already done >> Well, they already done >> Well, they already done >> I know, but they've done it in this way >> I know, but they've done it in this way >> I know, but they've done it in this way which is a little ham-handed in some which is a little ham-handed in some which is a little ham-handed in some cases, cases, cases, >> but they're excellent at it. these >> but they're excellent at it. these >> but they're excellent at it. these enduser apps are really good and they enduser apps are really good and they enduser apps are really good and they should just own that. And that should be should just own that. And that should be should just own that. And that should be their answer to Wall Street, which is their answer to Wall Street, which is their answer to Wall Street, which is guys, we have the best model. We will guys, we have the best model. We will guys, we have the best model. We will eventually go up the stack. And if I eventually go up the stack. And if I eventually go up the stack. And if I were them, I'd actually practice the were them, I'd actually practice the were them, I'd actually practice the following answer. There may be a version following answer. There may be a version following answer. There may be a version of a model that I don't release and just of a model that I don't release and just of a model that I don't release and just keep for myself and I'll just use in my keep for myself and I'll just use in my keep for myself and I'll just use in my own applications. How about that? own applications. How about that? own applications. How about that? >> Yeah. Well, that would be >> Yeah. Well, that would be >> Yeah. Well, that would be >> that's the real answer. That's >> that's the real answer. That's >> that's the real answer. That's anti-competitive. anti-competitive. anti-competitive. >> This No, it's not. They're allowed to >> This No, it's not. They're allowed to >> This No, it's not. They're allowed to build a model and not release it and use build a model and not release it and use build a model and not release it and use it for themselves. it for themselves. it for themselves. >> Hold on. Hold on. Let me answer that. it >> Hold on. Hold on. Let me answer that. it >> Hold on. Hold on. Let me answer that. it it would be anti-competitive it would be anti-competitive it would be anti-competitive in the eyes of their customers. It might in the eyes of their customers. It might in the eyes of their customers. It might not be in the governments, but if you not be in the governments, but if you not be in the governments, but if you are using them as a customer and you're are using them as a customer and you're are using them as a customer and you're lovable, which I talked to, and they're lovable, which I talked to, and they're lovable, which I talked to, and they're paying a ton of money or you're 11 Labs paying a ton of money or you're 11 Labs paying a ton of money or you're 11 Labs and you're paying them a ton of money and you're paying them a ton of money and you're paying them a ton of money and they say, "Hey, we got our latest and they say, "Hey, we got our latest and they say, "Hey, we got our latest and greatest. You can't use it cuz we're and greatest. You can't use it cuz we're and greatest. You can't use it cuz we're going to compete with your company." going to compete with your company." going to compete with your company." They would stop using it and they go to They would stop using it and they go to They would stop using it and they go to open source. I'll tell you why so I open source. I'll tell you why so I open source. I'll tell you why so I think you're wrong on this issue. I think you're wrong on this issue. I think you're wrong on this issue. I think open source is having its moment. think open source is having its moment. think open source is having its moment. I work with startups. They are all I work with startups. They are all I work with startups. They are all moving off of these and they're using moving off of these and they're using moving off of these and they're using open source and they're using it at much open source and they're using it at much open source and they're using it at much cheaper rates because a lot of the jobs cheaper rates because a lot of the jobs cheaper rates because a lot of the jobs don't need the latest models. They can don't need the latest models. They can don't need the latest models. They can use these uh the last generations models use these uh the last generations models use these uh the last generations models and people are moving them local. and people are moving them local. and people are moving them local. They're hosting them themselves. This is They're hosting them themselves. This is They're hosting them themselves. This is I think a nonzero chance that this is I think a nonzero chance that this is I think a nonzero chance that this is going to derail anthropic and open eyes going to derail anthropic and open eyes going to derail anthropic and open eyes uh IPOs and uh IPOs and uh IPOs and >> they're going to they're going to >> they're going to they're going to >> they're going to they're going to they're going to be fine. They're going they're going to be fine. They're going they're going to be fine. They're going to be fine as long as No, hold on. Let to be fine as long as No, hold on. Let to be fine as long as No, hold on. Let me finish guys. I'm making my point. me finish guys. I'm making my point. me finish guys. I'm making my point. Shut the up for 30 seconds. I Shut the up for 30 seconds. I Shut the up for 30 seconds. I believe that this is going to derail believe that this is going to derail believe that this is going to derail their IPOs. I'm taking it from the top. their IPOs. I'm taking it from the top. their IPOs. I'm taking it from the top. It's going to derail their IPOs. It's It's going to derail their IPOs. It's It's going to derail their IPOs. It's going to be headwinds against it because going to be headwinds against it because going to be headwinds against it because I think that they're going to have I think that they're going to have I think that they're going to have massive margin compression. I believe massive margin compression. I believe massive margin compression. I believe they're spending so much money that I they're spending so much money that I they're spending so much money that I think they're going to get caught in a think they're going to get caught in a think they're going to get caught in a trap. I think this could be a trap for trap. I think this could be a trap for trap. I think this could be a trap for them. They overspend. They don't have them. They overspend. They don't have them. They overspend. They don't have the same profitability and it doesn't the same profitability and it doesn't the same profitability and it doesn't pencil out. And startups are the future. pencil out. And startups are the future. pencil out. And startups are the future. The startups are what eventually the The startups are what eventually the The startups are what eventually the enterprise copies. I think you're wrong, enterprise copies. I think you're wrong, enterprise copies. I think you're wrong, Sax. Go ahead. [screaming] Sax. Go ahead. [screaming] Sax. Go ahead. [screaming] [laughter] [laughter] [laughter] >> Well, I'll come back, but let your mouth >> Well, I'll come back, but let your mouth >> Well, I'll come back, but let your mouth respond. Raise your hand. respond. Raise your hand. respond. Raise your hand. >> You're wrong. You're totally wrong. >> You're wrong. You're totally wrong. >> You're wrong. You're totally wrong. >> I think you're wrong. I think they have >> I think you're wrong. I think they have >> I think you're wrong. I think they have caught up for 95% of the jobs. This is a caught up for 95% of the jobs. This is a caught up for 95% of the jobs. This is a crazy head. I'm not saying that the IPOs crazy head. I'm not saying that the IPOs crazy head. I'm not saying that the IPOs are off, but I think that their market are off, but I think that their market are off, but I think that their market caps and the headwinds are coming. caps and the headwinds are coming. caps and the headwinds are coming. There's a non-zero chance that they're There's a non-zero chance that they're There's a non-zero chance that they're going to get slowed down. going to get slowed down. going to get slowed down. >> I think the answer is slightly >> I think the answer is slightly >> I think the answer is slightly different. It's not that 95% of the different. It's not that 95% of the different. It's not that 95% of the bleeding edge tasks can be done by bleeding edge tasks can be done by bleeding edge tasks can be done by everybody. It's that 95% of the tasks everybody. It's that 95% of the tasks everybody. It's that 95% of the tasks can be done by many different models. can be done by many different models. can be done by many different models. That's the actual answer. And that's That's the actual answer. And that's That's the actual answer. And that's okay. And by the way, okay. And by the way, okay. And by the way, >> that's exactly right, Chimath. I agree. >> that's exactly right, Chimath. I agree. >> that's exactly right, Chimath. I agree. >> It's also okay for Anthropic to say, you >> It's also okay for Anthropic to say, you >> It's also okay for Anthropic to say, you know what, I have this next generation know what, I have this next generation know what, I have this next generation class of model. I'm going to class of model. I'm going to class of model. I'm going to instantiate, I don't know, a life instantiate, I don't know, a life instantiate, I don't know, a life sciences program, a cyber security sciences program, a cyber security sciences program, a cyber security business. That's where they can capture business. That's where they can capture business. That's where they can capture as Saxs was saying before over time as Saxs was saying before over time as Saxs was saying before over time trillions and trillions of enterprise trillions and trillions of enterprise trillions and trillions of enterprise value because I do think they have value because I do think they have value because I do think they have excellent models and they have excellent excellent models and they have excellent excellent models and they have excellent engineers and they have momentum. But if engineers and they have momentum. But if engineers and they have momentum. But if you're going to build a business model you're going to build a business model you're going to build a business model that tries to ascribe this layer as that tries to ascribe this layer as that tries to ascribe this layer as having a lot of terminal value, I think having a lot of terminal value, I think having a lot of terminal value, I think that that is a mathematical mistake. that that is a mathematical mistake. that that is a mathematical mistake. That's it. You can't do it. Open source That's it. You can't do it. Open source That's it. You can't do it. Open source is going to be a spec a headwind to is going to be a spec a headwind to is going to be a spec a headwind to these companies specifically because these companies specifically because these companies specifically because because because because all of their best customers and I talked all of their best customers and I talked all of their best customers and I talked to them whether it's lovable or 11 labs to them whether it's lovable or 11 labs to them whether it's lovable or 11 labs or the startups that were spending or the startups that were spending or the startups that were spending hundreds of thousands of dollars with hundreds of thousands of dollars with hundreds of thousands of dollars with them every quarter just last you know them every quarter just last you know them every quarter just last you know six months ago they have all moved on six months ago they have all moved on six months ago they have all moved on mass GLM52 mass GLM52 mass GLM52 making their own models the cat's out of making their own models the cat's out of making their own models the cat's out of the bag they are going to start losing a the bag they are going to start losing a the bag they are going to start losing a lot of customers to open source and lot of customers to open source and lot of customers to open source and Google and AWS and Elon Web Services are Google and AWS and Elon Web Services are Google and AWS and Elon Web Services are going to host them. And how do I know going to host them. And how do I know going to host them. And how do I know this? Every time I do a job, I'm using this? Every time I do a job, I'm using this? Every time I do a job, I'm using Plexity Computer. Not not a paid Plexity Computer. Not not a paid Plexity Computer. Not not a paid partnership or anything. It just happens partnership or anything. It just happens partnership or anything. It just happens to be the best harness that I found. And to be the best harness that I found. And to be the best harness that I found. And I start with Grock, Neotron, GLM52, and I start with Grock, Neotron, GLM52, and I start with Grock, Neotron, GLM52, and I also put it into Claude and the I also put it into Claude and the I also put it into Claude and the results are as good or better. I in results are as good or better. I in results are as good or better. I in other words, I can't even tell the other words, I can't even tell the other words, I can't even tell the difference between these. difference between these. difference between these. >> Let's superimpose the the OpenAI numbers >> Let's superimpose the the OpenAI numbers >> Let's superimpose the the OpenAI numbers on top of the anthropic numbers because on top of the anthropic numbers because on top of the anthropic numbers because I think it supports the the point I'm I think it supports the the point I'm I think it supports the the point I'm trying to make. trying to make. trying to make. >> These are estimates, by the way. This is >> These are estimates, by the way. This is >> These are estimates, by the way. This is not like literally from the companies. not like literally from the companies. not like literally from the companies. Just want to make sure people know. Just want to make sure people know. Just want to make sure people know. >> So according to this company that I mean >> So according to this company that I mean >> So according to this company that I mean look, who knows how they derive this. We look, who knows how they derive this. We look, who knows how they derive this. We don't know that they're totally true. don't know that they're totally true. don't know that they're totally true. They're basically showing that OpenAI's They're basically showing that OpenAI's They're basically showing that OpenAI's run rate, which is ARR. It rose from 33 run rate, which is ARR. It rose from 33 run rate, which is ARR. It rose from 33 billion in May to 41.3 billion in July. billion in May to 41.3 billion in July. billion in May to 41.3 billion in July. So they're seeing acceleration. Like I So they're seeing acceleration. Like I So they're seeing acceleration. Like I said, I mean Sam is out there saying said, I mean Sam is out there saying said, I mean Sam is out there saying they got their mojo back. They're going they got their mojo back. They're going they got their mojo back. They're going to have their best 12 months forward to have their best 12 months forward to have their best 12 months forward looking ever. And look, Anthropic is looking ever. And look, Anthropic is looking ever. And look, Anthropic is still growing really fast. We've talked still growing really fast. We've talked still growing really fast. We've talked about this on a previous show. It's not about this on a previous show. It's not about this on a previous show. It's not physically possible to grow 10x year physically possible to grow 10x year physically possible to grow 10x year over year forever. You'll run out of over year forever. You'll run out of over year forever. You'll run out of compute. You'll run out of energy. compute. You'll run out of energy. compute. You'll run out of energy. You'll run out of everything. There's You'll run out of everything. There's You'll run out of everything. There's just no Yeah. There's just no way to do just no Yeah. There's just no way to do just no Yeah. There's just no way to do things. things. things. >> But anthropic, I mean, look, if any if >> But anthropic, I mean, look, if any if >> But anthropic, I mean, look, if any if anybody had anybody had anybody had >> if anybody had said Anthropic would be >> if anybody had said Anthropic would be >> if anybody had said Anthropic would be at over 70 billion in the midpoint of at over 70 billion in the midpoint of at over 70 billion in the midpoint of the year back in January and they're at the year back in January and they're at the year back in January and they're at 10 billion, 10 billion, 10 billion, >> nobody would have said it. >> nobody would have said it. >> nobody would have said it. >> You would have said this is the fastest >> You would have said this is the fastest >> You would have said this is the fastest growing tech company of all time. The growing tech company of all time. The growing tech company of all time. The idea that they're at risk of getting idea that they're at risk of getting idea that they're at risk of getting their entire franchise destroyed, it's their entire franchise destroyed, it's their entire franchise destroyed, it's not in the data yet is what I'm trying not in the data yet is what I'm trying not in the data yet is what I'm trying to say. And moreover, Jamas, to your to say. And moreover, Jamas, to your to say. And moreover, Jamas, to your point, it's not only about the model. point, it's not only about the model. point, it's not only about the model. It's also about the harness. It's about It's also about the harness. It's about It's also about the harness. It's about the connectors. It's about the the connectors. It's about the the connectors. It's about the enterprise agreements. There's a lot of enterprise agreements. There's a lot of enterprise agreements. There's a lot of things here that you need in order to things here that you need in order to things here that you need in order to grow a business like this. And you know, grow a business like this. And you know, grow a business like this. And you know, this idea that they need to race to get this idea that they need to race to get this idea that they need to race to get government protection because of a government protection because of a government protection because of a competitive risk that might happen in competitive risk that might happen in competitive risk that might happen in the future, I think is just kind of the future, I think is just kind of the future, I think is just kind of unseammly and gross. I mean, this is unseammly and gross. I mean, this is unseammly and gross. I mean, this is literally the most successful tech literally the most successful tech literally the most successful tech company of all time and they're racing company of all time and they're racing company of all time and they're racing to the government to basically say, "You to the government to basically say, "You to the government to basically say, "You need to protect us against our need to protect us against our need to protect us against our competitors." Great argument. competitors." Great argument. competitors." Great argument. >> Not just our Chinese competitors, our >> Not just our Chinese competitors, our >> Not just our Chinese competitors, our American competitors, our potential American competitors, our potential American competitors, our potential future competitors. future competitors. future competitors. >> They should hire Lena Khan. Okay. And >> They should hire Lena Khan. Okay. And >> They should hire Lena Khan. Okay. And frankly, it's gross. And just let me frankly, it's gross. And just let me frankly, it's gross. And just let me give a couple of examples cuz I know give a couple of examples cuz I know give a couple of examples cuz I know people don't have a lot of sympathy for people don't have a lot of sympathy for people don't have a lot of sympathy for Chinese companies. That's fine. I'm not Chinese companies. That's fine. I'm not Chinese companies. That's fine. I'm not defending Chinese companies. I'm defending Chinese companies. I'm defending Chinese companies. I'm defending American developers who need defending American developers who need defending American developers who need to be able to use everything in the to be able to use everything in the to be able to use everything in the public domain. And let me give you an public domain. And let me give you an public domain. And let me give you an example. Ma Maratti, her new model, example. Ma Maratti, her new model, example. Ma Maratti, her new model, >> thinking machines. >> thinking machines. >> thinking machines. >> Thinking machines. They currently have >> Thinking machines. They currently have >> Thinking machines. They currently have the best American open-source model. You the best American open-source model. You the best American open-source model. You know how it was trained? It was know how it was trained? It was know how it was trained? It was bootstrapped. It was distilled off a bootstrapped. It was distilled off a bootstrapped. It was distilled off a Chinese model, Kim K 2.5. Now, if you Chinese model, Kim K 2.5. Now, if you Chinese model, Kim K 2.5. Now, if you say that Chinese model is based on IP say that Chinese model is based on IP say that Chinese model is based on IP theft, what is thinky? It's a derivative theft, what is thinky? It's a derivative theft, what is thinky? It's a derivative work off a model that anthropic is work off a model that anthropic is work off a model that anthropic is trying to taint as being IP. By the way, trying to taint as being IP. By the way, trying to taint as being IP. By the way, there's been no evidence of this. there's been no evidence of this. there's been no evidence of this. There's no evidentiary process. They are There's no evidentiary process. They are There's no evidentiary process. They are simply trying to paint with a very broad simply trying to paint with a very broad simply trying to paint with a very broad brush here and say that now that model brush here and say that now that model brush here and say that now that model is tainted. Let me give you another is tainted. Let me give you another is tainted. Let me give you another example. So cursor rolled out its new example. So cursor rolled out its new example. So cursor rolled out its new product composer 2. They were able to product composer 2. They were able to product composer 2. They were able to post-train that model using Kimik 2.5 on post-train that model using Kimik 2.5 on post-train that model using Kimik 2.5 on their own proprietary coding data. Okay, their own proprietary coding data. Okay, their own proprietary coding data. Okay, so think about this. They started with a so think about this. They started with a so think about this. They started with a Chinese open- source model and then they Chinese open- source model and then they Chinese open- source model and then they used their own data and they came up used their own data and they came up used their own data and they came up with a new derivative product. This is with a new derivative product. This is with a new derivative product. This is the way that open source works. You take the way that open source works. You take the way that open source works. You take things that are in the public domain, things that are in the public domain, things that are in the public domain, you fork them, you make them your own. you fork them, you make them your own. you fork them, you make them your own. And by the way, once it's in the public And by the way, once it's in the public And by the way, once it's in the public domain, it's not a Chinese model domain, it's not a Chinese model domain, it's not a Chinese model anymore. It is open weights that are anymore. It is open weights that are anymore. It is open weights that are freely available to anyone. It's a file, freely available to anyone. It's a file, freely available to anyone. It's a file, okay? And you take that, you fork it, okay? And you take that, you fork it, okay? And you take that, you fork it, you run it on your own hardware in an you run it on your own hardware in an you run it on your own hardware in an American data center. No packets are American data center. No packets are American data center. No packets are going back to China. No data is going going back to China. No data is going going back to China. No data is going back to China. Nothing's going back to back to China. Nothing's going back to back to China. Nothing's going back to China. An American company has taken China. An American company has taken China. An American company has taken open- source contributions in the public open- source contributions in the public open- source contributions in the public domain, made it their own, and then domain, made it their own, and then domain, made it their own, and then developed their own model. And if you developed their own model. And if you developed their own model. And if you say that American companies can't do say that American companies can't do say that American companies can't do that or that somehow it's tainted with that or that somehow it's tainted with that or that somehow it's tainted with IP theft, you are basically going to put IP theft, you are basically going to put IP theft, you are basically going to put a dagger through the heart of the entire a dagger through the heart of the entire a dagger through the heart of the entire American open source ecosystem. And that American open source ecosystem. And that American open source ecosystem. And that is exactly what Anthropic wants because is exactly what Anthropic wants because is exactly what Anthropic wants because they do not want to have the they do not want to have the they do not want to have the competition. competition. competition. >> Freeberg, maybe you can uh close this >> Freeberg, maybe you can uh close this >> Freeberg, maybe you can uh close this out here and then I'll put my out here and then I'll put my out here and then I'll put my >> I'll just zoom out for a second and I'll >> I'll just zoom out for a second and I'll >> I'll just zoom out for a second and I'll say it. Think about say it. Think about say it. Think about the strategy as well for China. If you the strategy as well for China. If you the strategy as well for China. If you think about the global economy of the think about the global economy of the think about the global economy of the last 50 years, the US has acrewed so last 50 years, the US has acrewed so last 50 years, the US has acrewed so much value by being at the core of the much value by being at the core of the much value by being at the core of the knowledge economy and effectively a knowledge economy and effectively a knowledge economy and effectively a services economy. And in that sense services economy. And in that sense services economy. And in that sense through the development of intellectual through the development of intellectual through the development of intellectual property of IP of knowledge and then the property of IP of knowledge and then the property of IP of knowledge and then the conversion of one bit to another bit conversion of one bit to another bit conversion of one bit to another bit we've been able to derive trillions of we've been able to derive trillions of we've been able to derive trillions of dollars in GDP. Meanwhile we outsourced dollars in GDP. Meanwhile we outsourced dollars in GDP. Meanwhile we outsourced manufacturing and created a sleeping manufacturing and created a sleeping manufacturing and created a sleeping giant in China where they have this giant in China where they have this giant in China where they have this incredible manufacturing capacity. And incredible manufacturing capacity. And incredible manufacturing capacity. And at the end of the day, if you think at the end of the day, if you think at the end of the day, if you think about the course of like human about the course of like human about the course of like human technology evolution and human technology evolution and human technology evolution and human prosperity, it's largely driven by our prosperity, it's largely driven by our prosperity, it's largely driven by our capacity to convert molecules from one capacity to convert molecules from one capacity to convert molecules from one form to another and use the least amount form to another and use the least amount form to another and use the least amount of energy possible to do that. That's of energy possible to do that. That's of energy possible to do that. That's that all of technology ultimately leads that all of technology ultimately leads that all of technology ultimately leads to that simple equation. Molecule to that simple equation. Molecule to that simple equation. Molecule conversion. Making that beautiful couch conversion. Making that beautiful couch conversion. Making that beautiful couch behind you at the lowest cost possible. behind you at the lowest cost possible. behind you at the lowest cost possible. Making materials, making semiconductors, Making materials, making semiconductors, Making materials, making semiconductors, making all this stuff. Everything in our making all this stuff. Everything in our making all this stuff. Everything in our world is driven by molecule conversion. world is driven by molecule conversion. world is driven by molecule conversion. So at the end of the day, if the So at the end of the day, if the So at the end of the day, if the knowledge economy and the services knowledge economy and the services knowledge economy and the services economy gets compressed, much like AI economy gets compressed, much like AI economy gets compressed, much like AI and open source AI in particular, and open source AI in particular, and open source AI in particular, effectively flattens that value because effectively flattens that value because effectively flattens that value because all of that value is now open source. all of that value is now open source. all of that value is now open source. It's free and it's simply a function of It's free and it's simply a function of It's free and it's simply a function of turning on a switch and running it. The turning on a switch and running it. The turning on a switch and running it. The value of the US and the western economy value of the US and the western economy value of the US and the western economy has been largely degraded. And what's has been largely degraded. And what's has been largely degraded. And what's left is the value of the molecule left is the value of the molecule left is the value of the molecule economy. the ability to convert economy. the ability to convert economy. the ability to convert molecules and use energy to do that. molecules and use energy to do that. molecules and use energy to do that. When you look at the juxtaposition of When you look at the juxtaposition of When you look at the juxtaposition of China versus the United States today, we China versus the United States today, we China versus the United States today, we have one terowatt of electricity have one terowatt of electricity have one terowatt of electricity production capacity in the US and production capacity in the US and production capacity in the US and they're on their way to having eight. We they're on their way to having eight. We they're on their way to having eight. We have about 10 billion square ft of have about 10 billion square ft of have about 10 billion square ft of manufacturing capacity. They have 200 manufacturing capacity. They have 200 manufacturing capacity. They have 200 billion square ft of manufacturing billion square ft of manufacturing billion square ft of manufacturing capacity. So they have 20x the capacity. So they have 20x the capacity. So they have 20x the manufacturing capacity, 8x the manufacturing capacity, 8x the manufacturing capacity, 8x the electricity production plus all of their electricity production plus all of their electricity production plus all of their other sources of energy. And I think other sources of energy. And I think other sources of energy. And I think that's the the long game for China over that's the the long game for China over that's the the long game for China over a decade, two, three decade process is a decade, two, three decade process is a decade, two, three decade process is by compressing the knowledge economy and by compressing the knowledge economy and by compressing the knowledge economy and the services economy, commoditizing it the services economy, commoditizing it the services economy, commoditizing it completely, they are left holding all completely, they are left holding all completely, they are left holding all the value in the global economy because the value in the global economy because the value in the global economy because they can make stuff and they can make it they can make stuff and they can make it they can make stuff and they can make it cheaper than anyone because they have cheaper than anyone because they have cheaper than anyone because they have the most electricity production. That's the most electricity production. That's the most electricity production. That's a very simple rubric for kind of how I a very simple rubric for kind of how I a very simple rubric for kind of how I look at the the long game that they're look at the the long game that they're look at the the long game that they're trying to play here. trying to play here. trying to play here. >> You believe they're trying to >> You believe they're trying to >> You believe they're trying to commoditize this very important space commoditize this very important space commoditize this very important space just like they did for just like they did for just like they did for >> global cars, >> global cars, >> global cars, >> global knowledge and global services. >> global knowledge and global services. >> global knowledge and global services. The creation and movement of bits gets The creation and movement of bits gets The creation and movement of bits gets commoditized and what's left over is the commoditized and what's left over is the commoditized and what's left over is the creation of electricity and the creation creation of electricity and the creation creation of electricity and the creation of molecules both of which they have of molecules both of which they have of molecules both of which they have this very difficult to surmount this very difficult to surmount this very difficult to surmount advantage that's going to make them the advantage that's going to make them the advantage that's going to make them the core dependency for the world. That's core dependency for the world. That's core dependency for the world. That's what I think is kind of the long game what I think is kind of the long game what I think is kind of the long game here. here. here. >> And just so you know, this data comes >> And just so you know, this data comes >> And just so you know, this data comes from reports in places like the from reports in places like the from reports in places like the information or other sources or leak information or other sources or leak information or other sources or leak numbers and they try to just make charts numbers and they try to just make charts numbers and they try to just make charts based on it. based on it. based on it. >> Yeah. And by the way, I you know, I have >> Yeah. And by the way, I you know, I have >> Yeah. And by the way, I you know, I have my own sources too. I've talked to my own sources too. I've talked to my own sources too. I've talked to investors in these companies and I'm investors in these companies and I'm investors in these companies and I'm just telling you that both Anthropic and just telling you that both Anthropic and just telling you that both Anthropic and Open AI are taking their estimates up Open AI are taking their estimates up Open AI are taking their estimates up right now, their forecasts up. So I mean right now, their forecasts up. So I mean right now, their forecasts up. So I mean look I think in the future it may be the look I think in the future it may be the look I think in the future it may be the case that open source takes share fine case that open source takes share fine case that open source takes share fine it's because the market's so big and it's because the market's so big and it's because the market's so big and there is always a market for open there is always a market for open there is always a market for open because open is more controllable it's because open is more controllable it's because open is more controllable it's more customizable you can own it you get more customizable you can own it you get more customizable you can own it you get the data sovereignty you get the the data sovereignty you get the the data sovereignty you get the sovereignty but it's also more work so sovereignty but it's also more work so sovereignty but it's also more work so there are different use cases there's there are different use cases there's there are different use cases there's different parts of the market different parts of the market different parts of the market >> that's actually very interesting the the >> that's actually very interesting the the >> that's actually very interesting the the more work part there Sachs is super more work part there Sachs is super more work part there Sachs is super interesting like 3 to 6 months ago it interesting like 3 to 6 months ago it interesting like 3 to 6 months ago it was so much work to stand these up and was so much work to stand these up and was so much work to stand these up and Now there's so many intermediaries Now there's so many intermediaries Now there's so many intermediaries building the harnesses that default to building the harnesses that default to building the harnesses that default to it that that is getting worked out. But it that that is getting worked out. But it that that is getting worked out. But that has always been the issue with open that has always been the issue with open that has always been the issue with open source for sure is the amount of work it source for sure is the amount of work it source for sure is the amount of work it takes to implement. Uh if you do want to takes to implement. Uh if you do want to takes to implement. Uh if you do want to implement this inside of your implement this inside of your implement this inside of your organization, please make a call to 8090 organization, please make a call to 8090 organization, please make a call to 8090 and try the software factory. Use the and try the software factory. Use the and try the software factory. Use the promo code JAL [laughter] to get a free promo code JAL [laughter] to get a free promo code JAL [laughter] to get a free consultation at 8090. All right. consultation at 8090. All right. consultation at 8090. All right. Can they get a free consultation? Can they get a free consultation? Can they get a free consultation? >> Everyone's talking their books. >> Everyone's talking their books. >> Everyone's talking their books. Everyone's talking their books actually Everyone's talking their books actually Everyone's talking their books actually including I'd say the anthropic and uh including I'd say the anthropic and uh including I'd say the anthropic and uh open AAI investors. It's amazing how open AAI investors. It's amazing how open AAI investors. It's amazing how many of these many of these many of these >> Brad was on the show two weeks ago when >> Brad was on the show two weeks ago when >> Brad was on the show two weeks ago when you on the episode Brad was LIKE LET ME you on the episode Brad was LIKE LET ME you on the episode Brad was LIKE LET ME TELL YOU WHY this is going to he's TELL YOU WHY this is going to he's TELL YOU WHY this is going to he's holding on he's holding on to this holding on he's holding on to this holding on he's holding on to this actually actually actually >> he's like >> he's like >> he's like >> I actually give Brad a lot of credit >> I actually give Brad a lot of credit >> I actually give Brad a lot of credit because I do think that he's objective because I do think that he's objective because I do think that he's objective about public policy or as objective as about public policy or as objective as about public policy or as objective as you can be given that he does own all you can be given that he does own all you can be given that he does own all these companies. But look, let me just these companies. But look, let me just these companies. But look, let me just tell you that you know I see a lot of tell you that you know I see a lot of tell you that you know I see a lot of folks who are suddenly China hawks and folks who are suddenly China hawks and folks who are suddenly China hawks and saying we need to stop China. WE STOP saying we need to stop China. WE STOP saying we need to stop China. WE STOP LIKE THEY'RE CHINA HOGS. EVERYBODY LIKE THEY'RE CHINA HOGS. EVERYBODY LIKE THEY'RE CHINA HOGS. EVERYBODY WANTED TO SELL THEIR CHIPS. WANTED TO SELL THEIR CHIPS. WANTED TO SELL THEIR CHIPS. >> How about disclosing first whether >> How about disclosing first whether >> How about disclosing first whether you're on the cap table of anthropic? you're on the cap table of anthropic? you're on the cap table of anthropic? Okay. Okay. Okay. >> Absolutely. Are you guys on any of these >> Absolutely. Are you guys on any of these >> Absolutely. Are you guys on any of these cap tables? cap tables? cap tables? >> No, I'm not. >> No, I'm not. >> No, I'm not. >> Not directly. >> Not directly. >> Not directly. >> No, not directly. Yeah, that's >> No, not directly. Yeah, that's >> No, not directly. Yeah, that's indirectly. Maybe got a little access. indirectly. Maybe got a little access. indirectly. Maybe got a little access. You know what it's like, Chimat? It's You know what it's like, Chimat? It's You know what it's like, Chimat? It's like when you you got that great flush like when you you got that great flush like when you you got that great flush or straight and you're like, "Please or straight and you're like, "Please or straight and you're like, "Please don't pair the board." Brad's like, don't pair the board." Brad's like, don't pair the board." Brad's like, "DON'T PAIR THE BOARD. PLEASE don't pair "DON'T PAIR THE BOARD. PLEASE don't pair "DON'T PAIR THE BOARD. PLEASE don't pair the board." [laughter] the board." [laughter] the board." [laughter] All right. Here we go. All right. Here we go. All right. Here we go. >> I love open source. I love I love this >> I love open source. I love I love this >> I love open source. I love I love this open source AI stuff. open source AI stuff. open source AI stuff. >> I think it's so awesome. >> I think it's so awesome. >> I think it's so awesome. >> The value punk rock. >> The value punk rock. >> The value punk rock. >> It's it's just like there's so much to >> It's it's just like there's so much to >> It's it's just like there's so much to be done with it. It's just exciting and be done with it. It's just exciting and be done with it. It's just exciting and awesome and yeah, Chimoff's point is awesome and yeah, Chimoff's point is awesome and yeah, Chimoff's point is exactly right. Most of the models can do exactly right. Most of the models can do exactly right. Most of the models can do 95% of the tasks. And if that's the 95% of the tasks. And if that's the 95% of the tasks. And if that's the case, then it's not like everyone needs case, then it's not like everyone needs case, then it's not like everyone needs to scramble to get the best open source to scramble to get the best open source to scramble to get the best open source model. You just need open source to do model. You just need open source to do model. You just need open source to do 95% of what you want to do with AI. And 95% of what you want to do with AI. And 95% of what you want to do with AI. And then the other 5% you get specialized or then the other 5% you get specialized or then the other 5% you get specialized or high value or you pay a premium. And by high value or you pay a premium. And by high value or you pay a premium. And by the way, if you're a big enterprise and the way, if you're a big enterprise and the way, if you're a big enterprise and you need to have rappers and support and you need to have rappers and support and you need to have rappers and support and all these other tools for your all these other tools for your all these other tools for your employees, buy Anthropic or OpenAI or employees, buy Anthropic or OpenAI or employees, buy Anthropic or OpenAI or Gro tools or Gemini, like just make sure Gro tools or Gemini, like just make sure Gro tools or Gemini, like just make sure you have a good partner, you have a good partner, you have a good partner, >> use the promo code Jal. You get a Zoom >> use the promo code Jal. You get a Zoom >> use the promo code Jal. You get a Zoom call with your mom. Okay. [laughter] call with your mom. Okay. [laughter] call with your mom. Okay. [laughter] A Zoom call with A ZOOM CALL WITH YOUR A Zoom call with A ZOOM CALL WITH YOUR A Zoom call with A ZOOM CALL WITH YOUR take a selfie with him on Zoom. take a selfie with him on Zoom. take a selfie with him on Zoom. >> I'm sorry. >> I'm sorry. >> I'm sorry. >> Anyone's going to sign a $10 million >> Anyone's going to sign a $10 million >> Anyone's going to sign a $10 million contract with 8090, you get [laughter] contract with 8090, you get [laughter] contract with 8090, you get [laughter] to have uh three of the four of us for a to have uh three of the four of us for a to have uh three of the four of us for a fiveminute Zoom call. fiveminute Zoom call. fiveminute Zoom call. >> Absolutely. You get to call >> Absolutely. You get to call >> Absolutely. You get to call 10 million. You get to GUESS WHO'S ON 10 million. You get to GUESS WHO'S ON 10 million. You get to GUESS WHO'S ON THE POD. THE POD. THE POD. >> And anyone ready to make a pre- purchase >> And anyone ready to make a pre- purchase >> And anyone ready to make a pre- purchase on a million dollars of potato seed, you on a million dollars of potato seed, you on a million dollars of potato seed, you also get to have [laughter] also get to have [laughter] also get to have [laughter] >> use the promo code Sax Poo. Yes. And if >> use the promo code Sax Poo. Yes. And if >> use the promo code Sax Poo. Yes. And if you'd like to guest host, the first you'd like to guest host, the first you'd like to guest host, the first person to put a $25 million check into person to put a $25 million check into person to put a $25 million check into Launch Fund 5 gets to guest moderate an Launch Fund 5 gets to guest moderate an Launch Fund 5 gets to guest moderate an episode with your boy J Cal. All right. episode with your boy J Cal. All right. episode with your boy J Cal. All right. Uh Promo City this week. All right. Uh Promo City this week. All right. Uh Promo City this week. All right. Anthropic Copyrights. Here we go. Anthropic Copyrights. Here we go. Anthropic Copyrights. Here we go. Anthropic has settled their AI copyright Anthropic has settled their AI copyright Anthropic has settled their AI copyright lawsuit for 1.5 billion lawsuit for 1.5 billion lawsuit for 1.5 billion billy on Monday. Largest copyright billy on Monday. Largest copyright billy on Monday. Largest copyright settlement Freedberg in the history of settlement Freedberg in the history of settlement Freedberg in the history of the United States of America. the United States of America. the United States of America. First major AI training lawsuit to First major AI training lawsuit to First major AI training lawsuit to settle. There are many more in the settle. There are many more in the settle. There are many more in the pipeline. Anthropic downloaded 7 million pipeline. Anthropic downloaded 7 million pipeline. Anthropic downloaded 7 million books from pirated websites to train books from pirated websites to train books from pirated websites to train Claude. And that alone it may or may not Claude. And that alone it may or may not Claude. And that alone it may or may not be a crime. This has been adjudicated a be a crime. This has been adjudicated a be a crime. This has been adjudicated a little bit in the courts. They had ruled little bit in the courts. They had ruled little bit in the courts. They had ruled previously that AI on copyrighted books previously that AI on copyrighted books previously that AI on copyrighted books is legal under fair use, but there's is legal under fair use, but there's is legal under fair use, but there's going to be some future cases. So, this going to be some future cases. So, this going to be some future cases. So, this is a settlement. They didn't go to the is a settlement. They didn't go to the is a settlement. They didn't go to the bat. Lawyers getting 101 million. bat. Lawyers getting 101 million. bat. Lawyers getting 101 million. Authors get 3,000 a book. 500,000 books Authors get 3,000 a book. 500,000 books Authors get 3,000 a book. 500,000 books were covered in it. Thus far, 91% of the were covered in it. Thus far, 91% of the were covered in it. Thus far, 91% of the covered authors have claimed their covered authors have claimed their covered authors have claimed their share. Tons of other ones are on the share. Tons of other ones are on the share. Tons of other ones are on the way. And here's your second victory p way. And here's your second victory p way. And here's your second victory p fap of the episode. Content providers as fap of the episode. Content providers as fap of the episode. Content providers as a group need to get together and fight a group need to get together and fight a group need to get together and fight for their rights in unison. New York for their rights in unison. New York for their rights in unison. New York Times Met for the right to party. Times Met for the right to party. Times Met for the right to party. >> No. Fight for the right to get paid and >> No. Fight for the right to get paid and >> No. Fight for the right to get paid and to survive. [laughter] to survive. [laughter] to survive. [laughter] TBT and say as a group either give us TBT and say as a group either give us TBT and say as a group either give us these terms or don't index us. They are these terms or don't index us. They are these terms or don't index us. They are interfering with their ability to interfering with their ability to interfering with their ability to leverage their own content. is leverage their own content. is leverage their own content. is profoundly unfair and those magazines profoundly unfair and those magazines profoundly unfair and those magazines and newspapers need to what's that? and newspapers need to what's that? and newspapers need to what's that? >> You're going to get steamrolled. >> You're going to get steamrolled. >> You're going to get steamrolled. >> It's possible. YouTube is a great >> It's possible. YouTube is a great >> It's possible. YouTube is a great example. That's what's going to happen example. That's what's going to happen example. That's what's going to happen here. There'll be a settlement where here. There'll be a settlement where here. There'll be a settlement where they are going to be able to claim their they are going to be able to claim their they are going to be able to claim their I will bet any amount against your your I will bet any amount against your your I will bet any amount against your your your premonition here Jal. This is like your premonition here Jal. This is like your premonition here Jal. This is like >> I am going to go with for my biggest >> I am going to go with for my biggest >> I am going to go with for my biggest winner for winner for winner for >> training data owners like the New York >> training data owners like the New York >> training data owners like the New York Times, Reddit X, Twitter, YouTube etc. I Times, Reddit X, Twitter, YouTube etc. I Times, Reddit X, Twitter, YouTube etc. I think what we learned in 2023 was that think what we learned in 2023 was that think what we learned in 2023 was that the language models are starting to hit the language models are starting to hit the language models are starting to hit parody very quickly and that the real parody very quickly and that the real parody very quickly and that the real value is going to be in and it may even value is going to be in and it may even value is going to be in and it may even become commodities and open source may become commodities and open source may become commodities and open source may win the day. So then I think the winner win the day. So then I think the winner win the day. So then I think the winner is folks who have the training data. is folks who have the training data. is folks who have the training data. >> You know the best thing about this is >> You know the best thing about this is >> You know the best thing about this is watching Jason's reaction to Jason. watching Jason's reaction to Jason. watching Jason's reaction to Jason. Did you do a picture and picture of me Did you do a picture and picture of me Did you do a picture and picture of me just be like go Jac just be like go Jac just be like go Jac did we make a bet here? Did we make a did we make a bet here? Did we make a did we make a bet here? Did we make a bet? I don't know. He's gone. bet? I don't know. He's gone. bet? I don't know. He's gone. >> Well, actually, this I'm this settlement >> Well, actually, this I'm this settlement >> Well, actually, this I'm this settlement I don't think quite proves exactly what I don't think quite proves exactly what I don't think quite proves exactly what you want it to prove. Jal, you want it to prove. Jal, you want it to prove. Jal, >> go ahead. >> go ahead. >> go ahead. >> Explain. Can I can I make a nuance here? >> Explain. Can I can I make a nuance here? >> Explain. Can I can I make a nuance here? >> Of course. Of course. >> Of course. Of course. >> Of course. Of course. >> So, okay. Look, and you know, obviously >> So, okay. Look, and you know, obviously >> So, okay. Look, and you know, obviously I'm not a huge fan of anthropics. I I'm not a huge fan of anthropics. I I'm not a huge fan of anthropics. I think they're potentially destroying the think they're potentially destroying the think they're potentially destroying the whole ecosystem for their own purposes whole ecosystem for their own purposes whole ecosystem for their own purposes of regulatory capture. But let's just be of regulatory capture. But let's just be of regulatory capture. But let's just be very clear about [laughter] what Let's very clear about [laughter] what Let's very clear about [laughter] what Let's just be very clear about show anytime, just be very clear about show anytime, just be very clear about show anytime, Daria. Daria. Daria. >> Yeah. Let's just be very clear about >> Yeah. Let's just be very clear about >> Yeah. Let's just be very clear about what this judgment was and was not. So, what this judgment was and was not. So, what this judgment was and was not. So, okay, what Anthropic did is they pirated okay, what Anthropic did is they pirated okay, what Anthropic did is they pirated all these books from LibGen and they all these books from LibGen and they all these books from LibGen and they trained on them. And the reason why they trained on them. And the reason why they trained on them. And the reason why they got in trouble is cuz they basically got in trouble is cuz they basically got in trouble is cuz they basically took stolen books. They didn't even pay took stolen books. They didn't even pay took stolen books. They didn't even pay for one copy of them. But if they had for one copy of them. But if they had for one copy of them. But if they had paid for just one copy of each book, paid for just one copy of each book, paid for just one copy of each book, they could not have been nailed for they could not have been nailed for they could not have been nailed for piracy. they would have been potentially piracy. they would have been potentially piracy. they would have been potentially under fair use, which I understand Jal under fair use, which I understand Jal under fair use, which I understand Jal is still being litigated in the courts, is still being litigated in the courts, is still being litigated in the courts, but that would have been their defense. but that would have been their defense. but that would have been their defense. So, the reason why they got nailed with So, the reason why they got nailed with So, the reason why they got nailed with this $ 1.5 billion judgment is they this $ 1.5 billion judgment is they this $ 1.5 billion judgment is they wouldn't even buy one copy. It is still wouldn't even buy one copy. It is still wouldn't even buy one copy. It is still Anthropic's position and it's OpenAI's Anthropic's position and it's OpenAI's Anthropic's position and it's OpenAI's position that they should be able to position that they should be able to position that they should be able to train on all these books under fair use train on all these books under fair use train on all these books under fair use if they buy one copy. And that issue has if they buy one copy. And that issue has if they buy one copy. And that issue has not been resolved yet. Now you should be not been resolved yet. Now you should be not been resolved yet. Now you should be able to see the total hypocrisy of their able to see the total hypocrisy of their able to see the total hypocrisy of their point of view relative to the previous point of view relative to the previous point of view relative to the previous issue which is they believe they should issue which is they believe they should issue which is they believe they should be able to train on every creator's be able to train on every creator's be able to train on every creator's output in the world. You know as long as output in the world. You know as long as output in the world. You know as long as I guess they bought one copy of it I guess they bought one copy of it I guess they bought one copy of it against the will of those creators against the will of those creators against the will of those creators whether those creators like it or not. whether those creators like it or not. whether those creators like it or not. They believe it is fair use to train They believe it is fair use to train They believe it is fair use to train their models and derive their own their models and derive their own their models and derive their own weights based on fair use. However, they weights based on fair use. However, they weights based on fair use. However, they say that the one type of content that say that the one type of content that say that the one type of content that you should never be able to train on is you should never be able to train on is you should never be able to train on is their output. That is currently their their output. That is currently their their output. That is currently their position. It's completely hypocritical. position. It's completely hypocritical. position. It's completely hypocritical. And actually, if you go back to And actually, if you go back to And actually, if you go back to anthropics blog post in February where anthropics blog post in February where anthropics blog post in February where they defined this concept of industrial they defined this concept of industrial they defined this concept of industrial scale dissolation attacks for the first scale dissolation attacks for the first scale dissolation attacks for the first time, they coined that expression. And time, they coined that expression. And time, they coined that expression. And this is, you know, I worry that people this is, you know, I worry that people this is, you know, I worry that people in the government policy makers don't in the government policy makers don't in the government policy makers don't understand that this is all part of a understand that this is all part of a understand that this is all part of a anthropic op. No one used the terms anthropic op. No one used the terms anthropic op. No one used the terms distillation and attack together until distillation and attack together until distillation and attack together until Anthropic wrote that blog post. Anthropic wrote that blog post. Anthropic wrote that blog post. Distillation was simply an industry Distillation was simply an industry Distillation was simply an industry standard practice. But then Anthropic standard practice. But then Anthropic standard practice. But then Anthropic coined this idea of industrial scale coined this idea of industrial scale coined this idea of industrial scale dissolation attacks. In any event, if dissolation attacks. In any event, if dissolation attacks. In any event, if you go to that blog post, search for the you go to that blog post, search for the you go to that blog post, search for the words IP theft. It's not in there. words IP theft. It's not in there. words IP theft. It's not in there. Anthropic did not claim even though they Anthropic did not claim even though they Anthropic did not claim even though they were trying to coin this new concept and were trying to coin this new concept and were trying to coin this new concept and brand this idea of industrial scale brand this idea of industrial scale brand this idea of industrial scale dissolation attacks. They did not have dissolation attacks. They did not have dissolation attacks. They did not have the hutzbah to claim that it was IP the hutzbah to claim that it was IP the hutzbah to claim that it was IP theft. theft. theft. >> The coahjones the hypocrisy the kutzbah >> The coahjones the hypocrisy the kutzbah >> The coahjones the hypocrisy the kutzbah to claim that it was IP theft. Why? to claim that it was IP theft. Why? to claim that it was IP theft. Why? Because they maintain that it is their Because they maintain that it is their Because they maintain that it is their right to train their models on all the right to train their models on all the right to train their models on all the world's output even if the creators world's output even if the creators world's output even if the creators don't want them to. IP for we but not don't want them to. IP for we but not don't want them to. IP for we but not for thee. for thee. for thee. >> Exactly. So, so Jal, I don't even want >> Exactly. So, so Jal, I don't even want >> Exactly. So, so Jal, I don't even want to get into whether you're right or not to get into whether you're right or not to get into whether you're right or not on the fair use question. Maybe you are on the fair use question. Maybe you are on the fair use question. Maybe you are right. I don't know. Okay. But my point right. I don't know. Okay. But my point right. I don't know. Okay. But my point is about the hypocrisy and they is about the hypocrisy and they is about the hypocrisy and they themselves never claimed that this was themselves never claimed that this was themselves never claimed that this was IP theft by the Chinese companies. What IP theft by the Chinese companies. What IP theft by the Chinese companies. What they tried to claim was that it was a they tried to claim was that it was a they tried to claim was that it was a national security threat because what national security threat because what national security threat because what would happen is these Chinese companies would happen is these Chinese companies would happen is these Chinese companies would distill off them, create their own would distill off them, create their own would distill off them, create their own models, and those models would not have models, and those models would not have models, and those models would not have guard rails. So they were making a guard rails. So they were making a guard rails. So they were making a different kind of of argument. That different kind of of argument. That different kind of of argument. That argument never that argument though argument never that argument though argument never that argument though never found purchase with policy makers never found purchase with policy makers never found purchase with policy makers because I think that they could see that because I think that they could see that because I think that they could see that yeah look guardrails are important but yeah look guardrails are important but yeah look guardrails are important but you know it never really found purchase you know it never really found purchase you know it never really found purchase until anthropic started claiming oh this until anthropic started claiming oh this until anthropic started claiming oh this is IP theft but they have not been is IP theft but they have not been is IP theft but they have not been willing to make that argument publicly willing to make that argument publicly willing to make that argument publicly because they know that it would poison because they know that it would poison because they know that it would poison all of their fur use lawsuits that are all of their fur use lawsuits that are all of their fur use lawsuits that are happening. And Jimoth, like you happening. And Jimoth, like you happening. And Jimoth, like you mentioned, the New York Times is mentioned, the New York Times is mentioned, the New York Times is currently suing Open AI for basically a currently suing Open AI for basically a currently suing Open AI for basically a industrial scale distillation attack. I industrial scale distillation attack. I industrial scale distillation attack. I mean, Open AAI went on the New York mean, Open AAI went on the New York mean, Open AAI went on the New York Times website, used scrapers, slurped up Times website, used scrapers, slurped up Times website, used scrapers, slurped up all of their information at a scale that all of their information at a scale that all of their information at a scale that no human could achieve, and then they no human could achieve, and then they no human could achieve, and then they used that as training data and reverse used that as training data and reverse used that as training data and reverse engineered the model weights engineered the model weights engineered the model weights effectively. So my point is that even effectively. So my point is that even effectively. So my point is that even Anthropic and Open AAI won't publicly Anthropic and Open AAI won't publicly Anthropic and Open AAI won't publicly admit that what China is doing is IP admit that what China is doing is IP admit that what China is doing is IP theft because they are doing it theft because they are doing it theft because they are doing it themselves. It's totally hypocritical themselves. It's totally hypocritical themselves. It's totally hypocritical and I don't think policy makers should and I don't think policy makers should and I don't think policy makers should be making arguments that these companies be making arguments that these companies be making arguments that these companies themselves won't make because they know themselves won't make because they know themselves won't make because they know that they will lose all these court that they will lose all these court that they will lose all these court cases. cases. cases. >> Freeberg, any thoughts here on um and >> Freeberg, any thoughts here on um and >> Freeberg, any thoughts here on um and obviously this is still being litigated obviously this is still being litigated obviously this is still being litigated as we've discussed. It's 150 major as we've discussed. It's 150 major as we've discussed. It's 150 major cases. New York Times is one of the cases. New York Times is one of the cases. New York Times is one of the music industry. >> So you write this book. Okay. >> So you write this book. Okay. >> Harper Collins >> Harper Collins >> Harper Collins >> and you opt to not submit it to AI >> and you opt to not submit it to AI >> and you opt to not submit it to AI because there's a restrict. You keep it because there's a restrict. You keep it because there's a restrict. You keep it closed. No one can read your book. closed. No one can read your book. closed. No one can read your book. >> We did for Google search. You can't be >> We did for Google search. You can't be >> We did for Google search. You can't be on Google. on Google. on Google. >> No one can read your book. You're not >> No one can read your book. You're not >> No one can read your book. You're not letting anyone read your book. you want letting anyone read your book. you want letting anyone read your book. you want to pay for your book if you want to read to pay for your book if you want to read to pay for your book if you want to read it it it >> 10 bucks >> 10 bucks >> 10 bucks >> and someone pays $30 for Genule the >> and someone pays $30 for Genule the >> and someone pays $30 for Genule the great American novel and they read it great American novel and they read it great American novel and they read it and then they write a review [laughter] and then they write a review [laughter] and then they write a review [laughter] and they publish their review on the and they publish their review on the and they publish their review on the internet now on the internet the internet now on the internet the internet now on the internet the reviewer talks about your book and reviewer talks about your book and reviewer talks about your book and describes your book gets webcrolled by describes your book gets webcrolled by describes your book gets webcrolled by an AI engine and the AI engine learns an AI engine and the AI engine learns an AI engine and the AI engine learns from that learns about your book and now from that learns about your book and now from that learns about your book and now there's some commentary made about your there's some commentary made about your there's some commentary made about your book when someone asks a question about book when someone asks a question about book when someone asks a question about your book in the AI engine do you feel your book in the AI engine do you feel your book in the AI engine do you feel like your copyright was violated in that like your copyright was violated in that like your copyright was violated in that sense sense sense Um, Um, Um, >> so the book the AI never ingested your >> so the book the AI never ingested your >> so the book the AI never ingested your book. It ingested metadata about your book. It ingested metadata about your book. It ingested metadata about your book. It ingested reviews about your book. It ingested reviews about your book. It ingested reviews about your book. It ingested third party analysis book. It ingested third party analysis book. It ingested third party analysis about your book. All of which was on the about your book. All of which was on the about your book. All of which was on the open internet. And it didn't just copy open internet. And it didn't just copy open internet. And it didn't just copy that stuff, but it used it to learn that stuff, but it used it to learn that stuff, but it used it to learn about your book. So you're saying these about your book. So you're saying these about your book. So you're saying these 1500 reviews for Angel, how to invest in 1500 reviews for Angel, how to invest in 1500 reviews for Angel, how to invest in technology stars, timeless advice from technology stars, timeless advice from technology stars, timeless advice from an angel investor turned 100,000 into an angel investor turned 100,000 into an angel investor turned 100,000 into 100 million. [laughter] These reviews 100 million. [laughter] These reviews 100 million. [laughter] These reviews would then be the basis of the AI. So I would then be the basis of the AI. So I would then be the basis of the AI. So I guess I would have to be okay. But this guess I would have to be okay. But this guess I would have to be okay. But this like, you know, this eloquently brash like, you know, this eloquently brash like, you know, this eloquently brash blueprint for angel investing, that blueprint for angel investing, that blueprint for angel investing, that verified uh review. Yes, I would be fine verified uh review. Yes, I would be fine verified uh review. Yes, I would be fine with that with that with that >> fivestar review being in there. >> fivestar review being in there. >> fivestar review being in there. >> Really? >> Really? >> Really? >> You now have no knowledge. You now have >> You now have no knowledge. You now have >> You now have no knowledge. You now have no knowledge of the above no knowledge of the above no knowledge of the above [laughter] [laughter] [laughter] 1498 reviews did you not write? Three. 1498 reviews did you not write? Three. 1498 reviews did you not write? Three. Uh, actually, I'll tell you the secret. Uh, actually, I'll tell you the secret. Uh, actually, I'll tell you the secret. When you guys actually get asked to When you guys actually get asked to When you guys actually get asked to write a book or any of you have the write a book or any of you have the write a book or any of you have the capability of completing a book. Yeah, capability of completing a book. Yeah, capability of completing a book. Yeah, because I because I'm 97 years old because I because I'm 97 years old because I because I'm 97 years old living in the living in the living in the >> What AI agent did have [laughter] you >> What AI agent did have [laughter] you >> What AI agent did have [laughter] you used to what bot what bot did you use in used to what bot what bot did you use in used to what bot what bot did you use in 2017? 2017? 2017? >> Now we know where he pointed that stupid >> Now we know where he pointed that stupid >> Now we know where he pointed that stupid open source AI slop cannon that he's open source AI slop cannon that he's open source AI slop cannon that he's built. [laughter] >> I verified the purchase too. >> I verified the purchase too. Freeberg, [laughter] you make a great Freeberg, [laughter] you make a great Freeberg, [laughter] you make a great point. You make a Oh, there it is. point. You make a Oh, there it is. point. You make a Oh, there it is. Jennifer, great American novel. Jennifer, great American novel. Jennifer, great American novel. Practical wisdom for mastering ambition, Practical wisdom for mastering ambition, Practical wisdom for mastering ambition, building resilience and winning at life building resilience and winning at life building resilience and winning at life work and innovation. work and innovation. work and innovation. >> Master virtue signaling master virtue >> Master virtue signaling master virtue >> Master virtue signaling master virtue [laughter] signaling. [laughter] signaling. [laughter] signaling. >> Incredible. Incredible. >> Incredible. Incredible. >> Incredible. Incredible. >> That's beautiful. That is beautiful. But >> That's beautiful. That is beautiful. But >> That's beautiful. That is beautiful. But JL, I mean, this is my point. Knowledge JL, I mean, this is my point. Knowledge JL, I mean, this is my point. Knowledge can't be contained. It's diffuse. And so can't be contained. It's diffuse. And so can't be contained. It's diffuse. And so the form of copyright is very clear. The the form of copyright is very clear. The the form of copyright is very clear. The case law and copyright's very clear. I case law and copyright's very clear. I case law and copyright's very clear. I cannot lift text out of your book, cannot lift text out of your book, cannot lift text out of your book, reprint it, and claim it as my own. That reprint it, and claim it as my own. That reprint it, and claim it as my own. That is a violation of copyright. But my is a violation of copyright. But my is a violation of copyright. But my reading of your book, my reading of the reading of your book, my reading of the reading of your book, my reading of the reviews of your book, the diffusion of reviews of your book, the diffusion of reviews of your book, the diffusion of the knowledge that arises from your the knowledge that arises from your the knowledge that arises from your book, that is ultimately going to lead book, that is ultimately going to lead book, that is ultimately going to lead to some abstract transformation of to some abstract transformation of to some abstract transformation of knowledge into a new output that someone knowledge into a new output that someone knowledge into a new output that someone might read. And I think it is very might read. And I think it is very might read. And I think it is very unlikely that we will find ourselves in unlikely that we will find ourselves in unlikely that we will find ourselves in a place where the idea that knowledge a place where the idea that knowledge a place where the idea that knowledge transferred digitally, processed transferred digitally, processed transferred digitally, processed digitally, and turned into other content digitally, and turned into other content digitally, and turned into other content is going to end up violating copyright is going to end up violating copyright is going to end up violating copyright in I understand your position. There are in I understand your position. There are in I understand your position. There are workarounds. Obviously, we've always had workarounds. Obviously, we've always had workarounds. Obviously, we've always had cliff notes, right? So, if a book became cliff notes, right? So, if a book became cliff notes, right? So, if a book became good enough, somebody could write the good enough, somebody could write the good enough, somebody could write the cliff notes of it. You can't stop that. cliff notes of it. You can't stop that. cliff notes of it. You can't stop that. There's a four-part test for this. We There's a four-part test for this. We There's a four-part test for this. We we've talked about this for three years we've talked about this for three years we've talked about this for three years here on the pod. What I'd say is here on the pod. What I'd say is here on the pod. What I'd say is American companies should take 10% of American companies should take 10% of American companies should take 10% of their revenue, if they're building these their revenue, if they're building these their revenue, if they're building these models, and do splashy cashy and do models, and do splashy cashy and do models, and do splashy cashy and do settlements. And that's exactly what's settlements. And that's exactly what's settlements. And that's exactly what's happening. If you're a copyright owner, happening. If you're a copyright owner, happening. If you're a copyright owner, you should study what the music industry you should study what the music industry you should study what the music industry does. They are raid dogs and they will does. They are raid dogs and they will does. They are raid dogs and they will fight tooth and nail and keep you in the fight tooth and nail and keep you in the fight tooth and nail and keep you in the courts until you submit and make a courts until you submit and make a courts until you submit and make a settlement and agree that you're settlement and agree that you're settlement and agree that you're licensing it and then that gives them licensing it and then that gives them licensing it and then that gives them that case law and that settlement to go that case law and that settlement to go that case law and that settlement to go to the next person and the next person to the next person and the next person to the next person and the next person and the next person and that's why and the next person and that's why and the next person and that's why they've been able to successfully defend they've been able to successfully defend they've been able to successfully defend it and then if you're competing with me it and then if you're competing with me it and then if you're competing with me that becomes the issue. So if you said that becomes the issue. So if you said that becomes the issue. So if you said hey what's his book about and what do hey what's his book about and what do hey what's his book about and what do people think about it what are the best people think about it what are the best people think about it what are the best parts of it and that comes from the parts of it and that comes from the parts of it and that comes from the reviews okay fine fair enough. The reviews okay fine fair enough. The reviews okay fine fair enough. The problem is and I and I'll I'll share problem is and I and I'll I'll share problem is and I and I'll I'll share with you there's been some other with you there's been some other with you there's been some other lawsuits here that are making the way lawsuits here that are making the way lawsuits here that are making the way through courts. What's going to be the through courts. What's going to be the through courts. What's going to be the problem is the application level layer problem is the application level layer problem is the application level layer that you talked about Shimoth as they go that you talked about Shimoth as they go that you talked about Shimoth as they go into the application layer and they use into the application layer and they use into the application layer and they use this. There's a there's a big court case this. There's a there's a big court case this. There's a there's a big court case here. Obviously you know about some of here. Obviously you know about some of here. Obviously you know about some of these but there are now other cases. these but there are now other cases. these but there are now other cases. There are music cases. There's a New There are music cases. There's a New There are music cases. There's a New York Times case. The one that's kind of York Times case. The one that's kind of York Times case. The one that's kind of interesting is Thompson Reuters versus interesting is Thompson Reuters versus interesting is Thompson Reuters versus Ross. This is a uh final judgment on AI Ross. This is a uh final judgment on AI Ross. This is a uh final judgment on AI uh training copyright. There's a company uh training copyright. There's a company uh training copyright. There's a company called Weslaw. They're like Lexus Nexus called Weslaw. They're like Lexus Nexus called Weslaw. They're like Lexus Nexus and people have been trying to claim and people have been trying to claim and people have been trying to claim that they can train on the outputs of that they can train on the outputs of that they can train on the outputs of something like uh Westlaw. And when something like uh Westlaw. And when something like uh Westlaw. And when you're in the same business as me that you're in the same business as me that you're in the same business as me that has a special place in copyright law has a special place in copyright law has a special place in copyright law because I have you're you're infringing because I have you're you're infringing because I have you're you're infringing on my ability to use my copyright. on my ability to use my copyright. on my ability to use my copyright. And your argument I think Fraber holds And your argument I think Fraber holds And your argument I think Fraber holds up that it wouldn't be it wouldn't stop up that it wouldn't be it wouldn't stop up that it wouldn't be it wouldn't stop somebody from buying the book. But the somebody from buying the book. But the somebody from buying the book. But the second you are actually competing with second you are actually competing with second you are actually competing with me like directly that's when these me like directly that's when these me like directly that's when these things have problems. And that's why I things have problems. And that's why I things have problems. And that's why I think the music industry is going to win think the music industry is going to win think the music industry is going to win and and some other places are going to and and some other places are going to and and some other places are going to win. But listen, this is win. But listen, this is win. But listen, this is >> brand new territory. These lawsuits are >> brand new territory. These lawsuits are >> brand new territory. These lawsuits are brand new territory and IP law does not brand new territory and IP law does not brand new territory and IP law does not >> actually have the nuance yet. So we're >> actually have the nuance yet. So we're >> actually have the nuance yet. So we're going to as a society have to make a going to as a society have to make a going to as a society have to make a decision here on what is fair. I suggest decision here on what is fair. I suggest decision here on what is fair. I suggest just like the self-regulatory group that just like the self-regulatory group that just like the self-regulatory group that we talked about last week, all the AI we talked about last week, all the AI we talked about last week, all the AI companies should get together, take 10% companies should get together, take 10% companies should get together, take 10% of your revenue, put it in a pool, and of your revenue, put it in a pool, and of your revenue, put it in a pool, and keep paying the people and getting keep paying the people and getting keep paying the people and getting permission from them so you can get permission from them so you can get permission from them so you can get updates on the content so you get the updates on the content so you get the updates on the content so you get the next book so you get the next New York next book so you get the next New York next book so you get the next New York Times story, the next Reuters story. Times story, the next Reuters story. Times story, the next Reuters story. >> 10% is not going to satisfy the rabbit >> 10% is not going to satisfy the rabbit >> 10% is not going to satisfy the rabbit dogs, let me tell you. They're going to dogs, let me tell you. They're going to dogs, let me tell you. They're going to go for 100%. Now, JK, let me here's a go for 100%. Now, JK, let me here's a go for 100%. Now, JK, let me here's a question I want to ask you. Yes. Given question I want to ask you. Yes. Given question I want to ask you. Yes. Given that the fair use doctrine is not a that the fair use doctrine is not a that the fair use doctrine is not a decided matter yet, given that anthropic decided matter yet, given that anthropic decided matter yet, given that anthropic and open AI are embroiled in huge and open AI are embroiled in huge and open AI are embroiled in huge lawsuits against very well financed lawsuits against very well financed lawsuits against very well financed content creators and those communities content creators and those communities content creators and those communities and the outcome is indeterminate and and the outcome is indeterminate and and the outcome is indeterminate and there's billions of dollars at stake, there's billions of dollars at stake, there's billions of dollars at stake, maybe even their entire product at maybe even their entire product at maybe even their entire product at stake. Do you think that they have stake. Do you think that they have stake. Do you think that they have potentially made a fatal mistake by potentially made a fatal mistake by potentially made a fatal mistake by arguing that distilling content against arguing that distilling content against arguing that distilling content against the wishes of its creator is IP theft? the wishes of its creator is IP theft? the wishes of its creator is IP theft? >> Do you see what I'm saying? >> Do you see what I'm saying? >> Do you see what I'm saying? >> Yes. >> Yes. >> Yes. >> Like, is this potentially a fatal >> Like, is this potentially a fatal >> Like, is this potentially a fatal mistake? See, here's what they could mistake? See, here's what they could mistake? See, here's what they could have done. have done. have done. >> Well, you would bring that to the >> Well, you would bring that to the >> Well, you would bring that to the Supreme Court and you say, "Hey, Supreme Court and you say, "Hey, Supreme Court and you say, "Hey, listen." listen." listen." >> But here's what they could have done. >> But here's what they could have done. >> But here's what they could have done. What Anthropic could have done is they What Anthropic could have done is they What Anthropic could have done is they could have said, "Listen, we have these could have said, "Listen, we have these could have said, "Listen, we have these Chinese companies are creating fake Chinese companies are creating fake Chinese companies are creating fake accounts and they're using proxies to accounts and they're using proxies to accounts and they're using proxies to basically use our product in violation basically use our product in violation basically use our product in violation of our terms of service." Now, of our terms of service." Now, of our terms of service." Now, >> using those model outputs is not IP >> using those model outputs is not IP >> using those model outputs is not IP theft because it's fair use. However, theft because it's fair use. However, theft because it's fair use. However, it's a deceptive business practice for it's a deceptive business practice for it's a deceptive business practice for these guys to lie about who they are these guys to lie about who they are these guys to lie about who they are when they set up accounts at scale. And when they set up accounts at scale. And when they set up accounts at scale. And so, they're engaged in a deceptive so, they're engaged in a deceptive so, they're engaged in a deceptive business practice. and we're going to do business practice. and we're going to do business practice. and we're going to do everything we can to stop that, but we'd everything we can to stop that, but we'd everything we can to stop that, but we'd like the government's help in stopping like the government's help in stopping like the government's help in stopping that, too. However, we not we're not that, too. However, we not we're not that, too. However, we not we're not saying anything about IP theft. saying anything about IP theft. saying anything about IP theft. >> Yeah. >> Yeah. >> Yeah. >> Wouldn't that be the more nuanced >> Wouldn't that be the more nuanced >> Wouldn't that be the more nuanced approach? Of course, because I think approach? Of course, because I think approach? Of course, because I think that they're on the verge of being that they're on the verge of being that they're on the verge of being hoisted on their own petard here. hoisted on their own petard here. hoisted on their own petard here. >> Yeah. I mean, it's a cell I think that >> Yeah. I mean, it's a cell I think that >> Yeah. I mean, it's a cell I think that kids call it a cell phone, right? Like kids call it a cell phone, right? Like kids call it a cell phone, right? Like you basically you basically you basically >> it's just a classic cell phone. And you >> it's just a classic cell phone. And you >> it's just a classic cell phone. And you know, in most of these cases, know, in most of these cases, know, in most of these cases, settlements happen. So again, if you settlements happen. So again, if you settlements happen. So again, if you just look at the music industry, the just look at the music industry, the just look at the music industry, the newspapers, the magazines, and some of newspapers, the magazines, and some of newspapers, the magazines, and some of those folks and book authors, they've those folks and book authors, they've those folks and book authors, they've tend to be very meek. There's a new tend to be very meek. There's a new tend to be very meek. There's a new trend happening now, Friedberg, they're trend happening now, Friedberg, they're trend happening now, Friedberg, they're a lot of content providers are saying to a lot of content providers are saying to a lot of content providers are saying to Google, take us out of the index because Google, take us out of the index because Google, take us out of the index because Google has one bot and that bot does the Google has one bot and that bot does the Google has one bot and that bot does the Google crawl and that bot also does the Google crawl and that bot also does the Google crawl and that bot also does the AI crawl. And what the industry is AI crawl. And what the industry is AI crawl. And what the industry is saying is, hey, split that up. I want to saying is, hey, split that up. I want to saying is, hey, split that up. I want to be in Google, but I don't want to be be in Google, but I don't want to be be in Google, but I don't want to be indexed in AI. So people are now saying, indexed in AI. So people are now saying, indexed in AI. So people are now saying, hey, we'll take you out of the index. hey, we'll take you out of the index. hey, we'll take you out of the index. which Rupert Murdo got right. If all the which Rupert Murdo got right. If all the which Rupert Murdo got right. If all the newspapers said collectively, "Do not newspapers said collectively, "Do not newspapers said collectively, "Do not index us, Google. We're no indexed, that index us, Google. We're no indexed, that index us, Google. We're no indexed, that would have made Google come to the table would have made Google come to the table would have made Google come to the table and give them a royalty and give them and give them a royalty and give them and give them a royalty and give them some money for being indexed." some money for being indexed." some money for being indexed." >> I did that, dude. There was a there was >> I did that, dude. There was a there was >> I did that, dude. There was a there was a deal that happened, but it didn't it a deal that happened, but it didn't it a deal that happened, but it didn't it go the way you're describing. go the way you're describing. go the way you're describing. >> Well, cuz they didn't have a united >> Well, cuz they didn't have a united >> Well, cuz they didn't have a united front. Now, I think front. Now, I think front. Now, I think >> these guys wanted they wanted Google's >> these guys wanted they wanted Google's >> these guys wanted they wanted Google's user base. So, they ended up doing a user base. So, they ended up doing a user base. So, they ended up doing a deal where they had this like payw wall deal where they had this like payw wall deal where they had this like payw wall like exclusion rule whereas like you like exclusion rule whereas like you like exclusion rule whereas like you could show a certain number of free could show a certain number of free could show a certain number of free articles. There was a whole negotiated articles. There was a whole negotiated articles. There was a whole negotiated settlement. Well, I'm talking even long settlement. Well, I'm talking even long settlement. Well, I'm talking even long before that when the first index before that when the first index before that when the first index happened. But here's I you know I I I happened. But here's I you know I I I happened. But here's I you know I I I think we are on the cusp of a some type think we are on the cusp of a some type think we are on the cusp of a some type of a settlement getting done here. Uh of a settlement getting done here. Uh of a settlement getting done here. Uh and I think that would be good for and I think that would be good for and I think that would be good for America to take a leadership position in America to take a leadership position in America to take a leadership position in that because you do want to keep getting that because you do want to keep getting that because you do want to keep getting that. But all of these content that. But all of these content that. But all of these content companies, they should be meeting with companies, they should be meeting with companies, they should be meeting with each other, the music industry, the New each other, the music industry, the New each other, the music industry, the New York Times, all of them to stop their York Times, all of them to stop their York Times, all of them to stop their content from getting used without their content from getting used without their content from getting used without their permission and from competing with them. permission and from competing with them. permission and from competing with them. That's my point. You know, you you only That's my point. You know, you you only That's my point. You know, you you only get a settlement when both sides can get a settlement when both sides can get a settlement when both sides can agree. And it seems to me that if you're agree. And it seems to me that if you're agree. And it seems to me that if you're one of these content creator lobbies and one of these content creator lobbies and one of these content creator lobbies and you see that Anthropic has just told the you see that Anthropic has just told the you see that Anthropic has just told the government that training on a creator's government that training on a creator's government that training on a creator's output without their consent is IP output without their consent is IP output without their consent is IP theft. theft. theft. >> Yeah. >> Yeah. >> Yeah. >> They have now basically confessed to >> They have now basically confessed to >> They have now basically confessed to their entire product being stolen. And their entire product being stolen. And their entire product being stolen. And it seems to me that why wouldn't the it seems to me that why wouldn't the it seems to me that why wouldn't the content creators now assert that they're content creators now assert that they're content creators now assert that they're entitled to own 100% of anthropics entitled to own 100% of anthropics entitled to own 100% of anthropics revenue? It seems to me that this could revenue? It seems to me that this could revenue? It seems to me that this could be a bridge too far that you know that be a bridge too far that you know that be a bridge too far that you know that that they're so good at regulatory that they're so good at regulatory that they're so good at regulatory capture. They're so good at making these capture. They're so good at making these capture. They're so good at making these arguments and getting the government arguments and getting the government arguments and getting the government involved to create new regulations to involved to create new regulations to involved to create new regulations to protect them. But I wonder if this was protect them. But I wonder if this was protect them. But I wonder if this was just a little bit too cute. And again, just a little bit too cute. And again, just a little bit too cute. And again, if they just positioned it slightly if they just positioned it slightly if they just positioned it slightly differently, if they said, "Look, these differently, if they said, "Look, these differently, if they said, "Look, these Chinese companies are creating fake Chinese companies are creating fake Chinese companies are creating fake accounts. That's a deceptive business accounts. That's a deceptive business accounts. That's a deceptive business practice. We're not saying this is IP practice. We're not saying this is IP practice. We're not saying this is IP theft, right? But instead they said IP theft, right? But instead they said IP theft, right? But instead they said IP theft and now the whole startup theft and now the whole startup theft and now the whole startup community is activated. You saw that you community is activated. You saw that you community is activated. You saw that you know Gary Tan and 200 startups wrote know Gary Tan and 200 startups wrote know Gary Tan and 200 startups wrote that letter. Why? Because they know that that letter. Why? Because they know that that letter. Why? Because they know that if this IP theft thing sticks that all if this IP theft thing sticks that all if this IP theft thing sticks that all derivative works of Chinese models are derivative works of Chinese models are derivative works of Chinese models are tainted now too. So that means the whole tainted now too. So that means the whole tainted now too. So that means the whole startup ecosystem is now at risk. startup ecosystem is now at risk. startup ecosystem is now at risk. >> Yeah. >> Yeah. >> Yeah. >> So I just wonder if these guys have just >> So I just wonder if these guys have just >> So I just wonder if these guys have just gone it's just all a bridge too far. I gone it's just all a bridge too far. I gone it's just all a bridge too far. I mean, if you go to Washington, mean, if you go to Washington, mean, if you go to Washington, >> Yeah. and you lay down with the dogs, >> Yeah. and you lay down with the dogs, >> Yeah. and you lay down with the dogs, don't be surprised if you wake up with don't be surprised if you wake up with don't be surprised if you wake up with the fleas. Like, you they decided to the fleas. Like, you they decided to the fleas. Like, you they decided to engage in this, you know. So, they they engage in this, you know. So, they they engage in this, you know. So, they they may have poked the tiger. Um I think I may have poked the tiger. Um I think I may have poked the tiger. Um I think I think it's pretty accurate. Oh, by the think it's pretty accurate. Oh, by the think it's pretty accurate. Oh, by the way, uh the publishing schedule for uh way, uh the publishing schedule for uh way, uh the publishing schedule for uh 2027 was released. We have some new 2027 was released. We have some new 2027 was released. We have some new books coming. You heard mine, Jen, you books coming. You heard mine, Jen, you books coming. You heard mine, Jen, you flecting coming to you now. Ferrari on flecting coming to you now. Ferrari on flecting coming to you now. Ferrari on my wrist. How to win at life and afford my wrist. How to win at life and afford my wrist. How to win at life and afford a [laughter] $250,000 watch from David a [laughter] $250,000 watch from David a [laughter] $250,000 watch from David Sax. Sax. Sax. >> Oh my god. >> Oh my god. >> Oh my god. >> This is Pompic Sachs. [laughter] >> This is Pompic Sachs. [laughter] >> This is Pompic Sachs. [laughter] >> We're going to get need to get that >> We're going to get need to get that >> We're going to get need to get that done. Here it is. The fight to save done. Here it is. The fight to save done. Here it is. The fight to save America: Destroying Socialism, Shrinking America: Destroying Socialism, Shrinking America: Destroying Socialism, Shrinking the Debt, and Winning AI by David. the Debt, and Winning AI by David. the Debt, and Winning AI by David. >> Yeah, it's a pretty good one. I think >> Yeah, it's a pretty good one. I think >> Yeah, it's a pretty good one. I think this is our new all-in uh here it is. this is our new all-in uh here it is. this is our new all-in uh here it is. Chama polyatina, [laughter] Chama polyatina, [laughter] Chama polyatina, [laughter] a sexual Italian summer. a sexual Italian summer. a sexual Italian summer. It's a romance novel. This is the only It's a romance novel. This is the only It's a romance novel. This is the only person who [clears throat] decided to do person who [clears throat] decided to do person who [clears throat] decided to do fiction. This is fiction. fiction. This is fiction. fiction. This is fiction. >> It's fiction. It's fictional. Chimat, >> It's fiction. It's fictional. Chimat, >> It's fiction. It's fictional. Chimat, [laughter] [laughter] [laughter] >> I got Traumat's uh non-fiction novel >> I got Traumat's uh non-fiction novel >> I got Traumat's uh non-fiction novel also. also. also. >> Oh, you have his non-fiction as well. >> Oh, you have his non-fiction as well. >> Oh, you have his non-fiction as well. Here it is. Here it is. [clears throat] Here it is. Here it is. [clears throat] Here it is. Here it is. [clears throat] Enterprise sales. Chimat dystopia. How Enterprise sales. Chimat dystopia. How Enterprise sales. Chimat dystopia. How my software startup [laughter] affects my software startup [laughter] affects my software startup [laughter] affects my Italian summer. my Italian summer. my Italian summer. >> There you go. >> There you go. >> There you go. >> It's great. This is great. Oh my god. >> It's great. This is great. Oh my god. >> It's great. This is great. Oh my god. Wow. That's coming from the allin Wow. That's coming from the allin Wow. That's coming from the allin >> the IT guy in Milan. >> the IT guy in Milan. >> the IT guy in Milan. >> Absolutely. This is This is coming from >> Absolutely. This is This is coming from >> Absolutely. This is This is coming from Allin uh books. It's our new publishing Allin uh books. It's our new publishing Allin uh books. It's our new publishing label coming in 2027. We'll also have label coming in 2027. We'll also have label coming in 2027. We'll also have the Brad Gersonner, Bill Gurley, Elon the Brad Gersonner, Bill Gurley, Elon the Brad Gersonner, Bill Gurley, Elon Musk, and other titles coming. So, we'll Musk, and other titles coming. So, we'll Musk, and other titles coming. So, we'll have those on future episodes. More more have those on future episodes. More more have those on future episodes. More more titles coming. Breaking topic here. titles coming. Breaking topic here. titles coming. Breaking topic here. Google and Tesla shared their results Google and Tesla shared their results Google and Tesla shared their results today. Had a lot of talk about capital today. Had a lot of talk about capital today. Had a lot of talk about capital expenditures. Google blew the doors off expenditures. Google blew the doors off expenditures. Google blew the doors off of their um of their um of their um >> blew the doors off. I mean, >> blew the doors off. I mean, >> blew the doors off. I mean, >> it was insane and outrageous. And they >> it was insane and outrageous. And they >> it was insane and outrageous. And they were down like 7 to 10%. were down like 7 to 10%. were down like 7 to 10%. Google Cloud growing Google Cloud growing Google Cloud growing >> because of their cash% >> because of their cash% >> because of their cash% year-over-year. year-over-year. year-over-year. >> Yeah, because of the cash flow numbers. >> Yeah, because of the cash flow numbers. >> Yeah, because of the cash flow numbers. And now is on a hundred billion dollar And now is on a hundred billion dollar And now is on a hundred billion dollar run rate. That's but one business. run rate. That's but one business. run rate. That's but one business. Tesla's capex surged 140% year-over-year Tesla's capex surged 140% year-over-year Tesla's capex surged 140% year-over-year and they expect 25 billion in capex. and they expect 25 billion in capex. and they expect 25 billion in capex. Google's capex forecast from 195 to 205 Google's capex forecast from 195 to 205 Google's capex forecast from 195 to 205 billion this year. So next year will be billion this year. So next year will be billion this year. So next year will be even higher. Tesla down 14, Google down even higher. Tesla down 14, Google down even higher. Tesla down 14, Google down 7% of taping. Who knows? Um but both 7% of taping. Who knows? Um but both 7% of taping. Who knows? Um but both reported negative free cash flow. In reported negative free cash flow. In reported negative free cash flow. In other words, the amount of cash in the other words, the amount of cash in the other words, the amount of cash in the bank went down instead of up. And for bank went down instead of up. And for bank went down instead of up. And for Google, that was the first time ever. Google, that was the first time ever. Google, that was the first time ever. IPO update, uh SpaceX down 30% from its IPO update, uh SpaceX down 30% from its IPO update, uh SpaceX down 30% from its day one closing price, now trading 1.5 day one closing price, now trading 1.5 day one closing price, now trading 1.5 trillion. A lot of pressure on the trillion. A lot of pressure on the trillion. A lot of pressure on the stock. We'll talk about that as well. stock. We'll talk about that as well. stock. We'll talk about that as well. Obviously, they went public at 2 Obviously, they went public at 2 Obviously, they went public at 2 trillion. Got a big pop, uh the Elon trillion. Got a big pop, uh the Elon trillion. Got a big pop, uh the Elon pop, and um there could be uh more pop, and um there could be uh more pop, and um there could be uh more downward pressure or it could have found downward pressure or it could have found downward pressure or it could have found a bottom. You know, you never know with a bottom. You know, you never know with a bottom. You know, you never know with these things. This is unprecedented these things. This is unprecedented these things. This is unprecedented territory. We've never had an IPO this territory. We've never had an IPO this territory. We've never had an IPO this big, but some lockups. Here's the chart. big, but some lockups. Here's the chart. big, but some lockups. Here's the chart. Bunch of lockups are are happening at Bunch of lockups are are happening at Bunch of lockups are are happening at different staged intervals. So, let's um different staged intervals. So, let's um different staged intervals. So, let's um Chimath Chimath Chimath talk a little bit. Here's your SpaceX. I talk a little bit. Here's your SpaceX. I talk a little bit. Here's your SpaceX. I guess capex chimoff is being built out guess capex chimoff is being built out guess capex chimoff is being built out obviously for AI and there is the case obviously for AI and there is the case obviously for AI and there is the case of open AI spending on capex in order to of open AI spending on capex in order to of open AI spending on capex in order to provide their service but then there's provide their service but then there's provide their service but then there's also Google which is making these capex also Google which is making these capex also Google which is making these capex investments to resell it as part of investments to resell it as part of investments to resell it as part of Google cloud incredible product and then Google cloud incredible product and then Google cloud incredible product and then on the other side they're using it for on the other side they're using it for on the other side they're using it for their own obviously infrastructure and their own obviously infrastructure and their own obviously infrastructure and their business is just growing like their business is just growing like their business is just growing like crazy whether it's YouTube or Google crazy whether it's YouTube or Google crazy whether it's YouTube or Google cloud or even search is still growing So cloud or even search is still growing So cloud or even search is still growing So I looked at this and I said, "Well, this I looked at this and I said, "Well, this I looked at this and I said, "Well, this seems like a really good use of capital seems like a really good use of capital seems like a really good use of capital instead of just giving dividends like instead of just giving dividends like instead of just giving dividends like building out this infrastructure to me building out this infrastructure to me building out this infrastructure to me sounds like an investment in the sounds like an investment in the sounds like an investment in the future." Seems like a buy signal to me, future." Seems like a buy signal to me, future." Seems like a buy signal to me, but the market is obviously but the market is obviously but the market is obviously disappointed. Why is the market disappointed. Why is the market disappointed. Why is the market disappointed? Is it a buy signal for disappointed? Is it a buy signal for disappointed? Is it a buy signal for you? Is it make you more uh excited you? Is it make you more uh excited you? Is it make you more uh excited about management and what Sundar and about management and what Sundar and about management and what Sundar and Sergey are doing over there? Or does it Sergey are doing over there? Or does it Sergey are doing over there? Or does it make you concerned? Yeah, make you concerned? Yeah, make you concerned? Yeah, >> I'm more bullish. Do you know what >> I'm more bullish. Do you know what >> I'm more bullish. Do you know what Google's 25y year average return on Google's 25y year average return on Google's 25y year average return on invested capital has been since going invested capital has been since going invested capital has been since going public? public? public? >> Take a guess. >> Take a guess. >> Take a guess. >> 17%. >> 17%. >> 17%. >> No. >> No. >> No. 21%. 21%. 21%. >> No. >> No. >> No. 23%. 23%. 23%. >> No. >> No. >> No. >> 29%. >> 29%. >> 29%. >> Prices, right? >> Prices, right? >> Prices, right? >> 35%. >> 35%. >> 35%. >> 32%. >> 32%. >> 32%. >> Jesus. >> Jesus. >> Jesus. >> Okay. This is when you are a machine and >> Okay. This is when you are a machine and >> Okay. This is when you are a machine and a group of people and a business model a group of people and a business model a group of people and a business model that compounds money at 32% that compounds money at 32% that compounds money at 32% over 20 year average. You give these over 20 year average. You give these over 20 year average. You give these guys the benefit of the doubt. These are guys the benefit of the doubt. These are guys the benefit of the doubt. These are not people that are flying fast and not people that are flying fast and not people that are flying fast and loose. They are methodically investing loose. They are methodically investing loose. They are methodically investing in their edge. And this is I go back to in their edge. And this is I go back to in their edge. And this is I go back to the first conversation. They are going the first conversation. They are going the first conversation. They are going to get massively rewarded. You know, to get massively rewarded. You know, to get massively rewarded. You know, there was a lot of Twitter chatter or ex there was a lot of Twitter chatter or ex there was a lot of Twitter chatter or ex chatter about Gemini usage and was it chatter about Gemini usage and was it chatter about Gemini usage and was it real or was it not real and is their real or was it not real and is their real or was it not real and is their revenue growth really coming from AI revenue growth really coming from AI revenue growth really coming from AI enabled workflows? It's all malarkey. enabled workflows? It's all malarkey. enabled workflows? It's all malarkey. Google has an incredible search Google has an incredible search Google has an incredible search experience. They've seem to be experience. They've seem to be experience. They've seem to be navigating this transition to use AI. navigating this transition to use AI. navigating this transition to use AI. It's been done very well. They have an It's been done very well. They have an It's been done very well. They have an incredible cloud business and they have incredible cloud business and they have incredible cloud business and they have an incredible silicon business. The best an incredible silicon business. The best an incredible silicon business. The best thing that can happen to them is 500 thing that can happen to them is 500 thing that can happen to them is 500 different models proliferate and they different models proliferate and they different models proliferate and they support all of them because they will support all of them because they will support all of them because they will make so much money at the silicon layer. make so much money at the silicon layer. make so much money at the silicon layer. They'll make so much money as the cloud They'll make so much money as the cloud They'll make so much money as the cloud provider and they'll find a bunch of provider and they'll find a bunch of provider and they'll find a bunch of apps including YouTube and other things apps including YouTube and other things apps including YouTube and other things to make money from because you use the to make money from because you use the to make money from because you use the AI to target ads better or to help make AI to target ads better or to help make AI to target ads better or to help make better content etc etc. better content etc etc. better content etc etc. >> Fragmentation's good for them. >> Fragmentation's good for them. >> Fragmentation's good for them. >> Oh, it's great for them. It's a >> Oh, it's great for them. It's a >> Oh, it's great for them. It's a compounding machine. I think the compounding machine. I think the compounding machine. I think the reaction, by the way, is because Jason, reaction, by the way, is because Jason, reaction, by the way, is because Jason, I saw a tweet from Ryan Peterson. I I saw a tweet from Ryan Peterson. I I saw a tweet from Ryan Peterson. I don't know if it's true, but he said don't know if it's true, but he said don't know if it's true, but he said Google will be spending 20% of this Google will be spending 20% of this Google will be spending 20% of this year's military budget in capex. So year's military budget in capex. So year's military budget in capex. So maybe what people are reacting to is maybe what people are reacting to is maybe what people are reacting to is just the scale of the investment they just the scale of the investment they just the scale of the investment they haven't seen. They're free cash flow haven't seen. They're free cash flow haven't seen. They're free cash flow negative for the first time since going negative for the first time since going negative for the first time since going public. So that obviously takes people public. So that obviously takes people public. So that obviously takes people by surprise, by surprise, by surprise, but they're in a huge investment period. but they're in a huge investment period. but they're in a huge investment period. And I think it'll pay off dividends even And I think it'll pay off dividends even And I think it'll pay off dividends even if they, as Freeberg's first guess was if they, as Freeberg's first guess was if they, as Freeberg's first guess was half the number. So even if they did half the number. So even if they did half the number. So even if they did half the number, they'd still be half the number, they'd still be half the number, they'd still be overachieving. overachieving. overachieving. Yeah. I mean, Freeberg, if you look at Yeah. I mean, Freeberg, if you look at Yeah. I mean, Freeberg, if you look at Apple, I think they bought back half Apple, I think they bought back half Apple, I think they bought back half their stock. They've given hundreds of their stock. They've given hundreds of their stock. They've given hundreds of billions of dollars back in profits. And billions of dollars back in profits. And billions of dollars back in profits. And gosh, it seems to me giving all this gosh, it seems to me giving all this gosh, it seems to me giving all this money back, buying back in the form of money back, buying back in the form of money back, buying back in the form of buying back your shares, you know, or or buying back your shares, you know, or or buying back your shares, you know, or or giving tons of dividends. giving tons of dividends. giving tons of dividends. I think it's great that tech companies I think it's great that tech companies I think it's great that tech companies are now saying, wait, we have something are now saying, wait, we have something are now saying, wait, we have something to invest in. The next big thing is to invest in. The next big thing is to invest in. The next big thing is ondemand intelligence and there is no ondemand intelligence and there is no ondemand intelligence and there is no upper bound for intelligence or I don't upper bound for intelligence or I don't upper bound for intelligence or I don't think anybody I certainly don't see you think anybody I certainly don't see you think anybody I certainly don't see you know anytime in the next 10 years people know anytime in the next 10 years people know anytime in the next 10 years people saying I got enough intelligence I've saying I got enough intelligence I've saying I got enough intelligence I've got it I've solved all the problems in got it I've solved all the problems in got it I've solved all the problems in the world I think they're going to keep the world I think they're going to keep the world I think they're going to keep wanting it so what do you think about wanting it so what do you think about wanting it so what do you think about this incredible change and you know this incredible change and you know this incredible change and you know basically a hundred billion $200 billion basically a hundred billion $200 billion basically a hundred billion $200 billion you know depending on the company just you know depending on the company just you know depending on the company just going into capex uh this seems like a going into capex uh this seems like a going into capex uh this seems like a savvy move right this is all of us think savvy move right this is all of us think savvy move right this is all of us think this is a good I mean, if you want to this is a good I mean, if you want to this is a good I mean, if you want to bet against Google's deployment of bet against Google's deployment of bet against Google's deployment of capital into infrastructure capital into infrastructure capital into infrastructure because you'd rather have them give you because you'd rather have them give you because you'd rather have them give you cash for your shares today, you cash for your shares today, you cash for your shares today, you shouldn't own the stock and someone else shouldn't own the stock and someone else shouldn't own the stock and someone else will buy it. I think Google wins in a will buy it. I think Google wins in a will buy it. I think Google wins in a lot of different ways. There's just so lot of different ways. There's just so lot of different ways. There's just so much to Google. There's the consumer much to Google. There's the consumer much to Google. There's the consumer business, which is a lot of stuff. business, which is a lot of stuff. business, which is a lot of stuff. There's also YouTube. There's also GCP. There's also YouTube. There's also GCP. There's also YouTube. There's also GCP. There's also this portfolio of other There's also this portfolio of other There's also this portfolio of other bets, which by the way includes 10% of bets, which by the way includes 10% of bets, which by the way includes 10% of SpaceX. SpaceX. SpaceX. and a good chunk of Anthropic that they and a good chunk of Anthropic that they and a good chunk of Anthropic that they own and so on. Whimo worth took a own and so on. Whimo worth took a own and so on. Whimo worth took a hundred billion dollar write up on hundred billion dollar write up on hundred billion dollar write up on Anthropic in the quarter. So they had a Anthropic in the quarter. So they had a Anthropic in the quarter. So they had a hundred billion dollar mark to market on hundred billion dollar mark to market on hundred billion dollar mark to market on on Anthropic just in one quarter and on Anthropic just in one quarter and on Anthropic just in one quarter and they own a piece of all these they own a piece of all these they own a piece of all these businesses. So there's a lot to like businesses. So there's a lot to like businesses. So there's a lot to like about Google, about Google, about Google, but just on GCP, but just on GCP, but just on GCP, I think that there's probably no better I think that there's probably no better I think that there's probably no better suited suited suited enterprise layer than GCP to take enterprise layer than GCP to take enterprise layer than GCP to take advantage of capturing value with AI for advantage of capturing value with AI for advantage of capturing value with AI for that enterprise setting. I think that enterprise setting. I think that enterprise setting. I think >> I think you're just so much better >> I think you're just so much better >> I think you're just so much better because you have so much of your because you have so much of your because you have so much of your enterprise data, all your email, your enterprise data, all your email, your enterprise data, all your email, your drive, a lot of information that you drive, a lot of information that you drive, a lot of information that you would want to have AI have knowledge of would want to have AI have knowledge of would want to have AI have knowledge of and have AI have access to to improve and have AI have access to to improve and have AI have access to to improve workplace productivity. And then they're workplace productivity. And then they're workplace productivity. And then they're model agnostic. I mean, you can run any model agnostic. I mean, you can run any model agnostic. I mean, you can run any model you want and you can run any model you want and you can run any model you want and you can run any workflow you want and you don't have to workflow you want and you don't have to workflow you want and you don't have to be tied in. A lot of other cloud service be tied in. A lot of other cloud service be tied in. A lot of other cloud service providers, cloud SAS, they're kind of providers, cloud SAS, they're kind of providers, cloud SAS, they're kind of model dependent. It's run in a certain model dependent. It's run in a certain model dependent. It's run in a certain way. With Google, you can better tune way. With Google, you can better tune way. With Google, you can better tune your system how you want to tune it. And your system how you want to tune it. And your system how you want to tune it. And what's the worst worst worst case what's the worst worst worst case what's the worst worst worst case scenario? The worst worst worst case scenario? The worst worst worst case scenario? The worst worst worst case scenario is they have the lowest cost scenario is they have the lowest cost scenario is they have the lowest cost infrastructure in the world to run other infrastructure in the world to run other infrastructure in the world to run other people's models as a service like Elon people's models as a service like Elon people's models as a service like Elon did with Grock with the Colossus did with Grock with the Colossus did with Grock with the Colossus >> Elon Web Services seems to be doing >> Elon Web Services seems to be doing >> Elon Web Services seems to be doing pretty great. pretty great. pretty great. >> And look at the return Elon's making on >> And look at the return Elon's making on >> And look at the return Elon's making on the Colossus install. So I think if the Colossus install. So I think if the Colossus install. So I think if Google in the worst case scenario, none Google in the worst case scenario, none Google in the worst case scenario, none of their application layer stuff works, of their application layer stuff works, of their application layer stuff works, none of their network effects work and none of their network effects work and none of their network effects work and they don't have any good models, they're they don't have any good models, they're they don't have any good models, they're still going to have the world's best still going to have the world's best still going to have the world's best infrastructure they can print cash on infrastructure they can print cash on infrastructure they can print cash on for years if you believe in AI. So if for years if you believe in AI. So if for years if you believe in AI. So if you want to bet AI, I think the best you want to bet AI, I think the best you want to bet AI, I think the best public market stock to own is Google. public market stock to own is Google. public market stock to own is Google. And by the way, you also get YouTube, And by the way, you also get YouTube, And by the way, you also get YouTube, you also get the consumer, you also get you also get the consumer, you also get you also get the consumer, you also get everything else. The multiple is kind of everything else. The multiple is kind of everything else. The multiple is kind of ridiculous right now. ridiculous right now. ridiculous right now. >> We talked about this on a previous >> We talked about this on a previous >> We talked about this on a previous issue. I I think Chimath and you and I issue. I I think Chimath and you and I issue. I I think Chimath and you and I were talking about like what Apple were talking about like what Apple were talking about like what Apple should do next and I I think we both should do next and I I think we both should do next and I I think we both came to the conclusion it's like why not came to the conclusion it's like why not came to the conclusion it's like why not have Apple web services they have such have Apple web services they have such have Apple web services they have such great relationships with developers they great relationships with developers they great relationships with developers they have the app store they have this deep have the app store they have this deep have the app store they have this deep developer it's not so easy because you developer it's not so easy because you developer it's not so easy because you have to build a cloud service provider have to build a cloud service provider have to build a cloud service provider you have to build some critical you have to build some critical you have to build some critical infrastructure it's taken Amazon infrastructure it's taken Amazon infrastructure it's taken Amazon >> call it 17 years to perfect it >> call it 17 years to perfect it >> call it 17 years to perfect it >> it's taken Google >> it's taken Google >> it's taken Google call it 12 or 13 years to mostly catch call it 12 or 13 years to mostly catch call it 12 or 13 years to mostly catch up. But the minute that you sign up to up. But the minute that you sign up to up. But the minute that you sign up to be a web provider, Jason, and a cloud be a web provider, Jason, and a cloud be a web provider, Jason, and a cloud service provider, what you're really service provider, what you're really service provider, what you're really signing up for is 59s of reliability and signing up for is 59s of reliability and signing up for is 59s of reliability and uptime. And that is just extremely uptime. And that is just extremely uptime. And that is just extremely expensive. Getting to the first two expensive. Getting to the first two expensive. Getting to the first two nines, you know, 99% uptime. If you're nines, you know, 99% uptime. If you're nines, you know, 99% uptime. If you're hosting something for a pharma company hosting something for a pharma company hosting something for a pharma company or a defense company, you can probably or a defense company, you can probably or a defense company, you can probably do it for relatively cheaply. Getting to do it for relatively cheaply. Getting to do it for relatively cheaply. Getting to the third nine, 99.9 probably cost you the third nine, 99.9 probably cost you the third nine, 99.9 probably cost you in the billions. Getting to the fourth in the billions. Getting to the fourth in the billions. Getting to the fourth nine costs the tens of billions, but nine costs the tens of billions, but nine costs the tens of billions, but getting to that fifth nine costs getting to that fifth nine costs getting to that fifth nine costs hundreds of billions. And that takes a hundreds of billions. And that takes a hundreds of billions. And that takes a real investment and real technical real investment and real technical real investment and real technical skill, and there's only three games in skill, and there's only three games in skill, and there's only three games in town. town. town. >> Yeah, I think Tim Cook's not the guy to >> Yeah, I think Tim Cook's not the guy to >> Yeah, I think Tim Cook's not the guy to do it, but this new CEO might be uh do it, but this new CEO might be uh do it, but this new CEO might be uh since he's an engineer, but they've since he's an engineer, but they've since he's an engineer, but they've returned in the last decade. returned in the last decade. returned in the last decade. >> They could buy 900 billion, 755 in >> They could buy 900 billion, 755 in >> They could buy 900 billion, 755 in buybacks and 140 billion sachs in buybacks and 140 billion sachs in buybacks and 140 billion sachs in dividends. Just let that sink in. 900 dividends. Just let that sink in. 900 dividends. Just let that sink in. 900 billion if they had invested that in billion if they had invested that in billion if they had invested that in Anthropic and SpaceX and other things. Anthropic and SpaceX and other things. Anthropic and SpaceX and other things. They just could have found some good They just could have found some good They just could have found some good uses for that money. But Sax, any uses for that money. But Sax, any uses for that money. But Sax, any thoughts here on what's happen? thoughts here on what's happen? thoughts here on what's happen? >> Who's to say? Sorry, but who's to say >> Who's to say? Sorry, but who's to say >> Who's to say? Sorry, but who's to say that the investors that got that money that the investors that got that money that the investors that got that money didn't find a good use for it? didn't find a good use for it? didn't find a good use for it? >> Oh, yeah. So, on society level, but I >> Oh, yeah. So, on society level, but I >> Oh, yeah. So, on society level, but I just think Apple could have been more just think Apple could have been more just think Apple could have been more ambitious if they just spent half that ambitious if they just spent half that ambitious if they just spent half that money instead of on buybacks and money instead of on buybacks and money instead of on buybacks and dividends on creating new products and dividends on creating new products and dividends on creating new products and actually releasing their car, maybe actually releasing their car, maybe actually releasing their car, maybe buying some interesting companies. I buying some interesting companies. I buying some interesting companies. I think they think they think they >> I think it was very much a do no harm >> I think it was very much a do no harm >> I think it was very much a do no harm capital allocation strategy which worked capital allocation strategy which worked capital allocation strategy which worked for the stock. for the stock. for the stock. >> It's going to be really interesting to >> It's going to be really interesting to >> It's going to be really interesting to see if John Turners flips the script. see if John Turners flips the script. see if John Turners flips the script. >> I think he does. I think he's going to >> I think he does. I think he's going to >> I think he does. I think he's going to be like engineer guy and yeah. All be like engineer guy and yeah. All be like engineer guy and yeah. All right, enough on the markets. The right, enough on the markets. The right, enough on the markets. The markets are going to do what markets do. markets are going to do what markets do. markets are going to do what markets do. We will talk about Iran and other stuff We will talk about Iran and other stuff We will talk about Iran and other stuff like that when there's more news for like that when there's more news for like that when there's more news for venture capitalists to comment on. Right venture capitalists to comment on. Right venture capitalists to comment on. Right now, it's just on on I know everybody now, it's just on on I know everybody now, it's just on on I know everybody keeps asking. I I don't think there's keeps asking. I I don't think there's keeps asking. I I don't think there's much for us to say on it. I do think much for us to say on it. I do think much for us to say on it. I do think there's a lot for us to say uh in there's a lot for us to say uh in there's a lot for us to say uh in socialism corner our new reoccurring uh socialism corner our new reoccurring uh socialism corner our new reoccurring uh theme here Freedberg every week there's theme here Freedberg every week there's theme here Freedberg every week there's more news coming out of socialism corner more news coming out of socialism corner more news coming out of socialism corner uh producer uh producer uh producer >> you can show my uh my videos on >> you can show my uh my videos on >> you can show my uh my videos on socialism going back six years socialism going back six years socialism going back six years >> let's add to the Freeberg socialism >> let's add to the Freeberg socialism >> let's add to the Freeberg socialism rants earlier this month rants earlier this month rants earlier this month city dictator mayor Zohan Mani city dictator mayor Zohan Mani city dictator mayor Zohan Mani >> don't don't misuse that term please come >> don't don't misuse that term please come >> don't don't misuse that term please come on on on >> a rental ripoff hearing at New York >> a rental ripoff hearing at New York >> a rental ripoff hearing at New York City's Tenement Museum. After the City's Tenement Museum. After the City's Tenement Museum. After the hearing, he introduced a rental ripoff hearing, he introduced a rental ripoff hearing, he introduced a rental ripoff report. If passed, bars landlords from report. If passed, bars landlords from report. If passed, bars landlords from charging applications for credit checks. charging applications for credit checks. charging applications for credit checks. It's going to let landlords require a It's going to let landlords require a It's going to let landlords require a credit check or the 40x rent income credit check or the 40x rent income credit check or the 40x rent income standard, but not both. Legally standard, but not both. Legally standard, but not both. Legally recognizes tenant unions and more. He's recognizes tenant unions and more. He's recognizes tenant unions and more. He's obviously frozen the rent for a year. At obviously frozen the rent for a year. At obviously frozen the rent for a year. At the hearing, an activist uh wore a COVID the hearing, an activist uh wore a COVID the hearing, an activist uh wore a COVID mask and referred to evictions as the mask and referred to evictions as the mask and referred to evictions as the violence of evictions. Here's your 22nd violence of evictions. Here's your 22nd violence of evictions. Here's your 22nd clip. The Mandani administration is clip. The Mandani administration is clip. The Mandani administration is emboldening us so that we no longer emboldening us so that we no longer emboldening us so that we no longer tolerate the violence of evictions as a tolerate the violence of evictions as a tolerate the violence of evictions as a matter of business as usual. matter of business as usual. matter of business as usual. [laughter] [laughter] [laughter] >> What the What were we just watching? Is >> What the What were we just watching? Is >> What the What were we just watching? Is that the sax? Do you remember the guy that the sax? Do you remember the guy that the sax? Do you remember the guy from Fat Albert who had the hat like from Fat Albert who had the hat like from Fat Albert who had the hat like that? [laughter] that? [laughter] that? [laughter] Can we pull that guy up FROM YOU Can we pull that guy up FROM YOU Can we pull that guy up FROM YOU REMEMBER THE GUY FROM FAT ALBERT who had REMEMBER THE GUY FROM FAT ALBERT who had REMEMBER THE GUY FROM FAT ALBERT who had the hat? What's his name? Oh my god. the hat? What's his name? Oh my god. the hat? What's his name? Oh my god. >> Is CO still happening? I thought CO was >> Is CO still happening? I thought CO was >> Is CO still happening? I thought CO was over. No, no, she just got a over. No, no, she just got a over. No, no, she just got a >> That was like a super duper mask. That >> That was like a super duper mask. That >> That was like a super duper mask. That was a super duper mask. That just wasn't was a super duper mask. That just wasn't was a super duper mask. That just wasn't like a little cloth one. That was one of like a little cloth one. That was one of like a little cloth one. That was one of these these these >> those big ones. >> those big ones. >> those big ones. >> I mean, combined with the hat, it was uh >> I mean, combined with the hat, it was uh >> I mean, combined with the hat, it was uh that was pretty [laughter] There it is. that was pretty [laughter] There it is. that was pretty [laughter] There it is. I remember that guy from uh I remember that guy from uh I remember that guy from uh What is going on? What is going on? What is going on? >> Wait, let's we're going to give Freeberg >> Wait, let's we're going to give Freeberg >> Wait, let's we're going to give Freeberg a chance to do a rant because I mean I a chance to do a rant because I mean I a chance to do a rant because I mean I could do I could do a rant on this. could do I could do a rant on this. could do I could do a rant on this. >> No, no. Let's give Freeberg his This is >> No, no. Let's give Freeberg his This is >> No, no. Let's give Freeberg his This is Freeberg rare meat. Freeberg in 1787. In Freeberg rare meat. Freeberg in 1787. In Freeberg rare meat. Freeberg in 1787. In 1787, John Quincy Adams, 1787, John Quincy Adams, 1787, John Quincy Adams, >> there he goes, >> there he goes, >> there he goes, >> published a work called a defense of the >> published a work called a defense of the >> published a work called a defense of the constitutions of governments of the constitutions of governments of the constitutions of governments of the United States of America. And in that United States of America. And in that United States of America. And in that work, he had a comment. The moment the work, he had a comment. The moment the work, he had a comment. The moment the idea is admitted into society, that idea is admitted into society, that idea is admitted into society, that property is not as sacred as the laws of property is not as sacred as the laws of property is not as sacred as the laws of God, and that there is not a force of God, and that there is not a force of God, and that there is not a force of law and public justice to protect it, law and public justice to protect it, law and public justice to protect it, anarchy and tyranny commence. And then anarchy and tyranny commence. And then anarchy and tyranny commence. And then in 1791 he made the statement publicly, in 1791 he made the statement publicly, in 1791 he made the statement publicly, "Property must be secured or liberty "Property must be secured or liberty "Property must be secured or liberty cannot exist in an essay series." cannot exist in an essay series." cannot exist in an essay series." >> Can you unpack it and explain why he >> Can you unpack it and explain why he >> Can you unpack it and explain why he said that? Do you think said that? Do you think said that? Do you think >> fundamental to the foundation of the >> fundamental to the foundation of the >> fundamental to the foundation of the United States of America was this idea United States of America was this idea United States of America was this idea of private property rights? Because if of private property rights? Because if of private property rights? Because if you think about where everyone that came you think about where everyone that came you think about where everyone that came to America was coming from, there were to America was coming from, there were to America was coming from, there were these tyrannical governments, monarchies these tyrannical governments, monarchies these tyrannical governments, monarchies or whatever, where some overlord or some or whatever, where some overlord or some or whatever, where some overlord or some cabal could decide at any point to take cabal could decide at any point to take cabal could decide at any point to take the things that you have. You had no the things that you have. You had no the things that you have. You had no private property rights as an private property rights as an private property rights as an individual. They could come in, they're individual. They could come in, they're individual. They could come in, they're like, "That farm is my farm. You're like, "That farm is my farm. You're like, "That farm is my farm. You're actually a surf. I'm the lord. That actually a surf. I'm the lord. That actually a surf. I'm the lord. That thing is my thing. You have a right to thing is my thing. You have a right to thing is my thing. You have a right to use it because I vest you that right to use it because I vest you that right to use it because I vest you that right to use it. I am the all powerful. I am the use it. I am the all powerful. I am the use it. I am the all powerful. I am the tyrannical overseer of these lands. And tyrannical overseer of these lands. And tyrannical overseer of these lands. And it was that stasis that drove so many to it was that stasis that drove so many to it was that stasis that drove so many to come to the United States and say we come to the United States and say we come to the United States and say we want a place where individuals, one want a place where individuals, one want a place where individuals, one person can say, I own something and no person can say, I own something and no person can say, I own something and no one can take it from me. Private one can take it from me. Private one can take it from me. Private property rights are the foundations of property rights are the foundations of property rights are the foundations of liberty in America. liberty in America. liberty in America. this idea that you can then claim acts this idea that you can then claim acts this idea that you can then claim acts of violence, that you can then claim of violence, that you can then claim of violence, that you can then claim circumstances of of extraordinary, circumstances of of extraordinary, circumstances of of extraordinary, extravagant wealth and say to that extravagant wealth and say to that extravagant wealth and say to that individual, I now have a right, the individual, I now have a right, the individual, I now have a right, the government now has a right to take your government now has a right to take your government now has a right to take your private property ultimately leads to private property ultimately leads to private property ultimately leads to this tyrannical form. And it starts out this tyrannical form. And it starts out this tyrannical form. And it starts out as being an anarchctic because, and as being an anarchctic because, and as being an anarchctic because, and remember, anarchy is a temporary state. remember, anarchy is a temporary state. remember, anarchy is a temporary state. It's always in between one state and It's always in between one state and It's always in between one state and another. All anarchies end up in another. All anarchies end up in another. All anarchies end up in tyranny. Groups of people fight each tyranny. Groups of people fight each tyranny. Groups of people fight each other. They're all stealing from other. They're all stealing from other. They're all stealing from each other. Everyone just goes and takes each other. Everyone just goes and takes each other. Everyone just goes and takes and gets what they want. And eventually and gets what they want. And eventually and gets what they want. And eventually people coales. They form groups. And people coales. They form groups. And people coales. They form groups. And those groups become the more powerful those groups become the more powerful those groups become the more powerful groups. And the powerful groups end up groups. And the powerful groups end up groups. And the powerful groups end up winning and they become the tyranny over winning and they become the tyranny over winning and they become the tyranny over the mass. And that is why all anarchies the mass. And that is why all anarchies the mass. And that is why all anarchies eventually evolve into tyranny. So eventually evolve into tyranny. So eventually evolve into tyranny. So anarchy and tyranny are one and the anarchy and tyranny are one and the anarchy and tyranny are one and the same. And fundamentally what's going on same. And fundamentally what's going on same. And fundamentally what's going on with these socialist principles is that with these socialist principles is that with these socialist principles is that we are taking your private property and we are taking your private property and we are taking your private property and you no longer have rights on your you no longer have rights on your you no longer have rights on your private property. Whether you are a private property. Whether you are a private property. Whether you are a landlord or whether you are a wealthy landlord or whether you are a wealthy landlord or whether you are a wealthy person that we've deemed to have too person that we've deemed to have too person that we've deemed to have too much wealth, we now will have the rights much wealth, we now will have the rights much wealth, we now will have the rights to come in and take your property and to come in and take your property and to come in and take your property and control it and take it from you. And it control it and take it from you. And it control it and take it from you. And it always starts with this framing of always starts with this framing of always starts with this framing of moralistic intent. We are good. You are moralistic intent. We are good. You are moralistic intent. We are good. You are bad for the following reasons. You have bad for the following reasons. You have bad for the following reasons. You have committed violence against the people committed violence against the people committed violence against the people that live in your building. You have that live in your building. You have that live in your building. You have taken too much wealth and none of us taken too much wealth and none of us taken too much wealth and none of us have wealth. We have a right to go and have wealth. We have a right to go and have wealth. We have a right to go and take your wealth from you. It has always take your wealth from you. It has always take your wealth from you. It has always started from this point of view that you started from this point of view that you started from this point of view that you are bad. So the first framing is that are bad. So the first framing is that are bad. So the first framing is that the private property owner is evil and the private property owner is evil and the private property owner is evil and that the private property owner has that the private property owner has that the private property owner has committed an act of injustice against committed an act of injustice against committed an act of injustice against those who don't have the private those who don't have the private those who don't have the private property and that is the justification property and that is the justification property and that is the justification for taking away their private property for taking away their private property for taking away their private property rights and it is the beginning of this rights and it is the beginning of this rights and it is the beginning of this transition towards a tyrannical system transition towards a tyrannical system transition towards a tyrannical system which will ultimately be what I call which will ultimately be what I call which will ultimately be what I call this kind of great American polit or this kind of great American polit or this kind of great American polit or whatever socialist framework gets set up whatever socialist framework gets set up whatever socialist framework gets set up by the the cabal of the socialists and by the the cabal of the socialists and by the the cabal of the socialists and and what they're trying to put together. and what they're trying to put together. and what they're trying to put together. So all of these little acts while So all of these little acts while So all of these little acts while seeming ridiculous and insane and seeming ridiculous and insane and seeming ridiculous and insane and inappropriate in aggregate are the same inappropriate in aggregate are the same inappropriate in aggregate are the same thing. They're a transition away from thing. They're a transition away from thing. They're a transition away from private property rights which is the private property rights which is the private property rights which is the foundation of the United States of foundation of the United States of foundation of the United States of America. That's why I think we should America. That's why I think we should America. That's why I think we should all be so shocked. And to John Quincy all be so shocked. And to John Quincy all be so shocked. And to John Quincy Adams point we need to vehemently defend Adams point we need to vehemently defend Adams point we need to vehemently defend those rights. As soon as those rights those rights. As soon as those rights those rights. As soon as those rights start to slip away even in the tiniest start to slip away even in the tiniest start to slip away even in the tiniest way it is a cascading effect and way it is a cascading effect and way it is a cascading effect and everything will become tyrannical and it everything will become tyrannical and it everything will become tyrannical and it will be very ugly in the United States will be very ugly in the United States will be very ugly in the United States of America. Saxs, uh, what are your of America. Saxs, uh, what are your of America. Saxs, uh, what are your thoughts here on um, Comrade Mandami? thoughts here on um, Comrade Mandami? thoughts here on um, Comrade Mandami? >> Yeah, I just want to add a layer to this >> Yeah, I just want to add a layer to this >> Yeah, I just want to add a layer to this this idea. You know, the these DSA this idea. You know, the these DSA this idea. You know, the these DSA socialists say that evictions are are socialists say that evictions are are socialists say that evictions are are violence and they basically want to stop violence and they basically want to stop violence and they basically want to stop them. I think Freeberg's making the them. I think Freeberg's making the them. I think Freeberg's making the point that this deprivives the landlord point that this deprivives the landlord point that this deprivives the landlord of their property, and that's true, but of their property, and that's true, but of their property, and that's true, but I think we also have to stop and I think we also have to stop and I think we also have to stop and consider what this means for the other consider what this means for the other consider what this means for the other residents in these buildings. I mean, residents in these buildings. I mean, residents in these buildings. I mean, first of all, if the landlords aren't first of all, if the landlords aren't first of all, if the landlords aren't making income because they got a bunch making income because they got a bunch making income because they got a bunch of delinquent tenants in the building, of delinquent tenants in the building, of delinquent tenants in the building, they can't now pay for upkeep and they can't now pay for upkeep and they can't now pay for upkeep and maintenance. And so, these buildings maintenance. And so, these buildings maintenance. And so, these buildings become more dilapidated, and that become more dilapidated, and that become more dilapidated, and that affects the the other tenants. But also, affects the the other tenants. But also, affects the the other tenants. But also, I have a friend who manages these I have a friend who manages these I have a friend who manages these apartment buildings, and he makes the apartment buildings, and he makes the apartment buildings, and he makes the point that it's often these squatters, point that it's often these squatters, point that it's often these squatters, these delinquent tenants who should be these delinquent tenants who should be these delinquent tenants who should be evicted but can't, who make the worst evicted but can't, who make the worst evicted but can't, who make the worst neighbors. So, when you think about the neighbors. So, when you think about the neighbors. So, when you think about the problems in a in an apartment complex problems in a in an apartment complex problems in a in an apartment complex where you've got people creating noise where you've got people creating noise where you've got people creating noise at night, maybe they're playing loud at night, maybe they're playing loud at night, maybe they're playing loud music or you have people punching walls music or you have people punching walls music or you have people punching walls or there's disgusting smells coming from or there's disgusting smells coming from or there's disgusting smells coming from apartments or they're misusing common apartments or they're misusing common apartments or they're misusing common areas or you have drunken and disorderly areas or you have drunken and disorderly areas or you have drunken and disorderly behavior. I mean, this is all the kind behavior. I mean, this is all the kind behavior. I mean, this is all the kind of stuff that happens in these rent of stuff that happens in these rent of stuff that happens in these rent controlled apartment buildings. And you controlled apartment buildings. And you controlled apartment buildings. And you have to remember that there's have to remember that there's have to remember that there's long-standing residents, a lot of old long-standing residents, a lot of old long-standing residents, a lot of old people who can't afford to find a new people who can't afford to find a new people who can't afford to find a new place. They depend on the rent control. place. They depend on the rent control. place. They depend on the rent control. And when you can't evict that unruly And when you can't evict that unruly And when you can't evict that unruly tenant, yes, it it affects the landlord, tenant, yes, it it affects the landlord, tenant, yes, it it affects the landlord, but it affects the neighbors even more but it affects the neighbors even more but it affects the neighbors even more because now they're stuck in a downward because now they're stuck in a downward because now they're stuck in a downward spiral. And I think this is a problem spiral. And I think this is a problem spiral. And I think this is a problem with the progressive mindset across the with the progressive mindset across the with the progressive mindset across the board is that these DSA types are always board is that these DSA types are always board is that these DSA types are always these like highly educated and often these like highly educated and often these like highly educated and often affluent types and they can afford to affluent types and they can afford to affluent types and they can afford to have luxury beliefs about public spaces have luxury beliefs about public spaces have luxury beliefs about public spaces because they never use them, right? They because they never use them, right? They because they never use them, right? They don't use the bus or the subway or don't use the bus or the subway or don't use the bus or the subway or parks. And so when they get taken over parks. And so when they get taken over parks. And so when they get taken over by homeless drug addicts, they always by homeless drug addicts, they always by homeless drug addicts, they always defend the addicts as opposed to the defend the addicts as opposed to the defend the addicts as opposed to the middle class. middle class. middle class. >> An easy thing to do if you don't live in >> An easy thing to do if you don't live in >> An easy thing to do if you don't live in the tenderloin. the tenderloin. the tenderloin. >> Right. Exactly. And it falls the hardest >> Right. Exactly. And it falls the hardest >> Right. Exactly. And it falls the hardest on the working class because they on the working class because they on the working class because they actually need these amenities. They need actually need these amenities. They need actually need these amenities. They need the parks for their kids or they need to the parks for their kids or they need to the parks for their kids or they need to use a subway, right? And it's really a use a subway, right? And it's really a use a subway, right? And it's really a problem when you get people shooting up problem when you get people shooting up problem when you get people shooting up or doing drugs or, you know, defecating or doing drugs or, you know, defecating or doing drugs or, you know, defecating in a subway. in a subway. in a subway. >> You're walking your kids to school like >> You're walking your kids to school like >> You're walking your kids to school like the person in Maring County who has the person in Maring County who has the person in Maring County who has these luxury beliefs or on the upper these luxury beliefs or on the upper these luxury beliefs or on the upper east side, they just don't they're east side, they just don't they're east side, they just don't they're they're abstracted from this. They don't they're abstracted from this. They don't they're abstracted from this. They don't need to deal with it, right? need to deal with it, right? need to deal with it, right? >> We talked about this. >> We talked about this. >> We talked about this. >> And it's it's no different with these >> And it's it's no different with these >> And it's it's no different with these rent control departments. I think that's rent control departments. I think that's rent control departments. I think that's the important point here is that if over the important point here is that if over the important point here is that if over a period of several years you can't a period of several years you can't a period of several years you can't evict anyone no matter how problematic evict anyone no matter how problematic evict anyone no matter how problematic they are, you effectively turn these they are, you effectively turn these they are, you effectively turn these apartment buildings into the equivalent apartment buildings into the equivalent apartment buildings into the equivalent of housing projects. And you know that of housing projects. And you know that of housing projects. And you know that really affects decent people of modest really affects decent people of modest really affects decent people of modest income who have nowhere else to go and income who have nowhere else to go and income who have nowhere else to go and their quality of life suffers. And look, their quality of life suffers. And look, their quality of life suffers. And look, you know, the private equity wives in you know, the private equity wives in you know, the private equity wives in their gated communities will still feel their gated communities will still feel their gated communities will still feel good about themselves because, you know, good about themselves because, you know, good about themselves because, you know, they prevented these evictions, but it's they prevented these evictions, but it's they prevented these evictions, but it's the people in the building who are going the people in the building who are going the people in the building who are going to suffer the most. to suffer the most. to suffer the most. >> And well, these and they're Shimat, >> And well, these and they're Shimat, >> And well, these and they're Shimat, these people are not just thinking from these people are not just thinking from these people are not just thinking from first principles. If you want to solve first principles. If you want to solve first principles. If you want to solve the housing problem, the housing problem, the housing problem, anybody with any basic understanding of anybody with any basic understanding of anybody with any basic understanding of economics would just say, well, increase economics would just say, well, increase economics would just say, well, increase the supply and the price will go down. the supply and the price will go down. the supply and the price will go down. And it actually doesn't matter which And it actually doesn't matter which And it actually doesn't matter which supply you add. It doesn't matter if supply you add. It doesn't matter if supply you add. It doesn't matter if it's luxury units or multif family or it's luxury units or multif family or it's luxury units or multif family or single family. As long as there's more single family. As long as there's more single family. As long as there's more uh housing and there's transportation to uh housing and there's transportation to uh housing and there's transportation to get to it and to move people in and out, get to it and to move people in and out, get to it and to move people in and out, it'll be fine. As we've as I like I'm it'll be fine. As we've as I like I'm it'll be fine. As we've as I like I'm sitting here in Tokyo, like they figured sitting here in Tokyo, like they figured sitting here in Tokyo, like they figured this out a long time ago. Just build up this out a long time ago. Just build up this out a long time ago. Just build up and put more units in. They figured it and put more units in. They figured it and put more units in. They figured it out in Texas, Florida, Nevada. The only out in Texas, Florida, Nevada. The only out in Texas, Florida, Nevada. The only people who can't seem to figure this people who can't seem to figure this people who can't seem to figure this out, you know, is like New York, LA, and out, you know, is like New York, LA, and out, you know, is like New York, LA, and San Francisco just happens to be liberal San Francisco just happens to be liberal San Francisco just happens to be liberal elite elite elite enclaves. And it's not hard on a enclaves. And it's not hard on a enclaves. And it's not hard on a conceptual basis. Just allow people to conceptual basis. Just allow people to conceptual basis. Just allow people to build some more units and different build some more units and different build some more units and different types of units and then the price will types of units and then the price will types of units and then the price will go down. Chimath, any any thoughts here? go down. Chimath, any any thoughts here? go down. Chimath, any any thoughts here? The data from Austin says once you relax The data from Austin says once you relax The data from Austin says once you relax the permitting constraint, you'll get the permitting constraint, you'll get the permitting constraint, you'll get more units built. And for every unit more units built. And for every unit more units built. And for every unit that comes online, it literally drives that comes online, it literally drives that comes online, it literally drives down the rent. So if you want low rent, down the rent. So if you want low rent, down the rent. So if you want low rent, you need to have more units. If you want you need to have more units. If you want you need to have more units. If you want more units, you need to permit more more units, you need to permit more more units, you need to permit more aggressively. That's it. So, it's just a aggressively. That's it. So, it's just a aggressively. That's it. So, it's just a decision. The same political will that decision. The same political will that decision. The same political will that it would take Mandani to pass this law, it would take Mandani to pass this law, it would take Mandani to pass this law, he could actually pass some permitting he could actually pass some permitting he could actually pass some permitting reform and it would do a lot more good. reform and it would do a lot more good. reform and it would do a lot more good. The thing on private property, the The thing on private property, the The thing on private property, the reason I asked Freebrook to explain it reason I asked Freebrook to explain it reason I asked Freebrook to explain it is I really believe what he's saying is is I really believe what he's saying is is I really believe what he's saying is really important. It's like funny to me really important. It's like funny to me really important. It's like funny to me this idea that at the limit, let's just this idea that at the limit, let's just this idea that at the limit, let's just say you're driving your car and all of a say you're driving your car and all of a say you're driving your car and all of a sudden somebody jumps in it and they're sudden somebody jumps in it and they're sudden somebody jumps in it and they're like, "Well, you know, now I'm here. You like, "Well, you know, now I'm here. You like, "Well, you know, now I'm here. You can't kick me out." or you know, you go can't kick me out." or you know, you go can't kick me out." or you know, you go outside, you leave your door open to go outside, you leave your door open to go outside, you leave your door open to go get a FedEx package or Amazon box and get a FedEx package or Amazon box and get a FedEx package or Amazon box and somebody runs in and sits on your couch somebody runs in and sits on your couch somebody runs in and sits on your couch and now all of a sudden they can't you and now all of a sudden they can't you and now all of a sudden they can't you can't kick them out. And it sounds so can't kick them out. And it sounds so can't kick them out. And it sounds so ludicrously dumb. ludicrously dumb. ludicrously dumb. If you force the owners of physical If you force the owners of physical If you force the owners of physical property to not be able to credit check property to not be able to credit check property to not be able to credit check and differentiate who they rent their and differentiate who they rent their and differentiate who they rent their apartments to, what's going to happen is apartments to, what's going to happen is apartments to, what's going to happen is rents will go up even more. So, I rents will go up even more. So, I rents will go up even more. So, I suspect that what they should do is they suspect that what they should do is they suspect that what they should do is they should pass this law and they should should pass this law and they should should pass this law and they should observe what the outcome is and then you observe what the outcome is and then you observe what the outcome is and then you can do a pretty scientific AB comparison can do a pretty scientific AB comparison can do a pretty scientific AB comparison between New York City and Austin and between New York City and Austin and between New York City and Austin and you'll know what works and what doesn't you'll know what works and what doesn't you'll know what works and what doesn't work. work. work. >> Yeah. >> Yeah. >> Yeah. >> I mean, here's the problem is is the >> I mean, here's the problem is is the >> I mean, here's the problem is is the socialists never learn. I mean, we socialists never learn. I mean, we socialists never learn. I mean, we already have already have already have >> got rid of rent control in Argentina. >> got rid of rent control in Argentina. >> got rid of rent control in Argentina. Rents went down. Rents went down. Rents went down. >> Yeah. >> Yeah. >> Yeah. >> Yeah. Yeah, I mean this is the problem >> Yeah. Yeah, I mean this is the problem >> Yeah. Yeah, I mean this is the problem with Jimoth is that look, if the with Jimoth is that look, if the with Jimoth is that look, if the socialists ever learned from their socialists ever learned from their socialists ever learned from their failed experiments, you wouldn't have failed experiments, you wouldn't have failed experiments, you wouldn't have Chicago, you know, it's just you like we Chicago, you know, it's just you like we Chicago, you know, it's just you like we don't need New York to go down the tubes don't need New York to go down the tubes don't need New York to go down the tubes to know this isn't going to work cuz to know this isn't going to work cuz to know this isn't going to work cuz it's happened in so many other places it's happened in so many other places it's happened in so many other places already. But somehow it just never seems already. But somehow it just never seems already. But somehow it just never seems to stop. to stop. to stop. >> They never seem to learn. So they should >> They never seem to learn. So they should >> They never seem to learn. So they should run the experiment and learn. I mean run the experiment and learn. I mean run the experiment and learn. I mean what's crazy is you'll be learning and what's crazy is you'll be learning and what's crazy is you'll be learning and it'll be a failure on the grandest stage it'll be a failure on the grandest stage it'll be a failure on the grandest stage possible. You're talking about the possible. You're talking about the possible. You're talking about the biggest, most complicated New York City. biggest, most complicated New York City. biggest, most complicated New York City. My gosh. My gosh. My gosh. >> I mean, and and Sachs, what happens if a >> I mean, and and Sachs, what happens if a >> I mean, and and Sachs, what happens if a landlord landlord landlord >> cannot raise the rent reasonably? Well, >> cannot raise the rent reasonably? Well, >> cannot raise the rent reasonably? Well, they have no incentive to invest in new they have no incentive to invest in new they have no incentive to invest in new units. They have no incentive to upgrade units. They have no incentive to upgrade units. They have no incentive to upgrade new units. And there's this trap in New new units. And there's this trap in New new units. And there's this trap in New York City specifically. They have made York City specifically. They have made York City specifically. They have made this regulations for apartments such this regulations for apartments such this regulations for apartments such that if you do a renovation, it has to that if you do a renovation, it has to that if you do a renovation, it has to hit certain codes. And there are a ton hit certain codes. And there are a ton hit certain codes. And there are a ton of codes. Okay. So that means it's of codes. Okay. So that means it's of codes. Okay. So that means it's incredibly expensive. So now they have incredibly expensive. So now they have incredibly expensive. So now they have you have ghost apartments. you have ghost apartments. you have ghost apartments. >> Yes. So now the housing stock becomes >> Yes. So now the housing stock becomes >> Yes. So now the housing stock becomes dilapidated. And look, they're doing dilapidated. And look, they're doing dilapidated. And look, they're doing something even worse now, I think, which something even worse now, I think, which something even worse now, I think, which is they are banning landlords from doing is they are banning landlords from doing is they are banning landlords from doing credit and background checks on credit and background checks on credit and background checks on potential tenants. And they they say potential tenants. And they they say potential tenants. And they they say that you can't look at their income, so that you can't look at their income, so that you can't look at their income, so you can't vet whether they can actually you can't vet whether they can actually you can't vet whether they can actually pay the rent. So they're banning pay the rent. So they're banning pay the rent. So they're banning >> landlord. No more landlord. >> landlord. No more landlord. >> landlord. No more landlord. >> They're they're banning eviction. And >> They're they're banning eviction. And >> They're they're banning eviction. And then they're and then they're preventing then they're and then they're preventing then they're and then they're preventing you from doing the diligence to see if you from doing the diligence to see if you from doing the diligence to see if this is even a tenant who will pay the this is even a tenant who will pay the this is even a tenant who will pay the rent. rent. rent. >> We've lost the script. >> We've lost the script. >> We've lost the script. >> So what are you supposed to do? >> So what are you supposed to do? >> So what are you supposed to do? >> The interesting question is if you were >> The interesting question is if you were >> The interesting question is if you were forced to live under these rules, the forced to live under these rules, the forced to live under these rules, the landlord, what would you do? And the landlord, what would you do? And the landlord, what would you do? And the obvious answer is you'd start rent three obvious answer is you'd start rent three obvious answer is you'd start rent three or four times higher and you force or four times higher and you force or four times higher and you force people to sign up to a multi-month people to sign up to a multi-month people to sign up to a multi-month prepayment and you'd slowly ease those prepayment and you'd slowly ease those prepayment and you'd slowly ease those conditions until you find a market conditions until you find a market conditions until you find a market clearing price. That's the only way to clearing price. That's the only way to clearing price. That's the only way to do it. So rents will not go down. Rents do it. So rents will not go down. Rents do it. So rents will not go down. Rents will go up. So run the experiment will go up. So run the experiment will go up. So run the experiment >> and let's just observe what happens. >> and let's just observe what happens. >> and let's just observe what happens. >> That's a really good point, Jimoth. Like >> That's a really good point, Jimoth. Like >> That's a really good point, Jimoth. Like let's say that you know X percent of let's say that you know X percent of let's say that you know X percent of tenants are going to become delinquent, tenants are going to become delinquent, tenants are going to become delinquent, right? Because and by the way, what's right? Because and by the way, what's right? Because and by the way, what's their incentive to pay when they know their incentive to pay when they know their incentive to pay when they know they can't be evicted? they can't be evicted? they can't be evicted? >> Zero. Zero. >> Zero. Zero. >> Zero. Zero. >> So like actually a pretty significant >> So like actually a pretty significant >> So like actually a pretty significant percentage of people could just decide percentage of people could just decide percentage of people could just decide I'm going to make rent optional. I'm going to make rent optional. I'm going to make rent optional. >> And so now the landlord has to absorb >> And so now the landlord has to absorb >> And so now the landlord has to absorb those losses. those losses. those losses. >> Exactly. >> Exactly. >> Exactly. >> And that means they have to pass on a >> And that means they have to pass on a >> And that means they have to pass on a higher rent to everybody else. You're higher rent to everybody else. You're higher rent to everybody else. You're going to set the rent 3x higher and going to set the rent 3x higher and going to set the rent 3x higher and you're going to slowly meander it down. you're going to slowly meander it down. you're going to slowly meander it down. And like I said, you're going to have to And like I said, you're going to have to And like I said, you're going to have to wire in the first full year of rent. wire in the first full year of rent. wire in the first full year of rent. >> Well, good luck. How is that affordable? >> Well, good luck. How is that affordable? >> Well, good luck. How is that affordable? >> It's even worse, Sax. Not only do the >> It's even worse, Sax. Not only do the >> It's even worse, Sax. Not only do the landlords landlords landlords keep the dilapitated apartments in some keep the dilapitated apartments in some keep the dilapitated apartments in some cases, it's better for them to just cases, it's better for them to just cases, it's better for them to just leave apartments, housing stock, empty. leave apartments, housing stock, empty. leave apartments, housing stock, empty. So, somebody leaves, they are forced to So, somebody leaves, they are forced to So, somebody leaves, they are forced to renovate it and it costs more, you know, renovate it and it costs more, you know, renovate it and it costs more, you know, hundreds of thousands in uh renovations. hundreds of thousands in uh renovations. hundreds of thousands in uh renovations. So, they say, "You know what? I'll just So, they say, "You know what? I'll just So, they say, "You know what? I'll just leave it empty for now." And so, you leave it empty for now." And so, you leave it empty for now." And so, you have 50,000 ghost apartments according have 50,000 ghost apartments according have 50,000 ghost apartments according to reports in New York City. to reports in New York City. to reports in New York City. >> Well, that's an Airbnb problem. That's >> Well, that's an Airbnb problem. That's >> Well, that's an Airbnb problem. That's like a like a like a >> No, they banned Airbnb in New York. You >> No, they banned Airbnb in New York. You >> No, they banned Airbnb in New York. You cannot get an Airbnb. cannot get an Airbnb. cannot get an Airbnb. >> Oh, really? >> Oh, really? >> Oh, really? >> Yes. So, now it's like >> Yes. So, now it's like >> Yes. So, now it's like >> That's really interesting. Yeah. Look, >> That's really interesting. Yeah. Look, >> That's really interesting. Yeah. Look, if you're if you're a landlord, okay, I if you're if you're a landlord, okay, I if you're if you're a landlord, okay, I mean, I guess one thing you would do is mean, I guess one thing you would do is mean, I guess one thing you would do is just sell and go to another just sell and go to another just sell and go to another jurisdiction. Another thing you could do jurisdiction. Another thing you could do jurisdiction. Another thing you could do is just wait this out is just wait this out is just wait this out >> because it's not profitable to run an >> because it's not profitable to run an >> because it's not profitable to run an apartment building. You can't raise your apartment building. You can't raise your apartment building. You can't raise your rents. You can't evict people. You can't rents. You can't evict people. You can't rents. You can't evict people. You can't diligence the tenants. So, maybe you diligence the tenants. So, maybe you diligence the tenants. So, maybe you just leave the building empty and you just leave the building empty and you just leave the building empty and you wait this out. I mean, that's assuming wait this out. I mean, that's assuming wait this out. I mean, that's assuming you don't have too much debt on it, you don't have too much debt on it, you don't have too much debt on it, right? right? right? >> Or ghost apartments. Yeah. >> Or ghost apartments. Yeah. >> Or ghost apartments. Yeah. >> And then you have ghost apartments. >> And then you have ghost apartments. >> And then you have ghost apartments. >> Yeah. All right. Listen, you've been >> Yeah. All right. Listen, you've been >> Yeah. All right. Listen, you've been thinking about coming to the All-In thinking about coming to the All-In thinking about coming to the All-In Summit. This is your year. speakers are Summit. This is your year. speakers are Summit. This is your year. speakers are world class. The events, the parties, world class. The events, the parties, world class. The events, the parties, the networking, 80% of the people there, the networking, 80% of the people there, the networking, 80% of the people there, founders, investors or high level founders, investors or high level founders, investors or high level operators this year. Greater focus on operators this year. Greater focus on operators this year. Greater focus on network, network, network, >> the musical performances. >> the musical performances. >> the musical performances. >> Oh yes. I mean, in the past, we've had >> Oh yes. I mean, in the past, we've had >> Oh yes. I mean, in the past, we've had >> the food, the drink, >> the food, the drink, >> the food, the drink, >> Grimes, >> Grimes, >> Grimes, >> Diplo, >> Diplo, >> Diplo, >> Diplo. We've had so many incredible >> Diplo. We've had so many incredible >> Diplo. We've had so many incredible people. Go to the all-inssummit.com. All people. Go to the all-inssummit.com. All people. Go to the all-inssummit.com. All right, everybody. It's another amazing right, everybody. It's another amazing right, everybody. It's another amazing alltime legendary episode of the All-In alltime legendary episode of the All-In alltime legendary episode of the All-In podcast. podcast. podcast. Love you boys. Bye. Byebye. Love you boys. Bye. Byebye. [music] >> Let your winners ride. [music] [music] >> And it said >> And it said >> And it said >> we open sourced it to the fans and >> we open sourced it to the fans and >> we open sourced it to the fans and they've just gone crazy with [music] it. they've just gone crazy with [music] it. they've just gone crazy with [music] it. Love you. >> Besties are gone. >> Besties are gone. That is my dog taking an [music] That is my dog taking an [music] That is my dog taking an [music] driveway. >> Oh man, my habitasher will meet me up. >> Oh man, my habitasher will meet me up. [music] [music] [music] >> We should all just get a room and just >> We should all just get a room and just >> We should all just get a room and just have one big huge orgy cuz they're all have one big huge orgy cuz they're all have one big huge orgy cuz they're all just It's like this like sexual tension just It's like this like sexual tension just It's like this like sexual tension [music] that we just need to release [music] that we just need to release [music] that we just need to release somehow. [laughter] [laughter] >> We need to get mercy. >> We need to get mercy. >> We need to get mercy. [music] >> [music] >> [music] >> I'm going all in.