DOGE kills its first bill, Zuck vs OpenAI, Google's AI comeback

J what just happened did you just have a moment an emotional moment I don't know you know I've been trying to get over Sachs and um it's hard to get over your ex even when they didn't treat you well we were in a codependent relationship and we were working on it you have no one to fight with anymore who are you gonna fight with jcal that's the emptiness you feel inside because you're a fighter you're a street brawler and you have no one to brawl with anymore so you feel well you're the first guy to jump under the table in a bar fight I mean here you go there you go as I was saying always want I feel like if if  goes down I feel like sax and I would have like we would have thrown down we Bulldogs we would have fought like tooth and now I have this I have this I have this image it's like we're in a bar okay and all of a sudden you talking to me a fight is about to break out four thought bubbles appear okay J's like J's like let's go get him saak is like this guy this guy's a dip let's roll I'm like look at that chick she's so goodlooking and then freeberg like what will happen to my invite duck free BG's like how do I get out of this UNSC let your winners ride Rainman David and in said we open source it to the fans and they've just gone crazy with Love Queen all right everybody Welcome to the number one podcast in the world with me again today for better or worse your Sultan of science David freedberg is back how you doing freeberg I see you're a pawn only a pawn in their game what's going on with the pawn background The Imposter syndrome Pawn or queen what is that is that from a movie what movie is that from it's called The Imposter syndrome uh by just like some French wave I'm not aware of how I I've learned that freeberg backgrounds is some like weird secret communication language there's this small but fervent group of people that are really into these backgrounds they're always trying to figure something out absolutely of course with us again sham paa your chairman dictator how you doing Shaman nice winner thank you sir good to see you you ready excited to see you I know look at this three of four besties will be hitting the slopes three of four besties will be skiing together might be there eron where are you going for holidays oh actually I'm I'm uh we'll be in next week what well there we go new bestie and Aon are you staying in the town in just at the hotel okay this is perfect we're all gonna be there bro just $2,000 a night how many rooms you got with the kids in the fam you have three boxes at alltime highs take it easy what did you do did you start buying Bitcoin with your treasury how what do you mean boxes at an alltime high are you uh doing a Michael salor or something you know it turns out if uh if you were uh if you didn't get crushed During the postco period you can just keep keep cranking so that's what we've been doing oh you've been building a real business of course with us now our new fifth bestie Aaron Levy he is the CEO of the publicly traded company box which means he's got the most to lose by coming here so welcome back to the program centrax based on what you guys were just talking about before this uh recording started I have no idea what what uh what we're in for yes listen we're living in an of meme stocks and people selling convertible notes to buy Bitcoin for their Treasury and and and then becoming a NASDAQ 100 it's that simple Aaron when you see a company buy billions of dollars worth of bitcoin and get added to the NASDAQ 100 what method of suicide do you think of taking your own life with um there was a there was a brief week in uh in 2021 where uh where the thought kind of crossed my mind so yes um suu you're just gonna use the sword the short blade we have a very uh sophisticated audit committee that that prevented the action so I uh will you do this for me yeah just do this for me take how much cash does box have on the books ballpark well we just did a convert so we're probably 6 700 six or 700 million okay here's what I want to do a little experiment for next week just buy put 5% of the treasury 30 million in Bitcoin and then you we'll invite you back in two weeks we'll see what happens okay just put 5% of the treasury in Bitcoin hey everybody here's another announcement a little housekeeping as you know we successfully got the allin.com domain that was a big victory for us and uh we now have an email list so four years into this muga uh we now have the ability to take your email address and spam you with all kinds of great information like a notification when the Pod drops wow so compelling insights from the besties who you've had enough of and uh first dibs on overpriced event tickets to come hang out with us wow you this is the compelling pitch we have for giving us your emails so if you'd like to give us your email and get spammed go to allin.com and let the spam begin all right that's out of the way sax is out again this week I don't know what's going on we've been trying to figure out where he is he's Mia if anybody knows he's in DC this week yeah oh is that what's going on did you see all the meetings I know being fous he's he's uh he's in meetings Mr saxs went to Washington he creating waves but Mr saxs is in Washington and have you guys seen the photos Erin what do you think of what do you think of saaks in this role I think it's uh I think it's a strong pick um so so let the genu flecting begin go say more Aon so crypto I'm a little bit indifferent on you know I I I I haven't you know know so we haven't SP spent much time there leaned in much about there but but on AI I think is a very very strong pick and um I think you want somebody that is you know has a general sort of deregulation anti-regulation bent at this stage in the evolution of the technology I think there's risk of of sort of slowing down too much progress right now and I think that I think he'll provide you know some good kind of parameters and principles around uh around how to avoid that so I think very strong and then you know crypto again don't know don't know too much about and then we'll we'll see the rest of the topics as a software CEO yeah of a public company when the Biden Administration was putting forward their proposals on how to regulate Ai and have definitions on the size of a model and what the models could or shouldn't do and the regulatory Authority they would have over the software that's written what was your reaction and you were supporting Harris at the time I believe or Biden at the time right but like how did you react to that when you saw those proposals and just to be clear are you talking about the EO that that went out yeah there was the EO but then they were also drafting they they published a lot of detailed Drafting and then obviously California had its bill which you probably saw as well which specified like the number of parameters in a model and the size of a model and yeah all these kind of constraints in reverse order was was uh against s1047 it felt like you know you had two big issues one you probably don't want state-by-state legislation on this topic that that's going to be you're in a world for of hurt if if every state has a different approach to this and then second secondarily if you just look at how it evolved from the very first proposal to the final proposal and unfortunately the kind of underlying philosophy that was in the the bill it was it was very clearly a sort of like like viewing you know basically AI progress as inherently risky right now and so it just ratcheted up the the different you know levels of consequence for the AI model developers and and the risk is is is sort of the second or third order effects of that which is like does Zuck then want to release the next version of llama if you're taking on you know that much risk and and you know even the incremental updates um the liability you have yeah in terms of any of the model advancements and so right now we're benefiting from just an incredibly competitive market between five or six players and you want them running as fast as possible not having to have sort of this you know a Council before every model gets released because they're they're you know in fear of getting sued by you know the government for hundreds of millions of dollars if one person does something wrong with the model so that was the problem with sb147 that's been the problem with some of the the proposals on National legislation I felt like the first CEO it didn't have a lot of teeth in it so so it kind of was more like let's watch you know this space and continue to study it the actual current head of s ostp uh Arty probar a lot of folks in Silicon Valley know her she's actually very strong very technical you know understands the valley well is not a sort of does not lean into overregulation so I actually think ostp has had a a pretty good Steward uh even under Biden but but I think you know the efforts that that saaks would you know clearly be leading I think would would lean even more toward AI progress and and and sort of not accidentally over-regulating too early in uh in this journey so let me ask you a question then about crypto you're not into crypto crypto a little bit harder to regulate so with saxs being there what do we think the one two or three things he could do to actually make crypto not a scam not have consumers get left holding the bag obviously sandboxing projects maybe having people know your customer you know some basic regulation there uh the sophisticated investor test comes to mind shth what do you think Sac should do in terms of crypto regul in the short term in the near term that's a really good question I think that today there are a lot of really valuable use cases that can sit on top of crypto rails I think the most obvious one is how you can have real-time payments using stable coins I think the United States government is already using some of these stable coins for a bunch of purposes the number of companies that are beginning to adopt ADT and use stable coins is actually growing very take a second to to find stable coins for the audience just to cat people up let me Define what a stable coin is which is that you put a dollar into a wallet somewhere and in return you get a digital token of that dollar there are two big purveyors of stable coins there's tether and then there's usdc which is this company called Circle I think the easiest way to to disambiguate them is tether is abroad I think it's run out of somewhere in the Caribbean and usdc is American it's run by this company called Circle the other difference is that there is some ambiguity around how these assets are secured so what a stable coin is supposed to do is when you give them a dollar they're supposed to go and buy some short-term treasury security so that that dollar is always guaranteed right because if if they if you had a billion dollars of stable coins but only $900 million of assets to back them up there's an insolvency risk there there's a run on the bank risk right so theoretically a billion dollars of stable coins should have a billion dollars of cash in some short-term fungible security what's incredible is at the scale in which these stable coins operate that has turned out to be an enormous business why when you give them a billion dollars and get a billion dollars of stable coins return they just go and put it into the bank and you know when interest rates are 2 3 4 5% they're making billions and billions of dollars they get the float they get the float so these businesses have turned out to be incredible but that's beyond the point the point is that a lot of companies that you would never think so for example SpaceX uses these stable coins how how do you think they collect payments from all the starlink customers when they aggregate them in all of these longtail countries they don't want to necessarily take the FX risk the foreign exchange risk they don't want to deal with sending wires so what they do is they'll swap into stable coin send it back to the United States and then swap back to US dollars so it's a very useful utility so number one is I think we need to make those rails the standard rails in the United States and what that does is it allows us to chip away all of this decrepit infrastructure that the banks use to sort of slow down and tax a process that should never have been taxed in so this is good competition in a way Cham now the banks have somebody to challenge them for money transfer and money storage and it could be regulated and stable but I guess question yeah but that's that's the first thing but then the second thing it allows you to do is you you start you can see a world where now you can have real competition against the traditional rails specifically Visa Mastercard American Express because when you look at Great companies like stripe I use stripe I pay them 3% if I use stable coins from stripe I I don't pay zero but I don't pay 3% it's kind of somewhere in the middle if I was technically Adept at implementing stable coins through the entire stack of of my product so I I use it for this learn with me thing where we publish research I would save a lot of money so yes the idea that you can take that 300 basis points you pay to these companies and crush it to zero would be a boon to Global GDP because that's 3% on many tens of trillions of dollars aarin you're shaking your head this is a something you're experimenting with at box or you're aware of or a problem that you uh recognize no no just the I mean the credit card rails is I mean the tax on on transactions is obviously insane so so the the stable coin being the intermediary for that in the future makes total sense if you could get everybody to kind of coordinate against that so yeah well and ating it would get people off of tether hopefully which has a checkered colorful sorted pass you can go look it up but they've had many many legal but I think again I think it looks leave it at that yeah but In fairness to them I think again both of these two companies look as of today again you have a jurisdictional issue difference but as of today it looks like they're both pegged one for one but anyways the point is if if saaks can really push the adoption of stable coins number one and then number two is to incentivize much much cheaper transactional rails then I think he can go to bitcoin and these other more longtail crypto projects off of a back of momentum because these first two things I think everybody will Embrace and he won't get caught in a political Quagmire these other things you have these opponents always coming into the system and they have even Bitcoin like when I said this thing about encryption and and even though I I thought I was very clear the crypto community on the internet went absolutely crazy all last week up in arms yeah but the thing is like some of the Maxis piled on then when they actually took time to understand the technicalities of what I was saying other people realized I was right then they were tweeting it my point is that world is so religious animated and energized that I think it's hard to use them as the first where you find prog so I would tell go to stable coins then disrupt the Visa rails and then go to the other stuff I would go stable coins and I would go even before that the accreditation test that I've been talking about because the SEC has that mandate people were educated Aaron they could buy crypto and know they're going to lose their money or know that something's a fugazi a fugazi whatever it is yeah I mean I uh I I'm sure we want to move on but I I guess the so there there's a there's a a parallel universe where where so no matter what like obviously gendler did not get his arms around this whole thing so so that that was a big big mistake but there's sort of like like defi Financial crypto where where almost everything is is deflationary it improves the rails it you know if you believe in Bitcoin as this you know store of value and digital gold like all of those things can actually kind of make sense and and be a bit rational and like improve things and then you know you know fortunately or not depending on your views there was this other sort of you know uh fra fractal event that happened which was oh let's also use these things as a a means of of kind of creating uh a virtual you know currency and and and Tok and equities and and tokens for anything where that then runs into basically the SEC remit of like are these things Securities or not and is there insider trading or not and can anybody issue them at any time and promote them on Twitter or not and so so you know I think to some extent if you could get back to like crypto 1.0 which was like this is a this is a financial infrastructure I I think you would have avoided a lot of the the sort of noise and challenges with with crypto now I don't know you can't put the you you can't put it back in the bag but but there's like I don't think you could get 10 crypto people to agree on how you regulate that second category because some people some people believe I should be able to issue an nft on anything and I should be able to to trade that and and and at the same time they would obviously they would sort of claim well that's just the same as a as an aftermarket you know uh seat to a concert and yet another group would would be treating this as as effectively you know a security and so you you I don't know how you're ever going to reel that in without some people being upset you know within the crypto Community all right well more to come and saaks will be back saaks will be back and we will be rotating the fifth seat amongst uh you know Friends of the Pod and newsmakers sorry did I already did I already get rotated out uh based on yeah basically the energy was a little low but uh you know I mean it's just I think well what's your you already had to warn rate what's your resting heart rate versus we're boys and then we'll just make a decision got it all right listen doge is fully operational Elon and V have helped kill the last minute Omnibus spending Bill Wednesday night the bill had been killed and we were looking at the government shutting down starting Friday December 20th today when you're listening to this for some quick background in September Congress approved a bill that would keep the government funded through December 20th the day this episode published keep that December date in mind for a second this Tuesday December 17th three days before the deadline leaders in Congress unveiled what was presented as a bipartisan stop Gat bill that would keep the government funded through March 14 that kind of Bill is called a continuing resolution basically give you more time for the incoming GOP majority to reach an agreement on the funding for the government but there are two major problems with the bill it's a rush job it had to pass the house and the Senate by Friday night after being presented on Tuesday it's absurdly long 1500 pages with $340 billion in spending including pay raises and better health care benefits for the members of Congress my Lord read the room gentlemen and ladies funding for a global engagement Center for another year that's the disinformation strug group that was wrapped up in the Twitter files 130 billion to renew the farm bill for another year $110 billion do in hurricane disaster Aid just money being thrown everywhere a billion three to replace the Francis Scott Key bridge in Baltimore V had some spicy comments on it Congress has known about the deadline since they created it in late September he said the urgency is 100% manufacture designed to avoid serious public debate but serious public debate is exactly what's happening on Twitter people are screenshotting and using chat GPT and Claude and and Gemini to work their way through these documents and it looks like this is not going to happen freeberg your thoughts so the proposed bill made no real change to the current spending level of the federal government at roughly $6.2 trillion on an annualized basis which by the way is roughly call it 23% of GDP just to give you some context in 1860 nearly 100 years after the founding of the United States government federal spending to GDP was less than 1% and it took off during the Civil War uh for a couple of years but you know we're at these kind of like unprecedented levels year after year now really speaking to how the federal government has grown as we talked about many times so much in our life and you know at our roads were really bad back then though yeah our were were really bad back then but but remember the objective of the Republic was to have the states make local decisions about how to take care of their infrastructure the national highway effort obviously changed that in the uh the mid 20th century but this was kind of the original intention of the Republic it wasn't to have the federal government come in and employ people provide uh Insurance to people provide energy markets to people own football stadiums etc etc etc if you go through the list of things in this bill I think the hundred billion dollars of natural death disaster relief everyone says that seems very reasonable that's something the federal government should do when we have a natural disaster we need help we need support that's a great thing for the federal government to do but think about the incentive it creates it distorts markets so we've talked about this in the past in areas where you have a higher probability of natural disasters and people have paid a lot of money for their homes pay a lot of money for infrastructure should the federal government come in in and rebuild those homes and Provide Capital to those individuals and those businesses to help them rebuild those homes if there's a high probability of natural disaster events happening again in the future it means that the cost of insurance doesn't matter and the cost of real estate doesn't matter because the federal government effectively can come in and support those prices in the same way the federal comes in government comes in and supports the prices in agricultural products through the work in the farm bill and through the biofuels mandates which were also proposed to be extended in this thing so the federal government's playing both a Market role and you know also kind of this role that I think fills the Gap where people want to have a customer where there isn't a customer and an employer where there isn't one so like how did we get to this point so from first principal perspective we've kind of I think lost the narrative on what the federal government was meant to do if you think about the simple rubric in a bill like just go back some period of time and someone says hey I I want something I want to have this in this bill and you're the representative that's supposed to vote on that bill and say yes or no it's very hard to just say no we are not going to spend that money what's the incentive to say no the alternative is you say yes but give me X as well there is an incentive in that response and the incentive there is to get something for your electorate the people that voted you in as a representative of the house which is how we ended up at this point where everyone says I want something if you're going to get something and eventually the government the federal government swells to spending roughly 24% of our GDP now the biggest mistake I think the founding fathers made was that they didn't create constitutional limits on spending and enrichment and this was because they had these deeply held philosophical beliefs that relied on the House of Representatives to provide a check by the people if you read The Federalist Papers and I went through a couple of these recently and I use chat GPT to help me kind of you know bring out some of I think the key points but in the Federalist Papers 10 and 51 James Madison emphasized that the structure of govern was meant to ensure that both state and federal governments would limit each other's excesses including their financial ones and then in the Federalist Paper number 58 he said the House of Representatives has control over the quote power of the purse which gives the people's Representatives authority over Taxation and spending but they also warned along with Alexander Hamilton of the dangers of unchecked government power through burdensome Taxation and excess spending which would ultimately erode individual freedoms so they recognized that there were going to be limits but their expectation was that the house and the individuals that were electing people to the house that were members of this Republic would come in and say we're going to keep that from happening and clearly something went wrong along the way that we got to this point where again spending is 24% of GDP and I think that the biggest thing they got wrong was that they didn't create these constitutional limits on federal spending or taxation through either a balanced budget um structure spending as a percent of GDP no federal debt or term limits or all of these other mechanisms that could have been introduced at the beginning that could have created some structural limits instead they assumed that there was this natural limit that would emerge as a function of the democratic process because of how they formed the government but unfortunately I think they failed to realize that the electorate would eventually not want the freedoms of the people of the time back then in 1776 this was a pioneering country where everyone wanted to come here to have freedom to do anything they wanted everywhere they wanted to build a business to Homestead to be a rugged individuals it was entrepreneurial yeah it was and over the last 250 years we've gotten used to an increment in lifestyle every year and discovered that we have a mechanism to force the increment in lifestyle through the actions of government and so the electorate has stood up and said I want more each year and I want the government to provide it for me if the free markets are not doing it and that's really where we kind of got to this point where I think we elected people to the house who ultimately had this incentive that said if I give you this I need to get this and we ended up swelling this so I I don't know if it cracks with Doge I really don't know if people step up and recognize the limits of of government and what the limits should be of the federal government on an electorate basis it's an amazing moment to see that Elon went on Twitter and said hey guys this is nuts and everyone said this is nuts we're not going to elect you if you do this if that momentum and that transparency can keep up I I hope that people start to connect the dots that this isn't a free lunch that the federal government spending is not Limitless and it's not unaccountable Aon I think we have enough people who are notable now speaking up about this excess spending and the outof control debt that it's now in Vogue to talk about austerity to talk about inefficiency and that really all comes back to Doge and dare I say you know the conversations we've been having this podcast for 2 years that this is becoming acute what are your thoughts on this Vibe shift this complete pivot where we've gone from my Lord everybody saying I gotta get mine you got yours I'm getting mine to name and shame they're naming and shaming now very specific pieces of pork in these bills you know including stadiums for n the NFL and people are like why is the NFL getting this if they were 20 3040 billion doll two just quick thoughts one Patrick Carson had a at a tweet yesterday that basically said this sort of this this big misinformation kind of created by by people that want to be slow is that you you you have to sort of choose two of fast good and cheap and and I think basically you know elon's companies have sort of always effectively kind of proven the opposite which is which is actually if you just like start to ask the question like why does that thing have to cost as much you know if you're building a rocket or or designing a car or developing batteries like why you know if you just do ground up why does it have to cost as much and so so what's interesting is is that that probably if most people looked at what the government was spending on they wouldn't even feel like like you know it's not even helping them in like the disaster relief sense of of you know I think like that they're probably actually people that actually do experience the benefits of disaster relief it's actually just all of the all of the overhead that we've created to getting anything done in the government that could actually make the government better serve the all all the constituents I was talking to you know sort of a nameless individual in the government the other uh the other week where by Congress they have to hire contractors to do work and the contractors the Contracting firms charge them two and a half times the the the sort of cost of of an individual employee that they could otherwise hire and so and so now now they have to Outsource the work and they don't have U any accountability mechanism for that contractor and so I think there's not a single American that could look at that and say and say this is like actually working well like yeah we we are spending more money to do less and the ultimate outcome is actually lower quality and so so you have to at some point just kind of do a little bit of a reset moment and that's obviously the the upside of Doge is like it's like it breaks every rule of us thinking about how how you would actually go and attack this problem we thought you'd attack it through meetings and and we would do it through through Congressional you know sort of processes and and research and it's actually just it is you know obviously a much more sort of founder startup oriented way to approach this there's going to be lots of things that are broken glass around the edges there there's no question but I think what's interesting about this week's event is I think that there's been this underlying kind of notion of like you know Elon and and and whatnot at all you know don't understand the the government enough to be able to change it and it might actually be the case that the government doesn't understand Elon in the sense of of like he will just see this thing through and the tools at his disposal and Doge's disposal is is sort of you know completely unprecedented in terms of the ability to put any anybody in congress on notice if you know if basically they are promoting things that that are not making the country better so so the the the you know the thing that we saw this week was actually that playing out everybody's been wondering well what are the actual you know what are the formal mechanisms Doge has to accomplish an enact change and it's like you just saw it like they can just they can just create enough visibility and Spotlight on the problem that it it causes it a level of discomfort in in supporting moving forward with with whatever that thing is and so I think it's interesting I have no opinion on the actual elements of the bill other than from a a process standpoint and a and a new kind of case study of of how this is going to play out is I think we're seeing some early indication of what Doge will will be able to do Aon how do you feel about this Doge effort as someone who is a public Harris supporter so you you've come out I think you've you've been public about this I want to understand like why people wouldn't be supportive of this effort right like like what is like what is the motivation for people saying this isn't a good thing we shouldn't be doing this like because there's a lot of folks that have gone on these shows it's like they they blast Elon they blast the V but like aren't these principles like shouldn't they just be Universal that we should not be wasting money and stuff sure of course the now I mean so to give some credit you know you have rokana supporting it you have fedman supporting it Bernie Sanders you know everybody Bernie sand yeah Bernie Sanders had a good call out for El you have everybody has their thing in the government budget that they don't like so assuming that they see that as something Doge can contribute to you could probably get actually broad support you know there's a classic you know sort of reflex within within probably Democrat Party On on at this point just because of elon's support of trump that that if something is a is an Elon project they're gonna they're are gonna instantly respond no matter what the thing is as a negative without you know kind of actually saying is this does this actually support actually something I do agree with and so that it's all partisan none of its first principles right for these people for this group of people which isn't everybody that's gonna be true of both sides like Michelle Obama Michelle Obama was like let's get kids healthy and all of a sudden now it's in Vogue to do that so so I I think I think we're just in an environment where where any anything will become partisan what's interesting is is that because of the you know some of the the cross party elements of of of trump and now's cabinet is it might pull in more more of the Democrat Party than than would usually happen and and I think because of Elon and the people that are s surrounding Trump you probably have a bit more air cover for the ranas of the world to also step up because if it was like Steve Bannon and Trump doing Doge it would be like ah okay you know maybe this is not the thing to to you know lend credibility to for for Pure political reasons if you have you know some of the best entrepreneurs that that are out there actually like literally in the cabinet driving this at some point you know it's it is an IQ test if you're if you're on board or not shabath this is a c change that we're seeing and to Aaron's point this Administration gets to pick their priorities but everything can't be a priority or it's not a priority therefore they've picked the priority of smaller government more controlled spending over say Mass deportation or removing more rights from women to choose when they have an abortion Etc so this seems like a distinctly different Focus for Trump 2.0 the second term what are your thoughts on what we saw this past 72 hours relation to this bill it was the most incredible change in how politics will be done going forward I think that people are probably underestimating what happened here this was a multi billion grift that was stopped on a dime over over 12 hours of tweets you would have never thought that that was possible the point is to put a dagger in something that big that had so much broad support just a few hours earlier I think it's so consequential in how the United States can run going forward so building on what you said shath also very interesting here is the fact that Trump hasn't taken office yet and they're having this huge impact this is a current a month before he's even in office if they can stop this what will they do when they actually are in power I think right now you're seeing the first order reaction which is about the bill itself and I think that misses the point the bigger issue is going forward you will have the ability to and part of it is because we have a set of tools now that allows us to do this to read 1500 pages in a matter of minutes to summarize it into the key essential elements to really understand what's being asked and what's being offered and then to put it in a digestible format that normal people can consume yes then all you'll have to do is just connect the dots and tell your Congressman or congresswoman that you'd like or dislike this thing and what you're going to see is a much more active form of government and I think that's the really big deal the fact that it's it really becomes the voice of the people now the alternative can also happen imagine there's a piece of legislation that is very controversial but it turns out that people actually want it then the opposite will also happen and can also happen now so I think that it's a very nuanced and interesting way that governance can happen the other thing that I'll say though which is funny is we should have a segment called today in hypocrisy and if I was running the segment what I would say is today in hypocrisy you have a group of people I.E the Democrats who are very upset and who now point to Elon as sort of like some Shadow cabinet minister or some Shadow President elect or some Shadow first buddy right first buddy I love that except then I thought to myself well hold on a second like there was like some something UNT happening in the shadows and I thought well actually this is the exact opposite the guy is tweeting in real time his stream of Consciousness you absolutely know everything that he wants because he just lays it all bare and at the same time I thought it was really interesting the same people who were saying that were the ones that finally admitted that they were hiding Biden for the last two years and I thought did we just miss this like the same people that are like hold on Elon I don't like the fact you're telling us what you actually want on Twitter transparently while we hide our president of the United States in a box well yeah so you're referring to a Wall Street uh Journal story that broke uh think this week in hypocrisy Jason take it away yeah I mean it was just as we said on this pod we knew that they were hiding him now the cover up is worse than the crime and the coverup is a cover up they were not letting him take meetings they were limiting access to him Dean B Phillips came on this program shout out to him congratulations the great run you know he he just told the truth here he's not up for it he's Su Downing you know terrible situation people get old and people have cognitive decline the end question hold on a second so just to contrast and compare Trump is not even in office you know Elon is not a member of the cabinet per se these are effectively today still private citizens when there's all of this noise about what happened over the last two days to stop an absolutely ridiculous pork barrel bill but when are we going to double click into what decisions have been made in the last two years that were actually bidens versus surrogates that just decided and who gave them the authority to make those decisions if they're going to do Aaron and you and I are left leaning moderates I think that would be the most accurate way to describe us I mean if they want to do an investigation there should be an investigation to did they know that he was in massive cognitive client and let him stay in charge of the nuclear codes do you agree or disagree this is uh this is sort of not not the part of politics I I think about as much so I'll I'll leave that up to you as the other left leing moderate so yeah no I just wonder if like this is a crime that they like what if it turns out he actually has Parkinson's or Alzheimer's like a diagnosis it's not out of the realm of possibility that they covered up an Alzheimer diagnosis chth and if they did is that criminal I mean it's unethical it's deeply unethical yeah it's very dangerous Yes again it just goes back to the people elected Joe Biden he won fair and square he ran on a specific mandate that the people endorsed I just think it's devious though that certain figures in that white house took a level of power and decision-making Authority that they were never entitled to if if they wanted that they should have run and they should have been elected that's what we all sign up for and so I think that that idea that we let that happen or that that happened to the American voting public is I think very unfair that's why I think you have to realize that and you've said this before we need these checks and balances going forward and I think the way that you have these checks and balances again is Veer towards transparency the more transparency there is and again this is where I'll say you may or you may or may not like Donald Trump but the one thing you will never have to be worried about is whether you will not be able to hear from him in first person you're GNA hear from him that is absolutely true I mean simple suggestion here chth if you're ever in doubt you will be able to know very quickly where he stands on whatever topic is important to you and I think that that idea is very important because then if it's filtered through somebody else because of some health issue that's then covered up we're making decisions that impact the entire world we're making decisions that impacts the economy we're making decisions that touch hundreds of millions of American Lives who are making those decisions yeah it's kind of crazy I I have a simple suggestion here with these bills by the way when they're 1500 pages how about for every hundred Pages you release you have one day of review so if you want to release 1500 pages 15 business days review does that sound reasonable maybe three weeks and then just stop doing 1500 at a time break these things up into two or 300 Pages at a time I just love the fact that people are motivated and they have the will and the desire to focus on these focus and desire because you people have to have the will and people did not have the will to get in the weeds and examine the spending and now it's becoming like invogue it's becoming a Pastime to question the spending this is a really great moment in time for America the other thing Jason that we haven't done is I think that killing the bill was step one the thing that America has not yet seen and I think Aon brought this up with the Patrick Collison tweet which is just excellent Nick if you just want to put it up there it's it it really is true America still believes that the more you spend the more you get we do at the core that's why there are 1500 pages of spending in here because people want things because they want things to be better what we need to train people to understand is actually that it's the lies that are told that make you think that with more money comes a better outcome and we see every day in Silicon Valley we all start with next to nothing as a startup and we outmaneuver and we out execute companies all day long with way more resources so it has nothing to do with the resources contraint leads to great art Aaron your thoughts no I mean I I can't add that much more to this I think it's there there's probably a little bit of a a disconnected times from the let's say the the voting public and and you know broad constituents from then those that have sort of seen this in real life being in inside of a company having to you know do a startup and scaling up and and just this um the the perverse incentives to build bigger teams spend more your project then is more important the more dollars it gets we have all of these systems in place which is the stuff that gets attention are the things that you spent more on so you have all these weird incentives to actually have your thing literally cost more to have you know more overhead because you've brought in more contractors into the project that then you know you're going to get some you know kind of future benefit from in some way so you you have a lot that that is sort of fully broken in this and um and there's no there's there's you know it's hard to imagine any other way to Veer off from that path other than something that does shake things up you know as much as doge is doing all right listen we can't do any worse than being massively in debt so just let's have a culture of yes we can no yes we can you could have you could have Runway de yeah I think we already have that I mean we this is for for people who maybe are rooting against Trump in the audience or rooting against this because they're super part all I'll say is I know these individuals around Trump root for them and root for this process please because this is a path to fixing the most acute existential problem we have which is our debt you don't have to like Trump to like Elon to like V and to like these other individuals sacks included there are great people who are being called to serve let's judge them based on their performance that's all I ask for the people who hate Trump who hate these indiv ual judge them on their performance they've come out with a bold plan let them cook once they've cooked then judge their results that is what I'm telling everybody who hates Trump and who hates this Administration and who's partisan on the other side let him cook judge the results oh I'll just throw out one more one more thing in this because I think doge is The Branding of Doge is is often the efficiency side which people always go to the the spend side but the corollary to that is the regulations that that obviously are expens expensive to maintain and and that's what creates layers and layers of overhead on reviewing everything that's coming in then to the government and um and you know unfortunately we have great examples in California where where literally we spend more to do less and and it's because we've ratcheted up these layers and layers of Regulation and I have friends literally doing climate Tech in in like climate Tech you couldn't imagine something more probably left leaning Democrat that they can't actually get things done in California the state that that you would imagine to be the most kind of climate first you know friendly State because of the amount of Regulation that prevents them from getting things done so so you know there's there's actually this like you know total combination of actually a fewer regulations you'll spend less money in government you'll actually grow the economy faster which will create more jobs like all of the things get solved the more efficient you get you know kind of large on all of the topics so this is spending great Point Aaron regulations next let's see what they do there I was in the room when Antonio graes was doing zero based budgeting at Twitter now X and sax and I were looking at roles for people what the what this team can do in terms of making things more efficient it's amazing what can happen when you do zerob based budgeting and when you just think from first principles well do we even need to do this does this need to exist take all these regulations put a 20e clock on half of them a 10year clock on the other half can can I just give one one more random example feel free to edit it out chath you like this because it came out of meta um uh do you have you followed the Z standard compression library from meta so this open source Library kind of a you NextGen compression on on data and we finally it took us you know probably too long but but the team worked insanely hard implemented this compression algorithm we literally our uploads and downloads got faster we spend less money on on networking and compute and it you know took some re-engineering of the system but like it like that's just like not a concept that that people go into problem solving with which is like what if the thing actually was cheaper to run and it was better and so think about all the systems of government that could be that could just be upgraded and then you would spend less money actually maintaining them I mean we spend you know hundreds of billions of dollars way way too much on Legacy infrastructure technology we could automate more you could spend way less money and then get better outcomes so this is just happening everywhere and and I don't think people realize the the scale of the so and I'll just give an example when we went into Twitter nobody was coming to the office there were people who hadn't committed who hadn't come to the office who hadn't committed code in six months so what were they doing right so you start looking at the data then they were spending an enormous amount of money on SAS software that nobody had logged into and then they had desk software to Route people around that was costing $10 per day per desk per you know location whatever nobody was coming to the office but they were paying for software to Route people to the right desk in office suting it the waste when I tell you the waste and the Griff and I'll just call it what my interpretation is stealing they were stealing from those shareholders the government is stealing from taxpayers it has to be fixed let our boys cook freeberg you get the final word before we go on to conspiracy corner you got nothing all right let's go straight to conspiracy Corner everybody put your tin foil hats on there were drones over New Jersey Thursday morning the FAA ban drones this is breaking news in parts of New Jersey until January 17th due to quote unquote breaking news special security reasons they also warn that the government May respond with deadly force Against drones posing a threat this thing is getting Crazier by the day there have been thousands of reported drone sightings in New Jersey and bordering states over the last week here's some examples play the clip yada yada until Thursday morning why house officials have been dismissive saying repeatedly that nothing significant is going on one of the theories was that there was a that the drones were looking for nuclear material AKA a dirty bomb or lost radioactive material or the the ultimate a lost nuclear bomb from like an actual nuclear warhead from Ukraine on Tuesday Morning the mayor of Belleville New Jersey suggested the drones could be looking for that radioactive material that went missing on December 2nd that was radioactive material uh geranium 68 we'll get details on that from freeberg in a moment and then of course conspiracy theories are going wild it's Iran it's UFOs and my favorite Project Blue beam which is that NASA is using Holograms and other technology to create a new world order and religion and projecting Jesus into the clouds you can look that stuff up or we'll have Alex Jones on uh in Sax's seat one week okay freeberg you're the genius here tell us what's going on I think there are three likely explanations the first is that the government's got some activities that can't be disclosed so we don't know and they can't talk about it no one can neither you know say yes or say no to it so you know that's kind of one that that's pretty possible the second is these are just individuals with a bunch of drones messing around having fun trying to wreak havoc could be fun bunch of kids I think we've all been there the third is what I would call kind of a bit of a more nefarious like this is my conspiracy theory I think it it could be considered a scop okay so right now the US has a significant regulatory burden on on drone utilization in a commercial setting and it's very hard to use drones you have to have lineup sight to the operator these things aren't supposed to go on their own there's all these rules and restrictions and so on and so forth meanwhile you've got countries like China rocketing ahead so I don't know if you guys know the company mwan in China you know the food delivery company have you guys did you know that they do a large amount of drone delivery of their food now was not aware of that yeah we're testing that here in the US the drone delivery business in China is already $30 billion a year and they're also launching a pretty significant Fleet of what we would call kind of the eeve talls or flying cars the expectation is that by 2030 there'll be 100,000 flying cars moving people around in China and these are huge efficiency gains in fact with mwan you can now order food while you're on the Great Wall at one of the ramp parts and it'll bring the Drone will bring the food to you while you're walking the Great Wall as a tourist and in the US the reason that these things haven't taken off and the reason we don't have a large kind of drone industry which is clearly emerging is going to be a huge economic driver for China and others around the world is simply the regulatory restrictions and so if you were going to try and mess with the US's ability to move forward with the Drone economy you would probably try and wreak some Havoc Stoke some fear and get people to say hey this doesn't seem cool what's going on I don't like that there's all these drones in the sky I'm freaking out and try and get The Regulators to come in and say hey we're Banning drones and set up everyone including the people in the government to say we should take a beat we should think a little bit before we deregulate we should who would do this who's the motivation Uber Eats and Postmates no no no no it could be the the other government uh that's my scop point this could be you're saying this could be China doing this to try to slow down our economy think about it if you're going to pass a bill in Congress to make drones more freely rable in the skies you're going to reference back this crazy story in New Jersey everyone's freaking out about it and you're G to say hey wait what about all that stuff that happened in New Jersey maybe this doesn't make as much people are kind of scared about it we shouldn't rush we shouldn't rush we shouldn't rush that would be my scop theory that's my you know kind of conspiracy theory tinfoil hat I don't often do them but that's what I would kind of think about I think the first be Alex Jones would be proud Aaron uh why don't you jump fence and tell us your best conspiracy theory of this no I this is that was all crazy pills what I just heard uh there yeah take some I think there's like there's like 10 higher scops you would do if you wanted to to get us to you know have a collapsing economy than going after drone deliveries but um no I what would they be what would they be I mean well first of all I think I think you'd have ai like like do a robot I think you'd have a robot AI thing that goes you know runs a muck um robot RoboCop yeah yeah I I think that would be way sooner than you're worry about food delivery oh you have 10 self-driving cars hop the you know hop the curb and and crash into a storefront self- driving is on ice for two years that would be uh you know an example shamat your thoughts you got some conspiracies here what do you think's going on here no but I thought that the most credible thing was that they were they were looking for radioactive material that somehow some got lost and why would they only look at night actually it's interesting you say that there was somebody on Twitter X who claims to be an expert in this field and there's a startup actually that I just talked about which one kakoa the great I think it might have been King KOA the great shout out to King KOA the great and his mom's basement eating why do you hate Kena he's don't hate Kena I don't hate Tred to get me bad because he said I was trying to dox him you always can kcoa he's great no I just think it's hilarious that people are retraining K KOA the great as if he's like this great journalist and he's in his mom's basement eating hot pockets or he's working for Putin he's a really good I don't know do I want my jcal or kacoa I don't know I don't know who do you take I mean your is pretty good likea I subscribe to kencoa yeah Aaron Ley you have a favorite who are you are you autism capital or kcoa what do you oh I like autism Capital too I think he's absolutely I'm I'm liking Giger these days oh you're into Giger capital g capital I read all PCS I think the nighttime thing would be it would be at least typical of this government to do a striesand effect of of just like maybe if we cover it up nobody will see and then obviously it's the biggest thing so but if they there is a startup that makes I we really looked it up and there is a startup that makes drones to do this specific task to look for dirty bombs in ports and ports obviously look for these things it's a known threat this is not rocket science sorry and why and why only at night did free because that they can read the signatures better was the theory that at night you can read the signature which doesn't make sense to me Science Guy you want to come in here I don't see I don't see how nighttime You' get a better read on radioactive material that doesn't make any sense so that made no sense that sound like a crazy thing but anyway we're living in crazy times speaking of Crazy by the way that was my first consp theory in 208 episodes of the all in pod so very nice I actually can participate in conspiracy corner now I'm coming back next week with a better one okay read us read us some more news go to Google news and read us some more news so we can do another to Jesus Christ man read for us no you do it go no you got the do in front of you okay so today the Dow Jones Industrial liage is up 23,000 to 44,000 TR to guys make you look kler said he's super happy sking that's enough I'm going skiing I thought it was cool how he read the entire Congressional bill um earlier yeah all 1500 J loves to filibuster I'm not filibustering all right listen here let's do another story let's see if you can contribute something open a update M your contribution was amazing I was actually using chat GPT to go into the to go into the founding father's papers and uhal I was reading The Federalist Papers with G 13 in number 44 I would like to quote Hamilton the musical Hamilton the music I was comparing the lyrics from Hamilton the musical oh my God hey Nick can you send JK another Yahoo news article let's get going come on let's go Yahoo let's go let's go can't wait can't wait can't wait to see you tomorrow let's go oh my God we just can we just end it here yeah no do it do it because I want to talk about open a you want to talk about open you do yeah yeah give him his red meat give chamad his red meat all right here's an update on closed AI flipping and uh Sam Alman super villan Sam Allin secure in the bag meta wrote a letter to California's attorney open yet on open for profit conversion two months ago open aai announced a $6.6 billion fund around $157 billion valuation they're producting 3.7 billion in Revenue this year pretty great Revenue growth but there's a poison pill in the deal open AI must convert to a for-profit within the next two years or investors can ask for their money back and right before they announced this round you remember CTO Mira morat and two other top researchers resigned many people saw this as a protest Elon who put the first 50 million in and co-founded open AI is currently suing the company and seeking a court order that would stop the for-profit conversion now Zuck is joining team Alon Elon and Zuck are in some weird pairing up they're not in the ring not in the Octagon no last week meta sent a letter asking California's attorney general to stop opening eyes for profit conversion what do you think of this we've got them now not in the Octagon but they're in the political Arena math your thoughts I think that this is so interesting so I was looking at all of these things if you if you put them all together it paints a really interesting story so you have Elon filing an injunction which basically says you should not allow this conversion to happen until we sort out all of these details because if you allowed it to convert and then I win it'll be very messy to go backwards I think that that's a pretty credible legal argument then you have Zuck basic Bally say hey elon's right this company should not convert but the more interesting thing that really got me thinking about this was a chart that Menlo Ventures put out Nick can you just show this what this shows is just what's happened in the last year and what do you notice what you notice is the market share of open AI has changed pretty meaningfully from half to about a third and what you see is anthropic doubl meta roughly staying the same Google picking up steam and it started to make me think this is very similar to a chart that I would have looked at when you know in6 and seven when we were building Facebook because we had this huge competitor in Myspace that was the deao winner and we were this upstart and it made me think is there a replay of this same thing all over again where you have this incumbent that Pioneers an idea and they start with 100% share and then all of these upstarts come around from nowhere and then I thought well what is better today if you are a company that's just starting versus if you were the incumbent and I think that there's a handful that are worth talking about so the first is when you look at what xai is done with respect to invia gpus the fact that they were able to get 100,000 to work as you know in one contiguous system and are now rapidly scaling up to basically a million over the next year I think what it does Jason it puts you to the front of the line for all Hardware so now all of a sudden if you were third or fourth in line xai is now first and it pushes everybody else down and in doing that you either have to buy it yourself or work with your partner and I think for the folks like meta that translates and explains why they're spending so much more it's sort of like this arms race if you can't spend with my competitors I'm just going to prefer my competitor to you so I I think that that creates a capital war in a capital War I think the big companies like Google Amazon Microsoft meta and Brands like Elon will always be able to attract effectively infinite capital and their cost of capital goes to zero which means they'll be able to win this Hardware War okay so put a pin in that then the second thing is what happens on the ACT data and experience side on the training side if you listen to Ilia suer if you listen to Andre carpy what they effectively are saying is there's this terminal ASM toote that we're seeing right now in model quality so what happens a lot of these folks are now experimenting on the things around the model right the user experience how you use it can I keep things in memory can I cut and paste these things from here and there because what it says is like the data is kind of static and brittle but it's actually not that's what we said before because you have this Corpus of data on X that's pretty unique I suppose if Elon fed in all this kinetic data that he controls through Tesla that's very unique does that all of a sudden create this additive pool of information possibly and then the third thing is when you look at that chart what that chart says is hold on a second why are corporates moving around and what I can tell you just through the 8090 lens is we are complet completely promiscuous in how we use models and the reason is because these models offer different cost quality tradeoffs at different points in time for different tasks and so what we are seeing is a world where instead of having two or three models you rely on you're going to rely on 30 or 40 or 50 and you're going to trade them off and you're going to use effectively like an llm router to dis you know load balance them yeah and to Route them or just or just to manage and Route them and then there's an intelligence above that that's constantly tasking and figuring out prompt optimization across these models so it's this thing where we were very reliant on open AI now we're Reliant across three or four ideally we'll be reliant on 30 or 40 and so I just see this world where it's all getting commoditized quite quickly and so I'm just like sort of scratching my head like where is the market value here Aaron your thoughts I know you're very promiscuous when it comes to llms as well uh I I mean I we have a very similar model is what which M said which is we're agnostic so we work with multiple AI vendors but the um uh I think the a a friend deep in AI land a couple years ago right before chat BT said there's no secrets in Ai and I didn't totally understand kind of at the time it hadn't registered what that meant but very quickly it kind of became obvious which is the research breakthroughs sort of propagate insanely quickly across the AI community and so back back to Jas framework if you just think about it as as if if the research effectively becomes open at at some point in time quickly enough because either the researchers move or people publish it or whatnot then it really is a compute game and then maybe a data access game and that means that there's four or five ad scale players that can that can fund this and and I think as we've seen in other areas where it's an infrastructure play you eventually have the underlying service with with enough competition you have the underlying service eventually Trend toward the cost of the infrastructure so so what we should expect is that the price of a token in AI land you know basically will be whatever the price of running the computers are and maybe with like a you know plus 10 20% margin did you see that same thing happen with storage I remember in the early days box and Dropbox and YouTube you all had this major Innovation with storage how did that play out let me give you a fun stat we give our customers unlimited storage we have 82% gross margin so so the the what what happened was the of the underlying storage has gone down by hundreds of times since we started the company and then our all our value is in the software layer on top of the storage so we've benefited by this incredible just you know ruthless competition between Western Digital Seagate other players that are just trying to pack more more more you know basically more storage density into these drives and every couple years they have a new breakthrough we're now you know upcoming we're we're heading toward maybe a 50 terabyte hard drive when we started the company they were kind of 80 uh 80 gab how much of your time in the early days was spent on dealing with this infrastructure issue and then how much of your time and your leadership team's time is spent on this issue now yeah so so back in the day like if we had you know 10 10 people in in engineering you know 80% of them was doing you know pure infrastructure work now if we have a thousand people uh it you know be inverted in terms of the ratio so you just get you get more leverage uh both as the the you know as as you get the advancements in the technology but then also as you scale but all this is to say you should basically anticipate a world where and and I think Zuck is this interesting counterbalance on all of this because of Open Source um if at any moment you know that that Zuck will will basically provide an open source model that is at at kind of best-in-class benchmarks and and at the at the frontier then there is a limit on how much you can charge for the tokens of your hosted model because anybody will then be able to go host the open model and and be able to provide infrastructure around it so so if you always have that counterbalance and the tokens eventually kind of look the same uh the output tokens kind of look the same isn't it yeah always isn't it also the truth that major Enterprises Fortune 500s 200s you know 20 years ago weren't interested in open source and now that's kind of their default they want to buy into open source because they don't want to be locked into a vendor it's actually not even necessarily the case that the that the customer has to pick the open source vendor they might buy it through an abstraction layer that that is letting them get the benefit of Open Source but but still buy through proprietary so you believe open source wins I I believe no no no so I I believe open source causes pricing to always be extremely low right but okay but in this case do you think do you think open source is GNA ultimately win the day in models no not necessarily because only only meta has the has the the scale to be able to provide I think what eron is saying here let me let me maybe try to frame it I think what he's saying is there'll be open source models there'll be close Source models but the price that Aaron or me or anybody else pays these model makers will effectively go to zero got it and it it'll go to the cost of the compute to be to be clear with a little bit of margin for for theer the physicality of that compute got it now it's important step back and say I still think you could probably have the entirety of the model providers make 10 times more Revenue than they do today because we're just literally in like the first percent of the total Tam so so it'd be a mistake to think that that has you know some kind of downward pressure in in terms of the long-term economics of these businesses especially because I think open ai's Revenue stream is increasingly looking like a SAS Revenue business as opposed to just you know just the API kind of token pricing so so none of this is is to you know provide any any sort of color on like what would you bet on today I I agree with jamat that you're going to have maybe not 30 providers but let's say you at least have you know five to 10 good choices all all competing heavily for the next breakthrough like literally this morning Google had a breakthrough in in sort of this reasoning oriented model from from their flat from their Je family 2.0 yeah yeah and uh and and so what's what's incredibly you know kind of great is it's it's sort of the best time ever to be building software assuming uh you know assuming that that you have a play in the market that lets you remain differentiated and the key there is just do enough on top of the AI model that there's enough value there you know how much the world spends on software and software related things every year it's about5 trillion so there's like call it like a trillion and a half of software licenses a trillion and a half of Consulting and a trillion and a half of it folks inside of companies plus or minus a little bit more you get about five trillion and that's compounding 133% a year I I'm pretty sure that the market here shrinks by an order of magnitude and instead of fighting over five trillion I think we'll be fighting over 500 billion what do you think Aaron you you buy that no not at all uh I mean I don't know if you want to make the case more but but the only reason is that I think that as as we delever the software development process from humans I think the unit cost of creating code effectively becomes so cheap that it's going to be very hard to differentially price these products the way that they are so an example would be that let's say you use I don't know pick your favorite piece of software I I don't want to pick on anyway that's why I'm not I'm not saying say office Suite let's pick an office suite everybody's got one sure actually let's pick let's pick on Excel because maybe that's like sure Excel Google Sheets yeah it's not it's not that Excel isn't valuable it's incredibly valuable it's what is the marginal cost of creating the Excel equivalent that is good enough that people switch the marginal cost today is very expensive and you can see that because it's what it costs Google to make sheets but that's humans so the real question is if you have a legion of B that works 247 incrementally and increasingly more accurately every day the question is what is the marginal cost and I think the marginal cost of that is going to be very cheap and when you do that it's very difficult to price it anywhere near the same and the reason is that other companies will then replicate it and say hold on if if Excel wants to charge $100 I'll charge 50 and I'll take a lower margin that's just Supply demand economics yeah yeah so so so so I I think I I I think there's I I just don't agree with the Tam compression because I think there's another kind of counter event that's happening that that AI is is really going after like services and and so that then then conversely expands the the T of software where it budgets weren't usually applied to those types of things but we can get in that in a second but I think we've already seen I think we've already seen this though and it hasn't exactly played out as as you're saying so you already have like a z like so Zoho is this really interesting business it's probably a couple billion Revenue at this point um and it's basically a suite of of extremely lowcost affordable software products by category the cycle time of Zoho is poor but it's not that's not been that's not been the reason people don't switch though they it's all it's all lever to humans I just think it's not a good product it's it's decent enough why do you think people don't switch Aaron yeah I do agree with you Aaron by the way that when you bring C that whole offline Services category online and you automate them with AI I agree with you that that Tam could be ginormous all I'm saying is right the traditional software T today what people spend $5.1 trillion on I think people will spend $500 billion on and barely if that there there may be other things that people spend money on that that are that are wrapped in AI yeah I I guess the the the the counter and maybe you'd look at an Erp system or a CRM system or something else like like it that that is sort of like those things are totally screwed no but like but but this is my point the opposite like the last thing you want to touch is the system that is like like powering your supply chain the companies the companies I talked to they're consistently like rip it out get us to a point where we can rip it out and the reason is because what they've realized is they'll spend $50 to100 million do a year for five features and they're like just give me these five features as workflows yes give me a simple crud database and just get me get out of the way and it's like the tradeoff for that makes a lot of sense because look let's face it like when you have to build one piece of software that has to sell to 50,000 companies the reality is that that piece of software is trying to do everything and then some and it's trying to solve two or three use cases plus around you know five or six common use cases that are generalized yep for 50,000 customers so you end up with 50,000 features you know it's really interesting because aarin you kind of alluded to there's a tam expansion moment there and I'm seeing this on the front lines uh we run a program found University I've talked about it here before where we see people pitching us they're year zero startups two or three person teams and what they're doing is they're not going after existing Legacy software they're kind of going after jobs they're looking at a position or a job somewhere this is an accountant we're going to take an accountant we're going to make of the number one accountant in the world that's an AI agentic an agent we're going to make a podcast producer we're podcast AI we're going to make a virtual assistant with Athena we're just seeing it over and over again that's a whole another category where you study a person's Behavior as they work a social media manager and what they do and then you replicate it with AI and that's something that just hasn't previously been done so there could be two things occurring here chth and Aaron at the same time which is a deflation in Legacy systems and they'll be replaced and then additionally human capital and jobs that are easy enough for AI to do as an agent will also expand the Tam two things at the same time you are completely right about the usage all I'm debating is when you have to price something you have to look at the total cost of what it took to make it and then you want to try to build in a reasonable amount of margin and some reasonable expansion and you discount it back and this is what you think it's worth even though you may not think you're doing that when you implicitly price something that way that is what's happening underneath the hood to the unemotional buyer of that good and all I'm saying is if what Aaron says before which I agree with is true which is the cost of using a model to get to an output effectively goes to zero sort somewhat what I've been saying before the marginal cost of compute goes to zero the marginal cost of energy goes to zero the real question is what does it take to make a good in the digital world let me ask freeberg a question here you're back in the CEO slot at ohal you're doing it every day Dave you're making these choices as to what SAS products and how you're going to solve problems are you looking at it saying I'm going to hire developers who can work 10x because of all these new tools and I'm going to build my own internal systems or are you looking and saying I'm going to buy off-the-shelf SAS products what are you doing when you make your own decisions every day David freeberg well I try and encourage the teams to build stuff um that better meets our needs and then it can actually be a better solution and it can be built- in house and I think we did a I think I mentioned this the last episode but we did a hackathon where we brought in people to learn how to use cursor and chat GPT to build software that had never done it before to try and create this as a capability for people broadly in the organization and they were great tools that came out of it so I think that that's really the future as and this is kind of like you know I'd say early generation but as we get to further later generation capabilities you could see the instruction to a chat GPT or like interface hey I'd love to do the following things with a piece of software it shows you a couple options you pick one shows you a couple ux you pick one it does user testing automatically for you it does QA for you and ultimately it puts it into production for you which is the biggest challenging step right now you still need Engineers that can load stuff into production and do QA but if all of that gets automated as well now any user in a company can actually stand up software to do something for them a non developer you're saying for n developer stand up software maybe so jamat just to clarify you there there's two different ways to approach the lowering the cost of developing software one is that it just creates more competitors in each of these categories which then lowers my price because now there's there's some downward pressure Dave is bringing up an different example which is I'm going to build my own software at effectively the price of zero the the The Challenge on this especially the second one is is like when you like most organizations don't want to be in the business of having to think about about building their own software they just like want it done for them like it's like not a core part of of their like so you know you're your business would be very unique relative to the broad economy which is like I just want like like just like I want a place to put my CRM records I want a place to like just like have my HR get managed and I think the downward pricing pressure due to software cost lowering makes total sense I don't think it's it's a 10x Factor um but uh but but you know I I think that we've always had a long taale of applications that that enterprises build uh you did it in Microsoft Access now you do it in retool um so the next era of that will be obviously AI built and there'll be 10 times the amount of that software but it's not obvious to me why that would go after the kind of core the the core systems of running a business because just most companies are like not looking to re reinvent the wheel of that we're working with an aerospace partner won't say who it is and we sat there and they walked us through what they deal with to make the things that they're making it's convoluted and this is not a software problem it's that there is no piece of software that understands how they want to run their company and so instead they have to morph their orc chart yeah to the tools that are available so I think what freeberg is saying some is some version of that as well he's probably there were probably people there using the tools that were available and as a result at some point some HR person said we need to hire this other person and this other person and instead what what it allows companies to do is just completely reimagine how do you want your company to work and what is the business process you actually need to implement and then let's just get that built and and you know I I I don't know if you guys saw this but Saia Nadella had this clip that's gone pretty viral in the last couple of days where he effectively said the same thing and what he's effectively saying is all these big software systems are business rules wrapping a data base plus an incredible goto Market team you know and this is what Alex karp points to as sharp knives steak dinners and basketball game tickets I don't know if you guys saw that clip I did see the clip yeah he likes to win based on product not on sales effort Nick you should find this clip we don't play golf what we do do is we play software we will put if you want to actually compete compete on your product and what's very special and and yes do I enjoy humiliating people who have better steak dinners and sharper knives and better golf swings yes I do you know what I really I really like that we win in that way it makes me very happy and it makes our clients happy but it really points to the heart of how the software industrial complex that's what I call it this 5.1 trillion doar this software industrial complex how has it evolved I think it's people that build good point products but when the market meaning the shareholders and the public investors demand growth you have this natural expansion and what do they do they inflate the feature set they inflate the cost and then in order to sell that they inflate the set of incentives that they give to the buyer so the CIO inside of these large organizations they control budgets they're equivalent to like state level budgets in some cases you know what do you think the CIO of a top five bank is spending it's probably 15 to 20 billion dollar a year they are getting whed and DED to a way that you could not even imagine I don't even think the CEO probably understands and that filters down through the org and so they don't like totally ruin our whole game here well it's not it's not I'm just pointing it out like it's I mean I I'll say the cter but here but here's another part of the game on the field if these tools make your team yeah 10 20 6% whatever you can quantify more effective at their jobs then it's a dious amount for most organizations who have created very profitable businesses I see this where I was mentioning some companies earlier and their SAS pricing is broken because the number of employees at a company has been going down because people are getting more efficient so now they're looking at saying well what value did we provide with this podcast you know producer in a box and whatever it does they say they were starting with like $99 a month or $49 a seat I said listen just charge a minimum of $500 to get the software nobody complained and they got rid of the bottom tiers so there's a value being created here that is so great that I don't think everybody's going to roll their own like Friedberg because they're going to be like you know what what this is so great it's 6,000 a year fck it yolo I'll just buy it it is today and in five years just like we're all going to and we're all using chat like interfaces more frequently yeah you go to your chat-like interface and eventually you realize you can ask it to build some tool for you that does something and it renders the tool and it makes it possible and it stands it up in production and suddenly you're using it at your company and then you ask it to do another tool and it does it exactly to spec and you define the ux you want you define what you want it to do and it works and it interoperates but you and really clearly and really cleanly with the other tool and there's a big aspect of this where you can start to build all of the software infrastructure that you as an organization want right but I think you and Aaron you and Aaron mentioned this though the extreme difficulty is not that front end part that's easy it's like I think it's less than three or 4% of the work the 96% of the work is how you actually integrate it in the back end and how do you provision it how do you have controls and how do you do security because those things fail and those are implemented in a bot in a highly regulated market as an example you may not actually be allowed to operate let's go through that example and let's say that you're a bank and you tell the AI figure out all the security and permissions and and Authority rules that are necessary for me to operate as a bank and it can actually render it it sounds farfetched today but there's no reason that in seven years that is not the standard isure that I don't have the ability to say go look at all the software that's out there in the world today help build a tool that meets compliance standards that meets all of my security standards and you can actually instruct the AI to operate like a large number of software Engineers need to operate today the Practical issue where the rubber meets the road there is when there is a penetration and a regulator who's a human because it will not have been a bot comes and knocks on your door and you're like well here's this immutable log of the things that I did and they're like I don't want an immutable log who the hell tested this show me the unit test that you created in signed off on so there's a there is a critical human in the loop problem on that other 95% which is where I agree with Aaron that's in in in reach in in like stage one like we're in stage zero stage one that you need no but you'll I think it's in stage five and six I think you'll need governments to take an entirely different risk posture for highly regulated markets I don't see that happening in any in any time in the near future in in life sciences if you want anything in a in a clinical system I don't need to tell you guys this but you have to you have to do a QA test on every single change that ever happens and be able to prove that you tested every single thing so so the idea of a probabilistic AI system generating the the kind of code for you you know in a clinical trial you know workflow like I just think yeah it's going to take a lot of change from from Regulators we got another decade of evolution here to make these things sustainable and have a high quality I think it'll happen faster than everyone thinks yeah and I think actually that's that's like there's actually no reason why that wouldn't be a good thing if that did happen to be clear I I think though back to to you know Jason's earlier point though like then the the counterbalance on the Tam compression is is just now the the sort of thing that we think of as software that market is now is is much larger so if you're if you're selling if you're selling yeah so but like but like that means that if you're selling let's say $50,000 of security software you know maybe that goes down a little bit to you know $225,000 but but you might yeah but you might sell ,000 of new agent yeah that I so I agree 100% with that my only comment is the software industrial complex today has to shrink because the strangle hold that it has on how companies run is incredibly high for an experience that's incredibly poor nobody nobody raises their hand and says gosh this piece of enterprise software that I use in my day-to-day life is as good as Instagram or Tik Tok nobody says that well I mean except about box I was reading the reviews earlier today and I was on G2 or one of those sites and it just box was just the ratings were tremendous so I love Bock I love Bo God it's incredible well I mean I mean just what's the ticker symbol it dollar we try to make it very simple for people so is it dollar box is that what it is I have to put a I'm putting a j trade in here because I may have to J trade this sounds like a really great opportunity for me all right listen Ain you just got Kramer what with your lator yeah yeah you got Kramer FR J trade is I'm just I'm I'm loading up on uh MST and Bitcoin I'm doing a I'm shorting Bitcoin and I'm buying MST I don't know what that I'm not I'm not trading stocks right now I'm focused on investing in a 100 startups per year 100 new startups per year I'm putting the first check into to them that's what I do all right listen enough this has been a great episode Aaron you're amazing thank you for coming on constantly Everybody follow what is your before WRA on AI can I just tell you guys are you at Levy or at Aaron uh yeah yeahia Leia is that the French pronunciation l e v i eia have you guys seen the vo model from Google yeah I have you guys talked about how Google has like gotten some incredible they are they are I literally paid shout out to Sundar oh yeah yeah and serge is going to work every day by the way he's at work what can Brown do for you jel Sundar back in the group chat by way you guys see Genesis yesterday well okay let's let me just put this up here and then I'll te it up to freeberg Google has been putting out new models they have this new Google Gemini and they have one with deep reasoning and their 2.0 model I did a sidebyside test same prompts with our friend s deep madra on this week in startups just this week we did multiple tests he was he has the 01 Pro the $200 per month Gemini was beating that hands down for me and I think he conceded that with their free model and their $20 model if we just gave it decent prompts I think Google now has reach parody and they have an app out freeberg what are your thoughts because people were counting them out and here we are I think not only have they caught up I think they've exceeded what are your thoughts they were late the compounding effects are playing out and it's only going to continue to compound and I will say the data repository at Google the engine that they have the infrastructure the team all everything down to components is advantaged and so everyone's been kind of counting them out but it's clear they're in it to win it they're here 70% of the usage of open AI is consumer 70% consumer what does that mean for them as as Gemini and Google get get momentum I think you'll end up having a Gemini that has ads eventually and you could pay and have no ads or you could not pay and have ads no meaning do you provide enough value and of enough quality where folks don't need to then folks stay on Google on google.com I'm asking you whether it impacts open AI the quality of Gemini as it increases or do you think that these usage cohorts are roughly set I jump back and forth personally my experience is I don't feel like I've got embedded data on open AI or on Gemini that makes me stick with one I'm just like with Google I'm going to go to the best interface the best engine so I do think that there's fungibility here and people will move over as they realize better results better performance but I will say that what we're seeing now with the data Advantage at Google so you know the internet all these llms are are language models trained on text from the internet right there's call it 50 billion words on the internet and I think think if you estimate the data repository in these training sets it's like probably a couple terabytes 1 to 5 terabytes or something like that but if you look at the the the the video data that's out there there's hundreds of billions of hours or 100 billion plus hours of video data a large amount of that is sitting on YouTube and by some estimates there's a thousand exabytes of video data on the internet so about a billion times more video data than there is word or text data and I think we just saw that play out with the vo model that laun yesterday but here's some examples of VO Google has all of this YouTube data you know whether or not they're using it to train I don't know the answer I don't think they're allowed to is what I heard from the Insiders they have to redo the terms of service to get explicit permission to use it but you're right these models are tremendous whatever they're using and and it's basically rendering physics or it looks like it's rendering physics now Genesis came out yesterday and it's open source so you can actually go play with this Genesis model which similarly renders the actual 3D objects into a 3D environment so you so rather than rendering a two-dimensional set of pixels to look at a video video visual with Genesis as you can see here you can type in a prompt and it renders this extraordinary video that that also has underlying it the three dimensional objects that make up the video Banas which means you could change the angle right and you could work with it and also with Google and this you can start to implement three-dimensional models based on some prom that says something like I want to have the camera angle at this point in the room I want to have the room look like this I want to have this color this wallpaper and suddenly everything starts to prompt in a way that you can actually render in real time a video game a movie a visual experience and it goes to this point that we're unleashing the capacity for human imagination and creativity with these systems because it's no longer just a lookalike two-dimensional image it's now an actual three-dimensional object that then renders the visuals to make this happen so we're starting to see the next era of these models that goes beyond just text prediction what do you think Aaron yeah there was another release last week of experimental project for browser use by Gemini which is another Advantage because YouTube has obviously an incredible amount of screen sharing data and and videos so so you have you know like like we think about visual as just like okay it's it's going to be you know for for developing you know CG characters or something but it's it's actually just like like just all the use cases of a computer are also on YouTube Project Mariner is the name of it right where your Chrome extension AI can control your browser to do things and then if you go to the AI Studio from Gemini they they have a mode where you can turn on your webcam and and then you you basically it has full visual uh kind of access to anything and and so they're they're cranking and it's super exciting because that like just you can tell that Google's woken up and and they are just on Full Assault so the I mean just in 10 days the quantum the AI open source Gemini updates it's like every morning you're waking up to a Sundar tweet that is that is some new breakthrough so well yeah it's amazing when you fire 20,000 people who weren't doing any work and were involved in di nonsense and then you yeah that's not the point the point the point is they've had this compounding you know infrastructure Advantage data Advantage Personnel advantage and now they were just a little late to the game but when you they distracted is my point they were distracted with nonsense you know that's true come on the first version of this came out it was making Abraham afrian American and Asian you know like they were distracted okay a big part of Google's orientation historically has been Don't Mess the don't mess up the Machine Classic kind of big company dilemma where if I do something that's either disruptive to my core business or if I do something wrong where I will invite Regulatory and consumer scrutiny I'm going to get wrecked and so they avoided stuff early and what they've done is they've changed the posture in the last two years and now the posture is launch early launch aggressively push hard we have to win this battle or we're going to get eaten alive and it's amazing to see the founders and and Sundar lead this organization I think there were a lot of question marks a year ago but I think that the questions have been answered I agree I I I'm saying it right now I think we've hit Peak open AI in the market I think they're going to be the number three or four player I think Gemini meta and xai are going to lead them if we were sitting here in three years I think open AI is number three four five not one or two I don't think they get the one or two slot what do you think Aaron open AI who's in the one and two slot you I don't think you want to bet against Sam and Greg you don't want to bet bet against Elon you don't want to be bet against Sergey now uh you know in in office with h with Sundar you don't want to bet bet against zck so I think I think the rankings are kind of less interesting as much as just the fact that that it's like game is on you do not have you do not have incumbents that are sleeping at this point that's just going to push everybody forward so just an incredible time for everybody what a time to be alive all right four the Sultan of science David freeberg the chairman dictator Jamal payaa and I don't have a nickname for you Aaron Levy but we will have one soon this is the all-in podcast we miss you Saxy poo we miss you say come back soon Saxy poo come back soon SX we miss you all right everybody have a great Christmas break and we'll see you shortly go sign up for our spam at allin.com sign up for the spam newsletter we'll send you some uh updates on the podcast anything to sign up for I'm joking I'm joking sign.com love you let your winners ride Rainman David and instead we open source it to the fans and they've just gone crazy with it love you queen of going [Music] besties are my dog taking driveway man oh man myit will meet me at we should all just get a room and just have one big huge orgy cuz they're all it's like this like sexual tension that they just need to release somehow what you're we need to get merched I'm do [Music] all I'm going all in