The Exchanges

Q on the call here, uh, Are you optimistic about us coming out of coronavirus in 2021? And what's your best outlook for a return to normalcy? If you had to pick a time when it feels like we can go to a Warriors game or play cards regularly or go to the World Series of Poker. Wendy, do you have a time period where you think that could possibly happen?

A It's all politics and social behavior. It has nothing to do with science. Like after nine 11, there were no more serious like terrorist attacks on the United States, but our fucking lives changed dramatically. We go sit in TSA lines and, you know, get our asses swabbed when we get on an airplane now, and that's still going on 20 years later, so I'm, I'm pretty sure there's a lot of change that's here to stay in the U.S. because of coronavirus and will be even after everyone gets vaccines and the deaths drop below 10 a day and yada yada, so, um, yeah, I'm, I'm not convinced that this is like, hey, here's the date, we're all gonna be out of it, and then we're safe, because people are psychologically scarred. Behavior has changed Businesses have changed. The landscape of how we work as a society has changed, and that's not going away. So it's, it's, it's, it's not like we're going to go back. I think it's like we're going forward into a different world where we operate differently, much as what happened after nine 11.

AI assessment note: “I'm not convinced that this is like, hey, here's the date”

Q Wait, so you're saying somebody said that under Steve Jobs? That there was a lack of innovation? When Steve Jobs was running the show?

A Even during the no jobs era, when the iPad came out, I don't know if you remember how controversial it was. They were making fun of Jobs. He's lost his luster. What is going on with this guy? Total flop. They used to, they made fun of the iPad. They called it like the maxi pad or something. You know, remember all that stuff? It was like this thing, like who the hell is going to use this thing? It's a total disaster. All of a sudden, They sold ten million units, then a hundred million units, and everyone's like, holy shit. I would not count Apple out. There's a system there that's built unlike any other in corporate history. Let's see what happens.

AI assessment note: “Even during the no jobs era, when the iPad came out, I don't know”

Q Friedberg on the non-pology and culpability for someone like Joe Rogan having guests on who are anti-vax or, you know, maybe are debatable in terms of science, because yeah, he is a comedian. But as he says, like the show is kind of big now. So maybe I should do a little fact checking. What do you think he should do when he has scientists and people and people on?

A I'll make two points. One is I don't think that journalism is regulated in the sense that, you know, we have freedom of speech. So anyone can stand up and they can say, I have this belief, or I have discovered this fact. And, um, you may not actually hold that belief, and that fact may not be true, but you're still allowed to stand up and say it, and you're still allowed to have someone come on and say it. Um, and so I don't think that there's any disclosure obligation. He's putting on a show. It's the same as any news show or entertainment show. I don't think that there's a clear line or boundary. I mean, what the heck do we do here? We've all got opinions. We try and talk about the news. We talk about our, our perspectives on the future. You know, what the heck is, is it that we're doing here? You know, there's no kind of clear line there. So I don't think that he has any obligations to do anything he doesn't want to do, except if and when his audience tells him, or the listeners that he cares about telling his customers tell him, this is what we expect and want from you. And then he responds to his customers. That's the way the market works. And that's the way the enterprise system should work. I think the separate bigger question here, that's really important and worth noting. You know, and I just want to speak about this for 1:02. All of the great internet companies starte…

AI assessment note: “I don't think that he has any obligations to do anything he doesn't want”

Q gone. This show has gone off the rails. Um, we promised the audience would take two questions. The first one is for Friedberg, and the first question comes from Daniel Nielis. He says, Alphaphone made great progress in predictive protein folding. Is there anything similar for chemical synthesis? Could a similar system finally predict a less energy intensive pathway to ammonia than the Haber-Bosch process, for example? I don't see.

A This is a, this is a great question. When molecules interact, A molecule is a bunch of atoms stuck together, and there are electrons and protons that make up that molecule, and therefore there's this kind of variable electric potential, energy potential, that surrounds that molecule, and it's very difficult today to deterministically model how two molecules might interact with one another in physics, and, um, it turns out that that resolves using quantum physics. And so today, we can't really kind of put two molecules together and say, here's what happens when you put these together and have a computer program very quickly and easily solve that. Quantum physics is involved, and we don't have a good way to simulate quantum physics in binary computers. So, um, one of the theories, and, and there's been some work on this in, on the research basis, creating the framework for it, is that we can use quantum computers to simulate the quantum states of molecules.

AI assessment note: “we don't have a good way to simulate quantum physics in binary computers”

Q episodes and Joe Rogan was like, I don't care. I got paid. Um, but yeah, it does feel to me like this is a tipping point when you put Brian Armstrong, Joe Rogan and Chappelle together that corporations are going to say, You know what? The mob is fine. You can have your opinion, but your opinion stops where we have to run a business. Freeberg, what are your thoughts?

A I think, I think Netflix has a appreciation for artistry, certainly evident by the money they've spent and the product they put out, and I think good artists and good artistry is, um, Uh, you know, can be provocative. It's designed to make you change your opinion, look at things differently, think about things differently, and be challenged in the norms of, you know, your everyday life, and I think that's, um, that's important in art in all forms, um, and that means seeing and being exposed to and, um, being engaged by things that you don't normally get exposed to and engaged by, and I think that's what Chappelle is fantastic at, and I think that's what other great art is great at, and, um, And I think that as long as Netflix maintains that ethos, that artistry does that, and the good thing is, people appreciate it, and they, uh, they appreciate that, that form, and they appreciate being challenged in that way, and I think that as a result, the market will, as Reed Hastings identified, continue to demand it, and as much as some people might be offended, it's the fact that it is offensive that I think makes it good.

AI assessment note: “I think Netflix has a appreciation for artistry, certainly evident by the money they've spent”

Q Freeberg, you're back in the founder's seat after a brief sojourn as an investor. Any of this ring true to you or obvious? Did you read the essay? Any thoughts on it? The reaction to it?

A I mentioned this when we had our conversation in 2020 around governance and why governments seemed to not be able to synthesize different data to make decisions. They were being told what to do by their subordinates. The difference for me is leading versus managing that a traditional manager, and I've seen this in a lot of companies. I even saw this a lot at Monsanto. The manager Says to the people that report to them, what are you guys going to do? The people, they go down to the people that report to them and they say, what are you guys going to do? And so you end up net net developing this kind of bottoms up model for the organization, which is effectively driven with a diffusion of responsibility. And as a result, a lack of vision. The leader says, here's what we are going to do, and here is how we are going to do it. And then they can allocate responsibility for each of the pieces necessary. And the leader that's most successful is the one that can synthesize the input from the subordinates and take that synthesis to come up with a decision or a new direction, rather than be told what's the answer by the subordinates. So leaders, I think fundamentally are able to number one, understand the different points of view Of the people that report to them. Number two, set a direction or set a vision, really clearly say, this is where we are going. And then number three, figure out…

AI assessment note: “The difference for me is leading versus managing”

Q Why don't you have my position on this?

A Is it because I'm trying to understand because I don't think anyone has, I'm not, I'm not pro establishment. I think you know that. I think I'm, I'm just analytical around the fact that I think there's a strong orientation towards conflict. And I think there still is. I don't think that there's much of an incentive or A motivation to back down because this conflict creates a significant amount of debt owed back to the US. It creates a potential future asset stream, creates a realignment of power. Everyone's looking externally as internal, you know, economic conflict and wealth disparity issues arise and economic growth is challenged and inflation is soaring. It's a great place to, you know, address one's energy. So I think all of this stuff is detailed Analytical shenanigans around who's saying what or who's doing what. I think the underlying thesis and the underlying river that's flowing is one that's like looking for external conflict. I think the same is true with the US and China.

AI assessment note: “I'm just analytical around the fact that I think there's a strong orientation towards conflict.”

Q Yeah, uh, what do you think, Friedberg? Is this a good sign for America and the globe that, you know, and the democratic nations of the world that we're going to put our foot down with China and say, hey, some reciprocity, or you're not going to be able to participate in our marketplace, or is this a personal vendetta from Trump, or a little bit of both?

A I mean, I don't see how it's, um, anything but a slippery slope forward in the escalation of, um, you know, what's gonna be kind of transpiring between these two nations in the, the next couple of years and maybe decades. You know, this goes back to the, you know, early 2000 when Google and others wanted to enter China and China has, for those who don't know, China has this great firewall, right? Chinese citizens can't openly access the rest of the internet. And China wanted to censor content and censor, um, what, what their citizens are accessing. Um, and so there, there's been a back and forth between the tech industry and China, uh, going back almost 20 years now to try and figure out how we can bring our services to China. And then China launches a service that's very successful in the U.S. and in TikTok. And, um, I think it's just a, you know, a part of the reciprocity equation, which doesn't resolve anything. It only escalates things. So it's unfortunate, but it's just kind of another step in the path, um, that I think is inevitable in front of us here.

AI assessment note: “part of the reciprocity equation, which doesn't resolve anything. It only escalates things.”

Q it and I say, Hey, you have 10,000 people in your database. You want to go find them? We have, you have 8000 of them connected that came in through Google search. What about the other 12,000? You want to try to find them in the Google ad network? We can put that together for you. That's actually, if somebody's going to snitch on this deal, it's about the data.

A I'll tell you back in just improving conversion rates drives more ad revenue. And the key measurement we had the year after we bought Urchin and launched Google Analytics was we looked at how much an advertiser spent on Google's AdWords network before and after they installed Google Analytics. And that year, it was a ton of money. At the time, we saw an incremental roughly five hundred million dollars in revenue in ad spend with Folks who installed Google Analytics from before versus after because they then started to change their websites and tweak their sales flow or their marketing flow on their website to better convert customers so they could spend more on the network because higher conversion rates means you can spend a higher CPM on advertising. So the deeper you go from an integration perspective in closing sales, the better you actually can get and the more money you can spend on marketing on the front end. And so that benefits the growth in the network.

AI assessment note: “improving conversion rates drives more ad revenue.”

Q Brueberg, I'm sure you've gotten some good feedback, and we've had a little bit of time, and I saw you were reading a lot of the press hits, and we were talking about that on the back channel. Uh, coming out of it, what do you think the important moments were, and what do you think the public, uh, what resonated with the public?

A I don't know. I think people just like a long-form conversation with, I mean, all these guys from Vivek to Dean Phillips to RFK Jr. to Chris Christie having Trump on. I hope Biden will come on. The long-form format, I think, gives everyone a much more kind of authentic and genuine experience with the, the person that they're thinking about or considering in the voting. So all the wrappers around who this person is can kind of be Suspended for a minute, and maybe just hear a little bit from their mouth directly about The issues, um, and allow all, you know, all the judgment to kind of happen outside of that context, but let them speak, and let's hear the voice of the person that is running, and I'd love to do more of that. I think it's super helpful to hear the long format, um, discussions. I've heard so many people, by the way, reach out to me about Jared Kushner's interview on the show, that they were so surprised how different he came across relative to what they've read about him and heard about him, and he's never done much long form until the show. And that made a real difference for people. So I, I hope, you know, I'm not saying anything positive or negative one way or the other. I just think, like, the format's great. So I hope we can do more of it. And then you can judge if you think they're full of shit or you think they're legit, you know?

AI assessment note: “I think people just like a long-form conversation”

Q 10, one hundred million dollar missions a year. Let's try that and let's accept the three fail and get act. You know, I was going to introduce like time to science as a KPI. Like how, why don't, why do we accept things taking 10 years when they could be a year? Even the decadal process of, of prioritizing scientific missions over a 10 year span is kind of insane.

A A hundred percent. A hundred percent. And I, I think a lot of people hear budget cuts, and I hear this on the NIH side as well now, that the administration and budget cutting is going to take lives. People are going to lose lives. We're going to lose science. This is an anti-science agenda, but the, if you can get more efficient with how you deploy capital and how you manage the deployment of that capital and the utilization of that capital, You actually accelerate science. You accelerate outcomes, and you improve the condition and the prosperity for humanity, for America, and it's completely a misdirected statement when people say that a budget cut is an anti-science movement. It's about finding the right places that you get more outcomes and redeploy in a smarter, more efficient way. It drives me nuts. I just see it, you know, all over, uh, right now.

AI assessment note: “if you can get more efficient with how you deploy capital... You actually accelerate science.”

Q But that's not what's happening in Argentina, right?

A Well. They had, the problem was they were on the other end of socialism failing. Like they already had like, their economy was stagnating, right? And this, this, in this situation, there's a period of time where if you, like, let's say you cut a third of government spending, that's probably going to affect a couple million jobs and a couple million people's lives. And those millions of people are going to say, this is so messed up. Like, what are you guys doing? I've relied on this. I've depended on this. The government's been my customer. I've worked for X, Y, and Z agency for so long. Or for this contractor that just got shut down, and those people are going to say, I need that back, and they're going to come forward with a very simple- Wasn't Elon saying two years of pay, though, if you lose your job as part of the government? If they put, that's, I think that's the-

AI assessment note: “the problem was they were on the other end of socialism failing.”

Q occur on Facebook, but maybe not having the things that, you know, fake news, uh, you know, misinformation, you know, maybe lowering down the rhetoric and the charge nature of the algorithm. Freeberg, do you have any common sense solution here that might address both sides of the issue? Freedom of speech and maybe things being amplified to a hundred million people that are fake and just simply not true.

A We've talked a lot about this notion of like decentralized social networks. I mean, we haven't talked a lot. We've talked a little bit about it. But, um, if you end up putting a regulatory hammer down on Facebook and Twitter and telling them What consumers and remember, these guys aren't media creators, their platforms effectively for search, discovery and access. So you as an individual can discover third party content on their platform. If they start putting the regulatory hammer down on these quote unquote, platforms telling them what they can and cannot make available to their users, there will be another platform that will emerge. And that platform may end up being in this kind of decentralized model. And in that decentralized model, you're not going to have the same degree of regulatory oversight. And that system will end up solving the same use case. Eventually, consumers will get what they want, which is, you know, what Chamath calls kind of this emotional response is eliciting this emotional reaction. They will consume it until they, you know, achieve one of their kind of seven deadly sins objective, which is what's driving the emotion, underscoring their decisions on what to watch, what to consume. And, uh, and there will be an alternative. So, you know, go ahead and play whack-a-mole. You'll play whack-a-mole for a few years, maybe a few decades. But at the end of th…

AI assessment note: “I don't know what the right solution is.”

Q So I think it's, back to that, uh, what do you think, Friedberg? Um, are you, have any opinion on Joe Rogan getting dunked on? Another anecdotal story?

A It's interesting to observe how much we've kind of, as, as with a lot of things, when I say we, I mean, like, Society, each of us, reading social media, the internet, media itself, uh, kind of orient things along a spectrum, right and wrong, black and white, left and right. Uh, I feel like vaccination and vaccines have similarly become you're either vaccinated and you're good or you're not vaccinated or you're bad or the opposite is true. Um, and it's pretty clear there's tons of evidence that Vaccination, while it may reduce kind of the, um, the severity of COVID, um, you know, there seems to be a much less protective effect with respect to transmission, particularly with this Delta variant now, and that's just a fact. You know, you can say, oh my gosh, I'm vaccinated, therefore I'm safe. It's like, no, you're also exposed to Delta as someone who's unvaccinated in terms of catching it and transmitting it to other people. Um, there may be less severity, and there may be less transmission. One interesting fact, by the way, is that there's much, much, much less time when you're vaccinated, um, and you get infected with Delta, when you're actually infectious. Yeah, incredibly, uh, um, incredibly, uh, reduced amount of time from, like, 10 days to, like, one to two days. Um, but still, that is a very infectious kind of variant, and so it's spreading. But it's almost like we're blami…

AI assessment note: “everyone tries to then fit the story into that narrative.”

Q Freeburg, what are your thoughts? Obviously a lot of Americans work in retail. Um, you know, we obviously, uh, have all these restaurant workers who are out of work and travel is, uh, now hitting the end of the furloughs at a lot of these, um, different airlines, et cetera. What's your thought on this unemployment, middle America, um, catastrophe?

A Well, I don't think, um, happiness comes from, you know, absolute standards of living. I think happiness arises from one's relative standard of living, whether that's relative to how you lived last year or how you're living relative to your neighbor and, and seeing some progression over time is the only thing that keeps people happy. It's otherwise society decays. So the notion of some sort of flatlined or even flatlined and inflation adjusted Uh, basic income level for a large number of people will inevitably result in kind of what we're trying to prevent, which is, you know, some sort of decay, societal decay. We have to resolve the, the opportunity framework for people, which is how do you give people an opportunity to kind of progress in their lives and earn more over time and have access to, you know, doing more with themselves while they're here on planet Earth. I mean, that's just what humans need. So, um, you know, maybe there's a short term fix, but I think we've got some structural things to fix to kind of enable, um, opportunities and, and give people kind of an inherent, uh, you know, um, uh, kind of a stepladder in life. I heard a really dark theory a few years ago, which is if we do this, we're going to resolve to a world where we're going to have a bunch of people playing video games because then the only way you can get people to feel like they're progressing in…

AI assessment note: “I think we've got some structural things to fix to kind of enable, um, opportunities”

Q Now you, you have a cash crunch as an LP, and I think GPs are aware of this issue, so, you know, Do you want to provoke that or not? Maybe you run quick, you run early, or you run late. You don't want to be in the middle.

A I'll just say like anecdotally, it, it seems LPs are more reticent. I've heard several folks talk about how they're reducing commitments by 50%, two thirds, or in some cases, a hundred percent, particularly after the, the mad rush for capital over the last couple of years or capital commitments, I would say for the last couple of years. And so The downstream effect of that ultimately, as the current funds get deployed, there are fewer new funds and less new capital being committed from these LPs into new funds and, you know, fast forward two or three years, and there's going to be less capital available and so it keeps the bar high. Uh, so while there's, you know, and so the bar I think is only going to get higher over the next couple of years. As that capital cycle moves its way through the system.

AI assessment note: “I'll just say like anecdotally, it, it seems LPs are more reticent.”

Q a drug, because my understanding, you correct me if I'm wrong, you get a 20 year patent, it's from the date you file it, but then you're working towards getting this drug approved by the FDA. So by the time the FDA approves the drug, this 20 year patent window, how many years do you actually have exclusively to monetize that drug, and then your wider thoughts on this FDA?

A Yeah, I'm not going to answer that question right now, because I do want to kind of push back on the point. I, I'm generally pretty negative on a lot of the comments Lena Kahn's made and her positioning, and obviously, as you guys know, we've talked about it on the show, but I read the FTC, uh, filing, it's in, um, federal court, And if you read the filing, let me just start the company that Amgen is trying to buy is called Horizon Therapeutics, which is a company that's doing about four billion in revenue a year about a billion to a billion and a half in EBITDA. So it's a it's a business that's got a portfolio of orphan drugs, meaning drugs that treat orphan conditions that aren't very big blockbusters in the in the pharmaceutical drug context. And so it's a it's a nice portfolio of cash generating drugs. Amgen Buying the business gives them real revenue, real EBITDA, and helps bolster a portfolio that, you know, is aging. And I think that's a big part of the strategic driver for Amgen to make this massive twenty eight billion dollar acquisition. The FTC's claim in the filing, which I actually read and I was like, this is actually a pretty good claim, is that the way that Amgen sets the prices for their pharmaceutical drugs is they go to the insurance companies, the payers, And the health systems, and they negotiate drug pricing. And they often do both multi product deals. So …

AI assessment note: “Yeah, I'm not going to answer that question right now”

Q people buying a token are doing it to speculate, can the founder say it's a utility token, and then those people who are trading it like either baseball cards, minted coins, whatever analogy shares you want to use, are in it for the increase in the value, should it be a security and should they have to play by the rules we play at in the traditional venture startup game?

A I mean, the question is, what's the utility? So, I mean, if you can demonstrate some utility, then maybe that's the, uh, the, the, and this will probably be litigated at some point, right? Um, I'm sure there'll be enough capital sloshing around here that someone will say, you know what, we believe strong. I mean, we're seeing this happen with ripple already. But, um, someone will litigate this and we'll get some clear definition on, you know, what statutes are going to be referenced and what those statutes might say with respect to the how this ties to the definition of utility and then that'll become hopefully a standard that people can kind of look to to guide them in the future. But it's definitely the Wild West right now.

AI assessment note: “if you can demonstrate some utility, then maybe that's the... someone will litigate this”

Q invested in the market is just so daunting, but the feeling that everybody else is getting rich when you're not is the reason why I bought crypto not knowing anything about it. It's the reason why everybody else bought it. It's this feeling that the train is running away, And you're not going to be part of it. So how do we get them to feel part of that success?

A I think really importantly, you know, today, just, just to give you guys some other statistics, 60% of a middle-class household's net worth is in their home. Only 10, 10% of their net worth is in owning the S&P 500 in, in index funds or whatever in their retirement accounts. And so by creating this American dream around housing and allowing the federal government to provide loans on housing, We've increased the cost of housing. We've created a very like destructive housing bubble in the sense that it has reduced people's exposure to participation in productive value creation. And that's through the ownership of businesses. Instead, we've stored our net worth in a house. And in order to keep the economy and the social structure stable, we've created policies that allow the continuation of the growth in the value of houses. So people feel like their net worth is incrementing.

AI assessment note: “reduced people's exposure to participation in productive value creation”

Q Should the free country of Ukraine be able to join NATO on some timeline, or should they be banned from ever joining NATO?

A I think the statements are correct, that Ukraine joining NATO escalates conflict, and we will find ourselves in a de facto global conflict, world war. Now, the question is, is that the cycle, the natural cycle? I will, once again, Nick, pull it up please, reference Ray Dalio and his typical big cycle behind empires rise and decline. As he spoke at length with us in person about at the All In Summit last year, he points out that the era of prosperity that over the last 500 years we've seen six major empires go through Is followed by a debt bubble, which drives a wealth gap, which ultimately leads to economic challenges, which means printing more money, which is the cycle we are going through right now with a, as you guys know, two to three trillion dollar annual deficit and explosion in federal debt levels. And that ultimately leads inevitably to external conflict to war. Now, the particular motivations in every case, in all six times this has happened in the last 500 years, look different when you read the history books about what were the circumstances that drove us to external conflict, that drove that nation to war. But the truth is, every single one of them was preceded by a debt bubble, income inequality, wealth gap, and the printing of money. And there's a relationship between those economic factors and a desire for conflict, and I think that is what we are seeing play ou…

AI assessment note: “Ukraine joining NATO escalates conflict, and we will find ourselves in a de facto global conflict”

Q 2025. Tons of competition coming out. If you didn't see Google rebranded Their generative AI suite to Gemini, and they're charging 20 bucks a month for it. And then there was this bizarre Wall Street Journal headline that Sam was gonna raise seven trillion dollars. That makes no sense. Maybe that was the TAM. We'll get into that. Freeberg, your thoughts on this Ascension. Are we underestimating or overhyping AI?

A I mean, it seems like the compute buildout is underway. So this is going to continue for some time. I think the real question that keeps getting asked is, you know, when do you really see the tides recede and what's, what's there? The compute build out is underway, but are we seeing application and productivity gains associated with the capability of that compute? Some would say yes, some would say no, but you've got to build out the infrastructure. If you're going to assume that there's going to be these productivity gains in the application layer. And everyone's assuming they'll be there. So we need to meet the demand, which is almost like building out an entirely new internet. And so the core of AI is this matrix multiplication problem. And you need these chips that do that really efficiently. They're not traditional CPUs, which are general purpose chips, but they're chips that are very special purpose for a particular set of applications that render the output of whatever model is being run. It's sort of like the internet, like you could pretty much create a bogey of any number on how big this can get. At the same time, you're seeing some of the other players with different architectures and potentially that are going to be beneficiaries of this build out because there are participants in other parts of the data center or alternative solutions like ARM. And I don't know if …

AI assessment note: “Some would say yes, some would say no, but you've got to build out”

Q into this valuation if there is valuation compression, which is what there is now. So the idea that a private company with twenty million or thirty million in SAS revenue was worth 50, 60, 70 times that, that's not the case right now in the public markets, and maybe it goes back down to 20 or 30, but you just have to have that runway to land the plane, correct?

A Yeah, well, one way to think about that is it's less about people often use that high multiple to refer to this year's numbers. But what the market is doing typically in those situations is they're saying the multiple in the future will be X. And so they're saying we project five, 10 years out this revenue and I'm paying one to five times revenue, you know, for seven to 10 years out or whatever the right kind of way that they're framing that up. But then the commentators on the market pricing come in and they say, hey, you guys are crazy. You're paying a hundred times revenue. And the market isn't thinking about this year's revenue. They're thinking about revenue in years seven through 10.

AI assessment note: “it's less about people often use that high multiple to refer to this year's numbers”

Q because all that's going to be left. If you can get the answer to any question, if you can, everybody's a good painter, writer, photographer, designer, coder. What's left? Taking risk, right? Like, to your point, Shamath, and having grit, and maybe being a great communicator and a great leader. Greyberg, are you thinking about this at all? AI's impact and, and how it's impacting how you parent your children?

A I mean, I think it's Just finding leverage. The, um, the transitions that are possible with every technology frontier in human history have been ones of leverage where the human role can scale up and, you know, does it really matter if you know how to do good handwriting when everyone's typing? Uh, does it really matter if you know how to type if everyone's dictating? Um, and what can you really Do that differentiates you at that new up level? And I think that's really important to think about. I think a lot of people transition from a world of. Um, labor to design, like you become architects and, um, what the implications of that and how to be successful in that environment is how I would kind of think about re-education and how I would think about, um, motivating success.

AI assessment note: “how I would kind of think about re-education and how I would think about”

Q get the reinforcement learning, and then we lose the AI race, guaranteed. Friedberg, Let's take it from a Graham Allison and level up the discussion here, would be quite provocative to ban the Chinese models. How does Xi Jinping respond to that? How does the CCP respond to that? This is a crazy chessboard. It would seem like a pretty escalatory, and we'd be going up the ladder. Yeah, Freeberg?

A Yeah, look, I don't, I don't think it's as relevant that the open source model is published by China. I get that there may be security risks, but those can be Estimated and addressed. I think on the three things that are worth highlighting on this, this issue, I'm, I'm very much aligned with Sachs and Shamar. And I think the three things are really around distillation. I don't think distillation is just about AI. You know, distillation is a process whereby you look at the end product that someone else has produced in thinking about and learning about how to engineer your product. It is a common Technique that is used across every product category in every industry. One car maker will look at how the other car makers car operates, and they will use that to help them design a better car. You know, at Google in the early days, we would submit millions of search queries to Yahoo and Microsoft search engines to see what the results sets were. And we would compare our results against their results as a way of improving our search engine rankings and our algorithm. It was a very common technique. It doesn't mean we were stealing their algorithm. We didn't go into their servers and steal their software. We looked at the output of their software and used that to improve our software.

AI assessment note: “I don't think it's as relevant that the open source model is published by China”

Q but yeah, no, there is a, there is a discipline, right? And, and really it comes down to the leaders taking it seriously, and their, the leader's first responsibility is to help their people.

A Okay, I'm gonna put my analyst hat on for a second. Yeah. And I'm gonna say, My observation would, I would create a theory, we could test the theory right now, that being in Wichita, being founder or owner operated, and, you know, having this ability to be isolated from a monoculture, I just feel like Silicon Valley, a lot of companies replicate each other, you have to kind of, there's this term that's being used a lot now, over socialization, you have to operate like everyone around you, Or you're not part of the, you have to fundraise in the right way and do these deals, you have to hire people this way, you have to do this sort of vesting schedule, this sort of equity, everyone's the same. And if you don't, you're kind of a weirdo, but by being in Wichita, you don't really have that problem. You can think your own way. You can challenge yourselves, you can debate, you can come up with your own principles without feeling like everyone else is conforming to the groups around you.

AI assessment note: “I'm gonna put my analyst hat on for a second.”

Q um, and the cost and reliability of electricity and energy sources. The other thing we should say, electricity delivers 20% of global energy. Wrap the panel in a, wrap the whole planet in a solar panel, you got 20% of energy delivered. Where's the other 80% gonna come from? It's process heat. It's, it's transportation fuels to run jets, to run ships. That's not going to come from solar. Ever.

A Let me ask, like, maybe we can just get, and I'll follow up on Jason's question. One of the challenges of natural gas, which is actually methane, is that as a greenhouse gas, methane is roughly, call it, 80 times more heat capacitive than CO₂, so one of the pushbacks on that gas historically has been if there's even one percent leakage in the supply lines, it's worse than coal or oil or some other sort of hydrocarbon-based fuel source, even though if you have no leakage, it's better. It has probably, what, half or something of the footprint, but, but importantly, What's the administration's view on putting carbon into the atmosphere as a cost to society? And I, and I, I don't ask that in an antagonistic way. I'm just, just, like, because I met with a foreign minister from a European nation the other day, a couple weeks ago, and the whole delegation, this was a big topic, like, what is the difference between our point of view, which they have, no carbon in the atmosphere, spend all the money to keep that from happening, and our point of view, and I just ask for, like, like, help level set a little bit on What's the point of view on where carbon goes in the atmosphere over time, and how important it is to, to mitigate that?

AI assessment note: “What's the administration's view on putting carbon into the atmosphere as a cost”

Q So you've talked recently in episodes about the speed of AI, the adoption, and how the winners are still unknown. That was reinforced in the sessions today, a room full of investors. How are you thinking differently about your investment, you know, your strategic investment decisions and your strategy? Are there opportunities to look at venture investing differently, like a venture studios, you know, in the future of AI?

A I had this conversation earlier today. I think I started a company in 2006. Where we took large data sets and we built predictive models from those data sets. And we use those predictive models to make analytical tools available to a specific vertical in our case, agriculture farmers. And, uh, the models were both, uh, deterministic, meaning there was kind of definitions, algorithmic definitions of physical parameters. And there was like all the statistical inference that you get from large data sets. And it made recommendations for farmers. What a lot of people are calling AI today is fundamentally a predictive model on text on language. I am making a language predictor that gives you a sentence. And it seems so profound because it is how we all interact with computers and interact with one another. And as a result, it is kind of viewed as the sea change across all of these industries instantaneously. It's this whole new era. But the fact is that, generally speaking, the digitization of things and the amount of data that's being generated on Earth is going up by some order of magnitude every number of months, and our ability to make predictions and build predictive models that are useful to specific vertical segments is improving every sequential cycle that this is happening across every vertical. And it is continued, and it hasn't changed, and it's not any different. So there…

AI assessment note: “What a lot of people are calling AI today is fundamentally a predictive model”

Q taking a lot of predictions. Can you imagine if Larry, Freebrook, where are the chances of Larry and Sergey taking co-CEO slots, that's prediction one, and then prediction two, where are the chances of them running the next Google I.O. where they get on stage and they walk people through all the products that they shepherded? And that they have a vested interest in that they're, they want to demo.

A There is an institutional problem at Google at the top level, which does need to be solved, which is this position of constantly being in defense against the scrutiny, again, of regulators and public policy folks and, and, you know, all these different groups that are against Google. And so as a result, the, the kind of cultural seasoning, particularly the executive and the board level has been one of like, you know, protect the nest. Don't overreach. Don't overstep. And it's a real, you know, I think one for the, for the business school books or whatever, uh, ultimately is what they end up doing about it. Cause now is, uh, you know, the time when that defensive posture is really kind of putting the, the entire business at risk.

AI assessment note: “There is an institutional problem at Google at the top level, which does need to be solved”

Q Oh, this is the Illuminati? Did you genuflect twice going in? Because that's the tradition. You do one genuflect on each knee, then they give you the bag of capital with the Illuminati logo on the side for your fund.

A Yeah. What was striking to me in this particular thing where these guys were being interviewed on stage at like a dinner thing, and they were so oriented around their Next steps in escalation. And I think it speaks to the point, Zach. So, like, none of them were thinking about, like, where are we at today? How do we de-escalate? What is this going to get? There was no conversation at all from anyone about resolution or de-escalation. With every single one of them, it was all about, like, my orientation for getting bigger, going deeper, going harder, going stronger, making this thing bigger. And I think that was really scary to me because I didn't, I didn't hear anyone having a conversation around, like, how do we Should we even consider whether or not this doesn't get bigger? Everyone was thinking, assumptively, it was gonna get bigger.

AI assessment note: “Yeah. What was striking to me in this particular thing where these guys were”

Q have one week to do it. Um, people get really, really creative when you actually tell them that. And Maybe they don't get to 10, but they'll get to two or three in a week, and I think that inspiration is enough for people to make the best out of themselves. I think great leaders do that, right? They ask for more than you think you're capable, people are capable.

A What about learning failure, right? We were talking about this on the, yesterday we were having a conversation about, you know, how do we make sure that our kids grow up and learn failure like we all learned? And failure ultimately, I think, and persistent failure, I think really taught me a lot about, you know, putting up with failure, knowing that there's, as long as you're doing the right thing, you'll get there probabilistically. Um, how do you teach that? Because, you know, folks, especially in an environment where they've always been successful, uh, and how do you keep them from saying, you know what, I don't want to fail. I want to succeed because my orientation is to succeed. So when they start to fail, they run and they go do something easy, which they can succeed at.

AI assessment note: “What about learning failure, right?”