All right everybody, welcome back to the

number one podcast in the world. I'm

your host and executive producer for

life. Isn't that right, Dave Freeberg,

Jay Cal, not at all what you are.

Make sure you tune in startups and apply

to Founder University.

You're something very different.

With us again today, the Sultan of

science, David Freedberg.

Can I just congratulate you on your

fourth baby? If you double that number,

you're going to be able to catch up to

Chimoth and his five plus three

illegitimate. How are you doing?

[Music]

Let your winners ride.

[Music]

We open sourced it to the fans and

they've just gone crazy with it.

How you feeling? You're tired and

grumpy, aren't you? You're a little

transition for me. I didn't have to do

the work. It's all

Are you tired and grumpy? And how's

Allison? How's How's the

Everyone's wonderful. Thank you for

asking.

And a beautiful boy. Beautiful.

Nothing more is crushing.

Nothing more amazing than seeing a

child.

How's magnificent? Magnificent. Thank

you for asking. Thank you for asking

that. Yeah. Okay, let's move on. Thank

you.

Thank you for all the kind words. And uh

just we sent over a gift basket, Chimath

and I. Longhorn Pana Stakes uh a 10-year

uh membership for

Oh, hey, congrats to Olivia Landon, by

the way, of Long Hill Wagyu. She had

twins.

That means she's going to have more

people to work on the ranch and

slaughter cattle to send us our pana.

Congratulations. Shout out.

Congrats to Olivia Landon.

It's so funny cuz we love this. We love

these steaks so much. She doubled. We

mentioned it on the pod and you idiots

started like searching for it. Lunatics

and they ordered out all the Koolette

steak. So now Chant and I are screwed.

No crew.

No, they ordered out everything.

Everything was sold up.

Everything was sold up.

So now we have to gatekeep with us

again. Your chairman dictator Chimath

Polyhapatia. He of two votes in our fine

organization. How you doing, Chimath?

I love voting control. I'm doing great.

He starts Thomas Lefant with a uh tie

and then all of the

gamesmanship

happens between the team of rivals me

and Freeberg. With us again, Thomas

Lefant, a gentleman, a scholar. No idea

why he's here. a true I don't know how

he wound up on this podcast, but a true

gentleman, a true scholar and host of

Easts meets West, an incredible

conference that I attended this week

with our bestie David Saxs, who of

course is at the White House and can't

join us. Uh, but Thomas, what a great

event. Thank you for including me.

No box lunches, by the way. We we took

your feedback from a couple of years

ago, so I hope that we met your

standard. you did upgrade highlights for

you guys at your conference, Thomas.

I mean, I think for me, obviously, I

think a lot of news in AI this week.

So, I think that was kind of the center

piece of most of the panels pretty much

up and down the stack from SAS companies

trying to transform into AI to obviously

the big Zuck news on scale and then

potentially I saw in the information

today the the Nat Friedman news. So, it

feels like there's a lot going on in the

industry. So, should be fun to talk

about. Yeah. And we're going to talk

about it all today. We got a a really

full docket. Rick Caruso, the uh mayor

who would have saved Los Angeles from

the fires. He was there and you actually

hosted at his incredible facility. What

a

we did. We talked about the the state of

LA, which JCL, is that is that it looks

like that's where you're at, right?

Yes. I'm at my uh LA home, which uh

aka the compound.

Uh yeah, it's uh it's available on

Airbnb, so I'm here in LA. But yeah,

Rick Caruso, what a great speaker.

Interestingly, Jake Al, today a friend

just sent me a chart showing the

recovery of restaurants postco

andif uh LA is 50% behind on the

recovery per store location versus the

national average.

What do you attribute that to or what

did they attribute it to?

I think I think there's kind of a couple

different things, right? And I think one

the economy which you know unlike the

San Francisco economy being levered to

to AI and on the upswing is more levered

to entertainment and I think

you know secular decline I think you

know someone mentioned at the conference

that filmmings in LA are down 50% from

peak so I mean that's just a a massive

move down losing share to other geos

both in the US I think Georgia right Jay

Cal was mentioned I mean, Ted Cerrone

has explained exactly how aggressive New

York is being, uh, the UK is being,

Atlanta, I mean, so many different hubs

for movies giving much better deals than

Los Angeles is.

Yeah. So, I think it's a it's a

combination of I think, you know, being

levered to one industry that's kind of

in secular decline.

I can tell you from Mr. Beast that for

Beast Games, we had a deal in Las Vegas

and in Toronto, we got huge tax credits.

And in the second season that we're

doing for Amazon,

we did an enormous deal with the Kingdom

of Saudi Arabia. And so we're filming a

bunch of episodes there. We're building

the sets there. We're actually going to

keep them there after it's all said and

done. We would not film in Los Angeles

unless we absolutely had to. We will

stay as far away from California as

possible.

And regulations are such a big part of

this.

It's on economic. You can't make it

work.

Yeah. 30% more expensive I think it's is

the kind of the official number on on

well there's also speed right Thomas

like how quickly can you stand something

up how many how much paperwork do you

have to file

James Beard Foundation I'm seeing here

from the research has found that all

these independent restaurant owners said

they just can't get staff here so in Los

Angeles it's just hard for people to

live here and it's hard to get through

the regulations and if you make it hard

there are other options for people this

idea that California has a lock on uh

anything other than incredible weather

and beautiful people is Farsol. There's

a lot of beautiful people in other

places with decent weather and you can

you can go do your projections there. So

another topic that came up that a lot of

people were talking about something that

I know you've talked a lot about our our

debt issue and the debt to GDP ratio.

There was a lot of talk on the on the

flip side on the GDP side. What if

actually AI can increase productivity

and regrow GDP faster than expectations,

right? And perhaps that's one of the

reasons why, you know, interest rates

might not be quite as high as you might

expect given some of the trends that you

guys have talked about.

So, I think a lot of a lot of

discussions around

AI productivity and what we could look

at over the next, you know, five to 10

years because of the the improvements

we're seeing. This is particularly

beneficial to the US, right? I mean, if

you think about where AI is going to

acrue economic surplus first, it's

likely going to be in the US, not global

GDP. So, the US kind of does it compete

dollars or it increases overall

productivity or both

ahead of the rest of the world. If we do

see advances from AI to accelerate GDP

growth, is that because of all of the

onshoring of manufacturing and industry

that we outsource today? Like do you

think that that goes handinhand with

AI acceleration? I think that's part of

it and I think the other part is just

getting even out of the you know the

knowledge worker workforce, right? Just

getting significant productivity

productivity improvements there. One of

the things that we showed in our keynote

is the adoption of these technologies

and even taking doctors as an example,

right? An area you know well you know

this new company

um kind of coming in and and developing

kind of a diagnosis kind of engine right

that's now used by a third of doctors.

So you know I I think that uh it's open

evidence by the way is the name of the

company and already a third of US

physicians are on the platform using it

you know 10 times a day to kind of help

diagnosis. So in particular in oncology

as an example it's seen significant

traction. So, you know, you multiply

that by the legal profession, coding. I

think we're already seeing, you know,

what if we just see kind of a an

explosion of productivity gains across,

you know, both the physical and the

digital economy.

Yeah. The doctor one's a good example.

If someone had the opportunity to go get

more regular preventative checkups, um,

they would. The problem is it's very

expensive. It's hard to get an

appointment or insurance won't cover it.

But if the cost to a doctor goes down

because they can leverage AI, the

throughput goes up by 10x. They can see

10 times as many patients per day, then

suddenly diagnostic care becomes more

available. They can charge for that.

They don't need to charge the same

amount. The price will come down per

checkup, but you'll more people will be

able to get a checkup per day. So that

grows GDP in diagnostic care. That grows

the size of that piece of the economy.

It's a very good example. give you, by

the way,

anything where AI provides leverage to a

service provider where their throughput

now goes up. Um,

I'll give you another example of that.

Um, Dave, uh, so there was an LA dentist

that kind of hit got viral this week. I

don't know if you guys saw this story,

but basically he um he created an ad

using V3

about a skydiving gorilla.

Yeah, I saw that.

Who, you know, ultimately needs to get

his teeth fixed because he was drinking

while he was jumping out of the plane.

And you know, it's a very kind of funny

viral ad. He probably made it for a

couple, you know, hundred bucks. And now

his practice is totally full. He's been

flooded with requests, right, for the

new dental implants. So, you know, to

your point about increasing

productivity, boom, there's how how V3

can help a local dentist. All right,

everybody. Welcome to the number one

podcast in the world. We got a full

docket. Full docket. But we're going to

rocket the docket because there's so

much going on here. Zuck is tilted

clearly. Uh this has been the big

discussion in Silicon Valley for the

last 10 days or so. According to

reports, Zuck is super frustrated that

Meta is falling behind in AI. So he is

swinging for the fences. Sam Waltman

said Meta has offered top open AI

employees a $100 million, wait for it,

signing bonus. That's not comp, that's a

signing bonus. Who knows if this is true

or not, but he's also offering 100

million a year in annual comp. He's

clearly cut out tens of billions of

dollars for this effort. Not dissimilar

to when he did his VR efforts that

didn't work out so well. Here's a 30

secondond clip of Sam Alman talking

about this on his brother Jack's

podcast uncapped.

They started making these like giant

offers to uh you know a lot of people on

our team.

Um you know like $100 million signing

bonuses more than that comp per year.

Crazy.

And I'm actually It is crazy. I'm really

happy that at least so far uh none of

our best people have decided to take

them up on that. I think that people

sort of look at the two paths and say

all right OpenAI's got a really good

shot a much better shot at actually

delivering on super intelligence uh and

also may eventually be the more valuable

company. Meta just also vested over 14

billion I'm using invested in quotes in

scale AI for 49% stake and uh this

probably is better described as a shadow

aqua hire to get around antitrust

scrutiny. You remember Microsoft did

that with Inflection AI back in the day.

Google did it with Character AI and

Amazon did it with Adept AI. I'm not

sure if this is necessary anymore uh

since Lena Khan's no longer in the

position. Scale CEO Alexander Wang and

others will be joining Meta to work on a

new super intelligence team. They're

saying that Scale is going to remain an

independent company and get a new CEO.

Not sure if that's going to happen.

And if you don't know, uh Scale does

data labeling. They get experts to help

train language models. Two of their

biggest customers are OpenAI and Google,

and they both canled their contracts.

So, Zuck is taking that chess piece off

the board so he can get all that data

into his LLMs. He's also reportedly in

talks to hire former GitHub CEO Nat

Freiedman and Daniel Gross to work on

AI. They have a incubator investment

fund for AI. Daniel Gross had a really

cool startup incubator called Pioneer

Labs. I had him on this week in startups

a couple years ago. Really smart cat.

Meta has 70 billion in cash. Thomas

Lefant, when you see Zuck doing this,

what's your take not only on what Zuck's

doing, but how big of an opportunity is

this, you know, in terms of the prize of

having the best large language model?

What is he going for here? And uh what's

your take on these really aggressive

packages and 49% purchases?

I mean, look, I think one it it feels

highly rational, right? If you think

about Meta's market cap is uh rough math

1.7 trillion. If you're the CEO and you

ultimately believe that maybe 50% of

your market cap is at risk because of AI

850 billion,

why would you not spend maybe four or 5%

of that if you think it increases the

odds even slightly that you're going to

win the market? So to me it it kind of

reminded me of a few few things. number

one the scale and size of the

opportunity right obviously people think

AI is massive but frankly um Jake I'm

even wondering putting the regulatory

scrutiny to the side if it was time he

just didn't want to wait and obviously

doing it this way I think Alex literally

the next day who's the co of scale can

show up to work at Meta so I think it's

it's urgency of a large opportunity um

I'm curious to get Chamas's take because

it reminded me a little bit of the pivot

away from HTML 5 and also So a a much

smaller acquisition but one that we

really felt which was of a company

called Onavo.

And for those that may not remember

Onavo was a small data service provider

but what it did is it had a panel of

phones and we as investors could see

what people which apps people were using

and the data was incredibly valuable

because it was the only service that

gave you true engagement data. And so

obviously as an investor you felt wow

this is an incredible tool and

eventually it sold to to Facebook and

Facebook used it internally and didn't

allow anybody else to use it and we lost

one of our key abilities right in the

mobile app revolution to tell who was

winning and losing.

So um

and you're saying the scale acquisition

is you know uh parallels that in a bit

there's this great service a lot of

people rely on it. He buys it shuts it

down for everybody else gets the tool

for himself. gets the data for himself.

Correct. So, I definitely see parallels

and I think given this, you know, their

market cap and the size of this

opportunity, I think it makes a lot of

sense.

Shimath, your thoughts on Zuck's action.

Obviously, folks know you worked with

him as you went from tens of millions of

Facebook users to hundreds of millions.

And you were there actually during the

uh HTML rapper app disaster. Uh that uh

I think maybe

that was a debate at our executive team

at our M team and I was on the side of

apps and well without embarrassing him.

Somebody else was on the side of HTML 5.

I thought it was stupid. Why?

Why? Why was that? But that decision one

because you know all of my political

capital at the time was also wrapped

into native apps, our own phone, an

entire verticalized integrated stack.

And politically

I think I made the decision for them

very hard because I was not a very

play nice in the sandbox with others

kind of executive. I was more of a

scorched earth get it done kind of

person.

Okay. So no changes over the last 15

years. That's good to know. They made

they made an enormous mistake, but then

they admitted it about a year after I

left. They said this was the single

sucks at

Explain in plain English why HTML 5

rappers versus native apps.

I can't cuz it's

Okay, great. Uh I can explain it. So

like native apps are was obvious

in 2010

obvious

and the only the only reason

to use HTML was as an endound for

different carriers and for different

ecosystems that were trying to charge us

a toll. So in 2010, I went to Mobile

World Congress and I took a group of my

most talented developers and we built an

entire replica of Facebook that we

called Facebook zero which was only

available via URL and we launched it at

Mobile World Congress and we did it and

I announced it there because if you went

to India as an example, all of the folks

there would try to charge us a tax but

if you could navigate through the

browser you wouldn't have to pay it.

Right? So that was a good example of

what to do in a developing market when

people were toll taking. But the real

solution was to build an extremely

integrated app from the software all the

way to the hardware. And the only way to

do that was as a native application. And

that has tremendous applications to

today. But just to finish on yesterday,

my proposition was full phone, full

stack, full app, all of this other HTML

stuff should only be as a side thing

that we do in markets where they try to

make it difficult for us. Instead, it

became politicized and it became a big

bet on HTML 5, which I thought was

absolutely stupid and unjustifiable.

And that was also when I said, "Okay,

well, this phone's not going to happen,

so let me leave." And a year later, I

think Mark, to his credit, said, "This

was really stupid." And ripped all the

HTML 5 stuff apart, went native, and the

rest is history. So, let's fast forward

to today. Yeah, there it is. Biggest

mistake was betting too much. It was It

was an And that was again, I'll just say

it. people politicizing what should have

been an obvious technical decision.

Okay,

the other piece to that just to add to

it was it was also a religious decision

then people liked the open standards of

HTML 5.

certain developers who felt like we have

to support openly stupid people thought

that. Only stupid nontechnical people

thought that. It was stupid. It was

obvious. You'd have to be a

And there were morons at

the executive team that advocated for

this. Anyways, we were right, they were

wrong, and he was fine. Okay, fast

forward to the where are we today? It's

the exact same story playing out. Now,

what do I mean? You have to look very

carefully at Microsoft's deal with Open

AI. Why? Because what you see is the

compounding of secrets. There are

secrets in the training layer. There are

secrets in the model layer. There are

secrets in how these things are tightly

coupled to infrastructure and compute.

And what we have to remember is what

Open AI got from Microsoft was an

extremely competent partner that built

an enormous Azure compute infrastructure

to train everything from chat GPT all

the way up to the 03 model everything.

Why is that important? Because you start

to figure out these tricks. How do you

really optimize these models to be

extremely performant? And now if you

look at all of the other models, they've

also had some level of that advantage.

So if you look at Deep Seek, what did

they do? Well, we don't know. But what

we have been told is that there's very

tight coupling to hardware. If you look

at what XAI is doing, I think what you

can bet is that there's an extremely

tight coupling to hardware and

infrastructure and compute. If you look

at what Facebook is doing, they

generically train on Nvidia and they

launch it in the open source. So I think

that what they need to do is more of the

open AI, more of the Google playbook.

Look at Google. Google's Gemini models

are extremely tightly coupled to TPU and

it enables and unlocks an entire stack

of secrets and capability that then get

manifested in model quality.

So I think the first thing that Mark has

to do if I were him is start to chip

away at all of the sets of secrets. So

what secrets do you get from Alexander

Wang and scale? It's what are the

labeling techniques that allow these

models to be more and more performant?

What labeling techniques are used in the

reasoning models? What labeling

techniques are used in more traditional

LLMs? It is clear that Llama doesn't

know this. Meta doesn't know this that

well because their model quality is meh.

So now what you get is that set of

secrets. So what do you get from Nat

Freeman and Daniel Gross? You get what

are the apps doing? How are they

approaching writing agents? These

agentic tips and tricks that make

usability and value more obvious.

But then what's missing? I think the

thing that's missing is the

infrastructure and compute set of

secrets. I think it's insufficient to

buy stuff off the shelf from Nvidia and

expect these models to fundamentally

compete. So I think if I were a betting

man, he's bought the training secrets,

he's bought the app secrets, and now he

has to buy some infrastructure and

compute hardware secrets. you put it

together and he's got a pretty good

strategy here.

And also just to add to that, Shimothnat

and Daniel have invested in a lot of AI

companies and those companies are have

secrets of their own. Yeah. And those

are and actually I think they have some

along the full stack.

Freeberg, your thoughts on this strategy

as described by Thomas and Shimoth and

just the data we're seeing on the

playing field aggressive acquisition of

talent and companies.

I don't know if I have much to add here.

Okay, one additional point Shimoth by

the way that you mentioned if we look at

the winners right in models of the past

12 months anthropic the same right

they've been very um kind of deliberate

and have explained how TPUs right

they've been a big user of them how it's

helped define their training models so I

think you're 100% right if we look at

the models that have really performed

it's ones that have that that quote

secret as you mentioned

when I first started 8090 a year ago one

of the key bets I made which was a

mistake and we unw wound the bet. But

the first bet that I made was can we

build a transpiler, which is to say, can

you take a CUDA workload and then can

you redirect it away from Nvidia

to different hardware? And basically

what I learned in that process are all

of the attention mechanisms that are

built into transformers

that really differentiate

how good the models are need to

literally be handtuned for every single

target of silicon that you have. So when

Amazon just kind of wakes up and says,

"Here's this chip," it means nothing

unless you can incentivize somebody to

build to it. But the opposite is also

true. If you have a model and you just

run it generically, you're not going to

get the gains and it's not going to be

as special as if you have a dedicated

infrastructure and compute architecture

and say we're going to tightly couple

these. It's been clear that OpenAI has

had that, Anthropic has had that, Google

has had that, Deepseek has had that. And

I think Meta needs to do that.

Otherwise, they're always going to be

floundering on their back heel.

One quick misnomer, I think, you know,

when people hear labeling, they kind of

assume a photo of a dog and someone says

this is a dog, right? I mean, that's

definitely how it started, but if you

look at sales business, it's completely

more from that. So, you could actually

label the problem. So for example in in

simple terms 2 plus 2 equals 4 is

actually um a reasoning data set right.

So you got to think of labeling not just

in the simple terms of you know this

image but of massive data sets of of

outcomes and that's what's kind of

really used to tr uh train these

reasoning models. Um,

but I think there's another

Yeah, there's another story here, guys,

in my opinion,

and it's the performance of the Mac 7,

right? And I I'm going to have to check

with my data science team, but I'm

wondering if we're this is the year

where we've seen the greatest divergence

amongst the Mac 7, right? So if you look

at the Mac 7 and if I just gave you

right this performance you can see okay

so Meta's up 18 Google's down Nvidia's

up 8 Tesla down 20 Apple down 21 Amazon

down three and Microsoft is plus 13

right so it's kind of interesting in a

market that you know historically over

the past few years where we feel the Mac

7 have been truly correlated now the

market is saying wait hold on we might

start to see diverging performance. What

I read from that in in in one element is

the market's starting to try and sort

out who are going to be the winners and

losers. Who's well positioned versus

maybe falling behind, right? So, I think

we're going to start to see some

divergent performance from the Max 7. I

think it's going to reward not

Can you put that back up there for a

second? I mean, I think that's so

interesting because if you look at the

conditions on the field today,

you know, Google's down 8%. But again, I

would tell you as a user,

Gemini models are exceptional.

Like absolutely just baron exceptional.

I think Anthropic is incredible for

Codegen. Incredible.

What I see is every single company on

this list that isn't Nvidia

baking and rolling their own silicon.

Yet Nvidia is up and the rest are down.

I told you that I spent time last week

at Tesla. I would not be sleeping on

this business. I think that it is yet

again back into the land of being

misunderstood.

The only one that I understand why it's

down this much is Apple because it's not

clear that they're even baking something

in private. There's nothing public.

There's nothing private. It just seems

like they're transitioning into being a

cash cow and getting into sort of that

cash harvesting mode. But it's almost

weird that the price action is what it

is because I would have thought that

Google would be up. Meta would maybe be

a little flattish to down. Nvidia is up,

but maybe it could be down. Tesla's

down, but it should probably be up.

Amazon's basically break even and Apple

is down. And I think that kind of makes

sense. That's sort of how I read this

table.

Yeah. I mean, what I love Chimoth, by

the way, on that is that like now

there's debates, right? And and you can

argue whether you know you agree with

Chimath or whether you don't. spending

20 billion cuz he's cuz he's not afraid.

Correct.

Yeah. No, let's pull the chart up again

here. By the way, I think this is an

interesting way to

only the only reason Microsoft is not on

this list is because of the limitation

of the DOSS era interface of the

Bloomberg terminal where it will only

allow you to compare six charts and not

seven.

But we know that Microsoft is up 13.

Q perplexity. Yeah.

Yeah.

So, you know, when you also when you

look at these, there are some

extenduating circumstances here like

Tesla's car sales are down. All car

sales are down. And I think that's the

piece that maybe isn't being accounted

for here and they're in a transitional

period. Apple obviously

Yeah.

There's a lot of regulatory overhead. So

Tesla losing solar and EV tax credits.

Yes.

Apple Apple being told to onshore and

stop buying from China. So their supply

chains being disrupted because of

tariffs. those two companies in

particular are far more affected than

the rest and even Amazon you know

there's been some conversation about

tariff effect on Amazon but obviously

that's offset with some of the benefits

they've been realizing and promoting as

Jasse spoke in his letter this week uh

from AI so I think that there's a

variation here that's probably a little

bit more Thomas kind of tuned to

these conditions that aren't necessarily

call it natural market forces but are

kind of influence influenced market

forces associated with the the new

administration and some of the policy

choices that are being made.

If we were looking at those number one

and number two, which one do you think

gets to AGI first, Thomas? Well, wait,

hold on. By the way, the other thing you

should note, Jason, which I find really

interesting is nobody talks about AGI

anymore. If you listen to the language

of all the companies, it's all super

intelligence, which is a much more

achievable goal because it's defined as

being, you know, multiples more

intelligent than a human being. But I

think you're I think if you actually

did a search for the number of times AGI

is being said today. It's meaningfully

less because I think people have

realized that that's not in the offing.

Yeah. By the way, another lens chamat

that I think about on these is who

controls their own destiny of these

seven companies in AI,

right? And I would argue

most I would argue

Tesla does Nvidia

and then it's kind of interesting,

right? Neither Amazon doesn't have its

own foundation model, right? They're

kind of dependent on others, right?

Microsoft

49% does right because of this kind of

relationship they have with open AI it's

both you know uh they they own a big

share but they don't control it so

there's kind of interesting and then

maybe 6 months ago we would have said

well Meta absolutely does maybe Zuck's

trying to question that a little bit and

you know it's it's fun in my opinion to

kind of bring different lenses to this

list right there's the regulatory one

that Friedberg was just talking about I

kind of think about if I towards the co.

Do I control my own destiny in this

market? Right? And I expect these

companies are not going to want to be

dependent on others and are going to at

least want to say no. I'm going to

control my own destiny whether I win or

lose. Who's your number one? Who's your

number two? If you had to could only bet

on two here to achieve super

intelligence AGI, let's just say win the

AI re win the AI uh big prize. The big

prize super intelligence AGI, you know,

in the midterm, five years. Five years

from now, we're sitting here. Thomas,

give me your number one. Give me your

number two.

Look, I I think to me number one, I I

still think Nvidia, right? I don't see

the GPU kind of getting displaced. I see

additional architectures kind of coming

on board, right? And growing the market,

but um at the end of the day, all roads

still lead to the GPU for all of these

models. So, I would kind of still put um

kind of Nvidia on that. My number two,

more of a dark horse, but I I would pick

Tesla.

I do think it has the most potential for

vertical integration right from all the

way the silicon to the model to actually

the hardware right that might become

super important not just in cars but in

Optimus so Nvidia 1 Tesla is my dark

horse

wow stunning chimoth who's your number

one and number two in the midterm 5

years from now we're sitting here on

allin episode 700

Tesla's one and Google's two and the

reason is because they are the closest

to having that vertically integrated

stack that I spoke about. I think that

Tesla has the best vision models. Now

with XAI, they'll have one of the best

LLMs and reasoning models and they'll be

able to eventually stick that on Dojo.

And then all of that will be in all of

the physical AI that you will interact

with in your daily life, whether it's a

robot or whether it's a car or whether

it's a robo taxi. So that's number one.

And then number two, for many of the

same reasons, I think Google, because

you'll have the Gemini family of models,

which just absolutely kickass like V3,

which we haven't really spoke about, is

going to destroy Hollywood like in the

next year. Like Hollywood is done, I

think,

but they're landing model after model.

They have the TPU, and the next

generation TPU, I think, is exceptional.

They're baking quantum and then they

have an entire funnel of billions of

people that they can direct experiences

to. So Tesla one, Google 2.

Chimath, quick followup on that. I'm

curious on Google. This is the because I

I oscillate a lot on this particular

name. Can Google win if search declines?

Yes. And I think that what probably has

to happen is bear with me when I say

this, but if you had to boil down

Google's economic northstar metric,

right? not the value northstar, the

economic northstar metric would be price

per click

and I do think that Google is extremely

well positioned to pivot that to price

per token and I think that they have

some emergent classes of physical AI but

they have the largest pool of people

where they can generate a price per

token value framework through YouTube

through Gmail through workspace I think

through search but probably it's a

different kind of model. It just

requires them to rip the band-aid off at

some point. But yeah, I think Google can

do it.

I'm going to go with you, Chimath. I'm

one uh my one and two are either Google

uh or Elon. And I I'll just say Elon

because I uh like you, I spent a day up

at um XAI and I saw what a magnet for

talent he is. I got to sit in some

meetings and just he was interviewing

people and he was working with that

talent. 8:00 at night, there's a lot of

people there on a Saturday grinding it

out. It was nuts. I first went to XAI

in the 15 minutes that I was in the

parking lot finishing a call, the kinds

of people that were walking in and out

of there, you could tell they were big

brains.

Yeah.

I don't know how, you know what I mean?

Like from every walk of life, they all

just looked much smarter than the rest

of us. Yeah.

It some of them were like chain smoking

cigarettes and just like stressed out.

It was crazy.

I hit a couple of zins. I'll be totally

honest. Um, but the reason I say Elon

versus Google is I think Elon's in a

unique position. And I don't have any

insider information here and and I

haven't talked about this or I'm not

back channeling from Elon lest anybody

aggregate this. I think what Colossus

has done and what Tesla has done both of

these things Tesla with their own stack

of hardware to your point Chamoth

hardware plus software plus the user

application of FSD and Optimus. Then you

put that together with the data the

real-time data of X formerly known as

Twitter plus um you know what he's

building with XAI and obviously those

two companies merged. I think Tesla

board, XAI board have to get together,

put those two companies together.

One's worth a trillion, one's worth 100

billion. Put them and just have all that

brain power going in one direction as

opposed to Elon test switching between

the two. You do that, I think he wins

number one. You don't do that, I think

he either gets one or two and then I

think Google

um is going to have a better search

product. Thomas, I think it's a really

important point. Do they lose search

share? Doesn't matter. What I think

matters is are their ads more effective?

Is their ad network more effective? And

I think based on what they know on you

from your chat searches and your

discussions and what they analyze in

your email, just analyzing your Gmail

and your surfing behavior and Chrome if

they get to keep it, your Android phone

if you use it, your YouTube list and

what you how when you drop off allin and

when you start listening to another

podcast, whatever it is, all that data,

all that data is going to lead to an ad

network that performs so much better

that even if they lose search hair,

their ad network is going to continue to

grow. and I think it will increase in

velocity. So those are the my top two.

Freeberg, I'm curious from your

position.

Which one you think is number one and

number two? I saved you for last because

you know what we do here? We save the

best for last. Freeboard, go ahead.

I think there's a difference in how I

would kind of lump them. I I think that

Tesla probably has the it is the best

place to invest if you want to have a

shot at a massive new industry. So,

they've got a baseline business in in

obviously the automobiles, but I think

this humanoid robot opportunity is

absolutely mind-blowingly ginormous. And

I don't think that there's a better

company on Earth positioned to execute

against this humanoid robotics

opportunity than Tesla. So, you know,

it's sort of like I would call it a low

probability, high upside sort of call

option embedded within that business.

And obviously you're paying a premium

for that because it is still a very

healthy premium you pay for that

business. I think Nvidia to Thomas's

point I think the common thesis is it is

the most protected. The durability of

the business is there. But I would argue

that there's actually a low probability

but very high severity risk to Nvidia in

China. There was just a demonstration

last month of a 1 nanometer

semiconductor manufacturing process out

of China. I think the more that we

continue to try and isolate China from a

policy perspective, the more we are

emboldening investment in China, meaning

from the government, from private

industry into China to create

alternatives to the chip stack where the

United States companies, particularly

Nvidia, have emote today. So, I do think

that there's going to be an emergent

competitive threat coming out of China

to Nvidia. And just like we were knocked

over by DeepSeek, I think we will be

knocked over by some semiconductor

manufacturing processes um coming out of

China in the near term. But the overall

kind of by the way Dave just on that

point I think Sax's work on the

diffusion rule

just generally I don't think has kind of

gotten enough attention in the

rescending of the diffusion rule

which essentially handicapped our

ability to even arm our allies right

with our semiduct with our semiconductor

technology um in my opinion was kind of

a milestone and very important moment um

to to try and offset exactly what you

were just describing. That's exactly

right. I mean, there there there was a

report a few months ago and I mentioned

it on the show or maybe I didn't or

maybe I sent it to Sax and we talked

about it offline. I I can't remember but

it was about a $40 billion investment

being made in developing competitive

semiconductor manufacturing full stack

solutions out of China. So I I do think

that the lithography IP moat is being

crossed in China. I do think that China

is developing actually new technology

for uh DUV and EUV systems. I I do think

that there's a risk uh to Nvidia's core.

Now look, Nvidia is such a durable

business. There's great modes, great

advantages, but we're creating every

incentive for an alternative to Nvidia

to emerge from China. And then my my

third kind of categorization would be

what's the portfolio uh solution. I

think that's Google. I think that

there's a diversification of high beta

bets inside of Google of any one of

which could have call it a trillion

dollar market cap outcome ranging from

Whimo to quantum computing to the

biologics work that Demis is working on

out of um isomorphic. Uh there's a

number of things that do not get a lot

of attention at Google. So yes, there's

a there's a core business that that may

be at risk, Thomas, but I think that

there's a a portfolio of options you get

at Google and you just need any one of

them to hit to kind of make up for the

loss. But I do think also Sundar in my

interview with him, which we put out a

couple of weeks ago, is very thoughtful

about where search evolves to and he is

being, I think, reasonably aggressive in

in trying to evolve the search product

architecture to meet the market, to meet

the consumer. I do give him credit for

that. So Google would be in a good place

for me as an overall kind of pick in

that set of options.

So just to be clear, Nvidia 1, Google 2

or Nvidia Tesla?

Like I said, I think in terms of like

having the right sharp ratio is how I

would think about it. The alpha and the

beta adjusted returns, I would put

Google number one. I would probably put

Tesla. Uh Tesla's valuation, I think,

already has a premium associated with

those options. So I don't know.

Yeah. So I don't know if I would really

pay that premium. I think um

aside from the valuations, let's take

valuations out of it. Just the the game

here is who wins the AI prize 5 years.

That's how I understood it as well.

Yeah. So valuation irrelevant.

Valuation irrelevant. Who wins the AI

prize? One, you're saying Google. Two,

you're saying Tesla.

I think Google's in such a position. I I

mean, look, Demis uh Demis, I think, has

been fairly koi about where they are.

They obviously promote Gemini 2.5, but

there's a lot still coming.

And it's and and as Chimath pointed out,

it's not just LLMs. There's a pretty

sizable family of models including a a

lot of these um graph-based models that

are being used in really novel

applications that no one else is even

close to, no one spending time on. I

mean, some of the weather forecasting,

it might seem small and trivial, but

it's a demonstration of Google's

competency in in core model development

that shows an understanding and a depth

of research and work that goes well

beyond LLM. So, I'm pretty bullish on

the depth of talent, the full stack.

Yeah. Yeah. And whatever they learn

there could apply to Gmail, could apply

to search, could apply to ads, could

apply to YouTube algorithm, right? It's

just goes up and down. Yeah.

Yeah. From a product perspective, I do

think you see this kind of multi-model

emergence that that we're now seeing

that no one talks about the single model

that sits behind the application. There

are multiple models that work together.

And obviously this agentic architecture

unlocks another layer of not just kind

of solutions to complexity.

Sure. And so there's there's quite a lot

I think that's emergent here um that

Google will start to kind of benefit

from uh in the year ahead. I mean, for

those of us, you know, who love tech,

right? If we if we step back for a

minute, I really feel like to use the

analogy of this podcast, like we are now

at the WSL World Series of Poker, right?

We got seven companies around the table.

The stacks are trillion in size, right?

And all of us are going to get a front

row seat to see what happens over the

next 5 years. I mean, and on top of

that, we're going to get to analyze, bet

ourselves on who we think's going to

win. We know there's some other

companies that are pushing to get at

that table, right, with some sharp

elbows. I mean, what a time to be doing

what we're doing.

I don't know if I love the analogy

because I don't think first of all, it's

a zero sum game where there's this x

number of chips and someone ends up with

all the chips. I do think you could see

as an example, just talking about the

scenarios we we just described, Tesla

developing an extraordinary humanoid

robot business that's worth a trillion

dollars. Google building, you know, to

Chimath's point, a media empire based on

generative AI in media and then, you

know, Nvidia building an entirely new

chip stack that everyone's participating

in. So, all of them in an ecosystem

based way could could be major winners

here.

Yeah, you're right. I I didn't mean it

in the zero sum nature of it. I meant it

more in the in the stakes, right? And

and

and there's a lot of hands to be I like

the analogy because there's a lot of

hands to be played and there is a price

pool, right? And and you could have

three or four people at that table. One

thing I just want to point out here is

just speaking of regime change. What is

going on at Apple? Like they Siri was

just the early idea of an AI agent. It's

just totally disgrat. It's disgusting.

It doesn't work. It's embarrassing. And

then their biggest developer conference,

they're

redoing the UI like time for regime

change at at at Apple. No, this has

happened many many many times in many

industries before which is that

companies that were stalwart

organizations

transition themselves from being a

growth business to being a cash cow and

these are well doumented transitions and

it requires an extremely brutal reset if

you want to shake that up. Yes,

I think that the same thing that I think

you have to respect Apple for, which is

stability, the

duration of some of their best, longest

serving executives are there for 20 and

30 years. On the scale of innovation,

it's a horrible thing. And the reason is

that we all just get old. Our skill sets

become rusty and we don't have the

energy or the capacity to think about

what the future actually looks like

because we are not living it. And then

what happens is you task those decisions

to people that you try to hire. But you

know, you saw it in the clip with Sam.

Even in all of that crazy recruiting

chaos that's happening right now for

these brilliant machine learning and AI

people, maybe that's a fight between

OpenAI,

Meta, and maybe Google.

But what you don't hear is Apple. So

who's Apple getting? I have to think

that Apple is not getting any of those

people. So by the time you end up at

Apple, it's just a different caliber of

person.

That is true. and they're living inside

of a cash cow organization that's going

to optimize for don't make mistakes,

right?

But that's h it's happened to HP. It's

happened to Lotus. It's happened to

Intel. It's happened to General

Electric. It's happened to companies.

It's just and it's happening to Apple.

So, we should just not sweat it and move

on.

I don't know. Thomas, what are your

thoughts? I mean, it's kind of shocking

with all that cash and they don't

acquire anything. They had project Titan

$10 billion to build their own car and

they just shut it down. Imagine if they

kept going with that. You think regime

change time? Maybe Tim Cook retires and

put somebody who's a product person in

charge of it or maybe they should merge

with Tesla and put Elon in charge of it

all. There just seems to be no new

products coming out of there. Like it's

absolutely

uh confounding that they're optimizing

for share buybacks and earnings per

share instead of having some amount of

that money go towards innovation and

acquiring companies. Biggest acquisition

is Beats. Give me a break. I mean it's

interesting right for me and I've

studied Apple basically my whole career

and it's kind of interesting right

because if you think about the their

defining

competitive advantage right was the

integration of hardware and software

that led to the beautiful MacBook that

we're all using it led to the iPhone and

right the fact that they were so coupled

between hardware and software the user

interface you know etc and I think it

directly led to them winning let's call

the the mobile era right but I back to

Chamas's point and I think the analogy

holds in AI they're the opposite right

they don't control I don't you know the

silicon they don't control the

underlying models um and so now they're

back to maybe you know using a

historical analogy the PC makers who

didn't control the OS

that's right

so I I think the good news for them is

look they still have a monopoly on users

they have three trillion of market cap

to kind of play with so I think it's way

too early to count them out. But I

think, you know, the market, let let's

posate, what's the most extreme thing

that they could do, right? Just for just

for intellectual sake, right? Uh buy

OpenAI for 500 billion. I'm just going

to put a crazy thing out there, right?

So, you think, okay, that's the most

extreme. Well, is it even that extreme?

And what would Apple's stock do that

day?

Go up.

That's my view, too. Right. I actually

think it would go up, not down, even if

they did something like that. So I do

think they need to be kind of

aggressive. I do think to your point I

think Freeberg, it is important that you

know all seven of these companies could

actually win and do well, right? That

that is a absolute

possibility. But I I would love to see

them be a little bit more aggressive. I

mean you guys remember when Steve Jobs

bought Finger Works, right? It was this

tiny acquisition. They made this little

trackpad that you could use your fingers

on. No one figured out why they did this

and then in turn into multi-touch and

scrolling, right? So, I think it's it's

going to be fascinating to see what they

do.

Thomas, that was a great question I was

about to ask. If Apple could do one

thing, they could do one internal

project or buy one external company.

Maybe we could do both around the horn.

What would we advise them to do? My

number one is build a humanoid robot.

Like, how does Apple not have a humanoid

robot? That seems like that's obviously

the next giant consumer market is having

Optimus or Figure in your house.

Freeberg, I'm going to go to you first

since I went to you last last time. Is

there a product that they could do that

they could build that they would be

uniquely suited to that would turn this

all around? If you could pick it on

their road map, what would it be?

I do think there is. I do think they're

doing it and I do think they have a shot

at winning, which is this kind of

ambient AI assistant. I don't know about

you guys, I must own 30 friaking Apple

devices. Uh, I have many Apple computers

I use in different offices. I have

phones. I have many AirPods. I got

everything. Watches, everything. I'm

ubiquitous on the Apple platform. So,

I'm an easy transition into this if it

works. So, as everyone races to build

kind of the agentic AI assistant that uh

is sort of in my ear all the time or

available where I don't have to stare at

my freaking phone like this, um it is a

great unlock for humanity. It's a great

unlock as a consumer. it's feasible

technically and I'm sure Apple of

everyone that we've referenced today is

best suited to both access the consumer

design and engineer this solution in a

way that can be truly transformative. I

think it references a little bit what

Johnny IV and Sam Alman have been

talking uh about doing. But I do think

that this is exactly the direction Apple

is headed and I do think that they've

got a very great shot at at winning at

it. don't think they need to own the

full stack to be successful here.

Got it. Okay. So, we got Optimus, we got

the device you're talking about, this

ambient assistant is part Siri and part

maybe a pendant that records your

behavior in the world and gives you

feedback to it. And that's what they're

calling a puck perhaps that Johnny IV

has made or these pendants that record

everything. Thomas, what's your thought

on the one product they could create? to

that point. Um, it's interesting to

think that the AirPod business at Apple

is 3x Open's revenue base today.

That's right.

And that's just the AirPod business.

And by the way, let me let me just say

one thing about this. We all think about

devices in the context of a single

device being an assistant. I think if

there are more devices integrated into

our lives and the assistant is ethereal

and ubiquitous amongst the devices, it's

almost like uh the Star Trek Next

Generation. You walk in, you say, "Hey,

computer." And there's always a device

available that's doing things. There's

always a device observing, there's

always a device able to take care of

things for you. Whether it's in your

ear, whether it's your phone, whether

it's your watch, but basically these

devices all instead of acting

independently, they all know what you've

been asking or talking about with the

other devices. And so you could get in

your car and you could pick up, you

know, the conversation you were having,

you know, while you were sitting in your

office in front of your computer to do

work. And so the agent effectively is

almost like this ethereal ambient

assistant. So everywhere you go, the

agent is there.

They could even be in a candle lit bath

with you, Freedberg. They could be in

there.

They could Well, I mean, by the way,

think about also, you know, it it it

know having identity, so it knows who

you are, but I could be in your in your

home, Jal. Not that I would ever get

invited to your home, but let's say I

was there. Uh, you know, I could walk

into the the living room and there's

your puck and it starts talking to me

because it knows

who I am. And yeah, it's like it knows

me. Yeah.

Or you and I have a bath for two. You

and I could be a candidate for two

and it would know the when each of us

are fighting over what music we want to

play. The assistant will, you know, hear

out the debate playlist. Do you have a

uh a device before we go on to IPOs

here? Do you have a device or an angle

for Apple to go after if they were truly

ambitious? Or maybe they are and it's

just in stealth. What do you think? You

think it's the goggles, the glasses? You

think it's a pendant? You think it's

optimist? What do you think?

I don't think they have any chance of

anything.

Great. Love it. I would take the exact

opposite of what Freebrook says.

Look at this chart and I'll tell you

why.

Okay, here we go.

This chart is not This chart is not a

strategy. So, this is a chart of Apple's

revenue and what you see is iPhone has

completely stalled out. And so to

Thomas's point, where do you make money?

You make money in other hardware. This

is not a strategy of success. This is a

strategy of inefficiency.

I lost my AirPods. I need to buy a new

pair. Oh, the cables changed. I need to

buy a bunch of those. This and that. And

a this and that strategy is not a

strategy. It's a tactical play for

revenue optimization in the short term.

A company that focuses on this kind of

revenue growth is not capable of

creating something that's exceptionally

unexpected.

That will come from a new company who

has no ties to the past, has nostalgia

on the fact that we're going to swap out

the connector type and you know book

another billion dollars. The what Thomas

said is an indictment actually about

their ability to do it. When your

AirPods business is two or three times

bigger than Open AI, what there is

internally when you try to have a

strategy meeting about what to do is

derision about Open AI because you're

like that's small and even our AirPods

business is three times big. That's what

some smartass MBA will say in that

meeting and it'll shut the meeting down.

So, how do you expect that culture to

then all of a sudden get their act

together? I think it's exceptionally

hard. And here's the clip on Q. Play the

clip, Nick. It's a great point. Here's

the clip.

I'm Apple nostalgic.

Me, too. Bring Steve Jobs back. Watch

this lunacy.

You probably saw that Johnny IV is

linked up with Open AI to create some

sort of future AI device.

Yeah, I don't know what that is.

I don't either. Yeah.

Is this a space that Apple's looking at?

Is this a space that goes beyond what

you have in the current lineup of

devices? Something that is more

personal? Maybe you wear it? Glasses.

I I think I mean I think we have some

extremely personal wearable devices. If

you want something that's uh aware of

your environment with with audio, I

think you're you're wearing one right

now on on your wrist. Um if you want

something that you can capture the

environment with and see and also

receive visual content, you might just

have one in your pocket right now. Um

are there other form factors that can

make sense to AI? Uh sure. But uh pretty

hard to beat something that's uh with

you all the time and glancable or you

know provides a nice screen that you can

interact with. Um so uh yeah I I don't

know what they're working on.

What do you think Jimoth?

Again I think I want to be very clear

about what I'm saying. That is a very

competent Craig Federi very very

competent executive

and whoever the person beside him is

that guy's I'm going to assume competent

as well. They're competent at making

money

the way that they've made money for the

last 17 years with no meaningful

disturbance.

And I think it's just something to

appreciate that after 17 years of

unmitigated linear success, it's very

difficult to retool yourself. It's like

asking Michael Jordan to go and all of a

sudden become an all-star baseball. It

doesn't work.

And so I think I I think it's okay

though, this is my point. It's okay,

guys, to have creative destruction of

companies. Like there was probably a

version of us blathering on about HP and

being nostalgic about the transistor

radio that they made and the, you know,

HP12B calculator that they made and oh

my god, why can't they figure their

out and where are we today? HP doesn't

even exist. It's okay. I mean, just

Thomas, the fact that they launched

Siri, they bought that company, and Siri

can't do anything other than like an

alarm, can barely play a song, it barely

can do directions. I I I mean,

literally, we're in year like 27 of

Siri, and it can't do anything. And then

I have the the Google and Gro voice, and

when I turn that on, it does whatever I

want. It will load on my Pixel. It loads

other applications, fires it off, does

specific tasks in it. It's absolutely

descriat

on your Pixel.

I have a Pixel when I when I flip open

my Pixel.

I have

to I have the Pixel 9, Chimath. It's the

Anaconda of smartphones. Pixel 9

foldable.

Got it.

It's the greatest assistant ever. It's

what Siri. It's what Steve Jobs showed

Siri. I had you at nine.

He had me at Anaconda. Yeah,

I had you at 9 in. And we can all

aspire. Maybe get Roman extra get that

extra inch. Thomas, go ahead.

Chamath, I would argue to you that I

think this management team has done it

once and it's in the transition of their

gross profit base, which doesn't show in

the chart that you just highlighted, but

was something that I kind of lived as an

analyst covering the stock for a long

time where if you remember over a decade

ago, 90 plus% of their gross profit was

a onetime hardware sale on the iPhone.

And no one thought that they would ever

be able to get away from the drug of

selling that one iPhone unit, right? And

cut to, you know, over a decade later,

it's 40%. Right? And I don't think they

get enough credit for actually

transitioning from hardware to a

recurring gross profit base. But look,

you might argue that that was an easier

pivot and challenge than what they're

going to face. And so, let's see whether

they can do it.

The other thing guys I wonder about um

let's I know we want to talk about IPOs

but I do wonder whether Zuck buying

scale for 15 billion gives air cover for

other companies to really start being

aggressive right and and to me as we

think about circle and coreweave two

companies that have gone IPO recently

it's it's kind of amazing kind of

numerically that the charts are almost

identical even you know on a dollar

basis on a share price, right? Because

to me, what it says, we were talking

about the dispersion of the Mac 7

before, right? Which are going to do

well, which are not. I expect we're

going to have a lot of opinions on this

over the next few years. And frankly,

they may change. We, you know, we may

think Apple one way today, it may change

in a month, right? But I do think the

market is starting to realize that there

is dispersion that AI might create some

all winners or some winners and then

some losers, right? and is starting to

think about, okay, how do I want to be

positioned for the next five years? What

are big open-ended growth opportunities?

And here comes two companies, one lever

to crypto, right, and the other lever to

AI. So, I don't think it's a surprise to

me. These things are intertwined.

You're 100% on because here's the thing,

the average profit margin of the S&P 493

is, drum roll please, 12%. The average

growth of the S&P 493 is, drum roll

please, single digits. So to your point,

why would you belong any of these 493

companies that may turn around and one

day just get decapitated by something

you don't even know that's getting

cooked up by a couple kids in a garage

using OpenAI or Grock or what have you.

It just makes a lot more sense when you

find investable companies in the big

themes of the future to at a minimum

hedge, right? be less long the past and

frankly make some bets about the future.

And I think that that's where you're

seeing these IPOs just absolutely rip.

What is a better comparison in my

opinion are the companies that are truly

levered to the future themes of AI and

crypto versus any of these IPOs that

have happened of companies that are not.

And I think what you see is there's a

dispersion there as well. And they are

being treated almost as similarly,

Jason, as the

S&P 493.

It's like, yeah, it's good. Yeah, it's

fine. They get some reasonable gains.

But if you're lever to any of those two

two trends, you're off to the races

because it's just so disruptive. People

don't want to be bag holding these old

legacy companies. We're already into our

next topic, which is IPOs and M&A. Lena

Khan is no longer in the building and

M&A is back on the menu as are IPOs as

Tom has pointed out. Three IPOs March

28th, June 5th and June 12th. Coreweave,

Circle and Chime. Obviously Coreweave up

4x after going public, $81 billion

market cap. Absolutely stunning. Circle

25x oversubscribed, 6x from its opening

price, $ 48 billion market cap. Chime,

that's a NEO bank like New Bank, which

is already public. that was up 40% uh in

its IPO price, but then it went down

20%, $12 billion market cap. On the

other side of the ledge, we have a ton

of M&A this year. So, when you look at

what's happening under the Trump

administration, look at what's actually

happening. The game on the field is

three major IPOs. Uh and then massive

amounts of billion dollar acquisitions.

Obviously, we talked about Google

acquiring Whiz 32 billion. Uh SoftBank

bought Emperor. I don't know what they

do, 6.5 billion. OpenAI bought two

companies, one for three billion, one

point for 6.5 billion. Developer

co-pilot, Windsurf 3 billion. Johnny

Ives IO making some sort of a puck or

hardware device. Data Bricks brought

Neon for a billion. Salesforce uh did an

$8 billion acquisition. And then

interesting, Door Dash bought two

companies. Uber made two smaller

acquisitions. There is a ton of activity

here. What does it say about the market,

David Friedberg, that we're seeing so

much M&A and these amazing IPOs coming

out all within the last 3 4 months.

Okay, so let me just follow up to a

comment Chimath made and ask Thomas his

view. I have a a theory and I haven't

looked empirically to see if it makes

sense. For most of the S&P 500, the

fundamental profit growth is pretty

anemic with the exception obviously of a

couple of the big tech outliers, the

MAG7 and a few others. But for for the

majority of the S&P, this is a pretty

kind of anemic environment relative to

the transitions that are underway in the

world fundamentally with with AI and

ancillary technology. So are the

institutional fund managers hungry for

access to some of these new you know

high growth offerings and they have been

held off because and just to kind of go

back I think it was around 2008 or so

public institutional fund managers

started to do crossover investing into

private equities and that scaled up and

scaled up and it it entered obviously a

stage where it was a heavy flurry a lot

of activity and a lot of crossover late

stage investing um you right until 2021

when things started to pop 2022 and

because they were overexposed

with their private equity portfolios

relative to their public equities they

came out of 2122 with the market

declining and they now had a higher

concentration of private equities than

they were supposed to have and so they

have been kept out of the market for the

last 3 or so years of the private market

and now is there kind of this pentup

hunger or pent-up demand for new

issuances for high growth tech issuance

Is is that what we're seeing? Is there

kind of this pent up demand because

they've had to stay out of the the

private market for 3 years? And if there

is, obviously it bodess well for

latestage growth startups that are

looking to go public because the demand

will be there. And I think the reports

were that the Chime IPO was like 18x

overs subscribed. I think you're right

and and something that you know I've

talked about with you guys and uh was a

was a big conversation at our at the

all-in summit last year was the health

of the uh private ecosystem right and we

talked about the concept of look if you

put a dollar in you need to get a dollar

out right and so I do think that we're

starting to see a healthier market where

we know a lot of dollars have gone in

but now we're starting to see some

dollars coming out so I think that's

both in M&A by the way and it's also in

IPOs So I think that's one element. But

I also think the second element which is

we're the tailwind of the mobile and SAS

era, right? And even if you look at the

SAS companies, we kind of put this

together in our deck when we were

preparing it for our conference um this

week. Chamath, I think you'll find this

interesting, right? If you look at SAS

in 2021,

the median growth rate for SAS companies

was 17% and a quarter of those were

growing over 25%. Mhm.

Okay.

If you look at SAS today, the growth

rate has been cut in half, 17% to 9%.

And only 5% of that cohort is now

growing above 25%. So I think Dave,

what's clearly happening, right, is

other sectors which were predominantly

seen to be growth are now slowing down,

right? So that's kind of one piece. So

the market can no longer just rely on

saying, "Oh, I'm just going to own the

Bessemer SAS index, right, for the next

decade and I'll do great." Because those

companies have really slowed down. And I

think it's starting to look forward and

think, okay, now over the next 5 to 10

years, what are the companies that can

compound at maybe 25% per year over that

time frame? And I think companies like

Cororeweave and Circle and Chime, by the

way, and others are going to kind of

fill that gap.

I um I really like this chart.

If I had to guess about what has changed

from 2021 to 2025

is that most companies have realized

that buying yet another

vertical software solution is not going

to help their business that it typically

adds bloat, it adds cost and it adds

people. And I think starting in 2023,

what people started to guess is at some

point in the near future, you're going

to have some AI way of rewriting all of

this vertical software. And I think

that's why it stopped growing. I don't

think this SAS market ever had the

return on equity that it was supposed

to. And I think so many companies have

woken up from this hangover saying

there's got to be a better way. It can't

always be yet another tool, yet another

program, yet another multi-year delay,

yet another price escalator. And I think

that that the jig is totally up for

software.

You're referring to the Salesforce and

the SAS category, Chimoth, and what

you're doing at 8090 specifically. Yeah.

Well, it's it's not just us, but like if

you look at anybody that's rebuilding

software,

it is so much easier to rebuild software

from scratch today. Like my team of 30

people can transact hundreds of millions

of dollars of work. Not because we are

so prolifically amazing, but frankly

because well, I think the team is good,

but honestly because the underlying tool

chain gives you a level of leverage. And

so if you rebuild the software

development life cycle using these

tools,

you can't help it but become much more

efficient and you can't help it but

deliver custom solutions that are

meaningfully cheaper. And I think Jason,

if you look at the entirety of the

software that runs the world, we're

going to rebuild it soup to nuts. all of

that

and the tool you're referring to just

for the audience is the AI co-pilots

that are making that are contributing 30

40% to code bases at Microsoft and

less less specifically that because

those are those are good for individual

people but the software development life

cycle is more the horizontal end to end

of making things got it

so what we do internally at 8090 is we

have an entire process that starts from

the PRD all the way out to the

functioning code and we use different

techniques at each step but what you get

is a 50 60 70% increase at each step

which then compounds.

And so you have the ability of a team

that would otherwise be able to service

tens of millions of dollars

be a team that can service hundreds of

millions and then a team that would

otherwise service hundreds can service

billions.

Let me ask you guys your response to

this theory. If there is going to be

this kind of accelerated

call it custom software rebuild of

business models and you take the S&P

493, do you think that we enter an era

where there is a similar dispersion as

we're talking about seeing in the MAG 7

with the S&P 493 where there are going

to be probably the biggest money-making

opportunities for investors that we've

seen in decades

between those that do adopt and do

rebuild using AI and those that don't

for 100 100%.

I had a call yesterday with one of the

largest private equity funds in the

world, hundreds of billions of dollars

under management and we're doing

something with them at 8090 with one of

their most important assets.

And when you're an owner of a business

and you can direct

specific change

and you can rip out

hundreds of millions of dollars of

software licenses and replace it with

tens of millions of dollars of highly

customized software.

It's an enormous lift to opex and

business model quality. So why doesn't

it happen more? The reason it doesn't

happen right now for this S&P 493 is

that the IT organizations inside all

companies

essentially speak a different language

than the CEO, the CFO, and the board. So

if the CEO, CFO, and the board of

directors of the S&P 493 speak English,

the IT organization speaks Mandarin

Chinese, and you get away with saying

all kinds of I'll give you an

example. I went to a CIO conference. one

person that I met an $18 billion a year

IT budget.

What the does that actually even

mean to spend $18 billion a year on it?

I'm not saying that this is a mag seven

company, guys. And when you take that

example and you multiply it by 50 and

100 and 493 examples of people spending

money, there's an entire cartel of

influence that's been built in software

that's going to get undone because

you're not going to be able to justify

it. Free. Absolutely correct. And the

response from the SAS industry is

changing from the per seat model as the

number of employees at these companies

continues to get lowered. Obviously

Microsoft a lot of layoffs. Andy Jasse

talking about layoffs. They're moving

from the per seat model. They're not

taking this uh laying down. Uh they know

that people are going to make custom

software. So what they're doing is

they're moving to a consumption model.

So you're seeing people charge per call,

per customer support call, etc.

And well, it's I'll tell you why it

doesn't work.

They're working in combination. Hold on,

hold on, let me finish. The other thing

they're doing is they're dramatically

lowering the number of people and the

developers they have on their team. And

then a lot of what's happening in the

background is the third piece they're

doing is they're starting to uh do

rollups and people are starting to talk

about how can we take you know 20 of

these SAS companies lower them just like

you're doing to compete your thought

playbook. Well, I just wanted to comment

on this like consumption based pricing.

It doesn't work. And what I mean is you

can have some adoption in the short

term. The best example is Snowflake, but

in the long term it destroys your

business. And the reason is because you

don't know which data is valuable and

you're not going to put up with a

variable business model that increases

more and more cost because you need to

trap everything. And so what happens is

all of these other companies develop

around you. People go back to Postpress,

people go to Superbase, they find all of