Aaron Ginn, John Gedmark, Jordan Schneider, History of U.S. China Relations, OpenAI Explores Social Network Arena

27:43Popped. By 1984, Deng could famously declare, to get rich is glorious, reflecting China's new pragmatic embrace of wealth and markets, a quote often attributed to him. So very different from the cultural revolution, the communist mindset that I think people put on China in the 70s. And so during the 80s, the US and China found common cause in opposing Soviet aggression. They cooperated indirectly in conflicts like the Soviet-Afghan war. The CIA and the PLA coordinated to funnel weapons to Afghan guerrillas fighting Soviet troops. That turned out to be a bad decision, but they were working against the Russians at the time.

28:24Of course, all the weapons became the training ground for the Taliban. It was very bad. Anyway, So Reagan even went as far as to export them some military equipment. That is one of the most sacred bonds that two countries can have in any ways. It's dark, but it's true. Despite his anti-communist rhetoric, Reagan was committed to further normalizing ties with Beijing. I mean, we'll talk about Bill Clinton's perspective on China and what the internet would do to bring democracy to China. But this has been a thing since Nixon. and continued through Reagan is, I can fix her. I'm built different. Once they see how America works, once they get a little taste of our rockets, they're going to want to go full capitalism.

29:12And this is interesting. In 1982, the U.S. and the PRC signed an agreement where the U.S. agreed to gradually reduce arms sales to Taiwan, which was aimed at placating China. The U.S. kept selling defensive arms per the Taiwan Relations Act. Yeah. So clearly, again, they just can't pretty much impossible to pick a side. And everybody's just sort of kicking the can down the road on the big question. Yeah. And so by the mid 1980s, thousands of American companies were doing business in China and China's economy was growing at double digit GDP increases. You'll love to see double digit GDP increases, folks.

29:52And hundreds of thousands of Chinese students and scholars were studying in American institutions. So So there were a lot of people-to-people bonds, of course. Both sides largely viewed the relationship as mutually beneficial. The US saw a vast new market and a potential partner while China gained access to capital and advanced knowledge. But there were some frictions. There were some ideological differences. American leaders occasionally pressed Beijing on human rights and political freedoms, a theme that continues till today. And there were trade imbalances. China's exports to the US were growing faster than imports because China was still not a consumption-based economy, highly savings-driven.

30:27And so this U.S. trade deficit with China, while modest then, was beginning to draw attention. And of course, now it's like front and center. It's like the most important discussion point in the U.S.-China relationship. And then, of course, there was the Taiwan issue. Let's move on to Tiananmen Square and the Butchers of Beijing. This is 1989. The booming 1980s relationship came to a sudden crisis in mid-1989. Over a million Chinese, led by students, gathered in Tiananmen Square calling for democratic reforms and an end to corruption. On June 3rd and 4th, 1989, China's communist leadership ordered a military crackdown.

31:04PLA troops opened fire on the protestors, killing hundreds to possibly thousands of unarmed civilians, and the world watched in horror because photos like this were disseminated in American media. And so President George H.W. Bush publicly condemned the violence and suspended military sales and high-level contacts with Beijing. Congress imposed sanctions. Chinese officials were hit with travel bans and bilateral aid programs were frozen. Washington and its allies essentially put the U.S.-China relationship on hold. During, in 1992, during the U.S. presidential campaign, Bill Clinton criticized Bush for being too lenient on Beijing after the massacre.

31:44And this is what's so fascinating about the U.S.-China relationship is that it's not strictly a left-right issue. We talk about this with Trump put tariffs on China during his first administration. Biden kept those in place. And so it's not like, oh, the Republicans are the China hawks or the Democrats are the China hawks. It's always going back and forth ping-ponging based on what's actually happening because that's kind of the nature of geopolitics. And so Bill Clinton accused President Bush for being too lenient on Beijing after the massacre, accusing him of coddling the butchers of Beijing.

32:21This strong remark reflected widespread American revulsion at the Chinese regime's behavior in a sense that the U.S. should not conduct business as usual with a government that crushed peaceful protests. It's very anti-free speech. How can we do business with them if they're not embracing the most basic of what we see as human rights? Privately, Bush sought to preserve the strategic relationship. Just weeks after Tiananmen, he secretly sent Brent Snowcroft to Beijing to meet Deng, delivering a personal message that the U.S. wanted to maintain ties despite public outrage. The secret diplomacy, kept from Congress at first, showed Bush's desire to sustain the engagement framework, albeit under criticism.

33:01So the Tiananmen events chilled, but did not permanently rupture U.S.-China relations. The sanctions and global opprobrium isolated Beijing for a short period, but China's importance and the underlying strategic economic interests led to gradual resumption of engagement in the early 1990s. And so at a certain point, Bush is saying like, yes, they're violating human rights over there, but it's really far away and we're making a lot of money. So we got to stay the course. That's basically what happened. So Bill Clinton comes in and he moves from post-Tiananmen isolation back to a policy of constructive engagement with China, which again, like complete flipping from the campaign promise of like the butchers of Beijing, I'll never deal business with them.

33:41And then all of a sudden he's like, well, I mean, we could probably do a little bit of business. We'd probably get a little bit of money. Just a little bit of money. So Clinton initially tied China's trade status to human rights I think there was a continuous belief that if you could get China to adopt free market capitalism, that over time, you know, the free market would guide China to a system that was. I don't know. Who knows if it would ever been long term aligned with U.S. interests. But the I do believe that, you know, everyday citizens of every country in the world don't have this sort of general.

34:24I don't want to generalize this too much. Right. But like people in China don't have as much of a, you know, this sort of geopolitical power players, you know, want want people to believe like this is like, you know, citizen on citizen conflict. but it's really not. It's like every individual wants to further their own life and live in a sovereign country. I mean, when you think of America's Bill of Rights and free speech, that is very much aligned with just capitalism. And so it does stand to reason that if you get a country to go full capitalism, full democracy, free speech and human rights will kind of follow.

35:05But that's not always the case and that's where we get to this like state hybrid capitalism that's eventually developed. And so Clinton, he's channeling the art of the deal here. He's saying, hey, China, we're gonna trade status to human rights improvements. Your trade status is gonna be linked to human rights improvements. In 1993, he threatened to revoke China's most favored nation trade privileges. This came up on the All In Show last week. If human rights didn't improve, However, by 1994, he de-linked human rights from trade, concluding that engagement was a better strategy to influence China.

35:43So he is saying, you know what? I'm not going to break off trade if you don't clean up the human rights stuff. Instead, I'm just going to focus on increasing trade. And I think that will lead to human rights improvements, which is somewhat reasonable. It didn't really play out, but to some degree it made sense. This pivot acknowledged China's rising economic weight. And so there's just a certain amount of pressure. And this is the pressure that's been building and building and building where it's like decoupling every single year. Yeah, U.S. businesses putting pressure on the admin to say, hey, we want to be doing business there.

36:15We need to have an actual relationship between government to government for us to confidently go and do business. Every step that the trade relationship grows makes it more painful to break off. And so there's going to be more pressure. And so high-level visits between U.S. and China continue. 1997, Chinese President Jiang Zemin made a state visit to the U.S. And in 1998, Clinton traveled to China for a summit symbolizing the full normalization after Tiananmen. Clinton spoke to the university. They're back. But there are some security crises. The Taiwan Strait crisis happens in 1995 when Taiwan's President Li was allowed to visit the U.S.

36:58Beijing was furious, seeing it as a U.S. breach of the One China policy. China conducted missile tests near Taiwan to intimidate the island ahead of its first democratic presidential election. Clinton responded by deploying two U.S. aircraft carrier groups to the vicinity in a show of resolve. The crisis subsided. Taiwan's election proceeded, but it was a very hot and tense moment. And then there was the Belgrade embassy bombing in 1995. During NATO's air war in Yugoslavia, U.S. bombs mistakenly hit the Chinese embassy in Belgrade, killing three Chinese journalists and diplomats. Washington apologized profusely, calling it a tragic error due to an outdated map.

37:37Many Chinese believed it was intentional. Anti-US protests erupted across China. US consulates were besieged by angry protesters and angry demonstrators. The incident badly strained relations. And then there was also a lot of surveillance and spying accusations during the late 90s. There was a fear of Chinese espionage, allegations of Chinese theft of US nuclear secrets at Los Alamos surfaced in 1999. This injected some distrust, but it didn't halt the engagement. Everyone's making too much money. And so trade overdrive begins during when China enters the World Trade Organization. This is a centerpiece of late 90s engagement.

38:16China really gets integrated into the global economy at this point. Clinton pushed for a landmark trade deal to allow China into the WTO. In 2000, he signed the US-China Relations Act of 2000, granting China permanent normal trade relations. This is the PNTR that came up on the All In Show again. This paved the way for China's WTO entry in 2001. And so the U.S. believed that WTO membership would bind China to global trade rules, open China's markets to foreign goods and investment, which kind of happened, but not for social networking and tech companies, which we'll get into. And Clinton argued that by embracing China in the WTO, quote, the United States is exporting freedom by sending China a message that economic freedom can ignite demands for greater political freedom.

39:02So you get richer, and then you start saying, hey, I want some free speech. I want to yap. I want to start a podcast. I got money. I can afford a Shure SM7B now. So you're not going to censor me, China. Let me yap. So the U.S. becomes China's key market, and China becomes the U.S.'s key manufacturing hub. By the late 90s, China's export-led growth was heavily fueled by the U.S. market. China ran large trade surpluses, while Americans got low-cost goods. This is the happy meal of the late 90s. U.S. manufacturing sectors like textiles, toys, and electronics began to feel the impact of Chinese competition, but U.S.

39:42policy remained firmly committed to economic engagement. And so, the late 90s were often described as a honeymoon period for the U.S.-China relations, aside from some hiccups. Jiang Zemin spoke of a constructive strategic partnership with the U.S., and Clinton toasted to China's peaceful rise, a term China itself later adopted. However, unresolved issues persisted. The U.S. continued pressing China on human rights. There was the treatment of Tibet. You might have remembered the Free Tibet Movement that a lot of Hollywood actors were involved in, and just a general lack of democracy. China's military modernization began, albeit from a low base, which the Pentagon watched closely.

40:25In 1996, U.S. Defense Secretary William Perry raised concerns about China's missile buildup. And by 2000, a congressional Cox report warned of Chinese nuclear espionage. But despite such concerns, the two countries keep engaging with each other. So post-World Trade Organization entrance, China's economy absolutely takes off. yep uh it's the same 10 and the context here yeah for me personally is being born in the 90s growing up at this time where u.s china relationships you know is you know this honeymoon period trade is accelerating uh it feels like china is opening up and modernizing uh i had this dream as a young child of being an international businessman like i just had this idea of like uh the the thing to be was a guy wearing a suit with a briefcase doing international business and so as i got into school once i got to college i still had this sort of idea that uh china was going to be an important market for u.s tech which i was interested in so i started studying mandarin yep i studied abroad in china got in at effectively like a yc equivalent in china and realized very quickly that China, the Chinese market, despite what was being marketed broadly, had no interest in foreign, really foreign businesses being involved on the ground in China at all.

41:55And it really just, it completely, I basically slammed into a wall and within two weeks realized that like, this is not a place that US technology companies are ever going to do business, but I felt like I was sold a very different dream. There was still this idea on the ground, even people that were optimistic that, hey, Google's banned, but there's still tons of opportunities here. This was the lack of reciprocity. So by the late 2000s, and especially in the 2010s, US officials and business leaders accused China of failing to reciprocate the openness that it enjoyed from the West. So there were market barriers.

42:35China maintained high barriers for foreign countries in many sectors like finance, telecommunications, media, even as Chinese firms freely accessed US markets. Now that's stopping, but for all of the 2000s and 2010s, any Chinese company could come here and sell DJI drones and TikTok and all sorts of stuff. This was really a cell phone because it was how long did we have to go where, like you said, U.S. firms were being effectively stonewalled in China. But no one kind of realized it. Yeah. It was rough. So foreign companies in China face joint venture requirements, equity caps, and favoritism towards state-owned enterprises.

43:17You need to set up something called a variable interest entity. Yeah, so this was interesting. So when I was there, there was a foreign, I was helping, I was like an intern for this foreign startup. And there had to be like a Chinese person that was an equity holder in the company that did no work. They were not involved with the company at all. They didn't even have a board level role. It was just basically effectively a wealth transfer to someone local. And then that person was like, and and the the reason for that uh is is not just the economic reason but it's an influencing it's like if you come in here and you do anything bad this person is basically they can take all the assets of the of the of the chinese entity at any moment yeah it's yeah but but also it it puts the represent the chinese representative in a weird spot if the the foreign firm is not acting yeah in the interests of party it's very china broadly and then there was also intellectual property theft.

44:16The U.S. became alarmed by widespread IP theft and industrial espionage attributed to China. American firms reported being forced to transfer technology as the price of market entry. So, hey, you want to sell that car here? We got to see the blueprints, basically. And then there were state-backed hackers implicated in theft of trade secrets. In 2014, the U.S. That's such a crazy dynamic. I want to enter this market. Give us the exact playbook to - Give us the codes to Zion. Really. In 2014, the U.S. indebted five Chinese military hackers for cyber espionage against U.S. corporations. And of course, there was accusations that Beijing was manipulating its currency to keep exports cheap, a stance that led the Treasury almost to label China a currency manipulator on multiple occasions.

45:05And eventually it did so briefly in 2019. There was also the lack of political reform. Like everyone was hoping that the economic growth would help liberalize China politically, but that just did not materialize. In fact, if anything, China became more authoritarian and Xi Jinping became essentially a dictator for life. And so the CCP had no intention of loosening its monopoly. There was no two-party system. There was no one else. And this was like a core assumption of the US engagement strategy was that, hey, we're gonna take this leap of faith. We're gonna bring you into the global economy and we're gonna expect that you evolve into a democracy over time because China was on that track for a little bit.

45:41And to give China a little bit of credit, we were doing the same thing with Taiwan, basically saying like, yeah, you're the one China. Yeah. We're on your team. Let's do this together. A little bit two-timing going on. Simultaneously selling weapons to Taiwan. Yeah. Everybody was two-timing. Yeah. And so during the Obama era, this is the beginning of a tougher stance. So pivot or rebalance to Asia in 2011. The Obama administration announced a strategic pivot to Asia, devoting more diplomatic and and military attention to the region. This was partially to reassure Asian allies in the face of China's growing assertiveness.

46:18Secretary of State Hillary Clinton in 2011 outlined a policy in an essay titled, America's Pacific Century, calling for an increased US engagement across Asia as a counterbalance to China's influence. This included stationing Marines in Australia, strengthening ties with other Asian countries, and these moves were controversial. Beijing definitely viewed them with suspicion. There were also the Trans-Pacific Partnership, which was a standard free trade agreement with Asia-Pacific nations, but not China. So there's a new trade deal that advantages everyone but China. The TPP aimed to set rules on labor, environment, and state-owned enterprises, implicitly pressuring China to reform if it ever wanted to join.

46:59And so they basically structured this trade deal to say, hey, you got to follow all these different things that you're not doing right now. Oh, it turns out everyone just happens to do this except for you. Why don't you come on Reform and then you can join because it'd be great. You know, you'd have more free trade. So as China became more assertive territorially, especially in the South China Sea, the U.S. pushed back diplomatically. In 2010, Secretary Clinton stated the U.S. has a national interest in freedom of navigation in the South China Sea, which irked Beijing. In 2015, U.S. Defense Secretary Ash Carter publicly warned China to halt its island building and militarization of reefs in the South China Sea, saying the U.S.

47:37opposed turning these features into military outposts. China was basically like, we'd like some strategic islands, so we're going to make them. The Pentagon began regular freedom of navigation operations near Chinese claimed areas, which I'm sure people are familiar, which is basically just, you know, navigating boats through those areas. We could be here at any moment. Show of force. So, uh, power projection. The U S often with you, with the EU and Japan brought cases to the world trade organization against Chinese practices, uh, i.e. China's export restrictions on rare earth minerals, which they're doing again now, critical materials for high tech products led to a joint world trade organization complaint in 2012.

48:19While the U S won some rulings, China sometimes complied minimally or found workarounds, annual strategic and economic dialogues were established to air grievances and press China on issues ranging from currency reform to market access. There was very little sort of progress during this time. Yeah. They also host the Dalai Lama, which is very controversial to China. They don't love what he's pitching about universal rights. But Obama kind of frames this as this is, you know, general strategic, like a general strategic and economic issue. By Obama's second term, U.S. rhetoric had sharpened. Officials openly talked of China as a strategic rival in certain domains, even as cooperation continued on climate change and Iran's nuclear deal.

49:07And then in 2012, 2013, this is when Xi Jinping really takes over. He becomes the general secretary in 2012 and president in 2013. and he centralized a lot of power and championed the Chinese dream of national rejuvenation. They did domestic tightening. This was basically his Make America Great Again campaign. Yeah, basically. And so they did a military buildup. The PLA got a massive overhaul and budget increases. Dick Cheney was not super happy about this. And then Xi Jinping launched industrial policies like Made in China 2025. It's now 2025. And it seems like mission accomplished. guys yeah to some degree look yeah they were he was focused on semiconductors ai 5g and they're still not on the i would argue that they're not on the leading edge of semiconductors although they're making great efforts they are not you know tyler cowan yesterday was was very uh behind on ai a lot which is that they're behind on ai the most exciting ai projects they have that are public or trained on american models they're doing well in smartphone manufacturing 5g for sure uh and then electric cars to an increasing extent, drones, certainly.

50:18So important high-tech sectors, but not the key foundational technologies necessarily, but they're certainly working on it and investing very, very heavily. And in 2013, China began the vast Belt and Road infrastructure project across Eurasia, extending its economic and political influence, another point of U.S. concern, seen as Beijing creating a Sinocentric order. Again, people have been very sort of concerned, afraid, annoyed, frustrated with sort of belt and road initiative. But at the same time, I do want to give them a little bit of credit that the U.S. has just, you know, aggressively done many similar things over a long period of time, sometimes with different structures, right?

50:59You know, the IMF and some of these sort of like more global organizations are oftentimes carrying out a lot of those efforts, but still. And so Xi Jinping starts talking about the century of humiliation. That's from 1839 to 1949, when China was subjugated by foreign powers, vowing the great rejuvenation of the Chinese nation. And so he is arguing that China should no longer be pushed around or play second fiddle. It would reclaim its rightful place as a great power, the kingdom under heaven, the middle kingdom. This fueled a more assertive foreign policy. China became less willing to hide and bide, which was Deng Xiaoping's old mantra, to remain low profile.

51:43And so several incidents of deterring relations started to emerge in the mid-2010s. There's cyber espionage clashes. In 2015, there's a massive hack of the U.S. Office of Personnel Management. I actually know someone who was in the database at that time and all of their stuff got leaked because of this. It's kind of crazy. And was it made public? or? I'm not, I think it might have been made public. I'm not actually sure. But basically, if you worked for the federal government, all of your personal data was leaked to China. And this is widely attributed to Chinese actors. The US accused China of hacking companies.

52:20Obama and Xi Jinping reached a 2015 accord not to conduct economic espionage in cyberspace, which helped briefly, but distrust remained high. And so there was also a standoff in the South China Sea by 2015, 2016 china had built and militarized artificial islands with runways and missiles and in disputed waters the u.s responded uh with more uh with more military tests operations that's right procedures i believe phone ops yeah and rallied allies to condemn these actions uh and i remember there's some very viral youtube videos about like china's artificial islands because it's just like i how are they doing that we don't do that that's a crazy idea to just go and like build an island But it makes a ton of sense if you need to project power you build an island you kind of control it and then you can put a tank or a turret or a missile or a plane on it.

53:12And so the economic dialogue starts stalling. Annual talks are yielding only incremental Chinese concessions which frustrates US negotiators. Market forces market access for US firms remain restricted. By 2016 calls grew louder in a loss in Washington that engagement had failed to change China's behavior. Yeah at this point Obama was frequently uh saying please which was he would ask China to play by the rules of the international system warning that if it didn't the U.S. and others would enforce those rules yep Chinese leaders meanwhile accused the U.S. of trying to contain China's rise yep and not respecting China's core interests like territorial integrity the whole big Taiwan thing uh but um But needless to say, saying, you know.

53:57Yeah. And so then, of course, 2016, Trump gets into office. There's the 100-year marathon book that's very informing of China's strategy. And Trump is way, way more aggressive in the rhetoric. He says they're stealing American jobs. He says he promises to get tough on China and demand reciprocity. And this did resonate with a lot of American voters in industrial states. And that's a big part of why he won. The job loss, the various firms, manufacturing companies that had basically been shut down due to not being able to be competitive with China for various reasons. That was still fresh on a lot of people's minds.

54:36Right. If even, you know, if somebody had a family business that had shut down 10 years ago and Trump gets into office and starts talking like this, that family is not forgetting that that happened. Totally. And so we're talking about Chinese trade war today. it's actually a trade war too, because the first Chinese trade war happens in March of 2018. Trump announces tariffs on 50 billion worth of Chinese imports, and then Trump eventually widens that to 25 % tariffs on about$250 billion in Chinese goods, which are industrial components, electronics, et cetera. And additional tariffs on the rest, roughly 300 billion consumer goods at 7.5%.

55:18Virtually all Chinese exports to the US were hit, and the administration justified these as necessary to counter economic aggression and massive trade imbalances. So Trump has been beating this drum of economic warfare with China is happening. I'm going to lead the charge again and again and again. He's back in. He's doing it again. This should not be unexpected. And so China retaliates, placing tariffs on tens of billions of dollars of U.S. exports, targeting politically sensitive products like soybeans, agriculture goods and autos. For example, when the US levied$34 billion in tariffs, China responded with$34 billion on US goods.

55:54Trump escalated, raising tariffs from 10 % to 25 % on$200 billion of goods. Beijing answered with its own increases. And so there's this tit-for-tat spiral that rocked global markets and stoked recession fears. By 2019, bilateral trade volumes fell, supply chains began adjusting, and companies in both countries felt pain. American farmers in particular were hit or hurt by lost exports and Chinese manufacturers faced higher costs and uncertainty. And so now we get into revenge. COVID came immediately after this. There's, you know, we won't get into COVID on this podcast. I think it's more relevant to stick with the crackdown on Chinese tech, specifically Huawei and ZTE.

56:40So the U.S. banned government use of Huawei and ZTE products, citing espionage risks. And this was the big 5G debate. The U.S. also pressed allies with mixed success to exclude Huawei from their 5G networks, portraying it as a Trojan horse for Chinese spying. Of course, like if a 5G tower is intercepting all internet traffic, it's going to be pretty easy to spy, especially if it's unencrypted stuff. So Huawei responded with lawsuits, but this tech decoupling aimed to protect the US national security and technological leadership in the face of China's rapid advances. And so in 2018, the US Justice Department charged Chinese intelligence officers and hackers in several cases of economic espionage, and the US passed more laws to tighten scrutiny of Chinese investments, especially in tech startups.

57:29Sanctions were also imposed related to human rights. the U.S. sanctioned officials involved in Xinjiang's mass detention of Uyghurs and for undermining Hong Kong's autonomy. China angrily counter-sanctioned some U.S. lawmakers and NGOs. And this is from the U.S. Department of State website. It says, also required of every company in China, a branch of the CCP is nested within Huawei's corporate structure. And they say Huawei has deep ties to the Chinese Communist Party and military. And it's a privately held company, which is interesting too. So I think the American companies and politicians at this time that sounded the alarms were absolutely correct that just strategically cannot, the US cannot rely on telecommunication infrastructure from a privately held company with ties to foreign military, which is a political adversary.

58:25And so Trump is getting much more aggressive against about China in America. Simultaneously, Chinese officials are starting to use sharp rhetoric against the West, and they call this the wolf warrior diplomacy. And so the foreign minister Wang Yi blamed Washington for the worsening relationship, accusing it of McCarthyism. And there's some crazy wolf warrior like tweets and quotes out there that are really, really aggressive. And it sounds just like Trump, but from the other perspective, It's very much like, this is a failing country. They're the worst. It's very funny. And so, of course, there's a lot of propaganda and conspiracies around COVID-19.

59:03Obviously, that sours the relationship, but most people are super familiar with this. And so, in 2020, in July, the U.S. Secretary of State, Mike Pompeo, delivered a speech at the Nixon Library titled, Communist China and the Free World's Future. He bluntly stated, the old paradigm of blind engagement with China has failed. We must not continue it. we must induce China to change. Pompeo proclaimed the era of engagement is over, citing China's unfair trade, human rights abuses, and aggression. He called on the world to join the U.S. in resisting the CCP's ambitions. This was essentially an obituary for nearly 40 years of U.S.-China policy and set the ideological groundwork for a new Cold War.

59:42But also not the first time that communication had entirely broken down, right? This happened after Tiananmen Square and Anyways, this story is still unfolding. Yeah, yeah. And it kind of brings us up to today. I mean, obviously, Biden kept a lot of pressure on China. And now Trump has escalated things to what feels like 11. But we have three great guests today, breaking down various aspects of the US-China relationship, what's going on in Taiwan. But we're starting with a more optimistic take on how to support Taiwan with a satellite that will provide Internet. And so we are joined by the founder and CEO of Astronus.

1:00:27And welcome to the show, John. How are you doing? Hey, guys. How's it going? It's great. Thanks for having me. Great to have you. Congratulations on the announcement. Would you mind just giving us the high-level announcement and even just like a little breakdown of Astronis and how you describe the company on a day-to-day basis? Yeah, of course. So today we had this very cool announcement. You can go check it out on Bloomberg and some other places. We announced a new satellite for Taiwan. And this is a special kind of dedicated satellite in a high orbit that is called geostationary orbit. So it's a very special orbit.

1:01:11It's been around since the beginning of the space age. But it essentially allows you to park a satellite over a country or region of the world and provide continuous service with just that one satellite. Or, oh, wait, what the hell? You look and sound good to us. Something glitched on my Zoom, but it was all good. You guys can hear me? All good. Yeah. Okay. Excellent. So you can provide this service with just one satellite or in some cases, a couple of satellites parked up there and essentially create this backbone in the sky. Yeah. And this is really important in a case like Taiwan, which I'm sure we'll get into.

1:01:53Sure. Can you give us a little history of the company? Because I know you launched satellites before and I've heard about Alaska and a few other countries. What has the rollout been now that you're kind of in the commercialization stage of the company? Yeah, so we started the company coming up on nine years ago. An overnight success. Overnight success. We love an overnight success on this show. Congratulations. We'd love to see it. Just a quick, quick nine-year journey. Good job. Honestly, incredible timeline. Yeah, it's incredible. I appreciate that. Yes, yes. We did. Yeah, we just sprang into being with this beautiful manufacturing.

1:02:35It just snapped your fingers, basically. Yeah, fully formed. It just manifested it. Magically appeared. So we started the company actually to do this one thing, which I always like to joke. is there are no pivots we started with this exact thesis in mind and then we just have been you know grinding away executing on that all the way through but it is you know do a next generation satellite design using all the latest uh small satellite technology but in high orbits which have a number of benefits and a number of use cases that are they're very different from i'm sure what you you know you and your viewers have heard about in low earth orbit so yeah yeah like starlink and OneWeb and some others that are in low earth orbit have a lot of advantages and high orbits have their advantages as well and that's for both commercial and military and defense applications which we are are also now charging ahead on.

1:03:30So we started the company you know on some early commercial customers that we found and now you know fast forward today we've signed contracts for you know more than uh more than 10 of these satellites commercially we also have a number of u.s government defense programs uh there's there's in work as we speak so there's a there's a lot going on um but this one this was an important important one for us yeah can you talk about your neighbors in geostationary orbit i i saw on your site there's 15 billion dollars worth of these satellites being sent up every single year so there's other people you talk about kind of like what else is up there is like the hubble telescope like how high are we talking higher than the iss like really explain it like we're five explain it like oh yes yes actually yeah no no for sure so it is about a hundred times farther away than than lower earth orbit um it's about a tenth of the way to the moon and as as you as you said there's about uh 15 billion dollars worth of these satellite large satellites launched to geo and other higher orbits every year but historically those have always been giant behemoth satellites that cost hundreds of millions on uh really for the commercial side is in this like few hundred million range and then on the military side the satellites cost over a billion dollars per satellite sometimes multiple billions per satellite so we're talking and we're talking huge satellites the size of like a double Decker, London, you know, big red London bus, that kind of that kind of size.

1:05:04And then they're really designed to do everything from, you know, broadband communications, this is where all broadcast satellite television has always been from. And then there's some important national security missions up there as well. And so the 15 billion is total between commercial and military. But you know, I mean, it is a huge number. I was just like, it's one of these very big industries that isn't talked about a lot. And so we said, Hey, there's nobody really taking a new approach here. It feels like we could go do something really interesting and, and perhaps quite valuable. And talk about today's announcement and the significance of it.

1:05:42I imagine this is not the kind of partnership that you started working on in Q1. It's probably something that's been in the works for a really long time. Like what, what, what, what, what the, you know, what it's even like the timeline to make something like this happen. Do you have one click checkout? Can Taiwan just go please just buy now yes exactly buy now pay later no no for sure it it is a longer longer sales cycle for you know 100 million dollar plus uh deal but obviously worth the worth the effort this is so this is a commercial contract with uh a telco called chungwa telecom it's the largest telco in Taiwan they have about a 30 billion dollar market cap um 7 or 8 billion in a year in annual revenue.

1:06:24So it's very, I mean, this is a big country, big company, right? It's like in that Fortune 500 class of company. And they, among other things, in addition to managing, you know, operating the cell tower networks for Taiwan, they also manage the undersea cables for Taiwan. They also manage satellite connectivity for the government of Taiwan. So they have a, you know, they have a big footprint there, as you would expect. And so working with them, you know, going back, I don't know, at least a year, maybe closer to 18 months ago on where this could be, you know, this valuable asset for them. And then, you know, sort of going through the, I would call it all the normal enterprise sales activities from there.

1:07:11Right. You have to get together with our technical teams, with their technical teams, hash out exactly what the technical specifics are of the satellite and then the network around it. and then hammering out the business terms. So it is a big deal for us and I think a big deal for Taiwan. This is something they very badly need as I'm sure has not escaped your attention. What does it actually take to get the satellite up to geostationary orbit? Assuming you guys are partnered with SpaceX on the transport side, but what are all the different kinds of things? Is this uniquely unlocked by SpaceX in dropping launch costs?

1:07:55I'd love to know kind of the general trend in mass to orbit and how that's enabling the business. Oh, 100%. Yes. I mean, there's no question. When SpaceX came along and really dropped the launch costs in a big way with the Falcon 9, that enabled a whole array of just like new space opportunity. Like I said, we've seen most of that in low Earth orbit, but absolutely still the case for us in higher earth orbit. I think the difference is it's a lot higher earth orbit, the higher orbits, it's a lot harder to get to. So you have to have your own onboard propulsion. The rocket doesn't actually get you all the way there.

1:08:33That's what I was getting at. Yeah. Yeah. So in lower earth orbit, the rocket just drops you off where you want to be and you deploy satellites and there's satellites in lower earth orbit that have no propulsion, extra propulsion on board at all. They don't need it. We are quite the opposite. So you get dropped off in this transfer orbit, but it's really on us and any other satellite that goes to GEO to do the rest of the propulsion ourselves and get ourselves the rest of the way up to GEO. So that is where we had to really design the whole satellite system around this electric propulsion system.

1:09:09We use an ion thruster, very high performance that allows us to, you know, essentially have all the fuel on board that we need in the size of a couple of tanks that are basically look like, you know, a couple of scuba tanks. Right. So it's like that size of tank, that much xenon gas, which is the propellant. And we can actually get all the rest of the way there up to geo. So, you know, between that and if there's more recent technologies, I think what we're doing today just wouldn't have even been possible technically until, you know, coming around the time we started the company, eight, nine years ago, because you really had a few of these pieces coming together, including the electric propulsion.

1:09:55So, yeah, it is a more challenging orbit to get to, for sure. Interesting. How did you get into this? I actually don't know your background before you started the company. I'm an aerospace engineer. I'm a space guy. I've been a space guy since I was a kid. Did my degrees in aerospace engineering. Worked on some big satellite programs. Worked at, you know, a couple of the big defense contractors, which I will remain, you know, remain nameless for this. But suffice to say, learned that was, you know, not what I wanted to do with the rest of my life. working at the big defense primes and, you know, seeing how they operate.

1:10:36I think there's also, you know, there's something there that we just, we got to fix, you know, we got to fix for the country or we're going to be in serious trouble. So no better way to do that than starting your own company. Yeah. We talked to Ian Cinnamon over at Apex Space and he was talking about building a satellite bus or platform for low earth orbit satellites, kind of almost acting as like a supply chain partner to speed up, you know, delivery to low Earth orbit, like smaller companies that want to get going. You started the company so long ago, I imagine that that thruster is in-house.

1:11:11You built all this. Are there any other partners other than SpaceX that have been helpful to you as you've built out? Or what does the modern space economy and landscape of partners look like as someone's building a company like Astronus? Oh, that's a great question. So true, a lot of these pieces were not in place when we started the company. But as these pieces come along, we absolutely take advantage of them. So that includes, you know, more rockets coming online. Sure. You know, some of them have more what we call Delta V to get to the higher orbits. that also includes some of these transfer vehicles.

1:11:55So we would call them orbital transfer vehicles. So like impulse space, for example. No question as those things come online, we can take advantage of those and use that to really, I mean, not to benefit us, but to benefit our customers. We can get a satellite there faster. They get the faster time to market. They get the spacecraft and their service that much faster. if they come online and do the kinds of things that we're talking about. The orbital transfer vehicles, they may have more fuel on board, which means a longer life to the satellites. So a lot of these, there's a lot of great opportunity to come in and add pieces to the ecosystem for sure.

1:12:39Are you expecting Starship to change the business? I know Starship is going to be able to dump out way more mass in LEO, but does it also make getting to geo easier because it's just a bigger rocket? Well, I believe it is heavily geo-optimized. So using it, we will most likely, it's not strictly necessary, we don't have to do this, but we will most likely want to use one of these orbital transfer vehicles. Sure. And I think that's actually like part of the genesis of why Tom started Impulse Space, was he saw this real need there. But it will result in lower launch costs, right? I mean, which just really benefits everyone.

1:13:28I think it's going to be a huge boon to the industry. And I'm very much looking forward to it flying. Can you talk a little bit about how a modern telecom company delivers internet? Because I imagine Chungwa Telecom has cell phone towers and maybe some 5G stuff. And then also maybe now they have geo satellites and those plug into the rest of the system. Or are they trying to specifically create like, we're gonna sell you a separate product that's a satellite dish that will interface with this geo internet product. And it's like a completely different line. Just like, you know, I have a Verizon plan on my iPhone.

1:14:14I also have a Starlink terminal for when I travel. They're two completely separate products and networks and bills. But how are the telecoms thinking about providing kind of a 360 experience to the customer? Yeah, so for Telco, we are providing what we call trunking and backhaul, right? So trunking is exactly what you'd imagine, a giant pipe that allows them to bring huge amounts of data, pipe huge amounts of data from point A to point B. And then backhaul is, in their case, imagine you have cell towers out in remote areas and you need those cell towers are acting like any normal cell tower. And to the end user, they don't know the difference.

1:14:59They're just their cell phones connecting whatever cell tower they're the closest to. But if the cell tower is in a remote area, it doesn't make sense to run a fiber line to that cell tower. And so you need to do that backhaul length that is connect that cell tower to the network through some other way. And satellites are a very advantageous way to do that, especially in certain cases. I think what we've seen with a lot of telcos that we work with, like Chungwa Telecom, is they really, yeah, they do see it as a very separate kind of need and product offering than what people might get at their homes with, whether that be their terrestrial provider or a Leo provider like Starling.

1:15:50What they are really looking for is dedicated capacity that is set aside for their exclusive use. And it's on these what we call SLA, surface level agreements, guaranteed uptimes. And they know it's there whether they are using it or not. It's just always guaranteed to be there for them. And then on top of that, you can just think about what some of these customers, Fortune 500 customers might want. in an enterprise grade offering, it's security, it's a lot of the customization. So understanding exactly what the different endpoints of the network are, exactly what equipment is used, and getting to work with us to pick that equipment if they have a preferred vendor for that networking equipment.

1:16:40And then really just having this insight and transparency into exactly what's happening on their network at any given moment. So among other things, They know where their data is going and where it's not going. They know, for example, that their citizen's Internet traffic is not going up to a satellite and then landing in some other country outside of their control where maybe they don't, you know, they don't trust that country. They just don't know what's what's happening to that data. So that's where we've seen this this need out in the market for a true enterprise grade offering that has this kind of all these all these aspects to it.

1:17:15Yeah. How do you think about scope creep when you're sending a multi$100 million satellite up into the air? Everybody in traditional software is familiar. You start building something or you start scumping something out. You're like, oh, what if we added this button or this feature or things like that? I imagine there's a huge incentive to try to scale capabilities and offer a bunch of capabilities. But at the same time, you kind of needed to do one or two. Every ounce matters. Yeah, every ounce matters. and there's like one or two things that are critically important for the sort of value of the product.

1:17:48Totally. I, you know, when, when the, uh, when the customer asks for something and they know that there's a, you know, there's like a hundred million dollar contract there waiting, the sales guys always want to say yes. So you got to figure out ways to help them say yes to things without, as you said, you know, giving, giving into this, like, you know, giving, giving into this temptation to just like customize everything. Yeah. So we have a standard satellite design. We have a few pieces to it that are, that are essentially modular. So you can sort of plug and play a few different things like, like Lego blocks for slightly different customer configurations.

1:18:29But that's it, right. We draw the line there. And then there's only so much that we're willing to customize the design and you have to you know it's somebody you have to say no like hey uh if if we were to totally customize this thing for you would be the cost would you know balloon way beyond what what you are you know what what you're willing to pay here so um i i think that's uh i think this worked well for us you know we sold like i mentioned a lot of a lot of satellites of of this uh using that approach and i think um you know yeah there's there's there's always ways to make it work yeah i love the the meme of uh you know the sales guy the sales guy just promised like a bunch of features and the cto is saying yeah of course we can do that you want to just be able to go up and back whenever you want for sure yeah we'll make it happen yeah yeah you want it to land on the moon and then come right back yeah obviously yeah a little bit different i don't i mean well i guess i don't really know in enterprise software land but i can imagine that happens all the time and you know it's like um sometimes they just have to put up with it but yeah it's a little harder to like build a totally different satellite design but physical satellite hardware no no i i totally get it software features yeah no i totally get it with the with software it's like okay you know this engineering team is going to have to spend you know uh two days over the weekend like you know shipping this but it just doesn't quite work the same when you're sending nine figure payloads to space um can you talk about uh security kind of like risks in um in geostationary orbit versus low earth orbit are you far enough away that that that it's like a you know maybe a more secure environment or less risk or are the risks still kind of very real yeah so i mean i'm i'm gonna be a little limited in what I can go into here since I do have a security clearance.

1:20:21There are different threats to higher orbits and geostationary orbit than there are to low Earth orbit and different counters to those threats. I think what I would say is that our plan is and what we're executing on is we're building many of these satellites. We're spooling up our production here in this building to build you know many dozen build-in launch many dozens of these satellites including we'll have on-orbit spares we'll have satellites that we could bring in um and and and add to uh the you know add to the network or or replace if if a satellite was lost for whatever reason and you actually imagine i mean that actually is an easier problem to solve than uh an undersea cable yeah uh fiber Fibroactive cable is being cut.

1:21:16You just think about the difficulty to replace that. You have to actually get a ship to roll that out over. Oh, hold on. Thousands of miles, right? Somewhat related to that, but probably something you can talk about. In terms of space junk, we hear these stories about like, oh, the ISS had to dodge some satellite debris. uh is is that a problem for you do you have systems and thrusters that can turn on if you're detecting something or is it clear enough that it's not really an issue at this point no it's true i mean it it it occasionally it's it's much more it's much more rare in geo than in in leo these days but the orbital uh you know the the the orbital um you know space like airspace but space space is being actively monitored at all times by the u.s military they actually do this you know your taxpayer dollars at work they do this and broadcast to the entire world if they believe there could be a collision between two space objects uh and they call it a conjunction event and you get a conjunction warning and you on you know on board like we do have thrusters on board rocket thrusters that we could use to do these evasive maneuvers and get the satellite out of the way if we really believe there was a real risk of some kind of collision there like i said quite rare in geo um not i mean certainly not unheard of but uh rare for you to to get one of those warnings um more common in leo but that is just becoming a reality in uh you know in the space environment now i mean that's just a reality we're gonna have to all deal with Makes sense.

1:23:01Speaking of undersea cables, it's been 10 years working on this. Can you take me through what the next 10 years might look like? I know that a geostationary satellite is mostly, in the case of an island nation, mostly going to act as backhaul between cell phone towers on that country. But is there a future where instead of going through an undersea cable from an island in the Pacific to mainland America, you could actually do the backhaul backhaul in space between two geostationary satellites? Is that something that's possible even? Or I know it might not be as fast, but. Well, that is the that is the use of this Taiwan satellite today.

1:23:45Oh, cool. That we announced today. That's right. it will actually have a couple of different, you know, it will be able to provide service on the island, but it will also be able to be a relay to locations off the island in the case that all their fiber lines are cut and they would otherwise just be totally isolated from the outside world. That seems really, really important. That is very important. That is a real concern. You can imagine if you were just getting your communications, you know, hyped in with these undersea cables and then one day someone accidentally drags an anchor across all of them that you could end up very isolated and in fact completely unable to talk to the outside world.

1:24:31It's a very scary scenario for a country like that. And there are many such countries that have these concerns now. The world is a more complicated and I would say dangerous place than it was in the past. And so, you know, this is where we have seen a significant demand for this kind of service now. Do you have any insight into how Taiwan and the Taiwanese government views civil military fusion? We've heard from Palmer Luckey that, you know, every Every boat that's built in China needs to be able to be built to military specs. Obviously, you're doing a commercial deal here. But how does Taiwan think about that?

1:25:18I feel like in America, if AT &T does a deal, the government's like, or the DOD is like, OK, cool. Yeah, that's kind of its own thing. Taiwan might have a different positioning. But what is your take on how the Taiwan government views civil military fusion? Yeah, that's a good question. I mean, this is a commercial deal. Yeah. Sure. And it is one of our commercial satellites coming off our commercial production line. I think what I would say is that, you know, where we've seen interest from the DOD, it is actually also for these same satellites off of that same production line. They are very interested in this dual use type of scenario where they actually get to benefit from all the private capital that we've raised.

1:26:06We've invested that into this production capability. So then therefore, you know, we're using it commercially. We're using produce. And then if we use that same production capability, produce satellites for them, then they get a much lower price point than they would otherwise. If it just like all this investment had to come in to stand up a whole new production line just for a military, you know, a new line of military satellites. So that is where that's the benefit of of dual of a dual use technology. Like they are getting that benefit where they just wouldn't otherwise. And I think places like Taiwan, they saw the they saw the benefits from that.

1:26:43Also, they saw our U.S. military contracts. They know that we have designed something that the military is interested, not in some upgraded, you know, super, you know, turbocharged version of what we have today. but what we actually have today. And they're basically getting that same thing, right? So that is, maybe that's a slightly different way to look at it, but there's definitely, you know, we are definitely seeing a closer, you know, amount of overlap of our commercial industry and what the DOD is looking for than ever before, I think, in the U.S., as I'm sure you guys are seeing with a lot of companies you're talking to.

1:27:24For sure. I'm a big fan of the moon. I want to go to the moon. I want to be able to listen to podcasts on the moon. Are you going to be able to help with moon comms in the future? A hundred percent. Yes. We actually, yes, we have an early NASA study contract. We're studying that for NASA. NASA is going to need every, everything that we have, like every space service we have for Earth. We're going to need another copy of that around the moon. The moon's going to need its own GPS. moon's going to need its own comms networks uh both you know moon to the moon uh you know lunar surface to lunar surface comms as well as relays back to earth um there and then they're going to need all these transportation systems i think with the moon the most interesting story that nobody is talking about is we have a real space race with china happening as we speak and it's very concrete there is a series of craters on the moon that we know have water ice trapped in them and there these are permanently shadowed craters on the lunar south pole um and it is extremely valuable real estate like those that real estate and those mineral rights if you want to call that enormously valuable because you can use that water to create rocket fuel which you can use to then have the moon be this stepping stone to other places in the solar system.

1:28:51And whoever gets there first and really decides, we're not just going to plant a flag. We're going to put down a fence. A base, yeah. And we're going to say, this is our lunar property. Whoever does that first, there's no reason to not believe they will just maintain that. forever for all time right i mean it's currently totally green field now if if all the nations on earth agreed to not do that which they essentially did through international treaty i'm sure the us would abide by that but if china decides to just cloud that treaty and ignore it and just go land and start grabbing territory there um we would be it would be incredibly dumb for us to uh let Let them charge ahead with that and miss out and let them get there first.

1:29:43So and this is this is like I mean, China just landed a new lunar sample return mission that allows them to demonstrate all the technologies needed to essentially do human missions, do other types of missions for for all the things I'm talking about. and honestly we just we haven't been talking about it enough because we're we're we're sort of letting china just go out and do all these things in space without even calling attention to it i mean i i honestly i mean i think i think our new nasa administrator uh jared isingman who's going to be absolutely fantastic i think i i suspect he will talk about it once he gets in the seat so we've been waiting for him to get senate confirmed um i think you'll see other uh folks in the space industry start to talk about it because it it's a it's a big deal like we need to start getting um you know about the moon we gotta do you think in some way last question then we'll let you go do you think in some way you know calling this you know the space force the space force kind of like allowed people to not take it at like it doesn't in many ways i think the name sounds cool but i think a lot of people didn't feel like it was a super you know serious initiative when it actually it absolutely is something that you know should be mass you know continued to be invested in massively and taken more seriously um oh i i mean i i you know i think and i mean i mean more like the broader social media reaction to like oh like you know great we have a space force versus no this is absolutely a new frontier of defense and warfare and and it should be taken more seriously than ever.

1:31:26Yeah, I mean, it's important to keep in mind that in government terms, Space Force is still very new, right? These things take a while to get established and also essentially to really put forward their mandate. I also would argue that under the previous administration, things were a little muddled in exactly what their mandate would be. I think under the Trump administration, it's very clear. uh their mandate is to counter the um uh all of the uh activity and i would say aggression that we're seeing from china in space and we're going to see them um you know i think we're going to see a lot more from space from space force in the near term here so um you know yeah i i think i think you know sort of i think stay tuned on that and then um you know we will also and i think we'll also see an increasing amount of coordination between our civil space community, NASA, and the Space Force than we have in the past.

1:32:28And again, that's going to go back, I take it back to, you know, what China's doing on the moon. They have no, you know, not only do they have coordination, I mean, there's just no divisions at all between their military space, civil space, and even their commercial space, it's all just one big industry blob of activity that we can't even draw lines there. So I think to counter that, we are going to see more operation there. And I think people will start taking it very seriously very soon. Great. Well, thank you for starting the company 10 years ago. And congratulations on the milestone. Kind of a right place, right time story, really, when I think about it.

1:33:1110 years in the making. 10 years in the making. Anyway, this is fantastic. Thanks so much. We'll have you back. Congratulations to the whole team. All right. Cheers. All right. We have Jordan coming on. I'll be right back. Perfect. Jordan, when you're there, welcome to the show. We're excited to catch up, talk China. There's so much to talk about. You're in the right business. You're here at the perfect time. How are you doing, Jordan? Can you hear me? Let's bring him in. Are we on? We're on. How are you doing? i'm pissed off john what's happening i'm not happy this is this is the you should be celebrating this is the best time to listen to china talk if you're not listening to every single episode that you put out you're falling behind and so it's got to be just a bull market in every single stat you're tracking no except for except for america except for the america stat that i'm tracking which is the only one that I care about, John.

1:34:08I want to win. I want to industrialize. I want a golden age for America. But what we are seeing now is 2015 Warriors era execution of how to lose a trade war. But what about reframing it to use a metaphor? Like imagine playing like a beautiful, beautiful violin concerto on the Titanic as it sinks. Like that would be laudable, right? Yeah, it's really fun to play a violin in until your conductor gets thrown in a van and sent to El Salvador. This is the world we're living in, John. Oh, no. Well, I mean. Jordan, it's great to see you. Yeah, good. Yeah. Good to have you back. You came on with a bang.

1:34:51Maybe we could set the table like how have you been processing the tariffs? Have you been on a roller coaster? Has it just been black pill the whole time it's all the way down it's all the way down look i want to believe i really want to believe i was going to give him a chance i was sitting there you know january 10th like look this guy he's got some moves he's got some moves okay he wants to change the way r &d gets funded he wants to bring manufacturing back he wants to fight a trade war with china i mean like sure okay you can you can i'll put in some table stakes for that but what we're can we start can we start with the uh can we start with the research john jordy yeah let's start with that okay the facts xi jinping would cut off his left hand for the basic research university industrial complex which america has which no other country in the world can hold a candle to until 20 until late 2025 where every single good stem phd and stem uh and stem professor who you can get a job anywhere decides they're fucking sick of this and doesn't want to live their life terrified that they're going to be taken away from their family and their research and you know they're all their professional opportunities because they got a fucking traffic ticket and this is the world we're living in now john you went to northeastern right northeastern 40 40 visas already 40 people's lives fucking ruined because um marco rubio thinks that it's cool to um to pick fights with biotech and cs phds yep what are we doing here okay what about let's go back to the initial trade war with china led by trump 2019 tariffs kind of go in this tit-for-tat spiral 34 billion on on u.s good 34 billion on goods we were discussing at the top of the show starts with 50 those are rookie numbers then 250 billion um what is your post-mortem on the 2019 u.s china trade war the 2019 u.s trade it was kind of a wash and and you can sort of write it off because the u.s economy was growing and we weren't picking a trade war with every other fucking country on the planet but is it is it possible that we land in the same place and in the next four years you're like well yeah we can write off the first two trade wars but the third one's the real bad one right is that possible here's the thing here's the thing john jordy tell me about what the risk-free rate is and why it matters for a capital investment yes yes yes it's very how we have we done that yet have we talked about the basis trade it's not looking good well yeah joe joe uh joe was was talking earlier with with Tracy specifically about, uh, in the, the, the U S T bill being potentially the greatest export that we could ever have.

1:37:57And I think that's an interesting, uh, positioning. Uh, can we talk about your, your audience are, is, you know, deep state people. No, I was going to go, I was going to go towards his own definition. He says he's Dwarkech for the deep state. Okay. It's not me making it up this is what his words it's great lovers of freedom and democracy that's that's what we're encompassing okay yeah yeah yeah um what what's the what's the reaction from your business audience right now are they still at a standstill is it you know we can't make any decision because we don't have full clarity on what the world looks like in 90 days you know look it's not it's not going to be 90 days it's going to be four years because this man likes to be in the headlines more than he likes literally anything else.

1:38:47So he is going to keep doing things that put him in the headlines. He can't take wins. He was handed such a - But that could be completely different, right? He was handed such a - Yes, yes, he was going to be in the headlines next month, but it could be because he's fighting with Rosie O'Donnell, right? And that has a - Please, oh my God, what I wouldn't do to have him pick fights with Rosie O'Donnell. That is the timeline that we should all be rooting for. We need Donald Trump. If you want to take it all out on me, I'm here. I'll be the sacrificial lamb for America's basic research ecosystem.

1:39:19If you want to pick a fight with a shitty podcaster. I mean, like, you know, we've got a brain drain of America. We've got a capital drain of America. We've got a geopolitical drain of America because he wants to be buds with Putin and take over Greenland. And oh, by the way, we are selling the best chips we have to China because Jensen spent a million dollars to have a burnt steak at Mar-a-Lago. I mean, it's like truly we're just checking off every box of dumb thing to lose this tech war. Yeah, we can you talk about the decision that that kind of flew under the radar? Was this Friday or I don't even know if it was yesterday at this point, but NVIDIA is allowed to export the what is it?

1:40:03The H-200? The H-20. So it's an inference trip, which skirts right under the export control regulations. and Biden didn't do it because he's an idiot. And now Trump isn't doing it because he likes getting, you know, people to pay a million dollars to have dinner with him. There is no reason. NVIDIA does not need the money. It's like$2 billion of revenue. Like they will be just fine without it. But we're living in this timeline where if you, you know, please. So if it's$2 billion in revenue, then, well, it's only$2 billion of AI data center capacity. and that's not enough to build a GPT-5 level model.

1:40:42And so it's irrelevant. Those two things can't be the same, right? Yes and no. I mean, it's like, okay, sure. So what are... Okay, I'm going to take a deep breath. Because I'm running too high now. I'm running too high. I mean, the steel man here is that you... Yes, you don't want them building super intelligence, GPT-7 level models, like the Project Stargate, The$500 billion data center cannot be built in China. But yeah, take$2 billion, fine-tune GPT outputs. It's still going to talk about Tiananmen. And you have DeepSeq, which is basically an American model, or Manus, which is clawed, like vended into China.

1:41:22And that's actually, we were talking to Tyler Cowen yesterday about this. He was saying that this is a win for American hegemony because the Chinese leading models have American preferences baked into the weights at a very deep level. yeah i mean if we're if we're um if we're thinking that our models are going to democratize china i mean that's a that might be one or two steps too far away from me it would be like trying to playbook john is the way we kind of already are which is sell all the chips into malaysia and if chinese companies want to sort of run their cloud out of malaysia and singapore then okay and we can shut it off if and when we decide we want to shut it off but selling chips directly into china there's no upside to it um because you're just opening yourself up to this like whole other universe of risks of maybe these two billion dollars of chips actually do end up being enough to fast follow and you know compete with like a totally fucked up meta and an open ai who doesn't don't let a hyperscaler hear you say that two billion could ever compete with 65 billion in capex that's ridiculous can you break down we need to spend 65 billion this year 65 billion okay they're all spending 65 billion every single hyperscale let's see next quarter just what that 65 billion dollar number is going to be looking like i mean probably higher probably i wish i'd love to i'd love to jordan's jordan's not he's not agi pill he's so black pill his timeline is so extended yeah uh we're talking 20 20 80 at this point 20 80 20 80 uh i want to so So we covered earlier on the show the sort of venture capitalist version of the history of U.S.-China relations.

1:43:01So like sort of high level, you know, trying to get into the dynamic. There was a few days ago, April 11th, the U.S. told China to request a Xi-Trump call. This was reported, which is sort of a funny, you know, it's just a funny way to go about trying to get a phone call. Hey, I just met you. Yeah, this is crazy. your spot number i mean just call right i think we're just pick up the phone call no but talk about talk about the history this is that this is how you do negotiations but this isn't unique to trump like this was the same negotiation that we saw with reagan nixon clinton like like the the whole politics of diplomacy have always been extremely convoluted and there's never been an era where it's been like oh yeah this it was the democrats that always just picked up the phone and called or it was always the old school republicans it's like trump's just repeating the playbook of the last 60 years of u.s china diplomacy in my opinion john have you done a video about uh chan chesan no if if not you should okay so he um is a uh uh sorry let me get that okay so born um born in china came to the u.s to study at mit in 1935 he was got a clearance during World War II was a part of a lot of classified work, was best buds with Vannevar Bush, you know, part of America's missile program in the early days.

1:44:291950, McCarthy shows up and blows up this guy's life. He says, you know what? Fuck it. I'm going to move back to China and proceeds to turn into the father of China's nuclear and intercontinental ballistic missile program. And this is the playbook that we're currently running now is we're taking all of these smart people and telling them they're not welcome here. And this is I am so sure of it. And it's just like it's just ripping me up inside that 10, 15, 20 years from now, we're going to see companies founded. We're going to see weapons developed by people who at a sort of hinge moment in their life, you know, 30 some odd years old, they're thinking about where they want to build their life they're thinking about where they want to start a family and they see that you know this country is not open to them and and it's just like we have this founder cult in uh in in silicon valley right uh you know the 10x engineer like there are going to be a handful of people who are going to end up kind of determining the future of technology and the future of the world and we're taking on risk which we really don't have to yeah i mean telling all these people i I agree with all that.

1:45:41That's not about communication and picking up the phone, but also, also China, they, they do have Tik TOK. They do have DJI. They do have unitry. Like they have the companies already. Like, it's not like they're, they're like, Oh, we haven't thought to build a competitor to Facebook or Instagram. Like they've done it successfully. Like, like we're in, we're in a competition now. Exactly. We're in a competition. So we can't be fucking around anymore. I guess. Yeah. We're going to have four more years of fucking around. And it's just dumb. And I still think we're going to pull it out. I still have faith.

1:46:19You got to believe, right? We're going to be sitting here in six years being like, oh, yeah, we can totally sweep that one under the rug. But this one's the real deal. I really hope not. We can hope. I really hope you're right, John. I want to live in that future. You should. You should. You should hope that we're right about this. No, but talk to me going back to my original question. Sorry. Maybe it's not as exciting for you, but I think it's just interesting. Okay. What's up with the US and China never being able to consistently have clear, direct communication between the White House and Beijing?

1:46:58Yeah.

1:47:01You know, I think there's a there's a really interesting arc of the way that the Chinese government has sort of viewed U.S.-China interaction over the past 15 years in a way that's different for really the second half of the Cold War. So from like, you know, post-World War II Stalin up until really the Cuban Missile Crisis, the U.S. and China, the U.S. and Soviet Union weren't really talking. And then you had the Cuban Missile Crisis. People got really freaked out. And both countries realized that it actually probably behooves us to be able to interact with each other in a more straightforward way as opposed to, you know, finding like business people and like, you know, ambassadors handing people notes because we don't have like good sort of leader to leader interactions.

1:47:51And then even though there were scares for the rest of the Cold War, at least there was enough of a kind of muscle memory in terms of these two countries interacting with each other that people started to get a better understanding of, you know, what strategic intentions were. So the Chinese government, I think, like, first off, does not price in the risk of an accident turning into something really horrific nearly as much as the Soviet Union did over the course of the Cold War. And they see that, you know, the the the Biden administration and the Trump administration and and the Obama administration as well, like understand that this is can be a scary thing and they see it as a shit to negotiate with.

1:48:43So if you're if you're not worried about like, you know, planes hitting into each other and you think you can get something out of, you know, setting up like regular dialogues or calls or what have you, then, you know, you're going to you're going to put it on one of your five asks. But the sort of the other thing that I think, you know, she's looking at when he saw what happened to Zelensky in the White House, right, is like, you know, you I think the willingness to assume like interpersonal risk is a lot lower for that system. And they want to have stuff a little more baked out before you kind of like do one of these like leader to leader conversations.

1:49:31So whatever, they'll talk at some point. Like, I don't know if they're going to like end the trade war. I'm not really sure what like the aims are, because it seems like they changed a lot over the past two weeks and they'll probably keep changing. But yeah, it's just hasn't really been a priority for the Chinese government because it's the thing that they think they can squeeze us on is is the us wanting to have these conversations. One of the things that's repeatedly come up in our conversations is just the nature of U.S. tech companies broadly being banned from doing business in China, everything from Google to Meta, others.

1:50:15And a lot of the people that come on our show are not even allowed to travel to China because they're in anything defense, aerospace related. on the ground in China do they uh do does the government or the the military I don't even know how much this information would ever appear online and available do they laugh at us for allowing TikTok and DJI and Unitree do like do you think it's silly it's like you're tariffing our you know cheap toys but then you let us sell you still let us sell DJI drones you still still let us distribute brain rot to 100 like is it a funny thing to them because to me it's a terrible irony and that like we just can't get a tick tock ban across the line or we can't we haven't been able to get them to sell it yet and um and again like these sort of uh industries and products that have you know extreme national security risk you would think those would be the easiest things that the united states could make a sort of collective decision on that would um so i'm curious what their sort of like reaction to the the silliness of it all is oh yeah laugh laugh laughing their way to the bank i mean like look there there there is there is definitely like some trade war shit that needs to be happening step one tiktok and dji you said it yourself jordy i mean it's like i would love for there to be a like really wonderful globally competitive supply chain that America can create this sort of autonomous drones that Ukraine has been able to leverage.

1:51:48And even they still have to buy stuff from China because there's not enough. There's not enough. They're they're ex-China. But instead, we're kind of going in a very different direction. So, yeah, I mean, it's you're you're totally right, Jordi. It's just um uh there's there's not a strategic vision um that we're seeing out of uh this political moment um and i think they're um you know not to put china 200 feet tall like there's definitely things that they're not they're going to do wrong uh and their economy isn't perfect and they're sort of like techno-industrial complex is not perfect um but they figured out a lot of this manufacturing how do you and yeah so so the one thing that's clear very very good at manufacturing i don't think anybody disagrees on that um how do you judge like what do you look for to understand you know if china was really suffering right now from these new tariffs we wouldn't know about it right it would be it's sort of like it's not like they're going to come out and start saying you know talking to the people publicly and saying stock market right Yeah, sure.

1:53:00But, but like, there's a lot of information control in the same, in a way that that's not necessarily the case. Like if a U S business is being affected by the tariffs, that person's going to go on LinkedIn and TikTok or they'll come on TBPN and they'll say like, yeah, my costs are up, you know, whatever, 300%. And unless they're coping really hard. Yeah. But, um, but how, how do you try to judge the, the actual impact of the tariffs in the, in the domestic, you know you know the the yeah i see what you're saying jordi i don't think it's as as it's as opaque a system as like um you know the the the cia um and uh different corners of the u.s government were having these like big drawn out debates in the 1960s 1970s and 1980s about how large the the soviet um economy was because they were saying like okay let's say they percent they They spend 10 % of GDP on, you know, on defense.

1:53:59So like, you know, what's the base that they're doing this often? It was really hard to figure out how big the how big the Soviet economy is. I don't think it's that hard to figure it out today. As as John said, we have trade data. We have the stock market. We have, you know, quarterly earnings from from all these companies. And I think there's like enough out there of like chatter of people saying like, oh, shit i got laid off because of the trade war um that like you know you'll you'll you'll be able to pick up the the atmospherics just in the same way you you can by having uh you know reading joe weisenthal's twitter feed right what about uh what what about uh kind of the the new ally ships that are building i mean you obviously you were very upset about like you know america kind of potentially frustrating trade partners like canada uk australia france like we shouldn't be pushing them away.

1:54:53Some of that subsided. It still feels like in general, if we're going towards a more bipolar world and you are creating some sort of broad Western alliance, you're going to put the five eyes together. You're going to put NATO and America together. But who's on China's side? I've been worried about like a China, Russia, Iran coalition forming. Are there other countries that are starting to flip into Chinese allyship more seriously post-Trade War. Yeah, I mean, this is a really interesting thing, is like the reason that China wasn't really able to capitalize during Trade War number one is because they were feeling their oats and they thought they could still do wolf warrior diplomacy and bully other countries around, even though Trump was sort of like shitting on them in their own way.

1:55:45And it'll be fascinating over the next few years to see whether or not they take they sort of learn from that experience and take a more conciliatory approach. And and, you know, don't try to like, you know, nickel and dime these countries in order to really potentially win them over. But, you know, Southeast Asia, like, OK, I guess like we we did 70 percent, 76 percent tariffs on Vietnam and then we cut it back. Like, who knows where we're going to go with that? But it's it's it's two things. It's like, are we going to go to China or are we just going to cut trade deals with every other country X the U.S.

1:56:22so that we're going to, you know, the the sort of like the free world X U.S. is going to have this, you know, thriving inter, you know, thriving trade ecosystem, which we're just not going to benefit from because those supply chains won't run through the U.S. or our consumers won't get to benefit from or our exporters won't get to benefit from. So, you know, there is like there are a lot of like intellectual risks here. There's the intellectual risk of like thinking China is 100 feet tall and, you know, we're shot and there's no way we can compete with these companies. But there's also the intellectual risk of thinking America is 200 feet tall.

1:57:00And we are like, you know, we're still only 25 % of global GDP. And that's a whole lot of GDP out there, which is going to be thinking about what to do and who to trade with and where to invest. And so I have a question. What is the so China blocked orders of Boeing aircraft to their national airlines? are we going to see uh they're going to go with Gulfstream yeah that would be cool do you have do you have any sense of of uh I'm sure I'm I'm assuming that uh China's been aggressively trying to clone uh various you know U.S. commercial aircrafts for years is that as advanced as the automotive industry uh in China or is it is it a ways behind yeah it's interesting that one's kind of been like the final frontier um uh it has been a clear national priority for a very long time um and jet engines are really hard apparently even if you layer on industrial espionage and like an enormous amount of state support my guess is that like the reason it has taken so long for comac to um to get its shit together and and build competitors to boeing an airbus is is probably the fact that it is state owned and there are just like poor incentives going on versus the sort of free market free for all that you saw on the electric vehicle industry just attracted better talent more capital companies moved over into cars and they're not doing that in planes right yeah so i think there's you know and there's like relatively limited upside it's like a national prestige product as much as it is a capital uh you know a capitalist endeavor ever um to make these jets so we'll have to see i mean i'm like look if they can't do it the orders will just go to airbus and like that sucks um but it is what it is um and i think you know these that industry in particular there's so much like geopolitics baked into it that i'm not shocked that that was that was on the you know first list of like things to um uh things to start cutting from a U.S.

1:59:18import perspective. Last question. You seem pretty black-pilled. How's Dylan Patel doing? Have you done a wellness check? You seem pretty black-pilled when you talked to him a few days ago. What's his mindset like right now? I wish him the best. I don't know. I think he's, it's just like, I thought AI would be our out. but if we're going to sell them all the chips and we're going to screw up the like American capital base that we're banking on to fund all this AI expansion and we're going to throw away the AI diffusion role such that like the chips are actually just going to end up going to Saudi Arabia and Qatar and Brunei then you know it's it's just we're just taking on risk left and right And like we might be able to pull it out, but it's it's it's it's hard to watch.

2:00:17Thank you for letting me have turned this into the Jordan Schneider therapy session. We're going to leave you with a white pill one way or another. I just had a question of like, where does where does the Middle East really sit in all of this? Right. It feels like in many ways, you know, we cover business and technology. In many ways, the relationship between the U.S. tech industry and Saudi Arabia, you know, Qatar, UAE is, you know, thriving just due to the capital flows. But, you know, how do they think about even picking? You know, I haven't seen themselves inserting themselves into the story over the last couple of weeks, and I'm sure that's for good reason.

2:01:05But I'm curious how you see them as a player in all this. Yeah, it's interesting. I feel like I feel like their diplomatic system like knows how to play the kleptocracy game much better than Canada or Europe. You know, they got their reps and sets when it comes to dealing with, you know, family dynasties and whatnot. So they're smart to keep quiet. I think, you know, the diffusion rule that the Biden administration put out at the very end was really a play to force them to pick sides. And basically the the deal was like, look, if you want access to the future, if you want access to compute, then you really got to play ball with us.

2:01:47And you got to play ball with our AI cloud providers and our sort of like broader defense ecosystem. And if you're going to, you know, have too much China AI in your, you know, in your national bloodstream, then we're going to reconsider whether or not we're going to let you, you know, buy chips and access our models and whatnot. So we'll see. This is a regulation which I think is going to be a really interesting bellwether because it was a very clever hinge to sort of force the Middle East governments and the governments and the money that came with that to invest in the Western as opposed to the Chinese technology stack.

2:02:26And look, if they're if they don't love what they're seeing, maybe they'll be more excited to if they don't love what they're saying and B, we we take away the jack that we had around them. Then, you know, you could see them starting to wiggle in other directions and take and take side bets on a pot that they may have had to have gone all in with us if it wasn't for all the craziness we've seen over the past few months. Got very last 30 second question. And how real do you feel the yield coming out of TSMC Arizona is, or is it marketing to the admin that, hey, we're doing what you want? And NVIDIA coming out and saying they're going to make black wall chips in the U.S.

2:03:12You know, it's hard to judge whether it's hard to understand how real it is when when, you know, we know that people get excited about, oh, we're going to produce five hundred billion dollars of black wall chips in the U.S. in the next five years, I think is what they were saying, which sounds amazing. But in this current dynamic, when there's so many different conflicts and so much on the line, it's hard to know what's marketing and what's like actual, you know. you know yeah it's a it's a good question my my rule of thumb is like you can't lie to the SEC So just like wait for the filings. But look, there are everyone's everyone's trying to figure out how to get on this guy's good side.

2:03:58And maybe this is something that might work. So, you know, I like it's it's it's an interesting sort of like policy trade off. Like, would we rather have cheaper AI hardware that like Microsoft and Amazon can buy? Would we rather have it be in the US? I mean, like if it if if the sort of pressure is forcing more stuff to be built in America, like there are pluses and negatives from that, especially if we're doing like accelerated timelines and like the prices are going up. And I think this applies to TSMC as much as it does lots of other industries. So look, like they're like they're more pot committed than almost any other any other company in the world.

2:04:42And they don't really have an out for for this. So they're going to do everything they can to make make Arizona work and make the relationship with this administration in this country more broadly work. But I'm almost more concerned about the other the other companies who don't have as much money to burn and have other options when it comes to setting up manufacturing plants and finding kind of like end, you know, end users to sell to that are just going to look at what they're seeing now. And like, yeah, we can we can we can open that up that playbook again and see see what else is what other countries and locales are on the agenda.

2:05:20All right. Well, fantastic. Fantastic. having you spirited debate uh we'll figure this out we're in america we're built different america's gonna be fine don't worry okay okay another thousand year reign it's all good just relax just just put out great podcasts cash in while you can since china's in the news tell people where they can find china talk give the pitch china.talk china talk.media china talk.media Try to talk one word in your favorite podcast app. I promise you I'm not that negative most of the time. It's like 80-20 good vibes. There's some great stuff on there. And we appreciate you coming by.

2:06:01Activate golden retriever mode. Be a little bit more positive. All right. We have another guest. We have another guest. No, no, no. That is not family friendly. Get out of here. We'll talk to you soon. Thanks for stopping by, Jordan. Bye, Jordan. This is great. I missed that completely. Yeah, he did a little squirt gun to the head. Oh, not good. Never. Not family friendly on this show. Anyway, we got Aaron Ginn coming in the studio. He's written some absolutely banger takes about China GPUs. He's been called the GPU whisperer. And there's a fascinating article I want him to break down for us. He wrote this in January 22nd of this year.

2:06:44It's time to build America's cyber nuke. We desperately need a deterrent to stop wars before they start. I want to hear him explain it. Aaron, welcome to the show. How are you doing? Hey, doing well. Can you all hear me all right? Yeah, yeah, we can hear you fine. Would you just give us a little walkthrough of your background, what you do, how you got to the place you are in today? That's a good question. Let's say the Lord works in mysterious ways. So we actually started this project. It's my fourth company. We started this project actually as a help you leave the cloud, don't be canceled. And so what we found out is that data centers didn't have like a software stack to help them monetize customers.

2:07:27So they didn't, they, you know, they basically, they were mentioned like you're a merchant selling t-shirts and Shopify didn't exist. And so then we started building this. And then when the GPU Cray started, the data centers were like, we need something to run this stuff. And then we were there. And so we started that four years ago. And so, like, I can, I can, we never had the right customer in mind. But in terms of like a lot of the other stuff that happened with this space, it just had this really nice merriment of like, I've been working in public policy for over a decade as well. I have a foundation in DC, public policy think tank.

2:07:57And it also been like doing like political stuff on the side. And then just so happens that like AI is the fastest regulation in Silicon Valley history. And people view it as if, you know, it's regulated under missile technology law. That's how it's regulated right now. so so people in dc literally view the gents and is selling weapons of mass destruction to other countries uh yeah so that's why they use the word diffusion proliferation right those are nuclear weapons words so those are this is not a this is not like in in terms of politicians they don't view this as if you know you're selling this uh fun little gaming gear to to different countries um so uh so yeah so that's how we got into it and you know now we're uh in i think over a dozen countries we are at 50 data center or something like that doing hundreds of millions of years transactions so um so yeah so we think gps are gonna be everywhere and uh kind of reach out of cape velocity uh there's not really much the us government can do about it at this point yeah uh how did you rack react to the new nvidia deal that got announced in the last week you know another two another two billion dollar chips uh of chips to uh china you think it's oh you mean the h200 they're talking about the the reshoring thing with tsmc and foxconn which one first the first part oh yeah well i think it's positive uh because i think that the approach that americans doesn't understand is that the way that china uh and so like i'm a chinese exile my family fled communist china we fought for uh the kmt and uh during the cultural revolution half of my whole family got murdered in china and so fled to taiwan and then here so you know i'm i'm a i'm a hawk of and then my foundation also broke the story.

2:09:36If you remember the Chinese government buying land near the Belter bases. So like my policy foundation like broke that story. So, and like I was telling John that all like a bunch of like Chinese ambassadors blocked me on Twitter. And cause I was like harping on, it came from a lab, it came from a lab, like sort of thing. And, but anyways, like the, I think that the Americans like to think the world works as a Western kind of frameworks and philosophy. And a lot of, if you look at the history of Chinese and the way that they have accelerated their innovation curve, which is, by the way, like not, we sort of treat that post-Nixon era kind of frameworks as like how we got schooled.

2:10:19The pattern of China has always been to steal technology from other people. And so if you look at even how they got the first nuclear weapon, so the way that they got that, and this is just a quick side story because I think it's helpful for the West to understand just how they work. So if you remember, Eisenhower was asked, would we ever use a nuclear weapon against China to defend Taiwan? And that actually whole story was planted by the Chinese because China was trying to mount at the time. Mao was so crazy that even Stalin was like, that dude is freaking nuts and he kills his own people too much.

2:10:54It was way too far. I just do a couple million. He's doing tens of millions. right so so solid was like absolutely not we're never giving you nuclear weapons ever right because you're crazy and and so the chinese basically invented this narrative and story planted in dc uh created this line within the state department that like well they couldn't invade taiwan and so then got to the media and then i was asked and then uh then it was posted and he said yes we would use the nuclear weapon to to defend taiwan so then what mao does he goes back to Stalin and he goes, hey, do you want to have America on your borders?

2:11:29And Stalin goes, no, I don't want that, but I don't want to give you nukes. So what I'll do is I'll send Russian scientists to China to just co-develop a nuclear reactor with you, but just don't take my secrets, right? Then five years later, they have a nuclear weapon, right? So they've done that with nuclear submarines. They did that with fighter jets. They did that with SAMs. They did that with aircraft aircraft aircraft technology so this is just like a long line of history of like how they kind of work as like a country so but but when you're in an environment when they have 10 times the number of engineers as we do uh they have a relatively centrally organized government that can execute big initiatives uh but it's still a highly federalized government so it's in shanghai province and shangshin province the governor is kind of like all work separately like like in america like they they're all hyper-federalized.

2:12:20But generally they come up with these kind of big initiatives and big plans. And so when it comes to like GPUs, we have to realize that they are very much closer than we think. Like the reason why iPhones are built there is because it's so technically complex to build an iPhone that we can't do that anywhere else. It's not because it's cheap. The cheapest place to build things is Mexico. Like it was just by labor hours, but Mexico doesn't have the technical ability to doing that. And so when we have the situation with GPUs, you have to understand that it's not just like, we can actually protect this technology for that long.

2:12:52The actual modes around the information asymmetry that we have as a nation towards China on the advancement of ships is much smaller than we think. And I think it's like under 12 months. So if you think they're like five years away, I can be sympathetic to the airports control, but if they're under a year, the goal is to win. The goal is to reach escape blocks. They're like, I'll put a high remote, right? They brought everyone in Los Alamos. Not to be secretive, it's because we had to win, We had to be first because whoever was first defined the entire era of what nuclear weapons became. And so – and then we actually, by the way, cut off all of our allies too.

2:13:27We took the math additions from Britain. We said, hey, yeah, we'll share everything. And then we made the nuke and then we cut them off. And then they went to go build their own nuke. So it's kind of the same situation where building GPUs is actually much easier than the US government thinks, which is why Amazon is doing it. Microsoft is doing it. Facebook is doing it. Broadcom is now a trillion dollar company. And the second is that their actual ability on the foundry side is more like a year or two behind. So in that scenario, it becomes where we need to distribute our technology like a Boeing asset to as many places in the world that wants to take it.

2:14:02Because then that becomes our footprint that we control, that we can continually express and influence throughout our country. Otherwise, Huawei is going to show up and it's going to be like, hey, my thing is like, you know, 80 % is good, but it's cheap. And I'm not going to cut you off from the most important technology wave in the next 10 to 15 years. And that's a pretty compelling argument if you think you're another country. And so that's why I think this reorientation has to happen around where we actually are as a country in terms of how far we are ahead. But also we can take advantage of that because the stuff is like quite easy to deploy compared to like CPU infrastructure and as well as the world wants it.

2:14:40And the most recent controls are a little bit dishonest because if you go look at the January 15 ruling, it adds Greenland and Portugal and Poland and Finland and it adds Greece and it adds basically everywhere in the world but 19 countries. So, do we really think that Greenland is going to defuse GPUs to China? No, it's because they have cheap power, right? So it's turned into this like protectionism thing, where we're like, we have to protect our companies. And like, wait a minute, like, I thought this was about China. Like, so now we're like doing this to like protect and like isolate. And so one reason why we have lost the LLN race on the open source side is because we've done stuff like that.

2:15:24And I think that's putting us again, another disadvantage about another advantage for Huawei, because while I can be like, hey, I have the leading open source models china does it's it's unquestionable and now i have a chip that's designed for it so so like we're putting ourselves in kind of a really difficult position and also a difficult position for nvidia uh because the reality is like this is the goal where we have to achieve escape philosophy first like with a nuclear weapon uh not like we can hold off this wall and like play these games with countries and just slow them down in reality it's like we just need to win we need to stop like messing around and trying to do these kind of stupid games can you give a hyper-abridged version of your version of AI 2027?

2:16:04Like what is hitting escape velocity look like? Kind of like a potentially like a white pill. What does winning look like? I think America should have the largest GPU cluster in the world as a deterrent. That's what I mean by the new button. And that's a game of deregulating energy. They look kind of like the other things that I think are more widely accepted. Like to me, it's all energy should be acceptable. We can build on federal land, all that stuff's great. and we also need to reshore semis but I think the way you reshore semis is not randomly tariffing stuff and then providing exemptions when you have a lobbyist that is convincing enough to go to the White House.

2:16:39I thought we were supposed to be opposed to that but I guess not now so we should focus on deregulation and then subsidizing actual development here so then giving tax breaks for people to use the Intel Foundry or TSMC's Foundry to like reshore. So I think it's building large db plus in the world i think is being the production house for all advanced uh semiconductor work uh but then also having like so way out views that as like a new monroe doctrine that america is not going to either rebuild uh the supply chain for fans and servers or fiber optic cables or anything like that like all that stuff even that is not in china because china is too expensive to build there so that's why they put it in thailand and malaysia and these other countries but we can put that in like a Mexico, we can put that maybe, you know, we're outsourcing prisoners of El Salvador.

2:17:27Maybe we see if they can build fiber optic cables too. So like we can, we can have a new Monroe doctrine of like reshoring everything within this hemisphere. And I think that's more of like a reasonable and also quite more achievable task than just saying everything has to come back into America. And then, and then the, the next part relates to open source where we have to just get better at this. And we haven't gotten better, I believe, because of protectionist measures that were mostly secondary effects. I don't think they were primary offering for that. I think it's kind of more of a secondary outcome.

2:18:00But that's going to be how the space wins. It's going to be a myriad of models, models being used for wide different purposes, models that are highly specialized, and then kind of a separation between like platforms, service companies to help you run comp models and then the infrastructure. And so the infrastructure part we can actually win at. Because we're generally like good at, we're good at, um, we're good at energy, but we're not good at power, if that makes sense. Like really good at like finding stuff and exploiting it out of the ground or, or building different types of energy frameworks.

2:18:31We're not really good at power. And, and I think that that's where the rest of the world. And power you're defining as like converting that energy source into, you know, basically transferring that energy into chips. Right. And like into the actual, you know, cluster effectively. Yeah. Yeah, because you think that power in our country is deregulated, mostly deregulated, it's highly federalized. So just because the federal government says you should build power plants doesn't mean Virginia is going to do it. And that's designed to protect our rights as a nation. It's designed to protect the rights of the state.

2:19:05But the state ultimately is in charge of these things and has – there's the reason why anything that's not enumerated in the Constitution is given to the states. is because the enumerated powers are designed to protect the states from big actions down as a do all these things. And that's what's created actually a very stable political environment. And I do think I'm opposed to terrorists in general, but I think people are kind of overreacting. They think that it's the end of the world and everything's going to be done. I was like, if America is that fragile, like a lot of bad stuff is going to happen either way.

2:19:37Because it's just not going to be one person that's going to take down our system because, you know, and I voted for Trump And I don't believe that just from an ideological perspective, but also just the nature of our country. If you look at the history of our country, it's been through worse and it has survived because of the system and our ethos that we've built. So when it comes to like this situation, I think it's – I'll quote a – I'll butcher a quote because he's way better than me. but there was a prime minister in England who used to say that America is not a good primary actor, but an excellent secondary actor.

2:20:17It wins secondary, never wins primary. And it's because we don't generally rise to the task that's in front of us. We kind of like go play around Netflix and kind of like mess around for a while and like spend money on energy that doesn't work and kind of basically BSing. And all of a sudden something happens. And then we're like, we got to go to the gym. We have to win. And we're going to win. We're going to be fucking ruthless. Right. And then we show up. Right. And the rest of the world's like, hey, pay attention, pay attention. And we're like, why? Like, there's a new episode of, you know, love on the spectrum.

2:20:49So that's what I said. You know, like, yeah. And so I think that's what I think. The interesting thing right now is, and I'd be curious to get your take here. We had Jordan from China talk on just earlier. and I was asking him, I was like, do the Chinese laugh at us that we don't ban TikTok and DJI and Unitree and all these companies that are just obvious national security threats that like you could just end and it would be controversial, but you know, it's hard to argue. It's genuinely hard to argue in favor of allowing these companies to operate here when they wouldn't allow the same companies to operate.

2:21:26I want to kind of unpack something. One thing, my sense is that you have a much greater fear of a US average adversary like China with super intelligence with the biggest cluster in the world, then super intelligence by itself, right? So like, you're is it is it true that you're sort of like, P doom involves, you know, China winning the AI race and then, you know, using that to exert, you know, power and influence over us and the rest of the world. It's more of a, um, uh, it's more of like losing soft power and relevancy. It is, I think of it as a, uh, let's think maybe like a metaphor to help.

2:22:06Like, so let's think about airplanes. So Boeing is a national security asset, right? It exists at the pleasure of the U S government. Right. And so it's not, you know, obviously we don't own it. But it's clearly something happened, we would do something. So same with like SWIFT, right? Same with the U.S. dollar. That's why the bond stuff is the most concerning out of the tariff dramas, the behavior on long-term bonds. Basically, the U.S. liquidity is declining, which is like a very scary kind of thing because we are the default reserve currency and being pegged to the dollar. And so the social influence is what creates wealth for America.

2:22:43that uh being the policeman of the world doesn't mean just like where y 'all live and where i live the police aren't here in my house right now but it's it's the fact of like they run it and when we run the free world everyone gets wealthier we get more powerful and more meaningful and we can continue to bring people out of poverty introduce human rights all these like great things that i think god has chosen america to be a representation of to the world um and so i view Two more like China is not a kinetic country and it has kinetic abilities, totally true. But the most meaningful war that China has ever fought is the Indosina war.

2:23:20It was a couple thousand people. That's it. In the history of their country. And they've done proxies. That's true. Not at the scale of Iran, but obviously North Korea is the biggest proxy. And they played a little bit in Southeast Asia, but they're pretty racist as a country. So they don't really consider all the Asians equal. So it's just more of who's on their border. like china is mostly ccp is mostly interested preservation and insulation but that's what they're interested in and and and so because we express a mimetic desire to be expansionist because fundamentally the western philosophy is expansionist this is based on jadeo christian frameworks about being evangelical and being free free orientation i think it's also what humans are designed uh to be freely uh in commerce with each other um that presents an adversarial view to china But fundamentally, China, I would give you another very specific example too.

2:24:11The number of amphibian shipping vessels to actually take people from mainland to Taiwan, they have around 20, 20 or 30. They're actually capable of crossing that. So if they're planning on invading, you don't do 20 or 30. And the number of military you need, it's actually an equated synagogue. Hasn't Palmer talked about basically commercial ships? are outfitted to serve the purpose of an invasion but again let's see if that's asymmetric so like trying things asymmetrically they don't think they think in the manner of how do i get something to happen towards my favor without ever having a fighter bullet that has been their entire foreign policy since existing like the stalin example how they got submarines how they got uh fifth gen fighters like how they actually infiltrate slow compounding like like they're everywhere in slow compounding that's totally true they're taking rp was that asymmetric or was that symmetric asymmetric like so it that's the way they think about the world and so for example like she had took out huchin tao right publicly why is because the way that ccp works is like when it's confronted with a significant adversarial problem like like the outside of the country what typically happens is they replace the president or the premier and so who chow was the most logical person to actually they come and replace Xi, so he's sidelined.

2:25:31If you look at also there are some – all of a sudden there's a bunch of people in the Central Committee and the Standing Committee that have disappeared now. They have gone somewhere. It's because if the history of the CCP is that when it's confronted with a challenge like TNM and Square, someone – all of a sudden that person just disappears. They get sidelined in the Standing Committee. And that is the pattern of how the – because it's interested in the preservation of its party. Does a war increase the likelihood of preservation or decrease? It decreases. Every war does that because you don't know who's going to win.

2:26:05So they'd rather play asymmetrically because it's more of an assurance that they are going to win because we as a country are not very good at that. Asymmetric takes advantage of our Western ideas. So how do you think about American soft power in the context of the two highest profile consumer AI products that I think are top of mind right now are Manus? And I'm saying that in a very American sound. Manus. Manus. Manus. Manus. Deep Seek. And Deep Seek. Deep Seek. uh and and you know we had tyler cowan on the show yesterday and he was basically saying you know you know these companies are basically trained on western models and by nature of that they the sort of western thought is baked into them and that's some form of soft you know soft power for the west but i just don't want to go back to the boeing example i don't want france to have walleye gear i want it to be nvidia gear because that's an expression of america so that that's what i want yeah and and and that that's that's the mitigation thing of like if we allow them to continue to asymmetrically take over the world through the a new belt and road initiative the first one failed it because they because they couldn't actually fund it as a as a society and the delivery of the products was actually pretty bad um go ahead you mean like you mean like roads that roads that are you know basically cracked in half and like dams that don't work yeah belts that would fall apart when you try to pull up your pants and it's everywhere in africa if you talk to the like i've been to africa you can see some stuff behind me from africa like you talk to them there's there's cars there with chinese letters and stuff and they everyone africa says it's garbage stuff that they had to fix locally so it just it just was a failed experiment but they're they're generally very good at uh this kind of focus manufacturing to then to export to create to create asymmetric influence uh like that that's their goal and i'm more i'm more interested in how that uh sort of relates to ai how a footprint of huawei similar as we responded with with uh zte that how that would negatively impact our ability to influence foreign policy in europe or in south america or africa like that that's more of my concern not that they're going to invade taiwan i just think that that's like a very american western way of looking at the situation when the pentagon says that it would take the entire people's uh people's republic army to to take like the entire not not not 80 120 including reserve to run taiwan if they actually made it or would it be easier just to have a manchurian candidate manchurian candidate like like it's like like flood the airways with like fake ai you know stuff into taiwan and try to flip a party there is an entire party dedicated to closer relationships in taiwan in the taiwan environment so why would they invade like it's just an american way of responding because that's how we respond when like someone's like hey they punch us we're like hey we're on the freaking launch no launch missiles from a frigate and like destroy your country right that's like we the way we think about the world it and it doesn't mean that like i'm again i'm a hawk on china it's like what is the enemy and and i think we are appealing to the enemy but these export controls and regulating ai trying to do these polar friction diffusion rules treating ai as if it's a weapon and regulating as such that enables the man of some the deep seek to like to like to be prolific right so that's why we're not doing open sources because all these like regulation stuff is happening on in the west and china's like whatever we'll just diffuse the model and like you know everyone go to tamil right uh that we won the internet because we were free and open china's winning ai because it's free and open not because they care about that it's because like a word he's he's trying with llama four it's been a mixed reaction but he is trying what can you talk about you know something i find fascinating is the companies that feel extremely significant right now to u.s national security uh huawei you know the tiktoks uh unitree dji they're all private right and i'm assuming that that's like you know there's various reasons you'd want to be private One is they can access plenty of capital.

2:30:19But another obvious reason is that if you don't, all your metrics can be made up. You can be doing all these things. You can be taking all the state funding, right? Like you can just basically directly serve the state in a way that it just becomes much harder. Do you expect companies, you know, not financial advice or anything like that, but do you expect companies like, you know, Huawei and DJI and Unitree, all these critical companies to just stay private forever? Sure. I mean, I think of it as, again, going back to China is such a massive country, it's very federalized. So think of it as the Chinese people are very different than CCP, clearly.

2:31:00And so when China has something that's very successful, like a deep sea phenomena, what happens is that the CCP co-ops it. But everything up to that point is China, the Chinese people. Because we, speaking for my dad, he's Chinese, they're very industrious. uh the very driven uh people it's just part of the mindset but also you're very skeptical it's a very actually low trust society uh similar to like india and some other uh asian countries and so like you know my dad's in cds he doesn't like stock market like you know he doesn't trust banks and stuff like that it's just kind of like his natural like kind of like framework of the world and and yeah yeah and so so but but the desire to be industrious is like it's innate to the the kind of orientation around what it means to have a Chinese philosophy.

2:31:45And so when the CTV adopts stuff like that, it's like to get to the next level as a company, you have to get joined the communist state apparatus. And so everyone who's like a big company is co-opted in. But to say that, and this is where it's different than like Linus style communism. Mao adopted, I mean, 100 % opposed communism, but you got to be fair about what actually happened. And Mao took that as an authoritarian concept and just pressed it down on the people. They're not purists in any sense. They're almost a bit like rationalists because they want to be powerful and they want to stay empowered.

2:32:24So if the ideology has to change, it will change. And so that's where they let many of these successful companies in China that are, as the New York Times says, flooding the European markets of cheap goods now. It's like what they're flooding our markets of cheap goods. many of those are done by just chinese entrepreneurs like like no state interaction but anything that's extenuating beyond the state and a meaningful national security like an industry that is really it's not scary like the ccp is utterly in control of that um but yeah you have to understand the the etiology the like where it came from then understand the theological framework of like where they want to go with it rather than treating it as if but like i personally don't believe for example that china is interested in spreading communism and and they don't have a common turn like soviet union did to spread communism like they're interested in preservation and and so that is not a type of a country where you're like you know that they're going to go to war with any chance like yeah they're fact they're very hesitant they're very hesitant to war um and if you read a book we're gonna book about like a history about china there's a common pattern in history of china which is self-implosion they've done it like four times um so like they also know that too like it just ends up being where like so you know ah this all kind of falls apart right and uh and i love a book uh by it's by rodney stark he said that um china invented gun power at the same time as as europe did and uh china put it in uh in fireworks to scare off uh ghosts and Europeans put it in a barrel to shoot a bullet.

2:34:00Right? And so it tells you like very industrious, very driven in terms of ethos, but it doesn't always land a plane. And that's what I'm leaning into is like, yeah, Huawei will make something cheap, will make something alternative to NVIDIA, but like, let's like not give them the rope where they're like, you know, America as opposed to proliferation, as opposed to exports, as opposed to open source, is like you're giving them all the fuel to be like, come to China, we'll give you AI, even though it's not as good. Yeah, that idea of like mimetics, mimetic rivalry and geopolitics is fascinating to me because I don't know if you've read Wang Huning's America Against America, but it was this book that basically they sent an emissary to the United States.

2:34:46He looks around and he determines that America will implode. And it's clearly like their own anxieties about implosion uh you know writ onto the american story uh but america is undefeated and we're not going to implode it's the last thing yeah it's a it's a close i think it's closest thing to heaven like it's you know it's great it's an awesome uh my family loves being here and uh it has been an immense blessing my grandpa came here with nothing well this interview has also been the closest thing to heaven it's been fantastic i have a couple do you have a hard stop you have a hard stop you want no no i don't yeah okay i got a couple more questions uh one what does having the largest cluster right this like supercomputer you know super weapon and and uh in some ways what does that actually look like in practice is it run by you know who who sort of operates it is it a network of clusters what does that actually look like in your view yeah i would say be run by Department of Energy, a combination of NIST, be deployed in a place that's undisclosed.

2:35:51And it's used mostly as training in our own side, as in our own military, on advancing their own capabilities of understanding what LLMs can do, understanding how compute can work at scale. Because LLMs are, again, super cool. We all use them every day. But it's really the paralyzed computing that changes the way in which warfare works. And that when you have the ability to scale that amount of computing power at a single moment, it makes all types of – which mostly is targeted with asymmetric sort of attacks on us. We have to be able to understand what that actually means at that scale. And so it's not Stargate that's clearly for open AI.

2:36:29It's not like the DOD sec should email, say, hey, can I borrow this for – it has to be something that we own, we control, that is part of the people's power. and the point of that also is a deterrent saying that if you people will do something bad with AI that is inescapable it's part of the fallen nature of humanity that we take great things and we apply maladaptive adjustments to it and and so we have to just be prepared for that and and what that attack means I don't think we fully understand yet we have theories around it but I I believe that it's going to be some form of attack on our infrastructure that's not designed to handle this form of sort of computer power targeted us so it's mostly used with the deterrent um and and also kind of show our footprint isn't like we are going to be the best at this uh and you know taking a small slice of the uh how the budget can be five trillion just to like say that we're investing this as a f-35 f-35 cost about a trillion one trillion investment in the united states a lot less to copy it actually turns out right off all the R &D costs it's actually a pretty great plane yeah I know that's saying it's like it's if you lean into going back to the bad Mises thing and I know you like Gerard you know like it's like it's like we just lean into so much of like what Chinese really trend is really good like why are we shocked that deep seek happen like literally like like how look at team machine look at like one to many that's what china does best yeah so like we have to do it's actually two trillion two trillion you two trillion um uh i guess on this one question i have is uh again because this conversation is top of mind uh but tyler cowan yesterday was was very excited about agi coming in the next couple days we don't know exactly what he meant fastest fastest timeline uh extremely extremely uh agi Well, it's a social network.

2:38:31OpenAI is launching a social network. Yeah, that might be it. But I want to – like this conversation has been tremendously fascinating. I'd love to get sort of your personal definition, how you look at AGI and then what your timelines look like around it. So I could answer this differently, but I think it's more honest, is that if you don't know what you're looking for from a prima facie perspective, you don't know how to measure it. So how do you measure if someone's intelligent? Is it SAT? Is it, I mean, is it, is it, do they make money? Is it that they're wise? Crack jokes. Is it good people?

2:39:15Yeah, the funny, right? And, and I think that that's where the AGI problem hits a wall, which is like, what am I even measuring against? But like when it happens, when every single one of those tests, which are by the way, just randomly picked out of a hat, like it only 100 % across and it still doesn't fully work, what do we do? Right? And that's the fundamental anthropomorphic question is which is a metaphysical question of like – this is why it's so fun. I have a background in philosophy and theology. It's like what does it mean to be a person? What does it mean to actually represent intelligence?

2:39:51And many people who push ASI, AGI, they have a very piss-poor understanding. Like they didn't read Locke. They don't know who Descartes is. Rousseau is a stranger. Like they've read some Nietzsche because it's cool in high school. But there's very little understanding about the longevity in the history of what we have valued as just a social creature and the evolution of our culture to say, like, what is meaning and purpose and intelligence? and even the epistemology of there's a difference between information data numbers and knowledge like all those from epistemological respect are completely different things right like knowledge is the discrimination of information data is the series of numbers and and if you look at people pushing agi and asi they typically one have a very low view of humanity like their their their anthropology is like we're robots we're a reductionist thing like we're all biology and and which is like kind of been rejected since the new atheists have fallen aside and they kind of have like have all those pre-submissions built into it versus a person like me who's like i'm a i'm a evangelical christian like i don't have that view of humans i think that there is an immaterial part of our nature uh numbers are immaterial data is numbers like it's pretty logical to believe that like we are ourselves an immaterial there's something about it therefore i can't actually put it in bits and bytes so agi and asi i think is a trope to kind of make an interesting angle the other thing is yeah it's marketing and there's there's conflicts and it's hard to find somebody that works in ai you know that that obviously is intelligent on you know however you want to look at it that doesn't have at least a 10 million dollar you know position riding on the agi marketing you know like this this sort of like it's almost here like it's coming type of thing and so that that's why i was it's not like i just don't believe it doesn't mean it's not gonna be valuable that that's the confusion yeah is that if you create this trope this red herring that's not gonna be there you then false flag build a bubble and you know it's bad for everybody i think i think lm's is a as founders fund would say uh is that i have a star wars view of the world not a star trek view of the world and that technology is a is a positive adaption of the human capability to extend its arm further and it only helps humans become more human things and and so all the agi asi talk is it's really built on presuppositions of a negative view a negative anthropology that is not only been disproven over and over again philosophically and theologically but it just doesn't bear itself in the science like it the mind itself is as an example you can go back in the 80s and 70s and 50s they were like the mind is this we have fully discovered what the mind is and then 10 years later it's like we don't know what the mind is like it continues to expand and and i think that relates to unless you can actually pinpoint and understand what intelligence is on the anthropology side you're not going to be able to ever measure agi or have any aside interesting anything else jordy oh i'd love to keep going for another hour but we'll have you back on again soon this is great this is fantastic yeah uh i'm sure i appreciate it yeah this is really fun thanks for coming on yeah we'll talk to you soon yeah thanks so much bye that's great uh well let's rip through some timeline uh this might be a favorite world record for number of size gongs this uh this show let's hear them activate golden retriever mode not quite size gong but close uh there's some good sound effects the soundboard's back in business folks uh brought Brought to you by our very own Ben.

2:43:29Ben personally recorded these sound effects. It is his voice. It's his voice. Founder mode. Well, speaking of founder mode, Sam Altman was in founder mode yesterday when it broke that OpenAI is exploring a social network arena with AI features. Can't imagine. It's probably going to be absolutely flooded with Studio Ghibli pictures. but what is your take on the open ai social network will you be uh they're they're trying to rival elon musk's x the verge reports and uh on one hand makes a ton of sense to get more distribution more time in the app means more use i understand i understand uh sam and the open ai team wanting network effects, I feel it feels potentially like a huge distraction to try to go compete in consumer social, which we've just seen time and time again.

2:44:31Yes, they have massive distribution. They're on the home screen of hundreds of millions of people. They have, you know, in the same, the wild thing is, I don't know how many, how many X weekly active users. I think it's, I think it's actually around the same size, like 500 million or something like that so x has the same advantage in terms of launching a foundation model uh you know consumer app as in many ways as open ai does having building a social network i just think it's uh llm seem to be more intuitive to build because you have this sort of black box the model and then you have this like easy interface on top versus a social network which is like how are you going to seed it right seeding it with 500 million yep weekly actives from look at the lesson of google circles like yeah google had a billion people using google every single day to search for things people did not necessarily want to share their search results into google circles it was this facebook copycat it never took off uh and google had every advantage in that race against facebook when they launched that product i think in 2010 um the flip side is uh i know a lot of people that run great deep research reports, I would probably follow Tyler Cowen on the OpenAI social network.

2:45:48And when he finds a really great deep research report, he's spent 10 minutes waiting for that to come back. And he's put out a deep research report. If he were able to, with one click, hey, make this one public, this is an interesting finding. Or some of the OpenAI friends we talked to who said that they do deep research reports on just what towels I should buy. That was one of the examples or what what refrigerator should i buy instead of needing to wait the 10 minutes it's already in my feed and it's also this curation and discovery of i'm scrolling and i see aiden posts like hey there's this deep research report on washing machines i might just click into that i like the idea of building a social feed into the existing product because i would love to if you have the opportunity to prompt something find something interesting share it to a feed.

2:46:33That's very interesting. I don't like the idea of trying to then build this sort of competing social network with its own new, what are we sharing there? If it's funny, if it's a social feed built on top of the app, that again - That feels odd. But at the same time, right now the flow is you go into OpenAI, ChatGPT, you figure out that Studio Ghibli style is a great prompt for any image you upload. And then you screenshot that and post it on X and say, here's the prompt. MidJourney kind of hacked that by creating the Discord so you can see what other people in the MidJourney Discord are prompting.

2:47:14You can copy paste it, change one word. All of a sudden it's a cyberpunk dog instead of a cyberpunk cat. And that gets you started on the flow of prompting mid journey. I could see that being kind of interesting. But yeah, it'll be very interesting on how this actually gets integrated. But there's already a share button on every ChatGPT chat interaction. And I do share them with people sometimes. Hey, for the show, I turn this into some bullet points, share it with you. You can go right in. You could continue prompting. I think that there's something there. But it could also - But going and purely just trying to beat Elon Musk because you're annoyed that he's suing you.

2:47:54Yes. It seems like - It could just be like a shot across the bow. Yeah, hopefully there's something deeper there because I actually think it's much easier for X to build an LLM and chat bot than it is for OpenAI to build a thriving independent social network. And even though they have the app installed everywhere, it does, like there is a set amount of time on an app. There's only a set amount of screen real estate for a button, you know, Elon in the X app puts the Grok button down at the bottom by default, but there's only really six slots for there. So if you're putting that Grok button there that you're taking away from a different feed or messages or notifications, other stuff, there's trade-offs here.

2:48:33It could also just turn into an Instagram club where people are just sharing endless Studio Ghibli's, ultimately just flexing on each other. and the best way to flex is with a Patek Philippe Nautilus that's from Bezel. Go to getbezel.com. Look at this. Boom. With the Tiffany dial on the Nautilus. You take a picture of that. Risk on. Yeah, you buy a Patek. You throw it through Studio Ghibli filter. It's no longer cringe. You're no longer flexing. You throw it on the open AI social network. That's brother behavior. It's brother behavior. Go to getbezel.com. Anyway, Notion Mail, similar. AI company launching a social network.

2:49:09Now, Notion's launching an email service. We've got project management launching email. We've been talking about this. I was saying I want someone to build a new email client from the ground up with AI at the forefront of that because I've been very dissatisfied with the Gemini experience in Gmail. Even just my Gmail experience, I have like four different inboxes now. It's not really filtering stuff. Yeah, Notion was super quick to launch integrate LLMs within the product. Which makes a ton of sense on the core product. But then I think that they might be in enough of a founder mode, enough capital and engineering to actually roll this out and make this great.

2:49:45So I will definitely be trying this when it becomes generally available. It might be generally available now. Yeah, and it's an interesting concept. So in the marketing launch email, it says the inbox that thinks like you. One fascinating thing about Notion is if you're actively using it for project management, life management, business, it has so much context on everything in your life. right it has that's the scary it actually has me because like if google catches up i have way more data stuffed in google in sheets and docs and drive and i don't want to port everything over to notion because i'm not notion potentially is a is a better data source if you're a notion user if you're a core notion user totally totally extending 100 if you're a builder i know people that build their whole life on notion they have different workflows for every single project they're all in on Notion.

2:50:37This is going to be a fantastic experience for them. For me, I'm kind of stuck because I'm like locked into Google's ecosystem. I want them to catch up. They're not really doing it. Well, Notion's tool is integrated into Gmail right now. With Gmail. Yeah, so it sits on top of that at least. But I would love to just be able to have my email be processed for me while I'm sleeping on my 8sleep. So go to 8sleep.com slash DBPN. Five-year warranty, 30-night risk-free trial. I'm not going to lie. Free returns, free shipping. I hope I did well because I think I dialed it in I got done 99 let's go 99 I figured out the routine I dialed it in I was like I'm falling asleep within 30 minutes of the average of the last three days the rolling average that's their algorithm seven and a half hours of sleep autopilot cooked I felt great I feel great today nothing like going into a three hour show with a 99 on the eight sleep score so go get big numbers Go do it.

2:51:34Anyway, I hope you enjoyed our deep dive on China. If you're looking to follow more of the breaking news with China, please go to Polymarket. They have a bunch of great markets about what's going on with the Chinese economy, what's going on geopolitically, what's going on with tariffs. You can check it all out at polymarket.com. Anyway, you have to do two pilgrimages in your 20s, going to Japan, going to Switzerland. Neither of those I did in my 20s. But what do you think? are those worthwhile pilgrimages? Have you been to Japan? I've not been to Japan, but I'm still in my 20s. But you were in Switzerland like four months ago.

2:52:10I have been to Switzerland a bunch. It's my favorite country that's not the U.S. by a long shot. It's great. It's a perfect country. Yeah. It really is. It feels like being, the entire country feels like being on a golf cart, a golf course. Well, Sam Ross, sharing some big news from numeral tax. Q1 was a big year, was a big one here. Boom. Big in terms of revenue, customers, filings, our team, and of course, pieces of mail received by our virtual inboxes. Here are just a few of the highlights. They 3X their number of customers in Q1 versus Q1 last year. The sales team is crushing quota. They hired 22 new numerals, which is what they call themselves.

2:52:52They opened a new HQ in SF. They announced the Series A by Benchmark. And they rolled the dice at Shop Talk. and they sponsored the world's number one show, TBPN. Thank you for sponsoring us, Numeral. Thank you, gentlemen. And if you are... You guys, Numeral. If you have sales tax, put it on autopilot. Head over to Numeral HQ. Spend less than five minutes per month on sales tax compliance. Just do it. Just do it. This was a funny post by Sam Altman. He says, BU, work in HFT, shaving nanoseconds off latency or extracting BIPs from models. Have existential dread. See this tweet. wonder if your skills could be better used making AGI apply to attend this party meet the open eye team build AGI and so he's trying to recruit high frequency traders maybe uh he saw what happened with deep seek because they were a bunch of high frequency guys right a bunch of quants uh said hey time to optimize the models let's get our inference costs down and now he's going to try and pull some people from Jane Street Jane Street has a monopoly on Dwarkesh Patel ads apparently but not for long.

2:53:54Sam's got to buy some. He's got to pay up. Get Dwarakash to start running some job ads because it's one of the few shows I've ever seen Jane Street advertise on but it's working pretty well, I guess. But yeah, this is interesting that the next challenge in AI will be these inference optimizations. The GPUs are melting. We've heard this. The products are growing. They have the product developers. They're in San Francisco. I'm sure they're pulling in plenty of those people. the band the and if you love open ai might be just take a take a breather on ghibli photos we know you're still doing them take a two-day break take a two-day break breathing room go rent a wander till they can get some yeah your happy place find your happy place find your happy place book a wander with inspiring news hotel great success dreamy beds top tier cleaning and 24 7 concierge service it's a vacation home but better wander really is an overnight success it is because when you go there when you stay there you spend the overnight and you become a success yes yes and every night is a success i wonder um this stuff on this stuff on meta with the ftc is just wild so uh bring this down meta is in a battle with the ftc and uh they basically are claiming we're indistinguishable from any other app which uh shiel says is correct and they pulls a document that they're using tiktok instagram reels youtube shorts we can't have an monopoly it's a commodity yeah everybody's got a short form video feed yep uh and it's true uh convergence across apps yeah just got their um kind of mogging snapchat by not including them yeah but yeah i mean it really has been nap in some other there's a i mean there's a best practice for building a social app now i'm sure open ai has taken notes if they want to go this direction vertical videos algorithmic feeds, likes, comments, shares, inboxes and messages.

2:55:48And then you add long form, short form monetization, comments and show notes and all these different stuff. And all these different competitors, TikTok, Instagram Reels, Shorts, they've all kind of done the best practice across everything. And the platforms have become pretty commoditized, which is one of the big reasons why people shouldn't be complaining about TikTok potentially going out of the app store because the TikTokers will be able to pop over to Instagram Reels, YouTube Shorts, go viral with the same content and have a similarly sized business very quickly. So I think when you hear the stories of like businesses are built on TikTok, they will be destroyed.

2:56:21It's like realistically, most businesses are on all three. It's taken us so long to ban and they'll move over. You had time to reduce platform dependency. Yeah. But if you think they're going to win this case, if you think they're going to lose the case, why don't you go get some exposure on public.com to Meta stock investing for those who take it seriously. Not financial advice. Not financial advice. I'm Demonstrating that Public is a platform with multi-asset investing, industry-leading yields, and there's millions of happy users. Speaking of investing, Kyle Harrison quote tweets. Someone says, is backing competitive companies allowed now in venture?

2:57:01And shows what's going on at the foundation model level. Sequoia is in four foundation models. Thinking machines. Open AI, Thinking Machines, XAI, and SSI. Light speed's in four, indexes in two, Tigers in two, KOTU's in two, Andreessen's in five. Five. OpenAI thinking machines, XAI, Mistral, and SSI. Wow. It's a party. It's a party. We got six-way party rounds before GTA 6. It is odd. Like if the model layer is commoditizing, maybe you just want to buy all the commodities up, buy all the big oil companies, I guess. But maybe they wind up going different directions and OpenAI becomes a social network and Thinking Machines becomes a, I don't know, like B2B SaaS company or something.

2:57:51Who knows? We'll see. This next post is amazing from MKBHD. Yep. He is talking about nominative determinism, which we are big fans of on the show. Love to see it spreading. CEO of Nintendo America, Doug Bowser. Great, great name. Strong name. Fastest sprinter of all time, Usain Bolt. COO of Starbucks is Rosalind Brewer. Yep. World record chili pepper breeder is Ed Curry. CEO of Capital One Bank is Richard Fairbank. Fairbank. BBC weather meteorologist, Sarah Blizzard. Yep. Underrated is the nominative determinism that people kind of impose upon themselves. When I grew up, there was a weatherman named Dallas Raines, and he named his kids after cities.

2:58:40So it was like Austin Raines was his son. And I forget. That son is now the mayor of Austin. Yeah, or weatherman. Or weatherman. Fake news. So you can keep your kids in the family business by giving them a name that will determine their future, potentially. But no, I'm going to determine some so much fun. Anyway, let's move on to Gavin Baker. He says, Savage that former meta AI researchers are explicitly noting on their resumes they had nothing to do with Lama 4. There's a member of technical staff over at OpenAI joined February 2025 on reinforcement learning frontier research and post-training.

2:59:17And previously, this scientist was at Meta doing AI research and says that they were working on generative AI. Lama 2, Lama 3 have not been involved in Lama 4 at all. Interesting. I mean, there's been a lot of debate over like, is Llama 4 oversold? Is it really as bad as people say? But this is another data point of like, oh, maybe it's a little bit rough over there. But Zuck's in founder mode. I think he will figure something out. Don't bet against him. Let's go to Amy Wu. She says, founder secondaries at the Series A are becoming the norm again. We are back to 2021 fundraising heat. Founder mode.

2:59:54The funny thing is like, I thought you were going to go size gong on that. Went with founder mode. We actually don't have size going on here yet. We don't. Well, size going for all the Series A secondaries that are happening. No, I just think this is one of those things that's controversial, but never default bad. I think it just comes down to sizing and traction. I don't think there's anything wrong with founders selling a few hundred grand of secondary. I mean, there are plenty of founders. It's not going to change how they approach the business. it doesn't it's not like they're retiring i think some you know when we did in 2021 the secondaries that were happening were on another level where it was you know a founder selling 50 to 200 million dollars your secondary and it's like okay that's like an extremely material exit and they're gonna by default be in a very different mindset after that point i mean uh but the CoreWeave guys sold, I think like 100 million or more, I think like eight or nine figures of secondary before the IPO.

3:00:59CoreWeave's still trading at 40 bucks a share, like$18 billion company, like seems pretty stable. It hasn't sold off like crazy. But it's, no, John. Am I wrong? My dear John, it's down. I thought it was up and then down. I went lifetime CoreWeave. Oh, okay, sorry, sorry, sorry. right i was looking yeah yeah no no it's not 7 today like it's not having a good day but but if you look at the year it priced at 40 i was confused 60 and then it's down at 40 like it's like kind of in the trading range it doesn't feel like it's like it was originally meant to be priced at around 60 people were saying it was gonna be a 30 billion dollar company it's a 19 billion dollar company but that doesn't sound but that doesn't reek like oh the secondary like poison this like they're not taking it seriously like i don't know at least not yet we'll see what happens um but uh I mean, the other thing is that there are founders who are clearly doing their life's work.

3:01:53They're years into building the business. It's very serious business, makes revenues, even maybe some profit. And they come out to do a Series A later. And then, yeah, there is some secondary. But for lifestyle reasons, maybe they have kids, maybe they need to buy a house. There's a bunch of different reasons why if you don't have a high salary, great credit as a founder, you might need some secondary to pay for that. So mixed bag, all depends on the circumstance. But congratulations if you sold a bunch of secondary. Signal says every visual medium from concept art to fashion design to advertising to architecture is now downstream of text prompts.

3:02:26Remarkable. Yeah, it's true. This is just a good point. Weissman using ChatGPT to imagine interior design stuff around the house. It's like, it's not perfect, but it's doing maybe 70 % of what you would hire an interior designer to do in the early stages, right? Everything other than sourcing. Yeah. Ryan Peterson sent me a, like a meta poster, which was, uh, he generated a Flexport poster ad for every single city that they operate in. So he had like 50 posters that would be extremely complex to make. Uh, then he put them all on one poster. So it's this big like poster that you can print out and show all of Flexport's like footprint.

3:03:12And then he just liked the prompt. So he made me one. He sent me one for Lucy, which is really cool. And he was like, oh, yeah, you can just print this out. Like don't go bigger than 18 by 24, but it'll look great. And I was like, thanks, man. That's great. Very fun. Anyway, should we do the SBIR stuff that you were getting texts about? Big changes in the pipe for the SBIR, STTR program. All Air Force topics in the current batch just got removed. removed uh so there's an email uh from di dod sbir topic removals and you had some extra context about this of course sbirs are the small business uh uh deals that happen pre-program record for defense tech companies you get a little bit of money from the dod but it's not uh it's not a sustainable source of revenue but it's a great way to fund the business in the short term prove that there's at least some demand to get through the application followed up with adam yeah uh i'm going to butcher wallinowski wallinowski sorry adam i was formerly at anduril nvidia and yale he's now over at uh fid labs um and he says yeah there there are four major releases of cyber topics per year and the second one for 2025 was due to begin accepting proposals next week the two big agencies in that solicitation were navy and army or sorry navy and air force then the SIBR update email announced around 1 p.m.

3:04:33yesterday that all currently posted Air Force topics are being removed and no longer eligible for proposals. And that ends up being significant because in total, that would have amounted to around$135 million of awards, which would have gone in some part to early stage defense tech founders. And there's also follow-on awards, so that could be another 200 million in Cibir awards that were canceled. So anyways, there's reform happening around Cibir and just general changes to the acquisition process. And so thank you to Adam for flagging this. Yeah, that's very interesting. Well, we have Delian coming on the show Thursday.

3:05:16We have Shamsankar from Palantir coming on the show Thursday. And I'm sure we'll stack a whole bunch of other interesting folks. So we should dig into that topic more on Thursday. Let's do it. But other than that, I think we're good to wrap up. Thank you everyone who tuned in and listened to this show. We really appreciate you. We're having a lot of fun with this. And just trying to up the quality by just 5%, 10%, 100 % every single day. Compounding. Compounding, compounding, compounding. It's just the most powerful force in the world. And it would not be possible without our sponsors. John has been very upfront.

3:05:50This is corporation. Yes. This is corporate media. Corporate media. So thank you to Ramp, Public, Polymarket, Aidsleep, Wander, Bezel, Numeral, and Adquick. You guys are fantastic. Go support them. Go support them. And we will see you tomorrow. Looking forward to it. Cheers. Bye.