The Exchanges

Q We'll see, but I'm thinking very similarly to you. But it is, and I think there's, you know, the market is seasonal. Yes. I think there's real, real concerns around inflation and rates. What was CPI this morning?

A It was a 4.2. I think we added core came in at like .2 versus .3. So a little bit better. Um, but you know, clearly we're, we're above four again and, um, and, and there's short term pressure on, you know, core PCE, et cetera. Um, and we have some unknown unknowns, but the market, I mean, if I had told you the fact pattern for this year, that we're going to be in a war with Iran, that, you know, oil was going to be at a hundred bucks, that, CPI was going to be creeping back up. The internet was going to be down 15%. Software is going to be down eight percent. You would have said, I want nothing to do with that market, right?

AI assessment note: “It was a 4.2. I think we added core came in at like .2”

Q use cases are and build an organization that deeply integrates into his customers and does it so well all the way up into his roadmap that he's much more deeply embedded Than anyone else is. I, when I, I heard that part, I, I kind of gave him a real tip of the hat on that one, but what did you, you know, Brad, what was your take on that?

A You and I had this conversation after we first listened to it, and you know, if you really telescope out, you know, he talks as a systems level engineer. Right? Even if you hear, like, people, you know, people went to Harvard Business School and say, ah, can this guy possibly have 60 direct reports? Right? But how many direct reports does Elon have? Right? These systems level, and he said, I have situational awareness. Right? I'm a prompt engineer to the best people in the world at these specific tasks. I think when I look at this, the thing that I deeply underappreciated a year and a half ago about this company was the systems level thinking. Right? That these are, that he spent years thinking about how to embed this competitive advantage, and how it really, it goes all the way from power, all the way through application, and every day they're launching these new things to further embed themselves in the ecosystem. But I did hear from somebody over the last two days who, you know, Renee Haas, the CEO of Arm, Right. Rene was also at our event and, and he's a huge Jensen fan. He, he worked eight years at NVIDIA before becoming the CEO of ARM in 2013. And he said, listen, nobody is going to assault the NVIDIA castle head on. Right. Like the mainframe of AI, right, is entrenched and it's going to become a lot bigger, at least as far as the eye can see. He said, however, if you thi…

AI assessment note: “the thing that I deeply underappreciated a year and a half ago about this company”

Q Yeah, and like Bill said, turn that into a premium offering, right? Say that's the, you know, the gold. And, you know, the silver and the bronze are built off, you know, something that's, like I said, one-tenth the price.

A That seems to me, Bill, you know, if, if I had to forecast You know, if I'm open AI, I'm running a consumer business with really high gross margins, right? Because consumers are, uh, uh, less sensitive to what they're paying. Their, their, their, their intensity of use is lower. Whereas when, if, if somebody's writing code, you know, there's, the variable intensity is high. And so, you know, for them, it would make sense to launch an open source model back to where we started the pod. And price it really low to, you know, drive share knowing, you know, reminds me a little bit of Amazon back in the day. Amazon had this monopoly retail business they could use to subsidize AWS, gain share for a decade, and then begin to take price. That would be a rational strategy for OpenAI to follow. So you take the profitable consumer business, you use it to subsidize, you know, the, the, the market sharing other applications that you hope to build.

AI assessment note: “That would be a rational strategy for OpenAI to follow.”

Q Is that what I'm hearing you say? Yeah, on a place like OpenRouter, you know, where you can see where this is happening, I see we would see it rise to the top in a few days.

A Um, that's music to David Sachs's ears because, you know, clearly in the strategic plan, they're worried about Chinese open source models dominating, uh, globally. And we're, we're, if you just watch the pace of releases, the quality of the releases out of China, the cycle time on the innovation and the open source community out of China, it's faster and better at the moment. So, and the only real big development, you know, we may see some of these new startups, Bill, we may see a reboot out of Meta, but the, the one that has, I think everybody really holding their breath and hoping that we see something really capable and powerful, uh, is this open source model that's been promised out of OpenAI. Now, of course, Elon says he's committed to open source as well. Grok four is a great model, is impressive what they, uh, what they put out there. Any idea, uh, Sonny, about the open source plans out of, out of, uh, X?

AI assessment note: “that's music to David Sachs's ears because, you know, clearly in the strategic plan”

Q Brad, Brad, Brad, you're the expert on this. Why can't Google get 40 dollars for that flight or 30 dollars for that flight instead of the two dollars, uh, for clicking through to Expedia?

A Well, I, I think to, I think to Bill's point, if you look at the traditional commission models, and I think the iconic example is in travel, the traditional commission model, for example, in hotels is 10%. And let's just say the average daily rate is a hundred bucks. So they're willing to spend on a commission model, 10 bucks, but in a marginal advertising model where they're, where they're bidding up all the way to, you know, their gross profit on, uh, you know, in order to get that next And if you're a startup, you certainly go above it. You may spend two or three X right on that individual purchase. It certainly has extracted more rents, but I think the other piece here is that if we really just telescope way out here, like we are heading to answers and actions, right? And even the people who invented the damn blue link model don't believe that that is where this thing ends. And all I'm saying is the idea that Google can replicate a 99% monopoly and take all of that pool of profits with it into this new world after letting ChatGPT become the verb, at least at the start, for what this new world is. It just, you know, that to me is almost impossible to believe, but the consensus view has continued to be that, you know, they're going to dominate this new thing the way they dominated the world of search. And I just think if they pull that off, I hope I'm a shareholder along the …

AI assessment note: “if we really just telescope way out here, like we are heading to answers”

Q What does that part of the code do? This code defines encryption and decryption functions. It seems to use AESCBC encryption to encode and decode data based on a key and an initialization vector. Ivy.

A Happy birthday. So it only took us, you know, 11 years from her to have kind of our her moment, um, and I actually asked ChatGPT how long it usually takes from science fiction to it showing up kind of in its first iteration, and it turns out they, they estimate, you know, 15 to 40 years, so that seems pretty good, um, you know, in, in, in terms of the timeline there, but let's talk about what ChatGPT for Omni And Google Astra gave us this week. I mean, I think it's mostly these consumer facing small assistants. The models are smaller, faster, but most importantly, it's like this end to end audio model, right? It can listen, it can think, it can speak in one model. The voice seemed to have a lot more empathy. Uh, it could interrupt. It was much, it was reacting a lot faster, still didn't have memory, still didn't have actions. But the tone and the cadence of interruption, it all felt a lot more real.

AI assessment note: “let's talk about what ChatGPT for Omni And Google Astra gave us this week.”

Q Well, someone still has to take it and apply it to that business, right? And it may just be the one, you know, the one tech person in that business.

A It's a, I was on a walk last weekend, um, with a great economist over at Stanford, and we were talking about whether or not, about the amount of productivity improvement that would be unleashed into the economy because of AI. And what was interesting is You know, productivity's actually been under assault in this country because we've limited immigration, which was a huge source of productivity, um, because deglobalization is actually hurting productivity, um, because we're not moving the productions of goods and services to the lowest cost places, you know, anything that's causing friction. So he's like, all the goodness to come out of AI, we need it just to replace the headwinds that we have on productivity in other places. But I digress. Let's move on to the.

AI assessment note: “But I digress. Let's move on to the.”