The Ledger, every show

“The chip companies are now stepping up and saying, okay, we'll absorb some of the risk. We'll put in the capital to finance this build out where the demand on the other side is not so clear because of course the chip companies also get to book this as revenue.”

“If anything, Zuck's attempt to compete with OpenAI, and just the failure of that so far, just demonstrates how good the talent still at OpenAI is.”

“What I think is going to be interesting if to the extent that the bubble unwinds at some point, it's going to be an equity unwind. And what that looks like is 40% of the S&P 500 is basically a bet on AI. And so to the extent that the bet unwinds, stock prices …”

“I don't believe in King making and that's maybe a controversial thing to say. I think one of the lessons, you know, you'd think like, oh, Sequoia should be able to King make companies and like, that's so great. And that would be, by the way, if that was true, …”

“I think that the new playbook for these AI startups is actually going to be much more about hire the AI generalist, this 23, 24, 25 year old who's really native in AI, really passionate about it, and I think those are the sort of the front lines that are going…”

“The burden to deliver value is very, very high in business. And we're not seeing that so strongly in AI yet.”

“It's like, we're probably gonna be fine. AI is probably gonna change our lives and make it better. It's gonna improve productivity. Maybe AGI is gonna happen when you and I are like, 90, but I don't think AGI is happening like tomorrow.”

“There is a definition of success in this business. You're either a slugger or you are not. If you are generating billion dollar gains, you are a slugger. Doug Leone is a slugger. Pat Grady is a slugger. And Jurita is a slugger, right? So you either are sluggin…”

“I tell founders all the time, if you find someone who's going to transform your business, give them five percent of the company. Now I say that it's an extreme statement. Maybe it's four percent, maybe it's three percent. But I think we get very married to lik…”

“Definitely OpenAI. I mean, OpenAI has a brand, it has consumer distribution, it has product market fit with ChatGBT, which is a 3.4 billion dollar revenue business now. I think ChatGBT will definitely be around. Yeah, I think a bunch of the others will too for…”

“You basically have about three trillion dollars that needs to get paid back just since chat GBT.”

“Today humans do 99% of cognitive work in 50 years, humans are going to do maybe one percent of cognitive work, right?”

“What has happened with Anthropic in the last year is nothing short of mind blowing to anyone who studied companies, right? It's the fastest growing company in history.”

“Today it's a hundred billion plus across OpenAI and Anthropic. Now there's still two companies driving the vast, vast, vast majority of the revenue in AI.”

“If you kind of think about those dollars of CapEx, the only possible way to pay those dollars back is going to be AGI.”

“The current status quo of we're spending two hundred billion dollars a year on CapEx. And, you know, yes, we're renting our GPUs, so revenue is accelerating, but fundamentally there's no There's not a new business line coming out of it. That is not sustainable…”

“Andre Karpathy just joined.”

“The reality is, when you look at the ecosystem today versus two years ago, the vertically integrated companies have not been able to leverage that vertical integration into some model advantage.”

“Part of why I think Meta and Google are so all in AI is their businesses are the most at risk from AI. Like if we all move to ChatGPT, if we all move, if our time eyeballs move to these other interfaces, Then these ad driven businesses have a lot of questions.”

“In some ways I worry for Amazon, which is like, Heads I lose, tails I lose. It's like, if this all goes well and AGI happens, they're not well positioned for that. And then if it doesn't happen, they're kind of in the bath with everybody else on the capex that…”

“Apple is the one, by the way, with the do nothing strategy. Like you gotta look at Apple and say, wow, like there's some chance that Apple just comes out looking like a genius on this. Like if it does commoditize, Apple's not spending money on CapEx.”

“I do think we're in an AI bubble.”

“If you invest one hundred fifty billion in NVIDIA chips, that's about three hundred billion of data center investments. And to pay that back, the person using the compute needs to earn a 50% gross margin. So there's about six hundred billion of revenue that ne…”

“Is there actually an end user for this compute? I don't think that's been answered.”

“One of the predictions I made last year, in addition to saying it was going to be the year of the data center in 20, 25, I said, Hey, we're going to have these construction delays. We're going to have issues now in building out these data centers. And the info…”

“One of my core perspectives that I've been developing over the last 18 months of writing about this is that construction itself is going to be a moat. The ability to build things is hard. And I think we underestimate that.”

“If you're a 25 year old recent grad from an elite university who is perceived to be an AI expert, you can get a fifty hundred million dollar pay package right now. And if you are a brand name that everyone recognizes your name, you can get a billion dollar pay…”

“I think they're symbolic of this sort of desperation in the ecosystem where it's like, we need to eke out progress. We need to prove that all these investments are worth it.”

“That said, I think we are psychologically biased to overestimate what that percent contribution is. And it may be the case that there's these broader macro variables, which we'll talk about, I'm sure later in this discussion, there's these broader macro variab…”

“And I think that Meta, you know, these hundred million packages are coming in large part from Meta because they haven't performed as well as they thought they were going to.”

“I think that competitive pressures will push all of the model providers to spend more time on this and to have teams focused on this. So I think the answer is yes. I do think that this is a trend that is going to be durable.”

“So I think if you're a producer of compute, you're fundamentally in a commodity business, just like an oil company is in a commodity business, and that is going to trade a different way, and that is going to have more cyclicality than if you're in a non-commod…”

“The difference is that these monopolies are not hiding in plain sight. We all now know that if you build an amazing tech company, it can be worth a trillion dollars. In 2000, if you told people that they can have a trillion dollar tech company, they would have…”

“And I think probably 80% plus of the dollars in AI are still going to producers of compute. Not consumers of compute.”

“And so I think until the incentives change, the behavior is not going to change. And so there is no coordinating mechanism.”

“Microsoft walked away from two data centers and it sent a message to the market like, hey, we're not stepping up.”

“I actually think that what's interesting about this AI build out is that for the most part, and let's put Oracle aside, which maybe has some debt, but for the most part, the AI build out today has been equity funded and cash funded.”

“I think that we are, I think there's a number of things that are over being overestimated. I think the most important one is the timeline.”

“Like the path we're on was invented by these people who are raising the most concern or saying the timeline is longest. And it's the people who've been in AI the shortest who I think are saying like, Hey, it's going to come tomorrow.”

“At the end of the day, our job is to invest in companies that become really successful, not to be like super smart about analyzing them. And so I think sometimes the instinct to criticize a gross margin can get in the way of money making.”

“Maybe 10 years ago, if you joined a startup and people didn't join startups that often, 10 years ago, maybe 10 years ago, if you joined a startup, like there's this whole experience curve, you're the junior engineer. There's a lot of people who are smarter tha…”

“I would say, and I think this ties into our conversation so far, that AI, that defense is the next AI.”

“And so, anyways, I think that the Transformer paper moment was the was the Ukraine war, and then I think the Chi-GPT moment hasn't happened yet. And so I think that defense is actually, you know, is under-hyped in some ways, or like underestimated in some ways”

“We're like one percent there on catching up. Like we're actually so, so early in this defense cycle because, you know, now we have a few dozen companies, maybe a hundred companies that have sort of new innovations. They're not integrated into the force structu…”

“And I guess my framework, and this is the thesis that I've been investing behind now for the last couple of years is my framework is there are going to be fewer companies that succeed in defense for this reason. Defense is consolidated for good reason. There's…”

“And in my view, Andrew is clearly the national champion in the U S and credit to that team, just really phenomenal company, phenomenal visionaries.”

“I think the idea that we're going to be sitting here in 10 years talking to our AI, having a relationship with our AI, I think that's very likely, and I think it's a little bit sci-fi right now and I think it's going to get less so in the coming years.”

“No one's ever going to train a frontier model on the same data center twice, because by the time you've trained it, the GPUs will be outdated, and the data center will be too small.”