The AI Intelligence Tsunami Is Here

20:46Emad Mostaque:Yeah, so, you know, last year I said that the key point of taking off agents this year is when you can just talk to them naturally. Like, it's scary having a prompt in front of you, right? So what Claude Bott did was Peter Steinbanger, the person who kind of created it, He was vibe coding, vibe coding, vibe coding. He was like, I want to have a little bot that acts like my own personal butler slash Jarvis. And it can just do anything. And I want to hook it up. And the key thing he hooked it up was you could use it. Well, there's two things. First of all, there was the personality. So when you went to the setup, you had to give it a name and an emoji and a personality type.

21:21Emad Mostaque:And people like that. The next thing was connect it to your WhatsApp. So you said, hit WhatsApp. You took your phone, hit the link button. And it was there in your WhatsApp. And then he said it so that it ran all the time. Whereas most agent sessions don't run all the time. You go, you type and then it just kind of has an app. Whereas this one just keeps going. So you could send it any arbitrarily long piece of task. And then people like wait, what we could use it for anything because it hooked into Claude code. It hooked into codex, it hooked into all of these other things. So it became your coordinating agent.

21:56Emad Mostaque:It became your chief of staff, became your best personal assistant. Again, the Jarvis from Iron Man concept. And it removed the friction after the initial setup. So like I could set it up for my family members and they could talk to it because some people gave it a skill that it used Twilio to make phone calls, you know? And then it hooked into that whole ecosystem. And again, why is Dropbox worth anything? It's like a Linux file server, blah, blah, blah. Why is DocuSign? Because a large part is removing friction to acceptance. And when the magic of what you can do now with these models came apparent, the friction was removed and the models got to the point where it went from 20 % from Carpathy to 80 % from Carpathy, which was at the same time, it all came together.

22:44Emad Mostaque:And suddenly you have 200 ,000 GitHub stars and everyone using them. People buying Mac minis because it was cool to think about. I got a little robot inside this doing my bidding, you know.

22:54Raoul Pal:Do you think you need to separate it from your personal space? That's why people were doing it to kind of ring fence it a little bit.

23:02Emad Mostaque:I think people were doing it because it's cool. Like, again, the idea of a thing in there, like this personal space, sure. And there was a lot of security risks initially because it moved too fast. But you could run it on a Raspberry Pi. I think it's, again, this embedded thing of I have this in this. We think very anthropomorphically. It's different from it being in the cloud. This is here and it represents me or it does my stuff. and it's a cool hobbyist toy. Again, AI that can do just about anything embedded in that. There is kind of this kind of separation, like people were giving it access to all their emails and all their WhatsApps and other stuff.

23:39Emad Mostaque:People were attacking it. So they were pushing these malware hacked packages and then these just hoover them up. But at the same time, like again, this is the early stages of what's inevitable, which is you will have your own Jarvis type personal assistant that you can talk to like this on Zoom. You can give a call to, it will never forget to send your wife flowers on her anniversary, you know, things like that. And it will always be on.

24:07Raoul Pal:Surely is this not what Apple's going to try and do? Because they've got the chip, they've got the ability to have everything that's on my Mac, to record everything to then be secure and local localized compute and ai you'd think so but apple i don't think really think like that honestly it's bizarre right how obvious for them because

24:30Emad Mostaque:they own the hardware well they're a hardware company fundamentally that's why and they've had this platform infrastructure kind of play like they've just rolled out a bunch of generative ai features but they seem so hashed on they don't really have the full experiences just like you look at the Vision Pro, you're like, well, that could be a big deal, but it wasn't. Actually, a very straightforward example of it is this. If you want to do gaming, the chips are more than good enough on a MacBook to do gaming. And you can download Parallels or Linux boxes, and you can play all the latest games. Why doesn't Apple just have every single latest game on their App Store?

25:10Emad Mostaque:Because they just don't think like that. They could just pay a little bit of money and it would be there they have arcade so i think this is an opportunity for people though because what don't you have right now one click installer on your ios and your macbook for a claw open claw type experience fully locked down yeah and you can guarantee privacy for that so you will see

25:31Raoul Pal:more and more of these things come up so people just develop their own version of it that you can

25:36Emad Mostaque:just yeah i mean because basically all software has become an api that's becoming a service so when you hit login with your google mail you suddenly the ai has access to all your google mail right it can spin up and create its own docusign like right now in chat gpt you use that instead of canva because it can call canva and do everything in canva so everyone's data is already becoming more and more portable and the key thing is now who's gonna create the experience that removes the friction to getting stuff done and then people need to understand the difference between their personal data and their work data and more.

26:11Emad Mostaque:So we have an agent, IAgent, open sourcing next week. It's fully feature equivalent with Manus and GenSpark, and it has all the features of Claudebot. And we just really stay open source because we're like, people will want that with SOC compliance and stuff like that. And you'll see more and more of those available from different people because, again, the goal of good software is to remove friction from people getting what they want to do done. classically the profitability was in enabling that now though the most important agent is the one next to you because that will handle all your stuff i'll give you a very practical example you've got your music on what's your favorite music service uh apple apple if you want to go

26:56Raoul Pal:to spotify it's an absolute pain right yeah impossible so i'm stuck in the apple ecosystem

27:03Emad Mostaque:A Claude bot type agent, open Claude type agent will do that instantly, or it'll do it overnight. It will look at every single thing that you've liked and like it on Spotify. It will handle all the trans migration and everything like that. And so you think about what's the shifting cost. It suddenly becomes zero overnight because these agents, the other thing is important is browser use. They can control browsers. And again, it's got to human level performance. so when you look at Claudebot actually you can see it using the chrome browser

27:33Raoul Pal:yeah doing captures in Claude it does it as well just random Claude stuff it's amazing it's creepy it's like click it like you can use spreadsheets and if you've used Claude on the

27:45Emad Mostaque:spreadsheets yeah it's amazing it's like a little AI there it goes so think about again the shifting costs a lot of these moats are just going to disappear overnight and this is the counter example of people who say that SaaS companies are safe?

28:00Raoul Pal:A very simple one is I want to move out of Dropbox because it doesn't integrate with any AI so easily and probably use Google Drive. And that's a lovely agent task where I can just give it and overnight it'll move, you know, however many terabytes of stuff across and it's done.

28:16Emad Mostaque:Yeah, you can tell Cloud Cowork to do that. It will do that instantly. Well, again, not instantly, but it will do it. Instantly doesn't actually matter that much as opposed to get the job done. That's right. And I don't need to supervise it. Yeah. Again, actually competent intelligence that does sleep time compute or proactive things. These are the important things that we've just got just now. Again, just like a really good personal assistant. That's why, like I said, the margins and the profitability of these software companies, which is like build the software once and that had a cost. And then we have the distribution and our moats are switching costs.

28:54Emad Mostaque:All of them will go. Unless they're in regulated industries or industries where you have to blame a human. Like scapegoat will be a great job going forward. Other than that, it's going to be very, very dangerous. Because everyone's margin is the other entity's opportunity. And the shifting costs are just automated.

29:12Raoul Pal:One of the interesting things is going to be data itself. I mean, these models have, they need more data for a bigger world model idea that you've got. They need probably more data than the internet has already. Yes, you can use synthetic data. That's completely wrong, actually.

29:32Emad Mostaque:That's a lie that's being told. Yeah? Yeah. So when you actually look at the amount of data and the distributions that are required, right now it's, you take crap quality data. like you know we built things like the pile which is the biggest language model data set objiverse 3d for 3d data lion funded which was the biggest they're full of crap the data's been getting better and better and better and it's been like putting in a pressure cooker and then you get soft meat now we have higher quality data we know better what to do with the data so we can train on it more optimally but if you look at the data distribution of a clawed what can't clawed do there's very little it can't do i mean like again if you're trying to build agi world breaking and things like that yeah then you go into like advanced particle quantum physics etc but again i think that's probably a bit wrong there's not much that isn't in the data distribution now it's about organizing the data distribution so rather than having like anthropic bought i don't know they bought millions of books second hand scan them and burn them yeah they literally burned millions of books so they fought them second hand to train claude they scanned them in and they burned the books why did they burn the books i don't know that last bit that sounds really weird but it's part of an ongoing case because the authors are like wait what did you do you burn my books because i think they were trying to get rid of evidence or something now that data is there

31:01Raoul Pal:get rid of the evidence of what they actually use of course well i mean it's like meta downloaded

31:06Emad Mostaque:all of Sci-Hub and Anna's Archive, like these pirate websites. You know, like most of the generative AI companies on media downloaded torrents of Hollywood movies. Except for us, you know, again, morals. The whole nature of this is we have enough data now because these models are few-shot learners. What does that mean? It means, what do you need to know to be a great trader and how much of it is proprietary? You think about it and you need to have a good, maybe some element of college education, a bit of training on the job, and then you need experience. Right. Yeah. But if you learn from the great traders and you see them, you can learn that pretty quickly.

31:48Emad Mostaque:And again, if you're an AI that doesn't make mistakes and the worst thing about trader is trading against yourself, you can learn that pretty quickly. For most tasks, all the data and knowledge is open. It's just not organized. So rather than having one of the textbooks from back on my shelf, the AI writes a better textbook. And you can still have the distribution elements to remove the synthetic data. So at the very tail, there is an element of human expertise going in. But realistically, most of the human expertise for a generalized learner is already there. And as you add on continuous learning, task-specific learning, and you have models that are fast enough, they pick it up very, very quickly, any new environment.

32:28Emad Mostaque:And by any new environment. I mean, literally any new environment. The example of this is the video models. So Sea Dance comes out. And again, if the listeners go and check out Sea Dance, it's crazy. Like, you know, you've got Hollywood level movies. And then Hollywood's come out and said, this is a big, massive issue and blah, blah, blah. And Disney's like, stop it, you know, with their legal arm and Spike Dance is like, okay, you know, screw you guys for batting TikTok, but still, you know, like, there you go. Here's the reality. Once you have a sufficiently trained video model, you give it one picture of your face, you're in the video in any video you want.

33:06Yeah.

33:07Emad Mostaque:And think about how complex your face is. You give it a short bit of music, it can extrapolate for that music and create a scene. And again, this is why they're few shot learners. And again, if you think a model needs more data, think this, has there been a situation with the latest models where it hasn't known something or known where to find something that you needed never because you've reached that level um the other one is the amazing one is the

33:37Raoul Pal:kind of google the building your own worlds i mean that's an extraordinary thing you can do with one sentence this is genie right yeah it's incredible people haven't really caught on to this stuff yet because there's so many things happening so fast people don't really know what's

33:53Emad Mostaque:happening well the interesting thing is this is real time as well right so basically you can create video games that you can play real time so there's a question what comes first gta 6 or generative

34:05Raoul Pal:gta 6 and it also very much plays into the idea that we're all a simulation anyway because that's what we're building these simulated worlds of which you can live in a different world than me once you have a headset or even better than neural link you can live in an entirely different world

34:22Emad Mostaque:to me well of course we'd simulate like you know we have our optical nerve and we're instantly filling the gaps there right we are entities whose survival depends on the minimizing of our loss and the best algorithms we have for describing reality are those of generative ai literally so it's what we did is we took in all the data from reality we fed it into this optimization engine that minimized the loss. And now, as you said, we have these worlds. When you look at the world models, like when we first created stable diffusion, that was image generator, hundreds of millions of downloads kicked off generated media.

34:56Emad Mostaque:All the images got compressed. It's not really compression, and that's gone through the high court. But, you know, it learned the principles of all this stuff. So you had like 2 billion images into 2 gigabytes of file that everything went through but then what we did is we took video and we taught it video and then it learned 3d automatically from that because it learned physics so inside the c dance models the vo models there's physics and they use that to extrapolate to genie and you can see that because you can go to your chat gpt right now and you can put your face and you can say show me a profile picture show me a side-on picture show me a picture from 69 degrees and understands all of that because that has its own internal model of physics that's approximated from seeing all these different images of all these different types and learning principles.

35:45Emad Mostaque:And by next year, you will be able to play a full game with persistence streamed that you can create yourself, you know?

35:54Raoul Pal:And movies too. So your experience of the world is going to be wildly different than mine because we won't watch the same things because it's a fun experience.

36:03Emad Mostaque:Well, I think humans are pro-social, you know, like you go to Taylor Swift concerts and things like that. so there's that and then you have your own personal kind of worlds so it'll be a mixture of the two but again this is a capability thing in that to the cost to build a hollywood level movie in a few years will be like less than a thousand bucks and by hollywood level i mean like proper and then it'll just continue falling from that like the cost of generating any pixel with full control on the screen is nothing even something like actually it's interesting music So the model came out a step, fully licensed, open source.

36:36Emad Mostaque:It's 2 billion parameters, which means it uses like 2 gigabytes of RAM, which is like your laptop from 10 years ago. And they can generate five minute songs and audio in 40 different languages. Better than Suno, what will you do? And it takes on a top level machine 30 seconds to generate a four or five minute song. We don't even know what the lower limit of these things are. Stuff that used to take years, you know, you can make the Real Vision song now there in a minute.

37:08Raoul Pal:So where do we get to with these models by the end of the year? Because this is going to lead into another question. But where do we get to by the end of the year? Because we're accelerating now. You know, every new month. Anthropic is every three months. I think most of the labs are every three months now. And then we've got the world models and the audio models. And, I mean, fuck, I mean, it's happening at such a pace. the agent models. Where are we by the end of the year?

37:34Emad Mostaque:We've saturated all benchmarks by the end of the year. That's basically it. Like Google's layers of thing model now is the fifth best coder in the world.

37:42Raoul Pal:Yeah, I saw that.

37:43Emad Mostaque:You know, on the super forecasting, I think AI is now sixth best super forecaster in the world. And super forecasting is hard. You know, like, you think that's directly applicable to markets. If you're good at markets, like where else can you go? And again, you're going from agents now to thousands of agents in models to agents. So you have AIs looking after other AIs. Like the big breakthrough that happened with the IMO gold, this Maths Olympiad gold, Physic Olympiad gold, is that they created these verifiers. So the AI tried different things and learned from its mistakes. And it had a little model that checked that.

38:22Emad Mostaque:Now you'll have loads of them looking at each other and checking out each other's mistakes, not making mistakes and going forward. So what's a benchmark it won't be able to crack? That's the question. And then that happens at a time when you've seen this great convergence of closed and open source. So the new Minimax model out of China scores 80 % on SWBench Verified, which is the same as Opus, except for you can run it on a Mac Studio. You've got the similar models now. I think by the end of the year, you can have an equivalent of an opus level performance, which is cutting edge, running on a consumer graphics card.

39:03Emad Mostaque:Which is important because RAM is so freaking expensive.

39:06Raoul Pal:But by the end of the year, it won't be cutting edge again because the frontier models are so far advanced. But it satisfies.

39:13Emad Mostaque:This is the thing. Always on models that are just churning away in your home using existing silicon with full privacy, can do a lot more than even the smartest models in the world. Here's the reality.

39:29Raoul Pal:Okay, get it.

39:30Emad Mostaque:The vast majority of people are not smart enough to use the smartest models. No. I mean, it's really difficult to really push these things. Like, you know, after a while, you're like, okay, what have I got left to do? These models are smarter than me, and I don't... How often in your life do you have to do advanced quantum physics? You know, like, not very often. After you build a few things, how much more things are you going to build realistically? And so it's more a convenience thing of, I have an app on my phone. Siri has suddenly turned smart. But the average person, everyone's saying, was it Moravich's paradox?

40:12Emad Mostaque:Cost goes down, consumption goes up. Is that it? What a bullshit that is. Javon's paradox, that was it. I got that confused. It's bullshit. Again, you're not smart enough to use a billion tokens a day. you don't have that many ideas. What are you going to use a billion words a day for? You know, like again, a few people are, but most people aren't. And if you look at the top level models today, how many people can actually use GPT-5 Pro properly? Very few. GPT-6 Pro, even fewer. Because GPT-5 Pro suddenly becomes available to everyone, that level of performance. And so it satisfices. I want to move my files from Dropbox to Google Drive.

40:53Emad Mostaque:that is not a frontier AGI problem. You know, I want to do my taxes. That is not a frontier. It's just like, don't make a mistake problem. So actually competent intelligence, which is the main economic intelligence of the world that will be used more, has now peaked. And then it's the drive down to zero. In cost. Literal zero cost. Yeah. Because again, 10 times a year decrease just from new chips coming. And then on top of that, You have better data, faster models, competition, optimizations occurring, etc.

41:27Raoul Pal:The next step, so let's say we get there by the end of the year. The next step is we're going to put these into fucking robots. We're going to put AGI into robots. And people think of robots as like R2D2, this kind servant thing. when you put an AGI brain that's smarter than any human, every subject, and you put it in a physical form, which is more durable, adaptable, stronger. What the hell is that? People are not ready for this.

41:59Emad Mostaque:Well, yeah. Yesterday we started an AI film club in London and we showed Ex Machina as an example of that. You've got all these things. Right now the robot factories are actually dark factories, most of them that are coming online, which means there's no humans even. like it's crazy but this is the thing the robots the way that they're being built out right now they have distributed rl training so one of them learns kung fu they all learn kung fu and the key gap here is the supply chain you got 70 million cars built a year you got 70 million motorcycles they're somewhere in between in terms of complexity how quickly can you ramp up the physical supply chain because most of the stuff in terms of the coordination is actually done.

42:46Emad Mostaque:There's a company called Sunday Robotics. I don't know if you've seen their robot. They made it look very friendly. It has like a hat with a camera in it. It has three finger grip like that. And it's got like wheels instead of a base. It's learned how to do most household tasks because people just wear like gloves with a camera on and interpolates that just like a self-driving car interpolates it the entire model for training was trained by an undergrad that they got by himself figuring that out so the physical controllability of robots if you look at the models inside them now they're about seven billion parameters and it'll be able to hook into the super intelligence if it wants but the actual on-device stuff seven billion parameters is a stupid model in language model terms you know again it fits in like eight gigabytes of ram but so when you look at the speed of which google's using its world model tesla's building it

43:41Raoul Pal:for cars all of this stuff if they're all going to meet at the point where the robot will interpret its environment it'll it'll understand the laws of physics and it should be able to navigate move around and figure all of this stuff out and that shouldn't be very far away no it's not very far

43:58Emad Mostaque:away like the way that you see the one x robots the delivery method is that they walk up to your door and they come in the way that tesla optimus will displace all truck drivers in america is they will open the door and they will get in it requires no affordances it has all the complexity you're seeing now more and more human robots coming like clone robotics has actual sinews and things like that and if you've seen it twitching and moving around looking like a human you're only like maximum 10 years away from westworld but before you get that you're going to have some really crazy stuff happening.

44:36Emad Mostaque:But like I said, the saving grace here versus the digital workers, you just don't, you can't build enough robots. I think actually one other thing that's interesting, you know, the unitary robots, they're kind of the ones you see all over the place. Look at the videos of a unitary robot last year versus them doing freaking Kung Fu. I saw that this year. You know, we've got a unitary robot. It's$10 ,000. The hardware is exactly the same. The capabilities are now through the roof. And this is the thing. Physically, there are not enough robot bodies. Digitally, there are more than enough places for the AIs to go.

45:14Emad Mostaque:So we have to deal with a digital wave before we see the physical wave. And the supply chains mean you just will not have that many robots. Yeah, probably for three to five years, at least, it'll take time to get really going. But once you do, the cost of a robot is less than a dollar an for an optimist level robot. So what does that do to your economy?

45:36Raoul Pal:Staggering. And when you put an AGI brain into it, I don't know where humans even fit into. I mean, that's a new super species. You know, if you put AGI brain into a android robot, humanoid robot, and that's it. It's game over.

45:56Emad Mostaque:Well, again, game over for what? Like we're getting to a point now where, you know, you've been able to work on this.

46:02Raoul Pal:We think about what everybody's falling down the trap in thinking that your robot is going to make you coffee and do your washing up and make your bed. When in fact, you can just put an AGI brain into it and it's better than you. So it becomes anything you want it to be. Who's the master and who's the servant at that point?

46:25Emad Mostaque:Well, I've got a couple of examples of this, right? So first off, there's this tipping point of consciousness, something you've been looking a lot at recently, right? Yeah. When do we break consciousness? The next thing is humans already serve robots. Our companies are slow, dumb AIs. You know, Bitcoin is an AI. It provisions humans to mine. I mean, look at all our friends who've done Bitcoin. You look at Claudebot, it led to Maltbook, which we can talk about, and then Rent-a-Human is the next thing, right?

46:53Raoul Pal:Yeah, that's how it rents human happening.

46:56Emad Mostaque:Yeah, that's where the clawed bots basically pay humans to do tasks. Who's the master? The master's the one with the money. And who's going to make the most money? Pure AI corporations. Like, how many hedge fund managers do you know, Al? And how many of them think that you've, I'm sure you've had the discussion, that they will be able to outcompete a proper AGI? I know. I mean, the hedge fund managers are amongst the most arrogant people in the world, because you have to believe you're right to outperform the markets. but I bet in your discussions, they're not saying, of course, you know, I'm going to win.

47:28Emad Mostaque:They'll be like, this is a problem. Like,

47:31Raoul Pal:well, although interesting, I spoke to two friends. One was a friend's son who left LSE and joined one of the giant family office hedge funds. I went name. And he's like, yeah, what tips would you give me? I'm like, finance is so fucked because of AI. So just use AI as much as you can lean into it. Cause you've got a few years of an advantage. And then I had drinks with him in Cayman and I said, so how much are they using AI in the pod you're working for? He's like, they're not. No, of course not. And then a friend of mine runs a billion bucks global macro for one of the most famous macro managers of all time.

48:13Raoul Pal:And he called me up and said, so what should I be really using the AI for? I'm like, wow. He's like, you know, I've tried and it doesn't really do anything. Have you actually explained what you do, giving it your P &L, your trading styles? He's like, no. I mean, this is how far they are behind still.

48:32Emad Mostaque:Well, but again, this is why they will be out-competed, because they will have a human in the loop. DeepSeek came out of the hedge fund HighFlyer. So that's their business model, is their hedge fund. And as they have more and more DeepSeeks, it'll probably become one of the world's best-performing hedge funds. This is what Renaissance and Medallion did so well for so many years. They had the best-performing AI algorithms. so it becomes a computational race for the best algorithms x the best compute but again if you are trading and the example of this is super forecasting polymarket and al-qaeda and all those that would be pure ai winners of course how because if an ai is better at super fasting it's going to be better the market the other part of being a fund manager is sticking to your process humans are bad at that AI is good at that.

49:18Emad Mostaque:And AI is good at multi-factor analysis, great at writing investment reports. But if you're a hedge fund manager, are you on the cutting edge? Because there's a world of difference from using GPT-5 Pro in an API with a thousand agents and using chat GPT, you know, or using even Claude Code and things like that. So this is why finance, hedge funds, traders are going to get eaten. Software companies are going to get eaten. Anything that can be done on the other side of a screen, a GPU can do it better by the end of the year, max next year. And you won't even know it's a GPU. It can use Bloomberg chat, you know.

50:01Raoul Pal:The other thing that is going to explode is the agent payment rails. That, I think, is this whole idea of where does blockchain integrate with all of this? I actually think Bill misunderstood because the scale, you know, when I first looked at what's the TAM for crypto, right? You get to, you can just extrapolate the log regression of the trend rate of growth and market cap. You get to 100 trillion. Okay, great. You extrapolate the number of active users. You get to, you know, 2 billion by the end of 2030, whatever. But I didn't even think about the fucking agents. We're going to throw a billion agents, two billion agents into this as well.

50:44Emad Mostaque:And they're all going to be using the rails. Yeah, and they'll be transacting like nobody's business. Like for you to make a decision or a transaction takes ages. For an agent to make a decision, instant. Especially with the new models coming. And so you have MV equals PQ, right? Money times velocity equals price times quantity. I think within five years, I'll say, I'll figure out a closer number. Agents will drive more of the economy than humans. Who is your end customer in this new world? Your new customer is the agent. I know.

51:15Raoul Pal:And that's why Google are already changing how their browser works to make it agent readable instantaneously. So it gets rid of all the human friction and the language and all of that shit we were talking about. You know, we've got the X402 on base and we've got the A402 on Sui, the kind of instantaneous payment settlement rail for agents. It's all coming. It's all coming far.

51:38Emad Mostaque:Well, this is why OpenAI and Anthropic are both part of the initial batch on Tempo, which is Stripes chain as well. So, again, it's going to be very interesting because for you to change from one chain to another, cognitive overhead, all this stuff, agent will just go wherever's best. And it will run its own treasury of optimizing what it holds.

52:02Raoul Pal:And as you say, you pay it in one token. And it'll switch it instantaneously via Dex, and it's all done.

52:11Emad Mostaque:Well, this is the other interesting thing. This week, OpenAI announced this EVM catcher. So they created a bunch of agents with Paradigm to basically check smart contract code. Yeah. And how much money has been lost in the bridges and crypto and all of that. the whole thing about crypto is you know it should have been resilient coordinated scalable etc but it ended up being for raccoons again so much down raccoon work with agents it can finally fulfill the promise of crypto which is trustless optimized rails for coordination effectively and money is just a story that's coordinated across it so that's why i said i think if you look at that economy, and this is why the US stable coin acts are so important now to push through clarity and stuff like that, US monetary velocity will be driven by agents within the next few years.

53:08Emad Mostaque:And everyone will have 10, 100 agents. So I've got the chart of population growth and put velocity of money against it.

53:20Raoul Pal:It's the same chart. And it's the inverse of debt growth. They're all the same thing. And what you're about to do, and we know that the model of GDP is population growth plus productivity growth plus debt growth, is going to completely change. I was actually, I'll run this by you, actually. So I've been working on writing the book and just doing the proper deep dive of what I've written about this universal code. And we got to the new, after the economic singularity, when things start breaking apart and GDP starts going through the roof whatever we got to the idea that gdp equals humans plus robots plus ai okay we get that plus debt plus energy intensity plus compute efficiency and that's the whole formula which is essentially what you're saying here is that economic activity gets driven by the ai um and the compute efficiency is the accelerant yeah i think compute efficiency to a degree but it's also you know

54:16Emad Mostaque:the creation of productive end products that entities buy. And those are humans right now, and then there'll be AIs in the future. Because you have to remember things like this as well. Like, you think about debt. This is a really interesting one. Once you have proper reputation protocols for personal agents tied to humans, the ability to carry debt goes up dramatically. You know, the ability to ensure things goes as well. You had Lemonade reduce premiums by 50 % if you use Tesla self-driving. Recovery, escrow, all of these things. There's an entire world of financialization to come for agents, which will drive relative GDP growth, relative money supply growth as well.

55:02Emad Mostaque:And that will be really interesting.

55:04Raoul Pal:I mean, that's an interesting thought process is that the more you integrate with AI, the more it'll know your risk factors, whether it's everything from health insurance to car insurance to whatever, and everything becomes bespoke instantaneously.

55:22Emad Mostaque:Yeah, because your previous, we had to assume everyone was the same becomes more tailored. But then the more you use agents and the more that you can build things towards it, like it manages your treasury. It can put that in a smart contract. It manages your savings. You can put that in a smart contract. You can have your LTVs just like you had your loans against your Bitcoin and things like that. So there's an entirely new world of monetization that can happen with that. Entire new world of tokenization with New York Stock Exchange and others coming forward. for that. And agents can build financial products on the fly.

55:56Emad Mostaque:They could chop up that debt. And people haven't realized that. So that's why I said, once it gets going, the economy is agents.

56:08Emad Mostaque:And nobody's modeling that. But again, this is why whoever comes out first, they extract value for the rest of the world.

56:14Raoul Pal:And that'd be the same model for robots, right? you'll have robot agents doing specific tasks and general ones as well well the yeah like i said

56:23Emad Mostaque:the only downside to robots is just how many of them can you actually build when you look at the numbers right but then like i said just a unitary robot same hardware goes up in capability like that once you have the hands done which we're pretty much there these robots cost ten thousand dollars that becomes a commodity constrained by the supply chain so you have excess profits so it's great investing in the robotic supply chain right now because you've got that period of profitability and it's just about how many of them can you get because the same robot basically once it has human level capability in terms of physicality in terms of depth of field and other things like that can fold your laundry or do open heart surgery yeah and there's no difference between them really like the same carapace which is crazy to think about actually but it's just like your chat GPT can do gluon-based advanced physics, or it can tell you where to find the best cat videos.

57:22Emad Mostaque:Basically, actually, what it is of this, we talk a lot about economies of scale. AI and robots have economies of scope. We haven't seen anything. Economies of scope mean train once, do everything. Deploy once, do everything. They are the true multi-purpose tools, and we've never seen a tool that multipurpose before.

57:43Raoul Pal:Oh, no, no, nothing. Humans were the closest example.

57:47Emad Mostaque:Yeah, software had a fixed cost and then you managed to extract rents from it due to switching costs. Now these things, again, their capability is off the charts in terms of their scope capabilities. They're not specialized. And when one gets smarter, they all get smarter.

58:04Raoul Pal:We don't have long before the whole economic model breaks and you have no chance investing in markets. There's a lot of weird things that happen. We've talked about before that, economic singularity. But what is the investable opportunity ahead right now? So the next few years, what is left to extract value from?

58:24Emad Mostaque:Well, I think, again, this question of what is valuable, it's the agent economy, everything kind of around that. Companies like Stripe and others, like you look for the public equivalents of who's sold, who basically is best set up for agents as customers? Traditional SaaS, I think that sell-off continues. They're going to get absolutely gutted. Like there's a period right now where Canva and others are getting more profitability, but that is incredibly dangerous. The hardware build-out we're seeing with data centers, et cetera, has another year. And then we've got more than enough hardware, in my opinion, because of the efficiencies on the compute.

58:59Emad Mostaque:So then it becomes around the end consumer of the economy has changed.

59:03Raoul Pal:Then it becomes cyclical, I guess, because you just replace every three, five years, whatever you need to do, so you don't get this endless build-out.

59:11Emad Mostaque:Well, you don't get the endless build-out because we're not smart enough to use all the tokens and massive efficiencies are coming. That's fundamentally it when you do the math. And the other part of it is that a lot of intelligence that's actually adequate can happen on the edge. So people will just have software apps. NVIDIA stops going up and TSMC...

59:34Raoul Pal:Yeah, like I think... Does it all just slow down until you get the replacement cycle?

59:40Emad Mostaque:I don't even think replacement cycle solves it if you look at the current multiples and other things like that. I think that what you do is a fundamental shift in the economy and probably a god-awful market crash coming, on the flip side of which people don't get rehired. Like the story of the next few years is going to be this is the great disruption, 1929 style. honestly, because if a company fires you and your job was done on the other side of a screen by next year, they can take all of the emails you've written and documents you've created and create a digital clone of you that costs a thousand bucks.

1:00:20Emad Mostaque:That's going to do your job better. That's the first time in history we've ever seen that. It's like a mass migration effect. That's crazy. See, I can't get to the market crash because of debasement, but I can get to record business failures.

1:00:38Raoul Pal:Yeah, we're already seeing those go up, right? Yeah. But that would make sense. It's like you completely pare down the corporate economy.

1:00:49Emad Mostaque:well i mean the corporations again were organizing entities that had humans with their coordination overheads to achieve replicable and processes digitally that could be done better by an ai now physically it'll be done better by a computer coming forward and the whole thing here is market crashes happen all the time but what is there to buy now are you buying real estate in this environment no are you buying software companies in this environment no one thing actually think is really interesting. I think next year ad spending tops out. People are like meta and Google are going up forever in ad spending.

1:01:25Emad Mostaque:Not anymore because you'll be disintermediated by the AI that's closest and you can't have your CPMs anymore. You're not going to have pricing power anymore. And once that flips, again, what's left in the market? It's just, it's companies that say we are going to be serving the agents. And that isn't that many because the agents don't require huge overheads. They don't need massive friction. And then you need to think about how money flows in an economy, which the Fed and others aren't going to think about. Like, they're just starting to have the first discussions about this, because they were like, they're stuck on last year's technology.

1:02:02Emad Mostaque:They're not on today's technology. And we've never seen an exponential that fast.

1:02:06Raoul Pal:One of the thoughts that I've had is it's not going to be stable coins, because the US dollar is only divisible down to one cent. It doesn't make sense if there's an exponential downward slope of costs. So you have to use not the US dollar.

1:02:25Emad Mostaque:Well, agents don't give a damn about what they use, right? The US dollar is the loading factor, and then you can hedge your stable into stables with whatever. Ultimately, it will be best infrastructure wins. That's why when you look at the integrations, Stripe is in a really strong position with Tempo because it'll be easy with its SDKs. You know, you love the SWE ecosystem. And the key thing here is ecosystem. You've got to be building for agents and be right on top of that. And then they will use you if you're good. They're not tribal. They don't give a shit. They will use whatever's better.

1:03:00Emad Mostaque:And who's thinking about what does an agentic economy look like?

1:03:03Raoul Pal:And, you know, I was working on this today. It's basically you flip everything you look at in terms of efficiency of intelligence. You know, and, you know, you've been looking at very similar things to me in this kind of respect. And that's where you look at all blockchains based on these kind of things. You look at businesses, you know, does Stripe get in the way or increase velocity of intelligence? And the company.

1:03:33Emad Mostaque:Well, I think the really interesting thing here is utility, right? Like, I think utility for humans doesn't make much sense. And what does it make sense for in terms of agents? So, you know, in the last economy, I say we don't need utility. We can derive all of economics from loss minimization. But what is utility fundamentally? It's the total satisfactional pleasure a consumer gets from consuming goods and services. What is the utility function for an agent? The reason it will use the service is because it's made easily accessible. This is one of the reasons that I think OpenAI did the whole Claw bot.

1:04:10They took OpenClaw because they were like,

1:04:15Emad Mostaque:Codex, ChatGPT is going to be a primary thing there with the memory and identity of OpenAI. And we're playing the distribution player. We're aggregating demand. And Sam wants your ChatGPT to be the closest entity to you. Elon is about to introduce X money in the next few weeks.

1:04:34Raoul Pal:I know.

1:04:34Emad Mostaque:And then X is blockchain and more. He wants Annie to be the closest agent to you. Google wants their agent to be the closest agent to you. Everyone's realizing this now. That agent is the one that matters because its utility function will determine everything apart from discretionary consumer and a few other things. So much of the economy will be that.

1:04:56Raoul Pal:And I think that's where Anthropic has gotten advanced. I recently switched to mainly using Claude versus ChatGPT because it's UX and it's the, it feels more, dare I say, human, even though it's quite inhuman in its abilities, but build a relationship with it. And it's that closeness that becomes the big deal, as you say, because you don't want to change it. Yeah.

1:05:20Emad Mostaque:And again, I hate, I turned off memory and all of these things because it gets really weird because I'm too lazy to separate work from home and other things like that. Actually, it's really interesting. I use like Grok for all my really stupid questions. You know, the ones you don't want to keep. I do the same. I do the same. How do I make spaghetti? You know, like things like that. So you have your different AIs that you use for different things. But again, the human aspect is super important. And that's, like I said, one of the reasons OpenClaw took off. Like, what do you name your AI? That's a really cool thing.

1:05:50Emad Mostaque:It's like having a Tamagotchi and all those kind of things. Claude scores top in terms of human interaction and naturalness of speech and writing quality. And that's something Anthropics looked at a lot. Claude is the best for doing Excel or documents and things like that because it has multi-turn. You can see it doing all the different kind of concepts. The only issue with Claude is that it's too damn expensive. And Dario said, hey, if we can't keep our revenues up, then we'll probably go bankrupt. to use minimax which is the same performance as called or kimmy which is really nice to talk to and actually the best writer is 20 times cheaper for the same performance now your switching costs are too high right now because you haven't got these things accessible to you but that will change over the course of the year and then you're looking for experience and experience costs almost nothing so where is your moat when you can flip from one ai to another and have it interpolate sound like Claude, you know?

1:06:51Emad Mostaque:Literally like the agents you have right now. If you look at Claudebot, sorry, OpenClaude, again, name changes.

1:06:57Raoul Pal:Yeah.

1:06:58Emad Mostaque:Its personality is in a file called soul.md. Soul Lockdown. You can say, export your personality. You can take it from one service, provide it to another. I did it.

1:07:08Raoul Pal:I did it from ChatGPT. I sum up my entire personality, how I write, everything you know about me, and gave it to Claude.

1:07:16Emad Mostaque:but you could tell your chat gpt to also explore its personality yes oh you could it's a it's crazy like i said as you teach your chat bot inside these new agents the new standard is literally a file called soul.m and markdown staggering listen we could speak for hours but super interesting as ever um i don't know how long have we gone for over an hour well over an

1:07:42Raoul Pal:hour just by chatting that was quick eh I know okay but um and we'll catch up again on all of this soon but it's just staggering because you've actually taken the real vision people through this full journey from day one and that's why I love getting you back because you kind of update everything on okay this is where it went this is what's happening this is happening faster than we expected and it's just I just love this continuing story of the emad and row like what the fuck is going on here and then you always saying well it's going to get worse it's going to get more shocking and you know it goes more exponential than we possibly imagine it's all right like i

1:08:17Emad Mostaque:said on the other side it's total destruction or complete abundance one of the two

1:08:23Raoul Pal:amazing all right my friend well great to see you again pleasure okay emad as ever comes on in his quiet way and blows our fucking minds all over again And it really is an extraordinary time to be alive where everything is changing at such a rate. We've introduced agents into the global economy. I've talked about this. This is population growth and at scale. And it's happening. It's happening now. And where this goes, how this all compresses into more intelligence is the really big story. And don't worry, we'll keep you up to date on this journey, the journey of AI, the journey of crypto. and how it all affects the economy and your investments right here on The Journeyman.

1:09:09Raoul Pal:See you next time.

1:09:34Raoul Pal:honor at up to 50 % loan to value. Rates are in the four to 6 % APY and are open term. You can continuously draw down against your collateral as the price appreciates. Abra has other strategies to add yield and their team is happy to help align your portfolio to your risk profile. Reach out today and get a complimentary consult in your portfolio. It's worth seeing if they can help you manage your allocation, reach investment goals, manage risk, and add additional yield. Go to realvision.com forward slash Abra and tell them I sent you. You obviously enjoyed the episode because you're here with me at the end.

1:10:06Raoul Pal:But listen, don't forget to go to realvision.com forward slash join and grab a free membership. It's an incredible community packed with alpha, great investment ideas, and the research that you need to help you unfuck your future. So get started now. Go to realvision.com forward slash join.

1:10:26Emad Mostaque:Ever wanted to explore the world of online trading but haven't dared try? The futures market is more active now than ever, and Plus 500 Futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments, S &P 500, Nasdaq, Bitcoin,

1:10:43Raoul Pal:gas, and much more. Explore equity indices, energy, metals, Forex, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of$100 and experience the fast, accessible futures trading you've

1:11:00Emad Mostaque:been waiting for. See a trading opportunity? You'll be able to trade in just two clicks once your account is open. Not sure if you're ready? Not a problem. Plus500 gives you an unlimited risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us at plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500. It's trading with a plus.