The Exchanges

Q Freeberg, you got thoughts on this? Market manipulation, or meme, stonk, fun, good times, you're buying GameStop, you're buying AMC, like, buyer beware, you're, you're, you're in on the joke. What are your thoughts?

A Nick, can you pull up the image? I'm gonna talk about the stupidity of buying the stock of this company at this valuation. This is a, uh, company, and, and then I think we can talk about whether that's even relevant, which I think the indication is that it's not. GameStop finished the year, 20, 23 fiscal year, with Sales of 5.3 billion down from 5.9 billion the year before. So sales declined by 12% in the year. Adjusted EBITDA. Adjusted EBITDA for the year was sixty five million dollars, and they have about 1.2 billion in cash. Currently, as of today, the market cap is about 13 and a half billion dollars. So that makes it about a 12 and a half billion dollar enterprise value. 12 and a half billion divided by sixty-five million of EBITDA means that this stock is currently trading at about a 192 times EBITDA. A business that is profitable and you can say that the profits are stable and predictable and is likely not going to grow very much, will typically trade for seven to 12 times EBITDA. And this stock is trading at a 192 times EBITDA and the revenue is declining 12% a year. So I'll just point out, like, I don't think that there's anything about the actual performance of the underlying business and the security that you are buying or selling when you are making a decision about whether or not to buy or sell the security. And I think that that's the real question. Does that even…

AI assessment note: “Let people have fun. Let them go to Vegas. Let them play in the roulette table.”

Q Freeberg, you have lots. Watching all this. I know you don't like when we delve into politics too much. But what do you have any thoughts you want to add?

A Yeah, some of it's about politics as much as I kind of use a little bit of a startup analogy, like America never really found product market fit with what we were trying to do in Afghanistan. There's some fantastic, um, Gallup polling that's been done in Afghanistan over the past, uh, 1520 years already, and they've actually had people on the ground polling there. And most recently, which has been consistent for over 10 years, polling shown that 87 to 90% of Afghans said that the government is corrupt. This is the government, you know, put in power, put in place by the United States. 90% say businesses are corrupt. And if you go back to a poll they ran in 2010, the question was, in general, which of these statements comes closest to your point of view? Sharia law must be the only source of legislation. 56% of the Afghan population in 2010 believed that to be true. And another 38% said Sharia law must be a source of legislation, but not the only source. That leaves just seven percent of people that think that Sharia law should not be

AI assessment note: “America never really found product market fit with what we were trying to do in Afghanistan”

Q don't know if they're going to buy the stock. Can we get an adult in the room who's done this before? And they found Eric Schmidt who had run Novell and they brought him in as this, you know, third part of the triangle. And then eventually he wound up leaving, et cetera. What were your thoughts on Silicon Valley in that transition time and Eric Schmidt's role at Google?

A Well, Eric Schmidt came into Google through his relationship with John Doerr, and John Doerr, as a mentor to Larry and Sergey and investor in Google, had suggested that they bring in a professional manager that can help them successfully scale the business. And John had this relationship with Eric and Larry and Sergey started to socialize with Eric, and it was a very long process. And they ultimately respected Eric because of his technical capabilities and technical background, which was quite distinct from the other candidates that they had met during this process, but it was necessary. They were first time. They'd never worked anywhere. They'd never had a job. They had never had experience. I think similarly, uh, Sheryl Sandberg as a partner to Zuck, Ultimately helped him level up and obviously Chamath and others prior to that. But these first time founders that haven't had any sort of work experience and have no concept of kind of organizational dynamics and the challenges that will arise as you try and build and scale a team to execute a mission, typically need to have some degree of counseling, mentorship, and support. And so bringing in that degree of experience with someone who's ready and willing to partner with the founders, Meaning not necessarily direct them, but partner with them and help them learn as Eric did, and then ultimately handed the reins back to Larry. An…

AI assessment note: “Eric Schmidt came into Google through his relationship with John Doerr”

Q I mean, make it a short story. Brie Berg, you got a book that transformed your life?

A I put it in the, um, Summit gift bag, I think, last year. Oh. Zen Mind, Beginner's Mind by Suzuki, which is basically a, uh, compilation of the Dharma lectures by the founder of the SF, uh, Zen Buddhism Institute. And, um, like the whole, all the lectures are all about, like, sitting Zen, like Buddhist meditation, sitting Zen meditation. But the thinking Is so broadly applicable around how the human brain has a tendency to always seek, uh, things that it, uh, this continuing drive of desire. And if you can let go of that drive of desire, like much of your perception of reality changes. And the second is like dualistic thinking, where you think about everything as one or the other, everything in the universe, everything that we think about is like in or out this or good or bad. And I think, um, for me, Changing one's point of view on those two aspects of how the human brain kind of natively associates the universe within which we live, uh, can have a huge impact in, in decisions and, um, emotion and, and so on in life. So, uh, it's a very important book for me. And you could read it a million times and always get something new out of it. It's just a copy of his, uh, lectures.

AI assessment note: “Zen Mind, Beginner's Mind by Suzuki, which is basically a, uh, compilation”

Q Freberg, your thoughts on this? You're friends with Vinod, as you mentioned, and you've always said to me and in our personal discussions that The reason you do this pod is because you really want to set an example of how to have great conversations and learn from each other and, and the tone of what we do here. So your thoughts on this?

A The unfortunate reality in a voting system and election cycle, like we're in Vinod went and did a fundraiser. It's public, but he did a fundraiser for Biden a few weeks ago, and he wants to win the election. He wants to make his horse win. There's a lot of reasons why I'm sure Vinod has chosen that person to be his horse. And so when you get on the playing field, you got two teams and only one team wins. So, you know, everyone pulls out all the stops to win. One of the things that is done is unfortunate and it over time causes an erosion and a hardening into a kind of polarity between all people, which is that you call the other side wrong or bad or extreme. The term that he used, which really, I think Personifies the problem is he said their listeners are there are MAGA extremists.

AI assessment note: “he said their listeners are there are MAGA extremists”

Q Fred Barker, any thoughts for you about more options?

A Well, I think part of this is actually, there's been these Rules imposed by NASDAQ and New York Stock Exchange that have tried to enforce upon the listed companies rules and regulations that are not tied to securities laws, including some of these aspects of diversity of your board. And I know that there have been a lot of public company board members and CEOs that have quietly tried to push back on these rules that they're imposing. Social systems upon, you know, what is effectively a regulated exchange. And so there's certainly like an interest in a pushing for a competitive marketplace for exchanges. There was a survey done recently that showed, I got to find some of this data, but it showed the cost of going public on NASDAQ, Amex, or the New York Stock Exchange was about 7.4 million dollars. Cost of going public through an over the counter bulletin board listing service was about two million dollars. And then there's these additional kind of rules that are being imposed if you want to be listed on the big boards. So clearly there's interest and it's great to see a competitive market emerge, you know, how there have, by the way, there have been other attempts. There's that long-term stock exchange. You guys remember that a couple of years ago, incentivize long-term holdings. There was two other equity security exchanges efforts made in the last couple of years that didn't t…

AI assessment note: “I think more competition is always better.”

Q What are they doing with the extra money sacks? Because are they using that to make other people in this whole crater whole as well? So maybe they're thinking holistically, they're taking the profits of those Solana holders, let's say, where Bitcoin holders went for X. And is that going to trickle down to the equity holders? Who knows? Freeberg, you have thoughts?

A Yeah, I think the plan is that that excess capital beyond what is, quote, owed to the account holders goes to the equity holders because it's considered excess of the liabilities. Therefore, it goes to the shareholders. I'll also say In a traditional, like, brokerage, you create an account, and when you set up an account, your account has a currency denomination. It's a dollar-based account or a euro-based account, and then you, your account holds a bunch of assets, and so at any given time, the value of your account is represented to you in that local currency. The challenge with crypto exchanges is that there's often this representation of a wallet, which is meant to hold assets that don't necessarily Have the intention of being translated into a locally denominated currency, and so I think that's what makes the system different. In the case of a U.S. exchange bankruptcy, and this happens in commodity trading accounts or commodity exchanges often, there's a freezing of the assets and then a liquidation of the assets where the freezing of the assets sets the price or the value at the moment of what you're supposed to hold in that account in your currency of your account. And so the bankruptcy judge and the trustee are treating this Like a liquidation process using a local currency that was set at the time, whereas many folks don't consider that the intention of the account, th…

AI assessment note: “excess capital beyond what is, quote, owed to the account holders goes to the equity holders”

Q ten billion from Microsoft. Everybody else get a license and try to catch up. Friedberg. We have Chamath Pro regulation licensing, I think, or just being pretty thoughtful about it. There you got Sachs being typically a free market monster, let the laws be what they are, but these senators are going to do regulatory capture. Where do you, as the sultan of science, stand on this very important issue?

A I think there's a more important Kind of broader set of trends that are worth noting, and that the folks doing these hearings and having these conversations are aware of, which implies why they might be saying the things that they're saying. That's not necessarily about regulatory capture. And that is that a lot of these models Can be developed and generated to be much smaller. We're seeing, you know, models that can effectively run on an iPhone, we're seeing a number of open source models that are being published. Now there's a group called mosaic ml. Last week, they published what looks like a pretty good quality model. That has, you know, a very large kind of token input, which means you can do a lot with it. And that model can be downloaded and used by anyone for free. You know, really good open source license that they provided on that model. And that's really just the tip of the iceberg on what's going on, which is that these models are very quickly becoming ubiquitous, commoditized, small, and effectively are able to move to and be run on the edge of the network. As a result, that means that it's very hard to see who's using what models how behind the products and tools that they're building. And so if that's the trend, Then it becomes very hard for a regulatory agency to go in and audit every server, or every computer or every computer on a network and say, What model a…

AI assessment note: “it becomes very hard for a regulatory agency to go in and audit”

Q Yes. Who, who could eat less bites as we lose our weight? I have the place. I got the sandwich place over in Little Havana. That's unbelievable. But anyway, continue. Tell us if it's the end of the world or no worry.

A No, I mean, uh, it's at this point, there's three things that scientists are looking out for, um, data on. One is kind of the innate transmissibility of this variant. Uh, the second is, which is like, you know, the R-naught in an unvaccinated population. The second is Immune evasion, meaning it can get around antibodies or get around people that are vaccinated or have had the virus. And then third, um, is kind of the severity, right? Which is like how many people translate into hospitalized cases. So every day there's, you know, varying data and information coming out. There's an incredible spike in South African, um, surveillance data and testing data. Right now, as of today, I think, 25% of people getting tested in South Africa are testing positive.

AI assessment note: “at this point, there's three things that scientists are looking out for”

Q Is the biggest winner, and they did 65%, so I know both of those we did. I think all of us crushed that one. Who do you have, Freeberg, as your biggest business winner prediction for twenty-twenty-six? Go ahead, Freeberg.

A I couldn't decide. My number one is Huawei, which I've mentioned in the past. Out of China, I think Huawei's effort to Partner with SMIC to go deeper in the chip stack. And they're just firing on all cylinders. I do think keep an eye on Huawei over the next year. It's, um, it's going to outperform expectations, at least the Western expectations. And the second is a poly market. I think poly markets evolved from being kind of this one-off quirky prediction market to actually really providing insights into current events and the news in a way that none of us anticipated. And I do expect that after the deal we saw with NYSEE, That all of the exchanges, and we're already seeing this with Robinhood and Coinbase, and we should expect something from NASDAQ this year. Dina Friedman talked to us about this, but I do think that prediction markets could become not just markets, but also news. And I think poly markets, um, just in such a position to have a breakout year.

AI assessment note: “My number one is Huawei, which I've mentioned in the past.”

Q Well, what do you think, Freeberg? I mean, we get it. There's a, What do you personally think? Like, what do you, David Friedberg, the sultan of science, think?

A I think it is counterproductive to have every piece of communication foiable and kept in the public record. I think that's a mistake. And I'll tell you why. When you're making a business decision, let's say you're making an HR decision, the management team sitting around, they're talking about a particular candidate or person at the company. Should we give this person a raise? Should we terminate someone? You don't want to have a record of that, that employees can then go pull up and see and understand because it will have a really There's a muting effect and a dampening effect on the types of conversation, on the authenticity of the conversation, on the productivity of the conversation that you will be able to have if you're forced to say this is always going to be in the public domain.

AI assessment note: “I think it is counterproductive to have every piece of communication foiable and kept”

Q know if you remember that Saks where they stood up their own data centers instead of, you know, they were just scared to have their data at, I guess, AWS or whatever it was. And so it's going to be unbelievable how many businesses become viable with just three, four or five employees. And that's the, that's what I'm seeing on the field. Freeberg, any thoughts on AI right now?

A I just, I think that there's a chance that SAS gets kind of obviated. I've shared this in the past. I think that there's a chance that SAS looks like this kind of temporary phenomenon that occurred between the ubiquity of the internet and the prevalence of AI for writing software. If you've worked with any enterprise, non traditional enterprise from a traditional industry, meaning they didn't grow up in software and they're not software native, they have IT departments and those IT departments are really good at procurement of software. And that's really been their primary function, but they all try to hire software engineers and they generally suck. And, but they understand the needs of the business. And I think that if they can have software written for them at a, basically a cost of zero, To improve their workplace productivity, which was the original thing that was enabled by software in the first place, it starts to really change how folks are sourcing and using software, that it can actually be written for them in real time by software. And so I think that the, the tooling and the capabilities to enable the enterprise to write their own custom workplace productivity tools and their own custom workplace software, whether that's customer facing or internal facing, Really becomes kind of the standard maybe going forward. And, you know, you see this, what I think Doug Leone c…

AI assessment note: “I think that there's a chance that SAS gets kind of obviated.”

Q so those people may be a little more vocal, and we've seen massive layoffs in tech, massive layoffs in media, and those jobs don't seem to be coming back. People seem to be taking the gains and just having people on the team be 30% more efficient, as Brian told me on my other pod. So what do you think, Freeberg? Is this time different, or is it the same?

A So here's this article from June Second, in the New York Times, all about how computers are eliminating jobs in industries that were effectively offline knowledge work industries at the time, creating engineering designs, creating architectural drawings. I think this article spoke to the fact that these jobs were going to be eliminated. And as we all know, those jobs actually got enhanced by computers. Productivity went up. And new sub industries emerged. And in fact, the overall industries actually grew in some cases when we were fearful of them being replaced due to the automation enabled by software. So I think that in this particular sense, we can talk about the industrial revolution enabling through manufacturing systems and centralized production. A replacement of manual labor with machines. What we're talking about now is a replacement of knowledge work that has been aided by computers with machines. So the machines no longer even need the human. But the reality is that these systems are actually going to give humans 10 to a hundred X leverage. So when you think about that, one person could spend three weeks making an architectural drawing today. What if that one person could make an architectural drawing every six hours? So the question then is, do we stop making architectural drawings and we fire a bunch of architects? Or does the cost of making an architectural drawin…

AI assessment note: “we will see these tools creating more leverage for knowledge work instead of just simply replacing”

Q Is that what Star Wars uses with their, like, virtual sets now when they did the Mandalorian? I think they're using the Unreal Engine or Unity.

A They probably are. And then there's other tools. If you're in movie production, you'll use different stuff. But Unreal Engine is just so incredible. But it requires the placement and the rendering of three D objects. So where do those objects go? And then the physics of the light moving off those three D objects to generate a two D video is pretty straightforward. That's been done for 2030 years. And so the, the density, the, the rate of improvement, the color contrast, et cetera, has all improved, made it look incredible. Now it's super photorealistic. You create photorealistic video, but it still requires this concept of where are the three D objects in three D space. This doesn't do that. This was a trained model. So we don't know what's going on in the model. So how would you train a model to do this without having a three D space? Because clearly there's thousands of objects in that rendering. If you look at that video, thousands of little objects, the compute necessary to define each of those objects, place them in three D space is practically impossible. Today. So this is being done through some model that starts to render all of these things together. So it is very likely, my guess is that OpenAI used a tool like Unreal Engine five and generated tons and tons of video content, tagged it, labeled it, and were then able to use that to train this, this model that can, for …

AI assessment note: “They probably are. And then there's other tools.”

Q Yeah. Freeberg, let me, let me jump to you there. You shared the clip with us. What were your thoughts? What are your thoughts on this whole issue? Cognitive test.

A I don't, I mean, I don't think a cognitive test should be the law, because you're starting to get into edge cases where you'll create lots of different requirements, like what's the strategic test, and you know, what's the under pressure test, and there's obviously a lot of ways that folks can game and challenge and create new systems for Um, a new criteria. The system of democracy, however, is meant to solve these problems. The system of democracy is meant to allow individual voters to say, we judge that someone is not equipped, or prove us wrong, which is what the voters are saying and doing right now based on the polling data. The majority of voters in the United States are saying we do not think that this individual is equipped to be president. Rather than respond to that with a cognitive test, we are stuck with a single candidate, and I think it speaks more to the problem of the Democratic Caucus and how the electoral system works in the United States today, where the insiders get to decide who the nominee is for the party, and those insiders are self-dealt. They are getting benefits by putting someone in the seat for next term because that person is in the seat this term and is approving things that they want. This term. And so it feels very corrupt, and it feels very unfair and very undemocratic. I think it leads to either a sense that the individual voters rise up and s…

AI assessment note: “I don't think a cognitive test should be the law, because”

Q So, if you had Ukraine and Putin in under seven minutes for this episode, if you bet the under, you win. Freeburg, who's your prediction for the biggest political winner in politics for 2024?

A I'm gonna go with independent third party in the U.S. We saw the stats last week. I think we reviewed them with a poll that showed that 60 plus percent of people are claiming interest in a third party or an independent effort outside of the traditional damn Republican split. And if you look at, in 1992, Ross Perot got 18 to 19% of the general election vote. RFK Jr. is obviously running on an independent ticket this year. We'll see if he can even get on the ballot in a bunch of states. But I think that whether it's him or the interest in developing a third party in the U.S., US that there may be a big winner this year that challenges the traditional two party split in this country.

AI assessment note: “I'm gonna go with independent third party in the U.S.”

Q Oh, okay. Wow. So there's another prediction. Freebird, what do you got? 20, 24 prediction. Most contrarian belief.

A Okay. So I don't think we're past the conflict escalation stage. I think things are only going to Continue to mount. So a lot of the theater that we see on a global stage is more fundamentally driven by these big cycles that we're in. So I think a big one and a kind of tactical one, I think the big one that's contrarian is that there's an increased probability of a nuclear weapon being used for the first time in conflict. And I think that that's conditioned on the fact that there are declining Military, uh, supplies. There's declining appetite and capacity to support traditional conflict meat grinder type conflicts that, that we're seeing sprout up everywhere right now. And we're not everywhere, but in a lot of places. And you could see a moment where, as I mentioned in the past, someone gets backed into a corner and a tactical low yield nuclear weapon gets used. And I think that when you do that, it opens up the gates to hell. So it's a little scary. That's why, you know, we all joking aside.

AI assessment note: “there's an increased probability of a nuclear weapon being used for the first time in conflict”

Q Freeberg, is this a fair thing to do, a smart thing to do, a cynical thing to do to buy votes? Where, where do you fall down on this issue?

A This is absolutely moronic. I think that the fact that eight million households are eligible for this relief and 10 to 20,000 dollars is relief, uh, is provided to a minority of Americans is, uh, exactly what Chamath said, which is kind of distorted politics at its worst. There, uh, this is a three hundred billion dollar bill to the US taxpayer, and the ultimate beneficiary of that bill, while we all might want to say it's the people that are getting debt relief that have taken out these student loans, that money was transferred to somewhere. And you know where it was transferred to? University endowments and the profit, uh, and the, and the pockets of for-profit, uh, educational institutions. If there were a free market For education in the United States, and the government was not involved in the process of funding and supporting the educational infrastructure in this country, individual citizens would have the right and the obligation to make decisions about whether or not the money that they're spending on tuition actually has a positive ROI for them. By spending 10,000 or a 100,000 dollars, am I going to make more than that much money back when I graduate? And unfortunately, we've lulled our citizenry, we've lulled our country, Into complacency, where that decision and that calculus is no longer required, because Uncle Sam is there to give you all the money you want to go …

AI assessment note: “This is absolutely moronic. I think that the fact that eight million households are eligible”

Q Airlines, banks, and then the Trump tax break, 1.5 billion. So why can't a bunch of students get but three hundred billion? That is the counter argument. Everybody, we don't complain when, you know, the rich people get bailouts and the rich corporations and airlines do, but now we're suddenly complaining about this little pittance here. What's your best response to that, Freeburg? Well, I'm not saying that's my position.

A Larry Summers, former Uh, Treasury Secretary of the United States had a, um, a tweet storm about this, and he said, you know, the student loan issue arises, arouses passion. Um, here are some observations and some responses. There is no analogy with bank bailouts. Student loans are grants that cost the government money. The bank bailouts were loans at premium interest in which the government actually turned a profit. And it's important to think about all government services. Being infrastructure funding, where you are funding some underlying tubing or mechanism that allows society and the economy to progress, versus making up for the dollar mistakes or decisions that were made in the past. I also have issues, not just with this, but with the issues of people buying homes in coastal cities that they get bailed out at the price of that home at the fair market price when a hurricane hits, because they paid a premium Taking on the risk of a hurricane or a flooding event hitting their home. Why should the US government and the US taxpayer come in and say, you know what, I'm going to reimburse you for the full value of your home, which frankly should have been 50% of what you paid for it because it's sitting on a coastline. And that's a big problem that we generally have is we try and use the government as a system for providing bailouts to make up for past investment mistakes made b…

AI assessment note: “There is no analogy with bank bailouts. Student loans are grants that cost the government”

Q Yes, that giving credit, right? They're giving credit, right?

A Yeah, and they can't do that now because interest rates, let's say interest rates climbed to three and a half percent, I can go make three and a half percent by putting my money in for a 10 year bond. And now I can't kind of, and so I have to discount that future back from 10 years out. And now I'm only going to be able to value it in five years out. So now my revenue for five years out is like a little bit lower and the multiple I'm going to give them a little lower. So the valuation today gets a little bit lower. And that's how these things kind of translate as a function of interest rates. Um, it's a little bit harder to, to, to make a bet on a ten-year, you know, horizon because interest rates are no longer zero percent. Um, so you have to kind of make a bet on a five-year horizon or a three-year horizon, and if interest rates are really high, you're betting on this year's numbers.

AI assessment note: “Yeah, and they can't do that now because interest rates”

Q you know, increase upward mobility. And that is a double-edged sword. It's great that we increased the middle of class, but then they're going to want to buy stuff. So if people are now making 35 bucks an hour, and they were making 20, now they got more disposable. Now they're going to go on Amazon and buy more stuff, and it's going to accelerate this problem, is it not?

A The challenge is the rate of change. This is what the Fed tries to manage, and you know, there's a White House Economic Advisory Committee that's involved in trying to figure out what's going to happen here. Because the current estimate is it's going to take at least a year, or probably a year, to work through the current logjam in the global supply chains. And during that period of time, as Chamath points out, what's happening is The cost for goods is climbing because people have to, um, charge more because there's limited inventory, and people are bidding up the value of that inventory. As they do that, the businesses, um, end up needing to get more labor, and so they have to pay more to hire people. If they pay more to hire people, those people end up demanding more, and the cycle can actually go the wrong direction, where you have an inflationary spike that persists, How do you taper that inflation? It's not necessarily great for economic growth if you can't produce the stuff, and it can actually cause these runaway kind of effects in the dynamic system of supply and demand when you have these, these, these things clogging up the system for supply. So, um, so, so it is a real risk, and it is the biggest thing that, um, you know, the White House, this economic task force is kind of trying to figure out right now is where's the balance lie Where you can, um, you know, basical…

AI assessment note: “so it is a real risk”

Q if they lose search share, their ad network is going to continue to grow. And I think it will increase in velocity. So those are the, my top two free break. I'm curious from your position. Which one do you think is number one and number two? I saved you for last because you know what we do here? We saved the best for last for you, but go ahead.

A I think there's a difference in how I would kind of lump them. I, I think that Tesla probably has the, it is the best place to invest if you want to have a shot at a massive new industry. So they've got a baseline business in, in obviously the automobiles, but I think this humanoid robot opportunity is absolutely mind-blowingly ginormous. And I don't think that there's a better company on earth positioned to execute against this humanoid robotics opportunity than Tesla. So, you know, it's sort of like, I would call it a low probability, high upside sort of call option embedded within that business. And obviously you're paying a premium for that because it is still a very healthy premium. You pay for that business. I think Nvidia to Thomas's point, I think the common thesis is it is the most protected. The durability of the business is there. But I would argue that there's actually a low probability, but very high severity risk to Nvidia in China. There was just a demonstration last month of a one nanometer semiconductor manufacturing process out of China. I think the more that we continue to try and isolate China from a policy perspective, the more we are emboldening investment in China, meaning from the government, from private industry into China to create alternatives. To the chip stack, where the United States companies, particularly NVIDIA, have a moat today. So I do think…

AI assessment note: “I think there's a difference in how I would kind of lump them.”

Q care about them. We want to make sure that they're not sick. They are the most precious things in our country. Shouldn't that be the focus and, you know, whatever we're doing to make them so sick. When I was a kid, six percent of American kids had chronic disease. Today, 60%. Is that not an alarm? Is that not, you know, something that we should all be concerned about?

A I will, I will agree on, um, an important point. Uh, you know, the, the, the food stamp program, the SNAP program provides food stamps to support forty-two million Americans. Forty-two million people rely on food stamps. It costs a hundred twenty billion dollars of federal money per year. And as, um, as Bobby said, the number one product bought on the food stamp program is a soda, canned soda. And there was an important debate a few years ago about whether or not canned soda, by the way, Bobby, you and I probably agree on a lot of things. It's definitely a lot of things we don't agree on, but like these aspects I think are just no brainers. Uh, there was a debate a few years ago about whether or not canned soda should be allowed as a purchase on the food stamp program. Or whether it should be fresh fruits and vegetables and grains and other things. And ultimately there was a food lobbying effort to made, uh, that kept, uh, canned soda on the food stamp program. And it is, uh, again, a hundred twenty billion dollars of annual federal spend with the biggest line item going to can soda to, you know, feed forty two million Americans. And, and the, the, the, the connection is completely direct, high sugar, high glycemic index, diabetes, And other chronic health conditions arise from that connection. So, um, definitely aligned with you on the, the misincentives and the disincentives …

AI assessment note: “definitely aligned with you on the, the misincentives and the disincentives in these programs”

Q prepared the slides for the demo. All of us are out of jobs. I can't imagine that's real. Uh, but if it was, that would be a hardcore moment for Google to fire a bunch of people for screwing it up. Listen, you worked in the belly of the beast for your bird. What are your thoughts on being poking the tiger and telling Google dance? You know, Sundar dance.

A You know, what's interesting is Google's had like an incredible AI competency, particularly since they bought DeepMind, and it's been predominantly oriented towards kind of, you know, internal problems. You know, they're, they demonstrated last year that their AI improved data center energy efficiency by 40%. They've used it for ad optimization, ad copy optimization. The YouTube follow video algorithm. So what video is suggested to you as your next video to watch, which massively increased YouTube hours watched per user, which massively increased YouTube revenue. You know, what's the right time and place to insert videos in YouTube or insert ads in YouTube videos. So, you know, autofill in Gmail and Doc. So, so much of this competency has been oriented specifically to avoid this primary disruption in search. Obviously now things have come to a bit of a point because, you know, this alternative for search has been revealed in chat GPT. And you guys can kind of think about search and, you know, we've used this term in the past, Larry and Sergey, the textbook that they read, you know, one of the original textbooks that's used in internet search engine technology is called information retrieval, information retrieval. So information retrieval is this idea that, you know, how do you Pull data from a static data set. And it involves scanning that data set or crawling it, and then cre…

AI assessment note: “so much of this competency has been oriented specifically to avoid this primary disruption”

Q When will we know and have like a game plan?

A It's already coming out. There's no, it's not like a binary switch. We're discovering new things. There's a comp, there's a set of companies that are discovering what are called small molecules. So they're finding what are the little chemicals that those good bacteria are making in your gut? And what, and can we turn those chemicals into drugs? And so they're trying to turn those into drugs. Other companies are saying, you know what? This is a set of good bacteria. Let's just put them in your body and figure out a way to get them to inoculate and stay. Other companies are saying, let's do fecal transplants. And other companies are basically just saying, let's change. This is what we do at super gut. Let's just change the feedstock for your gut biome, and you can actually evolve the rainforest into a different state by changing what you're feeding the bacteria in your gut. And there's certain molecules you can feed the gut bacteria, and then the populations will change into a more beneficial state.

AI assessment note: “It's already coming out. There's no, it's not like a binary switch.”

Q a, uh, yes, anyway, it was a legitimate club, uh, you know, here in South Beach. Um, and so I took a little Insta, and I shared, I fed the Insta, and immediately I got three comments from friends who were like, what are you doing in that club? And I wrote back to all three, I'm vaccinated. And they were like, okay. I was like, is this not obvious?

A But I think this was the point I made a few months ago, which is, I do think that the, the, the subconscious training, the fear factor that's been kind of, you know, built into us over the last year, year and a half, um, is going to take a while to kind of, um, train our way out of, you know, people aren't going to be that rational and that conscious about, oh, I've been vaccinated. People are basically, the default is fear. The what ifs, the buts, but oh my god, people are still getting COVID even though they're vaccinated, but there's, there's variants, but, and everyone looks for a conscious, you know, a kind of conscious reason why they're rationalizing their subconscious fear, and everyone's got this fear to go and do things, and this fear to go back in the world, because we've literally been trained and beaten into a corner for the last year. Now, the conscious reality is, you don't need to be fearful, but I'm fearful, therefore I'm looking for reasons to maintain my fear, and I think this, this, This is like what, again, I, I'll say that, I said it like four times before, but this is what happened after nine 11, and it lasted for years, and you know, we still have ridiculous TSA processes.

AI assessment note: “the subconscious training, the fear factor that's been kind of, you know, built into us”

Q Let me bring it to you, Freeberg, because I think this is like a super interesting discussion. Our bestie, Bill Gurley, has a position that, hey, everybody can win. It's not an existential they win or we win. I mean, obviously it's a competition, but there could be many winners. What's your take on all this, Dave? If any.

A Well, I'm in the place, like I've said before, it's kind of like, who's going to win the internet? If we said that back in 1996, like no one quote wins the internet. It's an open standard. It's a platform. It's an evolution of, uh, access for markets of productivity for the world. I think AI is very similar. I don't think that there's, um, you know, there's this concept that you end up in some sort of state of super intelligence that perhaps reigns supreme and create superiority. But there's many vectors of competition. So within drone warfare, as an example, there's going to be a massive vector of competition. It's pretty clear that remote autonomous devices are going to be the kind of front lines in battles going forward. And China has both manufacturing productivity materials advantage over the United States on that front. So it's not about having the best model. It's about having a supply chain that can support their ambitions in warfare. And similarly in economics or in business, there's many dimensions upon which we're going to have advantage over China and China may have advantages over us that are going to be enabled, accelerated, magnified by, by tools and AI. Actual models, I think are going to be this continuously kind of evolving set of systems that It's unclear where things are going to head. But to kind of bring up your point, I do think that the CCP has a unique …

AI assessment note: “no one quote wins the internet. It's an open standard... I think AI is very similar.”

Q we invest more, then some person in a free market is going to say, you know what, I need to be ChatGPT. Therefore, I'm going to take the rails off this thing. I'm going to let it go faster and take off some constraints because I need to win. And I'm so far behind. How do you feel about that scenario? That sort of Chamath and Saks teed up Friedberg?

A I think there's like, GPT three, I think ran on 700 gigs. Is that right? Does anyone know what GPT four runs on? It's got to be on some number that's, you know, not too, not, not many multiples of that, but look, someone could make a copy of this thing and fork it and develop an entirely new model. I think that's what's incredible. About software and digital technology and also kind of, you know, means that it's very hard to contain. Similar to like what we've seen in, in biology ever since biology got digitized through DNA sequencing and the ability to kind of express molecules through gene editing. You know, you can't control or contain the ability to do gene editing work at all, because everyone knows the code. Everyone can make CRISPR-Cas molecules. Everyone can make gene editing systems in any lab anywhere. Once it was out, it was out. And now there's hundreds of variants for, for doing gene editing, many of which are much improved over CRISPR-Cas-Nine. I use that as an analogy, because it was this breakthrough technology that allowed us to precisely, specifically edit genomes, and that allowed us to engineer biology and do these incredible things, where biology effectively became software. And remember, CRISPR-Cas-Nine gave us effectively a, a word processing type tool, find and replace. And the tooling that's evolved from that has, is much better. So whatever is underlyi…

AI assessment note: “someone could make a copy of this thing and fork it and develop an entirely new model”

Q Okay, well, I mean, I think it's a debate, because we're not ventilating people now as much as we were, right? We're flipping them over, et cetera, but the, the lockdowns did, correct me if I'm wrong, Friedberg, at least allow us to not have the hospitals overrun like they were in New York and Italy, and that was.

A I, I don't know if that's true. I honestly don't know if the hospital, I don't know if, I don't know if the lockdowns actually changed the, we don't know. Look, I'm going to sound like some and now we're going to, you know, kind of enter into this controversial territory, but sure, let's do it. It seems like a lot of people still got together in private settings and the virus continued to spread. And so there's a question around how effective lockdowns were and how much they really did change the trajectory of the spread of the virus. And yes, they probably did have a muting effect, but, um, you know, it's unclear what the trade-off was and whether it was really worthwhile. And at the end of the day, a few days and a few weeks after they started, people were over them. And they started meeting on their own.

AI assessment note: “I don't know if that's true. I honestly don't know”

Q Freeberg, you have thoughts? And then we'll go to your next.

A Um, look, I feel like, um, everyone has a limit to what they believe, um, defines individual liberty. Um, you know, should everyone have complete freedom to the point that they can take a gun and go shoot anyone that they want? The answer is no. I think even the most die-hard libertarians would argue That there's some degree of, what is it, John Stuart Mill's sex? Um, you know, you should have the ability to do whatever you want within your sphere of influence as long as it doesn't intersect with the sphere of influence of others. And so the philosophical argument that I believe the pro-life movement made, which is really a different point of view on values, is that the sphere of influence of a fetus exists at some point in time, and therefore shouldn't be invaded by the, by the, by the mother. Now, I'm not speaking, obviously, my point of view. My point of view is extremely pro-choice, um, just to be very clear. But the argument is, um, It's, I think, one that we, we all kind of blush over and assume that it's, it's about taking away a woman's right without recognizing the voice on the other side, which says that there is a, a right to, to life by a fetus at a certain point in time. And so, to me, there's almost like this principle debate that arises, and it probably certainly falls more along religious lines than it does along, on a religious spectrum than it does on a, um, u…

AI assessment note: “everyone has a limit to what they believe, um, defines individual liberty.”