The Exchanges

Q found out my friend from OpenAI took a break a year off to bike through Japan. How could you? Like, you're gonna miss it. You're gonna miss everything. But he's like, I'm good, you know, like, like, I'm, you know, having kids, whatever. You did a sabbatical as well, and like, it was pre-AI, but, uh, it was interesting. I, I, you did, you did the Appalachian Trail. Which one?

A Uh, so there's three big ones in the United States. It's the Appalachian, the Pacific Crest Trail, and then there's a Continental Divide Trail. So I did the Continental Divide Trail, which is the longest and most remote of the three. Sometimes considered like the, the, the older, bad, whatever. But like, honestly, the PC, they're all different trails. Like I'm, I'm pretty steeped in hiking culture. Um, I think mile for mile AT is actually the hardest, but I did the CDT as my first trail, as my first through hike. Um, You know, you learn a little bit about the three when I was choosing which one I wanted to do, and the CDT was the one that scared me the most. Uh, I was like, hey, this would be the hardest, biggest accomplishment I could possibly imagine, and I thought, if I never have an opportunity to ever do this ever again, which so far seems to be pretty correct, um, which one I'm going to do to feel the most like, hey, I did the thing that I really wanted to do, because I've always wanted to do a long-distance hike, and so I, I chose the Content of Divide Trail. I did that in 2021, Pre-AI, and.

AI assessment note: “So I did the Continental Divide Trail, which is the longest and most remote”

Q So, um, let's, let's do a little bit of the dog story because a lot of people hear about Dylan. Uh, and I wanted to just make this the Doug story, make me the fad knowledge story. You used to be a value investor. That's kind of how you, you were value mule. And you had a mentor or something that nerd sniped you into semis. Is that the story?

A Um, no, actually I solo nerd snip myself. So I wouldn't say value because, uh, well, for, for everyone who's listening to this podcast, might as well be value, right? Maybe quality focus back in the day. But we had this whole thing where We wanted to buy quality compounder companies, and, um, the one I found that NerdSign me, all the, like, single-shot me, is I found ASML, and I, like, fell in love with it, and then I, like, after ASML, I just, like, read about all this stuff, how complicated it's to make these, who are the people who are able to make them, and then, you know, semi-copters, the whole downstream's all from there, but it started with ASML in 2018. I really fell, fell in love with it, and then I read, like, textbooks, and I just, like, kept going deeper, And my favorite part about doing that.

AI assessment note: “no, actually I solo nerd snip myself”

Q A part of the whole DeepMind story was, we will hoard all the TPUs, because we were first, you know, and so, like, why sell? You know, why, why, why give anything to the topic?

A I think it's because, at least last year, it became, um, Pre Gemini three. It was like, dude, we have all these TPUs. We're going to hoard them all, but like people aren't using our products anyways. And, and like, like, Hey, what's all, what, what good is all these TPUs? If, um, we're getting our asses kicked in consumer. I think it's an interesting thing too. Cause the other thing I think about is there's a lot of different ways to, to like break this down. One, we wrote about it in TP V eight, like whatever we think Ruben will be much more competitive. I think Ironwood a V seven is the peak gap between on Between TCO, between NVIDIA and TPU, right? So if you are at your absolute strongest point, what do you do? There's two ways you could do it. You could try to maximize and like squeeze the juice and like make margins, or you can, you can gain market share. I think the perspective of doing this externally with, with Anthropic is to gain market share because the biggest gap you have, um, and, and one of the reasons why there hasn't been a second merchant ship, and also you can argue NVIDIA's most valuable company in the world. What's the value of TPU in Google? It's, it's huge.

AI assessment note: “doing this externally with, with Anthropic is to gain market share”

Q How do you expect them to come in?

A Pretty good on a price basis. I mean, our expectation is, like, they're, they're the best TCO by a meaningful amount right now. Anthropic's very clear how they feel, like, like, everyone is very clear. I think even OpenAI would take, I think everyone would eat as much TPU v-seven as possible if you had it in a perfectly unconstrained world. It would probably be at this exact moment, like, you know, the, the hottest kid on the block until Reuben comes out. But the reality is supply chain really matters, and that's just, that's not available. And so that TCO, um, that TCO advantage is at this absolute biggest aperture, then like Jensen essentially gets its, it gets their stuff together, it's competitive, and boom, it closes. So this door, only open right now, probably TSMC is the biggest blocker, so there's no, yeah, what can you do?

AI assessment note: “Pretty good on a price basis. I mean, our expectation is, like, they're, they're the best TCO”

Q Um, but like, what are you doing, you know, getting so into cloud code? Like, you know, I, I, shouldn't you be reading reports and stuff? You know, like, tell the story of your, uh, cloud code psychosis. So,

A Yeah, I think here's the thing is, um, if you want to be good at any game, we're, we're tool users at the end of the day, right? If you are good, if you want to be like, and, and obviously this is like outside of my job as semi-analysis, like I have all these other things I need to do to, to grow and make semi-analysis the best research firm ever. But like, let's say you're a fund manager or an analyst, right? Your job is to find information edges and like new ways to put information together that no one else has done. Um, and so like, I've always thought it's really important to know the most important Weapons grade, uh, tool that you can do all the time, which is essentially Chachapiti, Anthropic, all this kind of stuff. And I've been pretty, like, I'm a, I'm an early adopter in tools as much as I can be. And, um, like, for example, I've been running the, our, our case study that we have into Claude Code since it first came out. Like, you know, I think over a year, like, you know, I want to say March, April, I started.

AI assessment note: “Your job is to find information edges and like new ways to put information together”

Q Yeah, where, why is it not showing up in GDP yet, right?

A So there's gonna be, you know, some people are gonna be like, oh, you know, the facts. The facts, the internet, same thing, information transfer. Whatever. I think I'm actually scared for a third worst thing, which is like, now, now this is a complete crackpot theory. Please don't hold me to this, um, internet. Um, but what if AI is massive, massively deflationary? And, and, and also, I think, uh, one of the more interesting conversations I've had in a bit is like, what was GDP was invented once upon a time as a way to figure out how much we could divert, you know, normal economy away just to war. During World War, like one or two or something like that. My spiciest take is I feel like GDP itself is going to be very, very challenged by AI because information work.

AI assessment note: “what if AI is massive, massively deflationary? And, and, and also, I think”