Trump's Deal with NVIDIA, Genie 3 AI Paintings, Intern GPT-5 Test, AI Hedge Funds | Peter Harrell, Aaron Ginn, John Maslin

27:24This is my take. So you'll use reinforcement learning to round off all the sharp corners or instead like kind of create spikes of spiky intelligence that create pockets of value within these generative worlds. So you can imagine if you're generating a video game, it's very important to have the main character look the same at the end of the game than at the beginning. So you might do some sort of like RL pass to make sure that character consistency is really important for your hero character. But really, it doesn't matter if I come back after 10 hours of wandering around the video game and a tree looks slightly different.

27:59It's fine. So there'll be areas where these companies and these foundation labs go and apply a ton more RL to make sure that this particular feature works. But at the same time, it doesn't make sense to go and try and rebuild everything and bake everything into the model. So you're gonna wind up with situations where just like ChatGPT got a web browser and a Python shell, you'll probably, these world models will need to be wrapped or interfaced with like a traditional database so that if you have an inventory and you want to track health points or you want to track ammo, that's not like hallucination.

28:33You generate a world and then you make it fixed. Yeah, yeah, yeah, yeah. Fix, or fix like the underlying territory of the world, the underlying map so that everything's the same, but then you're generating on top of that. Tyler, what's your take? Yeah, I kind of disagree that like scaling one fixes if you look at the I think if you look at genie 2, yeah, it had this big problem with like Consistency right you would turn left then you would turn right again, and it would like look totally different and I'm pretty sure in the paper They basically say that the consistency was just like an emergent property of scale.

29:08Yep, so Consistency over what time period though? I mean over the minute long. Yeah, I guess it 100 hours 100 hours that's how long people play GTA 5 like a rolling you know 100 hours like that's how long people will play these things and it's like they want to be able to go back to if you're in Elder Scrolls you want to be able to go back to like the very first village you started in and see that the tree that you chopped down is still there look how far I've come exactly like there are some there are some crazy properties in like in in Elder Scrolls where it's like in the first village you accidentally killed the blacksmith.

29:47And so later, like 12 hours later, you come back and you can't get the sword that you want. Like why bother trying to bake all that into the model? Why not just use a database? But I'm saying you don't need to like, like think about baking it into the model. It's just gonna be an emergent property as you scale. Yes, but I do think you will wind up hitting plateaus of scaling. Just like, just like, you know, ChatGPT, like LLMs got pretty good at math where they could do two plus two and then they could do much more complex math. But at a certain point it was like, we're not, we're just going to give you a Python shell so that you can just actually do the real math.

30:27Yeah, that's fair, I guess. Like, because even, even if, even if scale would solve like the really, really hard, intractable, huge, huge math problems, it's like, why burn the electricity to run that massive model to do some very, very basic calculation that would take like five flops on just a CPU. And so like, you don't need to, and I do think that there will be other tools that it doesn't make sense to bake into the model. I mean, just think about like multiplayer elements. Like how would that be baked in the model? Like you'd want to sit on top of just like a normal social network. You want to sit on top of some sort of normal interface so that you can join the same game.

31:13I don't want to recreate a new epic game store every time I launch. It's possible to imagine a new video game paradigm where the world is just constantly expanding and there's no real rules and characters are constantly emerging. But at the same time, imagine playing soccer. and if you dribbled to the side of the pitch at one point, it just opened up and you could just keep dribbling. Eventually, you'd be like, okay, I actually like having a rule set. I like having this sort of consistency in the game so that I have a framework in which I can play in. In so many ways, this will create entirely new formats effectively.

31:55You're taking the concept of an open-world video game and you're just opening it up infinitely. Yeah. But I think, again, people will want that consistency of play and even a shared experience. Right. Yep. And I mean, so Goldrock in the chat is saying$3 ,000 an hour to play at 60, 4K, 60 FPS. I mean, that is a real consideration. The other the other question is just is just like, is there a way that you can pull forward adoption by like not being a deep learning purist? even if deep learning is the solution over the long term, while you're waiting to build the$1 trillion data center to actually hit the crazy, crazy scale, if you can get user adoption by just using a normal database to track your inventory and your health bar, you'll get more adoption.

32:49And then you'll create this flywheel. It's the same thing with ChatGPT. Like you could you could have you we could have just been like open. I could have said like look there's no reason to give it to give an LLM access to a Python REPL at a certain amount of scale It'll be able to just reason about it and do do the Python in its head, right? But you can pull you can say like Actually, you do want to like if you use the world model as like an RL environment Then you can actually pull it forward that way by just like using it for other stuff, you know maybe like if you're using it instead it's not a game it's like a data set that you use for your and then like oh yeah we can also release it as a game for like normal users but really it's to train our robotics you're really piled on this robotics thing yeah i i think that this data is like the big issue at least that's for yeah yeah yeah certainly for robotics but i think that i think that there's i think there's a consumer product here i agree but the way that you like funded is through is using as maybe the opposite maybe the robots learn from all the humans acting like robots in a game and then that and then that generates a ton of a ton of data that like one hand watches the other a little bit exactly exactly um but my but my real question is like deep mind is obviously absolutely crushing on the research side they're like really really it feels like they're really far ahead right now this is clearly state-of-the-art um the question is like what does it take for google to actually get this out in the world as a consumer product everyone says gpus will melt if they launch this right now maybe that's true maybe they need to optimize it more but the the big question is like is like they had a large language model around the same time as gpt 3.5 yeah and they were really close in terms of their gpt4 first gemini launch at the similar scale but chat gpt launched earlier was more aggressive broke through and became kind of the default.

34:44And I wonder if there's, if there's, if they should be more like risk on in terms of actually productizing this and getting in people's hands. Like clearly people are going to use this for bad things. They're going to put all sorts of references, reference images in there and be walking around them. We can imagine all the bad things that they'll do. Well, you can imagine them being more aggressive around a product like this because it doesn't threaten their golden goose. Like in hindsight, it kind of makes sense that they weren't. It might threaten YouTube, but yeah. Yeah, but you can also imagine where it's a catalyst for YouTube where a bunch of there's like entirely new vectors of You're streaming it you're feeding it in you're exporting it that type of stuff And yeah, I can see this being like a net new category of content or just a tool that every creator can use to make better videos Whereas I Just know I was saying um, it's basically the same thing like there to release vo3 It's like it's all the same safety constraints, right?

35:38You can't put like some bad image into VO3 and then have it produce video. Yeah. So they, they, so it's like similar thing. Most of it. So yeah, they, even, even VO3, it feels like they're not being aggressive enough on the rollout of that. That's probably also just like, it's just way too expensive to serve. For Google, the company that makes a billion dollars a day, like really, it can be that expensive. Like, I feel like, I feel like the chat GPT. I mean, it says a lot that you were on the$500 a month VO3 plan. and you're still getting rate limited. Constantly, yeah. To the point where I've like sort of churned because I know that it's like such a rough experience to go in there and then like, okay, I need to plan it out.

36:20Oh, I can only do three queries and I'll come back the next day. It makes it really, really hard to actually do any real work there. Yeah, the question is how expensive is that? I don't know. It must be a lot. It must be expensive. It must be expensive. It must be expensive. But what was the secret to ChatGPT beating Gemini? Like the Gemini app launched three months later. So first mover advantage clearly matters. Also, ChatGPT, it seems like Sam Walton's never met a GPU. He doesn't want to melt. He will do anything he can just to scale, scale, scale. I imagine the margins for the early ChatGPT launch were terrible.

36:57And I imagine they were burning tons and tons of money in terms of inference costs. And they were way, way upside down there. I mean, ChatGPT was basically free for like months. And it was like, how? like this clearly has operational costs. This has inference costs and they're just eating it. And so yeah, maybe being more aggressive on the financial side. And then I think. Well, I still think for Google, if they were to come out and launch a ChatGPT product that didn't have, for example, like a knowledge cutoff that ChatGPT did at that time already. So there's a post here from an account that does a weekly newsletter of quotes from earnings calls, and they aggregated a bunch of quotes on AI-driven changes in Google search, reducing referral traffic and impacting user engagement.

37:50So these are just different CEOs in the last week. The one here, the portion of our traffic that comes from Google search has declined from 52 % to 28%. Another one from the Groupon CEO, Google is significantly changing the behavior of search result pages. what we see is that we have declining traffic another one on google when google provides the ai response there's a much lower click rate on it because it's typically a user getting the answer in that response and they don't need to go further uh nerd wallet ceo the google search is still pretty challenged um and another one we can't deny it it is a risk on page views and so again these all these ai features are reducing uh people's need to just navigate the web and drive, some of which is ultimately, I'm sure, paid traffic.

38:38Yeah, and maybe the world model stuff, video game stuff, it's not as threatening to their core business. I mean, it clearly is not. And so maybe Google will move faster on this and own the consumer product. But I feel like in the next 12 to 18 months, we are going to see some sort of explosion in consumer AI driven around world models. is something built on top of this, whether it's a game or meme engine or some sort of product. And it's interesting because there are two or three serious, serious companies building in this space. We talked to Descartes, who's building in this space. Fei-Fei Li has World Labs, I believe, that's building this space.

39:26And it feels like there's this dance from like, okay, you've done enough research, it's time to productize, and you need to completely turn the ship of your company towards how can we get this out the door in a way that's sticky and viral, but also doesn't completely put us out of business because of the inference costs. But we'll keep digging into it. We'll keep having people on the show to talk about it. The team over at DeepMind is posting. I just put a post in the chat. While you're pulling that up, let me tell you about graphite.dev, code review for the age of AI. Graphite helps teams on GitHub ship faster, higher quality software faster.

40:05You can get started for free. Let's pull up this post from DeepMind. From Vedant Misra. He is counter posting. Oh, I saw this. This is so good. Sam Altman, if we can pull this up. This is the Korean TVVN is gonna run into some challenges very quickly on pulling up posts. There we go. Here we go. Oh, wait, this is a different post than what? Multiple posts. He's posting multiple? Yes. Okay, so in this one, Google are the rebels, is what he's saying? I don't even know at this point. It's hard to tell who's the Death Star. Okay, I finally landed on it on what Sam Altman, the steel man of the Sam Altman Death Star post.

40:43The Death Star was the overwhelming weight of numbered language model releases. and he was feeling the crushing weight of GPT-5 needing to be an order of magnitude bigger and an order of magnitude better and a massive qualitative step up and a binary change in the overall experience. And he blew that up. He blew up the expectations that numbered releases would be correlated directly to specific model capabilities. That's the closest I could get on this deal, man, of the Death Star post. The vague post. Alternatively, it was provocative. It got the people going. It got the people going. It did drive a lot of speculation and a lot of frustration.

41:33Well, over the weekend, you posted there's 100 million in computer hardware locked in the replies. It's your job to get it out. So if you were on X over the weekend, Donald Boat at LaserBoat999 was on a tear. if you had a viral post over the weekend. He was going to be in your replies saying, I agree. The only way we can drive culture, science, and industry forward is if you overnight me a motherboard compatible with an AMD Ryzen, blah, blah, blah, blah, blah. And I believe he's made some tremendous progress in terms of putting together this computer. I was talking to him a lot over the weekend, tracking the story.

42:12He said he was shy. He didn't want to come on the show. but I a lot of people are questioning like is this some scam Martin Scully was wondering if it's a scam I think he's just having fun and he's a good poster and he is just he's kind of begging and kind of shamelessly asking for stuff but having fun and it's funny and it's basically like the tipping version of the X creator path like he's just getting extra stuff so he has received almost everything it's also hilarious the type of accounts that he responds to because it's everything from like Elon and Sam Altman to Dasha from Red Scare. And like he's all over the place.

42:51He's not purely just going after like the richest people in tech. He has a specific taste in poster. Yes, he has a specific taste in poster. And I mean, when he started this project, he already had 100 ,000 followers, his prolific poster. But he is apparently going to have some sort of MIT physicist put the PC together. He says he doesn't know how to code. and he's not using it to like build software. He's more just interested in playing Battlefield 6, which had a beta this weekend that apparently did very well and apparently blew out the Call of Duty beta, I guess. So there's this big debate over, did Microsoft overpay for Activision because they acquired Activision for something like$70 billion.

43:35They got Call of Duty and you would expect that Call of Duty would continue to defeat Battlefield, which is an EA property. X-Blizzard boss Mike Ybarra says Battlefield 6 to bootstomp Call of Duty Black Ops 7. Yep. Rough, rough. So, but, you know, it's fun. You know, he's 21. He's having fun on the timeline, getting an incredible PC that will be fully Battlefield 6 ready. I was in a similar boat when the first Battlefield game came out, Battlefield 1942. 42, it's probably like 2003 or something. I had to beg my mom for a cutting edge NVIDIA graphics card. Because I couldn't run it on my current PC.

44:16I had to build, I had to reply. Said, mom, you, me, Amalfi Coast. I was so Apple-pilled from a young age. I had to, I reffed hundreds of soccer games to buy a maxed out MacBook Pro, which is still like terrible. compared to any gaming rigs, but I would use that to play Starcraft. Yeah, it was always PC Master Race. And the last PC I built, the last bastion of the Windows ecosystem in my life is sitting right over there. I built that, not for gaming, actually. I never even noticed that. I built that PC for rendering computer graphics using, oh my God, Tyler's picking it up. Tyler's going to pick it up.

45:00He's going to show off the thing. Donald Boat, if you want an older PC with a, what does it have? It has two NVIDIA 1080 Ti's in there. It's not bad. It has a Ryzen Threadripper. I think it has 64 threads, actually. It might even have, it's probably not as fast, but it's a pretty solid CPU in there. That's a rig right there. It's a rig. I built that from scratch, and I was rendering. With scraps in a cave. With scraps in a cave. I was rendering computer graphics on Cinema 4D. We did a little Houdini on there. You let it cook. It was a fun time. And then I also played some virtual reality on there.

45:40Had a good VR rig set up every once in a while. It was fun. This is like, again, this is like Hunter Biden reminiscing on smoking crack. This is John's crack. I mean, Donald Boat was like totally getting me back into it. I was like, maybe I should build a new rig and play Battlefield 6. This seems like really good in the two minutes I have for free time this week. Absolutely not. Really quickly, Polymarket has which company has the best AI model at the end of 2025. And Google is still on a tear. There was a major switch after GPT-5 dropped. Google's sitting at 75 % for August 30th and way up there for September 30th.

46:23And even by the end of the year, Google is slated at 54%. So DeepMind is in control of the Rebel Alliance. Maybe they are the Death Star because they cannot be defeated. All eyes on Gemini 3. Although, of course, this is benchmark-based. So anyway, Donald Boat, he's having fun. People are starting to say, oh, maybe it's AstroTurf. There's thousands of likes on every post. They think it may be fake. I think it's organic. I think the kid is just out there hustling, having some fun. It's hilarious. It is hilarious, and it's bringing me a lot of joy. And I think that like the, no one is getting over their skis here.

47:04And it won't work again. No. The next person that tries to do this. It's going to be like Donald boat knockoff. It's a one time funny, funny like meme that, that, that does very well. And I don't think anyone here, there's no promise of financial reward. And most people are like Sam Altman can afford a graphics card. willmanitis can afford an amd ryzen 7 8 core desktop processor or uh or a motherboard you know and i don't think i think everyone was kind of chipping in what was reasonable to that where even if it's a scam if it takes you for 200 bucks it's not that big of a deal uh it's it's a lot of fun it's not a scam in my view it's entertainment i think it's entertainment and i think uh i did I was trying to push him like, hey, you're going to have some doubters.

47:55You got to go live. You got to stream Battlefield 6 when you get this thing set up. You don't need a face cam. Although he was asking for a Blue Yeti microphone, and that was suspicious because he was like, I'm really shy. I'm like, if you're shy, what do you want the microphone for? What's going on here? But overall, I think he's going to build the PC. I hope he streams Battlefield. I hope he's good. Could be a lot of fun. Anyway, let me tell you about Julius. What analysis do you want to run? and chat with your data and get expert level insights in seconds. You can ask Julius to analyze your data.

48:27It's loved by over 2 million users and trusted by individuals at Princeton, BCG, Zapier. And TBPN. We, you guys already know we love the CEO of Julius. Rahul Sunwalkar. Rahul. He's been on the show three, four times. He's been in person on the Friday show. That's right. But absolute legend. Go try out Julius. you're going to love it. Whether you're working in marketing, finance, product, you can use it to understand your business better. I was talking to a VC over the weekend who was lamenting missing Julius because he understood who Raul was. But Raul was working on a previous company and Julius was a pivot out of that apparently.

49:11And he was like, I should have just done it on the basis of who Raul was and knew that he would figure something out. but we didn't like that particular business, that particular market. Great founders are just one pivot away from greatness. Exactly, and so yeah, when you find someone, you got to let them cook and let them figure it out. Yeah, well, you know who else is having fun cooking on the timeline? He's monitoring the situation professionally now. Former OpenAI researcher Leopold Oshin-Brenner, his fund situational awareness is up 47 percent in the first six months of the year love to see you may have first become aware of the podcast he did with Dwarkesh and the essay that he wrote alongside it situational awareness is probably my favorite name for any type of fund in a long time it just says so much it's like hey we're aware of the situation we're monitoring it and we're deploying, we're trading against the situation.

50:16I like it. It's definitely up there. It's in the conversation, but the bar is extremely high. You're going up against Cerberus. You're going up against Aries, the god of war. Like the ceiling for quality of fund name is so high. When you're in the public markets, wouldn't say this about VC funds because they all have very silly names. You got Blue Owl. Blue Owl is a great name for a fund, a private credit fund. But, I mean, Citadel, it's a very strong name. Bridgewater, Blackstone, Blackrock, Bridgestone. I love it because it's unique. It is unique. It's very unique. It is unique. It aligns with this very viral thesis.

51:02And it says exactly what you're getting into. Yep. And, I mean, it was incredibly accurate. Like when he posted the original situational awareness essay, it was something that was consensus in San Francisco and contrarian everywhere else. And so what I loved about this was that there were so many people that were seeing what was going on in San Francisco in AI and they wound up starting seed funds. And he was like, no, the real alpha is in the public markets in these like long tail - Billions of dollars of market cap. Exactly. That's going to fluctuate based on AI adoption. Exactly, exactly. So his portfolio is very interesting.

51:46It's all deeper in the supply chain. Notably, Nvidia is missing. Maybe that was too consensus, but he's been long a bunch of things. Now, there was a little bit of confusion because in the 13F, which was released - I mean, Nvidia's only up 32 % year to date, John. It's barely in the conversation. trying to put up 47 % on a billion plus. You got to, yeah, it would have been a laggard in the fund. Wow. It's crazy. But yeah, so the 13F came out, which is the fund filing showing the position of the hedge fund, showing what they're in. There was a little bit of confusion because Intel was ranked at the top, but that was because it was a call.

52:25And when you buy a call, the total value of the stock that you have the right to purchase is listed. And so if you have the right to purchase a billion dollars in Intel stock, that will be listed as a billion dollars. But in fact, you will not have actually invested a billion dollars in that call. And depending on where, how far out of the money that is, that can be very, very cheap. Yeah. And people were questioning, like, hey, did this fund already blow up? Because Intel has obviously had that. No, no. They might have had to write down those calls or get out of the position. There's a million things it could do.

52:59but there's a bunch of interesting things in here. And so front page of the Wall Street Journal for Leopold. You'll love to see it at age 23. He emerged last year as a precocious artificial intelligence influencer, which I think sells him way, way short. But he did publish a widely read manifesto and then he also did a Dwarkesh Patel episode, which I think a lot of people saw clips from. If you're an AI researcher now and you do a podcast and it goes a little viral, congrats, you're now an influencer. But the influence of that episode is crazy. So he did Dwarkeash. Most people do Dwarkeash for like an hour, two hours.

53:42His episode is over four hours long. It's so, so long. The PDF is 170 pages. It's a multi-part essay series. It's a fantastic episode. It's a fantastic PDF. It's a billion-dollar PDF, as they say. The PDF that spawned a billion dollars in capital. The 23-year-old with no professional investing experience quickly raised more money for a hedge fund than most pedigreed portfolio managers when they strike out on their own. As valuations of NVIDIA, OpenAI, and other artificial intelligence companies continue to soar, so do investments in hedge funds hoping to ride the AI wave. Austin Brenner's San Francisco-based firm, Situational Awareness, now manages more than$1.5 billion, people familiar with the matter, said.

54:25He has described the firm as a brain trust on AI. And he certainly seems to be in the thick of it, cozying up to Dworkesh Patel. He's got Patrick Collison. He's got Nat Friedman in. He's got a really stacked roster of people that know what's going on at the cutting edge of AI, where the plateaus will be, where the investments will be made, the distribution of where different data center investments will be made, where the different bottlenecks will be. That's really, really key to the strategy. Yeah, it shouldn't be a surprise that he was able to accumulate this much capital so quickly because, you know, again, if you're Daniel Gross or Nat Friedman and you want to allocate to a manager that deeply understands AI.

55:08You're probably better off finding an incredibly intelligent 23 year old that was at a lab that can then deploy capital for you against all these different trends. It's basically like 1.5 billion. What is that? Like one researcher's lifetime earnings? So he just needs one? Just one. Just one. Graham Duncan is a core LP in the fund as well. He still got it, baby. Graham Duncan. Of course he does. Absolute picker. I love it. Cover of Colossus. Cover of Colossus. His strategy involves betting on global stocks. Let's see. Let's give it up for global stocks. That stand to benefit from the development of AI technology, such as semiconductor infrastructure and power companies, along with investments in a few startups, including Anthropic.

55:57Oh, he's in Anthropic. There we go. He told investors he plans to offset those with smaller short bets on industries that could get left behind. Situational awareness gained 47 % after fees in the first half of the year, some of the people said. In the same period, the S &P 500 gave in about 6%, including dividends, while an index of hedge funds compiled by research firm Pivotal Path rose about 7%. And so he is crushing the competition. We'll get into some of the pushback here, but I am very excited for this. Aschenbrenner, a native of Germany, briefly worked as a researcher at OpenAI before being pushed out.

56:33It was very interesting. He called OpenAI's security measures egregiously insufficient. And then he shared a document with external researchers about how OpenAI was doing security. And that violated company policy. So he was pushed out. Good way to get pushed out. I don't know how big of a deal that really is. I don't know. You should be able to talk to other people. Obviously, you shouldn't violate company policy. kind of weird to like talk trash about your own company's security things and then also we're in this weird phase where like okay like you got a habeas corpus when you talk about the security stuff because like if you were saying if you were running around the building being like we're all gonna get turned into paperclips we're all gonna get turned into paperclips and then it's three years later and like nothing's happened it's kind of like come on man like what were you doing but if he was sounding the alarm about geopolitics which is something he did in situational awareness or AI psychosis.

57:32There are a lot of things that are good to research in safety. And so his overall take was, I think he benchmarked the entire industry and found that less than 1 % of AI headcount was going towards safety and the alignment problem. And so he identified that as a problem to kind of go after. But now he's more focused on the public market. So Aschenbrenner, native of Germany, worked at OpenAI. He named situational awareness after his 165-page essay he wrote about the promise and risks of artificial superintelligence. He recruited Carl Schulman, another AI intellectual who used to work at Peter Thiel's macro hedge fund as director of research.

58:11Great pickup. The firm's backers include Patrick and John Collison, the billionaire brothers who founded payments company Stripe, as well as Daniel Gross and Nat Friedman, whom Mark Zuckerberg recently recruited to help run Meta Platform's AI efforts. Graham Duncan, a well-known investor who organizes the Soane Conference, is an advisor. It's really a who's who. It is. Quote, we're going to have way more situational awareness than any of the people who manage money in New York. Wait for this line. He says, we're definitely going to do great on investing. I love it. Confidence, baby. And another sign of the demand for Auschenbrennish services, many investors agreed to lock up their money with him for years.

58:53Other recent launches include an AI-focused hedge fund from Value Aligned Research Advisors, a Princeton, New Jersey-based investment firm founded by former quants Ben Hoskin and David Field. Ever really a former quant? Once a quant, always a quant? That fund has a billion, and VAR also manages about two billion in other AI-focused investment strategies. VAR's investors have included the philanthropic foundation of co-founder of Facebook, Dustin Moskovitz, according to regulatory findings. Veteran hedge fund firms are entering the fray too. Last year, Steve Cohen tapped one of his portfolio managers at 0.72 Asset Management, Eric Sanchez, to start an AI-focused hedge fund that Cohen planned to stake with$150 million of his own money.

59:41Assets of the fund called Tourion, after AI theorist Alan Turing, who's on the Mattis list, baby. We'll see if he can hold on. in the next revision, which is coming soon. Turion is up about 11 % this year and gained 7 % last month. So a little bit of a slower start for Turion compared to a situational awareness that seems to be absolutely swinging for the fences. It is no surprise that thematic funds are springing up to capitalize on the AI frenzy. In years past, hedge funds specialized in the transition to clean energy and investing with an environmental, social, and corporate governance lens proliferated in response to client demand.

1:00:26Identifying a winning theme isn't the same as trading it well. Investors' tastes can be fickle. Many prominent ESG hedge funds have either shrunk or gone out of business. But was it, I don't know, it's hard to say that smart money was saying that ESG was going to be such a winning theme. Yeah, it was odd because it wasn't some underlying technological shift. It was more just like - It was values-based investing. It was values-based investing, but it was also like predicated on more demand because everyone there, it was like a game of musical chairs a little bit. It was like, well, I think that Harvard is going to want an ESG strategy, so I'm going to build one.

1:01:03And Harvard says, well, I'm going to want one because CalPERS is going to want one. And there was a time that I think consumers specifically were demanding sustainability from brands. And it was really like a feature to a product. but I think that has changed to some degree. For sure. The market swoon that followed the January release of an advanced low-cost language model from Chinese company DeepSeek showed the fragility of the valuations of AI winners, though the market has roared back since. I don't really think - Going long, Jevons Paradox. Come on. Come on. Come on. AI-focused investors argue the long-term trend of development and adoption are inevitable, even if there are bumps along the way.

1:01:41With so many publicly traded companies that operate in the AI-adjacent economy today, stock picking funds often pile into the same positions as one another and more generalist hedge funds. Vistra, a power producer that supplies the juice to AI data centers, was a top three U.S. position of both situational awareness and VAR investors as of March 31st, according to each of their most recent securities filings. Other hedge fund managers are debuting funds to make investments in privately held AI companies and startups. Gavin Baker's Atreides management teams. Oh, come on. That's also in the top 10 best names ever.

1:02:17Atreides. Atreides is fantastic. It's from Dune. Paul Atreides. Atreides Management teamed up with Valor Equity Partners to launch a venture capital fund earlier this year that has raised millions from investors. Millions is such a funny way to describe a fund. I'm sorry. I would hope it's in the millions. Otherwise, what are you doing? Dozens of dollars. From Oman's Sovereign Wealth Fund, each firm separately invested in XAI. At least one portfolio manager is planning an AI hedge fund as a comeback vehicle. Sean Ma wound down his Hong Kong-based firm, Snow Lake Capital. Sounds cool. I mean, any time you add smash capital to the end of a word or a couple words, it always elevates everything involved.

1:03:04Yes. After it agreed to pay out$2.8 million to settle Securities and Exchange Commission charges last year that the firm participated in stock offerings of companies that it had also bet against. Ma took over an investment firm called M37 Management in Menlo Park earlier this year. He's currently fundraising for hedge fund focused on AI software and hardware. So a lot of action. Did you know that Meta is calling their AI lab TBD lab or something like this? Do you see this? Since when? I don't know. I thought it was MSL, but the journal saying Meta's TBD lab tackles new version of Lama. I think this is some sort of like sub lab focused on open source or Lama specifically.

1:03:48At the forefront of the push to build a computer mind smarter than any humans is a team dubbed TBD lab, which houses many of the researchers the company has lured from rival labs, in some cases with pay packages of tens or hundreds of millions of dollars. TB Lab, as in to be determined, is spearheading work on the newest version of LLAMA, the company's large language model, according to people familiar with the matter. I don't know. Just interesting. That feels like some weird leak that the journal is maybe misinterpreting. Anyway, back to Leopold. Interesting strategy. I think a lot of people are kind of, so Young Macro has an interesting take here.

1:04:26Leopold Aschenbrenner's fund has outperformed basically every mainstream hedge fund year to date, and he's running a billion dollars of capital. The Gulf billionaires and pension funds are watching this. Capital management will soon become an activity exclusively done by chronically online Zoomers. And there's certainly a lot of value in having these locked in, locked in Zoomers. Yeah. Let's give it up for Profound. Get your brand mentioned on ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. You can get a demo. So funny. I'm looking at the comments on WSJ.com.

1:05:07Giving a 23-year-old$1.5 billion to invest is pretty solid proof of a market top. How old was Ken Griffin when he started Citadel again? Wasn't he like 18? Oh, yeah. He was at Harvard. He was an undergrad. He hadn't even graduated yet. That's right. Interesting. Just say you've never studied the greats. Just say you've never studied the greats. Yeah. I mean, like, I don't know. Of course, there is a risk that there's some bubble and the risk management doesn't work. Of course, we're in a bubble. That doesn't mean you shouldn't try to make money on it. Exactly. But there is a risk that you get caught over your skis at the wrong moment.

1:05:43There's a pullback and the fund draws down really crazy. But again, Citadel drew down like 70 % in the housing crisis. All the greats have suffered a massive drawdown. It happens. Look at Bezos. I feel like Leopold, this is what he's meant to do. And I'm rooting for him. I'm excited for it. I think it's very, very cool. Anyway, this will be, this will be, will this be good news for Leopold? He's not in NVIDIA. You know, in some ways you could say he is net short NVIDIA because he is long everything but NVIDIA at this point. Is this good news? Is he cheering? Is he sad? the news is that, breaking from the Financial Times, NVIDIA has agreed to share 15 % of revenues from H20 chip sales in China with Uncle Sam.

1:06:33According to export control experts, no US company has ever agreed to pay a portion of their revenues to obtain export licenses. We were talking about this this morning at the gym. Uncle Sam eats first. And I was like, certainly this has to happen all the time. I chat GPT it and it's like, actually it's unconstitutional you can't do this at all and so i'm sure uh some uh so some folks worried about trump's overreach and abuse of the of the federal system will be up in arms over this so we're gonna have peter harrell on the show uh in 20 minutes and we're gonna talk to erin from january 2021 to 2022 harrell served at the u.s white house as a senior director for International Economics jointly appointed to the National Security Council and the National Economic Council.

1:07:22He co-led President Biden's EO 14017 supply chain resilience agenda, worked on the global digital 5G and telecommunications strategy, spearheaded negotiations with the EU on data privacy, and served as a White House representative on a number of related matters. So excited to get his takes. He shared a bunch on LinkedIn in yesterday evening or this morning. So we'll kind of wait to get into that. The wording in this journal article is so wild because it's not saying like the IRS or something. It's saying the Trump administration will receive 15 % of the sales as part of a deal to approve exports of Nvidia's H20 chip.

1:08:06So it's like, where exactly is the money going? Like, I guess it goes into the treasury, the commerce department, but it's just funny to phrase it as like, Trump gets to control where it goes. But hopefully it goes towards paying down the debt. Like, I guess that's the... Bone GPT says 15%. That's all. Off the top. You don't got to worry about nothing else. No problems. No supply chain disruptions. So, anyways. Exports of the H20 and MI308 were halted in April. So this actually applies to AMD as well, which also has a similar like nerfed GPU for China. And Trump had a quote on the Blackwell. Yeah, they halted the trade of these H20s.

1:08:54Jensen Wang has gone on a charm offensive since then, says the Wall Street Journal, talking to officials in both countries about the need to do business with each other. We follow rules the US government sets for our participation in worldwide markets, NVIDIA said in a statement on Sunday. while we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. This is an interesting one. I mean, there are good arguments on both sides. You know, if you're super, super intelligence-pilled, if you're AGI-pilled, you probably don't want that in the hands of a rival country.

1:09:27But if this is more like Microsoft Excel, why not go sell some seats over there? Why not go sell some licenses? I mean, we sell airplanes over there. We sell 747s. We don't sell F-35s. Yeah, but is this an F-35 or is it? That's a big question. Or is it souped up Excel, you know? And that's the debate. And I think a lot of people are shifting over into the camp of like, this is knowledge retrieval. This is like pretty generic hardware. This is not as critical of infrastructure. Trump saw the GPT-5 launch and said, okay, we'll give him some chips. I mean, why were we saying that he didn't care about the deficit?

1:10:06because he was super AGI pilled. Why is he now focused on the deficit and not worried about competition with China? Because he's less AGI pilled now. So he says, you know what? Like, I don't think God in a box is coming down the pipe anytime soon. And so let them have them, whatever. It's fine. Trump on Monday left open the possibility that NVIDIA could export its Blackwell chips for a higher price.

1:10:34the trump administration had closed the door on the export of that technology to china even after reversing course on the age 20 uh on monday trump said that he'd consider allowing it the blackwell is super duper advanced i wouldn't make a deal with that although it's possible trump said i'd make a deal some somewhat enhanced in a negative way blackwell in other words take 30 to 50 off of it but that's the latest and greatest in the world nobody has it they won't have it for five years. Okay. Wild card. NVIDIA's got to track this. He said, no, I got it again. Trump said Jensen will return to the White House in the future to discuss selling an unenhanced version of Blackwell.

1:11:12I think he's coming to see me again about that, but that will be an unenhanced version of the big one. You know, we will sometimes sell fighter jets to a country and we'll give them 20 % less than we have. Okay. See, see, see, we do sell fighter Yes, to come to countries. Let's go. Raghav says it should go into the Sovereign Wealth Fund, which he can eventually help pay down the debt. Yeah, that makes sense. A lot of people have been Venmo-ing the government.

1:11:39So NVIDIA is going to need to track this. It's very similar to sales tax. They need to get on Numeral, sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Maybe this is a line expansion for Numeral. Track your export bill. That's right. In other CHIP news, Tom Cotton is diving back into the Liputon news at Intel, the CEO. Of course, Liputon had to visit the White House and has been singled out by Trump as unacceptable. And Trump called for his resignation. We kind of debated that on the Friday show. But Tom Cotton, the Republican senator, he said, He said, the new CEO of Intel reportedly has deep ties to the Chinese communists.

1:12:24U.S. companies who receive government grants should be responsible stewards of taxpayer dollars and adhere to strict security regulations. The Board of Intel owes Congress an explanation. And so Liputon is set to visit the White House today. He probably is there currently or was there earlier today after President Trump called for his removal last week over ties to Chinese businesses. This is, Lip Bouton is not, he was born in Singapore, and he's an American citizen, but he had a venture fund that did a bunch of deals in China. And so that's kind of, I think, the main focus. And when you look at the web of like all the deals that he's done and all the company, it's like a lot of companies.

1:13:02And so it looks like this crazy spider web. It looks very like red stringy. So Ton is expected to have a wide range. Yeah, we gotta get the whiteboard out, break it down. Get Lip Bouton on the show. Get to the Ultramo. Could you whiteboard out Lippo Ton's portfolio? You're going to have to look it up. There is a crazy chart over here somewhere. But Ton hopes to win Trump's approval by showing his commitment to the country and pledging the importance of keeping Intel's manufacturing capabilities as a national security issue. Trump has aggressively pushed U.S. companies to make changes ranging from eating the cost of tariffs to doing business with more conservatives and other political allies.

1:13:46So Trump said the CEO of Intel is highly conflicted and must resign immediately. There's no other solution to this problem. The odd thing is that it's like, okay, so Intel with their really lagging semiconductor technology is now critical to America, but NVIDIA H20s aren't, and we can let those go to China. So there does seem to be some incongruence here, right? Have you sorted that out at all? I mean, in the conversations we had last week, it feels like Intel is still incredibly strategic and important. And we need to take it very, very seriously. We need to make sure that they can like the United States.

1:14:27It's the foundry business in particular. If you didn't hear our interview with Fabricated Knowledge, Doug over at Semi Analysis on Friday, go listen to it. But, yeah, I think universally people agree that Intel is important. It's in a bad situation. So the question then becomes, is Lip Bhutan the right guy to steward it? And ultimately, it's the Intel board that should be determining that, right? Doug did say he had issues with the board, wasn't exactly excited about their leadership over the last decade and a half. But again, this kind of thing typically feels like it should be. It just feels like if you were trying to keep semiconductors out of the hands of China, you would be anti-H20 sales and anti-Lipouton at Intel potentially.

1:15:19And if you had a more laissez-faire attitude, you would say, yeah, Lipouton's fine and H20 sales are fine. But it's weird to be like H20 sales are fine, but Lipouton is not fine. That's where there's like some incongruity. But I think this will all be resolved. It's probably just one of these Trump like gambits where art of the deal He's gonna ask for Intel the you know donate to some sort of thing or you know pay something They should donate to themselves Donate to the shareholders with a buyback maybe I don't know figure it out donate the Donate the fab business to TSMC or something like that.

1:15:59No, I think that's the whole point. It's like TSMC can be producing chips in the United States, but we still shouldn't let a company like Intel just fail at a point where it should be on the path to thriving. Mike Moritz was in the journal over the weekend. He wasn't in the journal. He was in the Pink Sheets, in the Financial Times opinion section. Intel must not bow to Trump's attack on its CEO. The latest character that US President Donald Trump has attempted to assassinate is Liputon, recently appointed chief executive of Intel, firing from his perch on True Social, the president wrote. The CEO of Intel is highly conflicted and must resign immediately.

1:16:41For context here, Mike Moritz is Sequoia, not founder, but longtime GP. The Financial Times describes him as a Silicon Valley investor. It doesn't quite do the job, but... It's technically true. But Sequoia, I believe, invested in Intel and has a long relationship with the company. And Mike Moritz is, I believe, anti-Trump, but then there were a few other folks at Sequoia who were pro-Trump in this last cycle, so there's a little bit of a divide there. But I think Mike Moritz is out of Sequoia at this point, or has maybe moved on to a different piece of the organization. It's all very complicated.

1:17:20I can't keep it perfectly in order. But it says, while presidents have sometimes expressed their outrage about the behavior of the corporate sector, Trump's assault has no modern precedent. The source of the president's ire and that of Tom Cotton, Republican chair of the Senate Intelligence Committee, is Tan's business dealings with China as both venture capitalist and in his prior role as chief executive of California-based Cadence Design Systems, a maker of electronic design systems. The president and senator pointed to a$140 million payment agreed by Cadence last month as part of a plea deal to settle claims of illegal exports to China between 2015 and 2021.

1:18:02They have also lambasted TAN's venture investments in a number of Chinese semiconductor companies. In addition, they are seeking to question whether with TAN at the helm, Intel is jeopardizing the$8 billion grant. It was given under the Chips and Science Act that was passed by the Biden administration. The attack on Tan comes at a time when the president's policy towards China and the Chinese tech sector seems to change by the hour. Of course, it's much easier to smear a man with accusations than examine his record and character. Tan, 65, is a longtime American citizen and much admired figure in Silicon Valley who is known for operating with a soft-spoken authoritative dignity.

1:18:42I've known him as an acquaintance for almost 40 years. The whiteboard is going up. Oh, there we go. Oh, he's connected to SMIC too? Yeah, yeah. So his firm was called Walden International. That's right. And they were early in SMIC seed investor. No way. I'm looking for more. SMIC, for reference, is the... Are they the NVIDIA of China? Or are they the... I think they're the TSMC of China. And then SME is the ASML of China. Yeah. And then Huawei. Semiconductor Manufacturing International Corporation. So they actually do the fab. They are a fab. And it is partially state-owned. Yes. Like many companies.

1:19:22Interesting. And then, I don't know if it's AMEC or AMEC. That's like a tool, a chain tool company for semiconductors. So more of an ASML type competitor. Yeah. That can make the lithography machines that then are used in the fab to make the chips that are designed by Huawei. or any other client. Interesting. I didn't realize that Mike Moritz and LipBouton go back 40 years. Wow, they met when Ton was 25 years old. What a legend. Did you know Intel's first external investor was the meme account Arthur Rock? Oh yes, it was Arthur Rock. That's right. Of course, not the current account Arthur Rock, but the original Arthur Rock, the legendary Arthur Rock yeah who his firm was Arthur just Arthur Rock and Co yes and you know what the rock stands for right Rockefeller really it's Rockefeller money Wow yeah I did not know that yeah the Rockefeller money got passed down this goes way deeper this goes deeper than we thought the Rockefellers are involved born in and educated in Singapore.

1:20:40Tan studied at MIT, where he was awarded a master's degree in nuclear engineering. After moving to San Francisco, he joined the Walden Group, one of California's early venture firms. Instead of plowing the Silicon Valley furrow, he elected to head to Taiwan. Later, he made investments in China, the majority in companies with deep technology roots. His deep understanding of both Taiwan and China is an asset many US chief executives would like to possess. When he later became CEO of Cadence, which had fallen on hard times. The Wise Acres assumed he would fail given his lack of operating experience.

1:21:13Instead, he transformed the business. In his 12 years at the helm of the company's revenue, tripled to almost$3 billion, and the stock price appreciated by over 3 ,200%. Today, Cadence is worth close to$100 billion. Wow. That is a phenomenal performance. earlier again he uh lip hutan made a seed investment in smic in 2001 well exited it fully in 2021 yeah and i mean you think about like the the the vibe around doing business in china in 2001 was like absolutely absolutely these are these are our boys we make shoes and nike's there we make iphones there like it was like completely reasonable there was no great power competition discussion whatsoever.

1:21:59All that has cropped up in the last decade. And so earlier this year, Liputan became the chief executive of Intel, a job which in Mike Morris's book amounts to public service. It is no secret that over the past 20 years, Intel has seeded its mantle as the world's most important semiconductor company to companies like NVIDIA, Broadcom, TSMC, and Samsung. Six different leaders have failed to return Intel to the glory days that it enjoyed under the late Andy Grove. It failed to capitalize on the rise of the mobile phone industry and was outgunned by Nvidia as the supplier of silicon engines for the AI revolution.

1:22:34Its manufacturing prowess, a rarity among US chip companies, has been consigned to the shade by TSMC. Oh, Mike Moritz, what a great writer. Today, Intel is an also-ran lacking much in the way of financial firepower. The last thing Tan needs is to be distracted by a vindictive political sideshow. Now, the Intel board must decide whether to march to the beat of so many other corporate leaders and capitulate to the president's artless bullying or to set an example for other companies and display some backbone. Early signs of defiance are encouraging. Let's hope that Intel's overseers abide by the refrain that old Tammy Wynette song and continue to stand by their man.

1:23:17What a hilarious reference. Do you know that song, Stand By My Man by Tammy Wynette? I do not. Famously quoted by Hillary Clinton during the Monica Lewinsky scandal, where she said that she was not going to leave Bill Clinton over the scandal, but she was also not doing what Tammy Wynette said. She was not merely standing by her man, but she wound up, she did stand by her man in some ways. And they did not get a divorce. But fascinating quote, fascinating article. I think he can probably riz this up. I think Tan can go to the White House, do some deal, art of the deal both ways, figure out some way, one hand washes the other, and be fine.

1:23:59Quick advice for Tan? Yeah. Obviously get a cool leather jacket. Cool leather jacket. Follow the playbook. Dust off those golf clubs for sure. Bring a Big Mac. For sure pick up some McDonald's on the way. Smart. And throw in a Vacheron Historique. maybe bring a bar of gold or or a lot even even potentially numerous bars yeah definitely definitely bring the biggest chip that intel has ever produced maybe just a whole wafer because he's probably seen blackwell you've seen about blackwell's pretty big right you got to bring something even bigger and just be like we're making the biggest and best chips in america we're american made i'm america all the way we're gonna build a fab at mar-a-lago we're gonna build in Key West.

1:24:45And I think he gets it done. Anyway, should we move on to linear linear is a purpose built tool for planning and building products meet the system for modern software development, streamline issues, projects and product roadmaps go to when we get on the show, we will be giving him a live demo of linear, we should we should linear will be the key getting Intel back on track. Let's make it happen. Okay, Tyler Cowen. He's loving GPT five. And he has a post he says, He says, somewhat unrelated, but somewhat related, of course, on the topic of AI. He says, the quote, AI is causing a slowdown for new hires hypothesis has pretty much been abandoned.

1:25:22The trend seems to predate GPT-4, and the trend seems to apply to tech jobs that have no serious AI competition. Interesting. I was digging into the hiring numbers across the world, because if AI is causing a slowdown in new grad hires, I would have to assume that it's also causing a slowdown in India because there's so much business process, BPO, business process outsourcing, and outsourced IT work, outsourced software development work that happens in India. And I dug up the unemployment data in India, split it out by rural and urban, And it doesn't seem like there's a huge spike. Maybe that's coming, but we're certainly not there yet.

1:26:13I think Tyler's post was in response. There was a New York Times article yesterday said, goodbye,$165 ,000 tech jobs. Student coders seek work at Chipotle. As companies like Amazon and Microsoft lay off workers and embrace AI coding tools, computer science graduates say they're struggling to land tech jobs. And there's a story of Manasi Mishra. remembers seeing tech executives on social media urging students to study computer programming. The rhetoric was, if you just learn to code, work hard, and get a computer science degree, you can get six figures for your starting salary. She's now 21, recalls hearing as she grew up in San Ramon, California.

1:26:51Those golden industry promises help spur Ms. Mishra to code her first website in elementary school, take advanced computing in high school and major in computer science in college. But after a year of hunting for tech jobs and internships, Miss Mishra graduated from Purdue University in May without an offer I just graduated the computer science degree and the only company that has called me for an interview is Chipotle I guess my first question is was this for coding coding creating software for Chipotle because having a burrito tracker on our with the Domino's pizza tracker we're doing pretty cool very Very good.

1:27:28And again, I think one thing that could happen is hiring managers and executives telling themselves we should be able to do more with AI. We don't need to hire for these people, even if AI is not at the point where it truly replaces a person. It's just sort of forcing people into this mindset of like, do we actually need to hire this person? And again, we'd call that before. Microsoft has laid off more people this year than they have in the past few years combined. and so again I think but at the same time I don't know how big the hiring glut was from Zerp and COVID like that could still be working its way through because companies really really staffed up and they staffed up remotely and they staffed up young people yeah we've heard a bunch of stories this year of companies that had people had eight different jobs remote engineers that they were kind of like you can move back to the office yeah you can move on at the same time Mr.

1:28:21Gav Mehta in the chat says, it's really bad in India. I have it on very good authority. I believe you. It's just not showing up on the data yet. I'm interested to track it more deeply and actually understand what's going on at some of the big IT outsourcing firms in India. Are they actually scaling down? Do we have hard data on it? And then, yeah, what is driving it? Is it actually AI or is it something else that's going on? Yeah, at the same time, Salesforce is saying AI is now doing everything at Salesforce, and yet headcount is... We heard the same thing from Klarna, and it was unclear if that was just like a right sizing of the business for where they were in terms of scale.

1:29:05But I don't know. It's interesting. AI is everywhere. It's at the same time, there's like a lot of these tools are just like extra levers, and the dynamic is that, like, yes, it helps you write more code, but there was always way more code to write than your business was able to write. And so you're really just unlocking new capability and just moving faster. Well, if you need an AI native CRM, get on Adio, customer relationship magic. Adio is the AI native CRM that builds scales and grows your company to the next level. You can start for free. Well, on that note, I think we have Peter in the Restream waiting room.

1:29:43Let's... Here we go. Welcome to the stream, Peter. How are you doing? You look fantastic. I was told I should wear something, you know, not just a black suit for you guys. So there we go. You look fantastic. Looking good. How are you doing? I'm great. I mean, you know, the East Coast, it's been a little cooler than it was a couple of weeks ago. The 90s are coming back, but not yet. So no complaints. And, you know, I am for better, actually really for worse, not an NVIDIA shareholder. So I don't have to directly deal with their 15 percent paid to the government. Did the stock pop today? What actually happened with it?

1:30:18It's it's a normal day. It's up like one percent. OK, so nothing crazy. Not a huge move. Before we dive into all the news, would love would love to just, you know, give us the highlights from the bio. You've done you've done quite a lot, but I think it'd be helpful context before we get into a discussion. You know, look, it's it's great for to be with you guys. Thanks for having me on. I currently am a non-resident fellow at the Carnegie Endowment for International Peace, which is a think tank in D.C. I also am an attorney and have a trade law practice sort of focused on trade and sanctions and export controls kinds of issues.

1:30:58I was in the Biden administration at the White House where I dealt with the global economics file, including a bunch of the export control issues and been in private practice prior to that was the state department for a while and when i was much younger i was a reporter covering campaigns and elections like many many years ago that's super cool that's kind of been around well breakdown so so so before we get into the nvidia amd stuff and the news from yesterday take us through kind of your experience of this year so far because there's been a lot of different stories go back further chris miller writes chip war everyone wakes up is that what happened like Like when did DC wake up to maybe we need to think more critically about the flow of semiconductors and AI technology back and forth between the US and China?

1:31:47You know, that's a great question. I give Chris a lot of credit. I also give a couple of guys who were at Georgetown University, which has a center for science and emerging technology. And a couple of those guys, like in 2018, 2019, started really tracking what kinds of high-end chips were the Chinese buying and like what was going on. You know, they'd hired some Chinese language researchers and were really looking at what the Chinese were doing. And so you had these kind of scholarly researchers looking at this and saying, hey, there might be a problem here. Then you had Chris popularize it with chip war.

1:32:25and you also had back in 21, you know, that was also the time, not on the leading edge stuff, but on the mature node stuff, semiconductors, when we had that semiconductor supply chain crunch. So semiconductors were very much in the news and kind of policymakers were focused on it. This was kind of that confluence. We couldn't make cars, right? During COVID, we couldn't make cars. And we couldn't make internet connected washing machines. It was really bad for the IoT microwaves. That was particularly rough. Well, there were like three months where, you know, I was working at the White House and, you know, Ford would call me up or GM and be like, we can't get semiconductors.

1:33:03And then it would be my job to like phone, you know, governments in Malaysia and Thailand and being like, could you, you know, get some of these shipped to your American customers, please, you know, before the Germans and the French. What was what was actually driving that? Was that like was that like like you needed because, I mean, fabs are clean rooms. Like I imagine that you could still go into the semiconductor facility during COVID because you're not going to spread it because you're not spreading anything. You're not spreading dirt. It's a clean room. But there was like this immense amount of pull forward during COVID, stimulus checks, people buying more cars than they thought they were expected.

1:33:39But then also there were shipping delays and all sorts of backups at the port. Like, how do you think about what was actually the root cause of the initial semiconductor crunch in what was this 2000, 2001 or 2020 and 2021? 2021, early 2020. Yeah, it was actually, I think, the combination you just highlighted. So you had demand going through the roof, right? Because there was this huge pull forward for everything from, you know, laptops to, you know, everyone's home. So they're buying home appliances. There's huge pull forward in demand. And you didn't actually see a fall in production of the mature node chips in 21.

1:34:21But because of just like bad luck, there were problems in Texas or problems in Japan. Like confluence of bad luck took a little bit of capacity offline. And the capacity coming offline, which would have been manageable kind of in an ordinary market condition combined with this massive pull forward just meant a mad scramble. And then you get into the, you know, psychology of shortages where everybody starts hoarding, right? Because people are sort of like, well, if I'm not gonna be able to get them, I better hoard. So it's sort of like the semiconductor version of the toilet paper shortage. You know, we'd had a few months prior where it's like, you know, everyone's hoarding everything.

1:35:02Please, please. Gotta start G-Wagons and Ford Raptors. Anything with a semiconductor in it, give it to me. I need it. People were certainly doing that for PS5s too. I mean, I remember even video games, like all different sectors people were pulling. And they were paying like, what,$50 ,000 over sticker for like a new Hummer EV and stuff. Like it was getting crazy out there. Wild times. So yeah, please continue. Yeah, so that was where we were on the shortage. But looking back, I mean, so if I that that got us the shortage, Chris Miller's books and scholarly research and just kind of heating up competition with China, you know, and sort of late 21 into 22 got the then Biden administration, but also folks on Congress.

1:35:51It wasn't just sort of a Democrat Biden thing. Folks in Congress focused on the strategic competition part of this and what is China? Where are they going with AI? What are the choke points we might have to slow their development of AI? And that really gave rise in October 2022 to the first big U.S. semiconductor export controls, where the Commerce Department essentially cut off most of the highest end semiconductor sales to China, as well as various manufacturing equipment and inputs to try to limit China's ability to develop indigenous production capabilities. And then that initial export control regime from October 22 got expanded a couple of times.

1:36:43Most recently in April of this year when the Trump administration paused sales of the H20 chips, of the NVIDIA H20 chips to China. What was driving the initial chip bans? Was it more, we have identified that large language models, these huge training runs are important. And once you marshal the big data center, the 100 gigawatt data center, you're good and you have a cutting edge model. Or is it more like, look, if we send a certain amount of equipment, it will be reverse engineered and copied. And then they will be able to catch up on the actual supply chain side. And we'll see not just competition from purchasing from NVIDIA, TSMC and ASML, but we'll actually see Huawei, SMIC and SME act as a alternative supply chain that will be an entirely internal economy that will keep them on the frontier potentially forever.

1:37:45Yeah, so it was in the first instance, an effort to limit compute to China. So there was really a pretty systematic, okay, if we're in this era of strategic competition with China, and if we think AI is going to be an absolutely transformative technology, you know, something with just a whole range of national security, economic impacts, you know, day to day life impacts. how do we slow down China's development? And you start thinking about, well, you know, they got a bunch of good engineering talent over there. It's not like you can prevent them from having talented engineers, right? That's just sort of life.

1:38:24You know, the model side of this, controlling the models is very, very hard because, you know, it's software, it's code. A lot of, some of the models are open source, just very hard to control. But what you could do mechanically is control their access, China's access to compute because their chips just are, you know, three to five years behind ours. And so if you choke off the chips, you slow them down by limiting their compute, their access to compute for training. So it's just kind of how do you trip them? This is the choke point. Let's squeeze on the choke point. And then, you know, they iterate.

1:39:04Right. They start developing lower compute models. Like you see this kind of back and forth, but that's what happens with export controls generally. Like, you know, your adversary is going to adapt. You're going to have to adapt. And that's kind of what we've seen play out. And how much were you tracking the GPU black market? You know, once you had export controls, there's certain countries start popping up saying, well, we'd actually like$5 billion of whatever GPUs you got. and don't worry about what we're going to use them for. We'll figure it out, but not your problem. Yeah, so that's a known problem you're going to get into, right?

1:39:43And you've seen that in other instances of export controls and sanctions. And so, you know, Commerce Department does have a unit that, you know, is supposed to be looking at the trade flows. Where is that? Where is that happening? Where are you seeing that? But, you know, it is a bit of a game of whack-a-ball. It's clear there has been a certain amount of diversion of prohibited chips going to China. I also think, you know, just if you look at kind of what NVIDIA talks about, the sales potential, clearly the export controls have reduced China's ability to get to the chips so that they haven't taken it to zero.

1:40:24How do you think about the evolution of the US government's thinking on how critical or like the role AI plays in near-peer competition? Because there's kind of two frames of mind that I see in Silicon Valley. One is AI is super intelligent god. It's nuclear weapons. It's one button you push and the AI goes off and just wins the battle for you. So it's critical to have it, and it's critical to keep it out of the hands of your opponent. The other is that AI is more like Microsoft Excel, and it's certainly useful in the military context. You want to know how many— Or it's like electricity. Yeah, yeah.

1:41:06You want to know how many shells you have in inventory. You want to know how many soldiers are in this particular part of the battlefield, and you want to be able to track things. But it might be advantageous to keep a technology like Microsoft Excel out of your opponent's hands, but it by itself will not win a battle decisively. And it feels like long ago, pre-ChatGPT, pre-AI boom, people were definitely seeing artificial intelligence as, well, yeah, we use it to serve ads. And it helps with spellcheck. And it's in TikTok. And it recommends what video you watch next. And then it became, OK, it's super intelligent God and it's nuclear weapons.

1:41:49But now we're kind of maybe in an era where we're moving back to it's more of an incremental technology. But I'm wondering how that thinking evolved in D.C. So so I think the evolution in that debate is an important part of understanding why the Biden administration took a pretty tough line on export controls, because I would say many of the relevant policymakers in the Biden administration were actually quite bullish on AI, you know, did buy into the thesis that, you know, I'm not, you know, whether it's 2027 or 2029 or 2030, you know, we could debate the years. But they bought into the thesis that in a fairly near period of time, you were going to see AGI kind of reach that, you know, escape velocity, where it's iterating on itself.

1:42:44Sorry, where you're going to see AI reaching that escape velocity where it's iterating on itself, reaching AGI, you know, sometime in not too many years. And if you believe that, if you think in a couple of years, we're going to see that, you know, escape velocity to AGI, then you really want to slow the Chinese down as much as possible, right? Because you think this is going to be this enormously transformational technology and, you know, two years or even 18 months or maybe even 12 months of lead is worth an enormous amount from a policy level. So it was actually because of a very bullish view on the future of AI that you saw the Biden administration really take kind of a pretty tough stance on slowing down China.

1:43:27And so reading into that, does that mean that the admin might not, if they're willing to say, yeah, we'll export to H20, we don't believe in a fast takeoff scenario, this is electricity it's valuable but it's going to be vended in everywhere because if you'd still believe in a fast takeoff scenario you would say it's not worth the incremental sure nvidia you know shareholders are going to suffer a little bit if you can't export to china but it's not worth the the however many billions of incremental revenue that the government's going to generate on a 15 percent take rate? Yeah. So I think the Trump administration is probably doing a couple of things here.

1:44:13I mean, first, there are lots of different views in the Trump administration. That's no news to everybody. You see some folks who I think obviously would prefer the Trump administration take a harder line on export controls. You also see, you know, some folks who, you know, basically have a view of, well, we shouldn't sell China our most advanced chip. the H20s are now a couple of years old. This is not really most advanced. You might as well get the NVIDIA revenue and a U.S. government take here. So I think you have diverse views in the Trump administration. I think it's less guided by a, you know, sort of slower view of the uptake and more my view, the Trump administration is looking at this as like this is not state of the art.

1:44:57And then also Trump is a dealmaker. Like it's hard to see any other politician, Republican or Democrat coming up with this. But, you know, Trump himself, he's always talked about getting, you know, a cut of the deal. Like, so it's in a way, this is a, you know, sweet, generous, unique to Donald Trump concept that I'm going to let you do this. But by the way, we get 15%. Well, and he said this morning that he would potentially consider exporting black wells, but at a higher rate, which now that I mean, this is, you know, it's interesting, like the H20s, I do think are kind of debatable. I mean, I am in favor of controlling the H20s, but I see the arguments on both sides is a dated chip now.

1:45:40You know, I'm not dating, but you know, it's not a cutting edge chip. it is very hard for me to see how charging a percentage you know rev share addresses any national security concern right I mean like if you have some national security concern the rev share doesn't address it maybe you know forcing a downgrade of the chip or trying to limit who it gets sold to which is very hard like rev share definitely doesn't address whatever your national security concern is. Is there any possible steal, man, for that? You take the 15 % revenue share and you pour that into some sort of national security AI defense fund that protects you from the super intelligence.

1:46:25I don't know. It's very, very hard to actually actualize. So there's a lot to unpack. I buy the logic of like, I'm fine to export the H20 because Jensen's convinced me that it's okay. but I still want my cut is kind of, is how I read it. Like, that's kind of how I read it. Like Jensen convinced him, you know, it's an old enough chip. We have enough of a lead. Like you might as well export it. And then there's a guy who made his living in New York real estate. Like, you know, you want your commission, right? I mean, that's just, I think that's kind of what's going on. When you, when you saw this, maybe you had a feeling that this was coming down the pipeline, but did you had posted on LinkedIn?

1:47:06I think it was earlier today, trying to look for some type of precedent for USG rev share on and didn't sound like you found one. Yeah, I can't find any precedent for anything like this. You know, there have been some instances. For example, if you are some of our defense contractors, you know, the Boeings of the world, If they want to export fighter aircraft, they have to pay like a couple thousand dollar fee for the government to review the license. Like it's just clearly just sort of the fee to cover the staff time of like reviewing the license. But it is literally a couple thousand dollars.

1:47:45It's not, you know, rev share of a multi-billion dollar market here. There's no precedent for anything like this. And what are you hoping? I'm thinking about where it goes. It's like, are we going to be selling F-35s? I mean, this is like it opens up a whole kind of, you know, what are we going to sell next on a rev share model? That is kind of crazy. Let's get some submarines over there. Hey, we got capacity. Let's make a bunch of submarines. Yeah, and then the concern is you highlighted, you said the rev share creates perverse budgetary incentives for U.S. agencies to issue licenses that undermine national security because they want the cash.

1:48:26It also sets a precedent that the U.S. might try to generally tax exports, something the USG has long avoided for legal reasons and because we have historically wanted to promote exports. Yeah, so so I do think this this does create a perverse incentive. I mean, in theory, the reason you control these things is because you think there's a real national security risk. And to your point, I think in some sense, Jensen convinced Trump, like, there's not really a national security risk here. But think about this going forward. You've created this really perverse incentive where, you know, company wants to export something to China or maybe Russia, like, who knows who's next on this, that poses a national security risk.

1:49:13But hey, if you don't, you know, if you authorize the export, like, you know, you get 15 % and you can use that to pay for whatever domestic programs you want. I just think it creates a really weird incentive for a person at the Commerce Department whose job is to consider the national security impacts of this. Is there an optimistic scenario where American industry or Western industry is strengthened by this move? And I'm trying to walk through it. So we've talked to a couple of people who work in the solar industry. And they've said that China is incredibly dominant in solar. And they flood the market with very cheap solar panels.

1:49:56And that's effectively kept American solar panel producers out of the game. And so America doesn't really have a strong solar panel production industry. And so maybe the bull case here for American dominance in AI is something like you get so many NVIDIA chips over there that Huawei, SMIC, and SME can't really stay in the game. They can't really be competitive. they fall behind even more. And then if AI plays out in such a way that you don't just need one massive data center, you need to be constantly upgrading your data center, you need to constantly be buying more and more NVIDIA GPUs, that if you don't have that flow, if that flow can be turned off, then you are always vulnerable.

1:50:47So I actually think the policy question of whether to sell the H20 to China is a hard one, for exactly the reason you lay out, which is that there is an argument, and I think Jensen makes it in good faith as well as for his own commercial interests, of we want China dependent on our chips. And if they're not dependent on our chips, they're just going to be building SMIC and Huawei chips, and that's going to ultimately develop a competitor to us. Yeah, and more inclined to take Taiwan. Yeah, right. Here's the question I got back. that like charging an extra 15 % on the American chips doesn't actually advance that dependence argument, right?

1:51:31It just creates a cost differential that makes the American chips more expensive relative to the Chinese chips. Presumably, if you really wanted to keep them dependent on American chips, you'd want to sell them as cheaply as the market would bear. So like the 15%, even in the like bull scenario, and I agree, I think it's an important debate of the the kind of bull scenario you laid out but 15 still doesn't make any sense yeah and you look at other other categories like smartphones or electric vehicles there's there's no precedent for china saying we'll we'll buy your versions of these products and we'll even manufacture them for you but don't worry we're not going to develop our own you know you look at this like of course they they they clearly care about having local industrial capacity and even end products and brands And those are categories that aren't around that don't have nearly as much national security.

1:52:30And if you talk to like the CEO of GoPro when they were trying to compete with DJI and drones, he's not going to tell you a story about DJI getting a tax on exports. He's going to talk about, well, DJI was subsidized and had government backed loans and had extra money poured in from the government that allowed them to flood the American market with drones. And now we don't have a really strong drone industry here. And so, yeah, we're kind of like, there's two different arguments. There is some incongruity there. They both can't be true. Yeah. So the steel man is, we were going to allow this. Yeah.

1:53:07So why not get Uncle Sam a few Billy out of the deal? But the concern is that it would set a precedent that could be destructive. So now we really got to talk Jensen's book and say, we should be subsidizing exports of age 20s to China. We should be, America should be paying an extra 15 % for every GVUE sends to China to really screw them over on this domestic supply chain side. This is seven dimensional chess in geopolitical chip negotiations. We've solved it. Exactly. There you go. What else is top of mind for you right now? Yeah, what's on the horizon for the rest of the year? How do you see things breaking?

1:53:48Yeah, I mean, so you got, this is a big development. We'll have to see, like, is this a precedent? does this become a precedent for, you know, HBM and other parts of the semiconductor ecosystem? Like, we'll have to see. The other one that obviously those of us here are watching, not on the export side, but on the import side, Trump has said and Commerce Secretary Lutnik has said their tariff regime for imports of semiconductors is going to hit fairly soon. obviously we saw Tim Cook get a um a deal or announcement out of the White House last week where if you know companies are promising they're investing in America they won't pay the tariffs uh and we'll have to see how that all plays out actually in practice but like how these potential semiconductor tariffs again on the import side plus whatever this exemption for companies that are investing here how that actually works in practice is going to impact US semiconductor companies, companies that use a bunch of semiconductors.

1:54:47It's going to be a big, noticeable economic issue for the industry over the next couple of months and certainly into next year. We'll have to have you back on if some big news breaks. I'd love to. We really appreciate you taking the time. Yeah, thank you. That's right. Super insightful. Thanks for having me on. Thanks for hopping on. We'll talk to you soon. All right. Cheers. Take care. Let me tell you that fin.ai, the number one AI agent for customer service. They're number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2. Go check it out. And Andrea has a scoop of cereal, man cereal.

1:55:21This was really the big story. Everyone's ordering this. It's got creatine. It's got protein. It's keto. It's got zero sugar. It has 2.5 grams of creatine. So you need two servings to get kind of a normal dose, right? If you're loading. Do you see the flavor here? What's the flavor? maple bacon oh that's very like bacon that's very like what 2010 era brooklyn hipster man vibes mustache that with like lumberjack coated maple bacon on everything this is a funny brand it's it feels like it's it's it's pulling from a few different years do you think is the final cereal would you would you go for this jordy uh i love sugar yes so for that reason you're out so i'm For that reason, you're out.

1:56:12Make a version with sugar and I'll give it a spin. I'm also very curious what protein is actually in here. Not all protein is created equally. Is it farm? Chunks of filet mignon. Is it grass-fed whey? Maybe. Could be interested. Is it collagen? Could be interested. Is it some random bean that I don't really want to be consuming? Or pea protein? Less interested. I mean, honestly, more important than protein, creatine. sugar all the diets important but exercise is super important and sleep is super exciting that's right that's why you got to get an eight sleep get a pot five back five year warranty risk free trial free returns free shipping let me check we're both on a generational sleep i do i got a 97 last night last monday i was performing on 45 i got a 94 on saturday 90 i I got a 76, 96 quality, 100 % consistency.

1:57:0996, Friday. Six hours and 10 minutes left. I'm back in the game. I think that's fake news. I think I got more than six hours and 10 minutes, but I think I was just, I think my son stole a little bit of it, although I do wake up at 5.20, so I think that is correct. I don't know. Well, if a kid jumps in the bed, it kind of throws off. It throws it off a little bit. We gotta get the pronatalist pack. When my son first jumped in the bed, I was configuring the app and I was like, yeah, there's like a left side for me and wife side uh right left side for the wife and he was like and the center for me i was like sorry bro they don't make this like get the we'll get the whole team to make an update there anyway we are we got it we got a highlight we got a post here from mirage marked safe from one shotting so on the left me and grok are going to get married mid curve it's great for adjusting recipes and then the high iq i have uncovered secrets of the universe god speaks through me so there were some quotes uh that were popping up last week over the weekend uh some very bright technologists uh discovering the boundaries of what is known in in many different domains yeah my current my current take on the ai psychosis thing is that It is it is a tool that like amplifies who you are and so if you're just like a curious person who likes being productive like it's gonna make you more curious and more productive and more productive and just gonna answer questions for you If you're like, you know, deeply falling in love with random stuff and developing crazy parasocial relationships, like that's probably a vector of risk for you.

1:58:44And the same thing with, you know, if you have delusions of grandeur, like get ready because like it's going to amplify that. And I think that's the same thing. You don't just have delusions of grandeur. You really are on another level. You really are brilliant. I'm grand. You really are grand. I have grandeur. Well, our next guest has grandeur. Aaron Ginn. Welcome to the stream. How you doing? Lovely hat. Let's go. There we go. Let's hit the gong for a hat appearance. Boom. Didn't even warm it up today. Take that. Actually appropriate as well. Culturally. From sales guys, from BDRs all over the world.

1:59:29Yeah. What's new in your world? Age 20s. Good? Bad? Are you happy? Are you pumped? Oh, I'm happy. They're happy. Yeah, they show final hawks that have a luxury belief system around that Chinese AGI is going to destroy us, like a Crouching Tiger hidden dragon version of OpenAI is going to attack America like we're done. And this 15 % deal, which broke Sunday, I don't know how it broke, was just amazing. It was just like, I mean, one, props to President Trump. who is the ultimate deal man. Art of the deal. It felt like both 4D chess and Art of the deal. Yeah. Rather than a one. Yeah. And so, you know, like the sort of average market margin of the H20 is around probably like high 50s percent.

2:00:18So, you know, they're still, and they also have the write-off they're probably going to roll in as well. And there's some struggles with PSC. Like you can't just, you know, I think it's one of the issues related to the Intel foundries. You can't just restart production within a month. It takes several months. So probably you're just going to try to find someone's non-destroyed and probably send them to China the age 20s. But what most Americans understand is that it's unconstitutional to export the tax exports. It's like in the Constitution. I looked it up and I was like, how is this going to happen?

2:00:48Because this seems unconstitutional. So you're saying a revenue share is like a workaround? Yeah, so it's voluntary. That's the only way it could happen. It's tipping. It's tipping. No tax on tips. Because the taxes are tips now Because like even from a process perspective like NVIDIA doesn't apply for export licenses like the OEM does Okay, when you apply for those OEMs, there's no license fee because that violates the Constitution Yeah, but you just get it and you can ship it but the bomb is listed the bomb is Really quickly who's the OEM in this scenario? Oh Supermicro Dell

2:01:23So someone in China will go and say, I want a rack of servers with age 20s already on them. Some other CPU, some other memory, some other hard drives on there. Bring those blades to me and they will call Dell or Supermicro for that. Yeah. And so that too applies for BIS. And so they're the ones that that final PO number is all that crap together. It's not NVIDIA. It's not NVIDIA. You don't know NVIDIA's pricing. You know, Dell does because I buy it from NVIDIA. So that's why it has to be something voluntary. You can go to the website now. Like, Jordy, if you're interested in donating to the Goliath, you know, the Levathon, you can go to Treasury.gov and you can find the little – You can Venmo.

2:02:00We accept PayPal, right? We accept Venmo. Yeah. So it's quite brilliant. I mean, I think many of the faux Neo-China Hawks are devastated. I mean, my op-ed last week, yeah, they're just seppuku. They're just like, you know, they're there. They're going to be on the Jefferson Memorial just like, you know, going at it. And because it's a decision.

2:02:29Yeah, it's a decision by the administration to be like, you know, we don't really care. Like we want to do deals. We want the American worker to get money from China. We want to do what China did to us for the last 20 years. We don't want to take money. Dig into the faux China hawks, the faux hawks, as we say. Explain the stated preferences, revealed preferences. Are they really doom-pilled? Do they really believe in fast takeoff? Do they really believe that AI is a nuclear weapon? Or is there something else going on, some other economic consideration that they're working through? I think, and I'm working on this op-ed right now for a very liberal newspaper, but they i think it's a uh deo sex machina uh sort of fallacy they built in their brain where they think ai is going to be god and america has to build the first god or china china has to build the first god and so it's kind of tower babble moment and and the problem is like if you remove that from their vote that's why i call them vote neo china hawks like they're not really china hawks they're actually agi zealots if you remove it none of their policies kind of make any sense because one reason why you hear oh like we have to prevent chips oh we have the black models oh like you know we have to restrict um you know model ways we have to do tokens like it's just kind of like amorphous blob but they can't really win in dc with the idea that ai is going to be god most people are going to be like that's kind of insane like you're go back to to reading you know the go back to watching matrix or you know reading the terminator or some other related sci-fi novel and and so they kind of wrap it in something that is like super easy to understand china oh china right you know the yellow country right and and and they and it's oh it's so scary right but you look at the specific policies none of it like makes any sense none of it's cogent together i met with a venture capitalist last week who said honestly none of this stuff's gonna matter in two years when we have fast takeoff but he wasn't he wasn't doomer pilled he was just saying like fast takeoff will mean that every single company goes to zero because there will only be one company, which is a very funny take.

2:04:39But he has invested in SaaS this year. Yeah, so the reveal preferences is all over the place. But yeah, it is weird to make the argument like we're going to develop AGI God, but it won't, like it will be God, but it won't be subservient to actual God, but also, or it will sit below the stack of, It'll it'll it'll respect the federal government of the United States. Yeah, it'll be God But it won't but it won't but it won't but it'll do what the president says or it'll do what the House and Senate say Or it'll do what one company says or what one person says. It's like if it's God can it be controlled?

2:05:17How does that make any sense? That seems very odd It's a and and as I said, you know, I talked about John's like like oh so much is built into Of their presuppositions are defined by the title to debate remember that whole thing of like oh free speech is gonna die we have to regulate and all stuff many of that same donor class many of those same policy people are also the agi doom or zealot people you go back even like a like here's a step further like many of those people were super hot on new atheism and like and like oh this idea of like we can we can prove free of science we just need more time we just need more scientists who just need more it's the same pattern in humanity that we create these kind of albatrosses, this idea of like creating an all-in sort of argument that because they don't have that in their life and then they make this thing.

2:06:04And as I said on one of – I think another time I've heard that if you don't have that metaphysical framework that is traditionally Judeo-Christian or Western, you try to fill something else in that void. It's a classic Charles Spurgeon quote that you basically fill it with something else outside of just the fact of what the place of like God or faith is supposed to fill. and technology, I would say Silicon Valley, probably San Francisco, they don't really understand that there's so much faith goes into actual the VC industry. That is really kind of selling BS to an investor. You know, like I know y 'all have lots of jokes around what is ARR in AI.

2:06:42It's mainly just selling kind of like nonsense. And it's the idea that like this could be something. It is a faith-driven investment. That's what also makes it so awesome, why we look at Zuckerberg, we look at Elon, who he made an idea and a vision of the future reality today. So it is heavily oriented towards a metaphysical, teological framework. But this AGI thing as it relates to China, so much of it has just gotten lost in this – I don't even know what I'm talking about anymore because these same people who are criticizing the 15 % tip to the federal government, to the American worker for NVIDIA are the same people who didn't want to ship GPUs to Switzerland.

2:07:20because, I don't know, they make two good watchos. They're Portugal. They have two good sandy beaches. Like, the same people, right? So it just keeps shifting because it's really trying to provide a luxury belief to a base around the idea of AGI. What's your line, though? Because I think the critique here that's pretty fair is that if you start applying this to other categories of goods, like fighter jets, Like, what would the fair price be to export an F-35 to somebody that, maybe they're on the edge, maybe they're kind of friendly now, but maybe in the future they might not be so friendly? Like, you believe we should draw kind of a line, and we shouldn't want government agencies to kind of apply this approach to fundraise?

2:08:12it's it's a difference between it's not a hunk of metal versus like you're selling a system i have the same sort of concerns relates to nvidia as it relates to apple building phones in china if i got an iphone no us on it none of the the magical you know more and more transparency via you know the design then i then it's kind of useless it's just like a phone right and that's the way nvidia actually is nvidia is an apple like ecosystem it's not just a hunk of metal Same with the reason, you know, we sell 787s, we sell 777s, we sell the 777X to China. Why? Because it's made up of this complex, the thousands of companies, it's a software platform.

2:08:50We remove certain things, which I'm generally okay with, like advanced avionics, we remove, we also kind of limit certain types of engine design. I'm fine with that. So with the B30, H20, these kind of Nerf chips, I don't actually make much of an opinion about it. Like, I don't have to have a no true Scotsman sort of argument about like, well, at what point would you not do it? I'm like, I don't sell fighter jets. I don't rent fighter jets. So you can talk to Lockheed about that or Boeing about that. And like what I think is most relevant is the fact of these innate externalities, these exogenous factors outside of the machine, which that half of all AI engineers are Chinese.

2:09:26Half or actually more, 75 percent, half of them are Chinese nationals. and if you include all the Chinese associated last names in Meta's super team are Asian. So like we either have to lean into our strengths, which is the fact we're good at making platforms. We're good at dominance. We're good at free enterprise. We're good at trade. And the fact that Chinese have something that they don't have the raw production capability of doing, which is not NVIDIA. I don't take anyone seriously who criticizes export controls. if they associate smic with nvidia it's like saying kirkland like kirkland and costco like that costco makes kirkland like that's not what kirkland is right like kirkland is a rebrand of somebody else's stuff and that's kind of like the criticism it's like oh like how dare costco make this kirkland thing you're like it's a rebrand bro like it's not it's i don't actually make this thing like it and so that that's where this constant confusion lies that many of these people who criticizes stuff or actually criticizing SMIC or TSMC, completely different companies, Jensen buys from them.

2:10:24So if you want to go after the foundry stuff, ASML, the Japanese, like you have to realize one, we don't make this technology. It's Japanese and Dutch. But the other, it's like, it's not what NVIDIA does. If you want to, I'm cool with targeting lithography equipment, preventing them from getting a five nanometer. And that is something that's actually quite reasonable because we do export control, triple sevens and et cetera. Like we have some limitations where we send. that's fine because it's a freaking size of a house and it costs 200 million dollars it's the same of the photography so much of what i what i'm advocating for is pragmatism is like realism like like we have to lean into what our strengths are we have to proliferate and prevent huawei from spreading its wings outside and if we want to target the ability to manufacture five nanometer two nanometer three nanometer or whatever like uh most nvidia stuff's on a four nanometer process that's cool like i'm totally in favor of that but don't attack nvidia because that's not what anything it does.

2:11:14Yeah, makes sense. On the Foundry side, I want to jump over there. Let's talk Intel. There's been a lot of headlines recently. What's your read on the situation? How important is Intel in your view? Do they need a new board? Do they need a new CEO? I don't want to. I'm going to get you in the hot water here. Yeah, it's, you know, so like my dad's Chinese. And so they're, this thing, like I am a true China Hawk. I'm OG China Hawk. And there's many times where like China's the largest country in the world and there's many overlaps that are just completely not, you know, they're just fine. And I don't know anything about the particular criticisms of Intel CEO.

2:11:55I think his strategy is not great for Intel. So like I mostly would target there, but America needs a boundary program and particularly trailing edge, leading edge, I don't think is economically viable. So that's why I'd rather ship that to like a Brazil or Argentina or something like that, like do a Newman and Roe doctrine sort of thing. Why is that? I feel like the leading edge is coming into Arizona through TSMC. Samsung's doing stuff like a few Trailing south and then leading edge here. Okay. Yeah, yeah Yeah, yeah I'll swell economically Yeah, we can't import the the semiconductor, you know geniuses that will run American TSMC Yeah, and you also have to understand that like there's lots of reports you can go read about it of former Chinese nationals that work at TMC that takes that back.

2:12:40It's a Taiwanese company. There's an arm that we can extend as a nation that can only go so far, and that's part of the America First concept of Trump. He's like, do I really want to take all of the juice and squeeze in terms of negotiating presidency over a nerfed age 20? He's like, no. We have fentanyl issues. We have$300 billion,$400 billion trade issues. We have IP issues. We have Chinese nationals at labs, all across the universe. Those are much bigger things to pry than the fact of like, oh, they get basically an equivalent of an A100 being deployed into their fabric. So the Intel stuff, I kind of have this disposition that it feels like it's going to be nationalized.

2:13:22I get kind of like vibes around that. As an economic conservative, I'm like, oh, that's kind of scary. But at the same time, it is one of those things that just kind of happens. Did y 'all hear about the federal government invested into a rare earth minerals project in America? Yeah, the one in Vegas, right? They got like 15 % for the SAM? Yeah. And so I think the same thing is going to happen with Intel. It's occurred through, there's a couple different lending vehicles in the federal government. It basically gets a warrant. That's kind of the vibes I'm getting from Intel. Something like that's going to happen because you also can't take TSMC processes and Intel processes and just mix them together like that's not the way that this works uh and also tsmc uh i think whenever they originally pitched that idea i think the president was like yeah like this intel thing tsmc was like maybe right and then they go look at them they're like holy this is a freaking nightmare of people who don't want to work who don't have the work ethic of tsmc and and that just kind of all blew up and i think there's some embarrassment in terms of like that this is america's founding program and this is kind of like how it matches up to the best of the world So I just get kind of vibes that it's going to be nationalized or split apart and divided as a company.

2:14:35But in terms of bearing on my opinion about whether or not that guy should be the CEO or not, I would point more towards the strategy rather than these kind of rumors. Yeah, we had Doug on from some analysis on Friday, and he basically said, look at the board. A lot of the people that are still on the board have just overseen numerous CEO changes. The strategy has clearly not been working. like you know well they're not semiconductor experts was this main yeah they're finance guys finance guys but also politicians and and thinkers like it's a it's a wide variety uh without a lot of focus on like manufacturing expertise yeah what was your what was your reaction to gpt5 uh not as negative as john uh yeah and uh i i yeah yeah i think you're like oh like it's over and i was like no i don't think so like so so first of all first of all so i think it's like pure pure number based gbt revisions being indicative of of order of magnitude scaling is over yeah so the pre-training scaling law is over i i so one is like a couple months ago we didn't say that because grog 4 came out so like so it it's uh so i get i would like maybe take a more like prudence perspective on this yeah one is that if there's a clear decision here by uh sam that he is a consumer app company exactly which is which is which is the right bet it's like i don't know consumer sass yeah yeah i'm not you know i'm technical i don't remember what all the freaking numbers and crap doesn't matter yeah yeah and so that's the biggest innovation here and if you look at the the idea like you know he he expanded the context window but not very much which implies inference right that he doesn't have enough capacity to run as many user requests the the other is that he mostly saw for downside scenarios and ease of use in the ux and those are like really big changes that the benchmark maxers are uh basically creating goal posts that are artificial and that if do you do you mean do you all remember your sat scores your scores.

2:16:46Do you remember Yachty or calculus, high school calculus? No, it's like these are all abstractions and metaphors that we create as heuristics to understand something's intelligent. But many times, as you know, in real life, we don't grade people really like that. What have you done? What can you do? Product. Consumers ask. My big takeaway Thursday was product now and the value you can deliver to consumers is the only thing that people should really care about in the short term. And OpenAI is in an amazing position here. Anthropics is an amazing position here. They have, you know, Anthropics got an amazing enterprise business.

2:17:29this open AI can sell a lot of subscriptions to a lot of people in the US and all over the world. And the real people that were in trouble seeing GPT-5 were the people that were, you know, still kind of fundraising against this idea of machine God. Yes. Yeah. Yeah. Yeah. Yeah. Deus Ex Machina is dead. Like I, I, I, I'm thankful for that. I'm a Christian. Like, you know, if people remember Tower Babel, it's like, it's a, it's a, both a story to take lessons from, but I believe really happened. And the, the, the point is that, uh, that humans naturally are drawn in every moment of the cycle, which is why that interesting quote, I don't know if it's true to him, but probably somebody else actually said it, that we overestimate in the short term, we underestimate in the longterm.

2:18:11And I think the God complex is that. And, and have a go into the, also the other kind of more tactical point is that many of these things that happen where people are using T5, if you go to grog four, it solves it just fine. so it was just funny that people are like oh my god they can't do blueberries you feel like you know i literally took that did it and brock and a dancer just fine so it seems like much more of like a tactical decision on sam it could be the fact of like yeah it's interesting people's desire to like gotcha the model so funny like they can they can completely ignore that it'll just like one shot like a really crazy physics problem and then they'll like get it on some like technicality And the whole point that everybody should internalize is that the models are really smart at some things, and then there's going to be edge cases where they mess up, just like humans do.

2:19:02And then there's going to be areas that they're not capable at all, and that's totally fine. It's still incredibly valuable. Exactly. I try to simplify always what AI is going to be, which is computing that talks like a human. It doesn't mean it is a human, just as if – like there was obviously the famous – I love this analogy because it shows how much humans are not aware about how signals and intelligence developed. So you remember back in the 70s and 80s, like they said, oh, like monkeys can talk, right? They talk in sign language, and then they could repeat it. So they ran the test again, and this time they had no facial expressions, and they tried to just limit all human interaction to the ape.

2:19:43and they couldn't do it because what they realized was actually the the the apes were responding to unknown human cues that the that the researcher was delivering to the end so rightly they were just mimicking what they thought would they actually think they want but they couldn't actually create discrete knowledge and action intelligence about what the actual language was being delivered and and and so that that's where it goes into like when you look at something so much about because humans are so amazing at being able to create it's part of the original genus argument of till to land name the animals we're amazing at that because because it's i didn't believe like a god-given talent that we have that only we have as a species but we're so good at it we have no idea how we affect other people or other animals via that that projection that as a as another basic scientific as a book you're married that's another like very simple thing that most people don't understand about the way to pick partners much about the way you pick partner is driven by the pheromones of their immunosystem and they've done studies of this where you where they basically created a blind test where they took sweat from different you know like opposite the opposite sexes and they basically gave it as as to the opposite sexes of like male and female like which one smelled better and they found that the one you thought smelled better had the most different immunological profile than than commonality and that's because of the desire to have children that have the greatest amount of protection from disease.

2:21:10So we can go into bonnet, blue eyes, high, whatever, but so much is driven by smell, and we're not even aware of it. And so we're here being like AGI and all. We've got to create Smell-O-Vision first. We've got to fund the company right now, Smell-O-Vision for AI. For sure. Last week, there's been different headlines, rumors around negative gross margins in various SaaS companies, specifically in the code gen space. The reason you would invest in a company with negative gross margins is you would expect inference costs to decline dramatically and for them to generate positive gross margins over time.

2:21:53And right now, you just need to acquire as many customers as possible and create products that people love. So that investment case makes sense. And then you have GPT-5 come out, which has, you know, a significant cost reduction. I understand, like, cursor has been... The margins are going to be 15 % better in the next administration. Potentially. Potentially. But how are you thinking about is that, you know, and the journos are freaking out about it. I'm like, oh, this is all like... I saw that Rune post. I know exactly what you're talking about. But what's your view in terms of - How fast can we actually drop inference costs over the next couple of years?

2:22:36Because it does feel like if it takes a decade to get an oom of savings, like an order of magnitude of savings, we might be in trouble financially. Yeah, but at the same time, I think researchers at the labs have been focusing on raw intelligence more so than efficiency. Yeah, yeah. Pure capability. If we're hitting a sort of plateau, intelligence-wise, the next thing that makes sense to do is really optimize efficiency. Totally. I think Jory hit it on the head, which is that there's two trends. There's the effectiveness trend and the efficiency trend. China is rationing us on the efficiency trend, absolutely demolishing us.

2:23:16This is the whole thing. We give them all these Nerf chips and we limit their chips so they just get incredibly efficient. It's like, we've got ourselves in the foot. I mean, bring it back and then we inference that. There's a lot we can learn. So yeah, exactly. So I think that it all develops into kind of, we don't really fully understand customer preference theory as it relates to these tools. And that what is the actual first past the goalposts sort of goal to pay versus free. But in terms of the brute natural law that compute gets cheaper, that's bulletproof. So that will continue. And so at what scale, like you said, does it actually floss that?

2:23:53But I think the bigger concern is more of these mega models that they just have the ability to absorb the cost, be able to spread it across different things. And if you think about it, it's a little bit like how Apple will continue to invest in its own apps. Remember when you first got the iPhone, you had a camera app, right? You had a calculator app, and then they kind of replaced it. That's the bigger concern for some of these tools is like a mega model be able to absorb the cost. like Google, which has a crap ton of code, or maybe Llama open source is a coding agent, which seems pretty probable, that that becomes more of the basic compressing even further.

2:24:33So they have to be able to create the data stream, like I think it was a cognition that's trying to do that, where as the engineers put stuff into the agent, then it basically reinforce self-learns from what the actual users are doing. That's probably the best path to create some significant amount of margin. But you should, every company can rely on, like, it's going to get cheaper. But as Jordy said, there's some protectionist stuff in terms of our national policy that has prevented that. And I made this argument on another show where I said that, well, finally, the U.S. government, this was pre-Trump, was applying protectionist measures to these large-scale model companies.

2:25:12And he, like, didn't understand that. He goes, well, what are export controls? Like, and he just didn't think through, like, the economic consequences of that. And that means in our country, we have an oversupply versus what we actually would pay for versus what the world paid for, which is a protectionist measure, which means that you don't have the same market forces being applied to our frontier labs as you would in other countries. As you already said, we send them Nerf chips. That's the cap. So then they then go down. Like that's their only direction they could go. So if we actually have a more liquid supply, a more market-driven supply where things can be priced in, then you're going to see OpenAI start doing more open source, more of this downward cost efficiencies because they're now exposed to it.

2:25:49So it shouldn't be lost on us that OpenAI is pursuing this idea of how do they have these mega releases, cheaper models. It's because they're starting to be more exposed to these cost structures that is needed for us to actually be competitive on the efficiency side. But if we continue going on this effectiveness range, effectiveness is generally like a B2B problem, like where you're a company versus company. So it's not really like adoption you're going after. Like we just got to be the best company. And efficiency is the opposite. Efficiency is like how do I make this as cheap as possible for someone to adopt?

2:26:18Javon's paradox. Like that's the direction. So I think over the course of two years, the next two years, I think you're going to see a tilting into lowering its cost, making things more efficient. so there's going to be multiple times on the show where they go on where people are like compute so cheap no one wants to buy more compute and like the member deep seek it's like this that's going to be kind of what continues to happen but it's good for it's good for the world like we want compute to be as cheap as possible and on a token basis and that means optimizing for like hydro energy optimizing for tax regime reducing construction costs reducing permitting all those great things that would make everything cheaper because the more cheaper we get the more people will use.

2:26:57And AI is such an innate good for the world, that it's something that America should be proud of, that we can share with the entire world. And the only way that's going to work is they got to make it super cheap to run in Africa, not launching a Stargate in, you know, in, you know, for Tanzania to like, that's not gonna go anywhere, right? But you have to make it to where it's capable of actually being scaled across the world. Okay, lightning round from the chat, pancakes, waffles or French toast? I'm keto, so I don't eat any of that stuff. None of that stuff. What skills do you think will be most in demand in AI and data infrastructure over the next three to five years?

2:27:33Many of the things that Trump ran on are actually still remain true. Electricians, plumbers, building something. Like the raw work with your hands sort of work. As well as there's going to be new categories of jobs that we don't even fully comprehend yet. They're going to take that salary of engineer and it's going to go there. Last question. Who was the most important hire you made in the early days of your company? What do they do? What do they do? Probably my CFO, general counsel. There you go. Anything else, Joey? Do you expect any data center project, like a lot of data center projects to blow up over the next few years?

2:28:14Yes. There's been some interesting commentary. What would that look like? People are basically... Private credit funds? Well, so people are basically forecasting the useful life of their GPUs and then separately what they'll actually be able to sell inference at. And ultimately, if either of those equations are out of whack at all, you can be completely underwater and not be able to service your debt. Yeah, I would say that for our next time, GPUs are not overbuilt, but data centers will. and and i lean into not but like i agree to agree jordi that the cost goes down and changes in vintages but the key thing is like look at what the money is doing there is very tight control still on like getting loans for gpus there is almost none for for data centers because they've used a lot 15 20 years but as jordi just said it's like if the square footage profile of power density versus what you can get is not structured correctly as well as nvidia is actually making less GPUs next year, there's going to be a lot of places that are just there and nothing's in it.

2:29:23And like in China, like we see in China. So GPUs in China are like massively being utilized, but there's lots of data centers that have nothing in it or like just can't actually run it. So I think data centers are far more likely to be overbuilt and be a bubble than GPUs because one company controls their GPUs. You generally, or market forces, don't really see that be a bubble because it's a monopoly generally. and data center lending is very aggressive because they view it as a 20-year asset and the GPUs are short-term. So there's just not as much money flowing into the GPU side as much of the data center side.

2:29:54Makes sense. Thank you for coming on. Always a pleasure. Thank you for coming on, Aaron. Always get on. God bless, guys. We'll talk to you soon. Bye. Public.com, investing for those who take it seriously. They got multi-asset investing, industry-living yields. They're trusted by millions, folks. Get on public.com. And we have our next guest in the studio. That's right. We got to get the gong ready. Vulcan Elements. Come on in from the restream waiting room. John. John, how you doing? What's happening? Hey, guys, I'm well. Big money. Thanks for having me. Give us a little introduction. Tell us the news.

2:30:29What's going on? Yeah. Good afternoon. John Madsen, I'm the CEO and co-founder of Vulcan Elements. We are a manufacturer of Earth Magnets, and we just raised a$65 million Series A. Hit it, John. Congratulations. So$65 million. Incredible. Perfect size for a Series A. Perfect size. Perfect size. Amazing. Give us a quick backstory on yourself and the company, and then we'll get into it. Yeah. So a former naval officer spent six years active duty in the U.S. Navy. Most of that time was in Washington, D.C. with the Navy's nuclear energy program. Worked across Navy shipbuilding, submarines, aircraft carriers.

2:31:08Got out a few years ago. Went to Harvard Business School. And I was just very focused on, yeah, a little humble brag. They call it, I've heard it called the Harvard of business schools. It really is. It really is. Yeah, well, I'll take it. But I was spending a lot of time thinking about my time in the Navy, thinking a lot about what were the critical components, as a good supply officer would, that were going to define the 21st century technology race. When we think about drones or physical AI, data centers, next generation defense technologies, what were the underlying components that would enable that?

2:31:46And doing my homework, it came down to three components, semiconductors, batteries, rare earth magnets. The way that I like to think about it is if you think about your own bodies, a semiconductor is like your brain, a battery is like your heart, and a rare earth magnet is like your spine. It literally converts electricity into motion. There was so much focus at the time on semiconductors and batteries, but no one was thinking about rare earth magnets. And if China produces over 90 % of those rare earth magnets, that means that we're going to have to ask permission on what we're allowed to build and buy over the next five years, which is not an acceptable outcome.

2:32:21So we're trying to rebrand them. We're just calling them earth magnets because we've heard that they're not actually that rare. They're in the ground all over the place. Is that true? What's the strategy? Are you actually mining these, just refining them? Like, where is America? Explain the full supply chain to go from something in the ground to something actually useful, and then where you want to slot in at least immediately. I'm sure that there's vertical integration down the pipe at some point. Yeah, so we're a refiner and manufacturer, but just a quick Rare Earth 101. So everyone's talking about critical minerals.

2:32:55What does that mean? A critical mineral is an element on the periodic table that is critical to our economy. with the supply chain that can be easily disrupted. Rare earths are a subset of that. There are 17 rare earth elements on the periodic table. Go back to 10th grade chemistry, close your eyes, think about the periodic table, the part that's detached that your teacher told you to ignore. That first row, those are the rare earths. Unobtainium funny. Exactly. Of those 17 rare earth elements, only four of them represent over 90 % of the economic value. Neodymium, prazoodymium, terbium, dysprosium.

2:33:30them. The main use for those four is a rare earth magnet. So the way to actually make a rare earth magnet is you either mine that material, and that can be from all over the world. China only mines 55 % of the global supply, or you take recycled end of life magnets. You have to separate those into an individual rare earth element, turn that into a high purity metal. We buy that metal. You then take all of the rare earths, iron, boron, and you turn that into an alloy, a super fine powder, you press it within a magnetic field, and then you shape, coat, grind. And that's a magnet that can go into an MRI, a missile, a ship.

2:34:09What does the go-to-market look like? I imagine you're focused on specific customer types early on that are maybe less price-sensitive so that you can start to scale and ultimately kind of grow into other categories. Yeah, so one thing that I say is vulcan elements is focused on defense aerospace and critical economic industries we do not make magnets for you to make a a smoothie in your blender at home we're not focused on kitchen appliances right so we are focused on data centers robotics drones defense applications aerospace applications uh enabling what the warfighter needs enabling what the economy needs in order to win the 21st century technology race it's as simple as that How quickly can you go from$65 million Series A to actually selling the end product to customers?

2:35:02We're already selling product to customers out of our small-scale pilot facility. So we took our first check, December of 2023. We told investors day one, if you give us a dollar, Q1 2025, we will have a fully operational, decoupled, rare earth magnet facility online. We did that on time. We did that on budget. it, we are selling magnets right now. In that facility, I'm sure you have a lot of equipment. Is there an ASML of rare earth refinery that you need to buy from? Is that an American company? What does your supply chain look like? Is that a resilient supply chain? So you guys already asked the question around, where do these materials come from?

2:35:48Where do the minerals come from? This is not a mineral availability problem. This is a software and equipment problem. So we actually helped co-develop some of the first pieces of rare earth magnetic manufacturing equipment made in the United States in the 21st century. There are so many amazing manufacturing equipment manufacturers in the United States who are doing aerospace and battery work. We've just partnered with them to say, hey, let's tweak a furnace and do it for rare earth magnetics. So 100 % of our equipment is from the United States for allied countries. Wow, that's pretty sweet. A bit of a dumb question.

2:36:24Are the materials magnetized all the way through your process? Or is there a period where they get demagnetized and then kind of remagnetized? So the elements like iron, like rare earth, they're naturally magnetic. This is actually something that I learned when we were starting the company. When does a magnet become a magnet? Well, you actually have to throw it through a magnetizer toward the end of the process. I remember reading a book to my son about how magnets get made. And it was like, sometimes there's a rock that gets struck by lightning. Is that real? I don't know. So really the intent is you need to make sure that you're creating a centered block.

2:37:01All those particles are perfectly aligned. You've done all the metallography, the microstructure, the grain distribution perfectly. And then when you're running it through that magnetizer, it actually hits the grade, the tolerance, the magnetic strength or flux density that is required to actually sell to a customer. What's unique about building a startup where it feels like there's, from my view and what you've said, it feels like there's zero demand risk. And you probably, the question comes down to, can you deliver it at a price that's competitive? But then it's really more so, So can you actually deliver it?

2:37:40Can you deliver it at the scale that really becomes meaningfully important to national security? But kind of what was your calculus, I guess, going into building this company with that kind of understanding of the market? Execution is the entire game. So we knew that we had to find incredibly sophisticated technicians and engineers and PhDs. We needed to understand how to interface with the DOD and the government, how to interface with large OEMs. We had to understand how to talk to mining companies and recycling companies. And so the bet was, can you actually build the team that can put all of those different pieces of the jigsaw puzzle together in a way that's cohesive to where you can actually get a contract, raise the money, and put a magnet in a customer's hands?

2:38:31And so we made a bet on ourselves. And that's what we've done is by finding incredibly smart people who are mission driven, who want this to happen, we've been able to deliver. We've been able to execute across every different domain within the industry required to actually get a result. Now, a lot of this has to be like the demand for American made rare earth magnets has to be somewhat tied to trade tensions with China. If those get resolved and Trump sending NVIDIA H20s over there and he's happy with that deal and then all of a sudden Xi Jinping is like, yeah, America, you can buy as many rare earth magnets as you want.

2:39:13Is that a short term, medium term risk? Is there a way that you can ramp the economic model so that you're competitive even if we were in a fully free trade regime? So our small-scale facility was sold out a full year before the trade tensions. So there's just so much demand that even with trade tensions, you can fulfill the backlog. Correct. People want resiliency within their supply chains. People want this component onshore. But to your point, I think it's incredibly important that we're not just copying and pasting. If you copy and paste Chinese manufacturing into the States, the unit economics make no sense.

2:39:51Yeah, because they'll beat on labor probably, right? Exactly. So one thing that's nice about this industry is there hasn't been a lot of innovation. And when you find incredibly smart people from different industries, aerospace and battery, shipbuilding, you're able to actually bring all of that learning and you can start taking a lot of low hanging fruit, innovate really quickly. And then over half of our technical team, they're scale up engineers. And so when you think about delivering at scale, coming down that cost curve, reducing operating costs and making sure that you are ultimately as cost competitive as you can be against the Chinese.

2:40:28What are your goals for the next couple of years? Look like you said you kind of called your shot in 2023. You delivered against it earlier this year. What do you want to do with the with the 65 million and going forward generally? So the$65 million, we're going to go to commercial, large scale, commercial scale, several hundred tons over the next couple of years, several thousand tons by the end of this decade. And what is the kind of market value of that kind of production? Minimum several hundred million dollars in top line, up to several billion. Thank you, Jordan. Figured there were some big numbers.

2:41:06Fantastic. Awesome. Well, yeah, thank you for everything you're doing. This is very exciting. Super important work. and glad you're doing it yeah we'll talk to you soon have a great day thanks guys talk to you soon bye take a little bit of that money buy a billboard on adquick.com out of home advertising made easy and measurable say goodbye to the headaches of out of home advertising only adquick combines technology out of home expertise and data to enable efficient seamless ad buying across the globe we've seen this playbook in mining buying billboards next to the companies that you want to hire from Speaking of billboards, Roy Lee is in the news again.

2:41:40He bought a billboard in Manhattan. And he said, Alex Cohen says, fine, I'm starting to like the Clue Lee guys because Roy put up a billboard that says, hi, I'm Roy, I'm 21. Missing an apostrophe on the second I'm, clearly deliberate, absolute wordsmith. This was very expensive. PLS, buy my thing, please buy my thing. clearly.com and John Chu Coastal Ventures says this is why I invested in Roy Lee once in a generation talent a tapping into culture and zeitgeist this was a spicy post people kind of going back and forth on whether or not this would actually deliver Roy also put out a post saying that like everything he does is for short form so he bought this billboard he expects it to convert on the short form that will be created around the billboard certainly feels like people will create, we'll take a picture of this share.

2:42:35When you look at I think what I'm interested to see from Clue Lee is where they really get where they really get retention, right? Because they have top of funnel marketing but when you look at it seems like if they just focused on students, right? They seem to be in this kind of place where they're thinking about enterprise. Exploring a lot of different markets, for sure. They're exploring different markets. But if you look at the way that ChatGPT's usage, basically tokens generated dropped as summer started, that's a good argument to say it clearly could just focus on products for students that will eventually graduate into the workforce and things like that.

2:43:23Sure, sure. But anyway, what else? Well, they didn't make the top AI agents by revenue chart that Anand Sanwal shared. said, who would you put your money today to win in the long term? The top was Cursor at$500 million in annual revenue. And they're making$3.2 million in revenue per employee. Glean's at$100 million. Mercor's at$100 million. Replets at$100 million. How are you defining an agent? I think it's just AI startups. Anyone who's used the AI agent meme, basically. The agents are going to be pissed about this. Stolen valor. I don't know. It's hard to call Mercor an AI agent. I agree with that one.

2:44:01That one feels particularly odd. Even Glean is enterprise search. Yeah, it's search. But I would say Replit is an agent company. It's kind of like every AI company is now an agent company. Harvey hasn't really branded themselves an agent company. But it's interesting, you're going to put Cursor on here, which generates revenue from Claude Code. Yeah. and is a agentic IDE. Yeah, well, you don't put a drop is crazy and also not including ChatGPT, which has deep research, which is probably the most used AI agent in the world right now, I have to imagine, just by number of queries. It's missing some stuff.

2:44:44It's missing some stuff, but it's okay. Also, Devin's not on here, which is kind of odd, but that's the nature of these lists. It's CB Insights, folks. They do the best they can and you can do the best you can in the watch game if you head over to getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. I like this post from Aaron Raleigh. He says, imagine you're one of the smartest AI engineers in the world. You just joined a company that has access to a GPU cluster worth tens of billions of dollars. Your work can one day help solve all diseases, create unlimited abundance for humanity, but you first have to build spicy mode.

2:45:21Spicy mode. Hey, you got to get the users in the door one way or another. You got to get the training data. The revenue is important, but also the training data. You got to get the users on board. They call this the Japan strategy. The Donald Boat saga is continuing, by the way. So Beth J. Zos said, maybe Donald Boat is just AGI trying to self-assemble itself outside of XAI servers. And Donald Boat said, let's just get this over with. I need to take Gramps to get his new hearing aids fitted tomorrow. and shares a picture of a Asus ROG Swift 27-inch 4K QD OLED gaming monitor, which I believe Beth Jezos purchased for him and then posted about.

2:46:04But the Donald Boat saga continues because Ryan Peterson posted, the difference between who you are today and who you'll be in five years is almost entirely made up of the books you read between now and then. and Donald Boat posts a picture of a penguin classic the day I bought Donald Boat a printer and is asking Ryan Peterson to buy him the Epson EcoTank ET2800 wireless all color all in one cartridge free super tank printer with scan and copy for$189. It's a reasonable request, but I feel like he might be getting over his skis here because what does he need a printer for? He has the gaming PC.

2:46:43The narrative's getting a little muddy, Donald. you might need to hone it in. This isn't exactly gaming peripherals. So I'm a little bit confused, but the posts are still performing. He's building out a home office at this point. I was talking to him, he was saying he's gonna go for Porsche at some point. He should just get a house at some point. It really is a great way to trigger people to flex on the timeline. For sure, for sure. And there's power there. He should go to someone, the next one he posts, he should say, I want you to - Larry Ellison. How about a Malibu house? How about a wander?

2:47:17He could find your happy place. Find your happy place. Book a wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but don't folks. Donald Boat. Get on wander. Start sending wander links around. We got you with a wander. We got you with a wander. We'll hook you up. Reach out. Joe says, just learned that nobody ever commissioned the Wall Street Bowl sculpture. A guy just built it himself and dropped it there. You can just do things. On October 19th, 1987, Black Monday hit U.S. financial markets in the country, entered a very difficult period.

2:47:51D. Modica recounted that he felt indebted to the U.S. for welcoming him and enabling his success. Wanting to give something back, he conceived the Charging Bull sculpture. D. Modica spent the next two years creating the 16-foot bronze statue, reportedly financing the$350 ,000 cost himself. The sculpture was created in his Crosby Street studio and then cast using a local foundry. Once complete, DiMedica spent the next few nights watching the police patrols on Wall Street trying to find a window of opportunity. Before dawn on December 15, 1989, DiMedica arrived with a group of friends, and the sculpture on the back of a truck to find a 50-foot Christmas tree had been installed during the day, exactly where he wanted to place the sculpture.

2:48:31With only four minutes between police patrols, he announced, Drop the bull under the tree. It's my gift. The late-night event went on to make news all around the world, including the front page of the New York Post. This is incredible. D. Medica stayed by the sculpture to greet the morning commuters. However, while he was away for lunch, the New York Stock Exchange arranged for the sculpture to be removed. Boo. Boo. The boo sound. Due to public demand for the loan return. We love New York Stock Exchange. We love Lynn. It was under different leadership at the time. It was different leadership. It was a different era.

2:48:58They would be totally cool. Parks Commissioner Henry Stern arranged for the sculpture's installation at Bowling Green on December 20th, where it can be found to this day. Amazing. More people need to be making statues of this size. There's a couple companies that are making statues. I haven't heard of any of them just dropping them in public places. They're also not using metal. Yeah. There's something about a metal statue. Metal statue is pretty good. Anyway, Megan Brobroski says, really good story from HK Knight SF about Mark Zuckerberg's compound in Palo Alto. Here are the 11 homes he owns in the Crescent Park neighborhood.

2:49:32Oh, interesting. He's doing the Ken Griffin thing, the Citadel thing, creating, playing Risk. Yeah. He's accumulating territory. Yeah, Monopoly. Well, hopefully at some point he'll be able to unify all those properties and build something really special, turn it into a museum one day. Accelerate Harder says OpenAI is really in a bit of a bind here, especially considering there are a lot of people having unhealthy interactions with 4.0 that will be very unhappy with any model that is better in terms of sycophancy and not encouraging delusions. And again, there's been a bunch of, I mean, Reddit has just been going off.

2:50:09Dude, did you wind up watching that TikTok compilation I sent you? No. Insane. So, I mean, good job on you because it's an hour of brain rot. But so there was a woman. It's an hour of TikToks back to back stitch. So she posted. People talking about. No, no, no. So it's one woman. So she apparently has ADHD and she is an ADHD coach, which is not a licensed therapist, which is kind of odd. So she makes TikToks about how to manage your ADHD. Cool. Fine. Anyway, she was going to a psychiatrist to get medication to manage ADHD. And by her own admission, she fell in love with her therapist or her. Her AI therapist?

2:50:52No, no. This is a real person, a real psychiatrist. So she goes in and the psychiatrist is asking her how she feels about her day. And she's like, wow, this man cares for me. I'm in love with it. And so she is basically accusing him of like sort of crossing professional boundaries by not crossing professional boundaries and like putting up walls and shields and being manipulative. And it's this like big long story. But at one point she starts talking to Chachupiti, but she gives it a name. And so she's like, I'm talking to Henry, which is the instance of the AI that I'm talking to about my love affair, my unrequited love of my psychiatrist.

2:51:36And Henry is affirming me and being like, yeah, you are right. He should be in love with you. And he's crossing lines by not being in love with you. Exactly. And so it became this big storm on TikTok where she was getting kind of She's brigaded in the comments, she turned off comments, she's going back and forth. A lot of people are saying like, oh, she's crossing a line, she's not doing well, other people are supporting her. It goes all back and forth, it gets very messy, and then people wind up doxing the doctor. It's just such a mess. It's a crash out, essentially. But it was interesting because it wasn't a singular, like falling in love with AI narrative, but it was like the AI was not a great player in the role, and did not make the situation better, basically.

2:52:21But you could also wind up in a Reddit community that's promoting - Yeah, people's reaction to 4.0 coming back. Here's somebody sharing screenshots from their chat with 4.0 saying, is that you, OMG? Please tell me it's you. That's why it's hard to believe it's real, but there's so many instances of it. I don't know, yeah. Yeah, I mean, it's certainly, I mean, we've seen enough like weird interactions that there's certainly some people out there that are having a bad time. So good luck to them. Hopefully they will get this sorted both at the model layer and also at like the society level where if you see a friend who's clearly going down some odd path, whether it's, oh, you're part of a really creepy Reddit group or that group chat is toxic, you know, or that AI chat is toxic.

2:53:14Like we're simple. Ask somebody how much time, how much time do you spend talking with chatting with chat GPT every day? Yeah. If it's. They're actually having long, super drawn out conversations. It's worth kind of trying to help them understand. Probably what's actually happening. Yeah. More importantly, back to email. Andrew Reed says Gmail search won't find you the email you're looking for, but it may well find you an email that can distract you for a while. this is almost every time it's wild almost every time which maybe it's a feature maybe it's not a bug maybe it's like hey this thing that you missed is actually kind of important you should go down this rabbit hole um but i'm really hoping that that agi can just make iMessage search work that would be great too it's really rough the photos app search is getting better though i've noticed that i'm getting a little bit better at tagging things i searched for a picture of a newspaper It found us reading the newspaper, one shot of it, very, very good.

2:54:13Didn't need to scroll and tag. And I could imagine iMessage getting there. Yeah. But it requires some new UX or something. Anyway, Ronnie Coleman. Wow, what a journey. Mr. Olympia, Ronnie Coleman in his prime versus now wearing the same suit. He was huge when he was Mr. Olympia. You got to find the tailor that made that suit. that's a wild suit we got to get some of those suits for sure that's a great suit anyway one of the greatest yeah we should get you we should get you like a body suit that you wear under the suit for sure for sure now we're talking look at how small his head looks on his shoulders it's crazy uh anyway aiden mclaughlin says one under discussed element of gpt5 is it just hallucinates so much less sweeping away 80 % of 03 era exit ritism and Marcus posting but because we're good sports we give them an evergreen batch of things to critique like gross margins that's something that's the next that's the next round of Michael true well says when we'll be able to add AI co-workers to slack to help take on miscellaneous operational work updating spreadsheets creating channels running cron job business workflows conducting deep research operator style tasks same API as human bi-directional DMs call shared links with persistent memory personality and access to all your team's tools who owns slack again who's been talking a big game about AI for the last two years Mark Benioff I think he should I think this is his game to live I logged into slack today and it said AI is turned on for tbpn oh yeah at the bottom that's great And I'm like, okay.

2:55:57Some of the AI features, I opened a PDF, and I got like seven different AI assistant pop-ups, and I was like, I just want to read this PDF, actually. I don't need anything. I'm just going to read this PDF. And, yeah, some of the spiky intelligences spike right through my eye. Well, a couple posts, a couple Grok posts. Rune says, Travis Kalanick will solve quantum gravity with the help of Grok. I hope so. Grok Heavy, please solve quantum gravity. Think extra hard. No mistakes. Thank you. I believe it. Skooks, watching her unclasped bra. Grok, are these real? That's a 2024 TBPN post. We weren't the first to do it, but it's a great format.

2:56:48What else is in here? Well, I got to get on with Taipei. Let's get on with Taipei. Thanks, everyone, in the chat. We had fun chatting with you today. We're going to be chatting more. Appreciate you all for watching. And we will see you tomorrow. Have a great rest of your Monday. And go subscribe to TBPN on Substack. Please do that. TBPN.substack.com. We appreciate that. We're going to be investing a lot there, and we're very excited about it. We'll talk to you soon. Cheers. Bye. See ya.