E133: Market melt-up, IPO update, AI startups overheat, Reddit revolts & more with Brad Gerstner
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I'm so fucked and tired. I've slept six hours in three and a half days, six hours, seven hours to .

the world service of poker with how me. So you spent?

No, no. First of all, I flew public, took southwest. What yeah cost me forty nine dollars. Yeah, cause I got to take for forty nine bucks.

It's so see a one also known as J. S. Resource to have my .

name on IT, but was in the front role and is great. Like southwest has these numbers and what .

they do first on southwest?

No, no, no, no premium.

Plus he was in the front row.

No, there's like these signs that that like have a number of that attached your ticket and then you stand in that line and then you go on in this orderly way. And so I was I had like, a five or something, so I was like, the fifth person on. And then I SAT in the front and I put my bank up the top.

Yeah, you Carried your bag. An hour later, I was in vegas. IT was so easy, southwest phenomenon. Then I flow back anyways, and after after losing as much money as I did, IT felt good to fly before nine dollars. I got to be honest with you.

Austerity measures have there. You can sleep Better at night with austerity measures. And did you go to the all you can need butter ticket to go as well?

No, I do that.

Rain man, give.

We open sort to the fans and .

they have got really.

Why did you fly southwest?

Why did I fly southwest? The planes in europe with that? That's number one. And then two, I just wanted some flexibility to get in and out depending on what I posted these tournaments. So let me tell about these tournament.

The hundred key is literally like a murdered role of, like every great poker process was like ninety six of us or something. I gotto be honest with you. I was so much fun. So much fun.

why? how? So you know that we play forty minute levels, and you have to really get the chips moving, which means that there's only so much like, you know, game three, optical poker you can play.

And at some point you just got a gamble IT up and you gotto take your shots and you have to be willing to love. And you know, you have to bet for thick, it's so much fun. And then you see some of these guys that just lose their minds.

Anyways, IT was, IT was really, really a lot of fun. I finished the middle of pack, like forty second or something. So I was brutal, but then the thing that on the most product is, and I went from that and I hopped in the three k six six handed right afterwards, and there was like twelve and fifty people on that, and I got to eighty first.

And wow, the problem, I just couldn't get anything going. I couldn't get any real like you need some car distribution like you to at some point, yes, make some hands. You you know, I could block my way to eighty first, but I needed hands to really to really, really have a chance to chip up and run IT.

Then I played in the race, which is seven cards. Stuff low. There's one hundred and twenty six people now when I finished in the midst of the pack there. And then this ten Candy, there's about six hundred people. And I finish like one hundred respectable.

I mean, I know play tournaments.

I have no idea how to play tournament, to be honest. I to play poker, I to play cash kings. But tournament are very different.

So I feel like I was very ill prepared, but I had so much fun. And you know, the crazy thing is when you're playing for twelve hours a day, you are focused for twelve hours. The thing that I forgot is that you end up, I ended up losing by two and a half pounds.

Oh, wow, if your brain is going going. Biggest fucking thing. And I was I was mentally devastated at the end of each night you just lying in bed, ice wake, yes, and then you can keep. And so then you know you go and you play crabs and buck rock to you for a couple hundred .

times and night .

there and then sounds like a week good new was light for you on your behalf from .

a by the way.

the other thing was I brought my phone, but I don't have anything on my phone like I don't have twitter. I don't have any that stuff, so I was just totally in the zone IT felt so great to not be connected to social .

low experience. It's a flow experience when you can turn the and in the moment, congratulations. You know, coming in the ten percent of the field in the three thousand or eight percent of the field, that's incredible.

dude. If I really practice at this tournament, I think I would think a couple.

but I just don't have the time. The paradox there is that you did best in the largest field if you can do this for three or four years, and you go into those rice fields when it's one hundred, or those twenty five, eight hundred keys when it's one hundred.

two hundred people in the hundred caters ninety, ninety five, ninety six people like you really do have about a one percent shot of winning the thing, which is pretty incredible.

Yeah, last two, ras is always a hundred.

I love tournament poker. That was my, that was my game back .

in the because it's because you afraid to lose money. So put up a small amount money, you can play for many hours. You in your mind, you're probably dividing the number of hours by your bias so that you can think about what your only costs this.

I actually like tournament poker because when you lose, you lose like you can't just a rebuy and basically and and then there's a broader macros ratee. You start to play the chips against the other players because, you know, however one else is playing this and how many chips they have in front of them.

is a great point. This theory of I C M, which is like independent ship model, is exactly what you just said. The crazy think freeburg happens right at the money bubble.

These guys, I start, i've never seen this before. They all try tank. All, oh yes, they go in the tank for two minutes and then they fold.

So obnoxious ous. When I used to buy term a program, i'd i'd fold a king suit, you'd fold pocket queens, you'd fold everything.

Is you're on the bubble of getting into the money or you're on the bubble getting to the final table IT? Just as a matter because if there's three guys with you that that have smaller chip stacks, let them get blind IT off and nei, you're in the money or nei, you're on the final table and then you'll play pokers like go get up, goes and dinner, come back in an hour. Don't even look at your cards if you can creates your way. There is a totally different game, totally different.

There's a guy that was tanking. He's a really lovely guy, uh, british guy. I offered him the main cash.

Just not site. Please stop taking for four minutes and four action. I to .

get in a, and I timed IT with the rest the table. I took out my phone, I timed ed IT, and I said, whatever number of second studio i'm doubling and I just did that. I was so obnoxious that the entire table, like the guy.

finally stopped. Well, in in the hundred k, we actually had a Better set up, which is that we had these ipads on the table and everybody gets a thirty second shot clock so you can really fuck around. But then in these big field events, they're not gonna ipads on two hundred tables, obviously, yes.

And so instead people just tank forever. Then you have to call the floor and you have to call time on these spooks. The funny thing though was like the last term I botton for was a ten k secret bounding, which means that on day two, when you knock somebody out, you actually everybody stops the action.

You go up on stage and you pull like out of like treasure hunting. Some of these boundings can be like a million box. And obviously there's a lot of people there are that kind of recognize me. And when they saw me the ten case, you could bony and there was like a movement IT was so funny, were like, if you win the secret bound and you win the million, we're gonna revolt and burn the room pairs so and I and I thought, you know, it's true. Be totally unfair if I was the one that one that million dollars seeker about how many .

self is did you take on southwest? That's the question. Everybody wants to know how many people recognize you on southwest and what was the shame?

Feels great to all the time. It's fuck great. I literally was honest to get from my house to the gate where you stand to get into the plane IT was like, plus, or maybe fifteen minutes more than just drive on the tarmac.

like he was a nothing burger JK.

Amazing what a downmarket .

can do to people. Now, this is a, this is the Victory of the age of fitness math first. You are the front role.

Oft are alright. Listen, there's a big docket today. I ve got a lot on the plate.

David sax is busy in a star chAmber right now. Select the next present in the united states. He's picking A V, P.

And the cabinet for whoever is gonna win. So we couldn't make IT today. So we brought the fifteen brogger in your back.

And great timing because the fed decided to poisoned hikes in just yesterday, I guess, and this would have been the eleven secretive rate hike. Is that about right? And they anticipated two more twenty five bases hikes before the end of the year.

So here is just the fed funds effective rate. So you can all can see IT here over time and the results in big news this week, couple of twenty twenty three I, P. O candidates started to be floated.

Obviously, we ve been hearing about red and stripe for a while, but ARM confidentially filed for an IPO back in April and they're seeking Terrys between eight and ten billion later this year. That would be a pretty big deal for soft bank, which owns the firm. And that could, I guess, save soft bank, which has had a just a brutal run with the two different to save soft bank.

The army deal is being done is what's the valuation is being done, a soft bank acquired .

on for thirty two billion in twenty sixteen. They don't know the valuation right now.

They haven't put that out there. A una from thirty to seventy. But I mean, bad.

What do you think that comes? I have no idea. I think that now they're shopping to get these anchor tenets into ARM. If the IPO market was super hot and this was really easy to get done, this would have been done, you know. So I think, you know, they're tip to me now because they need to get IT into the public market.

But you know, I I I think that anybody who does an IPO today, okay, is going to demand a you know, a rate of return into that offering. That is a significant margin of safety relative to all deals that we're done in twenty and twenty one. And what that means is on the road show, investment banks go and they try to drum up demand.

They want to have anchors in the IPO book. They call firms like ours. They call strategic investors. They want to size up what that is.

And you know, they give you their expectation of fair value or where they think the IPO will trade to. Of course, you meet with my management. You ascertain and develop your own expectations of fair value.

What i'm saying is maybe in the peak, you know in twenty and twenty one, people are getting center and center in terms of the margin of safety. They demand I my expectations, whether it's ARM, whether data bricks or other companies that are starting to q up in these fantastic companies, right? Make no mistake about IT and video tried to buy ARM. And you know data bricks is doing over a billion and revenue growing extraordinary arly fast LED by an incredible team. But in order to get into the public market is they have to, you know stepped in with a bigger discount and they would off you press correction and just put .

some numbers on IT. ARM had to agree to be acquire by in video of forty billion before the talks fell through. That was due to a regulatory scrutiny, bloomberg says.

Arms aiming for evaluation. The seventy billion officer is no confirmation about that. That's just the news, hopefully intelligence speculating about IT.

What exactly would you be buying for seventy billion dollars? I thought they missed that. yeah.

ARM had a window where they had to make some really important product decisions to be able to actually have reference designs that actually made sense beyond just simple mobile processors and CPU. And they don't have any of that. So they're a good cash cow business.

It's probably worth twenty five billion. They paid thirty, sometimes thirty two. They could have gotten that out for forty something, but it's a mid twenty billion dollar company Normal. And if you if if you buy IT at the twenty years, you're buying a casual yelling asset. And the good one told the players, I guess is what I would say .

clearly it's a function in a soft bank seeking liquidity, right? I mean they um if had this position for how many years now or years? No more.

I think this was six six years.

Yeah, when did they buy IT was .

at twenty sixteen. I think that was longer twenty sixteen.

So this and in the fiscal year ending march, the vision found alone took a thirty two billion hit right down. Obviously, softbank has a big chunk of the vision fund, but this is not in vision, not in the vision for an example. 带我去 我 去 第二， but it's clearly uh, liquidity driver for them. I don't think that this is you know at first of all. Js, I only the point about soft agnes saving is necessarily tros, not a company that need saving, but they have certainly taken some hair.

but they could use a win. At my point.

Yeah, yeah, they could use a win.

But the last two quarterly calls, you know, mozos san was pretty repented and humble, right? And in fact, he used that exactly should we talk to about IT here?

So this, uh, big liquidity needed some point from the business so they can get this thing out and get liquid on IT who would certainly support the baLance sheet .

more than anything. You know the the market is on a tair. The sheer bread is there now that everybody y's buying back into text docks. Uh, I guess two questions.

Why is everybody suddenly buying a detect socks when people think there's gonna a recession and consumers have run out of money? And yeah what's what's the thinking here of why so much money is gone to tech in this incredible rally? It's been great to watch.

But uh, people seem to be perplexed by the rally. And then the fed, even though they didn't do a rate hike, seem to put cold water and say, hey, listen to get help yourself. We're gona probably do rates later in the year.

We all have short memories, you know tech out a devastate in year in two thousand and twenty two. So this is a bit of a reversion to the me, right? If you remember the chart, we you know we showed a lot on this pot last year. The at the end of the study at the end of twenty twenty one was that we were trading at you know multiples that were you know fifty to seventy percent above their ten year average um and at the twelve we are trained about thirty to forty percent low the ten year average, right? So the market corrected IT overshoots on the upside because rates went to zero.

And by the end of twenty twenty two, when you are Larry summer and others who are going out and saying we don't know what the upper bound of inflation and rate, is that really scary to the markets? And so you had this overshoot to the downside. We're still trading below the ten year average for internet software companies based upon our numbers.

And so when you look at this, as we said at the end of last year, the framework changed early in this year. All of twenty two was about two things, is inflation going higher and our rates going higher. And those things are debilitating for growth assets and growth multiple.

By the beginning this year, we started to have confidence that inflation had peak, which meant that rates were largely in kind of you know, spitting distance of their final destination and the framework shift to economy. Are we going to have a hard landing? Now remember at the start of the year, mike Wilson from Morgan Stanley, who made given credit, made the call in twenty twenty two.

He said twenty two was gonna awful. He was right. But he stayed in that barrier position at the beginning of twenty twenty one, said the economy is gonna hit the skids in q 1 and that we're gona revisit three thousand or thirty two hundred on the S。

N. P. Instead, we're sitting at forty three hundred. So he was tragically wrong at the beginning this year because again, he was fighting, I think, the last battle that he, that was one, as opposed to, looking ahead, insane. This is no longer about rain inflation.

So the next that has moved thirty percent to start this year, you know the fed said yesterday, um we're hitting pause um you know the uh from chairman how that has everybody a little bit perplexed is on the one hand, he says were data dependent. On the other hand, he said we're likely to have more rate hikes, right? And the rates are going to stay high for a couple years.

Well, if date, you can have a ways. If we're data dependent, we have a hard landing like stand drug and million of things we're onna have in q for a this year, then rates are gonna get cut. But the market seems to like this.

And let let's talk about where we are. The ten years at about three, seven, the S N, P, basically flat in terms of where IT was, where IT was before and where IT was after the rate high announcement. The economy appears to be reasonable, good.

Eighty percent of earnings in q one b. The guides were OK stand druck Miller said. I shifted, you know, he pulled forward when he thought we were gonna a hard landing based upon the bank crisis, which now feels like it's a distant memory for many and he's now calling for potentially a hardly ending in q four.

So the feed just came out and said, now we're not gonna a hard land in A Q four. We think we're gonna one percent growth. They think the inflation to end the years going to be at three point two percent verses, but three point seven percent goldman consensus. What I would say is you know we've moved, but we're still below the ten year average, but you have to start paying attention now to individual stocks. They have likely gotten ahead of themselves .

or where they they take .

a lot of the return.

facebook.

apple? no. You know, I think a lot of the A I related stop are now at or within ten percent of our end of your Price target.

And when you when you see that take something like in video, if i'm playing at home marama, you know a professional investor, I may say i'm going to go sell some long dated calls to buy a little protection to the downs. I don't think there's any problems within video. I think they are going to continue to perform.

I think they are beat their numbers for the baLance of the year. But you know, remember that they started the year. People thought they were going to miss their numbers for data center.

People thought data center revenues issue, we're going to be negative and they just revise their guide from seven billion and q two to eleven billion in q to. So they're absolutely blistered their numbers and the stocks gone from one hundred and twenty five dollars. You know to over four hundred dollars.

So when you have those parabolic moves, just likely do with rates last year, I think it's wise to say it's a fantastic company. We want to be involved is going to continue to be one of our larger positions. But if I can lock in twenty percent yield by selling calls six months out, I think that's a reasonable risk reward.

So, you know, I think that's where we are. And now, now the question really becomes and is unknown and unknowable, right? Are we gonna have a soft landing, a medium landing, a heart landing in q ford rolling into next year. And I would say as an investor and very dated dependent, you we're talking to companies where .

what data point should we all be looking at, at this point. But you think jobs, unemployment, just these stocks in their multiples? And how are you looking at IT as a capital allocators to month still on the sidelines?

What if I said, like a broken record, rates are going to be higher than you want and they are going to be around for longer than you like? And now power is basically telling you the same thing. so. We're almost at the end of I think the bottom, though, I don't agree with the drug. And Miller, I think he's wrong on .

which part that does be a hard landing in china. yeah.

And the reason there's not going to be a hard landing is you just saw china today basically say we're gonna have to rip in trillions of dollars going to stimulate the economy. You can have a hard landing when china's printing trillions of dollars, not possible.

So I think that what power was forecasting is that if china starts to basically turn on the money printer and go through a huge spate of qualities devising, it's gna just inflated everything because they're just such a critical artery to the world economy. And so we just have to get prepared for racist being sticky and inflation being sticky. And I think that that's probably the most reasonable base case for the rest of the decade.

rest of the decade, seven more years.

yeah. yeah. So in that environment. The problem is that now you have the seven most viable tax talks tries to perfection yet again.

If you look at the enterprise value over the net income, these things are treating at astronomical yields that are less than half of the two year note and now approaching sometimes less than half of the ten year note, government bonds, that makes no sense. And if you extract out those seven, eight biggest companies in the S P. Five, one hundred, the asm peace not been a great asset.

So the I think the equated index pride, you probably know the exact number, the equation index is just shed. So what does all this been? I think IT means that people are psychologically exhausted with having lost money.

They are psychologically wanting to view the market up. They want a psychologically believe whatever will allow them to influence rates getting cut. But I think the most reasonable bare cases, rates aren't getting cut and whatever. Hope you had a rates getting cut, just one out the window today, because there is no world in which you cut rates. When china's going to print .

a trillion dollars burke, a lot of people seem to think that this pick run up in the markets his AI related. Everybody has got an A I angle for their company. Some of them super valid, like microsoft t to google.

Other ones feels kind of speculative. We talked about buzz. We talked about having A I journalists and nark stock, 就 looks like it's going be delisted。 Got a quick pop.

Do you think the AI A I actually coming to market, driving efficiency, driving revenue for companies is going to happen in the short to mid term? Or is IT more like mid term to long term? In other words, is the AI rally overheated and fake?

I don't know if I would assume that the pricing of equities is entirely driven by A I uh, I think there's a lot of factors in including a lot of folks maybe being on the sidelines for too long and needing to come in by end at the same time.

But I do think that there's a radical realization under way that a lot of businesses that are dependent on services that might be replaced by A I don't necessarily have the longevity today IT, also businesses that have been severely hurt by the point of view of what A I could bring to market ah and bring to industry. There's a lot of stuff happening on the short side. On the long side, I think it's a distribution curve unlike how quickly different industries will be affected in a positive way by A I certainly the most obviously, demand for chips is all the in first, you actually being built out.

So that's the first. And so you know with the high discount rate, which is the environment we're in today, you can more quickly bet on those opportunities. And so you see, uh, disproportionate bumbling evaluation and multiples on businesses like that.

There are other businesses that are further down, like services businesses. How long until lawyers are able to leverage A I, how long until banks, investment banks are gonna leveraging ing A I to create new products and improve their margins? There's a lot of speculation and a lot of ideas, but the discount rate is quite high right now. And that's probably a few years out to the point that the fuzz is White out the potential value.

Where would you mean the discount in, in this context?

So let's say that I think that investment banks are going to be severely changed in seven to ten years. That's the time horizon. I think that their business is gna improve because of A I as an example or you know factory machinery automation, right? Manufacturing businesses probably tend to fifteen years, so I can't really give them that much credit today.

And so I I apply a higher discount rate at there. But there are other industries that are certainly being affected much more quickly. And you know i'm sure bread and his this team of, uh, finance weser, it's probably have A A board you know where they have this list of all the industries are going to be affected in what time horizon.

I mean, that's the way you can kind of think about this. And over different time horizons, you could kind of accuse some net improvement earnings and say, okay, you apply discount rate s to that. Here's how much the stock should trade up and and you know, that's one way to kind of think about this. I don't think everything .

everywhere all at once. Great drop. Uh, great reference bread.

Great find a way. I I got to tell you, I just saw that movie, the reference IT.

because I saw over the weekend.

Have you seen that movie? Of course, of course. yes. What an val film I incredible anyway is IT one movie is everything everywhere all at once? At one best picture at the Oscar is last year.

I don't trust the best picture words at the Oscars for a few years. I've just been duped by that word. 嗯， like you get some really crap as movies that are like a watch this movie and then report back. I want even more totally to catch .

up because of Oscar so White to try to baLance things out. In fact, people.

well, that doesn't exactly reinforced trust that actually to complete trust and reputational .

credibility yes, there, uh, virtues. And actually that was something people said that everything, everywhere, all that wants, possibly because it's a nation.

an I even know what IT is IT.

What is IT? It's a size. I adventure surrealist kind of room we show you is in IT.

H she's very famous for crochet tiger.

hidden dragon and who played short and my impersonation, but I would get cancelled for doing the impersonation .

of him in the fact I must be like.

fucking and seventy years old. Yes, pretty. He also won best actor, best supporting actor. And there are all these pictures of him with Harrison ford and Steven spill berg. The guys made.

the guys that made IT are like music video directories. You gotta see this film.

It's really good. It's is not a, they have to go .

to a theater, watch on apple and go there, your plane and watch I go to the bathroom .

and .

not a long flight back for italy started taking my time. And I see that A A S sub sop that I can afford. It's like a hundred.

Yeah, that one. I see that. And I like way to second. So I look in the cabin underneath, if there's two up here, this gotto be six down below.

So I check in the gali, of course, the six down there I put two, I boost two in my bag, which i'm still like in my a battle here at three hundred box. And I I check out he's got A T, V set up. So, oh, I wonder what movies are on here and it's netflix.

He's got so much bang without that flame that just stand on the plane. You don't have to download your movies before you take off on my plan, right? Let's .

get back .

to work.

It's not the best family that was tar, but I don't want to get into with two moh.

Oh my god, i'd tried to watch tar. That movie sucks balls IT was so boring and fucked and self absorb .

and can try a little for anybody that has sleeping .

issues and otherwise needs to use a sleeping IT. I would just put that movie on because once you see kate bunch had blathering on and walking back and for from our kids, fuck in school and some crappy piano play, you fall and and nothing in the morning.

What puts you to bet faster to math? Ambient tar or science corner science corner.

which I I actually love. Science corner, I I, I don't, I don't take sleeps. I've taken ambient three times in my life.

Yeah, but that was recreationally during the day. Now he was prescribed to me because I wanted to try. Also tried to love as the ones they were there, both like that stuff.

You start tweet, we're shit. Be careful.

I tried those sleeping aid four times in my life. And you wake up, I wake up with IT has a really bad tail effect. So like you wake, I wake up, I wake up super gog, and I only get five or six hours of sleep with IT. So anyways, I I do take melatonin, and that's really good.

That works.

How does the trick does the trick for me in the night? Everybody.

are you just a naturally that easy to sleep?

Yeah for me what I do is like I use IT as part of a routine or like typically around ten, like all the you know devices, things get silenced, do not disturb mode, and i'm in a really restful place by ten o'clock am, and usually by ten fifteen to ten thirty. I'm out .

like like I the skin for red zona, you guys for red zona. This is like the new hot ness and man, and that is incredible. You get hearts rate goes way up and then you sleep like a baby OK. Let's get back to AI. But are people getting too much credit in their stock Prices?

And if you do contrast therapy after the information.

I don't meaning when you .

do the hot, then you jump in to like an ice.

No, i'm getting an ice bath next for my little outdoor sona area. I'm going start doing that. I did that with my friend antonio, friend of the pod tonio gratias.

He's got one of those cold lunches. We jump in the coal lunch together. He's got a thing of forty five freking degrees.

He says, don't try to do too much. I have a heart attack so I go in. I get forty five seconds in.

I start breathing like nearly heavily. And I like, I could get the holiday here. He does six minutes animal.

I do four minutes three times a week. What you what?

To forty two to forty four?

The research paper that everybody reference is now an icon. Is Susan solar burker something like that? He is the swedish research huberman did IT on his podcast.

That rogue did IT anyways, the the data is like and like a little lesson. An hour of heat and eleven minutes of called per week, per week was shown to be physiological optimal. So I do, at three times a week, twenty minutes of heat, followed by four minutes of of cold plunge.

three times we do. You have .

like a cold plunge, set the dial on IT or no no, I just throw because I, after i'm done working up, lasting on to do a slap outside, find my slippers, put on a robe, I am not going to do anything. So I walk up. So as I do, the mr. Team is like a hundred and ten degrees. And then while i'm working out, somebody just makes a nice .

bad for me and put a bunch .

of ice in the tub, fill with water and just jump in IT .

so that they do today, carve like a bunch of baby sales in ice. And then they, just when you .

get the ice cubes were made to look like my face. So I these shapes of.

Yeah no infor red gets up to like one hundred three hundred forty degrees and your hearts rate will go up to one hundred four hundred fifty .

degrees and it's all different experience trip and it's a this extraordinary sa it's wood fired.

Tell me .

about so so the lead guide on this trip, we go down there, he gets the thing headed up before we show up, right? I show up with this great athlete down there that we go in the hot box because, you know, this is the thing to do yeah. And I look at the thermos, I think it's a broken IT shows like it's hard.

And pg, that like two hundred and twenty five degrees very of you walk in here, I mean, you slow cook me at lips are burning, you know and this this person sitting in there is, like, now this is the way you do IT right, tough guys, you know, do IT at this temperature. And like, so, you know, we sit in there for, like ten, ten minutes, and then we go and we jump in, you know, in a frozen lake, and about ten minutes later, we're taking off. We had to leave this particular place and you know, people are waving goodbye and they're looking and they have to look over the son, they waving goodbye and they noticed that the suna is on fire 啊。

yes.

People are taking this a bit to the access is a .

little crazy, right? So back back to the docket here AI. yeah. Are people getting too much credit in public markets kind of running with this before it's actually ready for prime time? Just to add to freeburg point here, uh, there are a lot of people talking about doing things in startup PS.

I see people actually doing things, I would say four to five startups ah that we've invested in and the majority of them that we're being pitched on right now are not only talking about A I, which they were all talking about to three years ago, they're actually implemented now because the tool sets are available. I just had a call. Thank you, free bird for putting me in touch with the google people I just did call this past week with google and they gave me some previews of what working on I can say anything about IT, but it's it's mind blowing. I think google not as far behind .

closed day eyes. Thank you. Read on google now. We had a little coffle. I I talked about some dark reaction to you know, A I and the concerns that others might have on folks talking about the company. And what's your point if you're on google today? I know if you talk about this.

yeah, yeah, I know .

what I mean.

I think, you know, I had this, I had this dinner, this incredible dinner, actually thursday at the problem. You know how I know semicon values back, because I was just like san deputies we threw together in the afternoon. And you are like, orange dinner, you know, C, E, O, S, there.

And, you know, you had mustapha, that one, the confounders deep mind there and we from just just an incredible group and the twenty trillion dollar question is, is how does the entire open architecture of the web get rearchitects in the ai? Another way of ask asking the question because we're all kind of playing small ball, right? We're talking about all, you know our T P S T P, you know, and what clouds going to be accelerated that kind of the small ball, the big ball here.

The twenty trillion dollar question that is defined, the entire internet for our entire careers has been web search. And I will tell you that the conversation around that table, there's increasing confidence that whatever comes next, right, the top of the fund is up for grabs. S and all of those dollars over a period, again, a five years, seven years, is going to get redistributed.

And make no mistake, google is well position to make its claim for that. But its claim is going to come at the expense of search. And so google may create the best A I in the world, but it's gonna have to fight off the canabal zone of core search in the question is in this new thing and so rich partner, you know incredible um product founder right think .

about dia zero yes.

in zero. So it's founder expedia founder zero two vertical search engines that dominated write their particular vertical. And the topic of the conversation was that the new u right, the new u way you interact with your customers, right, is not optimizing a web page, is not optimizing an application.

He calls IT the race to intimacy. The race to intimacy that you have to build a conversational U. I.

I run that way of .

you and no, and it's a related race .

and I was print, not marthon .

sometimes it's the 吗？

I run a really good .

middle distances and then if I need .

to just make IT.

you run a boy.

I but OK and me, he's not .

longer and is C O H.

sorry, sorry. Expedia about me. What does he .

think about expedia travels and on twitter. But they tried in, you know uh, about the conversation from last week's pod, every vertical search engine and google itself. That architecture is suspect, right? The questions just over what timeline is the suspect but the world is move in past ten blue links information retrieval that look like a card catalogue. E is not where we're going.

You no longer need an index. You need someone to do the retrieval from the index for you. That's the the new and that personality you but I think one of the questions that still outstanding from an architectural point of view in terms of your interaction with all the data in the world is are you as a user gonna have a number of independent relationships with your travel search engine, uh, your travel and or you going to have a relationship with your doctor, medical office and you going to have a separate relationship with your you know financial uh, advisory type service? Or are you gona end up seeing similar to the chAllenge we have in search versus vertical search today, an aggregator of services because there's value across populating the data and the knowledge about you across those services. So sure, you know it's .

going to be the gonna be the former because like obviously, there's value to the company because every company wants to profit teer from you and monetize you in nine different ways and maximize the equity for their employees and their founders and they are board and their shareholders.

But that's not what people want, right? So like, for example, when you go to a doctor, would your doctor be Better off if you know he also had all of your data from, I don't know, pick your other service providers? Of course, maybe you could make a claim that if they had all of your person information and they understood your risk factors, they could do a much Better job.

But the reason you don't do that is you want some segregation or relationships. IT gives you some level of privacy, but most see a gives you control in a world of A I where you can be more conversation. The idea that humans will want to get reduced to talking to one thing for everything, I think is wrong, I think instead of actually going to be comment, because the best in class use cases are going to be the things that people want and then be IT gives the user control. The one thing I would tell people is do not give up all of your data to one thing who's professing to be at all. They're going to lie to you and trick you and you're gonna have a social media problem rid large all over again.

There's another way to think about this, which is the reverse of the client server model, where today you as you are the client, you are the note on the network and you're communicating with the center of the network, which is the server, which is the service provider, and all the data is there. You're getting data in a net of their product to suit your particular objectives.

But the future may be that more data is aggregating and accruing about you. You end up becoming a server. You then have the option. And just this speaks to kind of the architecture on the intern. Imagine if every individual have their own I P address, and that individuals I P address I had behind IT, behind your ability to control lots of information and lots about put about all, all, all your interactions across the different twelve providers that very you wanted be able to rent that data to service. And I don't even think about rent is is about you should have the rest.

The reason rent well, that then you have to rent to, you can't give IT to .

them because that's be stupid. That's right. Usage like, let's say the doctor says, hey, can I can I get access to your health data or sorry, your your apple watch activity data from the last year. You then have the option to provide that data to them through some permission type service that you then make available. So there will be interconnect activity among the the service providers, but entirely gated and controlled by the user.

Look, you're seeing this up front now with redit. When in this world the people that create the content are actually in control of the data. And if you try to like modernize A P I without paying the people that created IT or giving them control bill revolt, you're seeing IT happen now.

Reit lost what? Ninety seven x percent of all of their content, because the modes were like, fuck you to edit. Well, think of that rid large, where everybody is asked, hey, i'm this great service.

Hey, i'm this great service. I can solve X, Y, Z problem for you. Just give me all your data and then if you're not asking what what do I get and what you're gonna get a with bank service and that's all they say. You're being tricked. Ed.

it's already happening. I mean, there's an open source lawsuit against, uh, microsoft. Get up copilot and you have to get your lawsuit and know there is also a corner for this.

Google tried to kill A D A. already. They tried to kill you out and IT didn't work. Focuses both services. And you know, if you if you are trying to boil the ocean like chat B T might, I think it's not going to work because there's going to be so much innovation, so much community brand and all that kind of self.

And these LLM seem to be trending towards good enough or some kind of parity that I think you're right of. People are just not going to give their data over whole e. I've been using the the zillow plugin to get exact and the zero pluggin sucks chat chy. It's getting slightly .

Better room model.

It's good to exist on zero side. Zero will not let ChatGPT take their business you to go hey, show me mes that have a sona and an ice plunge and four bedrooms and that are you know fixer uppers or are not fixer uppers and have in sweet bathrooms and whatever. And just going to give you that list.

why would they give that business to close the take a what we all just said because your your initial question was freedman g was like, what does this me for google?

Well, we all just said that what we're certain of is there is not going to be ten the links and a model of search that they have monetized in a way that has been the most prolific business model in the history of capitalism, right? So that's a problem for them, you know, from a business model perspective. So they're gonna to reinvent their business.

That's going to be hard to do is like rebuilding the plane on the fly. But then if you just go to the two models that we outline here on the one and you said, you know, you're going to work with all of these agents, that's exactly what mark zoo said on wax is like you're not gonna one superagent. You're gonna, you know, hundreds of agents.

And he he thinks of what's happened. All of his platforms is the new open web where all of these agents will live. You interact with them, do you interact with your zillow agent there?

You interact with your booking agent, expedia agr exec, on the other hand, ChatGPT high inflection, reid hoffman and and in the stopper and many others think that the benefits of. General intelligence. This will be the first time that we solve vertical problems.

Horizontal right. And the metaphor, the compare there is we all don't have a hundred personal assistance in our in our office. You have one that gets to know you really well. They get to know what you like to wear, how you like to travel, the things you like to eat, the things you like in your house, how many kids you have. So there's a real average in that in that horizontal knowledge that can then be applied to these different verticals.

I think the answer lizer in between your personal assistant will do a lot of the general stuff, okay, whether it's pie ChatGPT, whatever goods comes up with etta, but I think they will subcontract to work, whether they change IT out via, you know, behind the the scene, get mechanism to other agents. So for example, if you're interested in traveling to this disclose location that I met in, in, in europe right now, you know, my, my, my assistant doesn't know, do anything about this place. So SHE may interact with a specialist for this particular place to get you that magical experience.

So, you know, I I don't think you have to pick one of the other. But architecturally, one trillion dollars of value on the web is built around web pages, advertising and e commerce, right? And sending traffic to those other places. And what we're all saying, unequipped, is it's moving to knowledge extraction and intelligent agents. And I think that's take time.

but I still think they'll be clicks. You know, I have been using bar a whole bunch and they have made massive rapid progress. Just to give you but one example here, i'll share my screen. He is pretty extraordinary how quickly they're figuring this out. And I did this just the search while we're talking with the five best restaurants uh, in the bay area.

Obviously came up with cocoa and you know other ones and then I asked that like, hey, what are the top items on each of these menus? They started putting images in and linking to yell. And then I said, hey, tell me the most expensive winds.

And i'd actually got that from cocoa. They have a shuttle or ago, two thousand and nine for fifty hundred and month. I don't think it's good enough for you.

But what years IT .

looks like? Two thousand nine? yeah. They have screaming eagle.

Two thousand and thirteen? I don't know that. A no go.

how? In two and fourteen?

yeah. But anyway, how good? Hardly good. I got to save anyway this. I did the same exact search like four weeks ago. I didn't have images and IT couldn't get me the items on the menu. And these could all be links and these could all be paid links.

So in these results, there's nothing to stop google from saying, hey, help if you want, will put your information here or not up to you, you choose, do robots start txt except to call IT A I that T X T. You d tell us what you want to be included. And if you want to be included, we want no, it's it's a marketplace for clicks, will include three of your images with clicks and will call sponsored.

They are going to be able to insert ads to hear that are Better than the corn nets and that will perform a higher level. And they are going to know is this could actually be the reverse of what everybody y's thinking. This could lead to higher C P M and higher cosplay c because of intent.

by the way. I mean the the twenty fourteen is actually, I think uh underrated and it's very highly rated. But I think this is an excEllent .

one that's an excEllent just in s your point. I think all of that I mean, that's impressive. It's true. You can also do on ChatGPT.

I'll just say the number of people I interact with on a global basis who talk about ChatGPT versus bar is like ten to one today. Now google got massive change. Google has got massive .

distribution power. Let me tell you I hard versus ChatGPT four that people are not paying attention. And when google puts this on the home page ah and start sending five percent of users to IT, I know it's expensive to do IT people are gonna their eyes, jump out of their head.

I think google is going to be chat ch A P T four. I'm saying right here, right now, I think they're going to beat them because I think that they're are Better at indexing all this information and understanding IT than anybody on the planet. And they have the the largest add network. If they get this done in the next six months, I think it's going to can increase the cost per click because you're gonna know so much about each sues are continue bread. I know i'm in the minority here.

No, no, I I mean, listen, I think a lot of google's revenue comes from defective navigation of the web. They turn, they turn the URL into a navigation box. There are bunch ads there that you know people click on.

They don't even know that click in on edge and you know they generate a lot of revenue off in that. Lets be clear, google is firing at this. I just don't think it's going to be as monopolists as they are in search.

I think they are going to be other competitors. They're gonna be wells and answer you're gonna access to the data. Um and today, you have well north of one hundred million people who are paying to you know a huge percentage of those to use ChatGPT.

And I think this you know it's the first competition, but you know free berg nose and I had the back and forth they reported earnings stock was that I said on C M, B, C that we had sold our shares. We bought back some of the shares around google, I O because we do think they're gona be a player. We think they're going to be a beneficiary.

But I I would say I sit here today, the distribution of potential for them is less than IT was before ChatGPT. You know the the distribution of of upside. They have some competitors now who are going to be fine for this next new thing. And I wonder whether or not, you know as they tried to navigate, you know you're saying they're gone to take some of this trophic from surge and feed IT into the other thing. The other thing Better monetizes well as search, or by definition, that means revenue goes down.

IT feels like google is so close to feature out. I mean, I been doing bark .

searches much.

Goole not. I been playing with .

the trading.

Think I like a band or two. But let's take IT over to this .

ready thing because .

it's super important that people understand this.

I'm going to buy seventeen more shares.

I'm going to buy like a harland twenty fourteen equivalent and chairs. No, my j trading is up right now. Jay, trading down shot out, uh, to my trades.

I did IT us for fun. I met like one of several charges.

and I didn't want to change them.

Do you track them and exit or what you do?

I'm going to try exit, but I haven't exited any. You're going to change. Train back time. You can play .

on check. How can you only be up twenty percent when facebook has doubled? Oh sorry, twenty two.

Facebook doubled off the the whole goal of trading J, K, L. To maximize your highest conviction, maximize your higher conviction. What do you do? What a nickel to put five percent in the facebook?

I don't know. I just I just want companies as they went by in the grow chat. When you take about our group chat.

I made the .

what's the table ames.

you're not a day trader. You don't .

trade as .

A A long trader. What's the up one number .

of names I should be you have too many I think with your level of insight um you know on the things that you really believe in, there was such a symmetry in that position at the time that you bought IT. IT was your best idea you should have put at least thirty percent of of whatever you are going to delicate ate to this .

into that's what I do yeah I mean, it's done. Okay I mean, listen, i'm up. What do I buy? But um five hundred chairs and my basis seven eight hundred right now imagine .

if you you know ten twenty action yeah that's .

what I should yeah .

how wait hold how much you put into all those stocks, one point five million.

I basically to I had some money in an index fn lying ground and I was like, do this. I did j trading as a blate attempt to get a sponsor for this week and started ups. So like maybe Robin hood or e trade will sponsor this and make IT like a second.

Oh, G I let me do like a .

segment where I trade and see if I can secure the bag. And you know, the markets are so crush that nobody y's spending advertising from Robin hood or each creator interactive brokers or bloomberg. But I I also did because I wanted to become Better a public market trading, to your point to last week, from my conversation to my, is on understanding when to sell and went to go long when you get distributions as a VC.

That was really the reason I tried to do IT, was just to try to have skin in the game. Yeah, just like learning to play P, L, O, or you playing the last tournament. I just .

wanted to it's very it's very easy once you get shares distributed to immediately sell them and then and then hold on and then we underline from scratch from there OK OK. Once the money is sitting in your account, even if he takes a day, a week, a month, is not like the stocks gna rip and triple on you over the next thirty days we under right from scratch and then see if you have that much conviction when you see the money in .

your bank account.

I like IT. I would just tell you guys the distribution, you know there were a lot of firms that road, you know a lot of these big names right all the way down. Um you know they ve got public but they didn't distribute much of funny and it's really don't serve the names.

But what do they ran with? I'll start, i'll start, what do you go？ You go.

To black .

black dream .

borrow's .

moulds .

and look at free, but expect me is up sixty seven percent.

So, right.

all of what tends to happen is things hit the bottom and outs a little bit. And people are so relieved that they bounce a little bit, they immediately start to studying, because L, P, S are hammering them. L, P, S are like, why did you not send us this, you know, snowflake, when I was at four hundred dollars and share? Why did you not send us this store? Why did you know, go to any name? You know, that you can think up.

But then people compound the mistake. I think that as soon as they get a little relief, boom is out the door and then the thing doubles on. And I just think, you know, part of the benefit of me having to get up every day five A M deal with public markets and think about longer.

That's what we are talking about. The fall of twenty, twenty one around the table before the poker games, which is the public market is guilty IT doesn't feel good and that, you know we stopped making venture investments in october of twenty one, principally because of how we thought about public markets at that point in time. And so I think a discipline, in fact, I was meaning with a managing uh partner of a very big venture firm in silicon valley this week. They just started about a year ago or six months ago doing public market investing. And they said IT was incredible bly valuable to how they think about distributions and what they're doing in the venture.

But what it's been for me, I have now started to learn how these things surprised, and I just think it's great as a learning thing for me, I have to make two decisions when to distribute to my L, P, S, which I just give them the shares, the second I have them and let them make the decision. But that is also personally for me. Do I want to hold that, or do I not? I like your suggestions. Punch up h of looking at the test and deciding if you want to.

I see this crazy thing from calpers where they were like, yeah, no, they they were down like four. I mean, horrible returns on the venture side. And so their decision was to double down.

but they didn't have they took like a decade off from venture. The returns of .

what they did invest in venture were atrocious.

To be fair, I don't know how the board has changed calpers, but culprits brought in, in a new C I, O, an entire new team. And so they can be held liable for, you know, that track record. I did kind to see something on twitter about I was shock, be very difficult to manufacture that, that attract record if what I saw was accurate.

However, I would say the team that is there now, the portfolio that they're putting together and doubling down, where I think venture is kind of at the bottom or bottom third, and this is the boat, I think bottom third, I don't know, bottom has, you know, listen, inventory, you ve got to find three things you ve got to find. You know, you don't want to invest all your money at the top, so you gotta get the bottle there. None of us can call the bottom.

But, you know, last here, the end of twenty two, we were certainly in the bottom third evaluations. Then you want to be early in a major platform disruption. I think we all agree we're early in a major platform disruption.

Res pride, the third of our careers. And then you want to back to the best firms, best brands. And so I come around like, if you do, I can people know who those are if you do those three things, you know, simultaneously like he got a good shot producing .

really incredible vote. But some of of amErica public largest public pension, calpers, california managed some four hundred forty four billion in capital on behalf of california is one point five years state school in public agency employees is leaning into venture. After years of bringing down its VC exposure to one to a one percent target, the institution vector is now looking to increase the location more than six old, obviously six percent from eight hundred billion to five billion, the financial times reported. So that's a next month.

Well, I mean, this is the moment there's a lot of venture firms that are hard up for money. And so they may have a shot. They can get allocations now in order to get into these funds.

The problem that they have to realizes they may be buying a bunch of toxic assets or a bunch of toxic partners in the sense that the lot of these people have been getting run over for the last three or four years. We don't know. Again, we've said before, most venture investors are probably unprepared for the shock because theyve never lived through one.

There's been a lot, lot of junior marketing Marks that were hired because they were X, Y, Z middle level exeat rando company means nothing. So I don't know. I think it's smart that they have I I mean, they have to be thought for king device. How is IT that the Cliff, like literally a cy truly ons of dollars being made in your backyard. And some genius was like, well, the thing that's creating all the wealth in the world, which is in our backyard, where we probably have the best pitch in order to, oh, god.

Day.

oh my god, that's unbelievably deric. That's unbelievably sloppy emotional. I am sorry. That's sorry. Let me just finish. That's actually that's the best word use when you look back on a decision like that.

There's no new miracle justification that one could have made in the two thousand to have made that decision, except that that was an emotional decision. And when you're running a half a trillion dollar fund, there is no room for emotion. You should not be allowed.

There should be some. So I think like that shows a very hollowed out and at a minimum, in basic risk management infrastructure, calpers, that needs to get fixed. So whether the allocation goes up or down, if I was a teacher and my money was being managed by them, I say, mad these people, I would want to understand how they're making decisions because I don't.

I would want to see the investment memo that got them to decide as an investment committee that one percent in the most important asset classes in your backyard that's making all the money in the world made any sense. I just want to to read that memo and see could I agree with that because that says we're going to change course and get back to five or six percent because if that processes and fix these decisions are just going to be equally bad, you're just onna compound bad on top of that because, again, they clearly did a terrible job. And then on top of that, they had horrible partner selection because the people that they did investing, because the data public have performed horribly. So what changes now all of a sudden, right? Because if the best firms still don't, what you in increasing IT from eight hundred billion to five billion just means you're gna lose four point two billion more than you would have other's IT eight hundred million.

Thanks here. They made, uh, two bets. They had bet on looks like light speed in the last couple years, late speed and tpg. So we'll see how those go in twenty and twenty. Those can be tough .

to and I do some data on this because we've spent a lot of time talking with him. And as you know, Jason, we were just like you know like talking to folks like mobile la. California were the larger sovereign alth funds in the world, right? This is not just the state.

This is bigger than most countries, right? This is one of the biggest economies in the world. I would say that what my interactions with the new team have been very impressive.

And I will tell you, they're not just looking at funds and building a new portfolio. I think they are thinking about double down at the right time and they're thinking about thermax betiding ant super cycles like A I to say, let's allocate this much money. Who are that we are for deep strategic partnerships that we can have to drive, you know, return on that. So I I I think that I think they're on their way, but I I agree with you, they're the sovereign fund of the most, the stay in the world, and they should have outsize returns, not trAiling reports.

I just want to point out one thing here is the power of writing tump. You decided to write your annual letter couple years ago, brad. You also will write a letter famously in the facebook getting fit one, or the meter getting fit one, the power of writings and and I just did this for uh, launch on four.

And when you write a deal memo compared to doing a deck, the questions you get are so qualitatively different and the people you attract are so different. IT is extraordinary. I am advising startups across the board to write really tight deal memo, because I write these, we make these deal memo eternally when we make an investment.

But man is IT great for clarity of thought and for the person on the other side to just stop and read a thousand words, or two thousand words as supposed to go through some stupid performative deck is just so such a Better process. Maybe you could you both could speak to that or freeview you've been writing deal memo, but maybe for people were listening. Or capital .

locators and founder i've been .

writing for years. why? And what is the what?

What is? What does he do for you? Well, IT allows you to actually find people who are critique things in a thoughtful, intelligent way.

It's hard to critique dex because you use broken english, you use fancy graphics. All of a sudden, somebody that's very good at, like graphic layout can dupe somebody else. And so you don't get to good outcomes because this weird group think effect sets in when you look at decks.

So i'm not a fan of ducks. I I use them, but they need to be a companion to some sort of long form narrative document. And I just think get more useful.

You get people who can really think about what they agree about, what they don't agree about. IT shows the intellect of the person writing IT, quite honestly. But I just think it's a it's A A basic scale that people should have is a useful skill to teach people as well.

Decks are very dangerous. I think if you're going to make decisions, I would encourage you. The bigger the decision, the deck is insufficient.

IT can be a companion piece, but IT needs to be attached along for documents, but the long for documents don't need to be long either. Two, three, four, five pages. But without IT, I think you're gona allow some really bad decisions to creep into some good ones.

Freeway, any writing from you for deals. Okay, do you have he ran. He does not talk about writing, right? As everybody knows, a read IT is on strike right now.

Should say the mod who run, read or on strike. Ninety five percent of reddit went dark. They basically turned off new post or they just went private.

Basically nobody could join, nobody could see. The content, I believe, is what that me means between monday and wednesday. And the reason they are doing this is because reddit decided he would start charging for its API. So ah who gets impacted by using the A P I IT turns out apps we saw this at twitter as well when twitter started changing its pricing for its A P I. And this means that some of the really highland red apps would have pay twenty million dollars year for access uh to read bits data.

Now they originally had said they were changing this pricing because they were going to train AI models, uh, and they wanted anybody using that data, I E uh, google, bard or ChatGPT form and close the eye they want on the pair. And Steve have was explained all this in the new york times profile in April. You can go search for that red IT once you get paid for helping to teach big A I systems.

The largest APP is called the polo h just say, you know, if you if you're not into those red IT really came out with their APP really late. This was a function of the two thousand and five to two thousand and fifteen time frame. Back then, web two point o startups didn't have a lot of capital.

So they let other people build on their apps and build apps. Some of those apps caught steam and are actually Better. Then the apps developed at least for a while. He was Better than the twitter APP and the redit APP. So thoughts on this freeburg .

there is a history here um is mimic that both faced twitter, both of whom had open A P S. That provided access to third party up developers to build tools on top of the platform by accessing either user data or content off of the network and in making that available via some different product functions, some different U I. Then the native tools allowed, if you will remember, facebook started to kill off at A P.

I. In the process, killed the number of these third party of developers, the most prominent of which was A I think this is around the twenty twelve time for him, you guys? No, i'm right on that. I think it's right time, right.

And you know we saw the same thing happen in in twitter where if you guys to remember in the early days, a lot of users access tweet from people that they followed through third party apps. And third party apps all competed for uh, the user. And ultimately, twitter management team realized that having direct access to the user, being able to control the U I, the U X, and not just become A A data network, but actually become A A service for users, made a similar sort of change.

So, you know, redit motivation around A I training is is an interesting one. But IT does speak to this idea that these social network companies social in the sense that the users themselves are creating the value. They're creating the content at both facebook and twitter and at redit. Ultimately, the company loses the value if that data, that content is extracted uh and they can't monitise that our captain value somehow. And it's a lot different.

You know every company ultimately wants to become a platform company, meaning that they can offer multiple products or services to users that sit on top of some you know, network they've created and in the process, created a network effect because more products, more apps creates more users. More users, you know, he gets more, more, more apps and so on. That works well in some contacts like an apple APP store context, but in the context where is a network unto itself, like facebook, twitter and read IT, meaning that there is already a user network that is generating value in the form of the content that's being produced and consumed.

You don't necessarily gain anything by then building a APP network on top of IT. And I think that's been one of the kind of key learnings that's repeated itself over over with twitter and facebook. The thing about read IT, it's always been a community service.

If you guys remember like in twenty fourteen, twenty fifteen, Allen power step down after there was a reddit revolt, he was the C. E. O.

At the time, and SHE fired an employee at reit that ran the Q N. A site for redit modes and their users and the network. The community was super pissed off when this happened, and they all revolt and they were going to shut down the service.

And ultimately, Allen, you know, got removed from her role as CEO when this happened. So you're because so much of the value of reddit isn't in the management team, is not in the the work that the software engineers do that run the company, is not the the VC or the shareholders. The value of redit is inherent in the community, is inherent in the individuals that build the content on that platform.

And that community has convinced many times in the past a redit to change the rules, to say, this is what we want this community to become, and this is how we want this management team to Operate. And so it's a really uniquely position. Business says a lot about how social networks in this kind of modern era are Operating.

I really speaks to how much of the value ultimately access to the shareholders in a business like this when the users themselves can step in and unionize and say, hey, you know what, we're not going to allow this much value to be pulled out of the network in this way. We want this to change. So I think IT will have a lasting effect in terms of investing in social network, social media type businesses where the users are generating so much in the value and have the ability that kind of communicate with one another and control where value ultimately false.

Trouth you, uh, a facebook. I think when soccer berg realized enabling a bunch of folks to use the API wasn't as good as controlling the user experience, having a uniform user experience. And I got depreciated, and I remembers singer and a bunch of other people had games, and we're sucking users off the platform.

There was a linking competition at one point that was growing and credibly violent pace. And I guess we all made a decision. We don't want you sucking our use face off the platform. Maybe you could expand and what the decisions were at facebook at the time.

That was one of the things I an I think one of my teams was responsible for facebook platform yeah was just a very clinical decision around enterprise value. Look, the the thing we have read IT is that is a hot mess. And in order to try to create enterprise value, they decided to really leverage the mods so that there was some level of control, and that control was necessary so that they could basically sell ads.

That's how this thing moved in lockstep because the minute that there was corporate venture investors and other investors and a need to generate enterprise value and is is worth two billion or five billion or ten billion, whatever the number was that they thought they were worth, they had to make money, right? And hofman was very straight forward about that. And wanting to go public in the whole nine yard.

But because he was such a hot mess, the mos became this integral part of the ecosystem so that they could actually drive reasonable revenue. But then what happened was IT also allowed them to basically take over. And I think that IT was a pretty significant miscalculation because I think that what they needed to do was really redefined the economics of how revenue generation split would work before they could do all of the stuff and try to monitor ze the A P I.

So I think like they got the order of Operations wrong, but I also think it's very fixie and I think that they have some very smart people around that table. So as long as you again willing to be clinical and unemotional like we were, i'll get to the right answer, which is give them a healthy raf share. That's the future.

freeburg. You know what version of what? freeburg? That is true. The content creators need to get paid. You know why? You know, you see content creators now on youtube making millions, tens of millions, hundreds, millions in a few unique cases, billions.

And then we are all content creators, yet most of us, all of these old legacy platforms make nothing. So that is that exchange has to change brand. Any thoughts with this to real?

I IPO that. I mean, I think, you know, you bring up the thing about meta. You know, did anybody pay attention to, you know, such launching project ninety two, right? And project done is gonna take on twitter, is a taxi base social network, is gonna pay creators.

And they are cording apparently open when free. The dilma and all of their creators that are already on their current sites are saying we will use this thing to interact and we will compensate you. And then on lex fridman podcast he mentioned something about um you know having been inspired a little bit by what was going on with blue sky so on super entry you know talked about IT at this all hands medii think Chris cox talked about IT.

So looks like met a maybe revisiting some of these things that they share the while back. You know doesn't have any direct uh implications on the edit front but I think there's a suggestion here that IT may be more about putting the control back in the hands of the user from a data perspective and a monetization perspective that would be a pretty ganger move, you know, and an interesting way to leverage the platform. And I don't really hear anybody talking about IT.

There's a really easy solution here for redit. Those mos, most of them do IT for fame, glory and affiliation community. But if some number of them wanted to monetize their activity there, why not allow people to subscribe to, subject its and pay a membership fee and split IT with the modes that seems like you would be a high scale move, getting patron, you know, subscription services to let them make a little bit money. And then with these is only three apps that are being effective that they should just either buy those apps and then bring those teams internal .

or I think it's not a thing revenue with those .

apps that could tell those apps .

that that's the key issue. It's like it's like if you're going to try to monitor ze A P S on user generated content, I think what's happening here is the internet saying, okay, that's enough because we're going to leak our activity. Some place us where we can directly monodist IT.

So that's the whole point. I think in this current version of the internet, the value is gonna go and again, further, further, further a roadway. From the centralized apps and more towards the individual people or in this case, these habit spokesly mods and not to the centralized org ization that that has the housing to read IT the facebook of the world.

So that's just the trend that's happening the of the world, and there's nothing wrong with that. Youtube as well is just where the pencil is swinging. So I think that bridge just has to cut a deal .

pretty easy to do. Speaking of A I funding, there was a breaking new story just the last forty eight hours a start of me mishel A I has raised one hundred and five million seed round they're calling IT should be at about a two hundred forty million valuation, according to reports. One of the cofounder ers is uh, a deep mind researcher. I guess people are saying this is insane because I hadn't writing any code yet, and we've been working on the company for .

and why these rounds are so big as I guess that you have to buy all these h one hundreds and they are expensive and these rigs are very expensive. I mean, you guys saw this, that nt freeman basically published that he spent seventy five million dollars on a bunch of hardware. And if you were one of his portfolio companies, you could use IT.

So getting these eight, one hundred hundred and one hundreds to train on seems to be a non trivial task. And so and they're very expensive even if you can get hold of them. So I think what we're talking about is basically that these rounds have to go up mip.

And because if you notice, like the the post, you had to raise the post so that IT wasn't so ugly, deluded as the completely distinct entitied employees. But let's speak on this here. Nobody's writing a hundred and five million dollars sea check bet. One hundred and five million is chopped up probably ten ways to sunday. So there's a bunch of people putting in five .

in tens and hi in the round and they said he was massively over subsequent.

Yeah so I so it's everybody taking a little teaser bet. The problem with these teeth er bet is they never hit in the way that you think maybe you'll get your money back with all the delusion that's gona happen in its seta IT. This is not the way to make money guys.

I'm just going to be honest with you. So whoever putting money in thinking they know what the fuck are doing, you might have just lighter on fire. Go to vegas and have some fun with IT because you'll make more. You will get more from that and you will from making these kinds of dump.

T. I, nothing to .

with company one hundred and five dollar around a two hundred and forty posts. You do not know what the fuck you are doing. That is not the job.

So again, mr. They'll be a couple months rounds, I think announce next week like that. I got ta make this one look like kids play.

Um so a lot more of this is coming. You're exactly right. This is about buying eight, one hundred in compute, everything we're talking about, right? An essential ingredient in his computer. And it's a scarce resource.

My god, these people that put the money in the sea well and their outside protection. This video has A A floor. And by the way, because IT in just in case miro doesn't work in video with one hundred, they they probably have the option to real.

I do think you're right on these teeth or beats. This is a power law business. There's a massive pressure on Young junior partners principles within these firms to do something. And it's not just teaser, but what .

happens to these .

because they need to explain sorry.

no, actually that of course, the G, P, that can't manage their fucking principle should be fired, right? So people should, those Young people should shut the fuck up. Okay, be lucky.

You have a job, learn the craft, it'll take you a decade. And if you are proposing stupid bets like this, again, sizing matters again. I'm not talking about the company here.

I'm just saying when you make a five million dollar, three million dollar deal memo for one hundred and five million dollar around, that is stupid. okay? And so if you're the partnership that allows those kinds of things to leak through, you don't know what you're doing.

So at some point, somebody should be held accountable for this. And I guess what's gona happen is the returns of calpers are gonna cate for everybody else. Think about, at least I know you, eight, one hundreds for a minute.

So let me see you you I think, no, that's just an incredible team that's going to do. You know, this may turn out to be a fantastic bed or I don't know, live speech. Whoever let this round, let me, let me say something different in in one hundred and ninety seven ninety eight, we had a similar phenomenon.

Everybody thought internet search was going to be huge. There was massive formal and chasing, and everybody y's scrambled to get a search logo altimeter info Y S go planet all you know, geo said, just go through the list, you know, that people were scrambling after. And the truth of the matter is almost all those companies went to zero, even though you got a couple of that right, you ve got the internet right, you got search right, but you didn't have to invest a dollar in search until two thousand three. And you had to captured ninety eight.

ninety nine. Do IT again. Do IT again now for social networking. Same thing. Do IT again for social networking bright, say all the names, say all the names.

It's the same thing, same thing. And so you know when you when I look at IT today, we have a huge anti portfolio for ai. It's painful. We've said no to over sixty companies, right? We you don't know, but when we look around, I see a lot of our competitors doing a lot of these deals, maybe their tea or bets.

I don't really know the size they're putting into those companies, but I suspect that if we believe this is as big as is, is is going to be and gonna play out over decades, then putting a bunch of really small bats in order to buy a network ker by relationships or buy logos. Etta, I don't think it's gonna work any Better this time than IT worked then around social networking. But to be clear, there are can be some people who need these deals, who help these companies build incredible businesses.

And those will you know, there are gonna some winners here. I think there's time to participate in the winners. A lot of this is unknown and unknown IT will become more clear in the one, two, three years ahead. The problem for the L P is.

like, if you are the L P, I am an L P in a bunch of venture funds. This stuff really turns my stomach because I like, wow, I am losing money every day when I see these things. That's why I get so emotional about us.

I think to myself, if the G. P. S. That i've given money to are doing these kinds of deals, i'm screwed at best. Maybe i'll get back fifty or sixty cents on the dollar.

And I immediately start thinking to myself, I really need to write this down, and i'm really underwriting that person and that organization because i'm wondering, how can you let these things happen? Because if you just look back in history, you have to be really, really negligent to not learn that these things never work out the way that you think they are. And especially these kinds of rounds and this nominal ownership, the inability to defend ownership, it's just not a sick of bath to success.

I mean, also, if you think about this tramp, you know what company in recent history that got overfunded actually use that money? Logically, the magic of silicon valley is the milestone based funding system. And whenever you short circuit that this money becomes a huge distraction to founders.

If they would receive ten million, twenty five million work for a year or two, then you raised another twenty five or fifty million. They don't need to raise all this money at once. This is like taking your abc round, putting IT all and apologies to track founders.

And then everybody coming for a salary says, what you got, one hundred five million. The bank, I want three million dollars. I want five million dollars.

What's the best example, guys, of a huge financial winner that raised these enormous amounts of money? What's the best example.

unch of a product? There is no product here.

What's the best example? Magically, what is IT .

of disasters that actually.

no, no, no. What is the best example of a great company that raised these kinds of amount so early in the site?

me.

No bra. And me, I think there are .

people who raised a lot of money over the lifecycle .

like an uber uber total. I can tell you what facebook was. There was five hundred thousand dollars.

IT was one point two five. I think .

facebook to was five hundred thousand dollars. We need a lot of money later. We needed a lot of money later. But there was five million, sorry, five .

or thousand.

Here's the other thing. Everybody walks and they say, I have to raise this much money and it's it's good. This a circular logic.

I have to raise this money because I have to have all this computer and I say, okay, you got to train you. You know, we will have a vertically, the great model. We want to train the moto.

So, okay, so there's a huge up for car cost and they're like, but I don't want to take a lot of delusion so I have to raise IT at a really high Price and so you say, okay, well, um that's that's a chAllenge for you, not necessary a good thing for us. And then they say, oh, and I if you ask the question, is this an ongoing expense? They're like, well, yeah, we're gonna have to retrain like we're gonna to continue to spend this money.

And I like, well, so if if if you're a software company, for example, and you say, well, what's my cogs? If all the sudden you have an ebit cogs that's massive and recurring, right for your computers that we haven't had in the past, then the revenue on the other side of that got to to be a multiple of what a traditional software company might have in order to get back to that set of economic. I think there's this there's a scramble and understandably so, if you think the big win A G I R, you know this autonomous agent that's going to, you know what be the top of the next function, that thing is going to be worth a lot. But to me, those those are lottery tickets at this, at this stage.

Can I tell you little secret, here's a little secret. When you put in a hundred million dollars into a startup to buy compute, you are not buying with buying next generation I P. You are subsidizing capex.

And that is a job that many, many other people do. Had a very low hurdle rate. And so IT is a law of capitalism that IT could be the most incredibly innovative company in the world.

But if you are offering money to them to fulfill low yield thing, you are just gonna make a lot of money. When you put money into a startup that is there writing code to build ground breaking I P, you owned something that's really real. But that's because eighty cents on the dollar is going to core critical R N D.

In that point in time. And then they raise a lot of money at a lot less solution. When eighty cents on the dollar goes to sales and marketing, then they raise a lot, even more money.

And an even smaller, smaller amount of delusion, you start to to scale international. So you start to see, right, more dollars, less return, right? You you're owning less of the critical differentiation. So if if everybody is, I call is so expensive for computer and need to raise one hundred billion, well, but you you know that like A A leasing function, you know you're like all of a sudden, like the best B C in the world have become like comerica. Ang.

yeah. I mean, they could have done IT with the same structure, right? AmErica could have given them fifty million to buy these machines .

and maybe they should and o america, J. P. Morgan and somebody else should basically say, hey, you know what? Here's a least line for your one hundred ds because I know there works so much and i'll just yes, right at at ten percent and and my point is that the that people don't understand this is why the money will get torch.

I would love a critique is actually to mattheo nadia. I'm right. I know that that happening, but here's why I still see that happening.

I don't know any other. Here's the problem with a critique. okay.

So you asked, like what are the biggest projects in history, you know, uh, around startups? Think about A W S. I don't know.

They spent four hundred million probably in order to get A W S off the ground. But IT IT wasn't done a startup, right? You think about what zc spending on the metaverse. It's not being done right by a the truth of the matter .

is that you go back to A A A W S. A W S was dog footed on amazon .

retail course, of course.

and oculus was done on kick turn. And the cash amazon retail fed, the development of A W S.

correct. My point is that when you think about what these hyper scale ers are going to do, they're not going to spend a billion. And I got to spend ten billion to spend one hundred billion dollars, right, in order to be in this race.

And so if your backing a startup that says i'm going to build A A Better ChatGPT, right, just like open a eye discovered themselves, they sold fifty one or fifty percent of the company to microsoft for a reason. They had to they had up the data, they had up the compute. This is a nuclear arms rates around compute. And so but I think this is the thing.

It's financially illiterate for someone to think that they are actually doing anything other than subsidizing cap accs. When you giving one hundred million dollars to start up to literally buy chips and sugars, and I give up forty .

percent of their equity, that's the other thing of this equity so valuable. Why would you want to give forty person of IT when you can get an equipment this and keep IT? Because if the this .

put in .

fifty million instead of .

a one hundred five, you don't think amErica become on the back five. Of course. What is right?

This happened in ninety eight, ninety thousand, where all of this money was getting flushed down the drain, going into buying data center capacity, where, remember, even facebook, we were racking and stacking our own servers. And then we then we ultimately got big enough where we actually built our east coast, west coasts data centers and data centers all around the world. IT was very expensive.

And in that moment, again, all of those companies just lit all that money on fire. If they torched, there was no remnant equity value for that capital. And so I I guess I guess i'm just i'm just questioning like what does A G P think they're actually buying?

Well, eighty per eighty percent of its going to hardware. I mean, they're by the other twenty percent chips. I mean, that doesn't make me put as IT constraint is important for founders.

And what the thing that I find really troubling about this is a and putting this start up decide because crypto people also went through this for the last three, four years where they were overfunded and IT tens of billions of dollars, burnt of L P monies, peri's retirements and college and downes. And it's going to be quite a postmortem. But look at you invoked mea.

It's important for people who don't know this to know that that was a kickstarter shout out to palmer lucky. He raised a couple of million dollars in twenty eleven. I think he was on a kick starter.

Please selling the devices. right? Contract makes for great art. Constraint makes for great startups.

You need to have pressure on the startups for them to deliver. You cannot give startups s five years of runway and expect it's gona work. IT just doesn't work and this will be so many times.

But now we've gone through eighteen months of nobody doing anything, I guess, in VC land. So first, on center R H, I, they wanted justify why they should still be drawing two percent on the four fund. They want to try to show activities so that they can raise the next fund and continue to stack fees.

And all of these sort of leads to the suspension of financial logic. But IT gets replace with financial literacy, which an optimal fun size, right? H, and this is why the people that pay the Price are ultimately the L.

P. S. And IT. Maybe the case of culprits maybe actually avoid a lot of these pitfalls because by missing, yeah, they missed all the returns, but then they missed writing the mega following checks for all of these folks up and then they .

would have torched. But I think it's nearly impossible to conceive that all of these bets that are currently being made or bad bets, I get a major platform disruption. But I you know instead, I think the right way to think about that is it's about paying.

And if you're trying to if everybody thinks they're going to build the next google, they're going to build the next autonomous agent, is going to sit on top of fund that's going to be worth a trillion. Therefore, they can burn a billion dollars. Training models.

That's not we're not gna have ten of those winners, okay? But at the same time, there's a lot of stuff getting in funded that is in the application layer, that is in the tool layer. And these are not the big headlines that you're reading about, but these are really interesting businesses that are solving real problems in the software.

And two in layer here, you know, in the smaller model layer, vertically oriented things around life sciences are uh you know targeting you know financial services or things in the application layer, you know like character di at sector. So I do think they're a lot of good things getting funded that will deliver real value. But I agree with you the problem there's there's a second problem to this.

To moto, if you drop a billion or two billion or three billion into something, you have not only A A product chAllenge, you have a distribution chAllenge, right? We know all the hyper scales are going to play, google is going to play, meta is going to play. And so you got ta compete and then beat them.

And IT used to be that you would say, well, I get a lot attraction theyll bind me if I means to grammar. What's up like by me? Well, we have such a regulatory nightmare.

Washington, D. C. Today, no hyper scale can spend over a billion dollars to buy any A I company.

not even four hundred million gift. What is A T N T states today?

We replace merger, right, with copy and compete because we've said the hyper scars, you're not allowed to acquire any of these companies. So the unintended consequence of the regulation of washington is the entrepreneurs and founders and venture capitalist, whom I otherwise to have had a good idea, built something with some traction. They can't find a home for IT in the way you know that what I found .

a home or no good thing, that a good thing to go public and be independent is in .

Better three supposes, that everything can become a big and profitable business there. Become a big and profitable business now on its own, no chance.

but still not a big profit.

okay. So that's what I said.

So maybe I have died. I mean, but I mean, just for .

the mocha able to back up with some good funding. And I think what's coming is going to be really exciting. But IT took a really long runway, a lot of capital, a lot of intelligence in order to build.

Unfortunately, we've killed that. So you have a two sided problem, were spending more than to fund d and start these companies. And we you know have undermined a lot of the downside .

protection freeze.

Er you that so if you look at how the capital being deployed, if it's mostly being deployed to train models, then the question has to be, is there really a sustainable advantage that arises by being the first to train the models and then being able to persistent advantage by training new models from that expounders model going forward? And the reason that, that matter so much is because you have to really have a deep understanding.

If you know invest a lot of capital here, you have to have a deep understanding for how quickly model development and training is accelerating and how quickly the cost of reducing. So something that cost, like we said, OpenAI, spent four hundred million dollars training models for for G, P, T. four. If they spent four million dollars in the last couple of years, you could probably assume that doing the same trading exercise could be done for five to ten million dollars eighteen months for now to generate the same model that's uh, you know hundred x cost and and i'm just about all parking in here.

But if that's really where things are headed, then does the hundred million dollars to train models today really make sense if trading those same models can be done for five million dollars in one thousand nine to twenty four months, and that's where becomes a really difficult investment exercise and one that you have to critically understand how costar s are moving in A I. The same thing was true in D N A sequencing in the early days. And it's following, by the way, a similar cost curve of D N A sequencing, which is actually greater than more law, greater than the two x cost production every eighteen months.

We're seeing something much greater than that in machine learning right now. And in terms of cost production, a model training. So ultimately, the business model has to have some advantage that by being the first to market, you can then generate new data that gives you a persisting advantage and no one can catch up with you.

And my guess is if you get under the hood of the business models, it's unlikely going to be the case. And it's very likely going to be the case that you don't know when the market advantage will lie, when you will be able to kind of create persisting mode, a mode that expands as you get more data and can train more. And this is why it's so hard to invest generally in technology is because you don't know the point at which the market tips relative to the point at which the technology tips. So there's a moment where the technology gets so cheap and then the market may be adopted after the technology gets cheap. And at that point, it's a totally different game.

Remember in the two thousands where we have memory shortages and we used to have to buy RAM, yeah, I mean, it's like it's all the stuff. And it's like if V, C. Are funding this stuff, just you just like like the equity on fire, guys.

Not gonna worth anything. brad. Point is right, which is the question is what's possible now? Where can you build the sustaining advantage now rather than go after big model development cycles where the cost curve is gna come down by one hundred full in some period of time in the near future?

Is there a business model advantage you can build by being in the market first, building a customer base, accelerating your features, getting user feedback and that certainly exist in the application. And the tools layer is bad, is talking about that seems like such a no brainer for disruption uh, across many different segments, many different verticle, many different markets right now verses trying to compete further down the stack where takes hundreds of millions of dollars of capital. And in a couple of months, that hundred millions of dollars of capital can be replaced with five million box training, exercise and computer.

Can I take the other side of that? Yeah, all that coordination makes no money today. So to your point, when you cut the actual input cost by a hundred fold, the coordination cost goes from being zero to being worth lessons, right? I don't see any money being made. They are either. And all the people that say i'm sure there's going to be some genius in the comments, but what about open source?

Seems like what about IT opening eye? Also just given update on their cost structure for their API and they just dropped IT twenty five to seventy five percent again. This is after the ten fall drop they did last year.

Play this out. A hundred million dollars of capital spent training today is a million dollars spent during training in eighteen month. Yeah, three years, eighteen, eighteen to thirty six months, somewhere that time fraighted the time frame. So why would you spend all this money today when in eighteen to twenty four month things going to get? I think the further of the value stack you go, the more of an opportunity to truly kind of innovate, disrupt, to make on capital is possible.

What happens in twenty four months when you've made a bunch of hundred million investments .

in their all zero? Uh, you get fired.

Maybe unfortunate as an investor to out as ever.

you ask you at some point, you don't get invited to join the next fund.

Think about the alternative investment strategy with lots of capital where the cost curve is not coming down as quick in terms of where the capital being deployed. For example, building rockets to go to space or uh building uh infrastructure to transport power or building roads. You could raise a billion dollars to build a whole booth system or or a port lets is a port.

A shipping port is a good example. You could spend a billion dollars to build a shipping port. It's not that the cost of building a shipping port is going to come down by ten x and eighty months. So that makes sense to raise a billion dollars and build a freak and shipping port and chores, people, way to come and out.

VC thought they were underwriting I P, and said they are just actually subsidizing capex.

It's is the razing think, brad, is this a problem of the optimal venture fund size that fed? Watson talks about that. The girl talks about a lot of the O G, say, hey, to fifty, four hundred, six hundred million. There's an optimal size here for four or five partners in adventure fund to put money to work. Is this part of the problem right now, which also have to encrypt, is you had billion dollar two billion dollar funds sitting around and and different venture brand names having four or five of these multibillion dollar funds burning a hole in their pocket and getting frisky ah over this you know eighteen months pause and is this about optimal fan size making that bit?

You know we have over a billion dollar funds. So if I if I if I take the other side of that, the people can say you're talking in your book, but I don't think this is about large funds. I think this is about good and bad decisions. At the end of the day, some of these decisions will pay up like, for example.

what's the largest bet size from a billion art fund that you've made or will make?

I think out of that fund would be uh hundred million dollars most likely. Uh, but we make cross IT over other funds and how you know bigger bets? Um certainly.

Would that happened two or three times that would you do at all at once like this? Or might IT happen over, you know.

a series A, B, C kind? I say, you know we're not writing I know we haven't writing one hundred million dollars check into a series a and I don't think most of people to chaos point that you're talking about a writing one hundred million dollar checks into the series. The is around that you reference, I imagine the lead checking into that was maybe fifty, maybe fifty.

So listen, larger fun sizes enable you to participate in companies that require more capital and and these companies do require more capital. So you may take the position that all these companies are going to zero. That's not my position.

My position simply is that I do believe there is a bit of over exuberance that too many things are getting funded, right? And it's some you know like the margin of safety, the margin of return being required is probably lower than IT should be. But there is no doubt out of this vintage in my mind that you're going to have some epic companies now I don't know what mostafa and read off and are doing.

That inflection is you know building pie to take on ChatGPT and to take on part and to be the intelligent assistant. The ambition is extraordinary. The cost of computer is high, but the first mover advantage is also high, right?

Because whoever secures this position, you, bill gates said by playing around with IT is one of his favorite agents or whatever. That's an interesting comment. I think it's pretty good, but I think ChatGPT is out in front in this regard.

I think a lot of people are gone to try to compete for that space. But you know, I can't imagine that all these researchers, leaving deep mind right, are going to be able to compete for the most sophisticated model to answer general purpose questions. So I don't think it's the large fun size. I think it's just a lot of experts to participate in what everybody perceives to be a massive platform disruption. I think that can be true just like the internet wasn't one thousand nine hundred and ninety seven and a lot of these bats can, can and and will likely go to zero.

How greatest america? You just rent other people's money. They pay you two percent, and then you're allowed to get exuberant yet keep your job when you lose IT. God lost america.

Well, I mean, the the issue trim is IT takes ten years to prove your bed of this job are good.

Now, no, no, no.

IT takes ten years to prove your good. And that takes twenty to prove to prove that you can be consistently good and didn't get lucky. But in a few years you can tell that somebody sucks.

Can L P tell? Well.

i'm not sure that they get the visibility because when L P S interact with GPS, they are Green fot for the most part. So I don't know. Probably not. But when I iraq with them just as a peer to peer level and I see the deals I get done, is pretty easy to understand that some people to suck. They don't know how to make money, I guess is the point which in the job, that's the job is to make money, to consistently make money.

Okay, brad, take care. And to go to science corner. Bill gates wants to generally modify mozos.

Is this fake news or real? correct?

I see it's fake news. Okay.

explain. The reference is from R, F, K juniors tweet that he set out, where he retweet someone talking about this mosquito factory in colombia. And this guy basically put out a tweet and overlook bill gates as a mosquito factory in colombia's, the largest in the world. Thirty million genetically modified mosquito oes are released every weekend to eleven countries.

Because bill knows Better than nature, what could possibly go wrong? Or if kate junior then took IT upon himself to retweet and say, should bill gates be releasing thirty million genetically modified mosquitoes into the wild part of the mentality of earth as engineering object, what could possibly go wrong? So I really wanted to take issue with this because I do think that this is the sort of misinformation that both create scientific illiteracy and damages and impact negatively some of the significant progress that can be made, uh, in medicine and in science.

So I want to speak very clearly as to what is going on, what the science is behind IT. Why does this super important? And then we can speak philosophical. You guys are interested on kind of should we be doing the sort of stuff and why?

So what's the real here? Like what what are actual facts or are is fake .

meme that take a place is the most common disease Carrying the squads are called uh h yes uh uh a gyi pty, uh g tia. Um it's a species of mosquito that Carry yellow fever, a dengue, uh, zaka, a number of viruses that obviously are pretty adverse to human health.

Each year, about four hundred million people are infected with danger virus of view of the this mosquito vector hundred million become ill and twenty one thousand deaths are attributed to the globally two thousand cases of yellow fever each year causing thirty thousand deaths these are prety significant um health concerns and IT turns out that in mosquito populations, not in this particular species that Carry these viruses, but in other species of mosquito, there's a bacteria, a natural bacteria called wallbach a and this bacteria exist in nature. And sometimes these mosquitoes es get infected with this bacteria. So they Carry this this this bacterial bond.

And this bacteria is really interesting because IT causes what's called cito classics, instability in the mosquito cells, which actually makes the mosquito largely resistant to a lot of viruses. And there's a bunch of theories for this mechanism and why this is the case. But IT causes the mosquito can not be able to Carry and spread these viruses that are super adverse to human health.

The number one, there is a natural bacteria that found nature, and up to forty percent of mosquitoes are already infected with IT. Number two is it's not common in the the the schedule species that is common in these areas that are spreading these awful viruses to humans. And so there's been a project that's been going on now for twelve plus years where they're taking large amount of mosquitoes and breeding them specifically to have this bacteria in the mosquitoes.

And then they released those mosquito oes into the wild. And over time, the bacterial infected mosquito started to become a larger percentage, the population. And as a result, the vector of Carrying these awful viruses into humans goes way down. There was a study done in indonesia where they took these mulbah a infected mosquitoes, and they released him into the wild.

And they looked at a population that was in a region where they released them, in a population that they did IT, in the releasing region where they didn't release some nine point four percent of people ended up getting infected with the gay fever, and where they did release them, only two point three percent were infected. So IT was an amazing seventy five percent reduction in the infection of people buy these mosques. And so the whole point is just the kind of you move the mosquito populations in a way, without doing any sort of genetic modification, but by exposing them to the bacteria so that they don't Carry these viruses into people. But you know.

because of that on point there freeburg the it's not genetic modification or is it's not I .

just explained it's a bacteria and they just provide the most OS they're exposing, they end up getting infected with the bacteria and then as they breed, the mosque s breed in this facility on have you have to have to an infected mail and an infected mail for the offspring to have the bacteria if you have an infected mail, are there actually in feral, they can only fertilize an infected female so unless you do this breeding work, you don't end up seeing this happen naturally in the environment where the world .

back to read where is the genetic modification misinformation coming from where is from from .

the the presidential candidate R R K junior, who just propagate IT and so this is why I want to make this point, because this whole idea that, oh, should we be engineering the earth? Let me just say something about engineering the earth. Humans used to wander around the earth, or proto humans did, without access to food.

And until we realize that we could plant a seed in the ground and grow crops and started to engineer the earth in the form of farming, we did not have access to a reliable source of calories. Human engineering, human engineering gave us the ability to do this, gave us the ability to feed ourselves. Similarly, humans got infected by viruses, by bacteria, by fungus, and died at a Young age over and over again.

And when humans began to engineer medicine and engineer unnatural substances, because he makes this point, oh, should we be interfering in the natural world? What is naturalist for people to get infected with viruses or bacteria and die? And if not for the advent of our engineering and our engineering, our ability as a species to create solutions through science, which allows us to do discovery, and then through engineering, which allows us to make solutions that solve problems that humans face, we would all be dead at a Young age.

We would not have realized the progress that we've had as a species. So I really get ticked off when I see guys like R, F, K, junior and others not just propagate the the B S misinformation spill about o genetically modified, this and that science is bad, but to then say, should we be with the natural world? Because I would say to him, what about when your kid got infected and you gave your kid antibiotics? Maybe you shouldn't have done that.

This notion, the group of people who are saying that you shall do that, right there is a movement to stop taking a thye ocs but that is making a because IT is having impact.

Tell a couple things. There are bad pesticides that impact human health and caused damage to our DNA. There is bad sunscreen that is underground disruptors and condemn in human health.

There are plenty of chemical products are made that we use in everyday products that cause cancer. There is an entry string of things that are wrong with the system of the system of engineering that we do use. That doesn't mean that they're all bad.

That doesn't mean that we then say, hey, you know what? Let's not do anything. Let's not do any engineering. Let's not use any antibodies, let's use any pology in food. And that's the chAllenge is, you know getting into the details on like i'll tell you, I don't use uh, any sunscreen products with myself for my kids. I only using and I have a similar sort of nuances approach to understanding what things we should or shouldn't use in our lives because of because of .

the can you please explain that? Because I didn't know this. What am I doing? Am I get what explain?

yeah. So there's a number of substances, uh, which are known androgen disruptors that are found in sunscreen. I think it's like one of the crazier things that we haven't made these products illegal at this point.

But the only sunscreen that you should use is natural mineral sunscreen. Uh, this, sorry, I shouldn't say that you should. I say this is what I chose to do based on the data that i've see what's a good brand, what brand any brain thinks.

Just sink sunscreen. Just look at the back if there's anything but thinking in IT don't use oxide. Is that .

yes zink oxx IDE .

sunscreen. Yeah the ingredient so I don't know what you guys um wow but h here let me just tell you this.

Are you saying that you're not a lot to have any other ingredient like .

there's no stabilizers is nothing else.

No prcise ingredient has to be in coaxial adversus some other chemical .

you're saying yes. So oxy benz one I don't use any product to oxy benz one that's like the most common sunscreen ingredient. Tino xy is the other one, hoo salad.

And the para bans all of product categories, which are the most common products used in sunscreen. They're absorb by your skin, they going to bloodstream and their underground disruptors. Now the problem with the zinc sunscreen in the mineral sunscreen is IT actually stays on your skin.

So you look like you're where it's really hard to rub in. You got a really, really rub IT in. So they're actually not popular from a cosmetic point of view. People don't like wearing because .

they look like I diet and it's really hard to yeah that's the I use the summer IT drives me crazy because I like the I that's like really hard core about so that's an example .

of understanding nuance, right? IT doesn't mean all sun screens are bad, and IT doesn't mean that we shouldn't use sunscreen. But understanding what the risk factors are that are associated with different ingredients are different. Engineering that's been done to make some screen available is important, but that so many levels deep, but it's a really difficult things.

So then people end up being scientifically literate and being wrong, because someone like R F, K junior comes along and says, hey, should we really be engineering the earth with genetically modified mosquitoes? And then people have this called action, shut those things down, shutt those things down, and they're incredibly beneficial. And effectively, they're not taking any sort of genetic editing to market.

They're not doing anything that people might consider risky. And we can have a separate conversation about the risks and benefits of gene editing. That's another topic.

But how much of this freeburg archa we get ready, rapier, is a reaction to what happened with cover in nineteen. And people's fear now of and getting sort of educated on gain of function research. And you know, this sort of recency effect of, my lord, doing some of the science feels like it's too dangerous, certainly true dangerous, to do inside the city.

And what's the point of taking bats out of caves and and doing gain of function research? How much of that has to do with that right now? And is a sort of the downside to .

question that technology can can be assembled. C, you can have, like nuclear weapons can wipe out the world. They can wipe out the whole population.

Here, you know, a taller makes this point on his argument against gmos, which I I would argue against him on this point. But we can do that another time if he's willing to come on the show. Happy to debate among this point, but the idea being that there is super asia, metric downside.

And so you know what happens as people, the incremental improvements from technology, and they don't really praise those incremental improvements, they assume that to be the case. It's a Linda step function. But when something goes wrong, it's a big step down.

And then people are like, oh, wow. And then people get scared of technology and then people want to step away from IT. And this is true. And anything that relates to your health, to food systems, to the environment now and um now doesn't mean that all technology is bad or all engineering is bad. But you know as mistakes are made in the system, as new things are discovered, we have to retrench and change what we're doing. But that doesn't mean that we should stop progress and IT doesn't mean that the whole system of human figuring out how to engineer ourselves of the world around us to benefit the health, to benefit the planet, to benefit other species on the planet, isn't a critical mission and effort that we should be undertaken.

While the sun screen thing is really tilting. I mean, I I make sure i'm pretty sure we have a good one, but I don't yeah.

i'm on this right now. I am just got a little nervous with my kids. I I like this like I have all my kids have long sleep sn shirts and I tried to that I think is like the giving. And because I my family has skin.

I have to do that since i'm dark skin.

I mean, you like skin cancer. I think I don't like a wash guard thing, you know.

you know, it's a summer .

time you're in the bed. Revenge body. I get, I get a chema quit, everybody.

On behalf of sax, let me just say ukraine, ukraine, ukraine. Biden, biden, biden and Francis, my Francis is now in the race. I guess we will have .

him on the pond we really talk to.

Oh okay. So um yeah at the summit last year and also we're doing a survey for the podcast, all in podcast that C O slash survey all in podcast that C O slash S U R V E Y. If you got to this point, the podcast, please follow our service or a and we will see you all next.

your.

World, man.

We open sources to the fans, and we .

just got crazy with.

Sexual attention to release b.

We need get.