Elon's Anthropic Deal, The Next AI Monopoly?, "FDA for AI" Panic, Trading the AI Boom

Got that face man for radio Don't look as tired as you have in recent weeks. That's true. Yeah. Yeah, somebody was slagging me for the bags and for about yeah I mean, but this audience is brutal. They're brutal. They're brutal. It's a good thing I'm rich All right, everybody. Welcome back. This is the number one podcast in the world. It's the all in podcast with us today tomorrow probably hoppity of David Sachs and

“our fifth bestie. Mr. Brad Gershner is here. I think David Freiburg is suffering from some”

Socialist related flu he's very sick of reading about social is but he'll be back next week with two

Incredible incredible interviews. You guys see the Spencer product. Wow. It's one of the best political ads I've ever ever seen

Oh, they're like three or four of their multiples. Yeah, whoever that social media team is is on fire If you get a good social media team and you get a good ad production team, I think it's next gen because these things go crazy and Spencer Brad, if he wins this election, which I think he's going to in Los Angeles, the reason is what Brad said those ads are in Incredible. Well, he's also quite a good debate or did you see clips from this debate incredible. He's so funny. He's so chill Yeah, well, he's up against Karen Bass who's the mayor who is basically extremely left wing and then there's someone who's a city council woman

Who's even further to the left of Karen Bass. I mean, she's often like fetal Castro territory. She's an Indian fetal cast Roman. So she was basically I guess criticizing the mayor for the homelessness problem

And then prep pointed out that this council woman is actually in charge of all these over the programs

already He eviscerated

“The key point which is look the problem here is not like a housing. It's an addiction issue, and it's a”

Mental illness issue, and he said he said if he went to the streets, he gets up to the death Which is pretty accurate if you've been to Skid Row. I mean, you would not want to walk through there It was like the spider-man photo. Next got the clip plays a clip. Oh, God this clip is built a different clip But this went super viral it reminded me of Trump a little bit. Let's see. I'm not sure how to respond to that vision of Los Angeles This is a bag of Republicans idea

What Los Angeles looks like? This is this is really now For those of you listening he put his hands up and we'll just have like oh my god Hey, hey, sacks you know Stephen Pratt wins mayor Spencer, but then the you know the ballot initiative the retirement protection and savings act Right, it's gonna pass gonna pass with big numbers. This is the you know referendum that effectively is gonna knock out the wealth tax Can you imagine if California effectively passes a constitutional amendment protecting retirement savings and personal assets and banning the wealth tax and

Prackets elected the message that would send to the country. That's that's a very non consensus view that I'm becoming increasingly optimistic about Well from your lips to God's ears

“But until that message actually is sent. I think I'm gonna be”

Intexus in Texas Well, I mean this is also in the face of I don't know just to follow up story here But Mondami did like an attack video on Ken Griffin's house We talked about it on the pot a couple weeks ago and like literally stood in front of his house pointed at it And this is in the face of like a CEO getting shot for ideological reasons Sam Altman's house being targeted

This is like a really dangerous thing for Mondami to do and Ken Griffin came out today and or yesterday in an interview and said hey, listen, I'm out. We're gonna be putting our efforts into

Florida and this is the same thing that happened to Chicago and he basically said like I really felt

offended and I was you know nervous about this Because of my personal safety and he called him out Mondami came out with like a Meal mouth response that didn't even apologize for what he did just double down on it essentially All right, let's get to the dot. I don't know if you guys saw it or not, but who cares in New York is becoming a fly over city Interesting way to put it don't just agree. All right first story Elon just leased all of Colossus one way to send he did

Yes, shocking to Dario and in pro picture mouth on last week's pod Go ahead and give yourself a pat on the back. You said Elon and Dario should do a deal tomorrow It didn't happen the next day it happened five days later, so you came close to my But no cigar because of inthropics obvious compute constraints and

The deal is already having an impact as we've discussed here Claude users have been experiencing rate limits well Claude has now doubled the Claude code rate limits remove peak usage caps For paid users and increased API volumes for Opus models XAI is now trading their models at Colossus two So they have more than enough compute Elon made a great bet On compute and they'll top those data set is really fast and that is now paying off

We have the cursor deal. We talked about last week. Let's talk about the emergence of Elon web Services EWS Jamoth he is now in the hyperscaler Computing against Google Cloud Amazon web services in Azure and I don't know if you had inside information or just a brilliant

“Epiphany, but take us behind the call and what do you think about the deal itself?”

I think the deal is fantastic. I'll say maybe three quick things

the first is as I mentioned a couple weeks ago and

Drop it and open AI's revenue performance has nothing to do with demand Zero it is entirely to do with the supply constraints that exist in data centers and specifically in power If they had infinite power, I think that their revenues would probably be even more parabolic And so all the breathlessness about either exceeding or underperforming a forecast in my opinion mean nothing I think the five year view for those two companies

Is quite robust the thing that they really need is more compute and more power. That's the first thing The second thing is while they need that we have a very big problem Which is we unfortunately have very poor leadership At the head of most of these AI firms

“I think they are coming off as untrustworthy or too self-interested”

The political reaction now is starting to turn negative The community reaction is negative You have about nine gigawatts that are supposed to come online this year Almost 50% of it now is being protested more than likely if if history holds Most of that will get turned off so they will get even more supply constraint so that's the setup

So what's the opportunity? I think for Elon if you look inside of how people Try to nitpick the spacex valuation case or let's not let's give them sorry, let's be more generous When people try to paint the bear case, or they try to red team the valuation The biggest element is the on the come value around the orbital data centers And by actually landing a bunch of terrestrial capacity

I think you start to blunt that because you can now start to say that even if the orbital data centers get delayed by a few months or a few quarters Even if the technological De-risking of it takes longer He now has this structural core business that will effectively subsidize

“His ability to train grok which I think is a really important and under-reported theme”

So you have all this infrastructure he somehow saw the tea leaves Before most people he built to a level of scale and secured power

Before most people it is now become the critical asset and now he's

Kind of king making and I think that that's a really interesting valuation Reinforcement as spacex goes through testing the waters and the and the roadshow Brad you're take Yeah, no, I think it's well said. I mean first we we know

There's nobody better on planet earth than Elon at converting Electrons to tokens. It's a critically important evolution to the story You know, I think our friend Sean McGuire he he sent out a tweet that summed it up well and he said spacex has his five layer cake launch Connectivity Compute hyperscaler space data centers and then applications and models and then other bets right the question on the roadshow has been

But X.A.I. does it isn't on the revenue trajectory of open A.I. and an entropic and yet there are huge commitments And now we see the ace card that Elon's plane he said he was building a WS all along or EWS all along

And so I estimate that there's gonna generate in this year an incremental $45 billion of revenue

On top of what I have seen analysts estimates in the mid-20s. That's a material amount of incremental revenue To offset the cost of the investments that he's made here and that will subsidize to Chamospoit All that he's investing to build the next generation of growth remember two that he has three facilities

So he's given the one that's kind of less connected H-100's great for inference to anthropic

“He's monetizing it in a big way. It's terrific for anthropic and it solves what I think was the biggest question”

In the valuation story which is what if he spends ahead of X.A.I's revenue? It takes the pressure Chamospoit off X.A.I. delivering an immediate revenue now he becomes an immediate competitor in the hyperscale I don't think this is the last announcement. I think he's going to make a lot more You know moves in this direction. I think it will be a material part of their story and their revenue projections as they come together

And I would just say finally, you know again

Everybody has talked about how we don't have enough power how we don't have enough compute how the revenues would not show up this year You know, but the chaos that is American capitalism somehow finds a way Okay, and there's tremendous demand for anthropic and we find a way I was so happy to see kind of the detente and the kind exchange between the team of anthropic and Elon because we need all of this in order to produce American frontier models to stay at the frontier and then finally I just say, you know, Chamathi reference these activists that are protesting delay in these data centers

in in these localities one thing I want to dispel this myth these this is not like organic hyper local protests by people in a community that aren't being spurred on this is highly organized activists that are moving across the country to stir up trouble in the exact same way they did to stop all vision reactors being built 30 years ago in America now we have no nuclear reactors being built. China's got a hundred of them Who was funding those activists? I think we need to really look into who's funding the activists now

I'm not saying that there aren't any concerns but the misinformation about water the misinformation about electricity bills electricity bills are going up in the places that are not building data centers New York in California because they haven't built any supply on the grid in Texas where you're building the most data centers in the country electricity costs are going down so I think that's a boogie man that we got to take on sack sure that's we're like the deal is highly complimentary as Chamathi and Brad pointed out

SpaceX has a profitable I think very profitable space and talk communication Starlink business the satellite business but the XAI business had huge losses the reasons pretty straightforward you need these super lord training clusters but they cost a lot of money and until you have a model that's capable of competing at the frontier you're not making any revenue and that promise compounded by the fact that right now all the revenue is in enterprise which is to say coding we know that XAI just did that deal with

cursor to try and catch up but they don't have a coding product yet so they're not participating in the revenue but they're just spitting in all of the cost so this deal fixes that problem Elon's now able to have a frontier model company but he's able to now not have these massive unpaid for capex commitments right because he's able to kind of lease that capacity so I think it's

“always a major problem for them and their balance sheet and then you have to say that for anthropic this”

is a really great thing because they were compute constraint and just to build on that point I mean I guess let me be the first to congratulate Dario on winning the AI race and you've been let's

be honest you have been on this podcast you've been moderately critical of that company and Dario

himself for being you know a little p-dumer 110 and on your ex account you've been even a little spicier so now that there's peace in the middle east of of the AI business what you're taking here. My take is look let's just honestly and accurately assess where the state of this AI market is at right now and anthropics place within it so for the last three years and anthropic has been growing at a rate of 10x a year I think going into this year probably the conventional wisdom

was that there'd be no way to sustain that kind of rate of growth at this level of scale and what happened in the first four months of the year first we find out that from January 1st to March 31st they grew from roughly 10 billion of ARR to 30 billion so it tripled and then in April if anything the rate of increasing to accelerate they went from 30 to 44 billion of ARR nobody in Silicon Valley has ever seen anything like it forget about the rest of the country I mean

all we do in Silicon Valley is deal with exponentials and people have never seen that kind of growth

“at that level of scale the only thing holding them back in the future was compute now they've made”

this deal they've made other deals as well to get that compute I think it's pretty much a foregone

100 billion of ARR and now the only question is whether they hit a trillion in 2027 and we can

debate where they get not bored now we can we can debate whether that's true or not but look if they do that

“I think they'll easily be the most valuable tech company in history in fact they might even be more”

valuable than the rest of the mag seven put together just to give people some basis for comparison here you're the biggest tech companies Apple in video in Google I think they kind of do around 4 to 500 billion a year right now of of revenue I mean I guess in videos in a little bit of a different category but you look at you look at Google is doing what like a hundred and twenty billion a quarter I mean like that hundred billion a quarter correct but growing at what 20% year over year not a

hundred percent certainly not a thousand percent so the fact that anthropic could be on track in fact you see them going to the maging I'm saying something else which is that

unless something about their current trajectory changes and anthropic will be the most powerful

monopoly ever created in human history oh again it will be you know a trillion dollars of ARR growing at some exponential interest thing Korea calls it a G.I. I call it the biggest monopoly in human history interesting to hear that word monopoly sacks very interesting placement Chamoth go ahead and then I guess in 2025 was 420 billion Microsoft was 300 billion alphabet was 390 billion Amazon 700 billion Nvidia 190 billion meta 185 billion Tesla 110 billion total

about 2.3 to 2.35 trillion so if sacks is right and anthropic you know can tack on a trillion it won't be the mag seven it'll be the mag one just to put it in perspective though Dario and Dworkish said he thought the combined AI revenue of the market leaders would be about a

“trillion in 29 I love what you're saying sacks I think there is on limited tam we may be over our”

skis a little bit in terms of you know the forecast if you back your way from compute right they expect to have five gigs by the end of this year 10 gigs by the end of next year it's kind of hard to get to those numbers for a single company but I do believe that you know trajectory that they're on I totally agree with you is on an exponential that not many people believed in four months ago right so then the question is okay I think we all agree they're on an exponential curve

and that the term is big enough to support that just one data point on tam my understanding of the total market size just on coding is one trillion meaning that a trillion dollars a year roughly is spent on software developers and all things related to the creation of software now I'm not saying that they eat that entire market but I can easily see the market for software I think doubling well hold on doubling from a trillion to two trillion given that coding tokens basically

10X's are 100X's the value of that market and the ability to generate code so I think we all agree that the tam here is large enough to support a trillion dollars a revenue but I think you bring up a couple of really important constraints first there may not be enough compute and there's on enough energy I say the second big one is what's the competitive reaction going to be totally because I would say at the beginning of this year all these frontier labs were playing around with

a lot of different things I mean and thropic was the porcupine they believed in one thing all these other companies were kind of acting like the fox who thinks are going to have a lot of different things they were doing nanobinana they were doing Sora they were doing you know they were doing image generation they were doing finisi character chapauts in hindsight they were doing a lot of things that appear to be kind of a waste of time the whole market appears now to be coding and the things

that we built on coding tokens like co-work like agents and so there is going to be a competitive response here where all the other guys realize oh wait a second we were misfocus they're going to get focused I just don't know how much share they're going to be able to take it does look like open AI has already made the pivot we hear very good things about codex now based on gbt 5.5 5.5 is based on a new base model called spud I think they're very optimistic about

continuing improvements their rate of growth appears to be accelerating now because of 5.5 so look there's reason to believe that opening AI can take some share here I'm sure that Google won't be asleep at the wheel they're very very good at coding they've got a really good team and Elon just

“tied up with cursor so there is going to be more competition but still what you have to say”

and I think all of us know this from Silicon Valley is you always want to be the company

in the lead that's on that trajectory where all you have to do is maintain inertia

so this is when I say somewhat sort of facetiously congratulations Daria on winning the AI race I don't mean that he's won it but he is winning it right now but here's the the brilliance of what Elon's doing if you look at the existing business which is Starlink and basically the launch

“services at SpaceX incredible business obviously 20 billion this year I think is the estimate but”

if you look at the footprint of Amazon Web Services Azure and GCP you're looking at you know

$300 billion in revenue and a market cap of combined five trillion fortunately and if these

were independent companies and if you look at what is Elon's core competency at Tesla it's building factories and if you look at the footprint of these factories they're huge what are data centers they're basically big giant factories and then if you look at energy what else is Elon extremely good at this is the battery deployment and he's also got solar deployment from the solar city often criticized acquisition he did years ago so you put this all together if this is five

billion I say thank you reference Brad if it's five billion dollars in incremental Elon Web Services business and he's a neocloud what could he build on planet earth what could he

build inside of Tesla's in terms of extra compute what could he build inside the power wall what if

the power walls had his new fabs in them and you built a distributed system from home to home the power wall has computed it the cars have computed it and of course the ultimate

“manifest cessation of this where nobody can complain is you go right out into space and that's what”

he's gonna do and the the sneaky small part of this announcement from Elon and from anthropic and Dario was they're also interested in space so look for the race to go from factories and data centers to homes the power wall with compute in it it's already online right and starlink also gives him the ability to do distributed compute to people's homes again you could be paying people to put power walls with compute in it that's gonna be the next you to drop I believe

did you guys see the deal that was announced yesterday between poultry homes which is a huge better they're doing it as well and span yes Nick just throw this up here it's super cool what's happening is that these guys are putting many data centers with Nvidia GPU clusters

beside every home and then allowing people to actually run those things and that's just incredible

I thought that was so cool it's a great so what this company did originally to math was they did the power panel they made smart power panels so you know when you flip your breakers all those breakers are in an app I looked at it for my house but I guess they pivoted to add this and I think base power brand you're going to do the same thing exact else doing that one of the things I just would same response Jason to what you just said about Elon right this is why the SpaceX IPO

is gonna trade at 40 to 50 times revenue okay so next year if they do 40 to 50 billion and this thing goes out at 2 trillion right that they're gonna trade at a really high revenue multiple compared to the mag 5 that are trading at like 25 times earnings and there's only one person on the planet who has a future pipeline of innovation and the largest Tam in the world because he's playing in all these different spaces that can command that multiple and it's Elon and it's deserved and

it's pretty Tesla has that same Tesla has that same Elon variable in it as well which is people value his companies at I would say two times market three times market four times market because of the future pipeline you guys and they devalue Apple because they don't have somebody like Elon or Steve Jobs there who is giving them the future I don't think it's devalued I think we're properly valued if you don't have an Elon and you have somebody like I think that's exactly

what it is we talked about this last week but explain why you think it's different I think all of these companies are actually very fairly valued and then Elon world gets a premium and that premium is because of what you guys said that I agree with the big message that I take away from this which the markets and retail are telling you is you guys have stopped innovating there's a lot of incrementalism and we as a society aren't benefiting broadly the way that you told us we would be

“and so maybe this is the best way for them to get this message which is to whack their valuation”

and by the way I'll just say it again when Tesla and SpaceX merge and we have all things Elon and Elon Corp which will happen probably by the end of the year maybe it'll happen in the middle of next year it's gonna then break everybody's brains again because you'll have this one asset as you guys said that will trade at evaluation premium and some people will say it's unexplainable and I think it's logically explainable which is everybody else has stopped innovating people know

yeah that's literally in fact it does the opposite there is no good left that was literally the exact point I was making when you cut me off if you look Tim Cook's greatest innovation Tim Cook's greatest innovation for you coming up was Apple TV not even the hardware product it was just spending money in making an effort there's been no other product being hold on let me finish again before you interrupt me making you don't like that you're like me no no no yeah well

“okay okay go back to me kettle if you look at their track record and I think this is why”

we had a change there is they have not done anything innovative and in fact the things they were doing that were innovating in AI or self-driving cars they shut down they won't take any swing to the bat so they are getting penalized in their valuation they're just not getting a premium they're

not getting penalized every metric they're trading at incredible valuations just look at them

oh no I don't I mean if you compare the two valuations I think they're being penalized anyway let's anybody else want to get in on this before we move on to the next one yeah there is no world in which Google and meta and Apple and Amazon could be viewed as being penalized in valuation there is very clearly a word where Elon gets a massive premium because he's innovating you're saying the same things you're saying the same thing it's not the same thing it's not the same

listen we're they were debating semantics here I'm not letting you off the hook saxy poo when sax is very deliberate in how he speaks they said he's the captain the debate club in his 20,000 word article this week and that is a master debater he's a master bader and you slipped in you slipped it in are you saying that the FTC or whoever should be going and looking at and throttle that book is getting attacked headwinds you said they're a monopoly or

they're heading to monopoly tactic sack is are that what you're saying well look I mean we know that tech markets have a history of consolidating down and turning into either monopolies or do populace and if you just look at the revenue right now there's only two companies making substantial revenue on AI it's in thropic and open AI we know that open AI is going at three to four x which is incredible at the level of skill they're at and thropic

that we said is going at an exponential 10 x a year and if they just do that for 18 more months they'll be by far the most valuable company in human history and they'll have unprecedented control

over the most important technology of our time so I don't know what you call that but it is

something to think about and I guess I do have a thought experiment for you guys which is

“I just want you to think for a second about the case of John D. Rockefeller who I think is known”

as probably the most successful greatest student of monopolist and in American history but he wasn't very good at PR he was terrible at PR everyone sort of recognized how ruthless he is we see movies like there will be blood which is basically about him in any event imagine if John D. Rockefeller was way better at public relations and instead of calling his company standard oil he called it safe oil okay let's just let's just play this thought experiment clean beautiful

coal yes safe oil he not safe oil because as we know kerosene is dangerous their first big product was kerosene and kerosene can light your house or can burn it down and in the wrong hands it can torture city or you can use it to make a bomb so John D. let's say should have called for the creation of a new government agency to regulate the safety of his product and they could have done rigorous testing licensing common sense regulation there would have been a very

intense debate over safety standards you know what should the proper wick thickness be

“as we allow all those dangerous independent refiner's right and I think people would have gotten”

so wrapped up in this debate over what constituted safe oil or safe kerosene that they would have

missed was really going on which is that Rockefeller was building the richest most powerful

monopoly of all time in fact people might even have called Rockefeller an effective altruist because of course he was so concerned about the safety of his product I love and shout out to David Saxon's writers great great newman newman wrote this no I wrote it but Emmy Award for best writing in a dramatic model of going to newman and wow that's my writing he landed it very good sex I thought after the Elon and Thropic did tons where Elon said you know complimented

and thropic that and David started off with a bit of a compliment I thought we maybe were passes first ridiculous to think of this as a monopoly you know we're talking about annual run rate

March okay so we're way ahead of ourselves by the way five months ago everybody thought open AI was going to run away with this Google's revenues are very substantial in AI and by the way Google

Amazon etc these companies are producing a hundred billion dollars a free cash flow to justify their

incremental investment at the same time you have these two startups that are still fledgling that are still fragile in the scheme of things you have all people should know we've got the best competition in AI on the planet which is why we're at the frontier and kicking the tail of everybody else on the planet so I just want to see these companies compete I want to see DC stay out of the way the last thing I want to be doing is is you know seeing people talk about this and throwing

“roadblocks into the way of the competition all right I think that's right great so let me let me”

hold on let me translate Brad for you don't f*** with my paper is what it's saying he's got bets on me so sacks Washington DC don't f*** with Brad's paper sacks you want to get into the regulations stuff right now as a segue or we respond to Brad and also translate what I'm saying satirically okay so first of all nobody wants to see these companies compete vigorously more than me that was the whole premise of the action plan that we worked on last year

is we want to bring out the best in everyone this is how America's going to win the AI race we have five major labs vigorously competing and as long as that competition is taking place that I think that's a good thing doesn't mean we can't have guardrails in the rest of it but basically competitions should be our north star all that being said okay what I am pointing out and I think it's historically true that people in Washington have woken up to monopolies

on the late side not early right because I mean once a company has won 80% of the market that's when they wake up and say oh we have a monopoly here and I'm not saying that they're

“monopoly yet but if the trajectory continues for just 18 more months then I think it will be”

in this unprecedented powerful position and and hold on and I don't think people should be

distracted from that fact by this rhetoric around safety because someone like Rockefeller could have used it too and I do think I mean just like one one last point on this I do think that if you actually look at what a lot of the the safetyist policies are calling for they're basically calling for a form of regulatory capture and they're calling for things that would create a stronger mode around this monopoly or dooply that's in the process of being created and it would get

in the way of competition so again I think that people might not have such a charitable view of all this safety rhetoric if they understood that what was being created here is the biggest monopoly in human history and I think we should be a little bit more skeptical about some of these altruistic claims I can't believe that David is like you know talking monopolies when we haven't even left the starting gate of AI I think it's as a to me there's only two companies

with revenue the last thing I want is DC I tried to preemptively preemptively which would be like a disastrous consequence get in the game of picking winners and losers and the starting line of AI that would be a disaster Brad did you just put another soapbox on top of the soapbox you were standing on let us said my north star is competition as long as there's competition going on I supported hold on hold on we know that monopolists want to stop competition and they use regulatory

capture to do it and furthermore they do things like ban their competitors from using their product what conceivable reason to the anthropic have for banning open claw using its models that is an easy competitive is it not I'm double click on it I might not you know file but I would double click okay listen chum off the girls are fighting let's keep moving through the docket we're going to be here all day with these two and one thing that you're going to need to act

on very quickly as you all in some and it's selling out fast don't miss it speakers are top tier again free bird busy working on some amazing speakers sax will be there he's flying in and out every day for four hours and then we're we can have a lot of networking stuff going down we're

“building some networking software so when you come to our events you get to meet people that's what”

we always say my playbook for events if you learn something from the speakers every day one or two

things if you meet somebody new and you eat some great food and have some fun you get to with three of those things ah man even if you get one you're going to come back to the event you're going to get all three all day long all in dot com slash events Los Angeles September 13, 14 and 15 apologies to everybody asking but liquidity is sold out and we've shut down the waitlist there's just

and FDA for AI that would vet you heard that correct folks that would vet new models for safety

the thing we've been talking about not doing here the thing gave us access spent the last year on the White House is considering New York Times reported Trump is considering an executive order to create it quote AI working group this group would include tech exact same government officials who would quote examine potential oversight procedures including quote a review process for new AI models oil according to the report the catalyst was wait for it anthropics mithos model which reportedly

scared spooked made people really nervous at the White House quote the White House wants to avoid any political repercussions if a devastating AI enabled cyber attack were to occur they want to see why a according to the New York Times Kevin has said that guy the director of the National

Economic Council confirmed the report on Fox Business here's your 15 second clip we're studying

possibly an executive order to give a clear roadmap to everybody about how this has got to go and how future AI's that also potentially create vulnerabilities should go through a process so that you know they're released at the wild after they've been proven safe just like an FDA drug additionally friend of the pod Scott Bessett had something to say what we had in the past month was a step change in the power of one large language model but we're going to see it from the other

AI companies what we're determined to do is work with our AI companies to allow them to continue innovate but our charge to the US government is maintaining safety and there there is a very

“important calculus here between innovation and safety and at the the US government we're going to”

make sure the things stay safe there you go Kevin has it and Bessett slightly different positions

here Brad what do you think actually I don't think they're slightly different positions but I would agree that Kevin bringing up the FDA kind of muddied the waters I talked to Kevin last night after that clip ran you know and I asked him I just said do you think FDA is the right analog here and he said you know I was I was only bringing it up to say that we want them to show us the model so that we can coordinate them obviously our job is to make sure that the government

is prepared that we harden our systems that our intelligence agencies are up to speed but he does not think and I can't find anybody on the right you know that believes that we're going to move to an approval regime right the approval regime this idea that you're going to have to share every model with an FDA in Washington and they're going to have to pre-approved the model is a disaster sex has been effectively fighting against this correctly over the course of the last year

it would just it would lead to three bad things number one we do not want to put the Washington in in the position of picking winners and losers when it comes to these models we're winning we're on the winning horse in America we're out in front of the rest of the world there's no reason to change horses and regimes at this point and we don't want to burden this with more democracy but at the same time obviously I call these pre-AGI or AGI models

mestral spot etc I see a lot of coordination going on between the industry and government

“I think we can do an even better job of evolving that framework so that everybody in government”

is on the same page we need to build more capacity in government to quickly be able to do the cyber review on these models right now it takes too long when the coordination does occur so we need to have a finite amount of time that get government feedback etc but the last thing that we want is an FDA of models sitting in Washington Kevin understands that Scott best in understands that so I expect that we will continue down the path that we've been on

Shaman obviously I think we all agree we don't need FDA for AI but there are things that a reasonably people would want to have guardrails around AI I'm sure you would agree it shouldn't be a total free for all so what's your take on this is it just somebody gave a bad analogy here or maybe some people were re-sealing their way into the White House to try to shift things when Sachs was back at home or something what what's going on here

“give us the cause that's what people say they say the last person to talk to Trump kind of”

has his ear and that things can bend a certain way I don't think it's a I think that there's a pretty profound vibe shift with respect to tech tech oligarchs Silicon Valley and particularly the AI that vibe shift has already happened on Main Street and I think that that's starting to see into Washington I think that regulations are coming I think there'll be worse under a democratic regime but I think that some form of oversight is going to exist under Republican regime the question

negatives of AI so I think we suffer from two things number one is we have horrible messaging

nobody spends the time and the money to articulate the positive upside case so that there's broad-based support and two the idea that there's going to be a Sachs at earlier a few winners

“and many many many potential losers I think is really disconcerting to everybody and the response”

from the tech community again should be the leadership of the tech world coming together and actually reinvesting in America writ large they're not doing that in enough of a scale that blunts this so what you're seeing is the build up of antibodies is it avoidable yes are we doing a good job of avoiding it absolutely not we're doing a horrible job I'd give the community the tech leaders a d-trending to an F the response is what we're seeing so I think the

question Jason isn't regulation no regulation it's why did we get here and I think we got here because the other version the glass have full version the demonstrated investment the broad-based uplifting of American society hasn't happened and if it has it's been very poorly communicated and so the response is hey hold on we're going to give three guys trillion dollar net worths

“and we're going to allow them to control the keys that's why this is happening exactly correct and”

it's very easy Sachs to imagine all the bad things that can happen our minds are constructed to do that we're vigilant we look out for the tiger or you know the tornado to keep ourselves safe humans have a bias towards safety and they're going to think about you know deepfakes they're going to think about robotics they're going to think about self-driving cars taking people's jobs they're going

to think about you know all the dark things that could happen bio weapons etc and we don't have anybody out there really talking about all the positives that could happen what's your take on the palace intrigue we all have here what's going on in the palace in the 47th administration around this debate who is leading trump down the path of regulation and creating this AI FDA we know you're part of the camp that wants to keep this train moving and not over regulated not have

“regulatory capture who are the people trying to slow this down we'll look I think there's several”

things going on here the first one is there's a lot of fake news this whole idea of an FDA for AI

I don't think any senior official supports it just like Brad was saying I spoke to Houses well that's not where his head is at so I don't think anybody in the administration is saying they want an FDA for AI certainly I don't think that's the way the president thinks about these issues he's the most pro innovation president we've ever had and the White House chief of staff Susie Walls just put us statement last night that I think pretty much shoots this down so I think there's a big fake news

component remember it was not really the White House who is saying it was the New York Times and really I think actually Andrew Ross Thorkin no I'm not criticizing him but he's a commentator and he's the one

who said this first and then somehow that span or that gloss somehow took on a life of its own and I think

Silicon Valley reacted accordingly there's a very visceral negative reaction here because we know how damaging that would be to innovation but look I think the good news is that that was fake news second I think that there's another thing going on which is a straw manning of what the Trump administration did on AI in its first year and in the same way that they want to spin this FDA for AI they're also trying to spin what we did as this completely laser fair attitude where there be no regulations

whatsoever no guardrails so way of criticizing what we did they're trying to portray it as unsafe in fact if you look on March 20th the White House release a national AI regulatory framework that I worked on in which we put out a four page bulletin list of legislation that we would support if Congress wants to pass it so we have not been against every conceivable regulation or every conceivable law we just believe that there should be specific solutions to specific problems as opposed to a

giant power grab by Washington that would squash innovation so I think that's point number two point number three is there is a legitimate thing happening here with let's call it mythos or cyber okay we know that it's not just mythos open AI now as a model that's just as cyber capable as mythos and within three to six months all the major frontier labs and including Chinese models will have cyber capabilities in response to that we do need there to be a hardening

and patch them before the hackers do it because the hackers will have these capabilities in a matter of months that's a certainty because the same capabilities you use for cyber defense can also be used for cyber offense is the same tool set and the open source models will have these capabilities anyway they already have it to a certain extent let's be honest they have been a percent it's simply the case that AI will be good at cyber and so we do need a response

to that now my view on what should that response be should be first of all we should want the

“government and the private sector to work cooperatively and I think they are we have a giant”

cyber security industry in the United States who's sole job it is to protect systems and protect against breaches we have the best companies in the world exactly we have proud strike we have Palo Alto networks we talked about that before we have the best defense right exactly and so what we should be doing I think is getting these tools mythos and then the open AI model and others like it in the hands of our cyber security industry and by the way not just the public

companies like Palo Alto networks and crowd strike although certainly they're two of the most know worthy but there's also some incredibly strong startups on the way out there's a little

detail that are putting edge of doing AI powered pen testing and all the rest of it we need

to get these tools into their hands as quickly as possible because there are force multiplier for all the companies out there that aren't that good at cyber security or maybe they've got IT departments they can use these companies as vendors so I think that there is a whole process question yeah do you think that the models should have a KYC rapper going forward KYC for the audience is know your customer yeah so what really what it would mean is that identity for you can

“use mythos you have to identify yourself so that we can try to know that you're not a”

state-sponsored actor or you know a bad guy I think that's the type of thing that we should be thinking about so first of all I want to say that both anthropic and open AI acted responsibly here

no one was trying to release these super powerful models so in a way all the people who are saying

that we need pre-release approvals from models they're trying to solve a problem that didn't exist they sell as regulated yeah which is a way that I wasn't trying to release this they all understood the power and they were all acting responsibly they understood the ramifications acts they would have been sued so there is a self-policing going on here which is the ultimate way to do this yes and but to your point Jamaat yeah look I think that before giving your API for a

super powerful model you should not give that to a company or an actor you don't know who they are so yeah some basic KYC makes sense they should know who we were giving these tools to and I guess my view on the mythos preview and whatever the equivalent is of what open AI is doing

“is that we very rapidly need to get these tools into the hands of more good guys you need to know”

who the good guys are you need to know who they are so yeah KYC is like a predicate for that right yeah just to be clear we'd all agree that if you did have identity for those frontier models which they're probably doing anyway right now and you logged what people were doing with them to look for security breaches that wouldn't necessarily happen when you released it to the public because of privacy issues here's your polymarket for Trump ordering a federal review of AI models

by May 31st 21% chance I think to our partner at polymarket man I got to get in here I don't do I have insight information here being the world's greatest moderator on this podcast or I can can I collect this money Jamaat what am I going to do here I would not do not do not place a bad check out don't place the back don't place the back but the last point I mean look I think we're kind of workshopping this in real time we are I think that I think that for the preview period

we should definitely have KYC what about logging what about logging well look once you're past the preview period and it's in general release I'm not sure if the KYC matters as much because so many people are going to have it but during the preview period there should be KYC let me just say one thing all the labs are already tracking API use okay and anything suspicious because they they're there there are major anti distillation efforts going on by all the labs there's a ton of coordination

going on with the government there's way more happening I think in terms of our API and API use and anything suspicious is being flagged and being shared with the government so the idea that we have no idea who's doing it I think is not the case and in fact in some cases we may want to allow people to use it so that we can see exactly the types of things that they are extracting so I would just say we're already down that path but better coordination may in fact be called for yeah and just

one last point in this whole thing is I just want to build on my point that free release approvals of solving a problem that didn't really exist because again I throw up again opening I won't

Doomers who are basically employing the classic never let a crisis go to waste strategy right that yes we

“do have this cyber issue that is real you know everyone needs to harden their systems now total over”

the next three to six months that is a real issue but that is a problem that we will solve over the next six months we have to but what they're trying to do is use that issue to try and create a permanent new infrastructure in Washington again I don't think the administration's intention that's not the administration's agenda but you saw a lot of people on social media a lot of the think tanks and even Bernie Sanders weighed in and he said for the first time I like something that

the administration wants to know the administration understands the one percent of the one percent the socks and everybody understands that this is out of control the AI is going to take the jobs they're going to take my summer home it's going to be tolerable so there are people who have this agenda look Bernie Sanders this won't stop the progress I mean he's he wants to ban data

centers he's put out a bunch of people he basically is bought into the whole Doomer narrative so

“look that's why he likes the FDA idea is because it would put the Kabaosh on innovation it's enough already”

let's give it let's have a go back to paper in panic was a bed of society sacks Jason what do you think I think there's two really interesting things I want to build on here the first is your point chum off around how do we turn around the sort of bad vibes around AI I think we have to have two strategies here one is giving what you've been working on Brad with your project we should see more people giving there's no reason why in video space x when they go public

and thropic when they go public open AI if and when they go public or if they because stay as non-profit there's no reason those folks in an IPO couldn't give a portion of the IPO to every american citizen so IPO k IPO for kids they all take you know whatever it is five percent one percent whatever they choose and they put it into the investor america accounts and we should see some major giving from the people who are becoming trillionaires hundred billionaires whatever

it happens to be there's no reason not to but those people haven't been doing that we had this giving pledge which was a little bit of virtue signaling and it wasn't real it was just you know at the end of your life you promise to give away half your money so let's have something real let's have something where you know people say I'm going to give away one percent of my stock over the next twenty years of my life every year one percent will go into investor america whatever

it is it won't cost anybody anything you can't spend this money whether it's bezos or whatever second and that same thing in terms of giving back we have not talked about how massive this could be for health and extending people's life and reducing suffering we need to work on that that's where contributions to basic science could come in and obviously education and lowering the cost of education and if you look at what americans on the bottom half you were talking about the you know

cup half empty there's really two or three things they really feel anxiety about one of it is income and the second is health care and on the margins housing and their kids you know their kids education the cost of those things we should really take a look deeply at and I know this is very unpopular amongst capitalists including myself we should really look at the minimum wage and study what happened in New Zealand, Sweden, Switzerland, Australia when they raised it what

actually happened when they raised it and there was a lot of hammering about it when they slowly

raised it what they found was those consumers don't save money they spend it they're always behind

the April in terms of their spending we should opt in to trying to raise the minimum wage company by company by company and just give people who are at the end of the spectrum that understanding that hey year over year whether it's Amazon or target et cetera restaurants we're all collectively going to add a little bit to that minimum wage and try to lift the bottom third of society that's the stuff we're not talking about we don't talk about it here on this podcast

“we don't talk about universal health care we don't talk about the minimum wage but that's what”

capitalists should be talking about and if we did that if we increase the minimum wage and I'm not as socialists I'm a capitalist who think this is good for capitalism if we increase the minimum wage just modestly each year and we opted into doing that and we figured out a way to give universal health care companies wouldn't have to deal with universal health care and we would have customers and we're a customer driven economy like 60, 78% of what happens in this country is driven by the consumer

we need consumer spending it's great for companies if we had more people being able to buy netflexer order sh*t on Amazon anyway that's my that's my ta talk thanks for coming how do we get from AI to the minimum wage I'm still in there because of the black eye no the black eye we have in this country with polarization of wealth and people scared of losing their jobs we we should look at why are they scared David and you said to me privately you can strike this if you want

health care if there was a way to do it you want to see every human have health care yes

sure I mean the issue is not the desire ability of it it's the cost I mean so you're awesome in order of our time how would you do it have you given any cycles just I haven't said you

“that issue so I don't know I just know how about your studies countries I remember what PJ O'Rourke”

once said which is if you think health care is expensive now just wait until you make it free yeah you take away all the incentives and you have an even bigger problem what do you think minimum wage yeah well we just couldn't please get back to AI listen you guys are right about the unpopularity of AI we've all seen those polls but I want to just put up this additional poll that came out about the salience of this issue which is how important do people think it is

and AI ranked 29 out of 39 so although AI is not very popular it is certainly not top of

mine for voters it's not in the top 10 issues it's not in the top 20 issues what is top mine for voters number one cost of living number two the economy and we know that AI is deflationary it helps with the cost of living and it's creating an economic boom right now okay it's 75% of GDP growth in Q1 by the way that that economic growth is not just limited to starvson silicon valley we're seeing a construction boom we're seeing a blue collar boom we're seeing

25 to 30% wage increases for construction workers and so on down the line so and Brad if you you look at that chart there's health care in there too so look my point is that AI may not be popular

“but the effects of it actually are popular if the media would honestly report what was happening”

which is AI is creating an economic boom right now it couldn't be better said David you know Bernie Sanders calling for a moratorium shutting out all data centers we'd have negative GDP growth this year the stock market would be down 15 to 20% unemployment would be on the rise you know there is a consequence to the government controlling through commandic control the economy in 1929 we had 4% unemployment three years later it was on unemployment's 23% because government

got involved in regulating everything and shutting down you know what was working that is the greatest threat we have here AI is delivering huge net benefits today in terms of unemployment rate in in terms of economic growth and productivity growth we need to tell the story but to Chamos earlier point we also need to deliver net benefits Jason thanks for the shout out yes every american having an investment account that compounds with the upside of AI we're going

to do that going to deliver that and that's going to be massive but I also think ideas like if we're going to put a data center in abolene taxes let's make electricity in abolene free for the households in abolene taxes right there are ideas that can deliver net benefits we got to deliver those I think optimism will be on the march I think we're in the trough right not your take on minimum wage and universal health care bread how do you think about it as a capitalist as an innovator

and in the face of AI which could have a dramatic impact on these issues you know like sacks I you know to me I haven't spent a ton of time thinking about those except that as a society where 38 trillion dollars in debt we haven't been able to afford to deliver those things I generally think the market works out those issues better than the government top down trying to you know

“the government gets more and more involved in health care and the only thing that happens it gets”

more expensive so we've all seen the charts of the most expensive categories where we've had inflation education health care et cetera it's where the government's involved I actually think if you just let the markets work we're entering and into an age of abundance a lot of these problems are going to be solved people are going to have a lot of AI coaches in health care and education et cetera let the market work government stay at bay keep things safe we're on a good march I think this

proves my point perfectly if you talk to any founder they're not thinking about housing they're not thinking about higher education costs they're not thinking about minimum wage you know and they're not thinking about health care all that often some some do though there's some innovation there and it's because it's so regulated that entrepreneurs and vc's are just like that's kryptonite the government has poisoned the well we can't participate in that and that's

the roadblock and that's where Americans are suffering and that's where it would be great if founders actually put their minds to it and the government's got to get rid of all that regulation and let us cook in those specific verticals all right the market is in hyper drive hyper scalar revenue has made the markets move up we hit it on this briefly but we didn't have

you hear 50 bg cloud computing on a tear I referenced it earlier but a ws is now on 150 billion

dollar run rate as your 108 billion gc paid google cloud 80 billion there's a little bit of fun with numbers there Chris Azure and Microsoft includes some of their software products in there and google cloud includes things like google office or google suite in there but the growth numbers are tremendous a ws which is the more pure play of the three 28 percent growth on a very big number

are google cloud at a 10 to the US 10 Azure 9.5 so basically 30 billion collectively

“jamming ball who works for you I think put out some data on the Twitter”

Brad markets at all times high all-time highs max seven cooking Uber blowing out growth Disney blowing out growth the consumer seems absurdly strong based on those two bellweathers tech seems extremely strong based on the cloud computing what's your take on the overall marketing overall economy obviously inflation up a bit people hand-ringing about the never ending war and the cost of oil let's just tell us give way up you know the level of criticism

directed to this administration right tariffs we're going to cause hyperinflation we're going to destroy GDP conflicts in Venezuela and Iran we're going to do the same you know we've heard all of the negative stories but what's happening accelerating GDP a 10 year that's sitting at 4-3 inflation totally under control AI AI compute compute compute compute we're leading the world it's contributing massively right to GDP growth in the country

we see the S&P only up 8 percent this year right so we're not into bubble territory here

meditating at 17 times fully tax gap earnings in video at 19 times microsoft at 20 times google at 24 times and then the memory stocks that everybody's excited about we have 25 percent of our portfolio in SK high next five times fully taxed gap earnings Samsung six times micron seven times right this is not the stuff that bubbles are made up you know David reference did earlier we started the year open a ion anthropic we're doing combine about 30 billion in revenue

now combined four months later 80 billion in revenue the the policies of this administration on the economy are working they're working in in spades are gap on the rest of the world in AI is growing and so from from my perspective you know you know we've been all in on the market I talked about it earlier than the year we're heavily doing that switch to go all in on the market cause you were bearish I say toward the toward the end of last year the market had run up a lot

we had a lot of these questions listen entering this year there was a huge question hanging over the market would the AI revenues show up if the anthropic revenues hadn't shown up and we didn't see this re acceleration out of the hyperscalers the market would be down 10 to 15

“percent because people would say there's no ROI on all of this so you have to be buried and infrastructure”

exactly what I saw the numbers start showing up in December and into January we went from

medium to large in terms of our exposures and 80 percent of our exposures or more have been

in compute AI memory etc and this is why it's great to operate in the private market and the public market because you can see things in the private markets that inform the public markets but the question remains Brad how much better would the economy have been doing you know as much credit as you're giving to the administration if they didn't start a hundred billion dollar war that we did not need to go into according to all reports and if

we didn't do a bunch of tariffs that wound up being unconstitutional by the Supreme Court which Trump himself put in we would have been further ahead that's my take on it we would be ripping even more if we didn't have those decisions it's hard to imagine okay just to set up again here it's hard to imagine a more goldy lock situation for the United States or America we have reset the table geopolitically the discount rate globally is actually coming down

not going up evidence by markets at all time high and the bond market in control and then look at the private markets we have multiple trillion dollar companies that have been created in the private markets that are now coming public space ex coming public is going to be a multi-challenge that you know opening eye and through this at some point you just have to acknowledge USA is winning of course we could be doing better but there's not a country on the world

that wouldn't trade all of its fortune for the United States fortunate to be interested in agreement American exceptionalism as embody by the great companies in America space ex google etc all the ones we've been talking here that is the story and I give infinite credit to this

“administration for being business friendly I do think they've made two critical mistakes I think the”

tariffs were poorly executed and I think we shouldn't have gone to this war and we should find a quick resolution to it which the administration seems to be desperately doing sat your take on the economy well look we have an AI boom going on right now and I think that's thanks to President Trump's policies remember the first week he was in an office he recended the

talking about models would have to go to Washington to get approved if they were trained with

some number of flops and then every sale of a GPU worldwide would have to be licensed from Washington unless it fit into some narrow exemption so the whole approach to the Biden administration that President Trump inherited was everything approved in Washington he rescinded that he declared that we had to win the AI race and he unleashed our companies to do that now one other really important thing is energy remember it was this president going back a decade who said

drill baby drill he said we have to unleash American energy that's the basis for the American economy it's also the basis for AI he also has said that he wanted to allow our AI companies to

become energy companies so they could bring their own power to these data centers so they're not

drawing off the grid they're not competing with consumers for electricity they're generating their own power and it's thanks to this president that we have seen this blue collar construction boom right now powering all this infrastructure what would the alternative been we know I mean Bernie's

“enters and said it would have been ban on data centers so yeah I think you need to attack”

the fantasy centers it's that would be a much a much worse choice uh tomorrow they'll give you the last word here as we wrap on the economy generally I think the markets are going to keep going up for a while and then at some point they're going to go down okay I wrote it down uh

come off you said markets are up and then eventually they're going to come down those are the two

things up and we put a U here and then a D here it's got that you're I think you're doing an impression of the taking notes emoji is that what you're doing yes okay off and down wow thank you for tuning it's all in where you can get your great calls and market action advice going to go up and then down folks act accordingly good you're not there no seriousness but what what what what what made you bullish you know let's say in the next six months 12 months catalyst and then

what do you think the headwinds are as well let's take the you know the short to midterm six

“months to two years I think that in the short term the people that makes the new thing”

needs to get valued and needs to demonstrate value so who are the people making the new thing it's the Nvidia it's the memory makers it's the anthropics it's the SpaceX's and uh it's the OpenAI's but eventually it all comes home to boost and you can't just make things for a market who then doesn't have a measurable benefit themselves to be very clear and blunt there is literally not a centilla of evidence that AI has helped lift the operating margins of the S&P 500

there's all kinds of bluster there's going to be an an important fork in the road it's probably two or three years from now one path will be opx shrinks hence margins increase and the other path is revenues grow and margins expand and opx stays flat but it or maybe it even goes up those two things are very important differences because in the former you're talking about shrinking workforce and shrinking opx as a percentage of operating margin in revenue in the latter you're actually

“growing through it the answer to that question I think is critical about how the markets will respond”

and how society will respond so I think we have kind of college 500 days where you just got to be net long but I think it's literally in the hundreds of days from now 500 you're going to have to have an important reckoning moment the people that are paying for all these tokens need to see it in actual benefit yeah that's reasonable yeah that's a really interesting point let me connect a little dots here between so each of us and what Brad said which is Brad said

the beginning of the year we went into this year with this massive cap access massive investment infrastructure but people weren't sure that the ROI was going to be there in terms of model revenue and that was true and then the model revenue has proven out and now what's moth is saying is that we're going to be at another fork in the road soon in terms of whether there's going to be ROI on all those tokens that are being sold entering the revenue for those model companies and I

agree with you that that is not proven out yet but I am optimistic that it is going to be proven out and otherwise he's you wouldn't be seeing the guy enterprises continue to to buy hold on the mainstream point you wouldn't be seeing enterprise continue their month of a month spend on coding tokens if they didn't feel like the ROI was going to be there but you make a good point which is what is the impact on the economy going to be when all of this new stuff where

this bespoke software that's being created through again all these coding tokens are being bought

you're seeing is the ROI is getting sort of trickling down from infrastructure to model to

“application to end user and I think it's going to create an economic boom I got to I'm with you”

Sachs it's this is deja vu all over again we watch this happen with the PC Revolution the internet revolution cloud revolution mobile revolution we had all this hand-ringing will this ever pay off should I build an app should I build a website should I not should I move to the cloud should I keep it on prem all of these questions over and over and over again and then they went from question marks to exclamation points I can tell you inside of my firm we have started

we were using agents then we started building code and I've got three people on the team who are making all the interfaces and products that a 22 person investment firm should not be making internally

they should be using SaaS software and they are shipping product day in and day out the ROI

is fate a complete brat it is fatal complete I think this has been decided I think it's been decided it has not been decided at all it has not been decided at all you have 80 90 you're working with the big enterprises I invest in a hundred startups a year I work with the small ones it is fate a complete with startups they are building software they're shipping they are getting massive value from the tokens and they're getting so much value that they don't have to add you know

but half the number of employees that they would with the same amount of capital they're getting further with less money it is working in startup land I don't know what's happening at 80 90 you would have a better picture obviously of the enterprise tell us what you see there I mean artisans is doing well but what I'm trying to get across to you guys is that you can't will

profits to go up okay so ultimately what happens is I'm just going to take a company randomly

and heiser bush they have to eventually sell more beer okay take Nike they ultimately have to sell more shoes take a medical devices company they have to sell more artificial hips and knees so the point I'm trying to get across is right now there's an enormous amount of very

“constructive and creative experimentation but I think it's what is also true is a lot of that”

has not yet proven value I don't think that means it's going to stop all I'm just trying to say is until a company can trace very directly I spent x and I made y where y is now greater than x and it's lifted my margins that is the thing that causes the flywheel to spin faster and right now we've started the first part of that equation we've spent the x and we have not seen the y you would see it in global GDP you had it you would see it in global

productivity you had it you would see it in the global profit margins at the S&P 500 we have it it doesn't mean it's not coming Brad you want to pick up on this because I'm definitely taking the other side of it because I'm seeing with a lot of these companies massive lowering of costs their ads are getting more effective at the same time they've stopped hiring they're not adding positions in a lot of cases and things like just picked a Nike example a lot of the photo

shoots they used to do for their app excuse me a lot of the imagery they used to make now they're able to make more of it without having to hire photographers and do that stuff I know this example because we have a story that does this specifically for brands like Nike they've seen a massive drop we have one that helped door dash with their food pictures all those pictures you have to be taken by photographers now it's all done by AI massive reduction in cost and they're using

ads an ad creative now at that is you know you know double digit percentage more effective while costing half as much so I definitely think we're seeing it on the earnings but is is that true are you seeing it in the earnings of these companies yet yeah so two data points number one we just saw as you're grow 39% in the quarter we saw due to the cloud growth 63% in the quarter headcount growth for those companies the last three years mag five combined is about 3%

so their operating margins are all expand if you look at the S&P 500 writ large in Q1 of 24 operating margins were about 11.8% that was up from 11% in 23 this year they're 13% so we've had a 200 basis point improvement in the operating margins of the S&P 500 which is massive

“do you think they are across those businesses and Chimuth I think that that's the question where”

where it could delve down with what you're saying yeah so we might be studying but you're seeing financial engineering that got these earnings to rise in the last decade yeah so I think that's the question is this margin expansion durable the forecast the consensus forecast and estimate is that margins are going to continue to expand over the course of the next two years you and I both know back in 2223 we went from the age of excess to the age of fitness

they had become you know to excessive during the period of COVID so I think it's a legitimate

“question whether or not that's all for me I but I will tell you anecdotally it maps for me”

I'm hearing like Jason and David a lot of these companies that are you know really growing their top lines at an accelerating rate without expanding headcount nearly at the same pace okay sacks I'll give you the final word while we're back but I was talking about how we got all these operating efficiency improvements the unemployment rates stayed at historic lows during that time I mean the economists consider full employment to be 45% and we stayed at you know the low

low 4% 4.2% roughly during this time so you're able to get these efficiency improvements while unemployment is still extremely low moreover there was just a big article saying that the unemployment rate for young college graduates has dropped so you know there was this whole narrative recently that recent college graduates were going to have the hardest time finding jobs because you know this is going to be no no work left for entry level jobs because of AI and in fact

it has gotten easier for recent college graduates to find work recently maybe that's because they're AI natives maybe that's because they know how to use AI better so in any event I mean we're just not seeing any evidence yet of these theoretical downsides of AI around job loss and unemployment and we are starting to see big approach of it against yeah I think this is going to be a circular discussion but yeah there's a lot of conflicting evidence the last piece of

cooking evidence obviously is the labor participation rate because if you are not even opting into participate then you you don't get counted as unemployed and that's been I think a big challenge 61.9% and March labor participation rate back in the four points of interest 63.3 yeah college graduates are hearing different stories certain degrees getting jobs other ones not getting jobs it's too early to tell I think is probably what we all agree in and it's a

mixed bag not whenever we're that no we're not look whenever whenever I have data to a few

one of your narratives you always say it's too soon to tell no no no what I do like Wall Street Journal

Nick put on the screen college graduates are finally catching a break in this job market

“yeah you should be happy about this I know I'm listen I'm happy anybody gets a job but”

what you do is then you say we don't trust the numbers and we should get rid of the Fed and we should get rid of the numbers so we all know that we're getting rid of the Fed no that was from obviously that you you chose from off who's getting rid of the Fed because we don't like the numbers you listen it's all great welcome to the debate club what did I say you said a ballad's the Fed a ballad's the Fed what is the Fed here for all right listen enough we're getting into Trump

arrangement syndrome or Trump bend the knees syndrome it's the end of the show we had a great show everybody we had some laughs we all learned we work shops and stuff let's leave it where it is great job president I want to I want to congratulate oh here we go I want to congratulate all of our innovators and I want to congratulate Elon and Dario de Rockefeller on their work in the program on the program next week I want to win the program have them come on are you

asking for me I will you ask him for me why I sure I'll ask him and the fact of the matter is

“I think are lucky stars that we have Elon that we have anthropic that we have open AI that we have”

Google that we have Amazon all innovating in this country and you know I know we like to you know kind of poke poke fun on the edges of these things but the fact of the matter is you know I see them all showing up sharing their models driving as hard as they can to innovate we have the best competitive framework in the country David's right it's been transformed over the course of the last 14 months we need to stay the course we're on the winning hours we just had the derby last week there it

is on the winning horse stay on the horse a matter of the win America for the win there it is Senator Brad Gersner I think if you're going to run you got to get rid of the red glasses we're going to go maybe 20 cents in there but I think you got to you got a serious shot Senator Senator I like secretary better secretary who's yes secretary of the treasury Brad Gersner secretary of state David's secretary of cashmere and wine

Jamoth Paul have to how you doing with the era there's so much fake news out there because I mean look I totally agree with everything Brad said look I poke fun at some of these companies for some of the things they do but I am happy that they are American companies and that they're innovating here so there's so much fake news out there I mean we just covered on this podcast

how beneficial some of these economic trends are you never get it from the media no and they are

trying to derail us from from you know that the policies that have been so successful yes but they did

we'll see you next time everybody bye bye love you boys

“oh my gosh you're all just get a room and just have one big huge or he's like this like”

sexual tension that we just need to release out what your feet what your feet you're a feet we need to get

but he's our little boy I'm doing all in I'm doing all in I'm doing all in