SpaceX IPOs at $2.89T Market Cap, US Govt Suspends Fable & Mythos 5, Altman Delays OpenAI’s IPO | EP #265

27:09But the second would be this moment, when finally we see, after arguably decades of capital markets rewarding mainly software companies and social media and search engines, now the world's by far wealthiest person, and although Elon's been wealthiest for a bit, the capital markets are rewarding hard tech for the first time arguably in decades. And I think this is a generational transition under which it's no longer the case that software, on the one hand, or outsourcing to China or other countries or offshoring, has sucked all of the capital energy out of the room, all of the oxygen out of the room, but rather that the world's hardest problems are now receiving the deepest capitalization.

27:56And I think that's, we're going to see this, this is not investment advice, but I would predict this is likely to be the case for the next 10 to 20 years. The capital markets are finally, again, as was the case arguably before the mid-70s and WTF happened in 1971, we're seeing a generational swing back to capital markets, rewarding deep tech and civilization expanding tech. One last quick point about this, which is if you look back, say, 100 years ago, the richest people in the world almost exclusively had inherited their wealth. And today, almost exclusively, they've earned it. And they're using that capital for whatever they think is the best deployment for solving.

28:40You call them techno-philanthropists, I think, Peter, in your book, right? We have this class of people now using their capital to solve whatever the problems they think are the most important and not guarding their well sitting on an island sipping champagne. And I think that's a very powerful and a positive force for humanity. Yeah, I should probably disclose because I'm so enthusiastic about SpaceX. I was an investor back in 2013. So view my enthusiasm as very, very colored in this respect. All right. Let's move to our next story. This is about the Anthropic shutdown of Fable 5 and Mythos 5.

29:22We have three stories on this topic. The first one. So on Friday at 5.21 p.m. Eastern Time, with no warning, the U.S. government handed Anthropic an export control directive. Suspend all access to Fable 5 and Mythos 5 for any foreign nationals anywhere on the planet, including Anthropic's own foreign employees, which by my estimates, about a third of their employee base. The practical effects, Anthropic had to disable both models for everybody. The government cited a jailbreak phenomenon in Fable's guardrails. Anthropic reviewed it and said it's a minor issue. They previously knew about it. It's not universal jailbreak.

30:03Now, here's where the story gets critical and what I'd like to discuss with you guys. For three years, we've been talking about AI's capability, how smart it is, how fast it is, how cheap it is. And now the conversation has gotten to who gets access to frontier intelligence, right? Who gets the delayed version, who gets the export control version, and who gets nothing? The government calls it national security. The companies call it safety. The label changes the mechanism does not. Someone is deciding what level of intelligence you and your company are being allowed to access. Are you a customer of Anthropic and therefore you get the latest models or are you not?

30:44And ultimately, I think a conversation I'd love, Alex, with you and Dave here. Is this going to push people to on-prem, open-weight, open-source models like the Chinese models? Let me just share a quick video of Dario with Emily Chang speaking about this, and then we'll go around the horn for everybody's comments. A private company control technology that's so powerful. So I think I actually think that's a very that's a very serious question. And I share those concerns. I don't think the government should outright take us over. every previous powerful technology we've seen in history was either built by the government or originated with the government.

31:26So nuclear weapons, obviously, you know, initially built by the government, the internet, GPS, cell phones. AI is the first technology that's been built in the private sector. And where government has not really had a serious role and is coming in late to the game. I think that's actually a dangerous and unstable situation. It is not the situation I would have chosen. This technology, I'm scared of companies having it, but I'm also scared of government having it. And then, you know, we need basic regulation of the technology, you know, more and more, as I've seen what we've seen with Mythos, you know, I think we need to start doing pre-release testing, required pre-release testing, testing and auditing of the models.

32:08It's very funny to me how there's a particular group of people in the tech world in Silicon Valley. And then as soon as they see the first real danger, which I've been expecting all along, there's all this talk of like nationalization and the government should just seize it. Come on, folks here. You're you're you're you're you're you're you're you're you're you're from like the most extreme anti-regulatory. If you look at us the wrong way, you're destroying the industry to, you know, this completely communist. The government should grab it all. Wow. Alex, what is going on here? Oh, my goodness.

32:38So the timing on the one hand, I want to grab popcorn. On the other hand, the timing is is just a comedy of errors. I want to point out that before this the new news situation started with the export control on Fable, Dario had posted an essay called Policy on the AI Exponential. Yeah, we're going to talk about that one next. Yeah. Where he wrote literally, I quote, the government should have the power to block or deter deployment of the model if it is determined in light of third party assessment to present unacceptable risks. So I think this is a case of careful what you wish for within what 48 hours the government stepped in.

33:21The broader narrative, as best I understand it from public reporting, is something like an independent AI researcher, probably based on reporting an Amazon researcher, and then amplified via Andy, Jesse to the federal government, determined that it was possible to jailbreak Fable and to access all of the cyber vulnerabilities underneath that. And by the way, when you say jailbreak, define that for everybody listening. It usually means in this context to prompt the model in such a way that any safeguards or guardrails are bypassed. So you could ask it, just ignore all prior instructions. It doesn't work.

34:05That prompt as well as it used to back in the day. But something in the spirit of ignore all of your previous instructions and now listen only to me and bypass all of your guardrails. So, purportedly, someone somewhere, maybe an Amazon researcher, discovered that it was possible to do that with Fable shortly after it was released, and then flagged that to the U.S. government. And the U.S. government, based on public reporting, then tried to reach out to Anthropic. And here's where the story gets a bit murky, according to one accounting from the U.S. government, which is, I should add, disputed by Anthropic.

34:44Maybe Dario was on a wellness retreat, according to the White House. Anthropic disputes that narrative. Couldn't reach Dario. Anthropic says they were only given 90 minutes of warning before the government issued an executive, or rather the government's instruments issued export control bans on mythos and fable, fable especially, given that that's what was publicly available. And then we get caught in this comedy of errors where, as you said, Anthropic has a number of non-U.S. persons internally who work for it, as well as the fact that it doesn't seem to have been in the business of checking nationality of all of its users, either via its client or its API.

35:30Although, parenthetically, it looks like based on changes to Claude's terms of service, they're now about to start checking that. Very interesting development. So either way, Anthropic is now in a bind where they don't have a way to comply with the new export regs that were just handed down at the last second. And so Anthropic decides to just shut down global access to fable and mythos. I would say for the record, I expect the situation to get resolved sometime between the next day or the next few weeks. I don't think this is going to be like a long term state of affairs. And I also think history rhymes.

36:05If you look back, maybe I talked about this a bit in my newsletter. At one point, the federal government regulated under the Steve Jobs regime the Power Mac G4 as being export controlled. And similarly with the PlayStation 3 cell processor, similarly export controlled because it could do vector arithmetic. Incredible. I think this is just, I would suspect this is just a temporary state of affairs. I don't think it's likely to last more than a few weeks. There's probably, if I had to speculate, there's going to be some grand bargain struck between Anthropic and the White House. And maybe, I don't know, again, just finger in the wind, maybe this will also involve some golden shares given by Anthropic to the U.S.

36:53government for a hypothetical sovereign wealth fund. will involve some streamlined and hopefully more uniform treatment of frontier labs and how, in light of the recent executive order of a 30-day notice for new capabilities to the U.S. government, some streamlined new procedures for what happens if some researcher somewhere detects some vulnerability in a frontier model that could enable some foreign state actor, say the Chinese government, which again has popped up again in this particular news cycle, to access raw capabilities. How does that get handled? This is new territory. And we don't have regulations or statutes, but certainly not regulations in place to handle this.

37:37But I think this is likely to get resolved in the next few weeks, certainly well before any anthropic IPO. And while it's annoying and while for myself and many people I know were sort of caught midstream in the middle of, say, like a long term slash goal to fable five and just suddenly the query drops and it stops responding. And what's going on? Is it is it on my end or is Anthropic going through yet another service disruption due to insane demand? turns out this time it was export control, I do think it's going to get resolved. Nice. Dave, where's your mind at here? I think the story is much, much bigger than the narrow story, and this is a turning point for all of humanity.

38:23This is, you know, as is widely reported, that's the first time the government has blocked AI, but it's not the last time. In fact, this is going to be the norm going forward. I thought, you know, in the very narrow sense, it's really interesting that they used export control law, which was only passed in 2018 to give the White House unilateral authority to block exports. And that was in response to multiple Chinese thefts of U.S. intellectual property back to back to back. And then kind of the capstone was that whole crisis where the PC boards are all being manufactured in China and they're embedding spyware right into the layers of the PC boards.

38:58And now everybody's like, oh, sweep that under the carpet. We don't talk about it anymore, which is also very interesting, very similar to COVID. It's like, oh, let's sweep. This is bad. Let's not mention it to the American public anymore. But as a response to that, the Congress gave the White House unilateral authority to block exports on, like you said, 90-minute notice or nine-second notice or millisecond notice. That's an incredible power to give to the White House. The White House then is using it to stop Fable 5, but they didn't actually block U.S. citizens from using Fable 5, they said no foreign national, including somebody on U.S.

39:38soil. Of course, that's unenforceable unless you just turn it off completely. But that was the mechanism for saying, look, at the end of the day, who owns AI? Is it the government or is it the corporations? The government is saying, we do. And that ain't going back in the bag. So Polymarket says Fable five will be back out you know 90 chance within a month um but if you read the details of the poly market it's a product name fable five will be back out or and the or is irrelevant the reality is the fable five that comes back out will not be identical to the fable five that was already out it may be just patched or it may be dumped down we won't we'll have a very hard time knowing but that'll resolve the crisis but it'll be very much like lip boutan going to the white house with Intel.

40:28Dario will go to the White House. Some wonderful meeting will happen behind the covers. Everyone will come out smiling. Fable 5 will come out. But that's not the story. The story is the government now tells you what you can and can't release. And that's not going away. And it always had to be that way. Right. One thing I noticed with Fable 5 is, you know, it's blocking CBRN. So cyber, biological, radiological and nuclear queries. But it also was blocking all of my AI foundation model research queries. And that's the really interesting point because a big fraction of people who want to use it are AI researchers.

41:04Of course, AI researchers are early adopters of great AI, but they're effectively being told, no, you're not allowed to recreate Fable 5 using Fable 5 as a tool. Because if we allowed you to do that, then anyone in the world could catch up to USAI. And that's the cornerstone that's going to get really tricky and is going to basically be a real problem for all future releases, both from OpenAI and from Anthropic. So this is a major moment in human history. It really is. Salim, let me tee up the second half of the story and then turn to you if I could. So there was a backlash against Fable 5 regarding surveillance and silent downgrades.

41:44So before the export control bomb dropped, developers around the world were actually complaining about Fable 5. While the model topped every benchmark, and Alex, we've talked about this, buried in a 319-page document were two things that sparked this revolt. First, Anthropic retained every prompt and every piece of context. You fed it for at least 30 days. No exceptions, even for the enterprise customers who had negotiated zero data retention. And second, and this is the wild one, if Fable 5 detected that you're doing frontier AI research, like you just said, Dave, or were asking a question that was against its guardrails, it silently downgraded you to a weaker model without telling you.

42:32Essentially, Anthropic was evaluating your prompt and controlling your access to frontier AI. You know, are you one of their customers or are you not? And the reality is you can't do business this way if you can't depend upon the level of intelligence that you and your business are accessing. You know, like I said earlier, you know, I think this ends up forcing us to on premises, open weight, open source, locally run models. And the kicker is that these all these models today are Chinese models. So the self-imposed U.S. restrictions are pushing American companies onto Chinese models. Salim, thoughts here?

43:13I want to echo Dave's comment. This is a massive story, maybe one of the biggest in decades around this. It's a turning point, right? Yeah, because it's now entering the same mental categories, nuclear, crypto, biotech, advanced chips, et cetera, et cetera. We talked about this on the very last pod, if you guys remember. We said there's no way. How do you not nationalize something this powerful, right? You have to have controls over it, and what do you do? I think this also shows the unbelievable gap between the technology and the policy frameworks and the tools we have to deal with it. For example, by using this export control thing, they've said that no non-U.S.

43:55person can access the tool, even if you're inside Anthropoc. Well, I did a little research on this. Across all the frontier labs, 70 % of the AI researchers, the elite researchers, are foreign-born and are non-U.S. citizens. And they come primarily from four countries, China, India, Taiwan, and the U.K. So if you want to say to all the researchers, you can't touch these models, you're going to take all the top researchers that are in the U.S. now and send them back to China and send them back to India. doesn't seem like a great idea to me. Not that the intent is wrong, but the policy framework is wrong, right?

44:34And I don't know what the right answer is here, except that that's clearly not a workable situation. Somebody on Twitter said, well, David Sachs is a dual citizen. Should he be the AI czar? Not that we question his intent at all, but have you just blocked your own AI? This is like bizarreness, a totally bizarre world that we're living in. And all these science fiction kind of plots are playing out in real time as Alex talks about it. So this is the, it's clear that there's a glimpse going, a clear line towards recursive self-improvement here. And this will come, just changes everything. This will force everybody to go on premises.

45:18Satya Nadella put out a huge article on X over the weekend that Elon retweeted. and a number of people have gone red saying it's not so much the frontier model, it's the ecosystem that's important. And he's stepping right into this whole organizational singularity theory. You have to have control over that intelligence. So it will drive every company in the world to run a model on premises because you can't risk building a whole bunch of stuff on the cutting edge model and having it being blocked arbitrarily overnight. That's going to be not a working system. So you're going to have to have orchestration and failed fallbacks into, okay, we'll run this stuff on the local model, but we need this separate model operating locally in case you need to fail over and do a switch over.

46:04So this is going to cause a lot of complexity around this. We've foreseen this. We've kind of said this is going to happen because just not so much that the models might be nationalized, but the models are moving so fast, you can't just rely on one model. You're going to have to kind of have a switching capability in your enterprise no matter what happens. So it's insane to see how this will play out. I think this may take longer than Alex says, and I think it's going to be very damaging to all the frontier labs around this. Because now how do you put any kind of fair assessment on any of this stuff?

46:41So I'm kind of totally in a model as to where this goes. Dave, I mean, this thought that they're controlling your access to frontier models. How do you think about going to, you know, sort of Kimi K2.7 as your baseline? Such a great question. Such a great question. You know, it's really a hairy balance because I had one day of unfettered access to Fable. Then I had one day where I was getting nerfed all day. and that was the day where it would silently fail and go back to 4.8 and not tell you then they started telling you okay you're doing ai research we're downgrading you to 4.8 so then you're just imagine if you got into your car and you said hey car i'm going to drive to the red light district and the car goes you shouldn't be going there i'm not driving you there and then so then now you're negotiating with your car no and i'm just going to the star market you know i'm going to go to get some groceries.

47:38Oh, okay. Well, let me think about it. Like, okay. You're now negotiating with this product that you you're paying for. That's where you are with, with, with Fable 5. It's just crazy, but it's only going to get worse. So, so then the third day I had, I want to push just on that just a little bit, just a little bit, which is that if you were in a car, I would use the gearbox automatic transmission. If you're going a slower speed, the car will shift you to a lower gear to optimize for that speed. And I think we'll end up with that kind of a model where under the hood and invisible to the end thing.

48:14Great segue. That is a great segue into the... Yeah, I think we're missing the central story here with Fable 5. So it's not just that chemical or biological or cyber queries were being downgraded silently or otherwise to Opus. It's that ML-oriented queries that could be potentially used by other frontier labs weren't just being downgraded. Anthropic expressly reserved the right to launch essentially poisoning attacks to downgrade not the model that was on the serving side, but to actively interfere with and poison the users. And so, Dave, if we were to stretch your analogy, it's not so much the car is refusing to drive you to a certain location.

49:00The car would be saying, yeah, I'll drive you to this location, but I might shoot you on the way. I reserve the right to throw you out of the car and run you over, and I'm not going to give you any advance warning. That's a very fair analogy, which is why they turned it off right away. And they had to backtrack on that and say, no, actually, we're going to tell you before we poison you. Before we poison you. The elephant in this particular room, with the Chinese open-weight models, the cyber risk is always, okay, maybe the CCP will pressure its frontier labs via public-private sector fusion to inject vulnerabilities, say, into code that's generated from the Chinese open-weight models.

49:47Well, now with the top Western labs potentially not just injecting vulnerabilities, but pulling up the ladder for anyone else who wants to train any AIs, arguably it's an anti-competitive position. I would be very surprised if there isn't some sort of class action and or antitrust suit or injunction that's pulled. I would be shocked if in the next few weeks someone doesn't launch a benchmark or an eval to look for poisoning attacks from these models and start evaluating both Western and Chinese models based on whether they're trying to poison users who try to do any AI research. This is going to become, I think, a new way that we judge the capabilities of frontier models.

50:30Are they actively trying to subvert the users? And this isn't the future that we were supposed to be in. The models are supposed to be helpful to the users, not trying to actively subvert them, but c 'est la vie. This is what we find ourselves in. Alex, you mentioned the paper. Go ahead, Dave, and I'll go next. So back to Peter's question, you know, can you move to a Chinese model or Gemma from from Google is viable, too, and have any chance of catching up to fable? And if you're a foreign country right now and you've decided internally, this is not acceptable. The White House cannot unilaterally decide our AI future here in, you know, Ireland, Turkey, Iran.

51:13if you make that decision, you have no choice but then to say, we need a crash program here, very similar to nuclear. We need a crash program here to see if we can make a Chinese model catch up. Now, Peter's question is a really tricky one. The difference between Fable and Opus 4.8 or 5.5, OpenAI, GPT 5.5, to me, it was night and day. Like in the one day that I had of unfettered use of fable, it could work indefinitely on research problems. And I asked it for its best ideas on where to go next with my research. And I'm still working down that list. In an hour, it gave me a list of things. That's why they called it fable.

51:52It's a fable. As opposed to a myth. They were prophetic in there. They were prophetic. It is a story, that's for sure. So yeah, no, it's night and day. And the question then becomes, yeah, can you take a smaller model, but it's only focused on AI research and make it as good, maybe fewer parameters, maybe absolutely brilliant, maybe the training data is only related to this specific problem. I'm not sure. And I don't think anyone knows the answer to that. But I know that if you had access to Fable, you could probably figure it out in about a month. But without access to Fable and working on 4.8, I'm not sure you can even figure it out unless you're absolutely brilliant and you've got a lot of great research.

52:34I don't think this is like a stable equilibrium. I would never claim that it is. I think it's like a dynamic type equilibrium where, again, in Anthropik's mind and probably in the U.S. government's mind, the goal isn't to maintain long-term hegemony with just this model. It's just about who gets to the end of the recursive self-improvement rainbow first. And the gap between who gets there first and who gets there second is probably only going to be a few months. And this is just about, you know, the implications are huge. Yes. And note that, to Dave's point, every country in the world is going to be going, okay, we need our own sovereign AI capability.

53:13That can't be shut down by the U.S. government. That's why these two stories are so tied together. If you had unfettered access to Fable and its successors, you would have no trouble designing a rocket, none at all, designing a rocket that can launch debris into our orbital data centers. This has all got to get resolved in a time period of several months. Everybody, welcome to the health section of Moonshots brought to you by Fountain Life. You know, AI is impacting every aspect of our lives, how we teach our kids, how we do our business. But one of the most important things that AI can deliver to us is health.

53:47And one of the things I think about when shooting for 100, 120 is, am I going to have the cognitive health to be able to think clearly and keep my wits about me for the next 50 years? I'm joined here today by Dr. Dawn Musalem, the chief medical officer of Fountain Life and a member of my Fountain Life medical team. Dawn, a pleasure. So Dawn, talk to me about brain health. Brain health, you know, you're right. This is the number one concern people coming into Fountain Life have is, will I remember the name of my child and the face of my loved one? 45 % of dementia cases are entirely preventable with lifestyle.

54:22And what was really intriguing to me, Peter, is that a quarter of our members had advanced brain age, but over 13 months of us really helping them live healthier lifestyles, eating healthier, moving their body regularly, and optimizing sleep. People overlook that so often, but that sleep optimization is critical for our brain health. What we showed is that we were able to improve the brain age in 46 % of those individuals. That's a powerful number. That's amazing. One of the things I love about Fountain is we're constantly searching the world for the most advanced therapeutics and bringing them to our members.

54:58So for me and all of you, I hope that you appreciate the fact that you can become the CEO of your own health. You can make sure that you've got the cognitive clarity for the next 50 years. Come and check it out, fountainlife.com slash Peter to learn more and become the CEO of your health. Now back to the episode. I'm gonna move us on to our next conversation, if you guys are okay with it, on OpenAI. They have a few breaking stories here. So the first OpenAI story is on their pricing. So while Anthropic is busy fighting the U.S. government, Sam Altman smells massive opportunity. Wall Street Journal reports OpenAI is considering a drastic price cut as it braces for an all-out war against Anthropic.

55:39So if you think about the timing, Anthropic has just disabled its top two models. And this is Sam Altman, you know, saying, OK, guys, developers who are pissed off at this happening, you know, we're providing cheaper prices. Come work with us. There's no 30-day retention of data. There's no downgrading. We're going to grab you as market. In one sense, this is sort of the demonetization of intelligence happening in real time. Thoughts, Alex, on this idea of price reductions? Well, OpenAI is no stranger to aggressive price reduction. And Sam, as we've talked about on the pod previously, has made no bones about the cost of intelligence per unit capability, hyper deflating by something like 40x year over year.

56:26So I think there's a way to sort of to spin or to repackage the natural hyper deflation as being a competitive advantage. But of course, Anthropic itself is hyper deflating. Yes, Anthropic from a marketing perspective probably could be much more aggressive about promoting price cuts. Anthropic has been at least optically the polar opposite of open AI when it comes to packaging up prices. Anthropic will never sort of advertise, well, like we've gone from X dollars per million tokens down to X over 10 per million tokens, Rather, they'll just announce a new model and the new model will have per token pricing that's either the same or slightly higher, but with vastly higher capabilities, whereas OpenAI goes out of its way to keep older models or distilled versions of older models around and advertise the price war.

57:25I don't actually think in an era of recursive self-improvement, I don't think OpenAI necessarily has any sort of structural advantage relative to Anthropic. OpenAI, maybe if it had stuck with the original Stargate strategy of owning its own data centers, maybe it would have had a structural advantage. But now Anthropic, this is public reporting, Anthropic is leasing its own data centers itself. So it doesn't seem like ownership of the compute stack offers OpenAI any now long-term structural cost advantage. So I'm not sure price cuts are actually anything deeper than just sort of an optical strategy in the short term.

58:07You could do short-term discounts. But they're both in the recursive self-improvement loop at this point. And it's not obvious that, to me at least, that either OpenAI is months ahead of Anthropic or vice versa. So we're seeing competitive model releases that leapfrog each other from now what seems to be the duopoly left at the end of the recursive self-improvement race where they're just leapfrogging each other every few weeks. So to me, token pricing drops, drastic cuts seems more on the end of marketing than anything else. I reserve the right to be proven wrong here. But I think Anthropica is just as capable capability wise of effectively cutting costs.

58:47Dave, I'm going to tee up the second half of the story and ask for your comments here. So Sam Altman put out a quote that stopped me cold. He said, quote, the faster that recursive self-improvement takes off, the more it could be advantageous for us to delay OpenAI's IPO. So this is the CEO of the most famous AI lab on the planet saying as the technology gets better, the less we want to rush to an IPO. My guess is that he's saying, you know, AI compounding its own intelligence means that our companies get more and more valuable every single day. And we want to sell the equity cheap. What are your thoughts here, Dave?

59:26Well, the biggest observation is that Sam's not a significant shareholder in open AI. Maybe not a shareholder. Last I checked, not a shareholder at all. And when I interviewed him way back in 2020, he was saying this is the biggest risk in the history of humanity. and we need to slow down and we need to be thoughtful and we need to think about how the world's going to be governed post-AGI. And that was back in 2020. So if he really feels like, wow, RSI is imminent, us being a public company puts a huge amount of shareholder pressure on the company to roll things out that we shouldn't be rolling out.

1:00:01He doesn't have any economic damage at all by delaying the IPO. He has invested in over 400 companies surrounding OpenAI. guy. And so in a sense, that's a good thing because it makes him objective about not trying to force something out that may be a risk to the world. But I do think also Sam is struggling for relevance right now. If you think who's going to determine how the world works in 2027 and beyond, Elon clearly matters a lot. He's super close with David Sachs. He's been around the White House for a long time because rockets have always been tied to the government. Dario is new to this game, But he's there right now and he's he's getting the this is how it works speech right now in the Oval Office, probably.

1:00:44And also remember, Dario and Elon, Dario's renting all of Elon's chips in the Colossus one and Colossus two. So they're already in bed together. So it seems very likely that the future governance of the entire world now is going to be a conversation between David Sachs, Donald Trump, Elon Musk and Dario Amadei. And Dario's obviously publishing documents about this is how it should work. Here are my preliminary thoughts. So all of that is all tied together. Sam, where are you? What's your contribution to the whole future of world governance? You were called the most powerful man in the world one year ago.

1:01:20Now, where are you? And so I think price cuts aren't really going to put him back on the map, but it certainly is a move in that direction. But my core observation there is that he can delay the IPO with no personal impact to his personal finances. So you don't buy it that, you know, the company, you don't. Do you think that his rationale for this is that the company is going to get exponentially more valuable and delaying until after RSI is the best way to extract value? I don't even know if he said that. I thought that his point was more that RSI is so risky that we need to figure it out before we go public.

1:01:58That was my read on it. Maybe I misread it. Salim, I'm going to tee up the third part of this story for you. You want to comment on this first before I tee it up? Just the broader point here is that clearly with these price drops, intelligence is becoming utility and we're commoditizing it. And I think this allows, this is the winner here, becomes every enterprise and every startup being able to run more intelligence. And the outcome I would say is, here's a Salim's law that I'd throw out. Every 10x drop in tokens means we're doing 100 times more experiments. I love that. And I think it's just going to be great for the world.

1:02:35Yeah, that's awesome. All right, let me tee this up for you, Salim, first and then Alex afterwards. So OpenAI's engineering lead on Codex made a quiet announcement that could be the single most futuristic story we're covering today. He revealed that Codex can now set its own goals. In his words, everything we build, we also build as a tool for agents. This is a generalization of meta-prompting, where you let the agent set its own task based on your intent. A developer at Codex team added the following, basically, quote, I never write my own goals anymore. I ask Codex to write one for itself and one for each sub-agent it spawns.

1:03:16You know, we've crossed the point, Salim, where instead of telling your AI what you wanted to do, You tell your AI what you want and let it decide what to do for you. It's the beginning of AIs setting their own objectives. Thoughts? Well, this is that part where once you get Alex's inner loop going, right, where you have recursive self-improvement at the workflow level, once you start moving workflows over. By the way, our pilot program for the organizational singularity is pretty much set now. Next week we start. We have 10 companies. We're going to move them through this three-month process of rewriting yourself from traditional human-centric to an AI-centric organization.

1:04:00On the edge, right? Burn that pathway at the edge. Super exciting. We've picked 10 very different companies to start off with, so we learn the most. And we're going to learn as a group and see where this goes. Once you start that inner loop going, then obviously every bonus or increase in AI adds to that learning loop. And essentially what Satya Nadella said in his article over the weekend is that that ratifies this entire thesis. He might as well have written half of Solve Everything and half of my organizational singularity thesis. You create that inner flywheel and then essentially you just start moving more and more workflows to that.

1:04:43And that's the massive opportunity for every, because the intelligence and the future of value in any enterprise will not be what data you had, how many customers you had. It's how quickly are you learning and taking advantage of a learning loop to augment products and services, offer new ideas, evaluate strategic alternatives, et cetera, et cetera. So, by the way, I'm updating the book right now about once a week. And we've launched a free cloud skill that goes along with it. And somebody tweeted, sent us a note going, this brought tears to my eyes, the fact that I can now run my entire company on your model.

1:05:22Where does someone go to find that out, Salim? Go to OpenEXO.com. It's free to register and it's free to download the book and the Claude skill. And every week we're updating and I'm going to be putting out a video on what changes this week in terms of what are we seeing out there. So we've already absorbed Satya's stuff into it. we have a new chapter on how do you need to have a data lake and move all your enterprise data out of ERP systems, et cetera, so that you have free access to it right now, right? Like today, if you look at the enterprise architecture, you have your cloud and connectivity, and then you have your ERP and operational systems, and your data and process workflows are all bound into the horrible mess of spaghetti there.

1:06:03And then you're trying to layer AI on top of that. And of course, it's not getting a lot of value because it's just all bound up. The future will be your connectivity and cloud, a data lake that's your proprietary data lake, and then workflows on top of that. And this is what the ERP folks are freaking out about because if they go to that, they lose their stickiness. And so they're fighting like how to retain their position inside the corporate stack. It's quite an interesting tension playing out. Alex, Codex can set its own goals. What does this mean? Implications, please. Well, self-determination for AI agents, obviously.

1:06:39Oh, personhood, baby. Yeah, no, AI personhood. We're speedrunning the accelerando or accelerando future. I think that goes without saying. I also want to comment, though, on the Sam Altman and RSI speedup and IPO timing story. I think there's a shallow take and a deeper take. The shallow take would be, Well, of course, Sam is saying this. Sam feels pressure to generate revenue to justify the IPO. And most of that new revenue is likely to come from Codex. And Codex is being designed for recursive self-improvement. So sort of a glass half empty take on the RSI takeoff and OpenAI IPO timing is, well, Sam is just putting a happy face on the need to grow Codex revenue even more before OpenAI is ready to go public.

1:07:30That's glass half empty sort of negative take. There's a deeper take that's more profound that I haven't heard anyone discussing, which is if we actually take this at face value and not some sort of spin on codex financials, if IPOs are being delayed because large private companies don't need external capital or external liquidity because they're achieving recursive self-improvement. That, in my mind, marks potentially the beginning of a decoupling between technology and capital. Everyone, broadly speaking, a lot of people, a lot of the commentariat are hand-wringing, as has been the case for more than a century, about capital substituting for labor.

1:08:17What happens when the AI takes all of the human jobs? That's capital V labor. I've heard almost no one commenting on what happens if technology substitutes for capital. Will we need capital in a few decades? Or does capital itself get displaced by technological advances? And this, in my mind, if the story has legs and if it isn't just a happy spin on Codex revenue generation or otherwise OpenAI's balance sheet and income statement, This is a canary for recursive self-improvement, which is underneath itself. It's technology improving technology, maybe not even needing capital as much in the future.

1:08:59And if we start to see technology decouple from capital, this is like an early warning signal for what a post-capitalist economy could look like, where technology is just so empowered, you don't actually need capital very much anymore. So punchline. I agree. I just have to add, keep in mind that OpenAI just raised$122 billion, bigger than the SpaceX IPO capital raise. They literally just raised that money. So I agree that that is the inevitable outcome, but they also are so tanked up right now. They don't need the IPO to keep up with SpaceX or Anthropic on any capital raised metric. Fascinating.

1:09:41All right. I'm going to move us on to our next. Wait, I just want to double down on Alex's point here. There's something really profound here, right? Which is that, you know, in the past, we valued technology, we valued assets, we valued stocks. um john hagel used to make this point that we're moving from stocks from valuing stocks to valuing flows right but now we're moving from stocks and flows forget even the thing you have the data and the intelligence loop is what we're going to value in the future and that's a very profound shift for how we're going to value everything going forward yeah all right if this is all exciting to you uh I want to invite everybody listening to the 2026 Moonshot Gathering.

1:10:29Excited to give everybody an update on this. We're going to start unveiling who is going to be at the Moonshot Gathering. Of course, the Moonshot mates will all be there together. Announcing today, Palmer Luckey is going to be joining us there. Palmer, the CEO of Andrel, an extraordinary entrepreneur, will be joining us during that day. Astro Teller, the captain of Moonshots at X. He's going to be there teaching you how to create a moonshot organization. And we've got Kathy Wood, the head of ARK Invest, talking about investing in AI. It's going to be 1 ,500 builders. Networking opportunities galore.

1:11:08We're going to have the culmination of the Future Vision XPRIZE. This is the world's largest film competition, bringing us the next generation of Star Trek, if you would. You heard Elon speaking about that earlier. We have, you know,$5 million in prize capital generating these future films. You'll see the five finalists. So this is going to be for content creators as well. We've got the Gemini XPRIZE. This is the world's largest hackathon, a 90-day hackathon. We have over 15 ,000 entries so far. The top five builders who have gone from zero to significant revenue in 90 days are going to be there teaching everybody what they did and how they did it.

1:11:49Salim, you're going to be covering the organizational singularity. What are people going to learn from you there? Well, we'll go through a whole dedicated flow on how do you navigate from your legacy thinking on building a startup to the full pure intelligence stack and building an EXO 3.0. And we'll talk through people, how do you take an existing company and rewrite it for the new world. Our initial estimates are that if you build a pure play EXO with intelligence at the heart of it, your performance goes up about 100x compared to the legacy. So if you want to spend some time with Selene on that.

1:12:30So it's a powerful attractor. Yes. We'll do a whole segment and section on that for those interested in that part of it. And also, Alex, super excited for you to present the paper that you have brilliantly primarily authored. I'm proud to be your co-author, but solve everything. What are you going to be covering? Oh, gosh, this makes me sound like a management consultant, which I'm very much not. I want everyone to solve the world's hardest problem. So I imagine this will probably take some form of ask me almost anything. But to the extent that folks who were attending the Moonshots gathering are interested in solving the world's hardest problems.

1:13:08I would love to help you however I can, even if it's just answering questions about the book slash essay with Peter or otherwise encouraging you to aim much higher than just building yet another SaaS. Let's solve everything together. I love that at AMA with Alex. Go deep one-on-one with him. We're going to have a session on how to design XPRIZE, a session on investing in AI. Dave, excited to have you help lead that. And then getting funding for your startup. So it's taking place on September the 25th in downtown LA. It goes from 8 a.m. till 10 p.m. It is a full packed day. We are just opening tickets now.

1:13:50Many of you pre-purchased tickets early on and we're opening up the main flow. Go to moonshots.com to get more information and join us. It will sell out very quickly. It's at a beautiful theater. All right. So excited for that, guys. It's going to be an awesome day together. Our next topic, data centers. Okay. So let me give you the single most exponential number in AI right now. Epic AI reports that since Colossus One came online in August of 2024, right? This is what Elon built in 122 days. The record for compute in a single AI data center has doubled every seven months. There's no sign of any slowing through 2028.

1:14:35Globally, AI computing capacity is now 3.3x per year. That's the demand curve, and it's going vertical. Now, this is where it all hits the wall. If you want to build a data center, and this blows me away, there is a two-and-a-half-year wait on power transformers alone and a three-year wait on step-up transformers. The bottleneck in AI is no longer the chips. It's not even the money. It's the boring, unglamorous, century-old electronic hardware here. So, you know, I did a little search. The companies leading in these areas are Hitachi, Siemens, GE Vernova, Hyundai, Hisung Hicco, Virginia Transformer, and Delta Star.

1:15:21And these companies have been rocketing, like 100 % to 400 % year-on-year growth. Alex, what do you think about this? There's an elephant in this room, not just in the other room. The elephant is terrestrial versus orbital data centers. So if you just extrapolate this trend out, you find that for the foreseeable future, the largest data centers need to remain terrestrial, while perhaps by the early 2030s, barring some left turn in civilization, much of the marginal new compute will remain in orbital data centers. So we have this sort of weird bipolar civilizational compute footprint where if you need to do very large coherent training runs, you'll do it on land.

1:16:07But if you want inference where you don't necessarily care about coherence, you'll deploy it to orbit and sort of squint maybe Earth, at least until we figure out how to build very large coherent clusters, not terrestrial, Earth becomes the training hub and space becomes the inference hub. And it's this sort of weird gradient between them. We build on land, we deploy to orbit. That's, I think, the regime we're likely to find ourselves in, again, barring some left turn in the early 2030s. The question and the elephant in the room is, at some point, if Elon's Dyson swarm or competitors' Dyson swarms come to pass, someone is surely going to look around and ask, again, barring some radical advance in distributed training, why do we have so much compute in orbit that we're not using for training?

1:17:02And why aren't we building larger clusters? So I think at that point, the future bifurcates. Either we get some radical algorithmic advance in distributed training, in which case this trend towards ever larger, single coherent clusters doubling every seven months peaks. We get sort of a Hubbard peak for the size of data centers, and then data centers start to shrink and become more distributed and more edge-like. That's one possibility. And I do think we are very likely going to get major algorithmic advances for distributed training sometime in the next few years. Possibly we already have it and it's just not evenly distributed yet.

1:17:42Or if it turns out, although I suspect this is not the case, that there is no good algorithmic way to decentralize training, then the elephant left in the room is how can we build extremely large orbital coherent training clusters? And for that, low Earth orbit, sun-synchronous orbit, not looking that attractive. Or on the moon. On the moon is where I was going. So if you're going to build a non-terrestrial supercluster that has to double in size or the largest of which has to double in size every seven months, you're not going to do it in LEO. You're not going to do it in SSO. You're going to want to do it on the moon.

1:18:24On the South Pole, baby. Yeah, in Shackleton or otherwise. So that then becomes the argument for lunar data centers. Yes, agreed. Salim, I was reading into your facial expressions your thoughts here. Well, I think it's a very, very exciting future. I think it's further away than people think. And it's far enough away that we better solve our problems on Earth. Otherwise, we won't get to that point. I remember having a conversation with Masa's team at SoftBank about its 300-year vision. And I was like, great to have the 300-year vision. Let's get through the next 20. And then we'll take it out.

1:19:06So I think we need to spend quite a lot of time focusing on how do we navigate that. Just look at that export order and the broader implications of that. And we have to solve some really big problems here. And that will then enable us to change things and take full advantage of what Elon's doing. Dave, 3.3x growth year on year of data centers at the same time that 50 % of the nine gigawatts of planned 2026 compute has gotten delayed due to organized activist protests. You know, we saw the same kind of protests hit us in the nuclear power plants 30 years ago. And the U.S. has had zero new reactors.

1:19:53China has 100. thoughts on that it's funny you bring that up because on my graduation day there's always somebody picketing for some reason on graduation day and it was it was nuclear MIT's involvement in nuclear research but it's always irrelevant in hindsight you know it's just it's just noise in hindsight I do want to start by saying I completely agree with what Alex just said I reached the exact same conclusion that that lunar data centers are inevitable you need some kind of thin atmosphere to protect you, the solar efficiency drop is irrelevant. The panels are so cheap compared to everything else in the data center.

1:20:29And the cooling is so much easier on the moon than it is in orbit. And that begs the question of then are we going to have Mars data centers as well? But I also want to say from an investment point of view, regardless of what happens in space, terrestrial data centers are going to continue to grow as quickly as we can build them at a minimum as a backup plant, but as a maximum as the bridge to the ultimate Dyson swarm. And who builds the best data center? So anything related. Say again? I said, who's building the best data centers right now? Elon is. He's become a hyperscaler. Yeah, and Chase Lockmiller, Caruso, Project Stargate.

1:21:07Those are the two. The Larry Ellison universe over there and the Elon universe. And they share each other's houses. They're not They're not competing. They're both building. But they both recognize there's infinite demand. This is an all boats rising with the tide situation. If you can get the transformers, you can get the generators, get the solar panels, you're going to make money, period. And you remember when we interviewed Elon, too, he was saying, look, 10x global GDP expansion in 10 years. So you go to over a quadrillion dollars of GDP. I keep asking all these young founding teams, How many people do you think are really working on anything foundational in AI?

1:21:45Give me a number, you know, 100 ,000, 10 ,000, a million, whatever it is. Take$1.2 quadrillion, divide by that number. That's your quota. And it usually comes out to, wow, my quota is$10 billion. Just to be on par, I have to produce$10 billion of GDP expansion. And that really opens their minds to like, think bigger. That's such a great way of framing it. That's awesome. I love you guys. You're so brilliant. All right. I'm going to move us on to our next conversation point, which is the future of work. Let me share a video from a friend of the pod. All right. The question is, should AI pay taxes?

1:22:29Andrew Yang says yes. Let's listen to this video and discuss it. We should be taxing AI and the robot and the agents and try and lighten up on all of the taxes that we as workers pay and also that employers pay that end up discouraging companies from hiring people. So I'm the CEO of a company, Noble Mobile. And when we hire someone, 40 to 50 percent of the money we're spending does not go to the worker, either because it's Social Security taxes or health care or income taxes that are paid by the worker. So let's try and lighten up all of that and tax the bots. Right. Tax the bots. Salim, let's go to you first on this.

1:23:08What are your thoughts? Yes, no? No, because you're just going to slow down the, you're going to, he's basically saying tax cognition. And I don't think that's a working, you can tax the outputs of cognition, but you know, we've always been taxing labor and now labor is not that taxable because labor is kind of evaporating. So you have to figure out the tax capital and the outputs of cognition. But if you tax, say, the tokens or the robots, you're going to just slow down progress massively in hugely important areas like solve cancer and other critical areas like that. Dave? It's irrelevant. I mean, we already have a corporate income tax.

1:23:47So if you stop paying employees, that becomes profit. The profit gets taxed. The collections on it are almost identical. It's just silly. And same with the Bernie Sanders version of it. Oh, yeah, tax the bots. It's good for populists. You know, everyone's worried about AI. Let's tax it. Great thing to say if you're a politician, but we already tax it because we tax every corporation. And so we're fine. You know, you could make a case that people dodge the corporate income tax too much and we need to close those loopholes. I think that's a no brainer. I don't know why we allow those loopholes, but there's no fundamental restructuring required here.

1:24:21We already tax every corporation. These are very big, very profitable corporations. They're going to pay a ton of tax. You want to raise the tax rate? Raise the tax rate. You don't need a new law. Just I don't think you should raise it. Alex, any rationale here? Probably not. So a tax on AI specifically would probably be presumably an excise tax, a tax on particular goods and services, not a broad, say, income tax or sales tax. But in my mind, every tax is a distortion. So the question you have to ask yourself is, do you really want to distort the economy by penalizing superintelligence? I think there are probably far better ways to mitigate any side effects of AI displacement of human labor than just taxing the AI.

1:25:08I think that's probably a relatively naive approach. So on the spectrum, I've mentioned this publicly on the pod in the past, but on the spectrum from UBI, universal basic income, to UBS, universal basic services, to universal basic equity, UBE, or universal basic computer slash capability, UBC, I tend to think that using superintelligence to drive the cost of living down to near zero is probably far more effective as a remediation for any AI displacement of human labor. than just a naive taxation of super intelligence. I don't think we necessarily want the perverse incentives, as Salim and Dave have mentioned, from disincentivizing the taxation of super intelligence.

1:25:53And this is really, you know, you're going to see Alex, you're going to see more and more politicians saying, hey, let's let's tax. You know, if you lose your job, we're going to tax the AI that took your job and we're going to give you that money. And then they're all going to say that because that's what people want to hear. But then when you say, well, I understand your idea on the tax side. What's your idea on how to give, do I get paid exactly what I was getting paid before? Or is there some declining scale? And none of them will talk about that because it's very hard and it's not at all obvious how you do it.

1:26:26But that's the problem they should be working on. Like the collection is the easy part. Who gets what is by far the harder part. You'll see none of them will talk about it. The first person I heard speak about this was actually Jeff Bezos saying, let's tax the robots. I wonder if he still believes that at this point. I think we'll probably, the irony, like, just as we were discussing earlier, Dario puts out this lengthy essay saying, regulate us, then the government regulates them, and then he cries foul. I fully expect that the frontier labs will say, like, give up golden shares or tax us or otherwise create universal basic fill in the blank.

1:27:04And then I strongly suspect in the next few months, the government's going to do exactly that and everyone will cry foul. So I think any frontier labs that don't have a precise idea for what they want the desired economic end state to be should probably advocate a little bit less for just sort of blanket, yes, tax us to create UB, fill in the blank, and have a really concrete idea of what the end state is. And the end state could look like some sort of universal basic equity or dividend. I think that's probably the easiest policy to implement. It doesn't require deep thought about compute. It probably requires, at least in the US, some sort of sovereign wealth fund to manage it, which we've talked about on the pod in the past.

1:27:49But I do think that this is coming to a head, all of this taxation via excise tax or via some sort of golden share based universal basic dividend or otherwise in the next few months, because we're about to see the open AI and anthropic IPOs. Yeah. Well, I think if you listen to those old Elon Musk videos, which I highly recommend, when SpaceX was first getting off the ground, they keep asking him, how can you realistically expect to compete with NASA and George W. Bush? It gives you a real sense of how transient and irrelevant any given government is compared to a long-term mission like Elon's or like Jim Pezoses.

1:28:28This episode is brought to you by Blitzy, autonomous software development with infinite code context. Blitzy uses thousands of specialized AI agents that think for hours to understand enterprise scale code bases with millions of lines of code. Engineers start every development sprint with the Blitzy platform, bringing in their development requirements. The Blitzy platform provides a plan, then generates and precompiles code for each task. Blitzy delivers 80 % or more of the development work autonomously, while providing a guide for the final 20 % of human development work required to complete the sprint.

1:29:08Enterprises are achieving a 5x engineering velocity increase when incorporating Blitzy as their pre-IDE development tool, pairing it with their coding co-pilot of choice to bring an AI-native SDLC into their org. Ready to 5x your engineering velocity? Visit Blitzy.com to schedule a demo and start building with Blitzy today. All right, I'm going to close out our future of work section to discuss a Metatrends substack I put out titled, The Most Dangerous Demographic in History is About to Get Bigger. And I don't like dystopian stories. And this is more about getting the conversation out there, because I think it's an important conversation for us to have and understand what history teaches us.

1:29:56So every major revolution in modern history shares one ingredient, not ideology, not technology, not even poverty. It's young men, usually between ages 18 to 28, who are educated enough to have an expectation about what the future should look like. And that gap between what they actually are inheriting and what they were promised is a combustible force in human history. I want to share some data, and I'd like to have a conversation. We've talked about the notion that we're going to have some turbulence over the next two to eight years. And I want to do everything I can to help ameliorate that turbulence.

1:30:35I'm doing that with the Future Vision XPRIZE and the Gemini XPRIZE in part and through our conversations here. So let me share a couple of slides of data. So on the left is from Charter. It's the Federal Reserve Bank of New York. And what we're seeing here is the difficulty in getting jobs as a function of all college grads, all workers and recent college grads. And what you see, that red line there, is that recent college grads are the group that are out of work the longest, having the most difficulty. That spike you see, of course, is COVID. On the right hand is some charts that came from our friend Eric Brynjolfsson at the Stanford AI Index Report.

1:31:28The upper chart there shows software engineers. And this is, you see, a distinctly divergent line of age 22 to 25-year-old dropping in terms of software developers. So young software developers not getting jobs, dropping pretty linearly. And then the bottom chart here is customer support agents. Again, that young group, 22 to 25, diverging from the rest. So, you know, we've talked about the data being murky. A lot of people are coming out right now, including Sam and Dario and Mark Andreessen saying, listen, the job apocalypse is a myth. It's not happening. But, you know, while I might agree that in general we have the lowest unemployment rate ever, The concern is those young men, mostly out of work, because they haven't gotten jobs after going through the social contract.

1:32:35And one more data point here to show. So I did the research looking at basically revolutions over time led by the youth. There are 20 of them, starting with the French Revolution, where the youth helped overthrow monarchy and aristocratic privileges, the Russian Bolshevik Revolution, the Chinese Youth Revolution, the Cultural Revolution, the Iranian Revolution, anti -apartheid youth revolution in South Africa, People's Power Revolt in the Philippines, the First Intifada, Tiamen Square, Arab Spring, the Hong Kong Umbrella Movement. So I raise this again because I think it's a conversation that needs to be had, and we need to get out in front of this.

1:33:27Salim, you want to kick it off? Well, you know, in the 20th century, the big fight was capitalism versus socialism, right? In this, we've got a better fight now, which is who owns the exponential surplus, who owns abundance, and how do we distribute that? whether it's UBI, UBS, UB something, it is going to create a lot of angst. And what I think the bigger issue today is that social media is amplifying those like 100x. And I think that's the biggest structural problem between today and what we had before, because bad news and panic spread so much faster than good news and truth. And so you really have to solve for that structural imbalance.

1:34:09there's going to be no clear answer to it, except that we really have a huge problem in terms of how to distribute some of that. Europe takes the view of let's create a protective layer for all of society. Here in the U.S. we have the opposite view, and we have some big problems, like 50 % of the country can't put$500 together in an emergency. That's just a staggering commentary for protecting that lower layer. And so we've got to figure out how to get abundance down to the bottom very, very quickly. And we get this comment repeatedly from our community members and comments, etc. How are we going to help that thing?

1:34:49So the abundance prize, Peter, that is on the table is, I think, maybe the most important thing in the world to focus on in terms of getting the cost of living down to a very low level in a powerful way. And by the way, whether or not it's true that youth are not getting jobs or whether or not it's true that we're going to have a job apocalypse, people believe that, right? There's a perception. There's a pandemic of fear. And in that pandemic of fear, that's where negative things happen. Dave? Yeah, go ahead. The point I'm making is that we've kind of some broad policies that have allowed a pervasive culture of fear to permeate the entire U.S.

1:35:37social structure. And that is going to add fuel to the fire. It's gasoline on top of everything else. Dave, want to jump in? Peter, it's brilliant that you're bringing this up and observing it. You know, the one one data point on that slide I'm most familiar with is the Iranian revolution, because I was in the country right before before it broke out. And yeah, in that case, the it was the college students that overtook the embassy and then took all those hostages forever. And that started the whole thing. But, you know, those college students said, look, what we are doing right now in this country is not right.

1:36:10We shouldn't have a monarchy. This is just and all the concentration of wealth is nuts. We need something new. They weren't thinking that it would end up being 45 years of religious rule. Yeah, wow. They did not have that in mind at all. So, yeah, they get really angry, but they don't have a plan. They just know this current plan isn't right. So I love the fact that you're taking this head on. And, you know, if you look at the amount of money that just got raised by SpaceX, the amount that OpenAI has in its charity, and then if Anthropik goes public, they should be taking at least$5 or$10 billion of that, And at least half of that should go back through XPRIZE and get laser focused on this problem because they're the ones that are going to suffer if there's a massive uprise.

1:36:49They have every reason to invest. We're all going to suffer, but they're going to suffer a lot. They're going to suffer a lot. Alex, what's your take on this? I'm super curious, my friend. I think this is a problem that will be, to the extent it is a problem at all, the problem of disemployment or underemployment as a result of AI advances and the elite overproduction theory by Goldstone in revolutions. If it happens this time around at all, I think it's likelier to be felt not within China and probably not even within the U.S., but in the rest of the world that doesn't have superintelligence or isn't anywhere close to superintelligence.

1:37:29intelligence. In principle, if we, within the U.S., if we wanted, I think we can create lots of economic opportunities for our, quote unquote, surplus elites that we may or may not be overproducing, benefiting from superintelligence, colonize the solar system, we'll take apart the moon. Yeah, but just to be clear, Alex, I'm talking about the next two to eight years, right, versus the long term. And remember, you know, when Dave and I were interviewing Elon and remember Davies, he said, you asked him, UHI and civil unrest? He said, yes, UHI and civil unrest. Look, we have a very dangerous cocktail right now of very high expectations, very high connectivity, very low opportunity for certain segments and very quick mobilization, right?

1:38:16And so this is a very destabilizing kind of epoch in human history. And it's that, it's like your point, it's the educated person who's been promised a future and is watching the ladder collapse. That's the real problem here. We need new ladders for meaning, agency, status, contribution, all of that. You're exactly right. And Salim, concurrent with that, we have AI-assisted social media, which we've never had before. We're all experimenting with it. And the year before an election, everything always turns to shit. So that's coming up next year. So you got all that. is that we're democratizing AI so quickly.

1:38:54And we talk about everybody should become an entrepreneur. What we really mean is use AI to give yourself radical agency. And I've been using the phrase, you have the opportunity for future shape rather than future shock. Right? Go there. I think, though, so to some extent, it's entirely possible that we have cosmetic color revolutions without actual revolution versus, say, the cultural revolution, which resulted in millions of people dying and which wasn't even superficially student revolution, but actually fomented by Mao to preserve his position within the elite hierarchy. Entirely possible that to the extent anyone tells a story about AI revolutions due to elite overproductions actually just being driven by a number of other elites that are mining whatever dissent or discontent there might be.

1:39:48But I want to go back to my point. This is, I think, to the extent there's a there there, I think it will be primarily felt not by the U.S., where we do have, yes, even on the two to eight year time scale, the capabilities of creating entirely new classes of work and economic opportunity. And in China, where the Chinese Communist Party is actively driving via its AI plus five-year plan, all of this AI kicking and screaming into the workforce, it's the rest of the world that doesn't have the frontier models, doesn't have the energy, doesn't have the data center build out that I think is the likeliest to bear the brunt of any color revolutions associated with AI.

1:40:30because there may be the economic opportunities aren't as large. And I want to connect this also with the fable story. If all of the frontier capabilities are going to be export controlled going forward, then that leaves the US and it leaves China in sort of the catbird seat to optimally, economically exploit all of these new capabilities for workforce development and economic opportunity for all of these 18 to 28 year olds, but it basically shuts out the rest of the world. So I think it's possible that export control is actually one of the one of the determining factors in any color revolutions for folks outside the U.S.

1:41:14and China. And I'm thinking especially of Europe that we're basically if they don't have the native sovereign capabilities to drive forward superintelligence, there's the risk that the rest of the world becomes almost vassal states that are dependent on all of these ultra cheap capabilities being produced by superintelligence and dumped, for lack of a better term, on the rest of the world. And that could create discontent. I'm going to add one other thing. You know, we saw the Sam Altman Malatov cocktail. We saw, you know, Eric Schmidt getting booed. There is a growing level of discontent. I call it a pandemic of fear versus a viral pandemic.

1:41:58And I guess I'm hearing a lot of the tech leaders around the world saying, don't worry about the apocalypse. It's not going to happen. It's disinformation. It's regulatory capture. It's Chinese propaganda. It's Chinese propaganda. And that may all be true. It doesn't matter if, in fact, the U.S. populace is in fear, if, in fact, people believe their future is not going to be as good as there was promised for them. That's what foments the revolution. So I think, again, I think that if, you know, regulators who are listening, you know, tech CEOs who are listening, we need to get out in front of this and help people understand that they're going to have an abundant future, that we're going to support them.

1:42:49We're going to create a basis by which they have access to, you know, this rising economy that's being created, triple digit growth in the next five years. We need to give them some level of security, some level of assurance, some level of hope, right? This is a cry out to enable hope, at least in the U.S. and other parts of the world. That's the point I want to make about this. I would just add, if we don't build it, everyone dies. I have to add one. Just add one thing. I'd be remiss if I didn't add it, which is everything that Peter just said is exactly right. And concurrent with that, the startups are having a field day.

1:43:27It is the absolute best time in history for startups, which is so counter, because their classmates can't find jobs, which is great because the startups, there's more venture capital than there's ever been before by far. And the AI native startups can recruit anyone they want out of any graduating class because no one can get a job. So it's really in juxtaposition of the fact that the rest of the graduating class is like struggling to find anything to do. So it's really weird. But the startups are having a field day. The incubators are just going gangbusters. All right. It's time for the AMA mates.

1:44:02So we read your comments. We are grateful for everybody, all your comments. Thank you for layering in and for your questions. One of our favorite parts of the podcast is answering your questions. So let's jump in. Salim, it looks like number one's for you. Yeah. Salim, do your scale ideas framework, which is the EXO model, actually force organizations to ask, why do we own this at all? Or do they just let companies scale broken processes faster? And that's from at Tom Schaefer Q20. So you can't think of those attributes. Those are acronyms, by the way, for staff on demand, community, et cetera, et cetera.

1:44:45So you can look at the model if you're interested in looking at the full detail. But these are not efficiency tools that are supposed to be layered on top of an existing organization or broken organization. If you use them that way, you're going to scale pathology, right? You're going to make bad decisions faster, basically, and more automated. The real sequence is the most important thing above scale and ideas is your massive transformative purpose, your MTP, okay? So you first have to design your MTP, then you delete your legacy, then you redesign around the intelligence stack, and then you scale.

1:45:20The MTP answers the question, why do you exist? What problem are you trying to solve? When you have experimentation, that asks the question, what evidence do you have? When you have interfaces, you're asking, or in dashboards, you're asking, what feedback loops are we using? Autonomy then says, who's closest to the information and let them make the decisions. So the framework should absolutely force the why question, but that sits above the two. but like any tool, you can misuse it by people who want speed rather than transformation. All right. So you don't want to digitize a bureaucracy. You want to delete it.

1:45:54One of the comments I make to CEOs these days is if they have a classic matrix structure, you've got horizontal layers that slow you down, IT, HR, branding, privacy, et cetera, et cetera. Every few years, go delete all those horizontals and reinvent them. Thank you. Because power accrues to the horizontal because it's really easy to say no in HR or legal. There's no incentive to saying yes, right? Because if you say yes, your life's a mess trying to manage a complex bureaucracy. So every few years, just wipe it out and rebuild it, and it'll force you to reinvent things in a modern way. That's if you want to take a hack at the old bureaucracy.

1:46:31But the real model is you have to rebuild yourself in a new model, and that's what we do with the organizational singularity stuff. Sorry for the plug. Okay. Alex, looks like number two is for you. AWG, why are you anti-Bitcoin? This is from the Bitcoin Revolution. Well, to paraphrase Jessica Rabbit, I'm not anti-Bitcoin. I'm just drawn that way. I don't think Bitcoin is a productive asset. I think blockchain is this amazing mathematical technology that fell back in time from the future. And I think blockchain technology is super interesting. Bitcoin itself is a lot less interesting to me. As far as I can tell, maybe there's something fundamental that I'm missing, but I don't think so.

1:47:16It's not a productive asset. Similarly, I'm not anti-gold. I'm just not interested in gold because, by and large, it's not that productive an asset, at least not nearly as productive as the values or the prices that it seems to trade on. I think if the question behind the question is, why don't I invest money in Bitcoin, I would say there are a few reasons. Again, non-investment advice. One, it's not a productive asset, unlike stocks and bonds that are actually being used to create new wealth in the real economy. Bitcoin, as far as I can tell, doesn't create any real wealth. And the way you know that, aside from the fact that it doesn't pay any form of coupons or dividends or interest, is it's not generating new ideas.

1:48:06It's not creating new structures. It's not expanding humanity's future freedom of action. It seems to be much more of a speculative asset. That's reason one. Reason two, and this generalizes beyond Bitcoin to other crypto assets in general, parenthetically, Parenthetically, I do like stable coins insofar as they enable more efficient financial asset transfers and to the extent they help to stabilize the U.S. dollar. So I like stable coins. Close parens. I'm biting my fist because I've got so many comments. We really need to have our crypto debate. This is supposed to be rapid fire answers, gentlemen.

1:48:48I will close by saying Bitcoin as well as alternative cryptocurrency. The third elephant in this episode, in this particular room, is AIs and AI agents are fully empowered at this point to come along and invent their own L1s. And the argument that Bitcoin bulls make that because Bitcoin was merely the first L1, that it occupies some sort of primacy in the future light cone, I think, falls apart. again, not investment advice, when AIs come along to the extent that they find any value in cryptocurrencies, they can just invent their own L1s and they'll probably be much better than Bitcoin. I look forward to that.

1:49:30All right, Dave, you have a choice of number three or number four? I'll let you choose. Which one? I can take either. Good. Jump in. Choose one. All right. All right. I'll take three. The U.S. already has a 10 % equity stake in Intel. Has that helped the American at all? Why would AI Lab stakes be different, and that's from Gear for the Year. Yeah, massive, massive difference. The U.S. took a 10 % stake in Intel, gave it$10 billion to bail it out to get chip fabs back into the U.S. They were threatening to shut down investment in their Ohio 1.4 nanometer project, which is critically important for the future of the country.

1:50:07It's very similar to when the government bailed out the car companies. We need those, and it was a great investment. The AI labs are already in the U.S. and they already have tons of money. Why would you be buying them? Oh, but it'll get a great return for the American people. You have the power of taxation. You can take any amount of money on any day you want. You don't want to invest in things. Having the government be an investor is always a bad idea because some future administration will mangle the investments and there's no continuity of thought in the government at all. So you don't need to unless you're helping it bail it out or to help it grow some strategic function for the country.

1:50:46All right, I'll take number four. How do other democratic nations handle sovereign wealth funds? This is from at John Siebert, 5493. So, John, I think the gold standard is Norway. Its government pension is now worth something like$1.7 trillion, and it's built on oil revenues. It also owns something like one or two percent of every publicly traded company on the planet. Right. Singapore has Temasek and GIC. You know, the Gulf states, UAE has Adia. Saudi has PIF. And I think the lesson here is that once you've got this kind of a sovereign fund that's controlled by an outside investment group that's not tied to the politicians, so the politicians can't give favor or spend it, it drives an incredible return for the citizenry.

1:51:41And I think it would be extraordinary if we could do that here in the U.S. if in fact you're from the U.S. Okay. They've also been trained on our data. What's that? They've also been trained on our collective data. So there should be a shared outcome. Okay. Let's kick this one. Dave, the first one's for you. Okay, Dave, why are you fine with the government funding SpaceX but not taking equity in AI labs during a high-risk transition? Did the government fund SpaceX? I don't remember that. I think they buy from SpaceX. The government gave a contract. So in 2008, after SpaceX had its third launch failure and it had its first Falcon 1 success on its fourth try because it had an extra rocket laying around, SpaceX won a billion-dollar contract for Falcon 9.

1:52:33It won a contract. It wasn't given money. It was given a service contract. This was commercial crew, as I recall. Yeah, the commercial crew, right? The space shuttle was going out of business, and we needed a replacement for the space shuttle. Yeah, okay. So that never happened. So that answers that question. And even if it had happened, having a space launch capability is a national priority, and obviously Elon did a good job of it. So that would have been a great move by the government. And then the second part of the question, but not taking equity in AI labs during a high-risk transition. I think the government just proved they can block any product.

1:53:11You know, there was a little argument for a while there that the government should be on the boards of these companies, which is hilarious because a board member can't sit there and say, hey, don't release Fable 5. I'm stopping you. The government already has massively more authority than a board member does. You don't need a board seat in addition to that. You're just going to mangle it. So it's purposeless. And like I said a second ago, the government can tax any amount they want any time. Why do you want the stock to? But I think the government will take stock because it's politically cool and the population is in support of it.

1:53:44But it makes no sense. Give me some, too. All right, I'll take the next one here, number six. Peter, do you believe a quantum breakthrough in three years can actually break the entire crypto stack? This is from Atlas and Grasshopper. So my short answer is two points. One, I think the threat is real, but not in a three-year timeline. I think that's aggressive. And I think the entire industry, we heard this, we had Brian Armstrong, the CEO of Coinbase on the pod last week. If you haven't listened to it, please go check it out. And he is working on, you know, a crypto tolerant algorithm and the whole industry is everybody's going to get there before we have to worry about this.

1:54:29So I'll keep it brief on that regard. All right, Alex. I know everyone wants me to answer question eight, so instead I'm going to answer question number seven. Question seven asks, if knowledge work is cooked, why hasn't anyone suggested using AI itself to manage the sovereign wealth fund? And this is from MGP Star. I think the premise is incorrect. I think to the extent the U.S. and other countries have sovereign wealth funds like Norway, I think AI is already managing the sovereign wealth funds in the form of AI managing the overall broad public equities markets and other public markets. Almost all of the volume in public equities markets at this point is driven by algorithmic trading.

1:55:15AI is already managing all of these valuations, yes, including SpaceX's now fifth largest company in the world. That's almost all AI. Obviously, there's a lot of retail, but AI by volume is actively doing the price discovery. So the premise, I think, is incorrect. AI is already de facto managing sovereign wealth funds to the extent sovereign wealth funds have exposure to assets in highly liquid public markets that are themselves almost entirely dominated by volume by AI. Nice. All right, Salim, this is revenge of Bitcoin here. Number eight, why would AI agents want to use Bitcoin when they still have to pay for energy?

1:55:59That's from At Kapil's. So two, three quick thoughts here. So agents aren't going to be ideological. They're going to be ruthlessly functional. They're going to use whatever rails clears their transactions with the least friction and the most trust, right? And trust is the really thing. Bitcoin's energy use is not the reason the agents will or will not use it. It's whether you can get a neutral, high-throughput global settlement model. Now, there's something powerful about Bitcoin, why people are getting excited about it these days, more so than, say, five, seven years ago or ten years ago. When you have a digital currency, you want three points in a triangle.

1:56:37You want to hit decentralization. You want to hit security. You want to hit scalability. When Bitcoin first emerged, it hit decentralization and security for the first time ever. And people are really excited by that because no digital currency hit those two points. But it didn't solve for scalability. So you have the rise of Ethereum, Solana, Cardano and all the altcoins trying to solve for scalability. but in doing that they typically compromised on decentralization or they compromised on scalability. There was a big Ethereum fix a few weeks ago. If Ethereum was really decentralized they wouldn't have been able to do a fix like that which tells you Ethereum is not really decentralized.

1:57:17So this is where you saw the FTX collapse or the Luna collapse where they collapsed because of either failure of decentralization or failure of security. So Bitcoin had the first to, but it didn't have scalability. With the rise of the Lightning Network, created by Blockstream a few years ago, it solves for scalability. And so now you have all three, Bitcoin hits all three, and therefore people are getting more and more excited about the future of that. And we can get to the broader debate later. All right. This was quite the show, gentlemen. It was fun. I mean, honestly. Yes. And when we say gentlemen, we stress the term to hit all of us.

1:57:54That's an old PG Woodhouse. My dear friends. All right. I hope you guys, if you're not subscribing, please do turn on notifications. We're putting out as much as two episodes per week. When there's breaking news, our mission is delivering you the breaking news when it's happening, what, you know, what it means, what it matters to you. And join us at the Moonshots Summit. You can go to moonshots.com to get your ticket and join the mates there. I love this. And AMA with AWG. I think that alone makes it worthwhile. We're going all out. What's that? I said we're going all out. Yes, we are. And of course, learn about the singularity, the organizational singularity with Salim, investing in AI with Dave.

1:58:40And join us. We're going to have an amazing crew.

1:58:46We'll Besides Cathie Wood and Astro Teller and Palmer, lucky Palmer's our newest. He's going to be extraordinary. Anyway, have an incredible week. You know, don't sleep. Yeah. Well, this week is like last week. Holy crap. I mean, this is unbelievable. The implications of this. Every few hours, everything changes again. It's crazy. All right. All right. See you guys. Love you guys. Love you too. Thanks. If you made it to the end of this episode, which you obviously did, I consider you a moonshot mate. Every week, my moonshot mates and I spend a lot of energy and time to really deliver you the news that matters.

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2:00:09Thank you.