Ep13. Silicon Valley’s Political 180, META AI, COVID Postmortem | BG2 w/ Bill Gurley & Brad Gerstner
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And instead of a $250 marginal cost to implement a rural broadband, we're going to get f***ing bulldozers out and drop fiber lines to a ranch in the middle of nowhere. Right. It's stupid. Right.

Hey, man. Good to see you. Good to see you. I mean, so much for sell in May and go away. This summer's been nuts. You've got a near assassination of the president. The head of the Secret Service resigns. Biden withdraws under pressure from Pelosi. Kamala has all the delegates. Now she's the presumptive nominee. She raises 80 million bucks the day Biden drops out of the race.

It really seems to overshadow everything else. I mean, I don't know that- How is that inconsistent with sell and go away? Wouldn't that have been a good strategy? Or wasn't it a good strategy? No, the markets are actually doing pretty fine given the background and the context here. But it's just trying to stay on top of the events. I mean, our group chat has been exploding. I find myself 50 to 100 chats behind every time I open the app just because of all the political activity going on. And of course, we don't talk a lot about-

politics on this pod. We want to talk about business. But, you know, we also look at kind of this debate going on about Silicon Valley. Like the Washington Post reported Silicon Valley realignment leading tech titans to back Trump. Yeah. You've been here a long time. Yeah.

Silicon Valley has really been dominated by the Democratic Party. It's been perceived as pro-business and pro-tech enough. It's been perceived as fairly moderate on social policies. But just in the last few weeks, leading –

And traditionally Democratic supporters, Ben Horowitz, Mark Andreessen, Elon, who supported a lot of Democrats in the past, have come out in support of Trump. What's changed? Why all of a sudden have people that have – in Silicon Valley that have traditionally supported Democrats, why are they moving to Trump? And I might even say like if I go back to when I joined and I mentioned this a bit in the talk I gave at All In on regulatory capture. I think –

I might even describe Silicon Valley as apolitical back then. Like there just wasn't... Sure, some people would say, yeah, I vote Democrat, but there wasn't...

any discussion of it within the ecosystem, within the industry while you're at a meeting that relates to a startup. Like it just didn't come up. And that was the, the title of my speech was 20, 2,851 miles, which is the distance Washington is from here. And ironically, it's about as far away as you could possibly be in the United States, which I think was helpful. As I said, um,

All of a sudden now, though, you've had those people you mentioned come out in a way that's very provocative. I think it's provocative not only that they're coming out in favor of Trump, but it's provocative that they stepped out in this way. Now, Ben and Mark –

foreshadowed this quite a bit, at least by 30 days or something. Sure, sure. Obviously, their firm's been getting bigger and bigger and bigger with multi-stage, multi-industry, like specialized funds. And as you move into things that they've been moving into, crypto,

defense tech. Like you're getting into heavily regulated industries. So you're going to bump up against this more and you're going to think about policy more. And if you listen to what they do on their podcast, and if you listen to what they write in their blog posts,

that trend has been going on for a while. It's not like just came out of nowhere. They've been talking about policy. And so, you know, they went through in their podcast, which I think is a must listen, you know. It was great, I thought, on this issue. On this Trump's, but they didn't just

throw down and walk away. They threw down and talked about it for 90 minutes. Exactly. And it's very clear, and this was in their foreshadow piece as well, that they're looking after the interest of their constituents and their business. And I don't think there's anything wrong with that. Like they have –

Correct.

endemic to everything that they do and work. No, I think to be fair, they believe like both you and I believe and I think most people in Silicon Valley believe

In fact, they talk about this triangle, which is technology is the great source of American advantage. It drives our economy, which is the strongest in the world, which is a great source of advantage, which allows us to have a superior military because both technology that we invent is leveraged by our military and we have the financial resources to invest. So that leads to American global leadership.

In their podcast, one of the things they lay out is what they believe was by the Biden administration an assault on business or technology. I think they go through a list of things, right? So one was an assault on business technology, being on the wrong side of crypto, which they believe the blockchain is very important to have an open and permissionless network that people can build on. Right.

They talk about being on the wrong side of AI. Obviously, you and I have commented on the executive order that was wanting to limit the number of flops and model sizes and everything before the industry even gets started. Right.

And then this crazy idea to tax unrealized capital gains and how that in and of itself is not only almost impossible to implement, but also would undermine the very incentive that entrepreneurs have to go create businesses. And let me just –

Press pause on that one point because I think when you hear, especially if anyone's listening to the podcast who's not deeply involved in a startup and knows what a cap table looks like, it'd be easy to miss this point or to look over it or to think maybe they're just talking about a nuance that doesn't matter. It would be catastrophic.

to the venture capital industry and to the startup industry to tax unrealized capital gains. It would be- Tell us why. Well, first of all, there's no way to value a private company. So you start with this problem that how would you go about saying what it's worth? And for those of you that have been exposed to 49A, which is this god-awful

policy where we have to get a third party to pay them to create this analysis to say what the option price has to be. This is the most voodoo magic that I've ever seen in my life. And it's so crazy. They run these models and they produce a number that's like to two decimal points. And I've always said they should be forced to –

They should be forced to give a confidence interval. Right. Because it would probably be like, you know, from five to 20, but they say 1149. Right. And there's this other great piece of work that was written in finance literature, which was titled, if you're so smart, why aren't you rich? If these people are capable of calculating perfect stock prices to the second decimal point, they should be in your business. Right.

And there's just something even more basic. I mean, we just went through this period of 20 and 21.

where companies were valued at $10 billion, $15 billion, $20 billion, you would have actually had to pay a tax. Somehow you have to come up with the money. The company, the employees of the company, the founders of the company have to come up with the money. There's no secondary market. There's no ability to get liquid on this. I don't even know how they would pay. But then the idea- And that's the second part. You would literally have to facilitate liquidity-

for them to pay a tax. And then the third point, which you just mentioned, there would be numerous situations where you'd have people pay a tax and then the valuations would collapse. And then they would just have this massive tax loss carry forward with nothing they could do with it. And they'd be wiped out by a tax. And it's...

Putting taxes on unrealized gains is just a nutty, nutty, nutty concept. Right. And by the way, Democrats historically have not supported that. Right. And so I think that that was to explain the 180 or the realignment as The Washington Post describes it. I think you have to understand that the Biden administration, at least perceived by these people in Silicon Valley, they did a 180. Right.

That it was they were, you know, introducing policies that were out of alignment with what has historically happened. Now, it's interesting, right? On the one hand, you have Vinod Khosla, you have Reid Hoffman, who have come out and said, listen, made this really a personality test about Trump.

He's a liar. He's a cheat. He's not good for America. He's an existential risk to democracy. On the other side, you really hear a lot of policy arguments, right, around whether or not they're pro-business, pro-tech, pro-AI, pro-crypto, etc.,

And that's really where you see the clash. I do think that Biden now stepping down and Kamala taking the position. Right. I think the straw that broke the camel's back, frankly, for a lot of people, Elon, you know, came out and endorsed after this was just the recognition that Biden was not in the mental state.

to lead on top of being on the wrong side of a lot of these issues. Yeah. You know, it makes me want to just back up to a super high level. Last pod we did, you were talking about how if you take out the MAG-7, the S&P was down. Right. Right. And you could take that to an extreme case and say, imagine if the MAG-7 didn't exist. Right.

Like what would our economy be like? What would America be like? And what you realize is that, you know, and not to maybe pick on Europe too much, but it'd be a little bit like that, right? Like where the stewards of our industries would be Exxon or Delta or, you know, JP Morgan or whatever. And those aren't companies that grow very fast. Right.

Yeah, I mean, the vast majority of the economic wealth that's been created in the last 20 years has been on the back of technology. And I think fundamentally- Well, in venture-backed companies. Right, right. And so this is, and remember, in a prior generation,

You know, it was the Lockheed Martin's. It was the, you know, Henry Ford's. It was the Thomas Edison's that were those innovators. And I think the one thing that does pull people together in Silicon Valley is an attack or an assault on innovation or on technology or on entrepreneurship. And what's interesting is, you know, I was watching somebody who I actually quite like, Pete Buttigieg,

And he said, you know, nobody should be surprised by what Silicon Valley is doing because it's just a bunch of rich white guys who are advocating for what's in their best interest. And what's interesting, I think Pete got it wrong, right? And the reason I think he got it wrong is because I don't hear in any of our conversations that we need – that we're supporting Trump.

Because he's going to lower our tax rate, right? I do hear things around key policy areas that impact entrepreneurship that people care deeply about. I hope that the conversation around the realignment, and I see some movement around this, forces the next administration, if it is a democratic administration, back to engagement. I thought it was really odd that –

Ben and Mark said, you know, they were stonewalled by Gensler, stonewalled by the White House. Like there was not even a willingness to talk about the issues openly. Right. And admittedly, this other candidate is just starting to run. But they talked about...

and Ivanka and Trump and like they asked for meetings and they got them right away and, you know, they're feeling responded to, to your point. And I think one of the things that happens anytime, and this may go back to where you started, that Silicon Valley has been a longtime supporter of the Democratic Party kind of writ large. Anytime you

you kind of unequivocally give someone your support for a long period of time, they may kind of forget that you're a constituent. They might take it for granted. And I look at the city of San Francisco who has lost Suave and Stripe and all these fintech companies because of

of the way they structured their homeless tax, the gross receipts thing. And it's just like, hey, you have a consequence if you don't keep this constituent happy. And you've benefited from this constituent being successful. And so, look, part of being a democracy is that everyone's allowed to have a voice. And I do think that it's worth – I think it would be helpful to the industry if –

The people that push back would say – and maybe they're saying this, but they say, I agree with you on all those issues, but I want to support the other candidate for this reason rather than trying to buffoon or bully the people who are expressing their point of view. Right.

And look, at the high level, and I know that not everyone in the world will agree with me on this, but I've talked in the past about how the single human that's brought the most people out of poverty is Ding Xiaoping. By bringing entrepreneurism and capitalism to China, he brought 500 million people out of poverty. And I go back to those Matt Ridley books. Like the way you create an increase in prosperity is through growth. And the way you –

can get outpaced growth between the countries that exist on this planet is by being really good at innovation. And so I don't know a better way to help the populace. Right. And I think it's something we should all be able to agree on, on both sides of the aisle. And by the way,

I've spent a lot of time on Capitol Hill recently with Democrat, Republican senators, Democrat, Republican House members. I will say I'm really optimistic. I think they're incredibly smart people on both sides. I think that they both see the right issues on AI, on national defense, on issues related –

to China on issues related to technology and innovation. I think that there is strong consensus in Washington that the greatest source of our national advantage is innovation. And I happen to agree with that. It just seems that this administration, and we don't really know what was going on over the course of the last six or nine months, but it kind of lost its way with,

With Silicon Valley, which was odd because Silicon Valley was a natural constituency of the Democratic Party. You know, Ben and Mark on their pod, they said they started to see some things 10 years ago in the 2010s that started to cause some concerns. And he pointed out, you know, this idea that Zuckerberg pledged to give 99 percent of his wealth away and he was attacked. Right.

And like starting to see some cracks in the wall. And you're like, hold on a second here. This should be something that everybody gets excited about, not something that everybody criticizes. But here we find ourselves in 2024 and –

I think the pendulum had just swung too far. I do think that you're going to see a Democratic Party that looks in the mirror, comes back to Silicon Valley on a lot of these issues. Trump was listening and said, listen, you think you ought to get a green card for people who have taken a four-year college degree? We're going to staple a green card to everybody who graduates from college. That was amazing. I think that most –

Everyone in Silicon Valley agrees that like tripling, quadrupling, maybe even 5Xing the size of legal skilled immigrants is huge for innovation, huge for everything that we want to do. And everyone's on the same page on that. And so it's ironic that no one's been able to get there. And for – I think Trump said that on All In, right? Like that's crazy.

That's amazing. Like you're going to get a lot of support for saying that. Right. And I, you know, again, it's not about taking political positions here, but the case we want to make is that if you attack innovation, entrepreneurship, uh, and capitalism, it will be to the detriment of the United States. Right. That's something both parties should support. I agree with that. And that's why, um, regardless of who you're going to vote for, I am, I am, um, I'm,

I think I was pleased that Ben and Mark brought the issues to the forefront by doing this, like taking a stand. Because otherwise, you just sit back and say, oh, I have to vote this way because that's what everyone does here. And like I said, I think it leads to being taken advantage of a little bit and not being paid attention to. And let's end this section with this. Over the 20 years –

you know, 25 years that you've been here, you know, yes, we're a long way away from Washington, but today it looks very different. Right. AI policy runs through Washington. Right. You mentioned American dynamism or national defense. All of that is running through Washington. The chips act, right. Whether or not we can export chips to certain country runs through Washington. Right. I find myself after a 10 year hiatus in Washington, spending a lot of time over the course of the last five years, uh,

How do you feel, like, do you think that engagement with Washington is a good thing? I know that, you know, top of mind for you is regulatory capture. You and I had a conversation about, you know, this rural broadband initiative. Oh, God. You know, tell us a little bit about that. Yeah, I mean— And how to balance engagement without falling into, you know, the abyss of regulatory capture. I'm going to—

Just admit like that I'm very skeptical. Like the way that legislation gets written is it gets written by the incumbents. We're already seeing, you know, this massive fight in AI. And we've pointed to these articles before, like the political article. But the leaders with their closed source AI models are spending millions.

more money than any startups ever spent, you know, in lobbying efforts. And they're drafting the language that ends up in the EU doctrine, you know. And so they're going to look at – I don't know why they wouldn't look after themselves. The thing that it would take – and I owe it to my – I've told some people that follow – I'm going to –

fund some research to study best practices in other countries. But it would take putting people in agencies that are non-conflicted and smart enough about the subject matter. Very hard to do. Right, right, right. That actually write the policy on behalf of the consumer or the citizen. It also means, I think, that engagement by Silicon Valley to fight back against the incumbents who are trying to do the capture. Right.

Right. So, I mean, if, if you're sitting here on all of these issues sitting on your hands, you know, then that's a problem. But I will also stipulate that there are now large incumbents in Silicon Valley. You know, you referenced some of the leading AI companies that have closed models that may in fact want to engage in the capture themselves, uh,

you know, and, and, and prevent open source. Let's, let's go a little bit down the, the E-line case, because I do think, I don't know who to blame it on. Maybe if you're a Democrat, uh,

I'll just pitch this as someone that's on neither side. But like if you're a Democrat, maybe you see a way that Elon picked the fight with Biden. I think if you're on Elon's side, he kind of feels like Biden picked the fight. We do know there was an EV summit where he was not invited. Holding an EV summit without inviting Tesla, who has like 95% of the shipments in the U.S., is horrible.

I don't know how you even do it with a straight face. Right. It's theater. Like that's flat out. And I don't even think they're hiding it, right? Like when Biden was signing some bills in the Rose Garden, he's surrounded by six people in union jackets, right? And he tried to pass an EV credit that would only be eligible to a car built by a union worker. Right, right. And-

Well, one, I just – I mean it's certainly not pro-innovation. Correct. And so anyway – and then this other one that's really bizarre. The FCC for a long time has looked over rural broadband initiatives. Right. And there's immense regulatory capture in this. Most of these programs are funded cost plus. I happen to have some rural property in Texas in Texas.

If you ask for anything, they'll do it. Because they get to bill the government cost plus because you're in a rural location. So I could get a fourth phone line and they would like dig a two-mile trench in rock.

Just because they get to make 30% profit on whatever the activity is. So anyway, they decided they were going to spend $42 billion on rural broadband. And between 10 years ago and now, Starlink's been built. And there's just, I don't know a better way to say this, but like if you want broadband in the middle of nowhere in America, Starlink's

Yeah, right. That's what this was designed for. In fact, because of the way Starlink works, if you're by yourself and isolated in an area, you'll get much better Starlink performance than if you were in a city. It couldn't be better. And you're going to get like –

You'd be shocked. You could get 200 megabits or 300 megabits. Now, the powers that be at the landline companies have written the laws that say, oh, well, will you stay up during a rainstorm? Right. And so they disqualify Starland because it might not work if it's the heaviest rain for five minutes a year. Right. And it's just so stupid. In this recent hurricane that went through Houston-

I paid attention, but like I was looking for this for this reason, but like some of the landline broadband things went out. And guess what? They were out three days. Right. Because someone had – there was like a flooded cabinet. Someone had to go in and take that apart. Right.

So Starlink may not have worked during the worst hour of the storm, but it worked the next day. Right. As soon as you could get power and plug in your internet. So for $42 billion, what did we get? Well, that's the other thing. So according to Brendan Carr, who is one of the four FCC commissioners, he says zero. Zero people have been connected. So not only – but –

Yeah, I mean, look, everyone knows government's not very successful in implementing things. But they disqualified the very best new solution that's perfect, perfect. Where the marginal cost of implementing it is a Starlink antenna. The cost of the antenna. Yeah.

Right. And you could strike a deal with Starlink and probably get that cost reduced or do it at cost like the government could have gone in and done like a bomb analysis and say, let's build one for the – And I think it's – You could have done any of those things. You could have probably got it down to $250. And instead of a $250 marginal cost to implement a rural broadband, we're going to get f***ing bulldozers out and drop fiber lines to a ranch in the middle of nowhere. Right.

stupid. Right. Right. And I can only surmise that that happened for political reasons. Well- Or regulatory capture, one of the two. This is related to another topic you and I have talked about. And this all goes to like, why has there been this realignment or perceived realignment in Silicon Valley? I wonder if there's something else going on as well.

Forever, we've had kind of this fourth estate in the media. It's called the fourth estate because we have three branches of government and you add the nightly news and the newspapers that worked very closely with those branches of government to report on what was going on. But really over the course of the last five years, 10 years, we've had this explosion in the democratization of media, if you will, right?

And you have all these citizen journalists. And just over the last four years, let's think since COVID really, right? You have people who feel like we – you have this libertarian streak in Silicon Valley, which I would agree is already slightly distrustful of government. Yeah. Right? And now they feel like based on this reporting, they were lied to about COVID. Right.

They were lied to about censorship in big online media. Yep. They were lied to about Biden's health being the latest thing.

And so I think there's something deeper going on here that you've kind of lit this fuse where people are looking around and saying, you know, this just doesn't feel like government is shooting us straight and that there's a real dialogue going on about what's best for America. So I think there's been a real breach of trust that also needs to be mended.

And so again, I think there are people of goodwill on both sides. But when I have people – when I hear people say, well, there's a realignment because you just have a bunch of rich white billionaires in Silicon Valley that are doing what's in their best interest. Yeah.

I think they need to really look in the mirror and take a deeper analysis as to the situation, right? And certainly there are problems that have been well documented about Trump. There have been problems on the other side. But I think if Democrats want to win back this natural constituency in Silicon Valley, there needs to be a real realignment on some of these issues.

Let's shift gears. We have open source going frontier today. Meta dropped a new model. It's 405 billion parameter model. It's the first open source really frontier quality model. It now stands on top of the leaderboard for a lot of charts. Importantly, they updated their community policies, right? So now this can be open and permissively licensed, including for commercial use,

synthetic data generation, distillation, fine-tuning. You know, Zuck wrote a letter in defense of open source. Beautiful letter. You tweeted about it. Elon then responded to your tweet and said it was an impressive model. He said Zuck deserved a lot of credit for open sourcing it. So what did we learn today?

Because there was some debate as to whether 405 was going to be open sourced or not, Bill. What have we learned today and why is this so important? Well, I think there's two things we could talk about. So you tell me which one you want to talk about first. There's the strategy behind why would a company like

Facebook meta, choose this methodology. And then there's the question of what's happening with the large language model competition. Which one did you want to- Well, let's talk about just meta's decision to do this and the commitment to open source and why it's so important. Yeah. So Mark, first of all, everyone should go read what Mark wrote. It's not ultra long. It's about four or five pages, but he lays out a lot of it. And he talks about

When Meta has run into other closed system companies, it's created a lot of frustration and limitation to what he perceives as innovation. And he mentioned the Apple world that he's kind of forced to live in. Right. Something happened over the past –

I'd say 15 years where some of the smartest companies in Silicon Valley have developed a new strategic play where they use open source as a defensive weapon rather than as an offensive weapon. That's my terminology. One of the first to do it was Google with Android. And it's really hard for people to put themselves in the mindset when that iPhone shipped and when Apple...

Apple had only let AT&T have it and it was on AT&T's terms. And Google convinced the rest of the world, all the handset manufacturers, the carriers to support this model by telling them it was going to be open. So I think they backed up on that a little bit, but that worked. Like that got them to get behind this thing. And I guess if you look at the China market, the –

The openness that Verizon and Samsung thought they were getting into with Android did play out there. Like there's no Google or Apple in the China market. Right.

But then others started to do this too. Google did it again with Kubernetes, which is a piece of technology that lets you move your workloads very easily between clouds. They were worried Amazon was running away with AWS. So they took a piece of technology that was inside their company, Kubernetes, and made it free. And they got the Linux Foundation to help organize, which the Linux Foundation is very good at.

And they got IBM. They got all these hundreds of players behind Kubernetes. And eventually, it became so successful that Amazon had to give up and support it. And that has allowed more fluid transfer of workloads and it's leveled the playing field a bit.

Facebook created this thing called Open Compute Project. And they basically said, if you want to sell computers into our data center, we're going to write a spec about the – or we're going to write a list of specifications that those things have to

to meet in order to go in there. Well, one of them is basically no proprietary technology. So it's almost like a patent deflection move that says we're only going to support open source things here. And by the very definition, if it qualifies to come in, it doesn't have any proprietary technology.

Right. Which has been a huge – and by the way, people say, oh, well, who would agree to that? Well, Dell sells into there, Cisco sells. All these people end up kind of just agreeing and selling in. And so that is a remarkable move by Facebook to lower their cost of their infrastructure and to keep it lower and to keep themselves out of position where they can be held up.

There's been a recent move in the map world to create an open source map project because they're worried about Google having too much power. So this has become a kind of a new go-to move. You need a lot of resources to do this. Obviously, there are startups that get behind open sources. But if you're going to play this defensive move, you need to be a big player. You usually need to get the help of others. Right.

Here, meta, I think, just became concerned. And you and I have talked about this, but I think some of the players in the AI world brought this upon themselves by claiming that they were going to change the world in such dramatic ways. You awaken the giants, right? If you cause every...

you know, investor call to be, what are you going to do about AI? You're going to wake up all the giants, right? Right. And so in this case, Meta didn't want anyone to end up in an advantage position to them because they were so much better than AI or they didn't want, um,

They didn't want to become dependent on a third party for an AI tool that they needed and couldn't have. I thought one of the most interesting parts of the letter and Mark's pod on it today is

is, you know, he said it's become personal. You know, first he points to Linux and Unix and it's just been a great unlock by unleashing the power of the long tail. You know I'm a huge, huge fan of this idea. The long tail of developers. But one of the things he said, he's like, this is personal to me.

Right. Because he said with Apple, you know, where we saw ecosystem control by a single company that extracted most of the rents out of the mobile ecosystem. Right.

He said it was bad enough that we had to pay a big tax, right? Because that tax hurts all the developers in the ecosystem. He's like, but you could tolerate the tax. He said, but it was absolutely soul crushing. He used that phrase, which I thought was interesting. When you develop, work really hard on a product improvement, and then you have a company that says, no, you can't release that into your product for whatever reason. Right, right, right. And so it seemed to me that

that this has become extraordinarily personal, right? Here you have a company that produces tens of billions of dollars of profit in the back room. It can fund all of these models for as far as the eye can see, and they've made a decision to make it open.

I think that has broad economic implications for the entire ecosystem, right? If you're a closed model company, the question first is, okay, I'm going to have to compete and keep up with this frontier level competition. That's hard enough. It takes a lot of resources. But number two, Mark's going to give it away – Meta is going to give it away for free. Right.

Now you have to develop a business model that can compete with free. Yep. And so this reminds me, and we'll put a link to it in the notes, but years ago I wrote a blog post about Android. And I said, it doesn't matter. This is so similar to what you just said. It doesn't matter if they can make money on Android. It turns out they figured out how to. Sure. But-

It creates a moat that's so wide around the castle. I think I drew a picture. I talked about like, okay, yes, you have the water moat, but now they're going to char the earth for five square miles outside around the water. But you're not getting to our goddamn castle. Yeah, exactly. And so it has – and not every company can afford a multibillion-dollar –

moat extender. Right. But it makes a lot of sense for these companies to do it. And there's no one today that is listening to Mark's podcast, playing with the new models. By the way, on Grok, they're like nutty fast. And saying, oh, that guy's stupid. No one's saying that. He looks like a genius today. He also said today that

that they've already laid out the compute cluster for LAMA4. So this was LAMA3.1. It was a large 405B model also distilled into an 80 and an 8B or 70 and an 8B version. But they said they've already laid out the compute cluster for LAMA4. They've already laid out the data architecture for it. They've run the research on it. So it seems to me and our team's best guess

is that Lama 4 is going to come in the back half of the year, right? Maybe in November, December timeframe. They probably don't want to be more than a couple of months behind GPT-5. So they probably think you're going to get a new release right after 4.0 from OpenAI that they can then try to quickly leapfrog with Lama 4. But what was interesting, he said, not only have we laid out Lama 4, but he said, it's kind of fun and fascinating. We've laid out 5, 6, and 7.

Okay. And he said, the models are all going to be bigger. They're all going to cost a lot more money, billions of dollars. And he kind of,

alluded to what Satya said a few weeks ago that you and I heard, which he said, this isn't going to be a straight line. He reminded folks of the internet bubble and said, you may have to go through a bubble here. So if you're a venture capitalist, Bill, and you're hearing this, OK, first, you've got to go compete with free. Second, you're going to have to spend billions for a long time. And these guys, you know, the incumbents are going to compete.

Third, that we may in fact have to cross this chasm, some bubble-like chasm. I think what it does is it's also a shot across the bow of those folks who might want to start closed model companies to go compete with that.

No doubt. And one other thing I would highlight for the listening audience, every startup, whether you are an AI startup or whether you're a startup that's been around a while that wants to enhance their product with AI, this should make you tickled pink. You should be so happy.

that he made these decisions and went – because as you said, he not just – he went further in terms of openness today than the model was before. More permissions. And the Hugging Face team was clapping and celebrating on Twitter as well for this reason. And so for – as Mark and Ben like to call it, little tech, this is phenomenal. Yeah.

Correct. It may not be for OpenAI, which I don't know Brad Gilbreth, but I saw a funny tweet today where he said, is OpenAI the new Netscape, which is somewhat provocative. But Mark created that question. And I would say this, I'm going to stop and let you go, but last thing. I just don't think that...

Sam Altman realizes when he talks about things in such a grand fashion, how it makes people like Zuckerberg feel. Or if Zuckerberg has to take a question, is AI going to make you irrelevant? Like it gets under his skin a little bit. I do think about it this way, you know.

If you're open AI, you got to go raise your next four or five billion dollars, right? Remember, Meta had allocated $20 billion a year to reality labs. And there was a report last week that they may, you know, tighten their belt on reality labs to the tune of 20%.

So that's $4 or $5 billion of savings on a research project that they have in Reality Labs that they can reallocate to AI. Now, what I would say on the open AI front, I actually think that they're doing extraordinarily well.

And here's the interesting thing about OpenAI. In the face of all this, Zuckerberg said, I want to have the number one consumer application in AI by the fall. But if you look at ChatGPT 4.0, since it was released, web visits have gone from 1.8 billion to 2.6 billion visits per month. DAUs have gone from 60 million to 100 million. And so, you know,

As I say to my team, there's only one way to build a business. Either you got to get a consumer to pay you or you got to get an enterprise to pay you. And the only other company that's really shown traction with consumers paying at that scale is OpenAI. So the question is, can they build a consumer product that is durably sustainable?

than the alternative, right, that Meta is going to put out there. And Mark mentioned that there are hundreds of millions of people using Meta AI, but they're not really paying a subscription and using a standalone product, right? It's embedded in all the other products. A lot of the time you're using it, you probably don't even know you're using it yet. But I do think that Meta has a history of grinding out good products, and I suspect it will get there. But no doubt about it, this is going to put a lot of pressure on people

the closed source model companies. When you, and you, and I mean, I, I, like those numbers, you're, you're,

Referring to, I think, are just at a high level. They're not necessarily the paid constituency. No, no. Those are total users. Yeah. And I, playing around with credit card data, I think OpenAI is about $2 billion. Anthropics, about $100 million. And Perplexity is at like $25 million. Yeah. I'm guessing based on credit cards. No, no. I think that's directionally right. On the $20 thing. But at 12 months, the retention –

Even in OpenAI, it's like 35%. So I doubt that.

that anyone that is looking at that, even at $2 billion, feels great about that as a durable business model. And you add to it Mark saying, Mark's not going to charge. It would feel really great if it didn't cost you $3 billion every year to build a new model in order to compete. I mean, ultimately, the cogs in these businesses, right, that you have to –

Right. You have to, you have to keep reinventing that model every single year. By the way, I pay for all of them. I play because I love playing with them and they're so much fun and so fantastic. I would say, I think one of the retention problems is simply all the substitutes that are available. And if meta is going to, and then, and then if speed's going to matter, like as speed there, there were these old stories of Google made itself like 30 milliseconds faster. Like there were more searches like, and, um,

Play with the Lama Grok demo. It's a different experience. I don't know how much that will drive. Yes. So anyway, I just think there's a lot of alternatives. If we're right about Mark's intention, he took it personally, he's playing defensively, he's going to make his version free.

Yeah, there's no doubt about that. And he might run it for four years with no ads. Right. And I think this fast inference and it's Grok, it's Cerebrus's fast inference, Fireworks, another benchmark investment, I think, is inference optimized on top of NVIDIA. Right.

You're now getting to the point with these inference engines that they're going to be, you know, it's faster than you can read. Certainly you and I had a conversation about this. That doesn't really matter because all of these interactions, you know, particularly when we think about multi-chained agent interactions, right? You may have a hundred different interactions, computer to computer interactions before you ever see an answer. Um,

And so speed really matters because computers can talk to each other at the fastest speed you can possibly kind of contemplate. And so reducing that latency unlocks a lot of innovation that will be good. And I think there's a lot of that coming. I was really impressed today with the alliances that Meta had built recently.

And Mark pointed that out, but really from AWS to Databricks to Snowflake to Accenture, the Groks of the world, Fireworks, et cetera, everybody launched with optimized versions of this. They've been playing with it. So in the case of Databricks or Snowflake, they can basically take these optimized models

immediately to their companies. They can do fine tuning, they can do synthetic data generation, whatever their companies might want to do. So part of the way that open source works is by running the field, right? Getting everybody into the pool. No doubt. While you were saying that, I went back to the Kubernetes Wikipedia page. So on launch-

The principal competitors were VMware, Mesosphere, Docker, Azure. And then, you know, a few months later, AWS came in. But yes, if you're a participant in the market who is looking –

for your own solution to be advantaged. And there's someone who wants to make a piece of it free and open rather than closed and paid. Right. That's awesome for you. Yes, yes. And so you're right, it becomes this attractor that brings the other parties to the table to play. Right. And yeah, that's part of why it's so powerful in this defensive way, what I call defensive strategic play. Yeah.

you are able to bring the other people in. Right, right. It's really fun. And once again, I think it's good for entrepreneurs. I think it's good for society. Right. Like 15-, 20-year patents on big pharma drugs is not good for society. This is the opposite. This is technology getting freer, cheaper, more available. You know, and I'll give you credit for this. In a lot of conversations I've had in Washington –

Your work on regulatory capture has actually made its way into a lot of congresspeople's minds and offices, right? They're on the lookout for regulatory capture. Awesome. Right? And so I think it's pretty wild. Zuck went from a few years ago having a bullseye on himself in Washington, D.C. And now he's somebody that people point to as a real asset of

against closed models. Yeah, and I hadn't thought about this until you just said that. So thank you for triggering this in my brain, but maybe there's a bit of a halo you get. From open source, for sure. Yeah, for sure. So you look like you're the good guy and not the bad guy. By the way, I do think it's worth mentioning on the AWS thing, just from talking to entrepreneurs in the AI space,

Microsoft certainly is advantaged by being – or Azure is advantaged by being the hosting system that has access to open AI. Oh, for sure. And Amazon doesn't. Yes. So not surprised. Yes. That – AWS was in the – kind of featured on launch day. It makes sense. They want to – they need a response to that. Yeah. And, you know –

We could talk about this for a long time. Let's continue on. We have a few more topics we want to talk about. We'll make these a little bit more lightning round. But you had me listen to a podcast –

you know, this week, excellent podcast with Dr. Jay Bhattacharya and Rick Rubin. You know, Jay's a Stanford kind of economic epidemiologist, was one of the senior authors on the Great Barrington Declaration in April of 2020. And that was really this seminal paper that showed that the COVID death rate was far lower than people thought and that the virus had penetrated

far deeper into the population by April of 2020 than people thought.

Which then had broad implications on whether or not we should lock down. You know, we're now four years later. Tell us why, you know, you were telling all your friends to listen to this pod. Yeah. You clearly are still agitated about the fact that there's been no postmortem here. Yeah, no doubt. Why is this so important for society that, you know, that we listen to this, that we come to terms with it, that we think about this?

Yeah, I would encourage anybody and everybody to listen to this. It's on Rick's podcast called Techno – I can't pronounce it. I give up. Rick obviously is one of the most interesting –

Yes.

guests that's just phenomenal. So I listen to it quite a bit and I'm a huge Rick Rubin fan, even though I can't pronounce the name of his podcast. And yeah, so he had Jay on and they talked for two hours kind of about, and they covered, I think maybe like a good two, three, four year period of COVID and everything Jay went through. And

You know, you were talking earlier about like the media just kind of blocking and not doing research. I think everything from the origin of COVID to the responsiveness to COVID, for whatever reason, we were in this weird place. And some of this came out in the Twitter files where if you said anything that wasn't 100% consistent with what Fauci and Collins were saying, it was labeled misinformation, conspiracy theory. And

I did a bunch of research at the time, but I looked and found this incredible New York Times piece about the tower collapse in Miami.

And maybe we'll put it in the show notes because it's just so amazing. So someone spent, you know, six months, probably thousands of hours of investigative journalism to figure out exactly what happened. Yeah. And they had these infographics. It was like amazing. And you look at the origin of COVID, we have, I don't know, 20 million people dead, probably the worst catastrophe since World War II. And no one was looking. Mm-hmm.

Like no one was looking. No one was doing the work that these New York Times journalists did for this collapse of this building. Yet the consequences were tremendous.

1,000x, like 10,000x bigger. And I don't know if it was Trump derangement syndrome. I don't know if, you know, I don't know why. I mean, and the Twitter files once again had a lot of this where people tried to talk up. And so to me, one thing should be obvious to everyone. We don't want to go through this again. Yet you look at how people talk. And if you hadn't listened to Jay, I would say,

If this happens again, are we any smarter? Are we going to make any better decisions? His concern is that we're not. Yeah. Right? And so I would argue that the reason to do the postmortem is that you had three prominent senior authors on this paper, 60,000 signatories, and it basically was –

Early in the pandemic and at odds with the conventional wisdom. OK, the conventional wisdom was that you needed to lock down, keep people separated, that it wasn't that deeply penetrated, you know, of disease and we could prevent it from spreading.

He was basically making the case because they had- And by the way, he had instincts. He had the data. He also had instincts that lockdowns would have massive consequences, which they did. Right, right. But he wasn't given a voice. And Francis Collins called him a fringe epidemiologist. Epidemiologist, right. And this is a celebrated- In fact, his area of study is economic studies.

Epidemiology. Yeah. And so he's actually thinking about how these things interact with our global economic system. Right. He's like the perfect person to listen to. Exactly. And he got attacked. And I think any time – and I might include this in –

And how some of the people responded to Ben and Mark. And I remember I triggered on Kevin Scott when people questioning LLM scaling called him trolls. Like anytime your reaction is not to react to the argument, but to throw this label, this negative label out at the other side, my brain says, you don't have the goods. Right, right. And that's what he said. And what was interesting here is...

is, you know, it was all ad hominem attacks. They wanted to be, you know, it was like excommunicating them from science, you know, because you had the head of the NIH and you had Fauci who were calling them fringe players.

They didn't deal with any of the facts, right? The science was that they had the sewage data from Santa Clara County and from L.A. County. They knew the penetration, and they, of course, knew the death rate that they could calculate. They knew among younger people that there was almost zero deaths, and among older people, you needed to take a different sort of precaution. Now, Jay, what makes him interesting is –

You know, he actually had two relatives in India who died from COVID. It wasn't like this guy didn't care about COVID. It wasn't like he was, you know, some cookie is one of the most celebrated scientists who actually looked at data, did the research, put together a,

you know, a very important paper. Now this is a person who was celebrated by the NIH. He was on NIH review panels. He had written over a hundred different papers, et cetera. And the reason, you know, so when you said I need to listen to this, I'm thinking to myself, that's been four years ago. But he says something at the end of the podcast where he said, the problem is we're no better prepared today than we were then.

And the exact same rush to judgment, right? Lock everything down. We're prone to do it again the next time because we haven't done the proper postmortem here. And the proper postmortem is that we need to do –

The science and the research. And one thing, obviously, I hope everyone goes and listens to it. But one thing that he uncovers, they've gone back through and looked at excess deaths at a number of different countries and lockdowns achieve nothing. And-

I think he makes a solid argument. I think most people believe there were consequences to lockdowns, definitely with kids, lost generations of kids from school. Increased suicide rates, lost education. And all of my kids were in high school and it was horrific for them not to have the experience that so many of us cherish from those moments in time. Actually, I get a little...

a little upset thinking about it. But there's more than that really because we need to go back through and look at everything. There were, you know, there's a lot of questions about the origin of COVID. If you look at what's being discussed in Congress and what they're uncovering, it really, really needs more discussion

more work to be done. And I think Catherine Bach and Alina Chan, there's people that you should follow on Twitter. They're uncovering that finally. There were these incentive systems pushed through hospitals where like you could charge 30% more if a patient had COVID. Yes.

Has anyone gone back through and seen if that was really a good idea? Or did people take advantage of it? And then they over select. They probably did. There were questions about how that I brought up during my regulatory capture speech about the different types of tests that could be done and their cost and which was more accurate. And all that stuff, while we don't have a pandemic, this would be a great time to go in depth. And I hope...

that whoever is our next president will put together a panel. And I hope Jay's in charge of it. I have no idea if Jay has that kind of time in his life, um, to, to go review everything that happens so that we can be better prepared next time. Well said, well said. Let's talk about Wiz. Uh,

This deal, Google was rumored to be buying Wiz for $23 billion. This is the second high-profile deal. The first was HubSpot that seems to have kind of blown up that Google was supposedly going to do. Asif, the CEO of Wiz, came out and said, not to worry. We're going to get to a billion dollars in revenues, and then we'll go public. Yeah.

You know, anything to take away here? I mean, my read on it just at a quick level is, you know, if this were to go public, it would probably trade at 13 or 14 times forward. That would be like 13 or 14 billion, not 23 billion. Are these things blowing up because people all of a sudden get cold feet about antitrust? Do we think that a Trump administration is going to loosen up M&A? Anything to see here? Well –

I mean, one thing I would say is that these are, if you're lucky enough to be involved in a situation where one of these deals comes down, it's, it's,

It's hard to know what to do, you know? And I, I mean, it's not nearly this number, but I remember when, um, Instagram, you know, got their offer of, I think it was 1.1, 1.2 billion and they had like 20, 20 employees and, and we had funded the 14th photo sharing site and Matt comes in and says, should we do this? And like, um,

Like it's easy to want to be on the yes side in these situations because it's like, wow, this might – and I can remember very famous situations where people walked away from these deals and never got close to that number again. So the consequences are high. Yeah. It's like a really intense poker moment like where you're making a gut call. Yeah.

And there's also the famous, you know, Google didn't sell to Yahoo for a billion and then became one of the most powerful companies of all time. Microsoft, Facebook for $15 billion.

It's a higher number. It makes me talk with a higher voice. Right, right, right. Because as we've often discussed, like it gets exponentially thin at the top. The number of people that make it to a billion is a fraction of the number that make it to a hundred million. Yes. And the number that make it to 10 billion is a fraction. Like, like it's,

The air's thin as you climb the mountains. Yes. Kudos to them if they're just that confident in the business. There's some rumors today that it may be that the CrowdStrike situation makes them feel that they may have more running room. I...

I have a hard time believing this one was a concern about the antitrust because Google doesn't have a huge security business. And there's actually concern about consolidation around Palo Alto and Microsoft and Cisco in the industry and CrowdStrike. So I would think they'd be supportive of it. And if you thought Trump were coming in, I think there'd be less reason even to worry about it.

about it. So I don't see that. Yeah, that's probably the one thing I would press on is, you know, the betting markets, I think, are now 60-40 with Kamala in the race of, you know, of Trump winning the election. You know, we've been in this period in Silicon Valley for four years where companies just stopped. They may have sent their M&A teams to the beach, for all I know. There just has not been a lot of activity, certainly among the hyperscalers.

relative to what had existed before. It seems to me they did three things instead. They bought back their own stock. They all started issuing dividends. And they bought NVIDIA chips, right? They tightened their belts on people. They weren't spending more money on people. All the companies became a lot more profitable. And there just was a real lack of M&A, which is a problem for Silicon Valley. Right. And I would say,

like having been in these situations before, usually the partner that's involved in the company, the one that's on the board or that led the investment, they're usually pretty, they tend to be overly confident. And that's often balanced by the other partners back at home. So when you circle around the table and have these discussions, they're like, really? Are you sure you do? And if we've been in an environment where liquidity has been scarce, then

The odds that they were sitting there pushing, hey, hey, maybe we should do this, maybe we should do this, I would think would be high. We saw this unusual Sequoia event where they actually recycled Stripe out of their own dollars, right? Which speaks to the fact that the LPs feel a need to.

Having to come up with alternative liquidity in a world where M&A can't get done. I mean, M&A was not on Market Ben's list, but it could have been. Yes, yeah. But it could have been. It could have been. As another problem that we face in Silicon Valley, part of the vibrancy of this ecosystem relies on not just the IPO market, but also the M&A market. Yeah, and so I think there's always been –

peer pressure to appear particularly confident and to play the long ball game amongst venture capitalists. And they almost fall over each other trying to express this bravado. So kudos to Index and Sequoia and others that have

Turn down Greylock. I'm just looking at the list, Andreessen Thrive, that said no. And the team, obviously. But boy, we talk about valuations being discounted future expectations. Nothing smells like that when you walk away from $23 billion. Yeah.

You know, I think it would be less in the public markets today, but they've clearly built a terrific business. No doubt. I've heard nothing but good things. I don't – and by the way, one thing that could be very positive that comes out of this is if they turn and run at the IPO markets very quickly. Yes. Because I would love for the list of – I think we have a bit of constipation here. Yeah. And we talked about this at the Code 2 event. I think people have gotten overly –

conservative about what they need to be a public company. So I hope they run as fast as humanly possible. We've had talk about these, you know, potential AI IPOs coming. I would, I'd love for you and I to, on this call to be talking about IPOs more than we are.

Yeah, you know, I just got off a board call with a company we're mutual investors in that's going to come public in September, October. And, you know, it's exciting to be talking about companies coming to the public market again. No doubt. And I think it's best days in –

its maximum innovation is still in front of it, right? And I was just reminding them, like all of that can occur post going public, right? And so I think for Wiz as well. So today, you know, Tesla reported tonight, they missed their numbers a little bit on margins, the stock's down seven or 8%. But interestingly enough, Elon said on the call, if you don't believe that Tesla is going to solve autonomy, sell our stock.

OK, so he's like, this is not just about the number of cars we sold in the quarter gross margin. Like the reason you're in this stock is because of autonomy. And so I want to talk a little bit. You know, you and I spent a whole pod talking basically about 12.3. But, you know, now they are on to 12.5.

He mentioned 12.5 and 12.6 on the call today. You know, what we've been able to discern is these models are much bigger, right? They're running like 5X larger models on the edge, on the car. So rather than a billion parameter model, maybe something like four or five billion parameter model. The rates of improvement continue to accelerate. And so here's how it manifests itself, Bill. Yeah.

You know, we went and did some testing of our own on this. In 12.3, you know, you could take your hands off the wheel for like 40 seconds before it told you to re-engage. By 12.4, you could take your hands off the wheel for up to four minutes, right? A lot longer period of time. And it has eye tracking. And so you could look away a little bit before, you know, it was telling you to take control of the wheel. Right.

On 12.5 and 12.6, we think they get to the point where they're 100% hands-free. So it doesn't constantly ding you to grab the wheel. And you can really start looking away from the road for longer periods of time. Now, of course, you won't have to do that. But I'm just saying it will do it before kicking in its warning systems because they're confident in the efficacy of the model.

In order to bet – Elon said because the 12.5 and 12.6 are so good, they're going to look for approvals in China and Europe around autonomy. I was wondering when that was coming because the way most of the world – they have to apply for licenses to –

for the car to run independently. And so I always knew that would be a step before they were live. Interestingly, one of our analysts who covers China. But they said Europe and they didn't. And China. And not U.S.,

Well, in the US, they already can run full self-driving in states like Texas. But not without a driver. They have to apply. No, no, the drivers in the car. The drivers in the car. So one of our analysts went to China to test all the L2 and L4s. You've read some of these. I've watched all the videos online. You've read the headlines of like deploying 10,000 cars in Wuhan overnight, et cetera. And here's what she came back and reported. This will be good.

She said, you know, they're still catching up to FSD 11. Now remember, FSD 11 was – so they're like three years behind on full self-driving. Those were still the deterministic models before the big breakthrough of 12.3%.

She said, but here's what's crazy. Although they're far inferior models, the Chinese consumers seem very receptive to being hands off the wheel, eyes off the road. And everybody's at this, Huawei, Xiaoping, NIO, all these different companies. And so she was in them.

And she said she had some really lousy experiences in the cars, but she was blown away at the Chinese consumer's willingness to adopt the technology. Well, keep in mind, I mean, you've heard a similar story about like –

technology. So in Africa, there are no landline. It went straight to mobile. And so everything changes in a different way. Car ownership in China was relatively low. Exactly. Like 5% or 10%. So most people are either

or commuters. And so that would be one reason why your expectations would be in a very different place than if you were an American who loves your car. Right, right. I mean, this is for another pod, but we spent, I don't know, 100 years, 70 to 100 years maximizing America's structure and layout and topology for that damn car. Yeah, yeah, yeah.

One of the things you and I have debated back and forth on this pod is just the impact that AI is going to have and the timeline against which it's going to have the impact. And you've called into question, right, the magnitude of the impact perhaps from the LLM. But we've been in lockstep.

that this is having a major impact on full self-driving autonomy and, you know, likely on robo taxi. And so it does feel to me like this is one of those places where, you know, now if you're in San Francisco, it's not surprising to see two or three Waymos around you. I think you're going to see a lot of people driving down the streets in their Teslas in the not too distant future, right? They're going to be reading a book. They're going to be looking away. Their hands are not going to be on the wheels, right?

And, you know, and obviously the robo-taxi is reported to pull the steering wheel out of the car altogether. By the way, on that last thing, I'm going to put one more podcast in the list that I was – that I found super interesting, which was Misha Laskin, who is an entrepreneur in

that runs an AI company here in Silicon Valley. He went on the Sequoia podcast. But he was at Google DeepMind and he talks about AlphaGo. And he has some different perspectives on AlphaGo. But when problems are finite, and there's this great book about infinite and finite games like chess –

The ability for these models to compete and innovate is so much higher than when you have open-ended problems. And one of the things about self-driving is I think you define it in a way where it's a finite game, which is no wreck. Like no wreck becomes the finite game. And so they're able to –

These models are able to go a lot farther when there's a finite game that can be played. And anyway, his talk is super interesting and it makes me think about the areas where AI is going to accelerate faster because you can do those kind of things. The open-ended AGI thing is actually, in my mind, is going to take the longest because it's the hardest problem. Yeah, I think there are a bunch of discrete things you can define as finite games.

you know, customer service being an example of that. But conversion on a website could potentially be done that way. For sure. So what the heck happened with CrowdStrike this week, right? Not only did it lose 30% of its value, all my friends were complaining that they couldn't fly, you know, get from point A to point B, airlines ground to a halt. What do you think this reveals to us

about kind of the nature of systems that are being built in the cloud today? And what are the things we ought to be looking out for or concerned about as a result? A whole bunch of things went through my mind. One, the one that actually I think J-Cal brought it up first, but that is just so like...

Such a strong argument is why didn't you stage gate how this is rolled out? Yeah. Like, how could you let it have this big an impact? Like, if you did increasingly large groups every two hours. Right. You wouldn't have never had this impact on the world. Deployment engineer that needed to go on vacation. I don't know. Like, someone, like, so, and I think that's on CrowdStrike. Yeah. So, and I think.

There were other people. There's a Twitter account that's really good at kind of analyzing crisis PR who went through his stuff. I think they could have talked about things like that, why that failed rather than like they gave a technical description of what happened and say, oh, we uncovered it.

But that doesn't really help. That doesn't say why this isn't going to happen again because there was a policy process failure, you know, on top of this. The other thing that if you read Matthew Prince who wrote a large analysis of this – and keep in mind, Matthew runs a different company, Cloudflare, in the security space. And he's very worried about a very specific thing here. Right.

I just went and read a whole bunch, so I didn't know this ahead of time. But apparently Microsoft will argue the reason that these security companies have access to the kernel is because they were forced to let them have access because of an EU ruling that related to how big and powerful Microsoft is. Now, there were no non-Microsoft boxes that failed.

And people will say, oh, well, you know, Apple doesn't allow you to have access to the kernel. And so what Matthew's worried about is that Microsoft's able to use this to reverse the EU initiative and then push these players out. And a lot of people don't know this, but Microsoft's now one of the top four security companies in the world and may want to do that. And so that's a new kind of dimension of competition that I think –

need to pay attention to. I'm also struck, like, there was a funny article that said Southwest was spared by this because they weren't on Windows 95 yet or they weren't on Windows. They were on really, really old Windows machines. And I just don't understand why anyone that has a terminal that matters is

is running Windows at all. Right, right. And maybe it's a testament to just the power of the network effect of Windows and all this stuff. But you would think there'd be a hardened Linux thing that would be so much less susceptible to this kind of risk. You know, we have these esoteric conversations all the time. We're investing in these startup companies. But, you know, the world has become software.

And, you know, we take for granted every day the amount of software that's running around us, that's getting us from point A to point B, soon to be driving our cars for us, etc. And, you know, with it, I think, you know, comes significant responsibility.

And again, circling back to where we started the conversation, you start taking down airlines. That really makes people in Washington unhappy. Oh, I believe that. Right. And so part of the reason I think that the nature of the relationship between DC and Silicon Valley is changing, is forever changed, is also as simple as this.

Our lives today are so twisted around all of these technologies, whether it's the phone we carry in our pocket or the software that's getting us from point A to point B to the AI we're going to be using in the future. And so I think that this symbiotic relationship, this figuring out

how to make sure that we're managing the relationship between Washington and Silicon Valley in the most productive way possible for this country is going to be super important. No longer acceptable for us just to stick our head in the sand and say we're 2,851 miles away. Engagement I think is going to be the new course. And

In that regard, I think policies are going to matter. Like I don't think any party can take Silicon Valley for granted. One of the articles said that people were forced to implement CrowdStrike because of regulatory reasons. So they had it implemented because someone had told them they had to. So that's another interesting dimension to this whole thing. Hey, before we wrap, I have two things I need to do super quick. One, I'm going to try and pronounce –

Tetragrammaton, which is the name of Rick Rubin's podcast. And apparently it's an important Hebrew symbol from way back before Christ. So I want to do him justice there. And then second, I would like to call out with respect...

Daniel Eck at Spotify who just printed amazing numbers and took his stock to an all-time high. He's been grinding away at Spotify for a very long time. It's a great product that I love to use. Super innovative. A lot of people thought he couldn't make positive cash flow because of the

the way that the music label deals are structured, but he's after it. He had a fun social media post before he did his earnings call, which I thought was clever. I love how he does this. And he's so thoughtful. He's so wonderful. He's so available. He gives back to other entrepreneurs. He cares about, especially about Europe where he came from and the company. And anyway, I wanted to...

Well, the stock's up 12% today. It's up 100% over the course of last year, 120% over the course of the last five years. Yeah, it's up like $6, $7 billion today. Yeah. So he's built an amazing business. But more importantly, again, getting back to what we just talked about, he makes our lives better every day. For all those who use the product, our lives are just happier every day. So kudos to him on a great quarter. All right, man. All right. Great to see you. Let's wrap. Let's wrap.

As a reminder to everybody, just our opinions, not investment advice.