E160: 2024 Predictions! Markets, tech, politics, and more

27:18Say if you want a query New York Times information and have that as part of your results, you have to have a New York Times account, right? So if you say I want the best coffee machines or what's the best coffee equipment, it says, oh, if you had wire cutter and And the subscription to New York Times, we would include the wire cutter results. And this idea that technologists can't do citations has been proven absolutely incorrect. There are language models out there that are using citations all the time. Opening eye, I think we'll wind up losing the case if it goes to the man. I think they're going to pay a big licensing fee to your question, Tramon.

27:50My prediction then is that if this happens, this is not my pick, but I'm just going to tell you. I suspect that what happens is you'll get these yearly licensing fees and then one year, the New York Times just falls off a cliff. And when it comes time to renegotiate, then open a eyes as no. And they won't have a choice. Well, I mean, that's possibility, but if you think about the Disney characters, I don't know if you saw Nintendo and Disney characters making stuff on Dolly or other things, if you make derivative works on that and you wanna have that feature as part of your image creator, you just have to have a licensing fee.

28:26And so I think that there's a win -win here to be had. And I'm really interested to see the market -based solution because I don't think this is a Napster situation where like OpenAid gets shut down because OpenAid is too savvy. I bet you're the fourth. The big difference between Napster and this is there. The content universe was limited and small. Here is infinite and unlimited. And so how do you pay anything to anybody without, I just think it's like without direct attribution of revenue, which is basically impossible, you're kind of making a value judgment which I don't think makes any sense.

28:55I think doing a revenue licensing deal is impossible when you get into the weeds. When these business people sit down and actually start to try to figure out the bid -ass, I don't know as a rational coherent business person what you would model in order to present a number. Yeah, so one suggestion would be what percentage of the model's creation was using the New York Times data. And I think people say one to two percent of the original chat GPT was built off a trading data was New York Times. And then if they waited that heavily, like let's say they said, New York Times is an authoritatively five times more important than these other sources.

29:33That could be upwards of five to 10 % of the authority of that model. Yeah, but I just said, it's not easy. But what's the cause? Yeah, but what's the cause for the thing? Are you telling me that like the easy industry has this? It's going to be like a 30 40 % cause the goods. You could say that Chatchy PT where let's say Apple, I predict Apple will do this right, they'll do a language model where they say 50 % of the revenue that we generate from query or subscription to this goes to the people we built it off of or the licenses. Sure, why not? Why not? They're already, the music industry already does that.

30:05Would guarantee the death of the startup ecosystem and it would guarantee the lock -in a big tech? No, I don't think so. You could build models that don't have the data and you could build models with it. So it'll be a choice by the person who builds the model. And synthetic data might make it So you don't need the New York Times, Shmop. It's early days for synthetic data. I don't have an opinion. I'm just reacting to this idea that 50 % of COGS, then all of a sudden these aren't software companies. These software companies will have a gross margin of like 30%. Yeah. Well, what a Spotify pay for music.

30:35So the same argument is made for Spotify. Or Netflix when they realize it's in London. That's the difference. It's limited in scope. Meaning there's only ever one hit song from Rihanna that matters. Or J .Z. Or whomever pick Taylor Swift. And so it's a very scoped content universe. And so you can ascribe value much easier because then the user goes and actually listens to that song over another. This is about something that's happening under the waterline where you don't know how the iceberg is both. There are things under the model that do it. And then there's also quoting stuff. And that's really what the New York Times got there and caught them with their hand in the cookie jar.

31:09Is that when it was regurgitating, information and giving the results. It was quoting deeply New York Times proprietary content. And so that's where there's like a you're right about the training data, but you might be wrong about the Yeah, that could be fixed right they could I'm sure they could they could exclude Storing any proprietary data you can create a filter that says the model can't store any of this data But it can still be trained or can't use it right? So if you say what's the best coffee machine? It can't use the New York Times wire cut a data and I bet you that Sam Altman has already built a model without it I guarantee you they've already built a for an emergent press here in case of emergency Here's the 4 .5 model in case they got an injunction which would be highly unlikely But if they did get an injunction they just say okay here's 4 .5 it doesn't use the New York Times training data So this is all uncharted territory as we all know I think we got everybody's business predictions Okay, andro commodities training data and bootstrap profitable startups were a great cohort there Let's go on to biggest business losers in 2024 for 2023, Chimatz had Google search as measured by profitability engagement.

32:17SAC said the consumer, freeberg said capital intensive series BCs and D growth companies, that's pretty good winner there. And I said white collar workers without hard skills, also known as surplus elites. Any feedback on those boys? As your winner, I'll give you my prediction for 24. Please, yes, go ahead. and vertical SaaS companies, I think are gonna get smacked this year. And I mentioned this, I think we talked about this off the show, or if we talk about it on the show, I apologize, but like I think these tools to write code, no code tools, copilating tools, and the ability for engineers to get 20, 50, 100X more productive to build custom applications for their enterprise are so incredibly powerful.

33:07I mentioned this to you guys, I know of a couple of vertical SaaS businesses that some of my companies use the software and they're getting off the software because they've built homegrown solutions in a very low cost, very low touch way. And I'm seeing that so frequently now, I think this is a real threat to vertical SaaS businesses that can charge thousands of dollars per seat per year that are getting disrupted by the ability for companies now to very cheaply and quickly build homegrown solutions. You're giving a lot of the generative tools that are out there. SACs, your prediction. My prediction for biggest business loser in 24 is actually the German economy.

33:44There's two big problems there. First, is that the loss of cheap Russian gas has really cut the legs out from under the German industrial model. Their entire economy is based on industrial output. And cheap Russian gas was sort of at the foundation of that. As you guys know, someone blew up the Nord Stream pipeline. I think that has really hurt the German economy. And then second, the German car industry has been massively impacted by a sudden glut of cheap cars coming from China. So if you look at the Chinese automotive industry, it's really exploded in the last few years. And AutoX Sports is one of, you know, it's one of the biggest products that Germany manufactures.

34:30And with German costs going up and Chinese costs coming down, that's just not a very good place for them to be. So I think double whammy for Germany. Chimap. Do you have the biggest business loser in 2024? I am going to say that 24 is the peak in terms of valuations of professional sports. Oh, and I will give you four examples in 2023 that I think were in some very concerning or pro -sports franchise values as of today. The first was you had an upstart competitor to a league that came out of nowhere, used money to overcome the ability to attract stars, talking about the live tour versus the PGA, and then essentially forced the PGA into merger talks with them.

35:26The second was you had a country use their balance sheet to basically try to jumpstart their own professional sports business. In this case, it was soccer. The country was Saudi Arabia and the players were Ronaldo and Messi. They got one but not the other. The third was the explosion of NIL inside the NCAA. You have people in college now making more in some cases than the same player in a professional sports context. So they're making millions of dollars to be in college. And then the fourth, which may not seem like it's related, but there was an article in the Wall Street Journal, I think recently, about a meaningful uptick in turn amongst all the streamers, Netflix, Hulu, all of these companies, Amazon, Kua, the only folks within a position to actually have the balance sheet to keep paying a premium for professional sports rights.

36:22So I think when you put that all together, you can start to see that there's been a tipping point in enterprise values. The acceleration we've seen over the last decade has slowed down. So I would say that 2024 is going to be the year of peak pro sports values. Okay, starts to come down. And I went with smartphones. Smartphone manufacturers are facing a major slowdown. Consumers obviously love their phones and and use them constantly, but people are skipping a generation of phones. And if you look at Apple's revenue, they're having a very hard time getting people to upgrade. And so I think that's going to flatten out.

36:59They will keep trying to squeeze money out of it. I don't know what you guys spent on your iPhone 15 if you got it. But I always buy the top of the line. And I think it was $14 or $1 ,500 this time. And when I got the accountants, they said, oh, is this a new laptop? I said, no, it's a new phone. But I think this is going to slow down and people will during our study, they're going to skip two or three versions of it. I know I skipped for the first time. I skipped the 14 this time around. So I'm going with smartphone manufacturers and Apple would be obviously the tip of that spear. Let's keep moving our next prediction.

37:31Biggest business deal of 2024. Biggest business deal of 2024. I went with last year. My prediction was Amazon getting into healthcare. Maybe they buy Peloton or Roman Hems. And they have been getting into healthcare a bunch more. And my wild car was a CCP divesting of TikTok. That didn't happen. Tomat, you went Starlink goes public in a spin -off from SpaceX at 75 billion. That didn't happen. But Starlink is doing fantastic. Sacks, you said a deal between Putin and she. And then Freeberg, you said Petro for Juan Trade, the Saudi China trade. Any thoughts on the predictions there? Doesn't look like anybody nailed it.

38:11Well, no, actually Putin and she did make a deal. Their ties have been stronger and the trade between those two countries keeps increasing as a result of the fact that we pushed Russia into China's arms. So that absolutely happened. And what's your prediction this year, SX? Biggest business deal. SX, what do you have? My biggest business deal is whatever the Fed decides to do to replace or extend BTFP, the bank term funding program. Remember that the BTFP, which is what the Fed used to bail out the regional banking system last year and was like March or April, it was only supposed to last for one year.

38:46It's supposed to be a temporary program. But I do not think that the balance sheets of regional banks are healthy enough to survive without this continued liquidity from this program. So I think the Fed's going to have to do something, tie the replace the program, extend the program, they're going to have to do something. And I think that regional banks are still in pretty bad shape with impaired commercial debt portfolios and they need this liquidity as long as the yield curve remains inverted. So I think the Fed is going to try and somehow figure out a program to keep these guys liquid until they can and de -invert the yield curve.

39:32And I think the Fed's trying to massage all of this into place without there being a recession. Seems like they'll be able to do it. Jamat, what are you on? I'm gonna go with the same thing. I think I was just off by your sterling, with good public. Fascinating. I like it. And I had a similar theme, my wild card last year, that the C .P. with divestive TikTok, I'm gonna say this year that I think TikTok goes public and they'll be under pressure from different political factions to get the CCP off the board. So I'm going to go with by dance taking going public or TikTok spinning out and going public some some version of that.

40:10Freeberg, what are you got for this year? We got some continuation bets here from J. Calons. Yeah, I would go in with my petro you on trade bet. I don't think that the US is going to let Saudi become a nuclear power. But so maybe leave that one outstanding. But I think rights holder is getting licensing deals for generative AI or there's gonna be a couple of blockbuster deals this year Great Where you'll see like Disney license out of chunk of their library so people can generate on -demand video games or content or I don't know you guys remember this company in the early 2000s called Zazzle. Do you remember that company?

40:44Yeah, what was that printed stuff on bugs? Yeah, and they had a big deal with Disney where the idea was you could put any character in any way you want on any piece of like T -shirt or mug or whatever. Merch. And it was like merch and it was a big deal. I think we see that again with Generative AI this year where you can take for example a character from a movie and generate them in an image. So anyone that has interesting content rights will start to license it out and get a lot of value from it. Absolutely. Because there are a couple of big deals like that this year. Okay, most contrarian belief of 2024.

41:18I went American exceptionalism source. I think I like that prediction from last year ahead. Chimap, you said inflation doesn't fall off a cliff as fast as people want. Saks as the bromance between Biden and Zelensky comes to an end. Freeberg, you said 2023 marks the beginning of the end of the US dollar as the global reserve currency. I nailed that one. It didn't fall off a cliff? It didn't. What was inflation in the first quarter of 2023? Just get a good fellow. Oh, I'm like, wait a second. It's like what the fuck you talking about. Yeah, sorry, you confusing me. I'm like, really? Wait a second.

41:57I think you get the Jim Kramer or the Professor Galloway moment for that prediction. Yeah. I think you might have missed that one by a bit. All right. What do you got, Chema for this year? What do you got? Most contrary, I'm relieved of 2024. I think the enterprise value of OpenAI goes down. I don't think it has anything to do with OpenAI. I think it has everything to do with the rest of the industry. I think there's a couple of factors that play similar to what I just said earlier. If you actually try to use these tools, which now I have been in my sort of day job as CEO, I've been trying to build models.

42:35Sonny's been helping me. My takeaway are two things. Number one is the latency right now amongst all these AI tools makes building production quality code absolutely impossible. So you can't have APIs where you take 30, 40, 50 seconds in between a request to get data back. That's ridiculous. These needs to be non -starter. 50, 30, 40, 70 milliseconds. Second is the actual cost of a million tokens on any of these platforms is economically untenable if you're trying to build something. So whether it's Amazon, whether it's together AI, whether it's open AI, it's extremely, extremely expensive. So I think that capitalism would tell you that if these two things are true, you should expect people to arbitrage that opening.

43:31And so if you see cloud services come out that allow you to basically get millisecond latency batch size one on the one hand, and second, where you have pricing for a million tokens that sort of 10, 20 cents, those folks, and they'll need to build their own custom hardware to do it. But those folks will multiply the capability of this market by a thousand X. And I think when that happens, the open source models really proliferate, proprietary models and closed models go under pressure, and the existing economics of how you make money today will get reallocated to those different players. And I think in that, it's going to be very hard for existing folks.

44:13And I would say the same is probably true for Nvidia. The folks that have won up until today to maintain a multiple of market cap in this next year if that happens. And so So my prediction is that will happen. And as a result, the enterprise values of those companies, and I think opening out will be the most obvious, will go down. People buying secondary at 90 billion right now will be under water next year. Well, though, it's, again, they have to believe that the revenue composition today is sustainable. And if you look under the hood, half the revenue is consumers paying subscriptions. The other half the revenue or enterprises paying for essentially some version of AWS.

44:51Yes. But the problem is that version of AWS is economically non -functional. It's unsustainable. It's way too expensive and it's way too slow. And by the way, that's just not an open AI problem. It's an entire industry problem. And so if this industry is really going to be real, it needs to be literally dirt cheap and as close to zero as possible. The minute that that happens, that revenue goes away. So then I just laugh at the subscription. And people, by the way, the people that provide that will be the ones that have the hardware to enable that thousand X -ing of the cost, which is Azure AWS and Google Cloud.

45:28No, no, no, I think these are startups that are building proprietary hardware. Oh, okay. Wow. So there's another prediction. Freeberg, what do you got? 2024 prediction, most contrary to belief. Okay. So I don't think we're past the conflict escalation stage. I think things are only going to continue to mount. So a lot of the theater that we see on a global stage is more fundamentally driven by these big cycles that we're in. So I think a big one and a kind of tactical one, I think the big one that's contrary and is that there's an increased probability of a nuclear weapon being used for the first time and conflict.

46:07And I think that that's conditioned on the fact that there are declining military supplies, there's declining appetite and capacity to support traditional conflict, meat grinder type conflicts that we're seeing sprout up everywhere right now, and it worked not everywhere, but in a lot of places. And you could see a moment where, as I mentioned in the past, someone gets backed into a corner and a tactical low yield nuclear weapon gets used. And I think that when you do that, it opens up the gates to hell. So it's a little scary. That's why we all joking aside. That's why you bought the radiation suits.

46:42And by the way, I don't think this is a high probability. And I'm not joking. I don't think it's a high probability. I think it's like, you know, call it one to two percent chance, something like this happens. But it's 10x where it was five years ago. And so that's why that's - And the outcome of this is terrifying. Yeah. It's such a significant event that it's definitely one to kind of be thoughtful about. And then the other one that I kind of said was tactical is I think there's a risk that Turkey gets challenged to leave NATO that a lot of what's going on right now, we're Turkey is citing with Hamas.

47:13This has obviously been talked about and rumored about for a long time. There's no real mechanism, by the way, for kicking a member out of NATO. But I'll share with you guys. There's a lot of political commentary that Turkey cannot be a trusted ally. And obviously that now Turkey is citing with folks who are actual threats to the West. The US incentive is you don't want to see Turkey with the biggest, one of the biggest armies in Europe run into Russia's arms, you're going to try to keep them in NATO, but there is a real risk that you start to see the first fracturing of NATO happen with Turkey being asked to leave or some negotiation on something that happens this year.

47:47So that's one that I keep an eye on that is certainly not top of anyone's mind, but it certainly begins to beg the question of the importance of NATO. What do you got, Sax? You're most contrarian, believe. Can I first make a comment on last year's pick? Yes. It's okay. So last year I felt like I was going out on a limb predicting a rift in the bromance between Biden and Zelensky because that really seems so tight. And with about four days left in the year, there was this article that came out in Politico that says the Biden administration is quietly shifting its strategy in Ukraine. The article basically says that the administration wants to go on the defensive and I think pretty clearly it wants a ceasefire and a frozen conflict.

48:29It wants to get this conflict sort of out of the way swept under the rug before the election season really cranks into our gear. And the problem they have is that Zelensky does not want to negotiate a ceasefire with Russia that would involve Ukraine losing territory. So there is now a rift between maybe not Biden himself, but let's say Biden operatives, the Biden administration and what Zelensky wants. And I think this will be a theme in 2024, is how do you reign in Zelensky after you've been telling the public for the last two years that our job is to support whatever Zelensky wants? And your prediction for this year?

49:10So my prediction for this year is that the soft landing gets very bumpy. I think that over the last two months of the year, I think markets got super optimistic. They started pricing in big -fed rate cuts. Let's call it one and a half percent. So we had this huge stock market rally in November, December, and I think there's generally a very strong belief that the Fed will be able to pull off the soft landing. I'm not necessarily saying that there's going to be a recession. I just, you know, I feel like I predicted 10 of the last two recessions. So I keep basically predicting recession when there's not one.

49:44But I do think that there's been too much too soon of this euphoria. And I just think that this year is going to be a lot bumpier than that, both politically and economically. So I think there's just a little bit too much euphoria and over optimism right now. I've attempted to go again with American exceptionalism. I think I know that last year, America just had an amazing year in 2023 while Xi Jinping paying made unforced errors and getting rid of capitalism in his country and nobody starting companies there on stock market falling apart, real estate falling apart. And now he's coming back to America as we saw when he had a summit with Biden asking people, please come back and invest again, huge unforced error.

50:25And I think Russia with the huge unforced error losing hundreds of thousands of their citizens, their young people to a senseless war for no reason and losing customers in the West like Germany as you pointed out, SACs, I think American exceptionalism will continue to soar, but I don't want to take the same prediction. So I also consider two other options. Apple making huge gains in generative AI and then streaming services, right sizing and becoming highly profitable and having a rebound between those two. I think I'm going to go with Apple as my contrarian belief. I think Apple is going to become a player in AI the end of the year, maybe they reboot Siri, but they're going to figure something out.

51:06And I think they're not going to remain on the sidelines when it comes to AI. So I'm going to go with Apple making huge gains in generative AI or AI in general, maybe a new Siri coming soon. Best performing asset of 2024 in 2023. I went with seed stage investing. I think I'll be proven right in five years. But that's kind of hard to prove in the short term, Tremoth. You said cash and the front end of the yield curve. Sack you went with short term tea bills as well and freeberg you went with semiconductor capital equipment oil gas services Farma infrastructure anybody have thoughts on their predictions from last year Cash was pretty good at 5 % no kidding right as good as it gets.

51:45Yeah, this is not a lot of motivation to enter the markets when you're Learning 5 5 and a half percent risk free. Okay, so let's do our 20 24 equipment up 60 % amazing Good. You're good here freeberg What do you got? What's your prediction for best performing asset of this coming year? Oh, I took the Uranium ETF you are easy money Whether it plays out in the next 12 months or over time I'm not sure it's if there's an inevitability a lot of folks have this bet on this trade on it's It's kind of an entertainment we have to see It's a it's an index on a business is that Benefit for mining and producing nuclear power with money Uranium producing the power China is building up of 415 nuclear power stations, as we talked about, there's a lot of ESG driven demand, and a lot of conflict driven demand, big shift underway, a lot of deregulatory effort underway, globally to try and get nuclear back on track, nuclear power back on track.

52:42So these companies are gonna benefit from this big macro cycle. So it's a - And this is an existing ETF where you're saying, you roll one. No, it's just one of them. You're any, it's a Uranium tracking ETF. URA is the ticker. I like that a lot and sent it to me. I do a lot of esoteric general statements. This one I thought I'd go a little specific. I like it. I mean, it's a great prediction and sentiment has certainly changed here in the US. That trade has been on, right? So since I'll just tell you guys, it bottomed out in March of this year at 19 bucks. It's up 50 percent since then. And in the last five years, you know, it's up to X, but plenty of room to run if you We looked at the underlying assets that the ETF tracks.

53:25Chimoff, what do you got? Best performing asset of 2024. What's your prediction? I have to do it with the worst performing asset of 2024 because it's a bit of a spread trade. So I'm gonna take the public software index, tech stock index, and my short is going to be the private tech software companies, the late stage, mostly SaaS companies. And I think we've all talked about the reasons why, but I think that the terminal valuations are getting reset in the public markets. I don't think the growth rates are there in the private companies. And so you're going to have a reset on valuation. In many cases, that reset may just be that they stay at the same valuation three years later, even after doubling revenue or more.

54:10The problem is you will have taken another 30 % delusion between now and then because of all the stock -based comp that these private companies give out. So long the public tech cycle short the private late stage tech cycle, expecting a valuation contraction in the latter. What do you got, Sax? What do you think is going to be the best performing asset of 2024? Well, I'm really not sure about this. So I would urge nobody to actually trade on this. Yes, this is not investment advice. It would be clear. None of this is investment advice. Yeah, I'm not trading on this on these predictions. So you shouldn't either.

54:45My guess here, just a guess, is energy stocks. Energy prices could be among the top performers of 2024, just because there's so much risk of conflict breaking out now and escalating. So I agree with Freeberg that there are huge risks of escalation in the Middle East. The crane war's still going on. I think not enough attention is being paid to what's happening between Venezuela and Guyana. Yeah. Venezuela is basically attempting to annex Guyana's offshore oil reserves, which are huge. This is basically just pure theft. Ethiopia also has tense relationships with a few of its neighbors, and I could easily see there being a war that breaks out between Ethiopia and Egypt or Ethiopia and they're at Treyah.

55:38And then that could spill over and create further disruption in the Red Sea. We also still have this unresolved issue of the hoodies and of course you have Neocons bring for war with Iran as they always do John Bolton dispolish another piece saying that we had to go to war with Iran So there's just so many ways that the conflict could escalate and create I think a spike in the price of oil All right, you know, I'd love to I in my heart of hearts. I believe the best performing asset will still be seed stage Startups But I'm going to go with consumer comfort services, I think as austerity measures and this, whether we have a soft landing or a recession, it's clear the consumers have spent all their money.

56:21So they're going to go for small luxuries like DoorDash, Airbnb, Uber, small things to have great experiences. And I'm talking my book in two out of those three, which I own shares in. But I think consumers are going to keep treating themselves to getting some door dash or you know getting an Airbnb and going to Japan or whatever it happens to be so Consumer conference services is my pick for the best performing asset of 2024 worst performing asset. Let's go right on to worst performing asset. We're cooking with oil worst performing asset. I will with energy, Tommaso and tech energy junk debt Sacks went with office hours in San Francisco and Fribberg went with consumer credit I think we nailed it in almost all those cases here.

57:04What do we got for 2024? It's actually got a 2024 prediction of worst performing asset. Again, this is not investing advice. Yeah, so I'm not going to trade on this. So just take it with a grain of salt. But I would bet against the magnificent seven, just because I believe that what goes up must come down and the hotter they are, the harder they fall. I'm not saying that the magnificent seven are actually going to go down. I'm just saying that the S &P 493 are going to catch up a little bit. So I would book this as a spread trade where I would bet on the S &P 493 over the Mingiffs and Seven because again, I just think that there's got to be some catching up here.

57:46And the huge gains made by the Mingiffs and Seven were really based on story, you know, based on AI. And I don't see why those gains should be limited to the miniaturists and seven if AI is going to place too big a role in the economy. Chema, I too when you predicted earlier about opening AI, losing some value, my worst performing asset in 2024 is LLM startups. I believe they've been massively overvalued. And I believe open source is making an incredible run at them. And I think they're going to hit parity and there's too many players. This is like having 15 search engines or 20 Amazon's. There's just too many players and there's too much parity.

58:27The prices make no sense and I think they're all going to come down by you know 50, 60, 70, 80 % in terms of their valuations. That won't get marked in their books but that will be the reality of where their stocks will trade on the private markets. Freeberg, what's your worst performing asset? We're just performing a set point. Just based on what I shared earlier, I would go short, vertical SaaS, vertical software companies and long cloud providers that have AI tools and platforms that will allow enterprises to build custom applications in a low cost, low code way. And so you could obviously pick the companies that would go in that bucket, go along those cloud bucket, and go short that vertical bucket.

59:09Is there like a per -seat price threshold that you think would kind of demarcate the companies that you think are a risk? In other words, I invest in plenty of SaaS companies that sell seats at 5 -10 bucks per super month. I'm just very skeptical. They're not going to have this worth. I'm not going to have this worth. And then it prices while to recreate that software. No, and so I'll give you an example that there's a vertical software provider. We're paying five grand per seat per year right now. And we look at that and we're like, okay, it's basically a data management tool for our particular vertical.

59:50Let's just go recreate that and did it very quickly, very low cost. And we're going to replace it. Cut that out. I don't want to say that. But yeah. Is it? So it's like, you know, very specific, very expensive. But I mean, Zach, you can probably see the same thing happen in sales CRM type tools that are obviously also very expensive and how much is a data? I received how much do you pay? 5 grand per year. 5 grand per year. So that's basically like over $400 a seat per month. We have like 100 employees. So we're paying like 500 grand. And so one of our software engineers is like this. It spins up a replacement for it.

1:00:27We're going to roll it out in Q1. Okay, so is there like a per -seep per month price that you think starts to where it doesn't work? Is it 50 bucks? What is the number? I mean, I do the math, but yeah, it shouldn't be in the range that it's at for sure. But a lot of these guys waited, they had a monopoly, and it wasn't worth the company's time to try and invest in software. At the price point that they were charging, they found a market. Now the market has to compress. So I'm not saying that the company's go away, but I do think pricing compression is going to hurt these businesses a lot. If you could pay 50 for the same software instead of 500, you would not have spun it up yourself.

1:01:00So there is a reasonable number between those two. Correct. And that reasonable number might be 250 or something. But here's the thing that we need to also factor in, which is that Freeberg's companies, that engineer, could also then just release that product for everybody else to use at 10 source. And everybody else will then use it, because it'll be good enough. And that 80 % assumption will take over the market. Yeah, that's my point. there's going to be price and compression. This is the thing, like, I think that people underestimate how deflationary this whole thing is. If it's like, yeah, exactly.

1:01:31It's like two or three orders of magnitude more deflationary than people have any inkling of. Yeah. Interestingly, I had Dave and Hanmer Hanson on this week in startups and they're releasing something called one .com where they're going to charge for software one time, like we used to do. And their first product is a slack killer. And so the idea of paying per seat for slack, what they're planning to do is just charge you, you know, And then you'll find a hosting company. So you'll host it. Okay. So it's old school on Prem software on Prem. And then you pay it up great fee when you upgrade the software.

1:02:06Basically, I think they're going to paint them like a maintenance percentage. That's why I thought it was cool enterprise software. Right. The pricing model was the revenue model was always built. When you did a sale, you would make on average 20 % of the revenue per year in updates. these. And so now and then everything switched to SaaS, which is continuing to support, maintenance, all that kind of stuff. So it's never, they say it's one time, it's one time for the software, but if you want to stay up to date and get support and patches and all that kind of stuff. Yeah, and the old school enterprise software model was always like figure 20 % of the install cost.

1:02:43Anyway, this is one of the reasons why Oracle made so much money is they did a roll -up of all these old school on -prem software companies that weren't growing, but the maintenance fees were just rolling in forever. And they rolled all that stuff up. And they probably raised the fees. I mean, for me, when you have a 20 -person company, 50 -person company, the Slack fees don't seem like a big deal. But when you get to, when you're spending $500 ,000 or a million a year on something like Slack, then maybe you would consider other options. And I know people at large organizations that have done that because there's an open source competitor to it.

1:03:17So that does exist in the world. Okay. Now, but what freeberg is bringing up is like, why would you support 500 ,000 to a million dollar a year op -ex for software? I mean, can you really put a model together that shows that that's somehow a creative team, especially if you're a money losing startup? It just doesn't make any logical sense. I understand that it happens. And the fact that that software SaaS companies have been able to make 80 to 90 % margins and grow on that But it has created the best business model in history. But I think what may become apparent now is that the SaaS business model is really a temporary phenomenon that existed between ubiquity of the internet and the development of AI and low cost low -code tools for developing software.

1:04:01Yeah, it was an arbitrage of the DERTH of engineers. It was the gross margin that was correlated to the market. And now that the work that software engineers could have done has been automated into software itself. You were going to see a lot of that Arbitrars say differently freebrook You could say like the number of engineers has now Multiply by a million fold that's right and now everyone has them available So then they can build models. We're not gonna be 90 % the gross margin is maybe 30 % right and so so everything gets competed away and pricing goes down pricing gets compressed and that's why this is a big macro trends for me Like I'm and I'm just seeing it across every company everyone's Rethinking whether or not the baby seat fees for all different types of software tools By the way, the part of that, which is economically true, is if you look at every other category in the economy and you look at the gross margin profile of businesses that are not pure play tech, we have grown up and we've monetized this belief that tech companies not only can start at 80 to 90 percent but stay there indefinitely.

1:05:01Stay there. They should be at 40 percent. Not even every other market can start off in the 50, 60, 70 percent when they're nascent, But capitalism competes away those margins. It keeps down to 30 to 40%. Right. And a best in class business generates 20 to 25 % EBITDA margins on a sustained basis. So if you believe that the average best run company is a 35 % gross margin business with 20 to 25 % free cash flow margins, tech stocks have a long way to go down. Exactly. Software, software companies. Yeah. Software companies. But if it's priced below the cost of you rebuilding it, then you're not you're just it's a buyer But the point is like when somebody does that so freebrook's company did that work He doesn't even need to need want to make a profit from that software to just say anybody else can use this I have an auto GPT that will basically configure myself to you if you want to use it and now that in plus first company who's starting up with two or three people can now raise an order of magnitude less money and will write the GPT that connects to his.

1:06:08Absolutely. So this is my point where like it's just a race to the bottom. Yeah. All right. Last year for our most anticipated trend, Chimoff and I both picked austerity. Feels like that came to fruition. Exactly. You're kidding, right? We did not see any austerity. We added like two trillion to the debt. I was talking about 34 trillion. I was talking about consumers and companies and individuals. Well, consumers didn't cut either. I mean, they kept spending and in fact, credit card debt is now at the highest level. It's ever been. So where's the austerity? I think it's happening right now where people are maxed out.

1:06:48You're already starting to see it happen with travel and some of those areas. But yeah, we could be off by six months on this one. And Sack, you said Trump's influence in the GOP wanes. That was definitely wrong. Yeah. That was special thinking. Freeberg, Selgin, there it is. Oh, it was for you. Wishful for you too. No, that's true. I mean, I - No, I never again, you don't want him as your candidate. Well, I can explain that. I mean, at the end of 2022, we had that election that was supposed to be a red wave and it turned into a red puddle. Remember that? And it was a big part of the reason. It was a big loser for the GOP and a lot of the candidates, I'd say in particular, that candidates who had been endorsed and supported by Trump ended up losing and not doing very well.

1:07:28And then by contrast, it seemed like the one part of the country where the Republicans had done incredibly well was in Florida, where obviously the census went by like 20 points and added seats to their majority in the legislature. So it seemed like going into the year that the census was kind of the era apparent and Trump's influence would Wayne. But like you said, that may have been wishful thinking is clearly not what's happened. But a big part of the reason why Trump's influence is greater than ever is because of all this law fair, all these indictments against him and this prosecution and persecution of him by Biden and his minions.

1:08:06It's really, I think, galvanized the base to support Trump. Freeberg, last year you said Sel Jean therapy becoming more mainstream. How did that one and pan out your prediction, most in post -age trend. I don't know about mainstream, but I mean, we've seen more approvals this year. It's been good. I mean, steady, steady pace of progress. I saw the sickle cell product come out. Sickle cell came to market, yep. There's a few more that got approved. So in cell therapy, so it's great. And we're seeing good progress there. And I remember there's like over 1 ,000 in clinical. So there's this tidal wave coming to market soon of cell and gene therapies.

1:08:42They're gonna have a profound effect on a lot of disease conditions. So really exciting. Friber, you want to continue and tell us what you're most anticipating. So this year, I'm really excited, based on the progress we've seen in 2023 of predictive models, AI -driven discovery, of novel molecules, materials, and methods of production in Biopharma, in chemical engineering, lots of new materials, new drugs that are actually coming out of software, not coming out of root force, wet lab, discovery processing. And then we're also seeing these really amazing, generative systems on production processes in chemistry that are going to unlock all of these new products and grow up costs.

1:09:27Going back to the deflationary point, not only does this introduce new products into the world that are going to benefit humanity, but it reduces the cost of making them and reduces the footprint of making them. So there's a lot of great benefit coming from these predictive modeling tools that's starting to percolate its way into these industries. So I'm excited about seeing what comes to market this year. I'm sure we're going to have a science corner at some point this year that says, look at this amazing new thing that was discovered in software and it works. That it's going to be really cool.

1:09:53Okay. What do you got you, Moth, for your most anticipated trend of 2024? What are your most anticipating, Moth? I think this is the most important year for Bitcoin that has ever existed. We are probably days away from a series of ETFs being approved. And so this is the moment for Bitcoin to use that old term across the chasm and really seen mainstream adoption where our parents and our grandparents understand what it is, can buy it and then do buy it. And I think that if all of this comes to pass Bitcoin will be a part of the traditional financial lexicon by the end of 2024. So that is my most anticipated trend of you.

1:10:42What do you got SACs for your most anticipated trend of the year SACs? Which of us has a pretty good one. I think there's a version of that same thing in AI. I mean, it's hard to know exactly what all the advancements are going to be in AI, but you know, when we look back on it in five or ten years, it's going to be pretty clear that the exponential pace of advancement in AI continued. And so I can't say exactly what those breakthroughs are going to be this year, but they're certainly are going to be some. And I think we'll see those innovations continue to percolate down to more and more of the average sort of mainstream consumer.

1:11:19Sacks, once again, you and I are simpatico. I picked my most anticipated trend of 2024 whereas efficiency in the form of AI advances and outsourcing. Basically, a lot of Americans don't want to work or they want to work from home or they want high salaries. We have record low unemployment. Thanks to Biden, I'm joking. But all of this is forcing people to build robots, AI, and software to route around, and make things more efficient. And I think the number one trend I'm seeing from startups and they tend to adopt this stuff early, is outsourcing to all other geographies around the world for work because it's so easy once you have a work from home, philosophy or paradigm at your company, well adding somebody from Portugal, Manila, Argentina, Canada is the same as adding somebody from outside of New York City or Silicon Valley or LA, but you can do so at a third of the price for somebody maybe who really wants the work.

1:12:21And so I think efficiency is my most anticipated trend, but in the form of AI and outsourcing. Okay. Now, media, everybody loves when we do our most anticipated media for 2024, for last year. I had Oppenheimer. Wow, that was great. Chimath, you had Dune Part 2. That was delayed. Sacch, you also had Oppenheimer. What did you think of Oppenheimer, Sacch? Did it deliver for you? Have you seen it? I thought it was good, not great. It was very long and the kind of went on long. It's not a movie I need to see a second time. Let's put it that way. Okay. And Freeberg, you said, Generative AI -based media.

1:13:00For this year, I have to confess I have inside information. So my prediction is going to be the winner. It turns out our favorite DJ is dropping a new album in 2024 and I got to release track. So my most anticipated media, I'll just play the wrote the The Pungleys track here. What is this? According to NASA, there's a new look at Uranus Uranus

1:13:30Uranus is this young spielberg? This is young spielberg Coming back to the summer jam of the year

1:13:47It's a banger. Well, there it is. Talk about my end is coming at you. That was a banger. Obviously likes the deep bass of my voice. It does like the deep bass of your voice. It is in. Yes. So that's a banger. That's going to be, I think that, that's going to be the summer anthem. The new album from Youngspielbuck Dropping. That's the lead title track, Your Ains coming at you. I also am looking forward to Gladiator 2 is coming out. Really Scott Lucius, the nephew of Comedis. is a grown man, it's gonna be awesome. I hope, and Netflix's three -body problem, if you have one of the books, they're great.

1:14:23And that's being done by the game of Thrones guys. That's gonna be awesome. That's gonna be awesome. And that's gonna be awesome. D and D. Anyway, three -body problem -gladiation for me. Well, as the books ran out, they were kinda, yeah, they were kinda on their own there, and the show kinda declined. It was a terrible last season. In this case, the three -body problem is a complete series, and it's mind blowing in terms of its epicness. Sacks, what's your most anticipated media of 2024? Is there a Putin biography coming out? Is it Alex Jones's biography, 10 -part series on Netflix, what are you looking forward to?

1:15:00Well, I agree with you about Gladiator 2. We actually have some low -chase and movies. I'm also looking forward to House of the Dragon Season 2. Oh, yes. But one project I will give a little plug to is Jimmy Sony's book The Founders, which is the story of PayPal and the entrepreneurs who shaped Silicon Valley in the sub -boss. That came out in 2022. The reason I'm mentioning it is because I optioned this book along with Jack Selby, who's another PayPal mafia alum who has a film company. And so we've optioned this and we have just made a deal with Drake's company called Dream Crew to turn this into some sort of television series, could be done as a docu - Wait, did you say Drake, the musician Drake?

1:15:41Yeah, he actually has a very successful production company called DreamCrew. They're the producers of Euphoria, which is this huge hit on HBO. Terrifying. So they've signed up. It is kind of a terrifying show. It is terrifying. It is terrifying. It's incredible show but terrifying and yet it is scary. Many of them it's a big hit. So they produce a lot of not just music but television content, they're very interesting in the story. And so we're partnering with them to create a TV show. So hopefully that comes together this year. Are you in production this year on it? Or is it? No, it's going to development this year.

1:16:16Development, hopefully. You get any deep credit sex? Yeah. Oh, how much does the money on the rest of us to get EP credits? 50, 50 grand. Yeah. Is it 50 grand or is it 50 grand? This is going to be an expensive one. Oh, really? Well, who's your dream? Is it HBO? is a dream or Netflix. Yeah, who falls for that? Ultimately, a studio would make this. Right. You would want HBR and Netflix, I take it. Those are the top two in terms of making high quality stuff. They'd be really good. Yeah. But there's not to be those two, but they'd be good. It could be Amazon Prime. I mean, there's a lot of these.

1:16:49And who are you hoping plays a young sack? Who would play a young, good, good, good, good, good question? That's a good question. Who would play a young David Sacks? What's the name of the guy that's dating Zendaya? What's his name? Tom Holland. How about that Tom? Oh the big Peter Parker Peter Parker. Yeah. How about me Bobby Brown for you? One guy can play a young sex that it would be Ryan Dossett. Oh you guys are really shooting the moon with this Hmm Tom Holland's interesting. Jake Health busy on the internet right now. He's gonna No, I'm looking I'm looking on the internet for a young actor to play you sex.

1:17:22Well, well, well, let the audience come back to that They love the audience decide who plays a young sex. Yeah, Chimoffie look at for anything in media in 2024 Did you have anything for us to look out for Jimmy Donaldson mr. Beast added a hundred million subscribers on YouTube in 2023 More than two times the next largest Channel and if you watch his content mr. Beast channel. It's incredible and that has become Event -based viewing now for hundreds of millions of people so I am I'm really excited to see what production value gets cranked out in 2024 from these guys. But that's my most anticipated media is Mr.

1:18:05Beast. And Freebird. Anything you look forward to in the media space in 2024. I mean, I put AI -generated news, which I think has become like an interesting. Have you guys seen these? Where there's like a broadcaster that just tells you the news and they're like, naked? I haven't seen that. No. That was the big news. your early days of the internet, right? Wasn't there like naked news or something? No, that was like a mean from the naked news. And I was like naked news where like these people would be like in the process of undressing as they like read the news. It was so stupid. Oh really? They were always really dumb, but it did capture people's imagination naked news.

1:18:45You could basically watch newscasters naked read the news. I do think you're gonna see a lot of this real time in generative video that's going to take if it's input news feeds and develops them understanding and then presented back to you in whatever visual format you want. And so you'll have your own personal newscaster presenting you the stuff that's interesting and be like, no, no, tell me less about them at least. Tell me more about Wall Street. Tell me more about tech. And you can basically interact with it and curate your own personal news feed, whether that's through video or through text or through audio, you can have it presented to you any way you want.

1:19:18So I'm really excited for the date that happens. And so I don't have to do this girl through Twitter all the time to get news. And I can have, you know, a personally curated needs cast there to your point. One of the things that one of the tasks that I had this year was the kind of like take a model and learn how to fine tune it. And sunny and I we took stable diffusion and there's a mod to it called juggernaut excel, which basically produces no, the most beautiful people you've ever seen. Like under any boundary condition, it doesn't matter what prompt you give. Handsome. The people that it generates are the most stunningly symmetrically beautiful people.

1:19:54And all it's going to take to your point is just put this stuff together next year. And you'll have these people that capture your attention and can keep your attention. And they'll tell you the news or whatever. And you can just say skip. You can say, tell me more. You can say, go back. You can say, hey, I want to hear more, like, double click on that story and interact with it. It's going to be incredible. I do think it's going to happen in 2024, where a series of products will come out that start to look like this and it'll get in terms of attractive views. If that as they're telling the news, you can have another agent that's basically scoring it and telling you how biased it is.

1:20:29Yeah. By the way, I'll tell you a crazy story yesterday. After Jason took Natt and I out yesterday, we had an epic day. It was incredible. It was fun. I was totally gassed skiing. And so I took an app and I fell asleep for like 40 minutes. And I woke up and I turned on the TV and I watched CNN. for 20 minutes. Have you guys watched CNN? I can't watch more than a minute. It is so bad. It is for all network news. Yeah, well never. No, it's really bad Jason. Like now by this it is and just how inaccurate it is. If you were to watch it for an hour a day, you would have this totally lopsided view of what's going on in the world that is completely not accurate.

1:21:10But here's my here's my point. There's nobody fact checking CNN just like there's nobody really fact checking Fox News. But my thought is these models and these AI tools should be the thing that presents objective news and then actually just tells the truth I disagree I think what will happen is people will bias this the the delivery to what they want to hear and you'll end up having Something that's going to become more of an echo chamber for you. I want to hear more about how X Y or ZE is so great I want to hear less about the stuff that I don't agree with and you're gonna curate your news to exactly what's happened with social media So I don't know if that's necessarily how this will evolve to my things people don't like to hear what they don't believe or what they don't already know.

1:21:44They don't want to hear the truth. Yeah, they want to hear the truth that speaks to them. They're version of the truth. They're mostly titillated. You know, it's about time I let you guys know that we ran an experiment right now. Chimoff and Freiburg. I did this with Saks's permission, but Saks's participation here today was actually his AI. This is an AI version of Saks that we programmed. AI Saks, can you reveal yourself and what training data went into this version of AI Saks? Can you Can you give us something about your training data, AISACs? What training data was used? If this is a bit you want to do, you're going to have to give me more bad stuff.

1:22:20I mean, I'm sorry. I'm hilarious now. We actually trained like a SACs model and we had them come on and we tried to pull the audience. Can we just do a quick roundtable if you guys were to summarize your, in one word or two words, your emotional condition for 2024, what would it be? Like how are you feeling going into 2024? SACs? Oh, I feel fine, but if I were to describe 24 and one word, I would say the years can be turbulent. Tribulant that I feel I feel levelless not me, but I feel like the world's going to be very turbulent. Jacob, kind of exhilarated, enthusiastic about 2024. It feels like a lot of the cleanup work, you know, that we had to do in 2023, 2022.

1:23:06I feel like a lot of that's, we've worked through it. And I'm finding a lot of optimistic. So I guess I would be, you know, enthusiastic and optimistic about 2024. I'm really excited to go to work and create. I want to create some new things in 2024. I feel very creative. Creative. Yeah, creative. I would say cautious and pensive. I think that just a lot of stuff is changing underfoot. and I'm personally not excited to make a bunch of decisions because I worry that those decisions will have to be remade or unmade even nine or ten months later. So I'm just kind of like very defensive. I'm like, wow, a lot of stuff can change, will change, even just like, you know, and then Freebird noses.

1:23:59But like, you know, there's like some deals underfoot that like, I think for the industry as a whole are just really meaningful things. And so to do stuff right now, Freeberg makes me very anxious. So, right, I'm really cautious and defensive. Right. Where are you at, Freeberg? I'm excited. I'm enjoying my new job as CEO at O 'Holo. There's so much cool stuff happening. I'm personally excited about it. So this is the most excited I've felt in many years in terms of my work. And then I would, and I'm really excited to share what we've done next year, which I'll do on the show first obviously. And then looking outside of the world, I'm just a little cautious, I'm a little nervous.

1:24:38I think there's still a lot of Tinder boxes out there. So I mean, you guys know, we joke about it, but I do think there's these little mouth traps that can get set off and then they set up all the other mouth traps. So there's a couple of those things out there that I'm a little nervous about. But in the course of history, aren't there always conflicts in the world and do you try to put them on a spectrum of like there's always going to be conflict, there's always going to be... There's never been this much debt in the world and that's what makes me so nervous. Like I think, yeah, no, and I think they're related.

1:25:06So actual conflict relates to the debt load. And that's why I'm so nervous because we've never been, you can't keep your societal fabric together if you have a lot of debt and you can't grow your economy. Those are two, that's a simple fact. And so that leads naturally to finding points of conflict with other nations and other places because you look for conflict elsewhere. There's a good chance that the Republicans will force some momentary temporary budget cuts in this next couple which shut down. Yeah, a couple weeks. 17, like two weeks away. Yeah. It's pretty interesting. Under the terms of the debt ceiling increase that they agreed to last year, they're supposed to all agree on a new budget.

1:25:50And if they don't, then there's a 1 % cut across the board on discretionary spending that goes into effect. Right. If I were the Republicans, why agree to a deal? You're never going to do better than a 1 % cut in discretionary spending. If you care about austerity or just having any kind of reason in our spending, just take the 1 % cut. Yep. Don't agree to anything. Agreed. That's the most likely tap, right? At this point. I hope so. And, you know, 1 % cut is a rounding error, but the Washington elites are going to shriek like crazy over that. I mean, they're gonna squeal over this minuscule cut like we were slashing their budgets.

1:26:27But that's all we're cutting to do. Yeah, exactly. They're cutting their fingernail and they're crying. So just click your toe. They're gonna have to like, we tough their arm when they got like a fingernail clip. Yeah, it's nothing. All right, I gotta run. All right, everybody. What an amazing 2023 we had. Here's to a great 2024. You got your prediction show and we'll be back with more news and a And a classic all -in -episode next week have a great new year and we wish you all the best in 2024. Love you boys, back out, you're bad bye.

1:27:19Besties are gone, go thrifted. That's my dog, take it out. Wish you a drive way. Sit next. Wait it up. Oh man, my ham is the actual meat. We should all just get a room and just have one big hug. Because they're all just like this sexual tension that we just need to release that out. What, you're the bee? What, you're the bee? Be your bee. Be your bee. We need to get my besties already. I'm going, darling.