Iran War, Oil Shock, Off Ramps, AI's Revenue Explosion and PR Nightmare

All right, everybody. Welcome back to the number one podcast in the world. Freeberg's out saving the world, creating new potatoes or, I don't know, Kenwai, maybe some Brussels sprouts, I'm not sure what he's working on at this point in his place. His personal favorite, Basti, he says that when I'm not here, I want Brad Gerson in the seat. Welcome back. We haven't seen you on the pod since your shout out the state of the union. Take us behind the scenes for a brief moment, your Brad of what it's like to get a shout out from Podas at the state. Did you know it was coming? Did you choreographed this thing? Did you choreograph that or was that was spontaneously? Honestly had no idea it was coming. And in fact, I found out after the fact that it wasn't in the speech in the president added it to the speech. So I don't even think it was that's so awesome. A few days before going to happen, but we got an invite to the state of the union and, you know, listen, it's an institution. This has happened every year for 250 years in the country. I've never been. I thought I did know he was going to talk about Trump accounts. So I figured if I'm ever going to go, that's the time to go. And I have to say, you know, I'm just a sucker for democratic institutions and democratic traditions. It was an extraordinary night set aside, you know, the headlines about what Democrats did or Republicans did. Just the whether it's a Democrat president or Republican president that this happens every year. You have to go report on the state of the union. So it was a special night dinner ahead of time. We're in the chamber. The chamber, as you all know, is very small. And so, you know, just to your right was the first family in Jared and Ivanka. And so, you know, we were there as to observe like everybody else. And wow, it was, it was quite a moment. And I want to just say you did a great job because when you sent your heart out to all of America, I took it. I took it. I took it. I was like, I did. You kept it at the right angle. Right. Right. You just got a little bit extra and out. You'd be nuts. You'd be nuts. You'd be nuts. You'd be nuts. You'd be nuts. What would have been no bueno? Those would be some super racist Trump accounts. Keep your protractor and your ruler out when you send your heart out. Okay. What final thing on adjacent? You know, we're signing up over 100,000 kids a day to these Trump accounts. Fantastic. We have millions of kids who've already claimed their account. We have nearly 30 million kids in America who are eligible for at least $250. If they just go claim their account, these things are going to go live on July 4th. And what it really showed, I think the country, it accelerated after the state of the union because the president, you know, really believes this is a way to get everybody in Main Street, America into the game of capitalism and get them all directly owning, you know, the great companies in America. So it meant a lot to me in that regard that it highlights the importance of the program. So it's deeply grateful to the president for not only making sure this happens, but the shout out. It's pretty cool. Good for you, bro. I have an interesting idea for you. I'm sure it's come up already, but with this whole discussion of UBI, somebody said to me, oh, you know, I really like these Trump account your friends did the, the, the invest America because it's like the start of UBI. And I was like, well, that's not exactly the intention, but I get it. And with wealth disparity going on in the country that has a lot of people concerned. What if there was a giving pledge around equities and people could opt into it? They don't have to, but if somebody like, I don't know, Larry and Sergey or Zuckerberg said, I want to pledge 5% of my shares to go into kids accounts over the next 20 years. What an amazing, beautiful thing that could be. And it would be incredibly material to get whatever it is, a 10th of a share, a hundredth of a share, a thousandth of a share of whatever company has that come up yet as an idea. I'm sure it's obvious, right? It's come up. Stay tuned. But yes, we're going to have some bang or announcements as we head towards July 4th. All right. Let's talk about the war in Iran. Obviously, there are much more important issues than financial ones, life, death, the freedom of the people of Iran. But we're unique and qualified, I think, to talk about the economic fallout, second order effects, first order effects. And there has been massive volatility over the last five trading days, just talking about Brent crude oil and we'll key the discussion off of that type of oil. It's spiked to $84 on Friday. That was day seven over the war, 119 on Monday, day 10. Drop back down to 84, jump back up to 100 after three commercial ships were hit in the straight on Wednesday. Those ships, by the way, were not oil tankers. They were carrying cargo. They were flagged as Thai, Japanese and Marshall Islands. Brent crude currently at 99 when we're taping this, it will be at something different by the time you listen to the pod, I'm sure. But it's quite a spike. And here's a second chart that shows you the spikes over time. I was old enough to remember the oil shock of 1978. We had to like get in line at the gas station based on your license plate number and you had to wait an hour or two to get gas. Gulf War, obviously, it hit $100 in 20, $26. 2008, we hit kind of a peak moment, $216 in today's dollars. That was the peak oil discussion demand from China. Went off the charts. When Russia invaded Ukraine, we hit 115, which would be $133 in today's dollars. So this is not new, but it is significant and breaking news today. It runs new supreme leader. Most Taba says he's keeping the straight closed as a tool to pressure the enemy. Wall Street Journal on Thursday quoted a senior fellow at the Middle East Institute saying that reopening the straight will require ground troops polymarket. 27% chance that US forces enter Iran by the end of March and 57% by the end of the year. So the sharps over a polymarket believe we will have boots on the ground. Let me stop there. Brad, your thoughts on what happens when oil hits this kind of number and we have this uncertainty of, hey, this could last, you know, two more weeks or it could last six months. It could last a year. Nobody seems to know and how it resolves. We just had a really interesting talk with Graham Allison. How it resolves is also a major unknown. Your thoughts. Right. So first is obviously their huge direct costs as oil prices go up. Right. Oil is a component of a lot of consumer, you know, and enterprise products. And it also hurts consumer confidence, enterprise confidence. Goldman Sachs is out today with some analysis where they updated kind of the economic knock on effects. Right. So they raised their PC inflation forecast from 2.1 to 2.9 right for the year. So that's a huge jump. Right. In terms of their expected, you know, PC inflation core PC, which excludes oil. Okay. Is they forecasted up from 2.2 to 2.4. So they're saying even if you excluded the direct price of oil, the knock on effects is going to cause a little more inflation. They lower their GDP forecast by 30 basis points for the year. And they also expect higher unemployment as a result of this for the year. All of that is weighing on the sentiment in the market. Remember just a few months ago, the S&P peaked at 24 times. Now we're at 21 times. But I think the market may be getting a little bit wrong, right? The Trump doctrine, you know, I tweeted about this last week. I think the Trump doctrine is far more pragmatic than the Neocon doctrine. Right. I think we, I think Trump has very limited set of goals. He wants to destroy and degrade threats to America's national security interests. He doesn't want to spread democracy. So my suspicion is that these impacts are shorter duration. But right now the markets have a little bit of post traumatic stress flashbacks to Afghanistan in Iraq and wondering if we might be wandering into a quagmire. All right. And just he may not, in terms of the doctrine he has said he wants to see the people rise up there. So might be splitting hairs, but I think he might actually be for regime change. He says he wants to regime change. He's being equal. I don't think he minds if the people bring it to themselves. The question is whether the US is going to, you know, put boots on the ground and try to spread Madisonian democracy like like the chainy doctrine was. And I think this is very different. Tremap, you're taking on the economic impact and, you know, and any other things you'd like to add about the war in Iran. I think the most important thing that I saw this week was, I think President Trump was asked about the war and he said the war would be over very soon. What did the market do? The market literally took oil from 120 a barrel to 90 a barrel. Almost in, you know, an nanosecond. I think that that sort of tells you what everybody thinks to the extent that the market really didn't believe it. Oil would not have budged. And if anything, it would have faded those comments and you probably would have seen oil stay at around 120 or even go slightly higher. So the fact that there was this reflexive booth, I think is a belief by a lot of the sharps that there is no path to a sustained conflict. There's going to be a lot of chest bumping from the Iranians obviously because they need to say face and they will want to set up whoever comes next to have the most successful chance of governing. So my perspective is that was a trial balloon. I think it validated what everybody thought, which is that this is going to be a short run thing. I agree with that. The downstream impact is, I think correct what Brad said, which is it could show up in some short term price spikes. But then on March 11th, you saw what Chris right did, which is the president activated a whole bunch of member countries in the IEA. And I think Chris released 172 million barrels. I think there's a coordinated release of about 400 million barrels of petroleum. That's going to dampen the effect of any price spike. On top of that, I I think the estimate is there's probably another billion or so more barrels than one could release out of strategic stockpiles. So I think that both of these two things together kind of paint a picture that probably the worst is behind us. And I think now it's about finding the off ramp. Sax, your thoughts? Well, I agree that we should try to find the off ramp. I mean, I agree with what Brad and Jamal said about that. Look, we've degraded Iranian capabilities massively. There are army, navy, air force, all been destroyed. This is a good time to declare victory and get out. And that is clearly what the markets would like to see. You are seeing, however, a faction of people, I'd say largely Ben-Akskussli and their Republican Party who want to escalate the war. And we're calling for things like ground troops or regime change, or they simply want the pounding of Iran to just keep going on. And on, I saw an op-ed in the Wall Street Journal to that effect that we shouldn't try and find an off ramp. We should just keep going with this. And I just want to lay out, I think, some of the risks of what an escalatory approach could entail. So first of all, we're all seeing that the straights of our moves are closed right now. We don't want that to persist longer than it has to. But there are actually worse outcomes than that. So if the Iranians get hit, if their oil and gas infrastructure gets hit, they're very said they're going to engage in tit-for-tat retaliation against the Gulf States. And we saw, there was recently, the Iranians blew up this giant oil depot in Oman. You saw some of those images. They could continue to target the oil and gas infrastructure across the Gulf States. And if that happens, it won't really matter if the straights get reopened because you won't be able to restart oil and gas production in the Middle East. So that would be, I think, a much worse outcome that could result from escalation. Furthermore, there's an even worse, I think, scenario from there, which is the region is very dependent on desalination plants. I think something like 70% of the re-odd gets their water from desalination. I think it's something like 100 million people on the Arabian Peninsula that get their water from desal. I mean, it's basically a desert, right? And those desal plants are soft targets. You already saw there was, I think there was one desal plan and Iran that got hit. And then it caused Iran again, tit-for-tat to hit a desal plant. I think it wasn't quite a coy off about that. But in any event, if you see that type of destruction continue, you could literally render the Gulf almost uninhabitable. I mean, you're not going to have enough water for 100 million people. And human beings cannot survive very long without water. So that would be a truly catastrophic scenario, and we're talking about destroying the Gulf states economically and then also from a humanitarian perspective. So I think we have to take things like this into account when you hear people preaching for, or advocating for escalation. You also have to, I think, consider the impacts on Israel. I mean, it's hard to know exactly how much damage Israel is taking right now. There's a social media blackout. And what you're starting to hear trickle out is that Israel is getting hit harder than they've ever been hit before in their history. And we're only two weeks into this. If this war continues for weeks or months, then Israel could just be destroyed in very large parts of it. Now, I think Israel is a harder target than the Gulf states. Their infrastructure is more hard and also they're further away. The Gulf states are vulnerable to drones and shore-range missiles, whereas Israel is mainly vulnerable to long-range missiles. Nonetheless, at some point their air defenses could become exhausted if it hasn't happened already. And Israel could get seriously destroyed. And then you have to worry about Israel escalating the war by contemplating using a nuclear weapon, which would truly be catastrophic. So there's a lot of scenarios here, a lot of really frightening scenarios about where escalation could lead. And even though the United States is a much more powerful country than Iran, they essentially have a dead man switch over the economic fate of the Gulf states and even potentially beyond that, you know, the habitability of some of these countries. So I do tend to think that this is a good time to declare victory. I think Brad, you're right that the president has never said that democracy promotion is one of his objectives. Yes, Jake, I'll obviously everyone would welcome if the people rose up and chose a new regime. But that's not something that we've said we have to accomplish. And this would be a really good time to take stock of where we are and try, I think, to seek an off ramp. And look, if escalation doesn't lead anywhere good, then you have to think about, well, how do you de-escalate? And de-escalation, I think, involves reaching some sort of ceasefire agreement or some sort of negotiated settlement with Iran. And we can get into more of what that looks like. But I think that's the big picture is that if escalation could lead in all these horrifying directions, and I think that's not the right approach, you have to look at de-escalation. Jake, where are you on this? Complicate it. I have my personal feelings on regime change. And since we don't have the information, the Mossad and the CIA and Trump has, I do think Trump would only do this if he had a very high probability of success and an off ramp. However, it's not looking good with the off ramp right now, and it could be quite chaotic. I think if the Neocons get their way and the people on polymarket are correct, the sharps who say 57% chance will have boots on the ground, I think this is kind of the end of Trump's second term. And if you were to put together the series of mistakes that he's made and the administration is made, they're really at the heart of why people voted for him. You take starting a war like this, specifically with Iran. That's what we were told was the reason to vote for President Trump. He was not going to take us down this path. He was not going to risk World War III. He was not going to risk a nuclear possibility as SACs correctly points out. And now you have all the Maga supporters from Tucker, to MTG, to Rogan, Matt Walsh, Megan Kelly. They are all up in arms about this is the end of Maga, and this is a massive betrayal. There's the 1B betrayal where Trump wouldn't release the Epstein files. We'll put that aside because I don't think that's as important as starting World War III. And then obviously the insane unnecessary cruelty we talked about many times on this podcast of ICE agents, which he has corrected by getting rid of Christy Nome. So you start putting these things together. If this continues for another six months, it's basically going to result in the Democrats doing a clean sweep in the midterms. Here's the chart that I think the Republicans really need to look at at how misguided this all is. This is the chart that should be absolutely terrifying. Maybe one of this war or very few people wanted it besides the Neocons and the people of Iran, probably, and the Israelis. But the chances of the Democrats sweeping now is up to 45%. This just happened. The Democrats are going to sweep. Then they're going to win in 2028. And the entire agenda of Maga and Trump's 2.0 will be gone. And then you look at just absolutely ignoring the working man, inflation going up above 3% as you pointed out is a likelihood, Brad unemployment ticking up. Still very low, but it's ticked up 10% worth keeping an eye on. These foreign affairs things are the least important to the American people. It's very, very low on the list of priorities. And people are looking at Trump and what they believe is the enriching of his family and all these business deals. And then they catch in sinking it. It's literally what I was thinking. You're bringing everything. At 1, 2, 3, 4, number 1, doing the war that everybody said he should not do, include, and that that was why we should vote for him. Number 2, the Epstein files, number 3, the ice cruelty, and number 4, not working for the American working man who doesn't own equities. Those are 4, 1, 2, 3, 4. It's not a kitchen sink. This is not my personal feelings on this. This is my assessment of the situation. If he doesn't find an offer imp, quickly, they're going to lose both houses in the midterms. I think the thing Trump needs to really consider it. And I think he will consider it. I think he's going to find an offer imp. Right. That is the topic. The topic was, are we going to find an offer imp or not? Find an offer imp. And this is in Iran. And I think Saks made the argument that there's danger that Neocons and others are arguing that we expand, put boots on the ground. You're saying if he doesn't, it'll be a disaster. Chimath and I both say he will. Right. And so that will what? He will find an offer imp over in the near term because the Trump doctrine is not the Neocond doctrine. As much as people want to talk about Iran, Iran, Iran, I think as I explained last week, I think this is about China, China, China. And you have to remember, at the end of this month, he has a pivotal three days with Xi Jinping in China. This is going to be an absolutely historic convening of the two superpowers that run the world. One, which is us, we are the established and one which is China who wants to be reassended. And I would bet dollars to Donuts that there is going to be an enormous incentive for Xi to negotiate a grand bargain. in those three days and do something historic for himself. And I think that the president will use that if he thinks that it creates levers. I think it's a great insight. How does the Shreya of Hormuz open? If this war is dragging on in Israel, which seems to be the driving force in this, if Israel keeps it up with Iran, how do we ever get the Shreya open again? I think the off ramp is that the United States, you know, DeGlares victory does what SAC says and says, listen, we degraded and we destroyed. That's what we came here to do. We did not come here for some experiment in democracy. We wish the best to the Iranian people to do the things they need to do. And if Iran does not back down, if after that declaration Iran continues to destroy cargo containers moving through the narrow streets, I think you're going to see Iran's neighbors and Israel and others get very involved as it pertains to Iran because it's in their interest. Listen, the United States produces 20 million barrels of oil a day and we consume 20 million barrels a day. This is a modest problem for the United States. This is a massive problem for China. This is a massive problem for Asia. This is a massive problem for all of our friends in the Gulf who are trying to dodge Iranian missiles right now. So there are a lot of people in the world who will take up arms to deal with the Iranians if the United States isn't there because we can take care of ourselves. Your position Brad, just to confirm it is we are going to leave the war in the next 30 days. And then if the streets are not open, then China, India and all the Gulf countries that are impacted by it, they will protect it. They will fight Iran. I think they'll put a lot of pressure on Iran not to continue firing missiles at their ships, right? At the end of the day, this is not just an American problem, right? Let's be clear, we're always involved in this part of the world. The only question is, are we going to have an active armada that's engaged in active military activities against Iran and what I'm suggesting again? And listen, anytime you try to clean up a mess like this, there is risk. This is not a risk-free initiative by the United States, nor was Venezuela. But let me steal me on the alternative. Doing nothing and allowing Iran to procure the ingredients for a nuclear missile when they are set on the destruction of the United States and U.S. interests, doing nothing in Venezuela while the Monroe Doctrine is totally wrecked and we let our adversaries take up positions in South America. Those also have risks, right? Those carry a lot of risks. And so we're way these two risks. Again, for me, I don't like the fact that we're engaged in military activities here, but I will tell you, I am very much on the side, if we're going to go protect American national security interests, you go in, you do the degrading of their capability and you get out. And I think, you know, that's what I hear out of the President. >>Chimafi, you want to follow it? >>All roads lead to China. I think that you're going to see G. Offer up a Grand Bargain. And I think it's up to the President to decide whether he wants to take it and see what he wants to add to it to get something done. But I just don't see them meeting and coming out with nothing. I think I see them going in and coming out with something that's historic. And I think that all of this, Venezuela and Iran together, is all about China. >>Let me just say one thing as to that, Chimafi. Because I think the point is absolutely spot on, right? Probably the single greatest takeaway for us from an investment perspective at the start of this war was that the Chinese, right, didn't take up arms on behalf of Iran. Aren't defending Iran. And they didn't cancel the summit with the President, right? The very fact that they need him, they need the oil. 20% of their entire domestic consumption is oil from Venezuela and Iran. 20%, but it's not 20% because it's literally 100% of anything that's feed stock, anything that's transport, cars, buses, planes. They are in an enormous world of hurt. Now they have a strategic petroleum reserve as well and it's quite robust, but it's not robust enough to sustain five or six months of this. It's not that robust. So at the end of the day, who is going to be hurting the most, it is China. And so if you play this game theory out, the reason he kept it is because now he needs to summit even more. Could you imagine if the President canceled? That would be a disaster for the Chinese. So the fact that it's still on the books, if I was Xi, I'd be like, how do I negotiate and help find the off-frame? How do I end up fixing this faster? All right. Remember, you have 25% unemployment of young men inside of China. 25% today. What do you think it goes to in five months with no oil? It's in the-- That's the unemployment rate you should be focused on, Jason. Oh. So the China issue is a separate one, just to-- No, that's separate. No, no. That was separate from my point as my point. I was bringing up a different point. Your kitchen sink didn't include the Chinese. I get that. I'm just adding to your kitchen sink. I didn't have a kitchen sink. I have four very selling points. All right, Zach, so I'll give you the final word here. Well, look, that was a bit of a broadside, Jake Hal, where you kind of did kitchen sink it. But look, here's the part I'll agree with you about, which is it doesn't take a political genius to understand that long wars are unpopular. It will hurt the Republicans in the midterms or 28 if this does turn into a long war. Fortunately, I think the president understands that his public instincts are impeccable. And he's always favored short, decisive, swift actions, military actions, whether it was midnight hammer, whether it was the Maduro raid. I think that is his inclination and preference. And I think we are pretty much at or close to a point where the president's going to decide on next steps. I think he's indicated that we have completed our objectives. And I think it's just important that we don't let this neocon wing of the party try to expand the objectives or aims of the war because frankly, they've always been wrong about everything. I mean, these are people who never wanted to get out of Iraq and Afghanistan would still be there after 20 years if they had their choice. So I think it's just important to not listen to those people and look, it's not just one op-ed in the Wall Street Journal. The Wall Street Journal is kind of the tip of the spear representing that whole neocon establishment. And I think it's just important that this is the time to frankly ignore those voices and let the president do what I think his public instincts are telling him to do, which is to wrap this thing up. I'm in strong agreement and it is my hope too that he wraps it up quickly. That we don't have any more loss of the line. All right. We'll keep discussing this ongoing breaking news story in the coming weeks. But back to our zone of excellence, AI and tech, open AI and Anthropic are scaling revenue and costs faster than we've ever seen in the history of business, the world, revenue at these two companies growing gosh, like unprecedented levels. Here are the reports. I believe your investors in both these companies, Brad and Anthropic hit a $14 billion run rate last month, February. That means they have grown revenue from $1 billion to $14 billion in 14 months, 12X Euro a year. They're valued at a meager, $180 billion last month. It feels like a bargain given the growth. Open AI ended 2025 at $20 billion, annualized run rate. They've grown revenue from $2 billion to $20 billion in 24 months. They're valued at $840 billion last month. And man, it looks like Sam Altman has Dario in the review mirror. He could get lapped any moment, lots of debate. Where did you find this? What the hell is this? I made that. This is Dario closing in. What is that a velociraptor? What is it? It's a famous scene for Jurassic Park. Oh, wow. I mean, I don't think anybody expected Dario to be coming around the bend this fast, but he's right behind apparently. And they're winning obviously the business to business side of the business. Jake Herve on these companies is insane. $250 billion, $500 billion. Who knows what gets invested before these companies reach profitability, Brad, but you're invested in these two companies. Yeah. Unless you sold when Sam Altman told you he would buy his shares back on the famous beach you do have the soda. I don't think you sold it. I bought a lot more since then, Jason. I bought a lot more since then. That's important information for us to have. Quick question for you. Number one, what's it better buy here? Anthropic at 380, OpenAI at 840. And then I think people want to know if these companies are going to go public. If you think they should go public, what is the chance of that happening? Take those questions, have you like? Well, listen, I know, love your children equally. They're both incredible companies. Lincoln questionably has a lot of financial momentum, you know, and OpenAI, I see in a lot of momentum themselves, right? But the single most important question this year, right, was would AI revenue show up? And just 60 days ago, 90 days ago, there was tremendous skepticism. No way all of these infrastructure investments were going to pay off. There's no incremental revenue coming out of AI, including many of our friends. But in February, we had January, February, we really had kind of a nuclear moment, right? The splitting of the atom moment. I mean, we had a $6 billion month out of Anthropic in February, right? Wily reported, okay? Let that set in for a second, right? $6 billion in a month, it was only a 28-day month, okay? more revenue than the annual revenue of Databricks and Snowflake that are two of the greatest software companies of all time after 12 years. They could do in the first four or five months of this year the total revenue of SpaceX this year. What is driving that? Just explain to the audience what's driving it? Is it token use? Is it cloud subscriptions? We crossed a threshold with Opus 4.6. We saw it again with ChatGPT 5.4 where the models and the agents on top of them, whether it's cloud code codex, ChatGPT, they're no longer competing with IT budgets, they're now augmenting labor. They're competing with labor budgets. You could not possibly have a six billion dollar month. It is impossible to do that by displacing IT budgets. Millions of other companies across America say, "Oh my God, let's spin up these agents and have them do things for us and we're willing to pay for it because the product of that effort is worth the money to us." With the revenue and the usage momentum, I will tell you in the month of March continues and it only accelerates from here. As Kevin Wile has said, "The models and the agents are the dumbest today they will ever be." Right? We're in the early innings of compute and algorithmic capability. And so, you know, like that to me is the observation of this moment. Should they go public? I've said yes, they should go public for several reasons. There's tons of institutional demand. They need cheap access to money to continue to build out the compute they need to support. There is more compute constraint in these businesses this very day than they've had any time in the last three years. So they need access to the capital. And then finally, I think you have to have the retail investor in the game. These are two of the most important companies in the history of capitalism and the history of America. It's destabilizing not to have them public. You know, Jensen said last week that he expected the 40 billion he recently invested in these two companies would be his last money in because they were both going to go public. When do you think they go public? He said they both go public this year. I think that, you know, they're preparing and heading down that path, you know, and listen. I want to get some of these shares in the accounts of all these kids that we're opening up because they're really, really important companies to the future of the American economy. Shemop, you had some insight into the quality durability of this revenue. It's not a single good example that we can find of sustained, positive margin expansion and impact of AI inside of a true corporate enterprise that is not right now a small test. There's not. So where does six billion come from? Because everybody has to show up to their board and have an AI check box. And everybody is thousands and thousands of companies. When you have tens of thousands of companies as customers paying $200 plus a month, it's not that hard to show up with that kind of revenue. The real question is the following. If you take, you use the Databricks and Snowflake example. If you look at the companies that use that software, those companies generate enormous revenues and enormous margins and these products are in critical production workflows that underlie those revenues and profits. That is just not true with AI today. We have all kinds of claims, but we are still experimenting. Why are we experimenting? Because we know it's important, but we don't yet really know what to do. You can't just slot this in to a critical workflow and healthcare and all of a sudden show up where if you make a misdiagnosis or if you make a mischaracterization of a procedure, you can get fined and go to jail. The companies that are in healthcare don't do that. If you're in financial services and you make a mistake about somebody's portfolio or you make a misallocation and you point to a model, you will get sued and you will be in trouble. None of these things have transitioned from its interesting, its experimental to its the core critical operational workflow. That's interesting. There will be a transition in revenue quality when that happens. A great example of this is Amazon. Why does Amazon issue an edict that says you cannot use this stuff inside of AWS unless a human now reviews and approves it? Because what happened? They had three or four, seven one faults from a bunch of code that was written by agents that brought down AWS. Now look, I've told you. I love AWS for one reason because it's hyper reliable. I hate AWS for the same reason that hyper reliability comes at enormous cost. I pay it, but I pay it to never have a seven one. The reason they have 12 nines of accuracy is because it's humans and deterministic code that never fails. It doesn't mean that two companies can't get to 20, 30, 40 billion of revenue. What it means is we have to be honest. This is an industry that's early. We are all figuring it out. There's a lot of test budgets that are going at it. It will slowly and methodically emerge into production, but let's not oversell what this moment is. Okay, Brad, I want to give you a well-constructed question here to respond. Then Sacks will go to you if you have some input of the 20 billion. How much of it do you think is experimental? What percentage is experimental versus production? Why is that? About the consumer spending for, because that's half of it. I'll put aside the consumer. Sure. We'll put the consumer subscriptions aside. They're obviously getting value or they wouldn't be subscribing, but it's like Netflix. By the way, for that, where it can be extremely faulty and there's no SLA that you're giving, it's a phenomenal, these are phenomenal products. Yes, for 20 bucks a month, well worth it. Consumers have decided it's worth it. So I think we're in agreement there. And also for the individual engineer of which I suspect there's a few million who get to pay $200 a month and have their company subsidize it, the company knows that these costs are being incurred. But there is no tick and tying at the end of it where then you review the code in a different way because you're worried that there's hallucinations as Amazon just demonstrated. Yes, there's a story in the FT about Amazon having some blast radius from some computer generated AI and they're putting controls in place. We'll put that in the show notes. Brad, let's get to the specific question I asked of the tens of billions of dollars in revenue between the two companies that's not consumer. What percentage do you think is production quality versus experimental to Chimaltz Point? Yeah, I mean, listen, and I've been, you know, I coined the phrase experimental run rate revenue, right versus annual recurring revenue, right? Like I think it's, I think Chimaltz Point is a really important one as an investor. I have to discern. It's repeating, right? What's recurring and what's not? What I would suggest is of course there's a lot of experimentation because these things haven't been around that long. But I suspect, right, that Palantir, the US government, the US military, Nvidia, and a lot of other major enterprises would argue they've gone full production. In fact, it's existential to the wartime effort going on in around right now. That then sound to me like experimental as much as it sounds like production capability. And I will tell you what will prove this one way or the other is in the month of March, do revenues continue and go up? Right? That's not true. The experimentation can go on forever. That's not true. That's not true. Okay. Okay. The experimentation goes on forever. That sounds like recurring to me. We scratch the surface of the number of companies that even know how to adopt AI. So these numbers will go to the stratosphere. I'm not debating that. Yeah. And the same side of the bed as you are. I want these numbers to keep going to the moon. I'm just being much more circumspect and honest with myself to say, I see it on the ground. I sit on top of these models. I am paying these models millions of dollars a year. I am. Yep. And what I'm telling you is my revenues don't go up faster than their revenues. I'm consuming more tokens every single day. Do I get more economic output? I am not. And I would say that my team is at the leading edge. And so I suspect a fortune 1000 company is steps behind my team. And if I am spending triple every three months and not seeing my revenues tripling, I suspect these other companies aren't a similar situation. I'd finalize it. But ask it on Friday when you're with Michael Dell because I've had this conversation recently with Michael Dell. Michael said a year ago companies weren't seeing ROI today. They're seeing very big ROI in their AI investments. But I think that's the question on the table. But what companies? Which companies? What's the second? Saxx, of course, and obviously we're in ROI. Saxx, we're agreeing. Other companies using it. This is experimental in large part and this is a new tool. So by definition, you have to experiment before you put it in production. What's your take on this grand debate? How much of this revenue is experimental versus real? Well, look, when you're talking about enterprise revenue, what you're really talking about is coding assistance. That's been the breakout use case. It's really the first big breakout use case on the enterprise side. The consumer side's been more of like research and writing that kind of stuff, the chat bots. But enterprise has all been about coding assistance. My sense is that the demand for code is very scalable. Software engineers has always been an area of the economy where companies have never been able to hire enough, even Silicon Valley, which is the most attractive place for software engineers to work. We've never been able to recruit and attract enough of them. The rate limiting factor on the progress of every startup I've ever invested in is not having enough engineers to code up the product roadmap. Then you look at the rest of the economy, the Fortune 500 and so forth and so on. They have hardly been able to recruit software engineers at all because they've all gone to Silicon Valley. So I think you're dealing with a. a part of the economy where there's always been a massive supply shortage. And I don't know what the natural limit on that is, but my sense is that there's a tremendous latent demand for the ability to generate code in large quantities, create new products. As the cost of code goes down, as the coding assistance get better, you can code up new types of products. And then of course, it's going to lead to agents, which is another way of basically using the code that gets generated. So my sense is that this could be very scalable. I don't know where it taps out exactly. Where I think, "Chamauth is right," is that I think there is a change management aspect to this in Fortune 500 companies, for example. And they haven't really wrapped their heads around how exactly they're going to use this. There's a McKinsey study that showed that a lot of these pilot projects in Fortune 100 companies were experimental. And a lot of them were proving not to be successful. So I do think, as you go beyond coding into company transformation, things like that, it becomes a little bit more speculative. That's not to say it won't happen. I think it will happen, I'm actually bullish. But I do think that we're still waiting to see what the breakout use case is beyond coding will be. Probably agents will be the next big one. But I think Brad's right that that's big enough to see this scale for a while. The thing about code is, you're paying for code on a metered basis right now. You're paying for token, which is kind of an amazing deal for companies, right? Because before, they had to go through this recruiting process to find engineers, source them, vet them, keep them happy, give them all the perks, the kind bars. And so to be able to buy code on a metered basis as the cost for token keeps going down, it's kind of an amazing deal. Peter before, it was just metered on people. Now to your point, it's metered in a different way, but it's still metered. Yeah. Let me just use this term labor displacement, right? That's like the one part where I might disagree with the US because there was such a shortage of software engineers. I think when people hear the word labor or term labor displacement, they might start to think that six billion of incremental revenue means six billion of layoffs. No. I don't think it does. And the way to thread that needle is the fact that we were artificially constrained in the number of software engineers and how they could be used and how rapidly they could be acquired and all that kind of stuff. So do you able to now turn that on like electricity? That's kind of what we're talking about. Exactly. Is just such a huge game changer and unlock for the whole economy. Yes. And that's what I think is really exciting about it. It's augmenting human labor, right? We're not at a place yet where it's displacing. And this is the definition of productivity gains. I'm going to make just two quick points here. The place to look for this actually moving from experimental into production is not at big companies. Big companies are actively resisting this management and big companies will resist it because it means lowering headcount. And it means the person who implements it might actually implement themselves out of a job. So that is the natural resistance you'll see in big companies. That's not where to look for adoption of new tech. That's not why it's happening. Let me finish now. And then you can counter it. Startups are the place to look at this. And that's where I am on the ground. And what I'm seeing there is that startups are using this in production for their legal work, for their marketing, for SDRs, for their accounting, reviewing legal documents. This is all work that would normally they would hire consultants for, outsource, or make hires for. And what I'm seeing on the ground is its production ready in startups who are using it in those categories, HR as well, accounting, marketing, all of that. All that blocking and tackling, all those shores are being done currently with these LLMs and they're doing it in production and they're doing it at scale. Just a quick second point here. Here's the J curve. And this is the question I think we'll get to in our next segment. When does this become a profitable business? If you ask this Sam, in that famous clip on the BG2 podcast, RIP BG2, here you go, the LLM industry J curve. I just asked Claude to make this from me. If you have 500 billion, I think you would agree it's probably going to be around that number, Brad invested in all of this. And then more. >> A lot more. >> Okay. So 5 billion is an underestimate here. And then when do we actually see these large language model companies hit profitability in a calendar year? We took Tesla, Uber, Amazon, you know, decade plus in each of those cases to win back their investment. Here's the precise. >> This is a really good chart. Here's the precise math on this. So I am building a one gigawatt data center in Arizona. >> Okay. >> When I greenlit that project, I thought it was going to be a four or five billion dollar investment. I was like, okay, whatever. Then it went to 10. Then it went to 15. Then it went to 20. And now it's upwards of 50 billion dollars for the powered shell for all the land, for all the permits, then for all the infrastructure, all the people, all of it. Okay. Sarah Friar said, I think it was about a year ago, maybe less than a year ago, that for them every gigawatt is about 10 billion of annual revenue. So if you think about that jaker of Jason, really the way to think about it is, look, energy equals intelligence. For every gigawatt that they're trying to spend, they have a five year payback is roughly what it means just to get to break even. And then year 6, 7 and 8 will be where the profit is. Now how do you shrink the jaker? You have better silicon. We're going to see something from Jensen in a week or two that uses a bunch of the stuff that we partnered with him at Grockon. There'll be other people. There'll be open source. So all those things can shrink the depth and the surface area of that jaker of so that you can get out of it faster. But right now that thing is roughly accurate, which is it's about 50 billion per gigawatt. And it's about a five to six year payback just to get into the money. And then it's about 10 billion a year. And the technology industry has to do something to make this better. Could I though take a step back and give you just a different framing of all of this? Please. I think the big thing that we're debating is actually something we've seen in every other technology trend when it started to get some really meaningful traction. So in the first generation of the internet when you started to see e-commerce and all these other business models, then in the second big wave of the internet around the move to mobile and the move to social. And then now we're seeing this big wave around AI. And I think what happens is in step one entrepreneurs are a b testing what it takes to raise money. Okay, that's step one. And I think what has happened is that at least some parts of the AI ecosystem have decided that this crazy, scary doom arisen is the best way to raise money. Where every now and then they come out and they say all the jobs will be destroyed and profit, you know, Dario says that. This thing is sentient. And investors are like, okay, here's 10 billion, here's 50 billion, here's 100 billion. But then the second step happens, they get the money, they start to do the training, they start selling. And then the investors are like, hey, where's the revenue? And so then they start selling everywhere. And then if you see in the Department of War example, all of a sudden you flip flop, you become sort of an unserious, dilatant like partner to the American government. They're like, we're going to boot you out. That's billions of revenue gone. And what happens? So same investors that gave billions of dollars, like, hey, hold on a second. That's absolutely not allowed. You need to conform and get back on track. And so what does Dario do? He flip flops. And he's like, oh, I'm really sorry. I didn't mean to. Let's sort of make good. All of that, to me, is an industry that's still in its very early phases and still figuring out what it's place in society is. So what is the problem? The problem is the following two clips and I'll just have Nick play these and I love your guys' reaction. The one thing though that I think even now is underestimated by all actors in industry and including the Silicon Valley is how disruptive these technologies are. If you are going to disrupt the economic and therefore political power significantly of one party space, highly educated, often female voters who vote mostly Democrat and military and working class people who do not feel supported. And you feel like that's, you believe that that's going to work out politically. You're in the same asylum. You cannot have this technology disrupts humanity's trained largely Democratic voters and makes their economic power less and increases the power, economic power of vocationally trained, working class, often male voters. And so these disruptions are going to disrupt every aspect of our society. And to make this work, we have to come to an agreement of what it is we're going to do with the technology, how are we going to explain to people who are likely going to have less good and less interesting jobs from their perspective and how is it that we are going and by the way on the military thing, these technologies are dangerous societally. The only justification you could possibly have would be that if we don't do it, our adversaries and we'll do it and we will be subject to their rule of law. So if you decouple this from the support of the military, you're going to have an enormous problem explaining to the American people, why is it that we're absorbing the risk of disrupting the very fabric of our society, including the most powerful parts of our society, if it's not because it's about maintaining our ability to be American in the near term and long term. Now watch Sam's reaction. Fundamentally, our business, and I think the business of every other model provider, is gonna look like selling tokens. But we see a future where intelligence is a utility, like electricity or water. And people buy it from us on a meter and use it for whatever they want to use it for. - So if you take those three messaging veins on a spectrum, one is we have a sentient super god, we're the only ones that can protect you from it, but you know, your days are numbered, that's Dario. Alex, which is, hey, hold on a second, you can't have it both ways. You can't both say it on the one hand and then try to run the fabric of society and flip it. You need to be much more circumspect. And then Sam's, which is, we want to sell tokens as a service. I think the point is that this industry right now, that revenue traction, if anything else, has distracted people from actually getting on the same page and being much more methodical and much more reliable and trustworthy in explaining all of this and managing the expansion of this. And so what I would say is all of this fundraising gobbledy book has actually created this breathlessness that is not useful and isn't helping. And I would say there needs to be a lot more seriousness by these folks to actually run this business thoughtfully. You can't be a dilatant, you can't flip flop, you can't pressure test, AB test, this kind of messaging in public, but I understand why you're doing it because the stakes are so high, you're playing this enormous poker game. But I think we need to do a better job of explaining all this to people because right now my end of this is look at this chart. This is now the result of those three messages. Here is where AI is. It is slightly above the Democratic Party and an autocratic state. That's where AI is. Ice is more popular than AI. So I'm very popular. So to me, this is really the crux of this, where we are not really being honest. It would be much better if we said soberly, there's a lot of experimenting, this revenue is great, but we don't really know what's real. We're going to try to figure it out. We're going to work methodically. There's a lot of regulated industries. We're going to work within those. We're not going to flop the road law and the rules. License sure will still mean something. That's a way better thoughtful mature message. And Brad, any Vendrant. And Grant. Great rant. Brad, does the industry have a PR problem? Obviously, these recent surveys, and especially comparing them to China, where people see AI as abundance and this incredible new technology they want to embrace here, people are scared. People are scared they're going to lose their job. People are scared about wealth disparity, the rich get richer, the poor get poorer. There's a lot of fear here in the United States. What can our industry do to turn this around in terms of communication from the big companies? They don't seem to be communicating in any coordinate fashion. They obviously are scaring the **** out of the public. Yeah, no, listen, I think it's a fair rant and a fair point. At the start of the industrial revolution, it's the start in the late 1800s, we had similar social responses to innovations that were occurring. We, in fact, had some violent clashes. We had demonstrations in the street. We had the entire Robber Bear in movement. So, class warfare and worse has come with other rebel, kind of industrial changes of this magnitude. So, it doesn't surprise me that we have a lot of anxiety by people that they may lose their job. And I think there are people out there who are kind of forecasting into the future in ways that are scary to the average person who's listening to this. And I don't think that's particularly helpful. So, could we do a better job messaging, no doubt about it? But if I just rewind to kind of where we started, I actually think the industry is, you know, this is going to be a pivotal year for the industry to demonstrate, right, how this is really beneficial for humanity. I think we're going to be able to demonstrate that it's very beneficial from a healthcare perspective, from a drug discovery perspective, from an education perspective, et cetera. But we need to have a coordinated effort because Chimas right is deeply unpopular in the country. I happen to be on the optimistic side of this. 70% of the jobs that exist in the United States today did not exist 40 years ago, right? We've gone through the digital disruption that put a lot of people out of work, but the abundance and the recreation of new jobs, right? Expanded the pie for largely everyone. I think that will be the case here. If you listen to Dario, he says the concern is that the disruption occurs at a faster and bigger rate. And so that we can't keep up with that replacement, I think that's another fine point. But if we just go back to where we started the conversation, which was, are these good investments, right? Do the-- That's not the conversation. No, of course they're good investments. Of course you're going to make money. No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, that's not what it's about. That's it. He asked the question. You made the argument. Jason asked the question, right? Are these companies simply selling tokens at a loss? Right? And we moved into this-- No, no, no, they're selling at a profit. I'm buying them and losing money. Right. In the 1849 Gold Rush, and Thropic and Open AI and all of these model makers are selling the pick and shovel in the Gold Rush. I am buying it and I'm trying to pan for gold. But as with the Gold Rush, most of these companies will go out of business. And all I'm saying is, if we are really circumspect and honest, there is still way more to figure out than has been figured out. This is not a solved problem. And I think we would-- It would be-- Who have everybody to just tell the truth about this? It would be way better to be honest. This is not figured out. I would say I think the data-- the cards that are being turned on the table, move me in the exact opposite direction. Okay. Right? And then you get sacks involved and then I'll give my take, sacks, you have any thoughts here? Well, I have some thoughts on the question you asked about is the industry doing a good job with PR? I think the answer is clearly no. I think they are scaring the bejesus out of the public. And that's why the popularity is right down there with, I don't know, what was it, Iran? It's free. I think we're a little bit popular than Iran. But like that-- Iran's at 100 years to f*** it up. So we've only had two. Or 47 anyway. But yeah, Iran's at 47 years to f*** it up. We've only had two. But it is very much a US-specific problem. If you look at data, sentiment data across countries, what you'll see is that other countries are much more optimistic about AI than the US. I think the Stanford did a study on AI optimism. They simply asked the question, do you think AI is going to be more beneficial than harmful? Something like 80% of people in China said yes in the US. It was in the 30s and it might be even lower now. And it's not just China and the US. You see across Asian countries, they tend to be pretty optimistic. And then the US and Western Europe tend to be pretty pessimistic about it. I think that's less about the reality of AI and more about our media environment and who influences it. Obviously you have the influence of Hollywood. It's create a lot of dystopian films about AI. You've got the fact that like we talked about these CEOs are doing a horrible job and they keep talking about putting everyone out of business. I mean, this is I think been not accidental. I would say some of these CEOs are speaking this way because they're not very good at columns. I think others are actually doing it because they see a strategy there. You know, they're going for a regulatory capture. Such a good point. And they act. It's delusions of brands are plus they're positioning their companies. Yeah. It could be for financing reasons like you've mentioned Schmoth. It's like they want to tap the stuff for fundraising. But also I think that some of it is to create a regulatory backlash that they can then control, you know, create a licensing scheme or permissioning scheme. And that's a big part of it too. And then I think you just have the fact that in our media environment, the scare stories are the ones that get a lot more attention than the heartwarming stories. You know, if it leads at leads type thing. So you can just see how unpopular it is for all these reasons. You know, New York is about to outlaw medical and legal advice from AI chatbots, which by the way, that's probably the most obviously valuable and high and highest ROI thing for a consumer. So I heard it's core is people the worst. Hurts poorest people the worst. But you understand like if you're say a professional association that sees as your job to protect your industry from disruption, you might actually want to spread, fud about AI in order to then seek those protections through your state legislature. Well, if you have companies that are fanning those flames and those companies are the ones in the industry, it's making your job even easier. But just think about the poorest person. They can't afford a lawyer and they want to do their own research. And they research the legal stuff to in order to fight an eviction or there are poor people who don't have a primary care doctor. They are not insured. And they find a way to deal with, you know, some medical issue they're having. This is the greatest thing. It's a level is the playing field for poor people or people without resources. So this is the crazy. But the problem is the city is a disgrace. No, but the problem is very specifically that these people that rely on these models to make a healthcare diagnosis or get a legal opinion to help improve their lives. The makers of those tools are telling everybody that they're about to bring death and destruction upon the economy in the world. So then the lawyers and the doctors are like, well, then maybe we should slow this down and they tell their lobbyists who then go to New York and then tell the New York legislators, hey, these guys are like trying to wreak havoc. And then they're like, oh, yeah, well, then maybe we should shut it down. That is the loop that's happened. Right. That is the Bernie Sanders moment this week where he said, we ought to have a moratorium on all data centers being built in the United States because AI is dangerous. That was his message. And that is what he's pushing. And actually, that brings me to another point, which is if you look closely at Bernie Sanders messaging, one of the talking points he used was literally verbatim from future of life Institute. I think it was something about how AI is less regulated than a sandwich shop, which is just not true. But future of life is one of these EA fund doomer think tanks and they've got something like a billion dollars of metallic butering donated 600 million dollars of dog coins to anyway. You just, I mean, this is one really weird sort of quirk about our media environment is we have these EA funded think tanks with literally billions of dollars. You know, it's guys like Dustin Moskowitz and they're the decals. They're the democratic socialists kind of arm. It's so weird that like New York is now taking the crown of most retarded state from California. I don't know how this happened, but they just seem to be making every mistake possible. Yeah, but hold on. I mean, just finished my point because you've got these, let's call them doomer think tanks funded by these EA billionaires. They have literally billions of dollars. You can influence a lot of public discourse with that a lot. Sure. And they are behind a lot of the nimbus stuff around data centers. They've been spreading a lot of the fud around data centers increasing your electricity prices, which again, I think is a solve problem now because the users, the I companies have agreed to pay for the incremental costs and stand up their own power generation. They've been spreading a lot of stories about water usage, which is just totally made up. I mean, the modern data centers recently water. Yeah, they're cool. So they don't use up water. But again, you've kind of got these doomer groups who are just trying to stop AI, however they can. And they're extremely well funded and they're having a big impact. And I think actually this is one of the reasons why you're seeing in the US. Again, that AI, I think is it's basically the least popular thing they can pull for except for the democratic party in Iran. And by the way, F.L.I, the future life institute, they also fund journalism, fellowships and elements of publications. So who probably writes negatively about AI? Yeah, exactly. Here's a look at this chart. It goes back now a little bit earlier than 23, but I have the data accurately from 23. So we're going into the fourth year. About 40% of all protested data centers in America get canceled. And so in 2023, this was the non issue. There were a few data centers that were protested and a few of those 40% of them, I think it was literally like one or two, God cancel. But then starting in 24, when you have this divergence of messaging or this chaotic slip shot messaging, and it was just a fever pitch to raise money, what you started to see was this fomenting of negative perspective by individual people on the ground. And so in 2024, about 40% of all protested data centers were canceled. Still a small number you could ignore it. But last year was when the bottom fell out, we had about 25 data centers canceled, about five gigawatts that God canceled. If you use Sarah Fryer's number, that's $50 billion a year of revenue, which is off the table because of what happened in 25. Now that has implications to everybody. Look at the amount of taxes that that would actually raise for federal and local and state governments all gone, vanished. In 26, just at the end of February, there are about a hundred data centers being protested, which if you flow that through, will mean about 40, we'll get canceled. And that number right now is about seven gigawatts, so another $70 billion a year of revenue. So just last year and this year, we've taken off the table $120 billion of cum revenue per year. This is a wake up call that this messaging is wrong. These people are not doing what is right on behalf of a very nascent and critical industry for America. There's only so much that sacks can do, the white house can do. All these other people are kind of at the periphery. But if the people that are on the ground don't get their sh*t together, this is a national disaster. Just to give people a sense of where this is happening, almost all of these cancellations are Virginia and Indiana according to some just cursory research here. And there have been zero cancellations due to local opposition here in the great state of Texas, where we have over 150 gigawatts of data capacity requests. So if you want to do this, come to Texas, talk to Abbott, talk to Ted Cruz, you just CC them on your tweet, and they'll have you to the poker game and they will greenlight it. Brad, before we move on, we want to get your opinion on open source. And how powerful it is and how powerful Apple Silicon is getting. I'm not sure how you factor this in at altimeter into your thinking. But this seems to me to be a massive headwind against the two big bets you have. All of these open source models, we started running them, picking up about 85% of our tokens right now. And every start up I know is saying we are standing up our local models and we only use the top models, the paid ones when we have jobs we can't do. So I'm just curious your thoughts on that. And you can add to that the auto research project from Karpathy that came out this weekend for people who don't know, we now have a group of tinkerers who are setting up their open clause and now setting up a large line of models and now trying to train them with his auto research tool. This seems like a parallel track that could be material. I'm just curious if you're monitoring it. I mean, first I would say that I am very enthusiastic for open source. Okay. We see it widespread use everywhere. But here's the interesting thing, you know, for the advanced companies, they're doing some like planning, you know, with the frontier labs and then they're kind of doing the execution, if you will, with the open source models. So they're running an ensemble of model strategy. But here's why I think it's more impressive. We have incredible open source models nearly on the frontier and notwithstanding that we're seeing companies like Anthropic at five or six billion dollars of revenue in a single month, which is extraordinary. We've never seen anything like it in technology. And that's in the face Jason of all this open source usage. So what does it tell me? It tells me that the tam is dramatically bigger than any of us think that it is. And that, you know, when we look back on this period, you know, that will be the big takeaway. It's a takeaway with Uber, the takeaway with Google, the takeaway with Amazon, the tam was way bigger. We've crossed an important threshold. Open source will be a part of it. But clearly the front, frontier labs can do well, even in the face of it. All right. A little housekeeping. The all-in summit is coming. And liquidity is, I think it's sold out. We're about to sell out. We've made a couple of tickets left. You can find both events at all-in.com/events and all-in summit tickets. If you want to get there quickly before they sell out September 13th, 14th, 15th and Los Angeles again. And for all the all-in listeners who are launching a survey today, this is super important to take the all-in survey. If you made it to this point in the podcast, if you are an early true believer in the pod, if you are one of the all-in stands, we need you to fill out this survey, all-in.com/survey, all-in.com/survey. All right. Let's wrap up with this final story that went viral. The millionaire tax has hit Washington State, Howard Schultz, CEO, longtime CEO of Starbucks, Has Bell. And he's gone to Miami. Surfside. He's in Surfside. He bought a condo in Surfside. He pulled a J-Cal. He pulled a J-Cal. I think you can be in a sexy pool. Well, yeah. I was never a Starbucks liberal before I left the state of California. Listen, I don't know how many times I have to make a scratch, and I am a moderate. I literally voted for elections in a row for Republicans. People have asked me for the receipts. Pataki, Truplee, Connie, and Bloomberg. I literally for almost a decade voted exclusively Republican. Washington's millionaire tax passed this week. Here's what the tax is. People making more than $1 million a year will pay an extra 9.9% in tax starting in 2029. The budget center estimates the tax will impact 30,000 households bringing another four billy for the state's general fund. The funds are supposed to go towards public schools, higher education, and healthcare. In a huge coincidence, on the same day, the new tax was passed. Power shouts, the billionaire Starbucks found them in huge goals. Did you say? Yeah. Just unrelated stories, but unrelated story. Yes. Unrelated news. He will be leaving Seattle after a 44-year run because he found out about these incredible Cubans. There was an opportunity. There was an opportunity to buy a $44 million condone serve side. He couldn't pass it up. It just happened to be on the same day that they passed a millionaire tax. He had the Cuban sandwich at Los Sanguich. He fell in love. Shultz has been getting crushed after saying when he ran for president that he would be willing to play more taxes. Bezos obviously left back in November of 2023. People speculated maybe the 7% capital gains tax would have influenced that. Who knows? So I guess, Chimoff, what is the end game here? Because for these local politicians, They must have learned the lesson that people of means can move. They have the ability to buy new homes, put their old homes on the market. They're very mobile and they could even leave the United States and go to Singapore or Dubai or other locations in the world. Why are they still enacting these and will they continue to still enact these until we get to 60-70% tax rates and we just lose all of the creators and this becomes an Iranian? I think that state politicians on the West Coast are very ineffective and not very smart. Nick, there's a tweet that was published. I think maybe it was infographic. That showed net migration rates of every single state for 2025. Washington is a few months behind California in trying to enact these stupid taxes and the reason they're stupid is these kinds of things don't work at the state level. We know what it's already done in California because the Hoover Institution just published something this morning and it's a complete indictment of what the billionaire tax was trying to do. By the way, this billionaire tax is only polling right now at 25% of the votes it needs. Maybe it'll find a way to get on the ballot and then even then it'll have an uphill climb to get voted in. Look at the destruction that it has done in California by just announcing it. The Hoover Institution basically ran this Monte Carlo simulation. They ran 100,000 runs and in 71% of those runs it comes out with a negative NPV. And if you expected value it out, it's about a $25 billion whole. They also found that they overcounted the number of billionaires in California so that number was wrong. They undercounted the amount of revenue that they pay so that was wrong and they overcounted the estimate of how much money that they would make. So they're not going to math. They're not going to math. When you add it all up, they thought they were going to make 100. They're actually going to make 40. The people that left pay three to five billion dollars a year of taxes. It's going to create a $25 billion whole. You're going to have the middle class that's now going to have to foot this because this is net revenue that's not going to come into the budget. That's about 2,500 per middle class household. There's about 10 million in California. So that's what's happened just by making the threat. Washington had a 23 hour debate and passed the law. So I suspect when you look back on this in 18 or 24 months, it'll be as bad or worse than California. These things don't make sense. The reason they don't make sense is that you are putting good money after bad. We all know that money that goes to the state governments are wasted. We just don't know how much. So when you keep asking more, eventually the smart people say enough, "Sinoff, I'm out of here." We might find out how much. I think Barry Weiss is on the case. I don't know if you saw her do her CBS report this week. She's going hard for fraud. Until you get fraud out of the system, I don't think you have the moral high ground to raise taxes. I think that should be the message. Well, all Americans send to politicians. That should be your campaign promise when you run. Okay. I have Jason Calaghanis and I will get rid of fraud in lower-year taxes. Look, you may have seen an even more severe tax was the federal level where Bernie Sanders and I think Rocana came out with their version of a national wealth tax where it wasn't just 5% once like in California. It was 5% per year. Year. So in other words, in roughly 20 years, the federal government is going to take all of your money. I mean, look, this is socialism. This is another way to get to the same endpoint, which is the government owns everything. They seize. Well, I mean, the seizure part of it, I think, is the nuanced point we have to get across, which is if you earned it in paid your taxes already, it's your stake and just decide, you know what? We didn't take enough 10 years ago. We need to go seize that. Hey, when you sold Yammer, we need to take enough. We need to take it now. Raise your hand if you believe that things you own are better off being owned by Bernie Sanders and Rocana. Raise your hand if that's what you believe. I mean, you'd have to be an idiot to believe that. Well, God, I know. I'll tell you the last time we saw these proposals of asset seizures was during the Gilded Age, you know, 1870 to 1920, you know, then it was Carnegie and Rockefeller. You know, it's interesting. I went back and looked at it. There were actually, like, it was actual warfare. We had hundreds of people killed in clashes, you know, during the Great Railroad Strike, the Pullman Strike, etc. And it was all over this. And so I think shame on the politicians that are fanning the flames of class warfare. We all need to bring the temperature down. There are fair debates on whether states have enough resources to fulfill their obligations to the citizens. There are fair debates about fraud. All has to be taken on. But I think it's interesting in the state of California, right? I think the teacher's union is against the billionaire's tax because they know it's going to lead to less dollars for education for the state of California. Matt Mayhan is running for governor is against the tax, the current sitting governor, Democrat against the tax, right? They all need to step up and explain not just that they're against the tax, but we, you're either on the side of business and entrepreneurs and creativity and moving the state forward and growing the economy or you're against it. That's what's at stake here. Unfortunately, the outcome of the battle during the Guilded Age was that America didn't abandon entrepreneurialism. We didn't abandon capitalism like Europe did. And now we played it out. One point on that. So you mentioned that some of the unions in California are opposed to this, this asset seizure tax. That's only because they weren't cut in on it. Right. Exactly. That California Teachers Association is working on their own version of a billionaire asset seizure for not this selection cycle, but for the next one. And next time they're going to have their ducks in a row and they're going to have all the pigs at the trough and all the danger they get together because the SEIU, UHW, they did this on their own. So again, they didn't allow all the other groups to wet their beaks. So I think that, unfortunately, I think that's been corrected. If this one doesn't pass, they'll correct it for 28. And it's more likely to pass because they're all going to do it. And the other thing is that I think that by 28, this national wealth tax will just be a standard part of the Democratic platform. It's going to be table stakes. Yeah, it's table stakes. I think that the Bernie Sanders' role-con of position will be the position of the Democratic Party. And you even see Gavin Newsom creating wiggle room for himself to embrace this position. If you look closely at his statements formally opposing the BTA in California, what he says is that a state can't do this by themselves because they got 49 other states to compete with. So what he's saying is that, look, California is operating in a comparative environment. One state can't do it. And then he's leaving the other part elliptical, which is, well, the federal government needs to do this. And I think that you can expect him to embrace that position by 2028. There is a way out here from the socialist movement. It's very simple. If you think from first principles, what does an American want? What does an American family want? What are mothers and fathers in this country want? They want to educate their kids. They want to be able to own a nice home. They want to have decent health care. They want to have healthy food. It's a very small subset of issues. And AI is uniquely positioned to solve a lot of these problems. And entrepreneurs can come in and take these highly regulated industries if we're allowed to participate in them. Education, we have to break this accreditation, you know, cartel. And then housing, we have to break these regulations like the great state of Texas, Nevada, and Florida have. And then, you know, when it comes to health care, this is where AI could have a tremendous impact. And entrepreneurs can have a tremendous impact in lowering the cost of health care and letting people solve for that with their own, you know, health care led, you know, self-led health care. These are the problems. If you solve for these problems, people's homes, people's health, people's education of their kids, we're going to solve these problems. And we don't need to go to socialism and seize people's assets. That's what entrepreneurs should be doing. That's what entrepreneurs should be working on. And that's what we're with the government. That's where Trump's uniquely qualified. He is the regulatory breaker. He got nuclear back on the agenda. No other president got nuclear back on the agenda for America. He can get housing back on the agenda. We have to break those things and not start foreign wars from an earlier point and start creating houses for Americans. Another amazing episode of the All in Podcast, gentlemen. >> Submission, you always give yourself the last word, J.K. >> Well, I go last. If you like, you can moderate. I'll go first. But I always go last. But you can give me a round of applause or you can throw a tomato. Go ahead, Zach. >> That's all good. It's all good. Go for it. >> All right, everybody. Another amazing episode of the All in Podcast. >> Thank you, Bestie Brad for joining us. >> Thank you, Bestie Brad. Love you, boys. [MUSIC] [BLANK_AUDIO] But we just need to release that album.