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Bond Crisis Looming? GOP Abandons DOGE, Google Disrupts Search With AI, OpenAI Buys Jony Ive's IO

All-In with Chamath, Jason, Sacks & Friedberg

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  • Bond Market Signals Fiscal Trouble
    • Rising interest rates significantly increase the US government’s interest payments, worsening the debt problem.
    • Weak demand for Treasury bonds signals market concerns about high deficits and unsustainable debt levels. Transcript: Jason Calacanis The bond market is the captain. Apparently, Treasury Department sold $16 billion worth of newly issued 20-year bonds on Wednesday afternoon. And there was weak demand. This pushed yields higher across the board. The 10-year, which Besant has said to focus on because it’s the benchmark rate for most borrowing costs, mortgages and stuff like that, it spiked. And here it is. It actually hit a five handle at one point. A lot of people were hand-wringing about this. And the S&P dropped 1.5% in about 30 minutes. Here’s that chart as well. And the three major indices were all down between 1.5 and 2% on the day. Obviously, in related news, the House passed the big, beautiful bill at the 11th hour last night. This makes the TCGA tax cuts permanent. And it’s estimated to increase long run GDP by 60 basis points. That’s if all the cuts were implemented. It’s also going to reduce tax revenue by $4 trillion over 10 years is the estimate. And it’s going to add between $3 and $5 trillion to the national debt over 10 years. Freeberg, what’s your take on the BBB and the weak bond market, all of it? David Friedberg I just want to take a quick primer on how the government gets funded. I know we assume everyone understands it, but I think it’s important for folks to really grok it. For the federal government to make payments to employees and contractors and buy stuff, they need to put money in their bank accounts. And the way they put money in their bank accounts is they issue bonds. These are treasury bonds. So they’ll sell treasury bonds to the public, and individuals buy it, companies buy it, banks buy it, and foreign governments buy U.S. Treasuries. And they transfer or wire cash into the federal government’s bank accounts, which they can then use to pay for stuff. And then the Treasury Department needs to continuously sell treasuries to raise cash to fund the government. When folks don’t show up to buy treasuries, that’s a bad thing. And that means that the government needs to increase the interest rate that they’re paying on those bonds. So what we saw on Wednesday was a really weak demand signal for treasuries on this, you know, modest treasury auction selling $16 billion of bonds is not a lot. There’s hundreds of billions being sold each quarter. And so this was not a big number, but there was no buyer, the market was really dry. And so everyone that participates in financial markets saw this and freaked out. And the big motivation, the big understanding of the relationship here is to your point, that this big tax bill and spending bill is passing out of the House. And that bill, as we talked about last week, has a high deficit, and that’ll run up US debt over time, which makes it more difficult for the US government to pay its bills because it has To issue more debt, interest payments have to be paid every year, and so on. Now, if you just pull up this one slide, this is something I thought was really worth sharing. The CBO estimates, which is what you referenced, Jason, are estimates of what the cost is going to be over time. And this is from Jessica Riedel out of the Manhattan Institute put this chart together. Jason Calacanis Congressional Budget Office. David Friedberg Yeah, so the Congressional Budget Office, the CBO, creates an estimate of the budget, the spending, the deficit, and ultimately the incremental debt that the U.S. Government will need to issue to fund its obligations over time. This is a chart that was put together that the expectation on a baseline basis is that over the next 30 years or so, U.S. Debt to GDP will climb to 203%. But what a lot of people don’t know and don’t talk about is that in the CBO estimates, they assume in all of their models that interest rates are at 3.6%. And with the bond sell-off yesterday, what we are now seeing is 30-year treasury interest rates at over 5%. It’s 5.1% this morning. And for every incremental 1% above 3.6, you’re spending an extra $350 billion a year in interest. $350 billion a year. So as we go up by 1.5 percent interest, over the next 10 years, we’re spending another $5 trillion just on interest payments, half a billion dollars, half a trillion dollars a year of Incremental interest on the difference between 3.6 and 5.1. That’s an incredible recursive problem. And I say recursive, because the incremental interest that we now have to pay because interest rates just went up, because the market is demanding more payments from the government To fund this means that the government has to issue more debt. And it quickly gets away from you. There is a non linear relationship between the deficit and interest rates, which drives up the debt problem in a nonlinear way, and it gets away from you and you can’t fix it. And that’s what the market is telling us is that the current bill that’s being passed out of the house is showing such an extraordinarily high deficit, that the market does not want to Buy the debt from the government. Rates are now climbing, and that creates a massive problem for the government. Jason Calacanis Okay, Chamath, you’ve been tweeting about this. We thought we were going to get an administration and maybe some focus from the government that we would have more austerity measures, balance the budget. Now it looks like we’re going to pour gasoline on the fire. What are your thoughts? Chamath Palihapitiya I think we have to be careful here. So Jason, the political calculus will be for the president to decide how much credit he actually wants to take for this bill. Because even though it has his name on it, the contents of the bill are different in actual facts than what I think he intended. And what I mean by that is when you look inside of what happened in the 11th hour last night, it’s disappointing. This thing is like anti-Doge. (Time 0:02:51)
  • Bill Opposes Fiscal Austerity
    • The recent big, permanent tax cut bill worsens the national debt rather than controlling spending.
    • This bill contradicts the public’s desire for fiscal austerity and risks inflation and higher borrowing costs. Transcript: Chamath Palihapitiya Think we have to be careful here. So Jason, the political calculus will be for the president to decide how much credit he actually wants to take for this bill. Because even though it has his name on it, the contents of the bill are different in actual facts than what I think he intended. And what I mean by that is when you look inside of what happened in the 11th hour last night, it’s disappointing. This thing is like anti-Doge. If Doge was meant to be a reflection of the American voting population’s desire for meaningful reform in government, cost controls, some form of austerity, and to get this debt spiral In check, this is the opposite of that. What happened was, in the 11th hour, you had a handful of people abstain. You had one person that passed away in the last few days. You had one person that fell asleep on the floor of the house, so he wasn’t even woken up for the vote. And in the middle of all of that chaos, what happened was all kinds of things were added and attached and canceled at the last minute. Because what happens is you have to have these puts and takes as Freeberg described. If you want to spend over here, you have to find a cut over there. But I think what happened was there was really not a lot of financial literacy used to decide what to actually put in and what to cut. And that lack of discipline is going to create, I think, a negative set of consequences. So what are those consequences? Today, the tenure is around 4.5%. At the rate in which it’s escalating since Liberation Day, by the end of this year, we’re going to be past 5%. The 30-year is on a rate now to get past 6.25%, maybe even Those are way beyond what most people thought was a reasonable place to be for the United States economy. And so what will the implications be as rates go to those levels? You’ll de-lever from the United States, you’ll sell US debt, you’ll own things like gold and Bitcoin. If you’re curious about what’s happening to gold and Bitcoin, they started to spike in the last few days. You’ll have ratings organizations that add to this cascade by downgrading the United States. That happened on Friday. You’ll have very smart people starting to signal that this is a much harder problem than they initially thought. That’s how I personally interpreted Elon’s comments over the last few days. So what was the House supposed to do? I think what they were supposed to do was implement some form of austerity. They were supposed to, by the will of the people, pass a rescission bill. They were given that rescission bill. It was just $9 billion. They couldn’t even pass a $9 billion rescission. And instead, they passed a $4 trillion inflation to our debt. Now you hand this to the Senate. The Senate is in a very difficult place as well. Do they want to, quote unquote, claim victory and say, here you go, President Trump, here’s your bill. But they’ll further bastardize this thing. And it will be even further away from what I think benefits MAGA and benefits Main Street. So who does it benefit? Current course in speed right now, this bill is about traditional Republicans and traditional Democrats circling the wagon and putting on a platter a set of things that I think will Be hurtful to average Americans. You’re going to see energy prices spike. You’re gutting the number of electrons that will be available for things like AI. You’re going to increase Medicare prices. And the math is wrong. So when you sensitize this thing to a four and a half or five or five and a quarter rate, so meaning not what the CBO use, but the real conditions on the ground, this thing is an albatross. And I think unfortunately for President Trump’s agenda and for a MAGA movement, is the worst of all conditions. The financial markets will punish this. And then the last thing I’ll say is now, to top it all off, I think that Jerome Powell will see the writing on the wall. Many aspects of this thing are inflationary. And if they’re not handled well by the Senate, he has a lot of room to actually increase interest rates. So I would just say that the Senate has an incredibly difficult job. I think the president has an even more difficult job about what to do right now, but the House did nobody favors. (Time 0:08:17)
  • Realistic View on Tax Cut Bill
    • Despite the bill’s flaws, it permanently extends 2017 tax cuts, avoiding a large tax increase.
    • The political reality limits immediate spending cuts, making this bill a pragmatic though imperfect choice. Transcript: David Sacks Well, look, I mean, I wish we had 435 members of the House who thought like Freeberg about spending and deficits. We don’t. The Democrats all want a lot more spending and a lot more taxes. Remember, if it wasn’t for Manchin and Sinema, we would have had that $4.5 trillion build back better. And among the Republicans in the House, unfortunately, we have a bunch of Republicans who are pretty soft on spending. I mean, you can call them rhinos if you want. And we only have, what, like a three-vote margin in the House, and the Democrats are not cooperating in any way. So you don’t have that many votes to spare. So what I’m saying here is you can’t make the perfect enemy the good. I think you have to be realistic about how much we can get done here. And I do think that this bill does contain a lot of good things in it. There are a lot of priorities for the administration in here. Do I wish it cut spending more? Yes. I mean, do I wish that it made all the doge cuts permanent through rescissions? Yeah, absolutely. I think it’s outrageous that there were enough House Republicans who didn’t want to back up doge that that wasn’t enacted. But there are a lot of good things in the bill, and I should just highlight them for balance here. So the number one thing here is that this bill will permanently extend the 2017 tax cuts. And if we don’t pass this bill, let’s just assume that we do nothing. If we do nothing, you’re going to get the largest tax increase in decades. And it won’t just affect the rich, this affects the middle class as well. The 2017 tax cuts increase the standard deduction, which is important for the middle class, it raised the child tax credit. So again, if you do nothing, you get a huge tax increase as soon as the 2017 tax cuts, which Trump passed back in his first term, when they sunset. So that’s number one. In addition, there are promises here that were made during the campaign to eliminate taxes on tips and overtime that have been enacted. And the president promised to do those things, and he is accomplishing those things. So I think that’s important. There’s funding for the border wall here, 10,000 new ICE officers, more detention beds, and so on. On energy, it repeals methane tax and unlocks new oil and gas on federal lands. And there’s a bunch of other things as well. So there are a lot of good things in here. Now, to Tomas’ point, will this bill be bad for the Republicans’ prospects in the midterms? I guess what I would say to that is, I don’t understand how you expect to do well in midterms if Republicans preside over the largest tax increase in decades. A tax increase that Joe Biden tried to get during his administration. (Time 0:14:14)
  • Fix Bill with Senate Revisions
    • Senate must add meaningful technical guardrails to fix last-minute bill changes.
    • Protect incentives for energy production to avoid capacity shortages and rising prices. Transcript: Chamath Palihapitiya And I think that that is a good part of what this bill did. The problem was what happened from 11 p.m. To 6 a.m. And that’s all of the nonsense where, I’ll just be honest, I think the people in the House are not nearly as financially literate as they need to be. And I what they wanted to do was pass something and throw it over the wall and say, mission accomplished. Now it’s up to the Senate. And the good news is, look, the Senate has these six-year election cycles for a reason. It allows them to think strategically and see past what’s right in front of them. So I still think that there’s a chance for the president to have his cake and eat it too. But I just want to highlight that as a supporter of his and a supporter of that MAGA agenda, which I think a lot of people voted for, I just want to be honest and say this is not it. And there has to be some meaningful reforms in the Senate version of this thing that gets sent back to the House. So I’ll give you an example of one. 81% of the incremental energy that’s generated in the United States last year came from private enterprises that were investing in short-term forms of power that have a credit and A transfer market tied to it. This is just the financial machinery. This is how Blackstone and Goldman Sachs and Brookfield and all of these big players move tens and hundreds of billions of dollars around. They changed those rules at the 11th hour. What is the impact of that? Elon foreshadowed it. Nick, maybe you can show the headline of the article. He said, we could be running into a power capacity issue by mid next year. Now, if we knew that, why would we take the short-term incentive away to generate more electrons? All the great things that David has done, that the president has done on AI, I mean, we’ll talk about what happened in the Middle East. But when the rubber meets the road, and you actually have a shortage of electrons, because these financial actors, they’re not, you know, and in fairness to them, they’re acting rationally. You take the financial incentive away, and you can’t underwrite this thing, what are they going to do? They’re just going to stop doing it. So in the absence of electrons, what happens? Prices go up, it’s inflationary, and now you’ll have to allocate electrons. Does the electrons go to an AI data center or does it go to a home? In a different example, actually on the residential side, places like Florida, I think there was an incentive for batteries. So if you are about to get hit by a hurricane, you can buy these big battery systems from Tesla, as an example, but there are other ones, Generac and whatever, Train. That was cut out. And so in Texas, all of these impacts will have negative consequences. My point is, I think you have to really look at what happened in the 11th hour and fix those things. Because the problem with these plans is you can’t look at gains that are in years six through 10 to justify pain in years one through five. You can’t do that because I understand how that mathematically makes sense. It doesn’t make sense practically for the average American. It’s just not how life works. You don’t go into a J curve. (Time 0:17:41)
  • Presidential Leadership Needed
    • The president should use veto power to demand spending cuts and fiscal responsibility.
    • Leadership must push Congress to rethink and reduce deficit increases to avoid fiscal crisis. Transcript: David Friedberg I think the writing’s on the wall that the system is winning, And the rebels came in, and they tried to fix the inefficiencies in government with Doge under Elon’s leadership and our Friend Antonio’s participation and a great group of individuals who are true patriots who are spending time trying to help reassess how the government operates. And they, as I’ve said, from day one, from my first visit to DC during inauguration weekend, and every visit I’ve done since I always leave after meeting with members of Congress deeply Worried that they won’t actually do what they need to do to make the changes. And the last line of defense ultimately is the president with his veto authority and his ability to tell people to go back, rethink this, and cut spending. (Time 0:21:37)
  • Japanese Bond Crisis Warning
    • Japan’s bond yield surge signals risk of global financial market sell-off.
    • A sell-off of US debt by key holders like Japan could worsen US borrowing costs globally. Transcript: David Friedberg Nick, if you’ll pull up the Japanese government 40 year bond yield chart. So just so you guys can kind of observe in the last couple of days, we’ve seen Japanese bond yields soar from two and a half percent to three and a half percent. Remember, Japan owns $1.1 trillion of US treasuries. I’ll just read a quote from a guy who’s the chief global strategist named Albert Edwards at Societe Generale. And he said, recent developments in Japan may signal the end of the favorable investment cycle that’s been established since the 2008 global financial crisis, potentially reshaping Global financial landscapes in the coming months. Can I translate that? Chamath Palihapitiya Because it’s incredibly important what Freebrook said, but I’ll translate that. What he is saying, so this is a guy from SockGen, since 2007, 2008, every now and then the markets give you free money. One of the most obvious free money trades was the yen carry trade. And in order to execute that trade, you’re effectively leveraging treasuries against the Japanese bond market. What he is saying is that there is increasing risk that that trade unwinds. When that trade unwinds, what you’re going to have are net sellers of up to, as Freebrook said, a trillion plus dollars of U.S. Treasuries. What will that do? It will further exacerbate the market’s reluctance to own U.S. Treasuries, which means yields go even higher. David Friedberg Which means interest rates for businesses and individuals go higher. Correct. The only way to keep those interest rates low will be for the Federal Reserve to try and step in and buy those bonds, which will devalue the dollar. And in his commentary, he went on to say that the 20-year Japanese bond auction that just took place, similar to the U.S. Treasury auction that just took place, was the worst they’ve seen since 1987. That’s how significant this event was in Japan over the past week. So the massive climb in bond yields in Japan indicates a massive sell-off in credit. And remember, if you look at the historical perspective, when the global reserve currency nation sees their debt sell off, it usually is part of a global sell off that happens. It’s not just the US that gets affected. And any one of these markets can cause a cataclysmic follow on to the rest of the global financial markets. Like if Japan sells off too much, we are going to start to see a lot of unraveling happening. (Time 0:22:32)
  • Google’s AI Search Pivot
    • Google pivots strongly to AI-first search, blending AI and traditional search.
    • AI Ultra subscriptions show Google’s shift toward subscription revenue away from ads. Transcript: Jason Calacanis Let’s start with Google here. They had their IO conference on Tuesday. This is where they show a bunch of new stuff. They get developers to come together to embrace their products. And the stock ripped 5% on the day, which might be a turning point for Google. Up again today. And up again today. Search was the big announcement. And we had a discussion with Sergey about that in Miami. And we had multiple discussions about it here over the last couple of months. They demoed something called AI mode. No, not founder mode, AI mode, and they compared it to regular search. Here it is on the screen. If you’re watching us on YouTube or Spotify, a very elegant app. And so here you have somebody searching. And what you can see is in AI mode, it looks like a nice comprehensive search instead of 10 blue links, and tons of advertising. So you can flip over and see all or you can do a perplexity like search here, we’re showing you what this search would have looked like the AI summary at the top, and then your 10 blue links. It’s distinctly different. It is exactly chamoff what you talked about, somebody has to have the courage to flip the switch here. And so that was the big drop. And I think that in your interview, Dave, didn’t Sundar say, we’re going to integrate ads into that kind of result? Yes, the comprehensive search result? David Friedberg I think there were a couple of things that Sundar said in the interview that showed up in a really important way IO. The first was exactly this, which is to make AI mode more ubiquitous in search and effectively over time replace search with this AI mode experience, which they’ve been testing in a Small group. And now they’ve expanded very specifically to kind of Chamath’s point a couple of weeks ago, they should try and flip the switch. Well, it appears they’ve done that. The key question and the challenge has always been, what’s the revenue per query? How are you going to make money? And I think one of the other kind of interesting announcements that we saw come out of IO, which indicates the business model opportunity here is not just AI mode in search, but some of The other tools that they launched, bundling them together. And they have this product offering called AI Ultra for $250 a month that includes, you know, YouTube premium, it includes 30 terabytes of storage on your Google account. It includes access to flow, which is their movie creating AI model where you can use they have VO3 Gemini and Imogen below it. Those are the three models that contribute to this movie creation studio tool. And they’ve launched a number of other kind of high value Gemini models as standalone research apps. And you can get access to all of these kind of high powered tools for $250. So I do think this sets a new direction that Google is likely testing as a business model, which is subscriptions, you’re saying we met Yeah, very high dollar volume subscription model For consumers that over time could create a very meaningful shift in the revenue mix for Google away from ads and more towards subscription revenue that we already see in some of the Consumer services like YouTube and YouTube TV. This is, I think, a really important turning point. I would say if anyone were to identify the week that Google really pivoted into the AI business model, it might be this week. They launched over 15 products at this thing. And another important one I’ll highlight, Sundar talked about this in the interview I did with him. In the early days of Google, from 2002 till about 2011, Google had this kind of playground of products called Google Labs, where they would introduce new stuff. I don’t know if you guys remember checking out new stuff. So they relaunched Google Labs like a year ago or so. And as Sundar said, they’re putting a lot more stuff in labs. So labs is now becoming the new testbed. And they launched a bunch of the announcements in labs. So that becomes the place where they’ll say, what’s the business model? What’s the use case? Do people like it? Do they love it? If they do, it graduates out of labs into full production. And I think that opens up the opportunity for some of the things like Chamath was talking about, where they could experiment new ideas, new modalities, and then productize them if they Work. (Time 0:38:21)
  • Google Must Accelerate AI Shift
    • Google has started AI mode in search but needs to fully flip the switch to remain competitive.
    • Delay risks losing ground to competitors like OpenAI, especially with emerging device innovations. Transcript: Jason Calacanis Looks like they’re pretty much on the cusp of doing that. The search results in AI look elegant. They look, dare I say, perplexity-like. When you look at them, I would say, I would like to have that as my default, I think, when I’m doing search. What do you think of the product? We’re showing it here again. And what do you think the roadmap will be? Chamath Palihapitiya I gave one possibility. Saks is totally right. I think that this is not the destination, but they’ve taken a really important step. And now they have to follow through. We all know what has to happen. So I think we’re all just going to debate when it happens. And I think what the market is betting is that it’s going to happen in the next 18 months. So what is it exactly? It’s when AI mode becomes the default for a large swath of existing Google users. How will we know that happens? They’re probably running A-B tests right now. They’re probably gauging behavioral patterns of which kinds of users, what the actual impacts to search are, and what impacts exist to CPCs, to cost per click, which is one of the inventory Types that they sell. But I think this is the beginning of a process. I suspect it’ll be done in less than a year. And for a large swath of users, they are going to put AI in the front door. I think that’s a fait accompli. I think we’re just now debating the mechanics of getting there per how Sachs alluded to it. That’s a really powerful step. But here’s Jason, I think I go back to what they also have to keep in mind. What you don’t want to have when you are going through an innovator’s dilemma is to have the competitor be on to the next lily pad while you are figuring out the current lily pad. (Time 0:43:57)
  • AI Diplomacy in Middle East
    • David Sacks visited Middle East tech hubs, noting Western-educated leaders eager for AI growth.
    • The US must offer export licenses to strengthen alliances and counter China’s regional influence. Transcript: Jason Calacanis Or did you go on Air Saks? David Sacks I took my own plane. So I know that sounds a little bit like a flex, but… Jason Calacanis Were you in formation with Air Force One? Were you like, you know, just right behind it or on your own travel? You were on your own travel schedule? David Sacks I was doing my own thing. Jason Calacanis But did you have the option to go on Air Force One? David Sacks I probably could have if I wanted to, but I actually wanted to get to the region a little bit early because I hadn’t been before and I kind of checked it out. And so I was waiting there when the president arrived. Jason Calacanis Oh, wow. So it was your first time in the region. Yeah. Well, tell us about your impressions generally and what were you trying to accomplish there as the czar? David Sacks Well, I call it AI diplomacy. First of all, these countries are, obviously, they’re very resource rich. They’ve got a lot of capital to deploy. And they’re also very interested in diversifying their economies. They’re very interested in high tech, and they want to do things in AI. They’ve got very significant aspirations there. And so I was over there just to kind of listen and learn and see what they’re interested in doing. And I also got to see some of their tech scenes and just understand better. Jason Calacanis Oh, you went to Digital Garage in Riyadh, right? I’ve been there. David Sacks Oh, you’ve been there. Okay. Jason Calacanis Yeah, yeah. No, no. They are really pushing entrepreneurship, trying to generate more ideas and teach people how to start companies and co-working spaces, all kinds of incentives in terms of visas to Come to Riyadh, to come to UAE, you know, Dubai, Abu Dhabi specifically. So, yeah. Right. I’m curious your impression of the individuals who are leading a lot of these different groups. I was really taken back by how much time they had spent in the West. It seemed like every single person I had met had taken one of these scholarships to go to Oxford, to Harvard, to Caltech, whatever it was. They all had spent massive amounts of time in the West and then come back to either Saudi or UAE or Oman, et cetera. So maybe you could talk a little bit about the people and their knowledge base, motivation, et cetera. David Sacks I had the same observation. The elites of all these countries have all been educated in the West, usually in the United States, some in the UK. The leadership tends to be young, visionary, future-oriented, intensely interested in AI, like I was saying, and they want to do big things in AI. The thing that’s been in their way is that in October 2023, the Biden administration basically put a blanket on the whole region, acquiring semiconductors, GPUs. And it required that every export of a GPU or a server that contains a GPU had to get a specific license from commerce department. And it put a major damper on their efforts to do things like build data centers in the region or to have their own local AI efforts. So they’ve been kind of in this holding pattern where the Biden administration decided to kind of alienate them. And it wasn’t just AI, there was other things too. Remember the fist bump and the Biden administration was very, I’d say- Hostile? Standoffish? Cool to and even hostile towards these states in the region. And I think from a geopolitical standpoint, it was just stupid because we’re in an intense competition, a high-tech competition, a security competition, economic competition with China. And these states want to be aligned with the US and we’re pushing them into China’s arms. And if we don’t give them the ability Biden buy the American tech stack, it’s not like they’re going to sit on their hands and do nothing. They’re going to be forced to buy the Chinese tech stack. Jason Calacanis They’re going to participate one way or the other. Right. David Sacks And China still has some limitations on how many chips it can produce, but they clearly are building their own Chinese tech stack. It’s a Huawei plus DeepSeq tech stack. There’s actually a story in Malaysia just in the last couple of days where they were talking about building a local data center using the Huawei Ascend GPU plus DeepSeq. And then they walk back that story because I think they’re afraid of getting in trouble with the US government. But the point is that if we drive these countries away, if we alienate them, they will end up partnering with China instead of the United States. I don’t understand how that’s in the United States’ interest. Now, as part of this trip, we rolled out a new framework for an AI acceleration partnership with these countries. And there’s a few very important terms that I think it’s worth going into. So first of all, the purpose of the framework is to replace the Biden export control to the region with a framework that gives them the ability to buy GPUs and build data centers. But there’s a few very important provisions. Number one is there’s a matching investment provision. So for every dollar of investment they make in terms of building out data centers in the region they have to invest a dollar in the united states and building out our ai infrastructure So it’s a huge win for the united states in terms of accelerating our own infrastructure build out so that’s point number one number two is even with respect to the data centers they’re Going to build in the region, at least 80% of the chips have to be owned and operated by American cloud service providers or American hyperscalers. So even with respect to the data centers they’re building, the vast majority of the compute is going to be run by American companies. And so, I mean, this to me is just a huge win. Jason Calacanis Were people critiquing it? Like, you know, this expansion? I guess Ro Khanna said like, hey, we should build more data centers here. That was sort of a light critique maybe, or a misunderstanding. David Sacks Well, I mean, there’s two types of critiques. One is the one that Ro was making, and Ro’s a friend, but just, you know, I respond to him on X, which is we are building out data centers in the US. We want to do as much as we can. It’s the Trump administration’s policy towards energy that’s making that possible. We’re making it easier to spin up new power generation, and we’re making it easier to permit. Both of those things were virtually impossible during the Biden administration. So we are building more here in the US. In addition to that, you’ve got these countries who are resource rich and they have their own AI dreams and aspirations. And we can either partner with them or drive them into the arms of China. And the deal we’ve made is to enable their aspirations while getting them to fund more AI infrastructure in the United States. And even the infrastructure they’re building over there, first of all, it’s going to be on an American tech stack, right? We want it to be NVIDIA and AMD and those types of companies that improves our balance of trade. It also ensures that these data centers across the world are going to be built on American technology. We want American technology to become the standard. And if you allow those data centers to be built on Huawei plus DeepSeq, that will become the standard. So I think this is something that people in Silicon Valley intuitively grasp, but people in Washington don’t, which is the way that you win these technology battles is you create the Largest ecosystem, right? You want to have the most partners. You want to have the biggest app store. You want to have the APIs everyone use, the most data. Exactly. So the point is we want to involve the whole world on our tech stack. I think export controls on China, that makes sense, but we don’t want to reduce our (Time 0:57:27)
  • Balanced Export Controls Needed
    • Export controls on China make sense but restricting allies harms US interests.
    • Involving resource-rich countries in US AI infrastructure boosts global tech leadership. Transcript: David Sacks Saks, did Jensen just say that he thought export controls were kind of pointless? Chamath Palihapitiya Did he just say that recently? David Sacks Yeah, he’s against all export controls and you know where i would split the baby here is that i think that most people in washington believe that the export controls on china make sense Because we simply can’t allow our most powerful semiconductors to be to be used by china because of the dual use Now, where I agree with Jensen is that I think we should not place undue Restrictions on the rest of the world using the American Tech Stack, because we will simply concede the market share to China. And so I think he’s right with respect to the Middle East. Now, the other concern that you heard a lot is around this, quote, diversion. The idea that somehow the GPUs or somehow the IP, if we allow it to be used in data centers in the Middle East, will somehow find its way to China. And yeah, I mean, your expression on your face, J. Cal, shows that. Jason Calacanis That makes no sense. It makes no sense. These guys have unlimited resources. They have unlimited ambition. That’s just a naive point of view. They want these for themselves. They understand the power of AI. They don’t want to give it to China. They want it for themselves. David Sacks They make trillions of dollars selling oil and gas. They don’t need to smuggle our GPUs. It doesn’t make any sense. The other thing is that people don’t understand. They’re called chips, but really these things are now the size of mainframes. The NVIDIA data center product, NBL72, is this giant server cabinet. It’s eight feet tall. It weighs 3,600 pounds. It’s not like diamonds you smuggle in a briefcase, right? All you have to do is send an inspector. You’re not putting them up your butt and getting them across the border. That’s definitely not happening. No, it’s not happening. All you have to do is send an inspector to the data center to count the servers, and you can see that they’re there. Ridiculous. So this idea that somehow they’re going to get smuggled, it’s like this totally fake concern that’s been created. It’s almost like a totally fake narrative. Then people say, well, they won’t physically smuggle the servers, but the IP will somehow be transferred to China. Look, there’s nothing in a data center that China hasn’t already seen. They have at least one of everything. The issue is that they can’t reverse the advanced semiconductors just from the chips, right? Because it’s about the process technology that it takes to create an advanced semiconductor. There’s hundreds or even thousands of steps in that process. And you can’t figure out the recipe just by seeing the end product. Chamath Palihapitiya I would like to say that I’m very proud of my bestie. I got three calls. I do want to tell you, Sax, you crushed it. I think you- Yeah, it was pretty impressive. Put your best foot forward and people were really impressed. But I got calls. I got three calls from the powers that be. They were very psyched to meet you and spend time with you. And they thought you were super impressive. So it was awesome. Thank you for doing that. Well, I appreciate that. Yeah. Jason Calacanis It’s an incredible region. And I think you’re doing like a really patriotic thing. If you look at that region, like you said, it could tip one way or the other. They could be involved with the West. We could be building businesses together. And if we build businesses together, that’s better than them building businesses with China. Pretty obvious, I think. I mean- Totally. David Sacks And this is the thing is I just don’t get the opposition of Washington to this. And I especially don’t get how the opponents of this can call themselves China hawks. Because at the end of the day, this is a tech battle between the US and China. (Time 1:04:37)
  • CRISPR Breakthrough Treats Child
    • First in vivo CRISPR gene editing successfully treated a child with a rare genetic mutation.
    • Scientists edited liver cells directly in the patient, restoring protein production and health. Transcript: David Friedberg It’s got a lot of press coverage, but there is a baby born named KJ in the research paper that was published, was born with a mutation that was inherited from the mother on a specific gene Called CPS1. And the same mutation inherited from the father, which resulted in the fact that this gene has a deficiency in it. CPS1 produces a protein that’s part of the urea cycle, so basically breaking down nitrogen or protein compounds in the blood so that they can be excreted. And in the absence of this protein, if this protein is not being made in the body, ammonia accumulates in the blood, and that has extraordinarily harmful consequences including brain Damage and ultimately death. This gene had a G that was mutated into an A on both of the copies of the gene meant that the protein wasn’t being correctly produced. And as a result, the breakdown of nitrogen and ammonia was not possible. And so this leads to a very short life for the very, very, very, very few people that have ever had this double mutation that this particular child was unfortunately born with. So we have technology today, CRISPR gene editing technology. In fact, CRISPR gene editing technology is what we use to do some of the work we do at Ohalo, the company I run. And some advanced forms of gene editing technology include what are called base editors, where you can change a single letter on a strand of DNA into another letter. So in this particular case, changing an A to a G was the goal. So the physician, Rebecca Ahrens-Nicholas, giving her a big shout out for the incredible work she did in partnership with scientists at the University of Pennsylvania. They developed very quickly a very specific gene editing target to go in and find the letter A and turn it to G in this particular patient’s body. Now, remember, we have the same DNA in all of our cells in our body, but specific cells have specific functions and genes are expressed in only those cells. So in this case, it’s the liver that makes this CPS1 protein. And so they had to get the gene editing into the liver cells to edit the liver cells. And if they could edit the liver cells, then those liver cells would start to become more functional, and you would have a functional protein. So they quickly tested dozens of base editors, these are different proteins that can go in and edit. They tested different guide RNAs, these are the guides that tell that editing protein where to go, what part of the DNA to go to, which is trying to get it to this exact same site. They tested it in petri dishes, then they tested it in mice, men and monkeys, to make sure that the selection that they came up with worked. They then put it in the child. And so basically, by putting it in the blood, found its way into the liver. And that’s the fortunate benefit here was at the end of the day, you’re trying to edit specific cells and we can get to the liver by putting CRISPR and the guide into the blood it made its Way to the liver and they coded the gene editing system with liquid nanoparticles which helped it get into the cells it got absorbed by the liver it got went into the cells it found its Way to the site on the dna converted the a to g and as a result those liver cells became functional to make the protein that breaks down the ammonia in the child’s blood. And so they did the first one just to make sure the child would handle it. It worked. The child didn’t have any adverse effects. They then did the second dose, able to take the child off some of the medicines and compounds they were giving the child to break down ammonia in the blood. And then they gave it the third dose and they’re monitoring. So this is the first time that we’ve seen this kind of custom CRISPR gene editing for a genetic mutation being applied to a patient in vivo, in the blood, for a specific target for a specific Particular treatment. (Time 1:15:33)
  • Energy is the Growth Linchpin
    • Energy abundance is the critical key to enabling advances in automation, longevity, and food production.
    • Without enough power, technological gains and economic growth will be severely limited. Transcript: David Friedberg I think the limiting fact… So, the CRISPR side is going to have profound effects in longevity, human health and food abundance. So those are like, I think about abundance in four ways. One is abundance of food or calories. One is in abundance of labor through automation. One is in abundance of lifespan or longevity. And one is an abundance of what I think is the most important and gating factor, which is energy, which leads to everything else. So you can’t have the labor savings without the energy and the productivity improvements without the energy. So the thing I do watch the most, Sachs, and that I do think, you know, I’ve talked about this, that I do think is the critical linchpin for all of those other points of abundance being unleashed Is the energy equation. And this is where I look very clearly and plainly at what China’s doing versus where we’re at today. We’ve got stated intentions, but the actions are where we’re still, you know, we got to start showing up. David Sacks That’s it. But let’s assume that we have enough power. I mean, my point’s really about… David Friedberg Yeah, if we have enough power, the 38 trillion of debt doesn’t matter. Really? You’re saying that in a… No, in a very serious way. David Sacks That’s a pretty important conclusion because if that’s true and we can grow our way out of this problem, then that’s an alternative to having this austerity approach for which there’s No political will. David Friedberg Sax, listen, if I saw us adding a terawatt of electricity production capacity per year in the US, I would shut the fuck up about the debt. I wouldn’t care. Terawatt? We’re talking about gigawattsawatts yeah i’m talking about one terawatt no i know but i’m saying like china you guys know china right now dealing in gigawatts yeah i know we barely have A terawatt and china’s dealing in terawatts china is moving i mean we’ve been through the numbers but they’re going they’re adding an entire united States every 18 months, I think. Every 18 months, yeah. So every 18 months, China adds all of the power production capacity of the entire United States, additional to their grid. Jason Calacanis Mostly in nuclear and solar? Solar is a big component. David Friedberg Hydro. I mean, look at the number of times. They’re adding like hundreds of gigawatts just on the Yangtze. Chamath Palihapitiya Yeah, look at the number of times that Elon has said this. It’s like the amount of energy that’s available if we just harness it from the sun and redirect it with some storage would solve all of our problems. But the problem is that we’re at like just a little over a terawatt. Inching along in gigawatts whereas china is in the terawatts adding terawatts yeah they’re at the same three there are three literally in the corner of arizona or utah there’s like David Friedberg A little three going to eight and we’re at one going to two yeah i’ve shown this many times before on this show crazy this isn’t this is total production over a year. So this is terawatt hours. And this shows 4,000 terawatt hours is where the US is at. If you break that down on basically a continuous production, you measure it in watts. So the number of watts that the US can make in any given point in time or is making any given point in time is one terawatt, one trillion watts. Meanwhile, right now, China is making three terawatts, and they’re scaling up to make eight. We are at one going to two over the next 15 years. (Time 1:24:51)
  • US Energy Expansion Lagging
    • The US lags behind China in rapidly expanding energy production capacity.
    • Catching up in energy is essential to sustain future economic and technological productivity. Transcript: Chamath Palihapitiya So now do you think it’s esoteric s Sachs, to like add these line items at this market? David Sacks Well, I just don’t. I mean, you’re talking about. I just I’m not sure. You’re going to have to provide a lot more information about what exactly is. No, but I mean, look, Sachs, it’s obvious. It’s obvious. Go talk to Brookfield and Blackstone. David Friedberg They’ll tell you. And I just want to translate this. It’s so obvious that automation. David Sacks Has there been happened last night. Chamath Palihapitiya This is the point. David Friedberg I’ll just say one thing, because I think it’s, I just want to add it at the end. Sure. Automation, which is unlocked by AI, we are going to see an explosion of robots. They’re not going to all be humanoid robots, but like robotics allows humans to get an incredible amount of work done. Imagine having the cost to build a giant building go down by 50X. That’s what this unleashes, is all of this automation. Because we’ll have optimists doing it, yes. We’ll have optimists, but we’ll have these robotic devices doing it. You can see it in China. Go look at how they build bridges. It takes like three days to build a multi-mile bridge in China because the whole thing is automated. They do automated drilling. They do automated mining. They do automated building. All of that. And if we unleash that capacity in the United States, we can build things that are economically productive for America, all of this gets unleashed. The technology is here today. The only thing that’s missing is the power. (Time 1:28:15)
  • Accelerate Energy with Private Markets
    • Private markets must focus on scaling energy production to enable technological breakthroughs.
    • Government should ease regulations to accelerate energy infrastructure growth. Transcript: Chamath Palihapitiya The energy. We need to figure out how to get energy. And you can’t decapitate the markets that finances it. We’re all willing to put up the risk capital. That’s the crazy part. We don’t even need the government. David Friedberg I don’t know any of the details of what Chamath’s talking about, but I mean, generally, I do think- Okay. Jason Calacanis And your chairman, Dictator, (Time 1:30:30)