The Exchanges

Q a couple years ago. Really smart cat. Meta has seventy billion in cash. Thomas Lafont, when you see Zuck doing this, what's your take? Not only on what Zuck's doing, but how big of an opportunity is this? You know, in terms of the prize of having the best large language model, what is he going for here? And what's your take on these really aggressive packages and 49% purchases?

A I mean, look, I think one, it, it feels highly rational, right? If you think about Meta's market cap is, uh, rough math, 1.7 trillion. If you're the CEO and you ultimately believe that maybe 50% of your market cap is at risk because of AI, eight hundred fifty billion. Why would you not spend maybe four or five percent of that if you think it increases the odds even slightly that you're going to win the market? So to me, it, it, it kind of reminded me of a few, few things. Number one, the scale and size of the opportunity, right? Obviously people think AI is massive, but frankly, um, Jcal, I'm even wondering putting the regulatory scrutiny to the side, if it was time, he just didn't want to wait. And obviously doing it this way, I think Alex literally the next day, who's the CEO of scale can show up to work at Meta. So I think it's, it's urgency of a large opportunity. Um, I'm curious to get your take because it reminded me a little bit of the pivot away from HTML five. And also a much smaller acquisition, but one that we really felt, which was of a company called Onavo. And for those that may not remember, Onavo was a small data service provider, but what it did is it had a panel of phones and we as investors could see what people, which apps people were using. And the data was incredibly valuable because it was the only service that gave you true engagement data. And so obviou…

AI assessment note: “I think one, it, it feels highly rational, right?”

Q I mean, but- Actually, Thomas, can I ask you a question? Like, tell us about the state of liquidity and actually about IPOs and SPACs in general. Like, where's your, where's your temperature on it? Just give us a read on what you think.

A I mean, look, I, I think we're getting real world data, Chamath, right? Like in real time, um, not just from kind of higher visibility companies like Circle and CoreWeave, but, um, Chime also did really well. Um, Keras, uh, company, you know, more in Dave's, uh, wheelhouse, right? Um, also just coming out. So, and then wait till we see, um, the flurry of S ones that have already been filed, right? Figma is a, is a generational potential company, right? That's going to be coming. So I think we're going to see fantastic assets coming out. And I think the market is saying we're open for business. The, the Mac seven is controversial to Dave's point, the, the S and P four 93, there's going to be lots of winners and losers. It's maybe not as obvious. There's going to be some dispersion. So, bring on the new cohort.

AI assessment note: “I think the market is saying we're open for business.”

Q in the US, not global GDP. So the US kind of, does it compete away dollars or it increases overall productivity or both ahead of the rest of the world? If we do see advances from AI, To accelerate GDP growth. Is that because of all of the onshoring of manufacturing and industry that we outsource today? Like, do you think that that goes hand in hand with AI acceleration.

A I think that's part of it. And I think the other part is just getting even out of the, you know, the knowledge worker workforce, right? Just getting significant productivity, productivity improvements there. One of the things that we showed in our keynote is the adoption of these technologies and even taking doctors as an example, right? Uh, an area, you know, well, you know, this new company, Um, kind of coming in and, and developing kind of a diagnosis kind of engine, right, that's now used by a third of doctors. So, you know, I, I think that, uh, it's Open Evidence, by the way, is the name of the company, and already a third of U.S. physicians are on the platform using it, you know, 10 times a day to kind of help diagnoses. So, in particular, in oncology as an example, it's seen significant traction. So, you know, you multiply that by, The legal profession, coding, I think we're already seeing, you know, what if we just see kind of a, an explosion of productivity gains across, you know, both the physical and the digital economy.

AI assessment note: “I think that's part of it. And I think the other part is”

Q something, but I think enterprise folks, when I talk to them, want the open source product most of all. So anyway, I think it's still anybody's, um, I think it's anybody's game right now. And I don't know how you get a return on five hundred billion invested in this. That that's the other thing. And I don't know if that's the real number free, but what do you think?

A I don't know. This is out here in some crazy- I think, guys, the way these things happen, right, is you don't, you don't fund it all equity up front, right? I think these things get funded facility by facility, data center by data center across four years, right? And to Chamas's point, it's not just equity, it's, you know, site level debt and et cetera, right? It's a complex capital structure to these things. But look, we live also in a world, right, where I was just kind of looking at this chart, the kind of cloud CapEx chart, right? And we know that in total, 20, 25 CapEx for the top five players in the US is going to be three hundred and twelve billion, right? So that's this year, that's in one year. So we can also kind of frame this in saying, hey, does that number make any sense versus what others are spending? Um, it's at least kind of in the order of magnitude, right? When you think about it's over four years. By the way, another really interesting kind of corollary on this point is the US internet companies spend 20 X what the Chinese companies spend on capex. Really interesting as we think about our competitiveness, right? Uh, Dave, to your point, it's not just power. It's also kind of compute. I mean, pretty powerful that you're spending 20 X what your competitor is on these kind of advanced technologies.

AI assessment note: “does that number make any sense versus what others are spending? Um, it's at least”

Q for high growth tech issuances? Is that what we're seeing? Is there kind of this pent up demand because they've had to stay out of the private market for three years? And if there is obviously bodes well. For late stage growth startups that are looking to go public because the demand will be there. And I think the reports were that the Chime IPO was like, 18 X oversubscribed.

A I think you're right in, in something that, you know, I've talked about with you guys and, uh, was a, was a big conversation at our, at the All In Summit last year was the health of the, uh, private ecosystem, right? And we talked about the concept of, look, if you put a dollar in, you need to get a dollar out, right? And so I do think that we're starting to see a healthier market where We know a lot of dollars have gone in, but now we're starting to see some dollars coming out. So I think that's both in M&A, by the way, and it's also in IPOs. So I think that's one element. But I also think the second element, which is where the tailwind of the mobile and SaaS era, right? And even if you look at the SaaS companies, we kind of put this together in our deck when we were preparing it for our conference this week. Chamath, I think you'll find this interesting, right? If you look at SaaS in 2021, The median growth rate for SaaS companies was 17%, and a quarter of those were growing over 25%, ok? If you look at SaaS today, The growth rate has been cut in half, 17% to nine percent, and only five percent of that cohort is now growing above 25%. So I think, Dave, what's clearly happening, right, is other sectors which were predominantly seen to be growth are now slowing down, right, so that's kind of one piece. So the market can no longer just rely on saying, oh, I'm just gonna own the …

AI assessment note: “I think you're right in, in something that, you know, I've talked about”

Q We'll see if Intercom, Salesforce, HubSpot, we see if all of those people start Slack, start losing their customer base, or if they lower their pricing to make it just too easy to keep those systems in. Thomas, your thoughts?

A Yeah, so two quick thoughts. Uh, number one, Chamath, to put a kind of a mathematical frame on this, right? We know that Anthropic is kind of the level zero of code generation. They're, they're doing incredibly well at powering companies like Cursor, right? I think, and this is order of magnitude correct, that Anthropic in Q-one added 70% of the net new ARR in the SaaS industry, right, defined by public SaaS companies, right? So let's just think that the company in AI that is most powering the disruption of SaaS added three quarters of the net new of the entire industry, right? So that's kind of point number one. I think Friedberg, point number two, I think what we're seeing in the Mac seven, right, where we're starting to have debates about who's well positioned and who isn't, who's going to win and who isn't, right, is actually, as it was in the past five years, going to be a broader lens into the S and P four 93. I think inside of boardrooms, inside of every investment committee, you're going to see the exact same conversations that we've been having about the Mac seven, right? Who, who's well positioned, who can win? What are the management teams maybe like suck that are being aggressive and bold and capturing the opportunity and which are the ones that are not. So for me as a stock picker, right, I think over the next five years, I couldn't think of a more interesting time…

AI assessment note: “for me as a stock picker, right, I think over the next five years”

Q That's a valid concern. If there is any resistance, resistance to this, Thomas, what would be on the top of that list? Just theoretically, how could anybody want to block this? What would be the resistance?

A One other element, guys, I think you know that we are blocking the ability of China to get access to the latest GPUs, right? And the whole point is we don't want them to use to develop systems that could be used against us. But if China, if one day China had 10 XR power capacity, it won't even matter, right? Because they'll just have so many more, whether they're not quite the same advanced GPUs or not, they'll just have so many more of them. Their industrial AI capacity will be so much larger that even if we have the best H-one hundreds and the latest technology that Jensen and others can provide, it won't matter. So in order to make our strategy effective, we need to be able to, to build this power base.

AI assessment note: “One other element, guys, I think you know that we are blocking the ability of China”

Q you have people like Andreessen Horowitz, maybe going for the average in a major way and indexing venture. What, what is the playing field going to look like for people who are LPs, angel investors, venture firms? What, how does this all sort out into a cohesive strategy over the next decade or two? Because it's clearly the private markets are operating much differently than the playbook 20 years ago.

A Yeah, so I think that the first breakdown I would, I would submit is On the positive side of the ledger, the outcomes are big, right? We're seeing outcomes that we never thought possible in private companies, and I think that's good just generally for our ecosystem. So we have big outcomes. It's really why I wanted to kind of show that SpaceX slide. It was somewhat counterintuitive to me on the launch business. Why is it that the company would be valued more? Is it launched more? So I think at least we have a number of big outcomes, and those outcomes will be public within, it seems like, a 12 month period. So if I think about, you know, the Zerp era, where the outcomes were smaller, and companies were not going public, I think at least in this era, we have Big outcomes, and a desire of these companies to go public, right? I think both Anthropic and OpenAI are both publicly saying that they want to be public, so I would say that's good. I'd say the biggest issue is the, it seems like we're talking about K-shape and power law in every aspect of life, and it seems like that's the case in startups as well, so we've seen, if you looked at my Centacorn slide, we've really kind of been stuck at this number for a little bit now. So I think, Jake, Al, I think the point that you're asking is, if we were to see no new centricorns, right, in the next decade, we've basically not really see…

AI assessment note: “it seems like we're talking about K-shape and power law in every aspect of life”

Q Um, and these- How do you, as KOTU, you know, your asset base has swelled, you've gone into, You've expanded strategy. You're now doing, you know, data centers. You're doing many things. How do you keep it all organized when maybe a slide like that would say, hold on a second, maybe we should have just plowed ten billion dollars into Anthropic. Like, how do you balance that?

A The reason I, I make a deck like this, and in some ways I should thank you guys, because when we, when I do something like this for you guys, and it is tremendous amount of time from myself and our team, and, um, we really want to present you with accurate information, so the past two weeks is It's pretty much been a full-time job doing this. But for me, it re-anchors my conviction around what to do. You know, I, I can't go and listen to a thousand people, and then I get distracted, and I, I don't know what I'm thinking anymore. So going back to these ground truths of numbers and valuation bring me back to a point of, ok, conviction. Right? So for me, whenever I try and understand the world, I go back to, ok, what do I understand? I understand models, I understand numbers, let me go back and kind of peel this out. What I think hopefully the deck will show is, look, there is substantial reasons for why, right, if you look at the trillion dollar companies that became trillion dollar companies in a matter of weeks, These are not fake companies. Like, these companies have been around for decades, right? And they traded the lowest multiple of earnings of the S&P, 500 of almost any other company. So there is kind of something kind of real happening.

AI assessment note: “for me, it re-anchors my conviction around what to do.”