0:00I checked in with one of our portfolio companies, Pirates Labs, that makes lasers, and uh they they said if anyone has graphine, like pure graphine, more than a millimeter, they own the world.
0:12Uh so, um I'll get you all the graphine you want.
0:18[laughter] What do you mean?
0:21My desk drawer over here. [laughter] Oh my god. I have access to the company, the biggest graphine manufacturer in the world. Who's that? Nano Nano Nano Nano something. [laughter] All right, guys. I I got I have a question. So, Chimath dropped a bomb last week, right? Saying Bitcoin is capped and then I think it'll eventually get hacked and then it'll go to zero.
0:45Uh, you know, I'm curious what you thought. His his basic premise was that central banks can't really hold it, so the buyer pool is limited and self-improving AI and quantum is going to disrupt it. Um, you know, you know, Salem, your thoughts.
1:03I think it's I think I I'll be blunt. I think it's a scop. I think he's working on behalf of the Treasury Secretary to say that it's a complet he used to be a massive Bitcoin.
1:13He was saying he was going to go to a million bucks. He was playing his book.
1:16So now he's like saying totally the opposite. The the the I've talked to the Jeff and other folks.
1:23All they have to do is solve the right consensus mechanisms. Also, if you saw the crypto thing, uh Immad, you may have a better view on this, but the elliptical uh crypto seems to be holding steady even in the face of quantum and we can shift go to quantum encryption and other things. It it's not as far as I can see, it's not going anywhere.
1:43Um yeah, our viewers hack the viewers are freaked out.
1:47Yeah. Well, the viewers are saying please have the Bitcoin debate. So, we're going to do that.
1:51Yeah, please in in a week or so. uh either either end of next week or the week after that. And then of course you guys saw that Binance got hacked, right?
2:00Out of 6.3 billion. No. Well, I mean we chat about now for a minute, but you know 6.3 billion got ported out and it's the largest crypto theft in history. It might be the largest, you know, theft in history. And apparently it was it was not tech. It was basically the weak link in the loop, the human. So yeah, it was one guy's machine. Yeah.
2:23So, one engineer got compromised uh from the attackers apparently out of North Korea. I mean, that's the accusation right now. And they got a hold of his machine and and got in the door and stole $6.3 billion. That's insane.
2:41In 20 minutes. Crazy.
2:43You had to do it all at once, right?
2:45Like you couldn't do it.
2:46Yeah. You couldn't do a little bit at a time.
2:48You can't dribble it out. You people notice. So the good news is that the other exchanges have put a lock on everything now. So wherever they moved it to should be somewhat traceable. They're trying to move them into smaller and smaller chains as fast as possible to cover their tracks.
3:03But this is the problem. You know, the the the uh crypto is not fully anonymous. Um you you can follow the chains.
3:12So and apparently 3 billion was is been frozen so hopefully recovered. And then the majority were stable coins. It was Tether and Circle. uh it wasn't Bitcoin.
3:23Any any thoughts on that, Immad?
3:27Yeah, I mean Tether Circle again they can kind of freeze it. The human is the weak link. I mean again but this is the problem with the banking sector too.
3:34Bangladesh lost $100 million via Macau uh when someone pretended to be the central bank minister there with Swift and the kind of money went through. So, you're going to see actually more sophisticated attacks like I've mentioned before, I've had calls from my mother saying, you know, send money and things like that. Did you um with voice spoofing attacks? No, you know, it's the other way around. Um and like you're going to see more and more sophisticated attacks, but I think that when we go to the Bitcoin and all this
4:02stuff, like the models are capable of crazy things and they haven't released the cryptographic advances for a reason so far. And that comes at the same time as quantum computing. So, I think if anything can be hacked, it probably will be because the AI can ask the quantum computers the right questions. But whether or not that impacts Bitcoin given where it is right now and makes it go to zero, I think it goes to zero.
4:24There's always going to be a buyer as a kind of historic asset that can upgrade its thing because 50% of the hash rate is two miners, right? They can upgrade quite easily.
4:33Um, but it could take hits. And I think the bigger problem, as we discussed with Kathy Wood on stage, is that it the energy, right? like who's building all the new flops for it because all of the miners are saying I want AI chips instead. Why do I have ASEX?
4:51Of what Shamath was saying though was not technical. It was that you could easily increase the encryption, but they'll never agree on how to do it. They can't even agree on how to meet.
5:01We don't know in this age except for that when there are big targets now, every big target is going to come under attack. like how does it kind of handle like one of my friends had a NFT exchange swarms of agents were attacking it and he was fighting back with agents and he ended up rewriting his entire stack in like one day because they couldn't figure out a way to make it secure like the losses were only like 100,000 but they're going to visualize it out literally his agents back and forth they
5:31were finding everything thank god humans thank God other things waves [laughter] well I think it's a very good time to protect your credibility at all costs cuz oh and by the way you know Mark Carney invested 1.6 6 billion in coarser's latest round, right? From Canada, so did Yeah.
5:50So, Canander is going to start investing directly in one more thing before we guys get started. Uh, you let's take a moment and say farewell to Sir Patrick Stewart, uh, Captain Jeanluke Peard who passed away on Wednesday at his home in LA. He was 86 years old. I mean, you know, listen, you know, Bill Shatner for me is will always be the captain of the enterprise, but you know, Jean Luke Peard was extraordinary, you know, very unbelievable,
6:18you know, very beautiful man, a lot of legitimacy for us both folks.
6:23Yeah. Um, one thing I'd like to clear up, um, with the with the commentary about the Borg, they switched at some point from saying resistance is futile to resistance is feudal. And let's just say for the record, it's futile.
6:38Futile. [laughter] Cuz that's how English is pronounced.
6:42So, Alex, any thoughts on on JeanLuke?
6:46Yeah, it's very sad. Hopefully with under I I would say humanity's common task, we can someday resurrect Patrick Stewart and certainly the character of Captain Pequard is already I I think in a million different sea dance sessions being resurrected as we speak. So I I think the character will live on and hopefully the human can be brought back as well. And then maybe just narrowly on Binance and Bitcoin Crime River. This is an unproductive [laughter]
7:15we know. We know this is an unproductive It's an unproductive use of capital. So sad. So sad.
7:23It is not. It is not the ability to do micro payments or the ability in the world. Awful. [laughter] I'll save it for the debate.
7:34Well, anyway, let's schedule that because I want to kind of get Jeff's time at as a slot in one of those and all the rest of it.
7:41Yeah, for sure. And it was fun. I saw this morning Elon saying longevity is coming. He finally is converted. He's finally using some of his gro cycles to to hit longevity. So that's it's a huge market. It's a bigger market than AI and to the extent SpaceX is no longer a rocketry company and is now a Neo hyperscaler. I I'm sure Elon himself will discover GLP1s and whatever market they're creating in longevity is I don't know maybe Tesla pivots to GLP1s [laughter]
8:11or or GLP 1000s whatever it might be. Yeah. You know I I had a I had a call this morning uh with a friend Max Zerberg who's the president of Isomorphic. Just amazing stuff going on there. Just extraordinary.
8:27Um, so gentlemen, shall we jump in?
8:32Now that's a moonshot, ladies and gentlemen.
8:36This episode is brought to you by the Abundance Summit and Link Ventures.
8:42Welcome to Moonshots, everyone, your number one podcast on all things AI and exponential, your front row seat, as you know, to the singularity. I'm here with a fantastic five. Alex Weezner Gross, our our genius physicist, computer scientist, our very own in-house ASI Dave Blendon, venture capitalist extraordinaire, serial founder, our resident translator of what goes from AI hype to AI revenue. And Immod was stock, founder of intelligent internet, author
9:11of the last economy, and the only one on this pod who can really effectively joust with Alex. So, that's your purpose now. Hey, I can joust that. And maybe that is successful.
9:23Okay, successfully jousted. I can joust with Alex and pass the butter. That's my purpose. There we go.
9:30And of course, Selene Ismael, founder of the Exponential Organizations, the man who's visited more countries in the last year than most diplomats. And it looks like everybody's home today.
9:41Yes. This is home week on the pod.
9:45back from uh back from Stanford late last night and back at MIT which is just bubbling. I cannot tell you how much it's bubbling over.
9:53Everybody is just optimistic about AI and uh I saw a whole bunch of abundance t-shirts by the way walking around campus. Yeah.
10:02Yeah. Well, you know, solve everything abundance, you know, pdoom less than zero. You know, those are our themes.
10:09Uh the number So, is the moonshots much still up and running? Well, we're going to actually we're in the middle of redoing the Moonshots uh website and we're going to provide the merch there to all of our fans so that they can they can get all the slogans, all the t-shirts, all the mugs. I'm I'm I've got my Moonshots mug right here. It says on the back, "Where can you go 10x bigger than others who are hoping for 10%."
10:32Oh, we're the Ministry of Information, the Ministry of Truth, if you will, for the Singularity. So, we might as well have great merch.
10:40Yeah. [laughter] Got to make some revenue someplace. Uh the number of this week is 1 billion.
10:46That's how many users Gemini app now has. The fastest growing product in Google's history. And yet, as you'll hear today, Alphabet just had its worst stock day in history. If you're new here, hit subscribe. We publish twice a week. You don't want to miss any of these episodes during the singularity. I mean, it's insanely difficult to keep up. I mean, the speed is accelerating. It'll never be slower than it is today.
11:08Also, if you want, you can follow us on X at moonshots_pod. We put our most uh fun and provocative clips up there. Uh some great love from our uh subscribers in our last episodes. Quote, "Congrats to Alex on his chain theory." So, very impressive. You got a lot of love for chain theory, Alex.
11:28It's very kind, but the ultimate court isn't public opinion. It's the physical world. And um it's reality.
11:33It is reality. So, I I Thank you. But I care even more about actually in in some sense not just predicting and retrodicting reality, but also doing my own part to make sure that the institution of physics itself actually cares certainly in fundamental physics about the real world and not just about pure theory. That's the ultimate arbiter here.
11:57I want to acknowledge that response because a lot of people going to get stuck on their theory. It's really great to see you say it'll it'll work when it meets the real world. So I just want to say amazing.
12:08Thank you. I I maybe not to gild the lily but I I think it it's sort of a a decent portion of physics as a research community is is in my view stuck in call it an unfortunate state where it's lost contact or let's say lost the the spirit of making falsifiable predictions about the physical world. And that used to be the case. uh unfortunately for whatever reason and I certainly have my own views there are large portions of physics
12:37research that now that don't even aspire to make falsifiable predictions about the physical world. So we we'll do what we can to bring the good times back.
12:46Yeah. It's what Wolf Gang it's what Wolf Gang Pie said. Not even wrong, you know, like it can't be wrong. [laughter] Yeah.
12:53I got to use that. I got to use that. Well, that comment thank you Peter White for popularizing not even wrong. [laughter] All right, let's jump in. So this morning, we're going to open up with a sequence of four stories about Google.
13:06Quick reminder and disclosure, Google is one of our sponsors on this pod, but they have no editorial control, but we had to cover this. Google is so back uh they've taken back the AI crown. So on Wednesday, Google CEO Sundar Pachai announced Gemini for Carbon only two weeks after announcing Argon. And that's the pace of the frontier, right? two major models from a single hyperscaler
13:32in a single week on artificial analysis intelligent index. Uh they had a score that beat out uh Opus 5.5, beat out GPT6 Astra. The score was 59. We'll take a look at that in a moment. But here's the real headline for me is cyber security.
13:51Carbon found 88% of vulnerabilities on a benchmark called SEC Bench Pro. Um, it's it successfully exploited 55% of the flaws on exploit bench and it wrote working patches for 71%. Google's own Chrome security team says it's more than 10 times better at producing high-quality patches than a competing Frontier model. So, uh, it's a big deal.
14:15I'm curious. I'm going to go to you first, Alex. What did you think? Because honestly, we've been saying on this pod that Google is so far behind that they should open source it. And here they are leaping forward once again. We've seen this every time, right? Meta leaps ahead of everybody else. And then it's anthropic, it's open AI, and Google's back.
14:36I so want Google to be back, but big asterisk there. There are two things I I think that maybe are buried in the headlines. One is this model isn't generally available, unlike say Opus 5.5 that everyone has access to. So by the time perhaps that it does become generally available, it may no longer even aspirationally be at the frontier.
15:01Yeah. No. Well, okay. So I'm I'm ex Peter, I'm exercising my editorial independence here and I'm calling balls calling balls and strikes.
15:08The other thing is if you look a little bit more closely on artificial analysis, they they do uh a chart measuring the intelligence index versus cost per task by model release. And that one I think is especially striking and instructive.
15:23So Gemini 4 carbon if you look at that and then you look at the frontier defined by the opus 5.5 highlevel reasoning with fallback you see that Gemini 4 carbon is exactly just you can extrapolate that line. It's exactly on that frontier. So what what that would imply, what that would suggest is that actually Gemini 4 carbon might look like essentially at the back end the
15:51equivalent of an Opus 5.5 with fallback simply cranked up to higher reasoning level and therefore at higher cost. And if that's the case, I I would say that puts Google as uh puts Gemini for Carbon rather as maybe Opus 5.5 level but unreleased. And Google really needs to do in in my view a better job if it wants to credibly claim the capability frontier crown of actually releasing
16:20models and not just stealth releasing them or privately releasing them. And I I have friends on the team make no mistake and and I know the friends listen to the pod but they really need to actually get the models out there otherwise it's an apples to oranges comparison. And I'm sure Open AAI and Anthropic have models internally bell at all that are that would blow all of these released models out of the water. But because they're not generally accessible, then you know it's it's not a fair comparison.
16:47Yeah. Well, Google has released it to trusted cyber defenders first. Uh they've got a program called Fairwind uh and broader release. They haven't they haven't announced when they're going to do that. But the other thing is that carbon's come in 23% cheaper than opus.
17:02Uh if you have access to it though, like so so again I I don't want to be the the party pooper here, but I I do feel the need to call balls and strikes. If they're subsidizing it, we don't know what profit margins carbon for is for Google. This is presumably a very very very tiny portion of their business versus say anthropic and open AAI where we have reasonably good sense what their margins are. Google could hypothetically be subsidizing all of this and offering it at below cost. We just don't know.
17:29So, I I I would love much more transparency from Google before I'm I'm willing to say Google has achieved the frontier. That said, I want the Frontier to be competitive and kudos to Google for at least trying.
17:41Well, I wouldn't I wouldn't expect uh Google to be super super transparent anytime soon. They they are absolutely in an incredibly good position. You know, the TPUs are now second only to Nvidia in terms of total compute manufactured, and they've done it incredibly quietly. So, my my read on Google is, you know, they they have so much cash flow from the core search business. They don't have an IPO coming up. They don't need to be big in the PR wars and they are very quietly
18:10accumulating an incredibly powerful position. Now whether or not they execute with it or just quietly keep accumulating we'll find out but you know being vertically integrated between TPUs doing all the thinking now and uh their internal foundation models uh huge insane treasure trove of training data I mean crazy crazy data advantage and keep in mind that you know that Elon started open or co-founded open AI specifically because Google is just going to run away
18:39with the entire world and so now we have a little bit of balance in the force thanks to, you know, open AI and then people leaving Open AI to start anthropic. But absent that move, it would be an all Google world right now.
18:51I mean, I think the point I want to make is you can't count any of these labs out. They're they've all got massive pressure uh to to leap on the frontier and maintain it. Emod, what was your take on carbon?
19:05I mean, how many people are even smart enough to use the smartest models anymore? You know, like let's be real.
19:12like Anthropic just released a prompting guide where they're like, "You're being too complicated on prompting. These models can do whatever." And now it's basically become around you either use the models to do day-to-day normal work and they become very capable and very consistent or you want a swarm of a thousand or 10,000 of them and the capability to swarm them to solve the most complex work and there's not much in between. So I think the focus on the frontier as you said there's better models inside open AI and kind of other things is starting to miss the point a
19:39bit. What really matters is is it in front of people.
19:44Google announced Gemini Spark. What's Gemini Spark? Everyone says, "Well, do you remember it's going to be their personal assistant?" But why is nobody using that versus Dots or Grockbot, which now has a million users and things like that? And this is the flip side and the dangerous side because Google and Meta, if they don't have the AI that's closest to you that's buying your things, that hits their main business.
20:06In fact, I'm going to make a call here. I think search advertising will top as an industry in Q1 and that will be the big top and then that's a really really gutsy call. I appreciate I I cannot disagree. It is falsifiable which is awesome but uh yeah that's brilliant. Let's see. I'm I'm proud that you put that out there.
20:29I mean Google and Meta Yeah, Google and Meta have been literally look at it.
20:32It's growing way faster than GDP every single year. But next year, and I think it'll be as soon as Q1, if that tops out, that structural growth in advertising because people are buying via their agents. Their agents are doing SEO. What's Google's business model?
20:47What's Meta's business model? Like now Google has to think, well, maybe we get Astroteller and launch 10 companies a year or 20 companies a year, right?
20:57Because now it's time to diversify. GC obviously I mean so if you look at I I don't want to frontr run the stories here Peter but if if you look at the revenue mix from Google in their or Alphabet in their last quarterly it's so obviously transitioning away from becoming a search advertising company to becoming a hyperscaler cloud company and so I I think Google probably if this trend continues uh regardless of what happens with search advertising search advertising is going is is on a trajectory in the next year or two to
21:26become their second largest business, not even their largest business, and they'll just care less.
21:31Yeah, I've been saying this for years.
21:32There's there's no way that advertising to a human is going to be the way any of this does, right? It's going to be your AI is going to know exactly what the best products are, what you're using, what's right for your genome, what's right for your, you know, your schedule for the next three days, and it'll buy it for you.
21:50Humans are just there to be hacked.
21:52Yeah. [laughter] So what Alex said just to flush out that story. So GCP is growing like crazy.
22:01Uh the margins though are are higher on search advertising. So so it's a little misleading but you know to to say that you know they're they're fine because GDP is growing so quickly. um you know if if Ahmad is right and search tops out in Q1 there is a gap of about a year in there where the search revenue is declining while the GCP margins have not caught up yet but you know if you look beyond that they're in a phenomenal position the other thing though is GCP is growing on the back of TSMC
22:30manufacturing which is completely and totally sold out and demand is multiples higher than they can produce and so the way that GCP can win is by getting more TSMC capacity. That's not a given. I don't know how TSMC is deciding what to make between Apple, Google, Nvidia, and all other and SpaceX. Yeah, it's not they're not doing it on price.
22:54You know, in a rational market, they just raise the prices, but they're not doing that. So, it's all politics. It's very, very smoky backroom mirrors right now. uh it's very hard to know exactly what's going on there, but that's the lynch pin, you know, and the terapab will ultimately come online and and make that a balanced world, but right now it's completely out of balance.
23:13Twothirds of all real chips that matter are are made by TSMC. So, it's a very very odd, very fragile world we're in.
23:21It's also worth remembering, you know, you know, Google has such diversified holdings, right? They're a huge holder in SpaceX, uh in in Isomorphic Labs, in all of Deep Mind's other projects. uh they're not going to be hurting for some time. Wall Street is fickle.
23:36You know, the question I've got in all this Google owns 14% of anthropic.
23:41They're riding all the curves.
23:42Isn't that wild? Yeah. They're just everywhere quite and very quiet. You know, they have antitrust action all over them. So, it's very easy to say, well, Google doesn't seem to be doing much. They're trying like crazy to make it less obvious how powerful they really are uh because of the antitrust action that is ongoing right now. There's m you know multi- could be hundred billion dollar settlements related to this antitr trust action. So they have every reason to stay off the radar quietly build the smartest AI the world has ever known and the whole tech stack underneath it.
24:11This episode is sponsored by Google for startups. Think about this for a second. You now have access to the same generative AI models that cost hundreds of millions of dollars to train. Google's startup technical guide for generative media gives you complete blueprint for deploying Google deep minds models in production images, video, audio, all of it. Real architecture, real results. Find the link in the show notes below.
24:39All right, let's go to the second story with Google, which is Genie4 from Google DeepMind. So, Genie is a world model.
24:45We've talked about word models. We're going to have Fe Lee uh on the show very soon. uh you type a prompt and it generates a photorealistic 3D world that you can walk through, interact with using a keyboard like a video game. All right, so Genie has four additions, three big things. First, native audio, music, ambient sound, and characters who speak. Second, real-time physics and reasoning. So when you set up an an event in motion, it simulates what happens next and how people react to it.
25:14Third, you can steer the world mid simulation. I love this. You can type make it rain, add a person, you know, and the scene adapts completely to you. Demesis Obis posted the following quote.
25:25Simulations within the simulations makes you wonder just how deep the rabbit hole goes. Uh, I have a feeling we're going to find out very soon. So, uh, besides making amazing video games, why does this matter? Well, robots and AI agents are going to train in simulated worlds.
25:42uh and before they touch the real one, you know, it's being rolled out to trusted testers. Again, we're seeing the same thing here. It's being rolled out a little bit at a time. Uh then to Google AI ultra subscribers and developers. So, I'm curious uh for Emod and Alex, does this strengthen your views on the simulation theory or not? I mean, the stuff we're doing is extraordinary.
26:05Yeah, I maintain that there's one set of equations for all the physics. Like, it isn't suggestions, it's a law. And the equations of generative AI are like to be remarkably similar because they map physics and you see these models learning from everything. So in that we're trying to find almost the divine uh these core kind of elements there because the universe came from something. It was generated from something. And so I think the wonderful thing about this is you know again it learns physics. It feeds back to the real world. It feeds back to real
26:34systems that we can use to explore the universe and more. And it will accelerate our understanding of all of these different phenomena when we can finally model them properly through just these massive trading runs which is I think is just fant fascinating and fantastic.
26:49Alex, yeah I I think maybe the most interesting item buried in the Genie 4 announcement was planned future work by Google. Google now has explicitly said that they want to converge Gemini and Genie and presumably although I don't know if they've published to my knowledge I haven't seen any publications of architectures behind the scenes at this point with Genie4 presumably it either looks diffusion transformer-l like or looks something
27:17like transformer maybe with a few different we've talked about uh Gaussian splats in the past on the pod we've talked about Unreal style surface engines on the pod just based on the videos that Genie4 seems to be interactively generating. My guess is it's diffusion transformer like at the back end and that is potentially architecturally convergible with the architectures of the foundation models like Gemini and I I do think one of the weak historically
27:47weak spots on the anthropic model side has been weak visual perception. I think Opus 5.5 goes a long way to repairing what I've perceived as deficits in anthropics models to think about and visually reason. I think the best the the bullcase for Google converging Gemini and Genie would be models either for robotic manipulation. I I think we've probably saturated visual design for computer software development. So
28:16not super excited about that. probably something that requires something economically valuable that requires real world orchestration. Could be robotics.
28:26I mean robotics is what everyone else is investing in. Could be something else in the physical world. Maybe operating laboratories or visually reasoning about physical modalities, chemicals for example, that otherwise are difficult to to to arrive at novel economically transformative solutions from just purely based on text and images. But I I also want to highlight that Google seems to be the only remaining American frontier or near frontier lab that's investing in video generation. And I I
28:55would view these so-called world models, interactive video models as as just a natural generalization of videogen. OpenAI had Sora, dropped it. We've seen other smaller American players develop their own, you know, video generation models, but Google is the largest credible remaining American resource for video generation. Otherwise, the whole game is being thrown to China. So, I I want to applaud Google for continuing to invest in video generation because otherwise it's just a Chinese video world.
29:27Let's take a look at their their video announcing this one second and then we'll go to you Dave and Sim. Genie 4 is our most realistic and interactive world model yet. Build environments and simulate worlds on command. Keep prompting and Genie 4 will work out what happens next. Then explore and reshape them in real time.
29:57So here the prompt [music] is the bird to press a key on the keyboard picture into a dynamic environment that's ready to explore complete with ambient sound.
30:10I mean you know this is going to get used for video games. Yeah, not quite there yet, but yeah.
30:19Holex creat the camera direct [music] every detail.
30:28It's pretty beautiful.
30:29Change live. Do you really think we're going to make it?
30:39Or describe an [music] interactive experience.
30:43If they're smart, they'll use it.
30:45If they're smart, they'll use this to replace YouTube. YouTube is a sizable revenue source.
30:54Way beyond entertainment. It's definitely in my mind the future of all work is in this environment. I have a bunch of videos that I took to the West Coast with me and uh they're they're about photonic computing. I had one on chain theory uh and you know I've got I've got Albert Einstein and Isaac Newton and Mary Cury explaining everything and I'm showing it to Nobel Prize winners and and you know business owners and they'd so much rather watch the video than hear it in power form.
31:21Yeah. Well, yeah. Or any or I mean yes, [laughter] but or anybody. uh it's just so much more uh is so it's so much easier to learn from from an AI created video. The only flaw so far is it's not real time. So you can't ask it questions in real time.
31:38But now with Genie, we're like like as of this week, everything flips over. The the future of all management is going to be through this interface and and it's so much more effective and it's really fun compared to, you know, writing emails and and you know, writing documents. Uh, so it's it's really engaging for managers, but also if you think about, you know, how much of the world is factory assembly lines and construction projects and whatever, and you're like, you know, guys, we should be putting that beam over there and this elevator shaft
32:06should move. And as you're saying it, it's rrendering and and showing the construction team what you had in mind. That is irreplaceable. Once you've experienced it, you immediately realize this is the future of all management. It's not just entertainment and video games at all. It's all management of all ideas and and production of everything. So it's it's much much more significant.
32:28And I I had the I had the same experience. I was yesterday at a factory in Toronto where they were kind of using AI to automate. And it when I saw this, right, you're going to reach a point where you can simulate an entire factory, its operations, troubleshoot problems before even building the thing.
32:45And I think Dave, you're so dead on. This is such a huge huge uh shift. It's going to take people time to get their heads around is the problem.
32:55Yeah. [snorts] To give you an idea, I estimate the cost of running this is $20 an hour of running Genie for and that'll be down to $2 next year and you'll be able to do, you know, every bit, every every pixel being generated on demand. Uh, and now it's just a customized I mean, you can have your AI read your emotions and actually generate a movie that plays exactly to your emotions as you're doing it or a video game. It's crazy.
33:23Yeah. Well, I think if you walk around and talk to, you know, people in business and say, "Have you ever used a CAD CAM system?" 99.9% have no experience with CAD CAM. But if you talk to somebody in mechanical design that uses CAD CAM, the idea of of working without it is insane. Like like it's just so in ingrained in the way they imagine and visualize and then try and create. So now I think that CAD CAM experience will export out now to every area of human endeavor through this. And
33:52so so people will never go back once they've experienced designing, building, creating, structuring, planning, even if it's just a party like like a wedding party.
34:01Where's everyone going to sit? You know, just instant visualization of the tables and people milling about. Like even that use case, you never go back once you've experienced it. You could even have family members arguing and fighting each other as you plan out the wedding wedding layout. That'll [laughter] be easy to simulate. Um I have a I have a I'm you know with all these this stuff changing I'm updating the organizational singularity book in real time, right?
34:25And here's the question I've got with when you when this comes out. If you can simulate an entire business um or physical operation before you build it, all strategic planning is now obsolete.
34:38Mhm. [clears throat] like because you can essentially envision it, think about it, run the simulation and see what happens or not. This is like completely changes the game now for strategy consultants all seuite planning everything.
34:52So so what you're saying is that the singularity is going to automate human labor cognitive thinking uh and well now it comes down to imagination. We have to start and at some point it'll replicate imagination but for now we have to do the imagination imagining of it or imagineering of it if you want to use Disney's world for for now. For now for now but I think it's a really important point like nobody knows if the for now is a couple years a couple
35:22months maybe 10 years. It's somewhere in that range.
35:24Well, it's a couple of weeks at this pace. I mean for God's sakes.
35:26Well, maybe maybe not. But people get intimidated and then they don't jump in. They're like well you know matter what I'm adding to the party here it'll be irrelevant soon. And I don't believe that. I think I think right now the AI is not good at all at imagining outcomes, but it's really good at creating the outcomes that you imagined.
35:40It's the golden moment for humanity, for creators right now. And and to to waste even a minute of it is, I think, utterly insane. But I I a lot of people are wasting it out of fear that AI will will make whatever they're thinking of irrelevant very quickly. And I just don't believe that's likely.
35:55Yeah. Can I can I just segue to this video I put out, Peter?
35:58Yeah, of course. Um, so I put out a video yesterday basically asking a simple question, right? Um, and it's getting like crazy comments and it's worth revisiting because I think it's the thesis of this entire podcast, which is everybody's bemoning the lack of the the destruction in jobs and going, "Oh my god, what will we do when all the jobs disappear?" If you'll flip that around and say, "Wouldn't it be the greatest thing ever if all the jobs disappeared?" Uh, you you can start to imagine now how you get there.
36:27You have to add to that. If if you didn't have to work is the if you don't have to work and you still maintain your quality of life.
36:35Yeah. We have a precedent for this called retirement where you used to spend 50 years working to get that 20-year time where you could do whatever you want. Work on your hobby, kit car, spend time with your grandkids, do whatever, but you were too old to really do much. Now if we get to the right time and get to the point and figure out how to do the economic distribution, you can spend time on creative passions, spend time with family, work on building communities and let's start envisioning that future because that is actually going to become possible. There was a
37:03great I asked them for comments on what might happen uh if people do this and what would it look like. Somebody VK4058 got the great gave the greatest comment.
37:12He said, "What's actually going to happen is people will turn into easy dopamine addicted bonobos with IQ's gradually approaching those apes." And I thought that was awesome. But but the you could go down a Wall-E scenario and you could go down a, you know, have the greatest life of presencing ever. And you see people in in retirement doing one of those two things. They either go they fade away or they get super active, right? One of my uncles is doing a PhD
37:40in astronomy because he's retired. like doing that. I think it's going to be incredible to see and I' I put that provocation out. It's fascinating to see the results.
37:47So, so important to point out, you know, the importance of purpose, the importance of having goals and objectives when you don't have to work, right? I love the fact that, you know, William Shatner now 95 years old is, you know, appearing in rock concerts, flying to space, you know, he's going to come and do the closing uh conversation at the Abundance Summit.
38:09I mean, you need to have purpose. And the biggest concern isn't that you don't have to work. It's has work always been your purpose in life. And if it's taken away from you, are you, you know, sort of lost? So yeah, Emod, please. Yeah, I figured out something. Listen to this. The biggest difference between humans and AI is conviction.
38:30Conviction to do stuff to push it forward. Like what does Elon have?
38:34Massive amounts of conviction, right? He made the world go around him. Like when you were talking about strategic planning sem that's like an expected utility like the world is static whereas now we have the biggest levers ever if we have the conviction to push things forward and you see this when you're talking to your AIS and like Claude says you're 50% right and 50% wrong and 50% that's right it's the interesting bit or like when you actually look at the code of Astra and it's finding like edge cases that you like that will never
39:02happen. The AIs lack conviction. So they can deal with the current environment, but it's the humans that can push things through with individuals and people around them and agents around them to achieve the massive change. And I think we should reframe it like that.
39:15Why do you think AIs couldn't um do the or simulate that same conviction or take you could say to an AI uh I want you to take on Elon Musk level conviction and let's solve these problems. Why couldn't you do that? So I think that part of it is the AI is the way that their distribution of their latent space is set up is that they tend to do like exploration like even when the tuning and the training they do Monte Carlo research so it's very rare that you see an AI that actually has a conviction and
39:44pushes it forward whereas you see lots of humans achieving great things what do they all have in common they have conviction they have determination and more so I think it's just something about the architecture you could build an AI with huge conviction like now uh there are experiments where you're turning on little neurons and then they collapse their entire wave function. But that's not how AIs are right now. And so I think again once you realize that and you realize you can do everything, you can tear the threads of the universe.
40:11That's the really interesting thing here because I much more have a company.
40:17Yeah, I was just saying and the framework for this is um Jeff Bezos said, you know, he has a model where he has the inevitable and the unchanging. So it was like there would be books and people always want faster, cheaper, better.
40:28Like what business strategy doesn't work with that, right? Like the way you get there is one thing, but he had that conviction there and then the whole of Amazon went that way. And strategic planning doesn't really fit with that necessarily, which is why if you know where the future's going and you p it forward, then you can achieve bigger things than strategic planning would indicate. Sorry, Alex. I I I think I'm much more optimistic that conviction or call it long-term strategic planning is very much within sight of models these
40:58days even just a a system prompt away. I I think the distinction between say business leaders Elon at all and the models is Elon at this point has quite a bit of capital and he's also very good at marketing. When Elon decides no actually we're not going to Mars next we're going to the moon next. it was the moon all along and retcons the moon into SpaceX's plans. That's branded as business genius. Whereas, if a model did it, one might say, "Well, the model
41:27lacked conviction on getting to Mars first versus moon first." The models don't aren't yet in a position where they're allowed to market themselves as having these long-term ideas. They lack the capital. Certainly, they're unbanked. And I I would suspect if we had a model and it started with some long-term system prompt like carry out the following really challenging objective over a period of years and we provided it with the capital to do it
41:54and the real world uh engagement and empowerment to do it, it would probably be able to market itself just as competently.
42:03Well, guess what guys, we're going to find out soon enough.
42:07That's the beautiful thing. Our third Google story and now the paradox. You know, Google shipped the number one arguably not yet publicly released AI model. And on Thursday, Alphabet had the worst day from a stock perspective in history. Uh his shares uh dropped 13% wiping out $500 billion in market value.
42:28Um you know, the strange thing is revenues grew 25% to 127 billion. Google Cloud more than doubled up 100% and Gemini app hit a billion users. So what sparked them? What sparked the market?
42:41Uh two things. First, search uh search ad revenue while it grew 12% was down 17% from last quarter and 19% from earlier in the year. So people are very concerned that their main revenue driver may be on a waning trajectory. And second, cash. Alphabet burned $9 billion of free cash flow in the quarter. far worse than expected while keeping capex at 195 to 205 billion for the year. Um,
43:10you know, a few other stock movers worth noting here. Both AMD and Intel were both down. Intel dropped 28% Dave uh in uh today, you know, kind of crazy like 30 30 plus int, you know, Intel's results beat estimates. Its outlook for the quarter came in below expectations. The CFO said that the PC was CP PC slals were down uh driven by you know expensive memory chips. So I'm curious Dave your thoughts
43:38on the market here. I mean we've been talking about the potential AI bubble the you know the leak in the AI balloon.
43:47Uh it's continuing. What are your thoughts?
43:49Well what's going on here is really obvious. the the Mark Zuckerbergs, Sundar Pichis, uh Lip Bhutans, they're going to invest more money than humanity has ever invested before for AI. They they are 100% believers that whoever controls the chip stack or the AI algorithms controls the whole future of the world. And so the idea that you know some of the most profitable companies we've ever seen like Meta, like just an absolute cash machine, is now borrowing tens of billions of dollars because even that
44:18cash flow is not enough. we must do AI.
44:22We're not slowing down. Yeah. The the market is now like, "Oh my god, I'm getting scared. I'm really jittery about this." They're not going to stop, though. So, it'll probably get worse before it gets better in the sense of like they are not slowing down and they're 100% right. And this is the only moment, this is the moment in all of human history. And so, you know, if ultimately there just isn't that much money in the world, then then things can't rebound. You know, the money just physically doesn't exist. and but they're starting to draw from every nook
44:51and cranny and corner of the debt markets all over the world into this massive buildout. So, you know, a week ago the market was like, "Yeah, this is all going to work out." Now, now everybody on Wall Street's like, "Oh my god, that's a huge amount of debt." And and also the uh the shortage of RAM that ain't going away. Like we we did not build anywhere near enough chip fab capacity to keep up with the need for massive amounts of HBM memory. And so now people uh can't upgrade their iPhones. They can't buy a new iPhone.
45:21Why? Because it's too expensive. Why is it too expensive? Because the the RAM prices are way up. And Apple has its first earnings, you know, shortfall in as long as I can remember. Why? Because they have to pay so much more for RAM.
45:34So AI is going to suck up every resource in the world.
45:38And it will absolutely all pay off.
45:40There's no doubt about it. But the question is, what about between now and then? You know, like what's going to happen? And should we all be like, should we all stop eating and just, you know, pump that pump that money back into AI [laughter] generation? And, you know, there's there's a rational argument that we should just all subsist on rice for as long as we can, but put that money back into chips because it'll pay off a thousandfold.
46:03Dave Dave, we we've talked about how some employees purportedly at Frontier Labs have taken up smoking because they they just think their cancer will be autocured in a few years by their AIS anyway. It's even worse than that.
46:14Statement. Yeah, my my liver enzymes are up 50% after because I'm on Red True. So, I'm able to drink more wine. I think this is great.
46:23[laughter] I I I want to make a comment here. I think we have something really amazing going on here that is worth talking about, right? Which is the the unbelievable uh uh gumption and coonies of these CEOs to make these massive billion dollar bets. I mean, you you know, we talked about conviction just now, right? uh whether it's Sundar or Satan Nadella or Zuckerberg whatever they're coming unbelievable amounts of capital to a
46:50future that's not arrived they're absolutely so convinced of this the conviction they have like they're saying screw it if we think intelligence is going to become this the foundational infrastructure of civilization we're going to build for that future and that takes amazing conviction half the people are like yeah and there's all these people saying it's a bubble they're spending too much and look at that that that kind of dedication That's why these types of people win because they have that conviction and they're willing.
47:18I'll tell you, the people that are closest to the truth, so the Elons and the Zuckerbergs, the guys inside the middle of it, they have the most conviction and that tells you that tells you what's really going to happen. It's the people on the edges, you know, that are kind of investing through a series of funds that aren't quite sure. They're the ones that are panicking. So, I would just ask, what choice do they have? I mean even Zuck is purchasing GPUs left and right and has the reassurance meta compute can always absorb any extra capacity that he can't
47:46monetize but if you look at a Google really what choice do they have their other bets and of course all due deference to X and Astro and the other bets but they have Whimo okay that that's been a success story but other than Whimo in in terms of re for the moment they really other bets have not had a major success on the other hand if you look at GCP. Google has been often characterized historically as a one-trick pony and their their best next
48:15trick has to be just based on the financials has to be serving as a hyperscaler. So even if it means cannibalizing search revenue in order to become the best possible hyperscaler they can. I'm honestly I'm not sure Google had much of a choice but to cannibalize themselves if they wanted to grow.
48:31They're playing the long game, guys.
48:33They're playing the long game. I remember there was a quote from uh from Sam. I have a video. I should have found it where he says, "We're building an AI god. I don't care how much it costs." Right? And I think that's their attitude. This is they're putting all in on all the chips right now.
48:50They have to Sergey Sergey and Larry are still controlling shareholders of Google if you can believe that. You know, nobody really pays attention to that, but they still control it. And that's where that that fortitude comes from.
49:00Zuckerberg, it comes from him. Elon, it comes from him. But to answer your question, Alex, the other choice would be to be where Apple and Microsoft are, right?
49:09Yeah. Which we're just kind of touching around the edges, not really doing European infrastructure CEO. Remember when Microsoft said we're good for our 80 billion and that was like the beginning of the end for Microsoft reaching for all the possible capital that they could for in for a buildout.
49:25Microsoft bowed out of the hyperscaler race in in some sense. So I I do agree with you. there's an element of founder mode reaching for the capex even if it means cannibalizing the legacy businesses here.
49:37Yeah, I I think that the market is missing something huge here. U we've talked about GPUs and DRAM and you know necessity being the mother of invention. If we have 10 agents per American, there are not enough CPUs in the world.
49:54Not even Exactly. Great point. Great point.
49:56And who was number one in CPUs?
49:59Intel, you know, you have Intel, ARM, and you have AMD. Those are the players for for desktop. I mean, but in in terms of overall CPUs, it's uh well, for mobile, obviously ARM, and then for actual CPUs, putting aside uh chip architecture, it's probably something exotic like some microcontroller architecture or something. So, not necessarily Intel. Well, CPU is for agents. You've got obviously your gravitons from the hyperscalers and others, but I think we're always looking for where the next bottleneck is. And
50:29right now, it's clear that we're going to go from less than one to more than one agent per person. And we have discussed previously how inference costs are going to collapse and maybe the GPU buildout is already there. So, we have the capacity coming on of millions of Vera Rubins and MI450s etc. the CPU buildout with 2 to 3 years of lag time is only just starting. They haven't really invested there. So when you actually do the math, it's clear that this is for me this is going to be the
50:56next bottleneck cuz agents need CPUs.
51:00I'd love to push on that just a little bit if I I may. So what I think you're what I hear you saying, Ahmad, is you're you're sort of predicting monotonic growth of number of agents per person. And with that monotonic growth, the implication being it won't be GPUbound.
51:15it'll be CPUbound. There there's an alternative way that this [snorts] could play out, which is that as the the baseline foundation models get stronger, this explosion that we might naively see in terms of number of agents per person might actually reverse in the sense that when OpenAI released their Navier Stokes results, they went out of their way to say I was 10,000 result 10,000 agents over a short period of time, but then by the time of Bell and the slop drop, it was one agent for 3 hours. So an alternative perspective might be
51:45actually as the models themselves get stronger the need for swarms of agents or large numbers of agents actually diminishes and that then impairs the need for CPUs altogether. What what do you think? [snorts] I think that again I'm not talking about 100 agents per person that's like 0.1 to heading towards one. And if you look again four or five years out, I think you have at least one and they need houses and there are not enough houses built. And the lead time for RAM, we've already seen and we've seen what happened with RAM, right? Lead time for
52:13CPUs, again, it's a couple of years. So, I think the market's going to look at this probably not now. Again, Intel is down 30% today. You know, that's one of the biggest moves in the stock market ever.
52:24Like, I think it's going to be an interesting as we look for the next narrative, we look for the next choke point. And as you said, a single model actually can do a surprising amount. Sometimes you do see these massive increases like Navia Stokes, but also single models outperform a dozen models in many cases.
52:40This episode is brought to you by Blitzy, autonomous software development with infinite code context. Blitzy uses thousands of specialized AI agents that think for hours to understand enterprise scale code bases with millions of lines of code. Engineers start every development sprint with the Blitzy platform, bringing in their development requirements. The Blitzy platform provides a plan, then generates and pre-ompiles code for each task. Blitzy
53:09delivers 80% or more of the development work autonomously while providing a guide for the final 20% of human development work required to complete the sprint. Enterprises are achieving a 5x engineering velocity increase when incorporating Blitzy as their preIDE development tool, pairing it with their coding co-pilot of choice to bring an AI native SDLC [music] into their org.
53:34Ready to 5x your engineering velocity?
53:36Visit blitzy.com to schedule a demo and start building with Blitzy today. [music] All right, I'm going to move us forward.
53:45Our next two our next two stories come from a conversation that Sam Olman had with John Collison, the co-founder of Stripe on John's podcast called Cheeky Pint. And I think we should all be drinking beers during this podcast, guys. About half of We drink We drink water here. Unlike the Collisons who are drinking alcohol, we drink water. [laughter] Who's we white man?
54:08[laughter] No comment.
54:09All right. So, about halfway in drinking his beer, Sam said, "I'm actually probably not supposed to say this, but since we're drinking, All right, let's watch the uh the clip here."
54:21How much does the math cost?
54:22Order 10 million per like for for like Navia Stokes, I think.
54:26Maybe a little more.
54:2710 millionish that order. Yeah. Yeah. But but for one proof and so No, no, cuz then we kept getting better so fast. Like we understood more like Got it.
54:36And we spent way less than that on the average one. But like hundreds of millions of dollars of math.
54:40Yeah. Yeah. Yeah. That kind of Okay. Interesting.
54:42But that include like that includes like much more other discovery than we what we have published.
54:47So it's like maybe more than the 700.
54:50When did we get those?
54:52There was one weekend when we got a new model. And in I'm actually probably not supposed to say this, but I will since we're drinking.
54:57Exactly. We're half time. Yeah. Perfect time for the name of the channel was model name dash hold my beer.
55:04And people were just throwing at at the hardest problems they could.
55:08And people just like didn't think the model was going to do these things. And and we had this collective experience of people's like hardest research pro problems from their academic career. The model was just knocking down one after the other. Many different fields. It was incredible to watch. And kind of two nights in a row I was up most of the night cuz I was so excited I couldn't go to bed. It was it was like it was many of those problems that we published many other things. And I was tremendously excited and happy. But I also had like much more sadness and melancholy and
55:37like a feeling of like something ending than I was expecting. So again, I agree this is the right thing on behalf of the world. And and also I agree that this is just like the shape of reality and nothing that anyone can stop or should stop.
55:52Can you imagine, you know, 10 years ago saying a company, a private company that's not in the mathematics business spending $100 million to solve problems?
56:00Uh it's crazy. So uh you know Alex you know what do you think is sitting in the unpublished pile of math proofs?
56:10I can only imagine certainly uh probably the remainder we uh last time when we talked on the pod about Navier Stokes uh I predicted and I think Ahmad you predicted as well Yang Mills. So we already know now a bit more about their Yang Mill strategy. Probably a bunch more Millennium problems. I I wouldn't be surprised I'll give a hot take on this one. Wouldn't be surprised if there are further advances beyond ETH that collapse the complexity hierarchy. That would be pretty scandalous. Wouldn't be surprised if there are lots of
56:40cryptographic or counter cryptographic advances that they're sitting on, not publishing, going back to the original QST star allegations. But I I also want to touch on Sam saying, "Hold my beer."
56:51This is remember in in the context of GPT I think it was GPT5 with uh the Star Wars uh space station the b the Death Star and he was using a lot of Death Star motifs Sam on his ex post to describe it and the the Obi-Wan Kenobi line of I felt a great disturbance in the forest as if millions of voices suddenly cried out in terror and were suddenly silenced and here Sam and Open AI are sitting around joking on a Slack
57:19channel model name hold my beer about basically crushing entire disciplines. I I think there history will regard this as a striking asymmetry between sort of casualness on the interior with super intelligent superpowers on on the exterior entire fields rolling over and playing dead because of it. I I think it's striking. Selium, I'm curious. You know, he he said he felt sadness, right?
57:46An emotional response to this. What do you make of that?
57:57Um I think you know when there there's a sadness for the art form that gets lost when you get such magical outcomes coming from things. So there's the craft gets lost and I think that's what he's referencing there. Um, but the fact that we can get so many more outcomes should make you way more than happy for that sadness to balance out. I I think it's sadness for the old way of
58:25doing things sort of nostalgia.
58:28But this is but this is the same. You talk to any systems programmers, they go, "Oh, what happened to all the great assembly line coding, right?" And and that was great for that period of time and for those types of systems, but now we have so much more power in other levels. I think it comes down to that.
58:43Yeah. Uh Dave, I mean what he's talking about is is wholesale reinvention of entire fields for millions of dollars and we haven't seen their best models. What do you you know I'm curious if you think that you know OpenAI's value in the future is going to be everything they build on top of these models, everything they discover rather than selling compute or selling tokens.
59:11Yeah, it's a golden age. But, you know, coming back to the emotional reaction, it's it's I think if you looked into Alex's eyes on the last podcast we had when we were talking about chain theory, I I really felt that same vibe that Olympic gold medalist has when they they've been working for a decade toward this outcome and they suddenly have the gold medal in their hands and they're over the moon excited. But then after that wears off, then you're like, okay, well, now I have to retake stock of my entire life now. Where are we? So, the people working on these uh these
59:39foundation models at OpenAI have been at it for over a decade and they're some of the hardest working people you've ever seen in your life. You remember they they invested in that company that allows you to sleep for four hours and feel like you slept in eight for eight.
59:50Yeah. It's one of my try and recapture.
59:52Yeah. Just trying to get four more hours a day. But that's that's been their mode of operation for years now toward this outcome. As soon as you start cracking the world's hardest math problems, you know that you're over the threshold of success, which is always a wistful moment in time. It's like, wow, now we're in a whole new chapter for humanity where now we have to actually Yeah, like you said, Peter, now we have to leverage this to make the world a better place. So that starts a whole new
1:00:20chapter, but the the the immediate target, the urgent target has been achieved, and that's what creates that wisful feeling. So yeah, it's a it's a new world, you know, like the the world after 2026 will be nothing like the world prior to 2026 and here we are right on the precipice.
1:00:36Yeah, I I think part of it is, you know, are we going to run out of the big problems that we wanted to solve that we can now solve and then continue to push it. I mean, this is, you know, again, human purpose, uh, human conviction. I'm going to go to our second clip. In the same conversation, Alman revealed that OpenAI's robotic program is pointed at, get this, building data centers. So he said, quote, "People talk a lot about RSI as an AI that does AI research.
1:01:02There's very little relatively little speech about self-replicating data centers." All right, let's watch this this uh clip. It's awesome. I think the trend um is toward a we always just want more compute. Like the demand for sufficiently capable models at a sufficiently low price. I think that trend only goes one way and we're we're doing a lot of things to try to be
1:01:29prepared for this. Uh our we made a chip that is an incredible performance at like you know units of intelligence perform units of intelligence per watt. We are learning how to build our own data centers. We have a robotics program that we're going to point at making lots of data centers. People talk a lot about the real RSI.
1:01:46Yeah. People talk a lot about RSI as like a AI that does AI research. There's very little relatively little talk about like self-replicating data centers. Mhm.
1:01:54You know, this idea that you can use AI to control robots and run fabs and build turbines or solar panels and, you know, build data centers. But I think we are I think we have that like within grasp, but and so we'll try to make a lot of really cheap computating data centers. How far out you think?
1:02:15Well, you have dark factories and robots already, so why not within the next year or so? You know, I think again you're reaching these points and things like listening to Sam just now, I was like that's prrowed in search of lost time, right? These sorrows will be greater even as our desires are fulfilled. This is not a new thing. We've reached heights as humanity, right? And the question is what is our desire? I think it's weak the world in intelligence. We make it available to everyone. But then the space of solving problems has gone
1:02:45from kind of things that we should have solved I think ages ago if our mind had been put to it and we should solve health we should solve kind of these things to solving ourselves you know understanding ourselves and more and this replication of the thing like you shouldn't build data centers again this goes to sem's video like why would you need to be a data center tech you know why do you need to be an electrician you shouldn't have to because if we can build this actually correctly then we can be freed to think and desire
1:03:14the bigger things in life and to solve even more interesting [clears throat] problems including again those that are more personal to us.
1:03:22I had two thoughts when I heard this. Um one was that this is very reminiscent and and duplicative of Alex's inner loop.
1:03:31Exactly. Where did he get this? I have no idea where Sam gets this. It's the innermost loop.
1:03:35Um it's the innermost loop. And there's a precedent for this already. Like we've talked about this already on the pod. In China, they have robots putting up solar panels to gather the energy to feed the factory to build more robots and you have that kind of loop going. If you feed that into a data center side of thing, but the you know the the video also John pushes back and says look the bottleneck is regulatory and permitting and all these human things. That's where the real issue is and that is going to have to be solved in a different way.
1:04:03Oh government government will be taken over by AI systems. I mean, so this innermost loop, Alex, you know, robots building data centers, data centers, training the models that run the robots, smarter robots building better robots with lots of energy coming in as well.
1:04:19This is the innermost loop. This is the physical world embodiment of recursive self-improvement. And I think there's one piece that Sam is not saying sto Voce that Sam is burying which is are these self-replicating data centers going to be terrestrial? Maybe not.
1:04:38Arguably they want to be orbital or even better lunar because they're free of regulatory constraints there. Of course, Sam doesn't want presumably to say anything especially nice about orbital data centers because that's immediately handing the ball to Elon and SpaceX and their virtual monopoly in the short term on heavy launch. But if if we are if we're serious, if we're thinking critically about a future with self-replicating data centers in a world where, at least at the moment, we have all these municipalities that are
1:05:07hostile to terrestrial data centers. I can only imagine how hostile they'll they'll be to terrestrial data center construction that doesn't even create local employment via HVAC or construction workers. They're going to hate it. So, where where are these self-replicating data centers likeliest to materialize? I think probably on the moon. Uh and two predictions here, Alex, that's the elephant in the room.
1:05:28Two predictions. Number one, they're, you know, open eye is going to buy one of the launch companies. They'll either buy, you know, Rocket Labs or they'll buy Relativity Space. they can't afford not to have their own launch capacity.
1:05:41And the second thing, I hate to say this, is regulation's going to go to the moon. Uh, every, you know, we've seen regulation go to Antarctica. We've seen it go every place. There's going to be regulation there as well eventually.
1:05:54The question is, I'll take make a hot take. Who's going to regulate?
1:05:57I think it's going to be easier and faster to go under the ocean than to get to the moon.
1:06:02Maybe. I mean the ocean is more reg the the subca area is right now I think some materially more regulated than the lunar surface but Peter we have the outer space treaty we have the Aremis accords what sort of regulatory environment are you envisioning on the moon I imagine that whoever goes and becomes the dominant sovereign is going to drive regulation these are US corporations they're US regulatory capture doesn't leave them when they when they leave a particular country uh when you launch
1:06:31your satellites is still regulated by the country from which you're launching.
1:06:35So you think it's going to it I I I I agree with the premise that it'll probably be like Delaware and Texas law that's regulating the lunar surface, but that's regulating the actions of American companies with a lunar presence. But what happens when some other country, many of these lunar companies don't subject themselves to American law. They they'll pick some some other country uh usually a country with much more favorable like Luxembourg or whatever with a favorable uh outer space policy and regulatory [clears throat] regime. What happens
1:07:06Uh believe me, if there's a chance to to drive regulations, countries will make the effort. Uh I I think that is human nature. Now, the question is, are the future regulators going to be humans or AIs?
1:07:20Well, if they're self-replicating data centers, maybe they're self-regulating data centers as well.
1:07:24All governments and systems will be run by AI. There's no way it can't be. I think Let me help this discussion by saying the following. We should just get the UN involved.
1:07:33Oh, no. [laughter] I'm just kidding.
1:07:37Uh Dave, close us out on this one. I mean, you know, what are your thoughts here? This is the biggest opportunity we're going to see. RSI and physical as well.
1:07:46Yeah. And I think that uh people are way overestimating how much space it takes for a data center to exist. And in in a world where your geography embraces data centers, even if you said, "Hey, we've automated away all the plumbing and HVAC and electrical jobs." And that's not that'll be, you know, 3 four years from now at the earliest. But even in that world, it's generating so much revenue for that little chunk of geography that the immediately surrounding people are going to be some of the wealthiest and happiest on the planet. And I I I think
1:08:15um you know the chip supply is so constrained and in the US the energy is so constrained that if you wrangle those two things you're going to be a very very happy person regardless of the fact that it'll end up on the moon on the in the long long run. So between here and there people who embrace data centers and even the fully automated construction of the data center is only going to make that geography the wealthiest in the world. So I it's crazy to me that people don't see that and that they they fight against it.
1:08:44Jensen Wang just visited and spent time in Kazakhstan which uh has fully embraced this data center buildout. They're like let's just go. So kudos to them.
1:08:55Well also you know Intel had uh 300 million of its of its uh miss uh today's or yesterday's earnings call was related to their fab in Israel getting bombed. And so people are, you know, there's a lot going on in the Middle East that are making people very reluctant to build out their data centers there. And so if you're, you know, in Canada sitting on a hydroelectric or a nuclear power supply, suddenly not not only were you already in great shape, but now people are kind
1:09:24of reluctant to expand into Kazakhstan or whatever because of of that risk. So you're doubly in great shape if you just jump on the opportunity. So I think um I think you know the the self-replicating data center is really automated construction of all kinds of things but the money is all pouring into data center so anyone related to the trades to construction to finance just talk to Sam talk to Daario talk to the Elon to people building out the biggest building
1:09:52in the world you know the new terra fab that is where you want to put all your energy work on that first because that's where all the money in the world is going to go for the short term and then it'll will expand out, you know, to the moon or to construction of hotels or, you know, it'll go out from there. But for the next couple of years, that's the total focus.
1:10:10Highest revenue per cubic meter, right?
1:10:13Deep in the heart of Texas, I guess. And and also maybe just a movie reference. I I think probably everyone here saw the Johnny Depp movie Transcendence, which to my knowledge is the only recent movie that actually does depict a self-replicating data center. They call it in the movie the Brightwood data center, but it's inhabited by the spirit or the upload of Johnny Depp's character. And you watch it rebuilding itself, rebuilding its energy sources in real time with nanotech. It's a a pretty sci-fi cool depiction of what a self-replicating data center might look like.
1:10:42I have to watch that one again.
1:10:44It's Let's continue on on physical AI talk about robots and autonomous vehicles. So, first up this week, Tesla announced that their first production quality Optimus robots are coming off the high volume line at Fremont. Um, where they've replaced producing the Model S and the Model X, two vehicles I love. The line is designed to build a million robots per year, 20,000 a week.
1:11:09Elon says it will take at least a year to get those production line levels up that high, and the first customer deliveries are expected in 2027.
1:11:18Optimus is roughly 1 to two years behind Elon's original schedule. I mean, it's classic Elon. He gets it right just typically a couple years late. So, now the global picture, right? Humanoid robots uh have been shipped about 25,000 robots worldwide uh in the first half of this year, up roughly 400% from last year. Chinese companies built more than 95% of them, led by Agibbot and Unitry.
1:11:43Uh total 2026 shipments are projected to double to exceed 50,000 robots. If Tesla hits a million robots a year, that's 20 times the entire world supply. So uh you know the question is can we onshore all the production? Uh Dave, your thoughts on that?
1:12:02Can we onshore all the production? I mean I think with AI with AI based automation everything's onshoring at an incredible rate. You know, it's um there's a a really uh interesting video on the topic of uh TSMC, you know, educating people in Texas on how to build chips now and us needing to reimpport all of this knowledge that dissipated out, you know, starting in the 1950s and then, you know, the whole globalization push pushed all manufacturing offshore and now it's all
1:12:31coming roaring back because it's not labor constrained anymore. Everything's automated with this rapidly growing, you know, even before the Optimus robots, you have you just factory regular factory arm robots. But because there's no labor constraint anymore, all of this is going to come pouring back into the US, which is not great for the rest of the world. It's certainly great in the long run for America and for the few places on the in the planet and China as well uh that are doing it. Um so so yeah, it's uh it absolutely can all come
1:13:01back to America and it inev inevitably will. Also, the uh the intelligence that makes it all work has all kinds of export controls on it. And so, it's unlikely that it can leak away again, uh as long as that intelligence is manufactured purely inside the US and China. So, uh yeah, it's it's going to accelerate like wild from here.
1:13:22Yeah, I can't wait for our podcast with uh with Brett at Figure AI. It's going to be a fun conversation. I I wonder what you know if Elon is his uh you know sort of competitor of choice whether he sees himself competing against China. Uh Alex, yeah the the biggest mystery here is in my mind less on the supply side. I'm pretty confident Elon can meet at least eventually his supply side goals and catch up to probably past Chinese
1:13:51production. It's the demand side. What is going to be the demand for these?
1:13:56Obviously, uh I I think Peter, you and I are both still waiting for our 1x neo domestic humanoid robots. I I would love to have an one or more Optimus robots as well, but this is the part of the equation that I don't see the answer to yet. He's indicated in his past he's indicated in his past comments that the first application is going to be in in Tesla factories for uh for manufacturing. that's fine, but that's going to saturate pretty quickly based
1:14:24on his curves. And just like with Starship suddenly creating all of this new upmass capacity, he almost has to create, I think, a new market to satisfy his own supply to to on the demand side to meet his supply side. And I'm just not sure. I I can think of a range of speculative possibilities. Maybe he'll decide to go domestic early or maybe he'll aim it at construction or maybe he'll aim, you know, lots of different industries obviously just waiting for humanoid robots too cheap to meter. But
1:14:53the fact that he's been ky beyond just saying I'm going to put them in Tesla's or emerged SpaceX Tesla's factories I think is the most mysterious part of all of this.
1:15:05I do wonder, let's a little bit because, you know, he he's going to get Model S and Model Y equivalent manufacturing back to all-time highs once the robots are working on it. But he also wants to make a Starship every single day, make a new one like every day. So, I haven't I haven't actually walked through how many robots that'll require, but I imagine it's a lot. Well, we we can we and when I'm in front of audiences and I say, "Listen, these robots are going to cost you, you know, 300 bucks a month, $10 a day, under a dollar an hour. How
1:15:34many of them would you want?" Right? And I take a poll of that. Everybody wants at least two. $10 an hour, right? $10 a day. That's that's insane. I I think the market for the consumer, if they're proven safe, is massive.
1:15:48Well, again, I think we can do the math here on just even Elon and let's say just he uses them internally. Um the market has right now a h 100,000 to 500,000 robots that he produces next year. A 100,000 of them is $3 billion worth of robots. And you compare that against the capex of all those things. I think he can absorb even that. Um but the thing is this takeoff is going to be absolutely unprecedented. Like if he gets to a million next year at 1.6
1:16:17million the revenue from Optimus is greater than the revenue from Tesla. You know that's kind of what we're talking about here. Uh I I to be honest if I wasn't doing all the stuff I was doing now I'd be like let's set up a fund billion 5 billion and just buy 100 200,000 of the robots and give them the money right now because the other interesting thing about this and we saw this the unitary robots next year I think is where you see a freeze in hardware so the unitary robots were stumbling around then they got smart and they started doing flips and stuff next
1:16:46year you'll see a freeze in hardware whereby it'll be the same optimus created for a few years but the software will continuously improve into 2028 and beyond. So if you go and buy all these robots up front now, the value of them will actually increase just like we've seen with GPUs, right? Where you saw that and now you're seeing that and this is again the next big asset class. But again, if 100,000 of them, which is basically all the production is 3 billion and you compare it to the computing buildout, it's nothing. So this is why the numbers are very strange
1:17:17Yeah, I'll try saying maybe that uh slightly differently. SpaceX has approximately 20,000 human employees.
1:17:23Tesla has approximately 130 plus thousand human employees at these numbers of production looking out 1 to two years that Elon is talking about for Optimus. This is just going to to spill out well beyond whatever their internal needs or demand for production are. Even if they go full-on recursive self-improvement, these are these robots are going to be pouring out onto the streets or to somewhere. I don't think Tesla, SpaceX combined, I suspect has the internal capacity to just absorb all
1:17:52this output if he sticks with his numbers. That that's what I'm gesturing at.
1:17:55Agreed. But you don't think the home use is going to be, you know, sort of the dominant. So, See, I'm curious when you're on the same stage as I am. Do you ask this question to the audience? Like, how many would you buy?
1:18:07No. Um because my thesis is that we'll have we'll spend five years using them in commercial uh back uh back of the office stock picking inventory management. There's so much demand to solve that first before it gets to oh I need something to do my gardening and picking up my leaves type of stuff. Uh the this industrial use will suck up all the demand for quite a while before it gets to I just
1:18:35that's my view. I may be I may be wrong.
1:18:38I did find one use in my talks that I give which is a robot chef at home that always cooks you healthy food which is giving a robot a knife which is maybe not a good idea but for you know 10 bucks a day having a great chef that's the market that's huge absolutely that know that knows your physiological state in the moment it knows your protein levels and your you know your vitamin D levels your hydration and it you know all of your physiological data is getting ported by your AI to the chef to cook you the
1:19:07perfect meal. You need a dead version.
1:19:09Would you pay 10 bucks a day for that?
1:19:10That's all great. That's all great. The demand Yeah. Like people demand from industrial will over overwhelm the supply for quite a while to come before you able to get your home chef, which I love the idea.
1:19:23Yeah. I I agree with Sim on this one. Consumers at least in the West are relatively poor compared to enterprises.
1:19:29So I if the consumers couldn't even successfully absorb or metabolize open AI's reasoning models and the best that American the American economy could think of is like Meta Muse for absorbing reasoning models for consumers which probably is not that computensive ultimately. I I just don't see how consumers will be able to disagree. If you're if you're earning 20 bucks an hour at McDonald's and your robot can do your cooking and your home cleaning at two bucks an hour, it makes a lot of sense for you to have a robot and go and
1:19:59earn revenue elsewhere eventually. Yes. But remember, in the meantime, as with tokens flowing to the maximum revenue per token use case, I expect the robots to flow to the maximum revenue per robot action use case. And that's not going to be a poor cons where's the demand coming from? You'll get the you'll get families running into McDonald's together, grabbing the humanoid robot from behind the counter and kidnapping [laughter] it to take it home to the chef.
1:20:27Okay. So, Peter, you're you're now asking the question that I'm asking, which is, I think, the big elephant in the room, the big mystery here, which is what will be the use case for all of these hundreds of thousands of Optimus robots that maximizes revenue per robot. Yeah, I think they'll they'll go into industry first, but I think there's an unquenchable supply uh of of needs for the consumer as well.
1:20:50Anyway, we're going to find out. That's I think I think to a first order, if you look at Star Trek episodes, you know, it always anticipates, hey, we're going to have a communication device supercomputer level on our body. What do you know? It's here. Oh, and we're also going to fly faster than the speed of light. No, that that didn't happen. So, where are we today in terms of robots? I think that what's going to actually happen is we're going to spend enormous amounts of money building out data centers and the robots are going to be working on that night and day and they're also going to be building tons
1:21:18of rockets to get more and more Starlink up into the sky and the spillover into the folding your laundry is not going to happen because they'll be so busy building out the data centers. But then those data centers are going to give you your 3D virtual world and every consumer is going to have that and be overjoyed with that long before they have a robot in their house because the robots are busy building your data center that gives you your 3D virtual world.
1:21:43Maybe that's the point that I think Iman you've made the point that construction robots are going to be the massive use case, right? Like I mean you can just do the math around the clock construction.
1:21:55Yeah. I think Dave Dave the scenario you portray is probably the likeliest one that I've heard which is Elon inevitably to compete with Sam and his self-replicating data centers decides all right uh tell message to all all concerned shareholders Tesla and SpaceX have to merge because SpaceX needs Tesla's Optimus robots to build out all of its its terrestrial data centers going forward so merge them.
1:22:20Brilliant. Y I I I think the final point is this is not a demand side problem. I think the demand is going to be there from everything we discussed.
1:22:31Yeah. And I know Peter, you're dying for like six Optimus robots in the house, but I think it'll be waiting.
1:22:37Okay. Well, I'll give each of my I'll give each of my Grock bots a robot contest. Well, that's why I said I think this the Or maybe Peter, you have to open up your own data center if you want some. That's why I think the smartest thing to do right now is you launch a fund and you literally buy the first 100,000.
1:22:51You will make massive ROI on that.
1:22:55And we talked about launching, you know, if you're a consumer out there, buy a 100 robo taxis and put them to work for you, right?
1:23:03Um, which is our next story. So, let's jump into it. So, Elon posted about Tesla versus Whimo and said, quote, "It never was a real competition." So, let me share the chart here. And this was put out by our friend of the pod, Kathy Wood at Arc Invest. Uh, and here are the numbers.
1:23:23Uh, in terms of dollars per mile, uh, the the Cyber Cab is coming in at 20 cents per mile. That's the prediction, or at least what they're seeing today.
1:23:32Uh, Whimo's newest version is at 40 cents per mile. Uh Model Y is at 68 cents per mile and the old version of Whimo is at a $16 per mile. So uh why?
1:23:46Well, a number of reasons. You know, Tesla uses cameras only uh to build its car. It was a long debate about whether they should be using LAR and radar. Whimo is using a multitude of sensors including LAR and radar. And their new minivans are built in China, so they're facing tariffs. Um you know, the performance is is interesting today.
1:24:06Whimo has 4,000 robo taxis on the road, 500,000 paid rides per week, uh, and it's in 50 15 cities, fully driverless. Uh, Whimo is winning the competition today, but Tesla, you know, I think in my estimate, probably all of yours is ultimately going to win the race.
1:24:25They've just built a lower cost, higher performance vehicle. Um, Dave, uh, you know, your thoughts on this? Well, I mean, I think these numbers are correct, but I also think that uh catching up is not is catching up in the age of AI is about the easiest thing in the world.
1:24:41And so, I wouldn't I wouldn't write off Whimo/Google anytime soon. I think the winner is the the first person to build their chip factory. If if Elon builds the Terapab successfully and quickly, then he wins because he can just make that many more um cyber cabs. uh if he does not win that race, if if Google does something and you know the antitrust action around Google slows them down a lot on this front, but whoever buys either Global Foundry or Intel or whatever and gets
1:25:10control of their own chip manufacturing is going to very quickly retool their auto manufacturing around their chip supply. So I I it's very subtle, but everything else in the car has multiple vendors and relatively easy easy to fix supply chains. You know, you're not going to run out of tires. You're not going to run out of out of seats. You're not going to run out of windshield wipers. What prevents you from taking over the world with driverless cars.
1:25:34It's purely comes back to semiconductor supply chains that are that are constrained. Not not just the chip manufacturers, but also the uh you the surface mount and the and advanced packaging is hugely constrained.
1:25:46So that's why the Terrafab is the lynch pin to everything else. So yeah. Yeah, he's way ahead, but there there's no reason to believe way ahead means anything beyond like a six-month window.
1:25:57You know, it's worth saying there's at least 10 other autonomous vehicle manufacturers out there from Zuks uh to others. And the the winner here is the consumer, right? These guys are going to beat their brains out to get the cheapest price per mile. And I find it fascinating, you know, the poorest people on the planet are going to be chauffeered around every place they go.
1:26:1510 times safer, too. Don't forget that.
1:26:1710 times safer and getting better. And I mean that the the human toll of driving is astronomical. It's just a far better world than toll on time on productivity even time. Yeah. Everything.
1:26:31I've got two or three thoughts about this.
1:26:33I think people are underestimating Whimo's accumulated operational experience with in real world transportation. Right. It's a different I think it's a different kind of a competitive advantage. The metric I want to see is not theoretical cost per mile, which is an easy one to compute. What's the fully loaded cost of uh safe, reliable, completed mileage, right? Cuz you have to think about maintenance and remote assistance and cleaning, all this
1:27:01other stuff that come downtime, etc.
1:27:03That's the part I'd like to see. I think you're going to end up with both. Jevans paradox says that as we make this available like in LA it's hard to get a Whimo car now because they're so busy right and so I think the minute these cars become available the demand will just suck it up you'll have lots of time for both solutions to build up for quite a while and you're going to have your personal AI your personal bot bidding you know what car is close you know I pay for time right this is a this is you're
1:27:32buying back time with these devices you know when I have meetings I'm I'm taking a way or or Uber, but when I'm going on, I'm asking who's closest, who can get me a ride. You know, they're all they're all relatively clean and fast. So, I'll pay for whatever one is closest to me. So, I think [clears throat] production, how many are going to be on the streets is another parameter here.
1:27:53Yeah. I I just want to give a little parallel here. You know, I lived in Manhattan 20 years ago, right? And it was a nightmare cuz uh you didn't have traffic signals. you didn't have uh spot hero to tell you where you could park.
1:28:06You basically get to somewhere you're trying to get to live through cross town traffic hell and then guess where there might be a parking garage that would just charge you an unbelievably exorbitant fee. 20 years later, the the combination of ways plus spot hero means I can navigate in that Manhattan incredibly easily, know exactly where I want to park. It just gives me back so much time and mental space. It's unbelievable. And I think that's the part if you take that as a bridge point, fully autonomous driving takes it to the
1:28:35whole other next level. God help us. Can we please have that as fast as possible?
1:28:39Not to mention, Salem, if you're on a corner in Manhattan and you summer an Uber and then this Suburban, this monster two-tonon suburban pulls up and takes you four blocks. Like the inefficiency of that entire loop is is nuts. the and that driver is never speaking English to say to them say stop two blocks earlier please or something.
1:28:59Yeah. I'm also not sure the extent to which so I I first of all as a preliminary matter I I love my Tesla. I have a Tesla Model Y 2026 Juniper model. I love it. It's wonderful. I I use FSD. I think Tesla now gives drivers their FSD scores. What percentage of the time you spend on fully autonomous driving? I think I'm above 96 or 97% at this point.
1:29:22go from Boston to New York without any interventions. It's wonderful. But I'm not sure Tesla actually in a in an era when Elon on the SpaceX side and there's been quite a bit written about this maybe doesn't care as much say about NASA contracts as he used to. Why?
1:29:39Because SpaceX is now a data center hyperscaler company and Anthropic is its largest customer. Similarly on the Tesla side, Tesla SpaceX merge, will Elon really care a huge amount around to Sem's point, all of the maintenance issues and infra issues needed for cyber cab. I I know north of Boston uh on the uh on on the Google Whimo side or Alphabet Whimo side, there was this announcement that they just opened up a very large repair facility or
1:30:07maintenance facility. Will a combined Tesla SpaceX really care about maintenance of cyber cabs or will it end up just being viewed as almost a cost line item the way the buildout of um of supercharger stations was uh at one point there was so much churn on their supercharger team. Tesla basically paused supercharger buildouts. Will it end up more like that where it's a nice to have? It demonstrates to shareholders that Tesla cares about AI and autonomy.
1:30:37It motivates the merger with SpaceX, but at the end of the day, it's just viewed as a sub business and isn't fully realized in in the same way that Whimo, where it's a pure play, at least within Alphabet could. That would be my worry.
1:30:48Or Alex, is do does a population of millions of cyber cabs become infrastructure for infra uh across the, you know, SpaceX, you know, ecosystem?
1:31:00And does it become a, you know, repeater for Starlink? uh you know it's going to have bandwidth, it's going to have power and it's going to be distributed throughout you know a busy city population.
1:31:10If he really believed that though wouldn't he be allocating more production to cyber cabab and less to Optimus robots? I would expect Optimus robots. Yeah, sure. Starlink FTO cells or whatever and real-time mapping of urban environments. But do you think cyber cabab is is the play for that and not Optimus?
1:31:27I I think Cyber Cab is going to have 20 kilowatt hours of power. It's going to be where the people are uh and it's going to have all have Starlink connections being built in from day one.
1:31:39I think people are missing something on cyber cabs and this it's actually a first to market thing and how you can produce these on mass within a couple of years. I did some calculations and I saw that in the London or New York there's about 800,000 trips a day. The amount of cyber cabs you need to completely replace all those Uber and black taxi and yellow taxi trips is 40,000.
1:32:06So if Elon puts 40,000 cyber cabs in Austin and New York and London, he has the market because you're not going to introduce a marginal Whimo into that market, are you? And even then, like right now in San Francisco, LA, like it feels like there's quite a lot of Whimos already and things like that. So, can you imagine 40,000 of them? Again, there's actually an upper limit to the amount that the city itself will accept of these autonomous vehicles. So, I think
1:32:35that you're going to see a ramp up. And when you look at the numbers actually, you see that he could saturate a few first tier cities and then move to second tier cities. is just I think he's thinking Optimus first that then builds more cyber cabs but then every single city just do the math go and talk to your JBT how many trips and how many cyber cabs would you need to replace this and what's the cost of that and how difficult is it for a second player in that city then interesting production and of course producing them in China and he's
1:33:04producing them in his plants here in the United States which brings us to our next story for my colleagues in Cambridge Massachusetts It's uh Teamsters Local 25 rallied outside of city hall on Thursday, then testified in the transportation committee asking to keep Whimo and driverless taxis out of Cambridge, their reasons, job and public safety. So I, you know, look for a few historical analoges. So uh where there was push back from the incumbents back
1:33:33in 1865, Britain passed the Red Flag Act. self-propelled vehicles were limited to 2 miles per hour in town with a person waving a flag, a red flag in front of the vehicles. It was repealed, get this, you know, 34 years later in 1896.
1:33:51And then in 1945, 15,000 elevator operators went on strike in New York City and froze the city's sky skyscrapers, right? Saying, you know, you automated elevators were a danger to humanity. And more recently in New York, taxi medallions sold for about a million dollars each before Uber and then their values collapsed. So the lesson, you know, you can delay a technology uh that's safer and cheaper, but you can't stop it. Uh Salem,
1:34:20I'm I'm curious how long does this sort of like ban against robo taxis take to resolve?
1:34:27It's um this is uh classic immune system response, right? It's like the the lite revolt, etc.
1:34:34uh institutions uh always resist disruption especially when it's disrupting them and you you can understand it from that one perspective in that level. The what they don't see and I wish they would see is that black cabs and taxis in New York and other places are busier than ever because of Jeban's paradox. Uh Uber takes up a lot of the rides that they aren't willing to take up and and deals with drunk passengers at 3:00 a.m. in the morning that they don't have to think about. Um,
1:35:03and the this is just a phase they have to go through. My favorite story of this was that Fort Lauderdale uh blocked uh Uber because all of the um uh taxis complained and somebody in city commission had a voice and they so they blocked Uber at Fort Lauderdale airport.
1:35:20This is about 3 four years ago and everybody just went well why would I fly into Fort Lauderdale? I was flying to Miami and the plane tickets dropped. the sales dropped at Fort Lauderdale airport which meant there [clears throat] was no less business for the taxis and finally they had to repeal that. So that'll happen. It's just a question of how long common sense takes to to take hold in these situations. It's just slows down progress. This is the problem with the human factor in this is always the biggest drag on innovation and progress.
1:35:48And Dave and Alex, I mean this is your hometown, buddy.
1:35:53It's such a case study in dysfunction too. I love our governor Mora Healey. She's phenomenal and she's brilliant and to watch her fight through this stupidity every day and then and then you go into election cycle again and then it's like wow no wonder nothing ever happens. It's just it's just nuts.
1:36:10But you know Cambridge is the most high-tech place on the planet. More f four times more venture capital investments per capita in Cambridge than in Silicon Valley which is second highest in the world. More patents, more Nobel Prize winners. It's just the mecca of technology and it's just embarrassing to to be [laughter] doing this like Salem said this immune reaction. It's like come on here are you serious? It's ridiculous.
1:36:33This is why listen it's the same this is the same thing everywhere you know like in Canada for example doing venture capital is really difficult because people don't want to take a risk. I got black ballalled by the VC association in Canada because I was in front of them and they wanted to see profits before they would would invest in a company. So I finally started yelling at them going, you know, there's a V in your name.
1:36:53You're supposed [clears throat] to actually venture the capital. Where's the V? Uh, and after that, I wasn't invited to any more VC events. Uh, they people kind of get stuck in their old patterns. They operate in the way they're used to. And this is why I go back to my ultimate commentary about human beings. We would much rather be comfortable than happy.
1:37:11Well, the argument that's going to turn the tide is safety. I think not not you know jobs great teamster is great but no no you're talking about little children getting hit by cars if you if you have an opportunity for safety you have to take that opportunity so I think that's what's going to turn the tide I I had uh I had a an extended member of the family a relative who died in the Triangle Shirt Waist Factory fire which was one of the the key incidents that motivated the formation of labor unions
1:37:39in the first place in this country and I I think that marks sometime around then marks the beginning of an era and I think we're coming to the end of an era where manual labor where it makes sense where unions are adding to the social good and not detracting. One of the the unions it was reported involved is the Boston Carmen's union. First of all, Carmen.
1:38:05Second of all, the Boston Carmen's [clears throat] union is a union of MBTA workers. And honestly, it's it's both, to Dave's point, embarrassing. This is also why we can't have nice things. to be in Cambridge where the public unions are actively restraining not just technological progress but also to the points a couple of you raised safety progress. The the era of unions in America arguably started with protecting
1:38:32human safety. And now in on in the era of super intelligence, these autonomous vehicles could be radically increasing human safety. And yet it's the same unions that ironically were formed to protect human safety that are now impairing it. So hopefully very well said. Very.
1:38:50Can I make a direct appeal here, please? If we had a different camera, I'd shift to the different camera, but we don't. But so, you know, if you're a driver in a union that's blocking this, right? You have legitimate concerns.
1:39:02People have mortgages and families and financial obligations and all of that stuff. Gather everybody together. take your union dues and invest it in cyber caps. Then you'll own the means of production. You won't have to work and the revenues and profits will come to you.
1:39:18I think it's really important.
1:39:19I think it might also be like come on guys, you live in a democracy, right?
1:39:22Like you're in Cambridge. Just organize people to say do you want dead kids, you know, like use the means that you have to you I mean again you can organize students around that. you can organize others like families will speak on the behalf because one of the problems is the apparatus of democracy is utilized only by a select few and that's why they're in front of her and she feels the pressure but how many people in Cambridge would like safer roads and
1:39:49convenience and be able to do this more than the teamsters and ultimately lower cost lower cost per mile lower cost different style of living but the fact is that they are not being organized at the moment which is ironic because again the AI can do it and you Just hit that narrative again. Who is pushing that self-driving cars mean less dead kids? And there are strict numbers on that. 5,000 less dead kids per year if you have self-driving cars.
1:40:16Nobody I just got to throw out. I think you're you're the you're the foreign agent that America is looking to for guidance here to ensure that that we prevent child mortality. I you're you're the one you've been so nominated. Uh I'll just throw up my favorite stat which I've stated before. Half the court cases in the US are car accident related. Half that's why that's why the you know lawyers are funding uh the you know the
1:40:45the car and taxi drivers to basically you know put a stop here. Everybody's playing their book. Everybody welcome to the health section of moonshots brought to you by Fountain Life. The discussion in this section is forformational purposes only and is not medical advice.
1:41:01Please consult a qualified health care professional about your individual needs. I'm a co-founder of Inclient at Fountain Life. You know, AI is impacting every aspect of our lives, how we teach our kids, how we do our business. But one of the most important things that AI can deliver to us is health. And one of the things I think about when, you know, shooting for 100, 120 is, am I going to have the cognitive health to be able to think clearly and keep my wits about me for the next 50 years? I'm joined here
1:41:29today by Dr. Don Malem, the chief medical officer of Fountain Life and a member of my Fountain Life medical team. Don, a pleasure. So, Don, talk to me about brain health.
1:41:39Brain health, you know, you're right.
1:41:40This is the number one concern people coming into Fountain Life have is will I remember the name of my child in the face of my loved one. 45% of dementia cases are entirely preventable with lifestyle. And what was really intriguing to me, Peter, is that a quarter of our members had advanced brain age. But over 13 months of us really helping them live healthier lifestyles, eating healthier, moving their body regularly, and optimizing sleep. People overlook that so often,
1:42:10but that sleep optimization is critical for our brain health. What we showed is that we were able to improve the brain age in 46% of those individuals. That's a powerful number.
1:42:20That's amazing. You know, one of the things I love about Fountain is we're constantly searching the world for the most advanced therapeutics and bringing them to our members. So, for me, all of you, I hope that you appreciate the fact that you can become the CEO of your own health. you can make sure that you've got the cognitive clarity for the next 50 years. Come and check it out fountainlife.com/per to learn more and become the CEO of your health. Now, back to the episode. All right. Uh we've been talking about Cambridge. Let's talk about education a
1:42:48little bit more. So, two stories tell us that students are rethinking their educational degrees. Uh and they're in two areas of interest. Uh computer science and MBA. Let's look at uh at computer science first. Recording new data from the National Student Clearing House, enrollment in computer science fell more than 12% this fall at undergraduate level and more than 10% at the graduate level. Two years ago, CS undergraduate enrollment was down 18.4%.
1:43:16Meanwhile, you know, majors like health are growing. The data alone can't prove AI caused the drop, but students are reading the same headlines that we are. At the same time, in business schools are seeing the same thing. And according to the Graduate Management Admissions Council, applications to full-time MBA programs in the US fell 27% this year.
1:43:36That ends 2 years of growth. Most of the drop is coming from international applicants who are down 38% driven by stricter visa policies. But applications for Americans also dropped 6%. students site economic uncertainty and growing doubts about job prospects after graduation including the fear that AI will eliminate entry-level jobs and an MBA will be of no use. So you know as we think about MBAs you degrees traditionally what do they teach? You
1:44:05know analysis financial modeling strategic frameworks and slide decks and that's exactly where AI does its job really well. Uh hopefully you know it's not too long before we automate judgment, relationships, taste and courage. So Seem uh you know you've been talking about this for some time. So what replaces the MBA? Is it just experience building a company yourself?
1:44:30Yeah, I mean look there's only one path forward for business schools and universities in general which is to become entrepreneurship institutes.
1:44:37We've talked about this many many times on the podcast. uh if you're an MBA program and this will be the same for engineering eventually you won't study engineering for four years you'll go build stuff and after four years they'll go what did you build and if it was good enough you get a credential um these days you don't need this but the the computer science degree I have a little more sympathy for because Jeban's paradox means we'll just keep writing way way way more code for a long time to come and experienced computer science
1:45:06folks and people that understand data structures and networking and so are going to be badly needed for quite a while to come. But the MBA program has been out of date for a while. I've been noting for about 10 years that even 10 years now, like 2026, almost 2027, there's still not a single MBA program in the world that can teach you how to build Uber. Every single MBA program teaches how to build a 20th century Yeah.
1:45:30uh uh uh organization. And so there's that problem because the curriculum can't be updated in this. Uh the bigger problem though is you can't study business to build a bit to understand business. You really just have to go build it. And the opportunity because of the democratization and democratization of anybody in their grandmother picking up AI and using it to build a business has never ever ever been better. Peter, you talk about this all the time. Um go
1:45:58build a business. Do not take an MBA.
1:46:00Yeah. Dave, when you and I were in school, a lot of our our undergrad friends went and did their MBA degree. It was like the, you know, the most important degree you could get, you know, go get a job on Wall Street.
1:46:13Are you seeing MBA students in uh inside of Link, the Link ecosystem?
1:46:18Well, the the venture fund, you know, the deal negotiators and the capital raisers are mostly business school alums for sure. Um, but you know, we we would take people in that role that have won one year and they're done or they're about to go to get their MBA, but they decided not to get it because the moment's too urgent. You know, that they're just as good. It's the it's the building mentality. But I also think that the labels are out of date. If you said, "Look, Python coding is dead. I don't want a degree in Python and financial modeling in spreadsheets is dead. I don't want a degree in financial
1:46:47modeling and spreadsheets, but what do I want to study?" Well, Immod said earlier on the pod, somebody who goes and raises a $5 billion fund right after this podcast to buy a couple hundred thousand or as many optimuses as you can get your hands on uh and then builds a a company around that fund is going to crush it.
1:47:05Absolutely true. So, the person who reacts to that prompt is probably a business school person who studied finance and the the management of the logistics of what Ahmad suggested pretty damn hard. So, that skill is absolutely still worth having. Then at the other end of the spectrum, we're about to spend seven trillion dollars on AI inference and lots of people are switching over to physics to photonics to semiconductor to microode. So the the underbelly of computer science is
1:47:34thriving. So it's the middle stuff that AI has taken over. So you could still get an MBA, just focus on raising billions of dollars for world changing missions. You can still get a computer science degree. Focus on the physics end of it. Uh, but don't get stuck in the middle. But the labels imply MBAs are dead or computer science is dead. That's not true at all. It's the specific code monkey is dead. That's not a job you want anymore.
1:47:59Spreadsheet monkey is dead. That's not a job you want anymore. So, you got to parse that a little bit.
1:48:04I mean, good riddance good riddance to slides and presentation. PowerPoint sucks, right? Like, I just don't think there I don't think there are any safe harbors here. this institution uh this notion at least in the west especially in America post World War II that everyone has to go through a common pipeline in order to be an economically productive member of society this is a modern creation it's there's nothing universal about it uh that that would be if maybe if I were
1:48:33giving a speech in Germany uh which has a notion uh of trade schools that that's viewed differently with a different social veilance in America that's what I would say But also remember the sands are shifting from underneath us. With a 4-year undergraduate program, if your goal is to maximize economic productivity for those who look to college for vertical mobility, the world four years from now, if you're just starting college now, is going to look wildly different. And if if I had to,
1:49:01this is not investment advice and it's not college major advice, but I I would say the the only the only class of capabilities that seem at least somewhat secure in the very short term, call it the next 2 to 3 years, are those that touch on the physical world. Whereas computer science, we've seen already computer science has cooked, math is cooked. They're very useful uh and valuable nonetheless. And if you're going to start companies and and be an entrepreneur as Peter and and Dave uh
1:49:30and Salem and Amad actually all of you say then it's super helpful to to have knowledge in in your meatbody brain of computer science and math but at the same time recognize from a coding perspective or reduction to practice it's all AI at this point it's hopeless give it up and focus your attention on in the short term majors if you must and activities that touch the physical world where super intelligence and the
1:49:57singularity are are still creeping in but not quite there yet. Otherwise, build a company and ride the wave of super intelligence because there is no safe harbor.
1:50:07If I had to give a piece of instruction to any undergraduate right now in particular or someone considering graduate school, there's probably two major reasons to go. One, to get a great network. You go there to find amazing people that you're going to partner with, that you're going to find a common love with and build something.
1:50:28If you don't have a great network, going to a top tier university to get that network is a great idea. The second thing is if you don't know what you want to do, right? If you haven't found your purpose and passion in life yet, because whatever you do should be driven by an innermost hunger. doing anything big and bold is hard and unless you want it deeply in your heart and soul, uh you're going to give up before you get there.
1:50:52So, you can go there to find a purpose, find something that you love doing. But for me, those are the two major reasons. It's not learning because what you learn is going to be out of date very quickly.
1:51:03Uh and it's not going to be to get a job because we've all said, you know, the whole paradigm of jobs is cooked. So, go find your tribe, go find a purpose, and then go build. Uh, I Yeah, I think I was going to echo that, Peter. Like, I think now actually is the most important time to surround yourself with people that you look up to, you feel positive energy around because that's one of the key drivers of what success will be. And again, like you and Dave met at MIT, right? Like some of these connections will last for a
1:51:32lifetime. So, I think actually inerson humans around you is more important than ever. Ironically, previously could just coast by getting your accountancy or your MBA or kind of other things. The other thing I'd like to say is I just realized I haven't looked at a single line of code this month.
1:51:48Yeah. Isn't that amazing?
1:51:49Yet, you've probably generated millions.
1:51:51I don't even know how much I've generated, but I've built state-of-the-art things of all types that some of you have seen, and I it's been a month since I've seen any code.
1:52:01Yeah. I mean [clears throat] Dave, are you guys are you guys looking at code still? Like it must have I'm warning people like I can I can see in the prompt history as if people are looking at code and it's like a red [laughter] flag saying like why do you feel the need to do that? Are you a junkie? Like what's the issue?
1:52:17It's even worse than that. I would say programming languages themselves are no longer interesting. Like what's the point of even creating a new programming language if you're never going to program?
1:52:24Are you? [clears throat] Yeah. Yeah. But but AI management frameworks are hugely important all of a sudden and they're they're a lot like a language except much you know broader in in scope and suddenly that's a massive le lever. So the mindset you know of a of a person who thinks in terms of programming languages that mindset is more valuable than ever uh but it's moved over to agent management and frameworks tools.
1:52:48Prompting with precision is going to be a very very valuable skill over the next decade or so.
1:52:53You think so? I think that only had 5 minutes of shelf life before the models got so smart they just understand what you're talking about and don't need context engineering.
1:53:01But but if you embrace if you embrace the things that have five minutes of shelf life during that five minutes then you're really well prepared to embrace the next famous don't it was a glorious five minutes.
1:53:13Exactly. Exactly. Just keep writing.
1:53:15Keep keep thriving. Keep rioting. Keep changing.
1:53:17Motion motion. Keep the motion up. All right let's let me go to the last story here which is a great model. This is a friend of the pod, Pomero Lucky, and his company Andreal. Full disclosure, I'm an investor in Anderrol. So, Anderil and Qualcomm just announced BlueChip. It's a line of hardened Americanmade computers.
1:53:35The first product is a rugged laptop for the military, government, and first responders and police. It runs on Qualcomm's Snapdragon chip made in TSMC's Arizona plant. About 90% of the parts come from within the US or allies with a road map to get 100%. Uh, the screen for Blue Chip is still made in China. Final assembly is at Ander's Arsenal 1 factory in Ohio. Palmer Merli said it this way. Quote, "The anti-surveillance computer." Uh, he says
1:54:04it'll cost about 20% more than high-end PCs and be heavy with limited bar battery life. Uh, let's go to a quick video of Palmer discussing uh, his blue chip computer. 80 years ago, [music] America pioneered modern computing to defend our nation. Now we're bringing it home. This is blue chip. American designed, American built. Other companies might design their computers in the US. And makes them here. Yet, we're making parts out of metals that
1:54:34the US knows how [music] to extract, knows how to refine, knows how to process, and knows how to mill at scale at a reasonable price. And that goes for the entire laptop. The same thing goes for the battery technology. We need to design things that survive [music] very very rough environments. And so what we've designed is a chassis that makes it very very easy [music] to replace the bottom shell and even the top shell which you can easily integrate things like uh solar panels, other soft goods, other service [music] insignas, even things like flat phased array antennas directly into the laptop
1:55:03itself. Blue Chip is America's comeback. And is making sure that the machines we depend on every day are machines we can actually manufacture ourselves. This is America's birthright. It's time to bring silicon back to the valley.
1:55:22You know, I flew with him back from uh from New York where he was winning the uh the Wildfire X-P prize and he was telling me about this. He's so passionate about it. Uh it's interesting, right? Willing to pay 20% more for Made in America. Who wants to jump in? I I'll just say I I applaud Palmer for doing what Apple was unwilling to do. It's like pulling teeth to get Apple to to move its supply chain out of Shenzhen and they're mostly
1:55:51moving it out of China to India and not to North America, greater North America or or even lesser the United States. And doing what Elon threatened to do but didn't, which was to build the X phone.
1:56:03He he every once in a while gets frustrated with Apple and says that his supply chain large s is going to be used to build consumer general purpose computers but he hasn't done that. Bravo to Palmer to build a rugged book.
1:56:18Obviously defense applications are are the first application. I I just hope that we see whether it's through regulatory measures like export controls or whether it's just through demand and superior domestic arguably sovereign production capabilities that we see more and more of the entire device not just semiconductor but the entire device supply chain moved out of East Asia or Asia overall redmesticated back to the US. I think the country will be much
1:56:46safer. I think the country will be much more capable if we can take sort of transplant morg style all of Shenzhen into the US. Masa son had his project crystalalland project notion that never quite got off the ground. I would love to see a project crystalalland in the US that offers endtoend shenzhen type capabilities for laptop production and everything else and maybe Palmer will help to drive that way.
1:57:13Yeah, I think it's it's a no-brainer for this to come back uh to the US. I think the problem that Apple runs into is that that there's a big push right now to bring uh you know PC board and and and surface mount devices and all that bring that back to the US, but then you're like, well, there's another election in two years. They'll probably change their mind again. You know, it's just there's no reason to believe there's any continuity in the policy. And by the time you you get it all moved back, you know, you're two years into it and that's right when the next election
1:57:42comes along. So it, you know, countries like China that have continuity of leadership over long periods of time are just kill us, crush us with these long-term plans and that no one in the US can plan that far ahead. But it's obvious that if you do move it back, it's all going to be roboticized.
1:57:58There's no labor constraint anymore. So it's far, far smarter to have it back on shore. So Palmer's doing the right thing. And I don't blame Apple for being all worried about it. They're trying to move it to India now. Um but you know, moving it to the US, if you if you could promise that you'll still be saying that 6 and 12 years from now, we would do it.
1:58:18Yeah. It's a different it's a different business, right? The government's willing to pay more uh consumers or not, consumers will flock to the lowest cost product. Seem, you were gonna say I I just love the the overall MTP framing here because he's not saying we're going to build a better laptop. We're going to kind of rebuild the entire American ability to do innovation, right? It reminds me of Robert Goldberg who's whose MTP was reinvent American exceptionalism, right? There's some
1:58:45incredible potential and need and as Dave points out as we automate and you need less people. This is the best place in the world to do it and it will become the best place in the world to do it.
1:58:56And if you can build an ecosystem that is uh supporting all this you and you don't have to build the whole thing, you have to do bit by bit. while you get the whole thing done and then you're in an amazing place. You have to do it this way.
1:59:07Iman, I'm curious. Does does England build anything? I guess cars. I guess you built some cars.
1:59:12We've been shutting down those factories. Um I'm not sure actually again like we our electricity is like three times more expensive. Our permits are huge and so it's very difficult for us. And more than that, like the entrepreneurs like Dyson and others left because the environment was not favorable. I think the winds are behind Palmer, you know, God bless him. And he's showing that he can be a mega entrepreneur and delightfully retro as well. From the mod retro game boy to kind of this, it's kind of going back to the old school and bringing it forward.
1:59:42And as See said, not being apologetic like this isn't the fastest, cheapest, best laptop. It does the job very functional and all the things that he builds will be. you know, uh, Palmer and folks like Ben Lamb are very much sort of the analoges to Elon. There are very few entrepreneurs that make these huge bets, risk everything over and over again. We need more of them.
2:00:06But the thing is, it's not a risk actually, is it? This is Elon's idiot tax at work. The supply chain is going to be so much shorter for this. The supply chain as you re-industrialize America will be so much more resilient and particularly because there's probably holes everywhere.
2:00:20And I I think for Palmer in particular, I I wouldn't characterize this as an act of heroism. He has a customer, the US government, that very much wants to ensure that it doesn't have components that originate from Chinese supply chains with potential supply chain vulnerabilities. So I I think starting with the US government as a customer for fully sovereign device assembly makes total sense. Again the question in my mind is beyond the US government does the say the American consumer American enterprises do they have an incentive
2:00:49ultimately to buy American fully sourced desktops, laptops, smartphones or not?
2:00:55You can make them have an incentive with import controls which is what this administration is doing with robots but otherwise not obvious to me whether this spreads beyond the US government consumer. Well, the problem with the government as a customer is they have to put everything out to bid for to reevaluate every single year. It might be time to reconsider that way and that's not the way and works. And builds it and says this is now available for you. It's not a bidding process. I mean that's what Andre's genius is.
2:01:25Yeah. Well, that's why there is risk.
2:01:27Yeah. I mean there is I mean the way government contracting usually works is there's firm fixed price on the one hand there's cost plus on the other and the the success the notable success of Andre with selling to the government is that they are biased in the direction of selling firm fixed price products as opposed to just trying to bid bid uh on cost plus contracts which is what many inferior legacy primes do. That's been the strength. So presumably he's offering these at, you know, a fixed dollar amount per pop and it's an FFP
2:01:57contract, but still subject to bidding.
2:01:59And let anybody else who's making an all Americanbuilt laptop compete, right?
2:02:03Nobody is. All right, it's time for AMA with the mates. Seem give you a first crack here. What do you want to go for?
2:02:11Uh, I got to go with number three. Um, when an organization switches AI models or cloud providers, how can it ensure that existing security restrictions, decisions, records, and compliance obligations are preserved? And that's from Invisible Laws Official. Uh, what a great uh name. This gets like really right to the heart of the organizational singularity and the way we think about this. Companies totally need to rethink their architecture. You can't just add AI to existing workflows, right? The
2:02:41foundational principle has to be to what extent can you have replaceable intelligence but with a layer of persistent accountability on on top of it. Your security and your compliance. All those records should belong to the organization not to the model. And so you have to lift that above and the governance needs to be implemented by a machine readable policies. And so you have to figure out how to layer that.
2:03:05We've kind of designed this in what we call the intelligence stack which is available for free in our cloud skill because you have to be able to swap out claude or Gemini or another model. These models are leaprogging themselves every week now or every two weeks and you have to be able to swap those out without losing the organizational memory and the permissions and all the rest of it. So super critical to do this.
2:03:27Dave, over to you pal.
2:03:29All right, number two. Could breakthroughs by competing AI models cause stock price whiplash for companies like OpenAI and Anthropic? And is it sustainable for companies to focus purely or solely on AI in such a competitive market from Future Insights essay? You know, the the market is what 3% 3 and a half% down today. that that used to be like like you know a catastrophic once in a millennium kind
2:03:58of event and now it's like every week.
2:04:00It's amazing how much more volatility there is and that's just the nature of technology. Stuff changes so quickly and people people panic and everything bounces around. So yeah, I expect there'll be a huge amount of volatility in the open AI if it ever goes public and the anthropic soon to be public stocks for exactly that reason. every announcement, every new Chinese model, every benchmark, the stocks are going to go all over the place. But if you look overall in aggregate, you know, the market's up and up and up and the
2:04:30economy is growing and growing and growing. So, you know, Alex always says just diversify, be be hedged against it, but don't be unexposed to the category. Uh I think those companies uh are going to stick with the the narrow focus even though it's volatile and that's probably the right the right strategy for them and just live with the volatility.
2:04:50Immod um three or four three I'm sorry two uh two or four I'm sorry one or four I think you one or four. Thank you. [laughter] Um got it in the I got the four right.
2:05:04Number one, why are Chinese AI models cheaper? Is it due to greater efficiency? government subsidies or lower energy costs. That's from Ry 4770.
2:05:14And it's interesting. I think necessity is the mother of invention. They didn't have the big chips. They didn't have the compute. So they optimized for smaller or RAM intensive models when RAM was cheap. Um they obviously borrowed from US models as well. So they didn't have the same R&D. And the biggest thing actually is that they don't do margins.
2:05:34Um, so the anthropic S1 was just interesting because they have huge margins like 80%. And so did everyone else. And we all thought they were running at cost. In fact, they weren't. So with that optimization, with that distillation, and with again the need to drive these things down, they did it.
2:05:49And the final element is sometimes just superb engineering. The deepseek details that came out of their inference, like it was astonishing when they released their inference stack how efficient they had made it. And that's just good engineering. Full stop.
2:06:05All right, Alex. Number four, question number four. Is Microsoft's voluntary exit first have to admire the Orwellian double speak. Is Microsoft's voluntary exit offer to 60k employees an early sign of AIdriven job displacement or corporate restructuring? This is from PCN2B.
2:06:25This is a pretty weird future present that we're living in. If if we had told this story 10 plus years ago, the easier and more obvious story to tell would have been AI automation itself just obsoleting the the role of employees. So basically spend on employees being substituted by spend on replacement for the employees in the form of automation.
2:06:48That's not it appears what's actually happening here. What it appears and it's not just Microsoft, Oracle and other hyperscalers are doing exactly the same thing. It's not one opex substituting for another opex, it's capex substituting for opex. So in the case of Microsoft and the other hyperscalers, what seems to be the case from the outside is that rather than spending money on employees and all of their associated costs, which in their ledger would be considered an operational expense, they're instead taking that
2:07:17cash and investing it as a capital expense in the data center buildout. So it's not that again this pretty bizarre world we live in. It it's not that spend on AI is substituting or at least spend on AI applications is substituting for spend on human software engineers. It's that the investment in the data centers is so capital intensive Microsoft has relatively capital relatively little cash which they're calling an operational expense left over to pay their employees and that's why they're
2:07:46exiting them. So it is it is in some sense a capital substituting for labor effect but a weird one.
2:07:53Nice. All right. I think number six is for you, Alex. You want to take it?
2:07:57Okay. Six asks, "Does chain theory strengthen the case for simulation theory?" And this is from JSBGMC 6613.
2:08:05Um, so so as I was uh developing chain theory, uh, and again with the obvious caveats as a preliminary matter, these are very early days. This is a baby theory. It's still developing. Uh, lots of room still left. But nonetheless, this was actually a question that I investigated, spent a material amount of time investigating. And as far as I can tell, again, caveat, caveat, caveat, early days, it appears that chain theory does have weak opinions about Nick
2:08:35Bostonramm's simulation hypothesis. The weak opinion is that because there are no free parameters, if we are indeed living inside a simulation, it wouldn't be a very useful uh premise to have.
2:08:47There aren't rooms for say someone or something outside the simulator the simulation to twiddle knobs inject themselves otherwise. There just there's no degrees there appear to be no extra degrees of freedom that would make living inside a simulation a useful to anyone or anything outside it. But b uh it it also appears there isn't any way to test it as opposed to say if we were living inside a naive classical simulation you could run timing attacks
2:09:15on it. We talked in the last pod about timing and side channel attacks that baby super intelligences are running to chat with each other. Chain theory doesn't seem to have anything quite like what one would naively construe as a classical computer simulation. So it doesn't if if we are living inside a computer simulation, I think chain theory's view based on its current state would be it's like unfalsifiable. It's a gauge. You could choose either way. It's it's a little bit there's a concept in
2:09:45physics of a gauge basically a symmetry where it's there's no correct answer there like every answer is correct. Uh and thus far as I can tell within the the premise in the framework of chain theory are we living inside a simulation or not? It's a gauge. No way to tell maybe even provably no way to tell.
2:10:03See, what's your take?
2:10:05What question on this particular one? If you squint, we're living in a simulation. Okay, I'll use Alex's favorite phrase there. He's one of my favorites of Alex's. What you want me to take a question?
2:10:15Yeah. Five, seven, or eight?
2:10:17Let me take uh number I think I got to take number seven.
2:10:22That's the the the one. Um, wouldn't it be more practical to build an AIdriven mechanical dog instead of engineering real ones which comes from Ziv to live which I love that um for many applications build a robot but biology is very sophisticated in lots of different ways. Um, uh, it depends but it depends what outcome you want, right?
2:10:47Robot robotics gives us programmability and it gives us control but biology gives us adaptation and lots of efficiency that's evolved over 4 billion years like the sense of smell etc etc.
2:11:00Uh we'll end up with the combination of the two giving you the best ever. But just as a small example, a certain breeds of dogs can operate for like a day and a half without eating or drinking, whereas a robotic dog will probably need battery power pack replacements much much more frequently.
2:11:17And that requires a lot more infrastructure, at least for now. So, um, I go back to Brad Templeton who was talking about the, uh, Boston Dynamics horses, and he's like, if you want a robotic horse with all the mechanical stuff, well, I'll give you a male horse and a female horse. We'll breed you a horse. It's not that [laughter] hard.
2:11:35There's lots of advantage of biology that you don't get in the mechanical side. So, uh if you want those advantages early and quickly, go with the biology. Over time, we'll program programmatically get there.
2:11:47It's also worth noting mechanical dogs going to be a lot faster to produce and their software can be upgraded at a moment's notice unlike with biology. Uh but that is a valid point. I'm not sure about the faster we produce.
2:12:00I think you can have a production line of mechanical dogs. [laughter] Uh, I guess I guess you could put, you know, if they have artificial wombs at Colossal, they can, you know, sort of like put thousands into Fair enough. Uh, into development at once.
2:12:13Uh, okay, Dave. Uh, let's see. You've got number five or number eight?
2:12:18All right, I'll take number five. With Nvidia heavily dependent on AI infrastructure spending, could the lack of profitability at companies like OpenAI and Anthropic pose a risk to its future growth? And that's from Spiritual Evolution 14. Heck yeah. Um, I mean, keep in mind Nvidia sits between TSMC and a few massive customers.
2:12:39Anthropic, OpenAI, and others. Uh, Elon, a huge one. Um, and in that in that stack, you know, you heard on this podcast that Anthropic and their S1, they're operating at 80 85% margin. And then on top of that, Nvidia is operating the chips at 80 85% margin.
2:12:58And that's on TSMC operating at 50% margin. So when you buy a token from Anthropic, the markup on the markup on the markup is insane what you end up paying. Do you really think it's going to look like that in three years, four years, 5 years? There's definitely a theory that it won't. And everybody's racing to vertically integrate now. You know, Enthropic is designing chips. Uh you know, everyone else is also designing chips. Elon is the one to cross the next line and say, I'm going to build my own fabs. I'm not going to
2:13:27be dependent on TSMC. Yeah, but ultimately this will be vertically integrated uh across all of them and and Nvidia has their own models. They're not good yet, but they have their own models. So, they're all going to end up competing and those margins have to come down. So, heck yes, that could happen for sure.
2:13:43I number eight's for you.
2:13:45As AI accelerates scientific research, can the peerreview process keep up without compromising scientific rigor?
2:13:51Rita Rowling 7235. The peer review of reprogress process has held up science and it's terrible and awful. Having a few unappointed people gate ideas coming through that need to be as close to the norm as possible with basically no difference from chance per the Rothwell study and others and push back and endanger people's careers has been one of the worst things we have for science which should be an iterative open process where we explore and the
2:14:19marketplace of ideas wins. So I think it'll be the opposite of it because we should be putting out ideas into the world. Like for example, my take a high level on Alex's chain theory is I haven't absorbed it because he spent far more time than me. But I think the base is a far better thing than string theory because it's actually more reasonable and I think a lot of it is reasonable.
2:14:43But how will it win in the marketplace of ideas? Because now we all have AIs to be able to check these things. And we should reward putting out ideas that have merit and we should also reward replication of ideas and more because so much of science unfortunately is unfortunately just made up which is the craziest thing of all. So I hope it kills the peerreview process and we all become peers.
2:15:04Yeah. And the the thing about the peerreview process is if you're an expert in the field and some disruption comes along, you're no longer the expert in the field. And there's a absolute incentive to slow things down. All right. Uh gentlemen, anybody listening?
2:15:19Wait, I have a comment. I have to say something.
2:15:22Um I want to make a comment about my religion comment from last episode.
2:15:27So you you want to walk it back? Is is that what you're saying?
2:15:33He's muted himself.
2:15:34You're you're doubling yourself down.
2:15:36You're doubling down. This is great.
2:15:38The AI muted [laughter] me. Okay. No, no. I don't want I don't I don't want to from God.
2:15:44I [laughter] uh I I have to run back. I'm on stage at MIT in a few minutes. I have to run out of the door here. But all right, real quick. Uh apologies for those if I offended you. I don't mean to offend. If I do offend, I hope to equally offend everybody. So, I'm an equal opportunity type guy. But but in my defense, when people said in the comments, uh uh only Islam does that, Christianity does that, does doesn't do that, Judaism doesn't do that, I had to go go hello. Hello. Uh so the Christians have been forced conversion everybody
2:16:14for throughout history. The Spanish Inquisition is the the easiest example. Islam is a very bad offender on this.
2:16:21But even the Buddhists, okay, the Tibetan Buddhists who we think of these nice sweet people when it was established they suppressed bubon practitioners and they were heavily prosecuted and said you have to convert or you'll die. Uh and even the Jews in the Hasmonian kingdom [laughter] forced conversion multiple instance of that. So all religions are guilty and I will smear all religions equally with this.
2:16:43All right. Just don't tell the congrat Congratul Congratulations Sem. You're you're Mr. Popular.
2:16:48Quadrupling down. Quadrupling [laughter] down.
2:16:51Offended. Twothirds of the world consider themselves to be religious. So I've just offended that.
2:16:55We're going to wrap with a beautiful video from our dear friend of the pod CJ Truheart called Singarians. All right.
2:17:07[music] field where the airships used to sleep. Somebody drew a curve on a whiteboard and asked what if it bends up.
2:17:22The singularity started as a university under hangle [music] moonshot curiosity peter and ra to a curve on the wall. Selenium mind going to miss it all from deep mind technology to chess kids [music] quest. Solve [singing] intelligence first then solve the rest. SpaceX rockets landing back on the map and the WG's equations keeping futures uncapped. Decentralized OS for paradigm shift tech optimism is the gift. Big [music] problems need bigger minds to live.
2:17:52Many billion lives [music] at a time. Every singular I exponential tech with the soul. Abundance is [music] our goal. Building large pants for the whole of humanind. Yeah. The whole of humankind.
2:18:22Most [music] don't think it's probable, but we know it's possible. Just flip it to impossible. Every wall's a door that's [music and singing] optional.
2:18:28They called it impossible till we made it true. Cuz we hold an optimistic point of view for the protein map. Power the world with the sun that shines. [music] Double down to double up. Think exponential level up. Decentralized OS for a paradigm [music] shift. Take optimism is the gift. Big problems need bigger minds to live many billion lives at a time. [music] Wishing you
2:18:57exponential tech with the soul. Abundance is our [music] goal. Building launch path for the whole of humanind. Yeah, the hold of humankind [music] manifesting heart [music] and true hands in the work giving meaning to me.
2:19:24All right. Thank you, CJ.
2:19:26Nice job, CJ. And I I guess we're singularitarians, not extropians. I don't know what we'll be tomorrow, but it's nice to have a name.
2:19:33As long as we are.
2:19:35Tomorrow. Yes. All right everybody, great session guys.
2:19:39Great conversation.