Replay 2025: David Sacks on AI, Crypto, and America's Technology Future

25:42This is why the chat interface is so necessary is because it takes you a few times to kind of iterate to get to the output that actually has value for you. Again, the humans are end-to-end and the AI is middle-to-middle. We haven't seen any evidence that that fundamental dynamic is changing. I mean, I'd love to hear what you guys think about this. We're obviously at the outset of agents. And agents you can give an objective to and then we'll be able to take tasks on your behalf. But I suspect that the agents will work better as well when they have a much more narrow context. They're much less likely to go off the rails, start going in weird directions.

26:24If you give it a very broad task, it's just not likely to completely figure it out before it needs human intervention. But if you give it something very narrow to do, then it's much more likely to be successful. So I would just guess, like, okay, just you tell the AI, sell my product. It's very unlikely that it's going to figure out what that means and how to do that. But if you're a sales rep and you're using the AI to help you, there's probably a very specific task that you can tell it to do and it would be much more successful doing that. So I just tend to think, I mean, this also kind of speaks to the whole job loss narrative.

27:07I just think that this is going to be a very synergistic tool for a long time. I don't think it's going to wipe out human jobs. I don't think the need for human cognition is going away. It's something that we'll all use to get this big productivity boost, at least for the foreseeable future. I don't know if any of us can predict what's going to happen beyond five or ten years, but that's just what I'm seeing right now. I don't know. I'm curious. What are you guys seeing at this front? Generally consistent with that, things are improving. So like on agents, the early agents, the longer the running task, the more they would go like completely bananas and off the rails.

27:49People are working on that. I do think like everything's working better in a context. At least from what we've seen, that will continue. And even to your point on super smart models, there's a dozen video models out there. And there's not one that's the best at everything or even close to the best at everything. There's literally a dozen that are all the best at one thing. And which is a little surprising, at least to me, because you would think just the sheer size of the data would be an advantage. but even that hasn't quite proven out. You know, it is like, depending on what you want, do you want a meme?

28:38Do you want a movie? Do you want, you know, an ad? Like, it's all very, very different. And I think this gets to your main point, which is, and Mark Zuckerberg said something that I really liked. He's like, like, intelligence is not life. And these things that we associate with life like we have an objective, we have free will, we're sentient. Those just aren't part of a mathematical model that is searching through a distribution and figuring out an answer or even a model that through a reinforcement learning technique can kind of improve its logic. So it's just like the comparison to humans, I think, is it just falls short in a lot of ways is what we're seeing you know we're just different you know then another and the models are very good at things they're better than humans at things

29:34Marc Andreessen:already many things the other thing i bring up related to this which is sort of this which i think is a little orthogonal but also quite related which is sort of is is the future of the world going to be one or a small number of companies or for that matter governments or super ais that kind of own and control everything um and sort of all the value rolls up into a handful of entities and And, you know, and there you get into this, there's like the hyper-capitalist version of it where a few companies make all the money or there's like the hyper-communist version of it where you have total state control or whatever.

30:02Marc Andreessen:You know, or is this a technology that's going to diffuse out and be like in everybody's hands and be a tool of empowerment and creativity and individual effort, you know, expressiveness and as a tool for basically everybody to use. And I think one of the really striking things about this period of time and you being in this role is this is the period in which the scenario number two is I think very clearly playing out. which is that this is the time in which AI is actually hyper-democratizing. I think actually AI is actually hyper-democratized. It has spread to more individuals, both in the country and around the world in the shortest period of time of any new technology, I think, in history.

30:37Marc Andreessen:You know, we're something like 600 million users today rapidly on the way to a billion, rapidly on the way to five billion, you know, kind of across all the consumer products. And then the best AIs in the world are in the consumer products, right? And so if you use, you know, current-day ChadGPT or Grok or any of these things like, you know, I can't spend more money, you know, and get access to a better AI. It's in the consumer products. And so just in practice, what you have, like playing out in real time is this technology is going to be in everybody's hands. And everybody is going to be able to use it to optimize the things that they do, have it be a thought partner, have it be, you know, an assistant for building companies, you know, starting companies or creating art or, you know, doing all the things that people want to do.

31:20Marc Andreessen:You know, my wife was just using it this morning to design a new entrepreneurship curriculum for our 10-year-old, right? Right, like, you know, like, literally, it's like, oh, wow, that's like a really great idea. And it took her a couple hours, and she has, like, a full curriculum for him to be able to start his first video game company, and here's all the different skills that he needs to learn, and here's all the resources. And, like, that's just a level of capability. I mean, to, you know, to have done that without these modern consumer AI tools, you know, you'd have to go, like, hire an education specialist or something, you know, which is basically impossible to do that kind of thing.

31:51Marc Andreessen:And, you know, everybody has these stories now in their lives and among people they know. So we have the, I think we have like a lot of proof that the track that this is on is that this is going to be in everybody's hands. And in fact, that is going to be a really good thing. And I think, David, I think you guys are really playing a key role in making that happen. I think it's so important that this technology remain decentralized because the kind of the Orwellian concern is kind of the ultimate centralization. And fortunately, so far what we're seeing in the market is that it's hyper-competitive.

32:21There's five major model companies all making huge investments. And the benchmark, the model performance, the evaluations are relatively clustered. And there's a lot of leapfrogging going on. So Grok releases a new model, it leapfrogs ChatGPT, but then ChatGPT releases something new, they leapfrog. So they're all very competitive and close to each other, and I think that's a good thing. And it's the opposite of what was predicted through this imminent AGI story, where the storytelling there was that one model would get a lead, and then it would direct its own intelligence to making itself better.

33:05And then so therefore its lead would get bigger and bigger, and you kind of get this recursive self-improvement, and pretty soon you're off to the singularity. And we haven't really seen that. We haven't seen one model completely pull away in terms of capabilities. And I think that's a good thing. And so, Eric, to your point about this narrative about the virtual AI researcher, that was one variant of this sort of imminent AGI narrative is that the steps would be models get smarter, the models create virtual AI researcher, and then you get a million virtual AI researchers, and then it's singularity.

33:42And I think just the slight of hand in that is what is a virtual AI researcher, right? It's like a very easy thing to say, but what does that really mean? And to Balaji's point about AI is still middle-to-middle, it's not end-to-end. So if an AI researcher is end-to-end, there's things the person has to figure out. They've got to set their own objective. They've got to be able to pivot in ways that AI can't. Is that really feasible to create a virtual AI researcher? I think there's parts of the job that AI could get really good at or even better than humans, but probably that tool has to be used by a human AI researcher.

34:27So I guess the argument, I suspect, could be sort of teleological in the sense that you might need AGI to create a virtual AI researcher as opposed to the other way around. And if that's the case, you're not going to get singularity. So I'm a little bit skeptical of that claim. We'll see. Would Sam say he could do it in 2028? I mean, I guess we'll see in three years. I think all those claims tend to be like recruiting ideas as opposed to actual predictions. He's not the first to mention that idea. Other model companies have been promoting it. but Leopold's mentioned that too. We'll see. But I suspect that that's what's wrong with that argument is that virtual AI researcher requires AGI.

35:19And so the idea that you're going to get AGI through a virtual AI researcher is backwards. But we'll see.

35:26Marc Andreessen:David, you and the administration have also been very supportive of open source AI, which I think also dovetails into this in terms of the market being very competitive. Do you want to spend a moment on what you guys have been able to do on that and how you think about it? Yeah, I mean, so just to the, open source is very important because I just think it's synonymous with, you know, freedom. I mean, software freedom, you basically could run your own models on your own hardware and retain control over your own information. And by the way, this is what enterprises typically do all the time is, you know, about half the global data center market is, on-prem, meaning enterprises and governments create their own data centers.

36:05They don't go to the big clouds. And by the way, I've got nothing against the hyperscalers, but just people like to run their own data centers and maintain control over their own data and that kind of thing. And I think that will be true for consumers to some degree as well. So I do think it's an important area that we should want to encourage and promote. The irony right now in the market is that is that the best open source models are Chinese. And it's sort of a quirk, right? It's the opposite of what you'd expect. You'd expect the American system would promote open and somehow the Chinese system would promote closed.

36:46That has kind of ended up being a little backwards. I think there's good reasons for it. It could just be kind of a historical accident in the fact that the DeepSeek founder was very committed to open source and got things started that way. Or it could be part of a deliberate strategy. If you're China and you're trying to catch up, open source is a really good way to do that because you get all the non-aligned developers to want to help your project, which they can't do with a closed project. So it's a great strategy for catching up. And then also, if you think that your business model as a company or as a country is, let's say, scale manufacturing of hardware, then you would want the software part to be free or cheap because it's your complement, right?

37:35So you try to commoditize your complement. And I don't know, whether it's by accident or part of design, that seems to be what the Chinese strategy has been. I think that the right answer for the U.S. in this is to encourage our own open source. I think it'd be a great thing if we saw more open source initiatives get going. I guess there's one promising one called Reflection, which was founded by former engineers from Google DeepMind. So I hope we see more open source innovation in the West. But look, I think it's very important, it's critical. And like I said, in my view, it's synonymous with freedom.

38:17And it's definitely not something we want to suppress. Now, just back to the closed ecosystem for a second. It's true we have five major competitors there. and they're all spending a lot of money. I do worry a little bit that at some point in time that the market consolidates and we end up with a monopoly or duopoly or something like that, as we've seen in other technology markets. We saw this with search and so on down the line. And I just think that it would be good if this market stayed more competitive than just one or two winners. and I don't really know what to do about that. I'm just making that observation.

38:58I do think that having open source as an option always then ensures that even if the market does consolidate, that you do have an alternative and it's an alternative that's more fully within your control as opposed to a large corporation or the deep state working with that corporation as we saw in the Twitter files that the deep state was working with all these social media companies in implementing much more widespread censorship than I think any of us thought possible. So we've seen evidence in the past and again in the social networking space about how the government could get involved in nefarious ways.

39:43and it would be good to have alternatives to prevent that, or to make it less likely that that scenario comes about with AI.

39:54Marc Andreessen:Yeah, well, as you know, we and others are very aggressively investing in new model companies of many kinds, including new foundation model companies. And then also, you know, there are a whole bunch of new open source efforts that are not yet public that hopefully will bear fruit over the next couple of years. So I think that at least in the medium term, I think we're looking at an explosion of model development as opposed to consolidation. And then, you know, we'll see what happens from there. Yeah, that's really good to hear. I mean, I think, you know, if we assess kind of the state of the AI race vis-a-vis China, this is the only area where we appear to be behind is in this area of open source models.

40:31Yeah. I think, you know, if you don't care whether it's open or closed, I think we have the lead. Yeah. I think our top models, model companies are ahead of the top Chinese companies, although they're quite good. But just this narrow area of open source seems to be where they have an advantage. So it's great to hear that you guys are seeing a lot more efforts coming to market. Yeah, yeah, definitely more coming.

40:57Erik Torenberg:Peter Thiel quipped many years ago that he thought crypto would be libertarian or decentralizing and that AI would be communist or centralizing. And I think one thing perhaps we've learned that technology isn't deterministic and that there are a set of choices that determine whether these technologies are decentralizing or centralizing. And maybe we could use that as a segue to go deeper into the state of the race with China. Maybe, David, you could lay out what's most important to get right. You've already indicated open source as one example. You alluded earlier to our strategies related to chips.

41:32Erik Torenberg:Some people say that, yes, it's a good idea to do what we're doing because it'll limit domestic semiconductor production. Other people say, oh, well, some of these companies say chips are their biggest limiting factors, and so are we enabling them in some way? Why don't you talk about the state of play and then our strategy? Yeah. So when we talk about winning the AI race, sometimes we say we're in a race against China, and sometimes we just leave it a little bit more vague. Because I don't think we should become overly obsessed with our competitors or adversaries. I think whether we win or not will mostly have to do with the decisions we make about our own technology ecosystem, not about what we do vis-a-vis them.

42:14And so the president in his July 23rd speech on AI policy, I think, mentioned a few of the key pillars of how we win this AI race. And by the way, I'm not saying it ever ends. It might be an infinite game, but we want to be in the lead at least. And I do think that there could be a period of time where, like, you know, take the internet where, I mean, the internet's still going on, it's happened, but we understand that kind of who the winners are is kind of baked now. So there could be a period of time in which, you know, it's kind of baked who the winners in AI are. But in any event, you know, in terms of how we win this race, you know, I mentioned a few of the key pillars.

42:56Number one is innovation. You know, it's very important to support the private sector because they're the ones who do the innovation. We're not going to regulate our way to beating our adversary. We just have to out-innovate them. I mentioned, I think right now, the biggest obstacle is the frenzy of over-regulation happening at the states. I desperately think we need a single federal standard. A patchwork of 50 different regulatory regimes is going to be incredibly burdensome to comply with. I think even the people who support a lot of this regulation are now acknowledging that we're going to need a federal standard.

43:31the problem is that when they talk about it, what they really want is to federalize the most onerous version of all the state laws. And that can't be allowed either. So, you know, there's going to be a battle to come. I think as the states become more and more unwieldy, you know, as it becomes more of a trap for startups that they now have to report into 50 different states at 50 different times to 50 different agencies about 50 different things, people are going to realize this is crazy and they're going to try to federalize it. And then the question, I think, is whether we get preemption heavy or preemption light.

44:04You know, do we get a... I think everyone's going to ultimately be in favor of a single federal standard because I think one of America's greatest advantages is that we have a large national market, right? Not 50 separate state markets. Like kind of, you know, Europe before the EU wasn't competitive at all on the internet because it's 30 different regulatory regimes. And so, you know, if you're a European startup and even if you won your country, it didn't get you very far because you still had to like, you know, figure out how to compete in 30 other countries before you could even win Europe.

44:34And then meanwhile, your American competitors won the entire American market and is ready to scale up globally. So the fact that we have a single national market is just fundamental to our competitiveness. And it's why, you know, winners in America then go on to kind of win the whole world. So we have to preserve that. And I think we will eventually get some federal preemption. And I think the question will just again be whether we preempt heavy or preempt light. Second big area is infrastructure and energy. We want to help this amazing infrastructure boom that's happening. And the biggest, I think, limiting factor there is going to be around energy.

45:13I think President Trump's been incredibly farsighted in this. I mean, he was talking about Drill Baby Drill many years ago. He understood that energy is the basis for everything. It's definitely the basis for this AI boom. And we want to basically get all of these unnecessary regulations, the permitting restrictions, a lot of the nimbyism out of the way so that AI companies can build data centers and get power for them. And we can talk about that more if you want, but I think that's a second really huge part of what it's going to take to win the AI race. And then the third area is around exports.

45:47And maybe this has been the most controversial one, and it really speaks to the cultural divide between Silicon Valley and Washington. So I think all of us in Silicon Valley understand that the way that you win a technology race is by building the biggest ecosystem, right? You get the most developers building on your platform. You get the most apps in your app store. Everyone just uses you. I mean, you know, those are the companies that typically win are the ones that get all the users, all the developers, and so on. And so we in Silicon Valley have a partnership mentality. You know, we want to just publish the APIs and get everyone using them.

46:24Washington has a different mentality. It's much more of a command and control. We want you to get approved. We want to hoard this technology. Only America should have it. This was really fundamental to the Biden diffusion rule. The point of that rule is to stop diffusion. Diffusion is a bad word. But in Silicon Valley, we understand that diffusion is how you win. I don't think we ever called it diffusion before. That was a new word for me. We just called it usage. but we understand that getting the most users is how you win. So there's a fundamental culture clash going on right now. And the way I kind of parse it is that what we decide to sell to China is always going to be complicated because they're our competitor and our adversary and there's the whole potential dual use.

47:15And so the question of what you sell to China is nuanced. But what we sell to the rest of the world, that should be an easy question, which is we should want to do business with the rest of the world. We should want to have the largest ecosystem possible. And every country we exclude from our technology alliance we're basically driving into the arms of China and it makes their ecosystem bigger. And what we saw under the Biden years is that they were constantly pushing other countries into the arms of China, starting with the Gulf states in October of 2023. Basically, the Gulf states, I'm talking about countries like Saudi Arabia, UAE, longstanding U.S.

47:53allies. They weren't allowed to buy chips from the U.S. In other words, they weren't allowed to set up data centers and participate in AI. And here we are telling all these countries that AI is fundamental to the future, is going to be the basis of the economy, and yet we're excluding you from participating in the American tech stack. Well, it's obvious what they're going to do. The only play we're giving them is to go to China. And so, you know, all of these rules basically just create pent-up demand for Chinese chips and models, and it creates a Huawei Belt and Road. And we are hearing that Huawei is starting to proliferate or diffuse in the Middle East and in Southeast Asia.

48:38And I just think it's a really counterproductive strategy. We're completely shooting ourselves in the foot. and the greatest irony is that the people who've been pushing this strategy of driving all these countries into China's arms have called themselves China hawks, as if what they're doing is hurting China. No, it's helping China. It's basically just handing them markets. Our products are better, but if you don't give these countries a choice to buy the American tech stack, obviously they're going to go with the Chinese tech stack. And China is out there promoting DeepSeq models and Huawei chips, and they're not wringing their hands about whether exporting chips for a data center in UAE is going to create the Terminator and all these ridiculous narratives that we've invented, reasons we've invented not to sell American technology to our friends.

49:40so that has ended up being I think surprisingly maybe the most controversial part of what we've advocated for but there you have it so in any event I'll stop there those are kind of some of the major pillars of what we've been advocating

49:54Erik Torenberg:Should we go deeper on sort of the infrastructure and energy point in terms of what it's really going to take to get enough capacity or what's most important in that second bullet you were talking about? Yeah, I mean well Well, so, I mean, there are definitely people who are much more knowledgeable about energy than I am and are experts in the space. But here's what I've been able to kind of divine is, so first of all, the administration, President Trump has signed multiple executive orders to allow for nuclear, to make permitting easier. We've even freed up federal land for data centers to hopefully try and help get around some of these state and local restrictions.

50:29And obviously, the president has made it a lot easier to stand up new energy projects, power generation, all that kind of stuff. I still think, though, that we have a growing NIMBY problem at the state and local level in the U.S. That is becoming a little bit worrisome.

50:52And if we don't figure out a way to address it, then it could really slow down the buildup of this infrastructure. In terms of power, so my understanding is that nuclear is going to take five or ten years. It's just not something that we're going to be able to do in the next two or three years. In the short term, it really means that gas is the way that these data centers are going to get powered. And the issue with gas is the shortage there is not, America has plenty of natural gas, and it exists in enough red states where you could just build out data centers close to the source, which would be smart.

51:30The issue is there's a shortage of these gas turbines. There's only two or three companies that make these things, and there's a backlog of two or three years. So I think that's probably the immediate problem there that needs to get solved. However, I do think that in the next two or three years, we could get a lot more out of the grid. So I've had energy executives tell me that if we could just shed 40 hours a year of peak load from the grid to backup generators, to diesel, things like that, you could free up an additional 80 gigawatts of power, which is a lot. Because I guess the way that it works is the grid is only used about 50%.

52:1850 % of the capacity is used throughout the year because they have to build enough capacity for the peak days, like the hottest day in summer, the coldest day in winter, those are your peak days. And they don't want to commit to a bunch of the capacity being used. And then, you know, you find out that you have a really cold day in winter and people can't get enough heat for their homes. And so they can't like overcommit to, you know, to say contracts for data centers, things like that. But if you could, again, just like if you could shed that like 40 hours a year of peak load to backup, then you'd be able to free up 80 gigawatts, which is a lot.

52:58And that would definitely get us through the next two or three years until the gas turbine bottleneck's been alleviated, and then eventually you get to nuclear. So that would be very good. I think the issue there is just there's a whole bunch of insane regulations preventing load shedding. So like, for example, you can't use diesel. and this, you know, Chris Wright is the Secretary of Energy. He's very good on all this stuff and I think he's working on unraveling all of this so we could actually do this.

53:29Marc Andreessen:It's funny, David, as you talk about this stuff, I can't help it. It's a little bit like the principle is just do the opposite of the EU.

53:39Marc Andreessen:Basically, I think everything we've talked about so far is basically the opposite of the European approach. Yeah. Well, I mean, the Europeans, I mean, they have a really different mindset for all of this stuff. When they talk about AI leadership, what they mean is that they're taking the lead in defining the regulations. You know, it's like, that's what they're proud of. Like, they think that's what their comparative advantage is, is that, you know, they get together in Brussels and figure out what all the rules should be. And that's what they call leadership. The EU just announced a, I shouldn't be done with them too much, but they just announced a big new growth fund, a big new public-private sector tech growth fund to grow EU companies to scale.

54:21Marc Andreessen:And I just, I would literally, I was just like, well, it's actually quite, it's almost like a game store or something. They do everything they can to strangle them in their crib. And then if they make it through like a decade of abuse of small companies, then they're going to give the money to grow. Well, it's kind of, yeah. Well, it's what, you know, Ronald Reagan had a line about this, which is if it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it. Yeah. The Europeans are definitely at the subsidized stage. Yeah, and I shouldn't be in on them too much. But I've always been proud to be an American, but particularly now, because the fact that we've been...

54:59Marc Andreessen:It really feels like we're re-centering on core American values in a lot of the things that we're talking about, which is just really great. Yeah, I mean, again, it's... Our view is that, first of all, we have to win the I-Race. We want America to lead in this critical area. It's fundamental for our economy and our national security. How do you do that? Well, our companies have to be successful because they're the ones who do the innovation. Again, you're not going to regulate your way to winning the AI race. I'm not saying we don't need any regulations, but the point is just that's not what's going to determine whether we're the winners or not.

55:30Erik Torenberg:David, you recently tweeted that climate doomerism perhaps is giving way to AI doomerism based on Bill Gates' recent comments. What do you mean by this? Do you mean it's going to be a major flank of the U.S. left? What do you mean by this comment? Well, I think the left needs a central organizing catastrophe to justify their takeover of the economy and to regulate everything, and especially to control the information space. And I think that you're seeing that kind of the allure of the whole climate change doomer narrative has kind of faded. Maybe it's the fact that they predicted 10 years ago that the whole world would be underwater in 10 years, and that hasn't happened.

56:12So it's like at a certain point, you get discredited by your own catastrophic predictions. I suspect that's where we'll be with AI dumerism in a few years. But in the meantime, it's a really good narrative to kind of take the place of the climate dumerism. There's actually a lot of similarities, I would say. You know, you've kind of got, there's a lot of kind of pre-existing Hollywood storytelling and pop culture that supports this idea. You know, you've got the Terminator movies and The Matrix and all this kind of stuff. so people have been taught to be afraid of this and then you know there's enough kind of pseudoscience behind it you know kind of like you've got all these contrived studies like the one where they claimed that the AI researcher got blackmailed by his own AI model or whatever look it's very easy to steer the model towards the answer that you want and a lot of these studies have been very contrived, but there's this patina of pseudoscience to it.

57:15It's certainly technical enough that the average person doesn't feel comfortable saying that this doesn't make any sense. I mean, it's more like you're not an expert. What do you know? And even Republican politicians, I think, are kind of falling for this. So yeah, I mean, it's a really desirable narrative. And of course, as AI touches more and more things, more and more parts of the economy, every business is going to use it to some degree. if you can regulate AI, then that kind of gives you a lot of control over lots of other things. And like I mentioned, AI is kind of eating the internet. It's like the main way that you're getting information.

57:48So again, if you can kind of get your hooks into what the AI is showing people, now you can control what they see and hear and think, which dovetails with the whole, with the left censorship agenda, which they've never given up on. Dovetails with their agenda to brainwash kids, which is kind of the whole woke thing. So, I mean, this is going to be very desirable for the left. And this is why, I mean, look, they're already doing this. This is not like some prediction on my part. Basically, after scam bank run fraud did what he did with FTX and got sent to jail, he was like a big effective altruist.

58:25And he had made pandemics like their big cause. They needed a new cause and they got behind this idea of X risk, which is existential risk. The idea being if there's a 1 % chance of AI ending the world, then we should drop everything and just focus on that. Because you do the expected value calculation, and so if it ends humanity, then that's the only thing you should focus on, even if it's a very small percentage chance. But they really reorganized behind this with all of it. And they've got quite a few advocates. And actually, it's an amazing story about how much influence they were able to achieve largely behind the scenes are in the shadows during the Biden years.

59:05They basically convinced all of the major Biden staffers of this view of this imminent superintelligence is coming. We should be really afraid of it. We need to consolidate control over it. There should only be ideally two or three companies that have it. We don't want anyone in the rest of the world to get it. And then what they said is, once we make sure that there's only two or three American companies, we'll solve the coordination problems. That's what they consider to be the free market. We'll solve those coordination problems find those companies and we'll be able to control this whole thing and prevent the genie from escaping the bottle.

59:40I think it was like this totally paranoid version of what would happen. It's already in the process of being refuted. But this vision is fundamentally what animated the Biden executive order on AI. It's what animated the Biden diffusion rule. Mark, you've talked about how you were in a meeting with Biden folks and they were going to basically ban open source and they were going to they're basically going to anoint two or three winners and that was it.

1:00:07Marc Andreessen:Yeah, they told us that explicitly and yeah, they told us exactly what you just said. They told us they're going to ban open source and when we challenged them on the ability to ban open source because it's, you know, we're talking about math, you know, like mathematical algorithms that are taught in textbooks and YouTube videos and universities. They said, well, during the Cold War, we banned entire areas of physics and put them off limits and we'll do the same thing for math if we have to. But yeah, and that's the, yeah, that's the, yeah, that was the best. And you'll be happy to know that the guy who actually said that is now an Anthropic employee.

1:00:42No, that's exactly right. I mean, literally the minute the Biden administration was over, all the top Biden AI employees went to go work at Anthropic, which tells you who they were working with during the Biden years. Yeah. But no, I mean, this was very much the narrative. You sort of had this imminent super intelligence. And then one of the refrains you heard was that AI is like nuclear weapons and GPUs are like uranium or plutonium or something. And therefore, we need... The proper way to regulate this is with an International Atomic Energy Commission. And so, again, everything would be sort of centralized and controlled, and they would anoint two or three winners.

1:01:28And, you know, now this, I think this narrative really started to fall apart with the launch of DeepSeek, which really happened in the first, I don't know, couple of weeks of the Trump administration. Because, you know, if you asked any of these people what they thought of China during this time when they were pushing all these regulations, they basically, you know, and specifically, well, wait, if we shoot ourselves in the foot by over-regulating AI, you know, won't China just win the AI race? if you were to ask them that, what they would have said, they did say, is that China is so far behind us, it doesn't matter.

1:02:01And furthermore, and this was said completely without evidence, that if we basically slow down to impose all these supposedly healthy regulations, well, China will just copy us and do the same thing. I think it was an absurdly naive view. I think that if we shoot ourselves in the foot, China will just be like, thank you very much. We'll just take leadership in this technology. Why wouldn't we? But this is what they said. And when the Biden executive order on AI was crafted, there was no discussion whatsoever of the China compete. It was just, again, assumed that we were so far ahead that we could basically do anything to our companies and it wouldn't really affect our competitiveness.

1:02:46And I think that narrative really started to fall apart with DeepSeek at the model level. back in April Huawei launched a technology called Cloud Matrix in which they compensated for the fact that their chips individually are not as good as NVIDIA's chips by networking more of them together so they took 384 of them you use their prowess in networking to create this rack system, Cloud Matrix and it was demonstrated to show that yes, NVIDIA chips are better they're much more power efficient but at the rack level at the system level you know, Huawei could get the job done with these, you know, Ascend chips and Cloud Matrix.

1:03:26And so, again, I think that showed that, you know, we're not the only game in town on chips, which means that if we don't sell our chips to, you know, our friends and allies in the Middle East and other places, then Huawei certainly will. So, I think it's just been kind of one revelation after another in which we've learned that a lot of their preconceptions and belief were wrong. And we've talked about the fact that the markets ended up being much more decentralized than they ever could have predicted. And I would also say one other thing, which is they also believe that there'd be imminent catastrophes.

1:04:00So this is kind of like the equivalent to the global warming thing where we're all supposed to be underwater by now. They were saying that models trained on, I think, I don't know, like 10 to 25 flops or whatever were like way too risky. Well, every single model now at the frontier is trained on that level of compute. And so they would have banned us from even being at the place we're at today if we had listened to these people back in 2023. So just a couple of years ago. So that's like really important to keep in mind that their predictions of imminent catastrophe have already been refuted. And so things are moving in a direction that I think are very different than what they thought in, let's call it the first year after the launch of ChatGPT.

1:04:41Great.

1:04:42Marc Andreessen:So David, just to come back real quick while we still have you on crypto. So the administration and I think the country had a significant victory earlier this year with the president signing the stablecoin bill into law, which was the Genius Act. And I think that, I'll just tell you what we see is like the positive consequences of that law have been even bigger than we thought. And I would say that's both for the stablecoin industry and you now see actually a lot of financial institutions of all kinds embracing stablecoins in a way that they weren't before. And sort of the phenomenon spreading in America, by the way, being in the lead and doing very well there, But just also more broadly, just as a signal to the crypto industry that this really is a new day.

1:05:25Marc Andreessen:And there really are going to be regulatory frameworks that make these things possible and that are responsible, but also make this industry really possible to flourish in the U.S. As you know, there is a second piece of legislation being constructed right now, which is the market structure bill called the Clarity Act, which is sort of phase two of the legislative agenda. And I wondered maybe if you could just tell us a little bit about your view of the importance of that bill and then kind of how do you think that process is going? I think it's extremely important. So as you mentioned, we passed the Genius Act a few months ago, but that was just for stablecoins.

1:06:00Stablecoins are about 6 % of the total market cap in terms of tokens. So 94 % are all the other types of tokens. And the Clarity Act would apply to all of that and provide the regulatory framework for all those other crypto projects and companies. If we could be sure that, currently we have a great SEC chairman, Paul Atkins, and if we could be sure that Paul Atkins and a person like Paul Atkins was always at the SEC forever, then we wouldn't necessarily need legislation because they're already in the process of implementing much better rules and providing regulatory clarity. But the truth is that we don't know for sure.

1:06:36And if you're a founder who's trying to make a decision now about where you're going to build your company, You want to have certainty for 10 years out, 20 years out. We want to encourage long-term projects. And so, again, I think it's very important to canonize the rules that first provide the clarity and then to make sure there's enough stability around them and sort of canonize those rules in legislation. That's the only way that you provide that long-term stability. I think that we will get the Clarity Act done. Like you mentioned, it passed the House with about 300 votes, about 78 Democrats.

1:07:09so it was substantially bipartisan. I think it will ultimately, it's now going through the Senate. I think it will ultimately get done. We're negotiating with a dozen or so Democrats. We have to get to 60 votes, so that's the hard part, is under the filibuster we've got to get to 60. But we're negotiating with about a dozen Democrats, and I do think that we will ultimately get to that number. By the way, we ended up having 68 votes in the Senate for genius, including 18 Democrats. So I do think that even if we just get, you know, two-thirds of the number of Democrats we got for genius, then, you know, we'll be fine on clarity.

1:07:49But, you know, this will provide the regulatory framework, again, for all the other tokens besides stablecoins. And I think it's just a critical piece of legislation. And, yeah, this would ultimately, I think, kind of complete the crypto agenda where we've kind of, you know, moving from, you know, Biden's war on crypto to Trump's crypto capital of the planet. And then, you know, I think the industry will have the stability it needs and can just focus on innovating. And there'll be, you know, rule updates and things like that, but, you know, fundamentally have the foundation for the industry in place.

1:08:24On Genius Act, you know, President Trump really made that bill possible. I mean, first of all, it was his election that completely shifted the conversation on crypto. We would still be, you know, if a different result had been reached, we would have, again, sort of like figure out the SEC. The founders would still be getting prosecuted. We wouldn't know what the rules are. Elizabeth Warren would be calling the shots. So President Trump's election made everything possible. And it's his commitment to the industry and his commitment to keeping his promises during the election that's made all of this possible.

1:08:56But also, I mean, he got directly involved in making sure the Genius Act passed. The legislation was declared dead many times. I saw it with my own eyes that, you know, he was able to persuade recalcitrant votes and twist arms, cajole, and charm. And, you know, he ultimately got it done. And I think that clarity will be a similar result. People are always prematurely declaring these things to be dead or whatever. There are a lot of twists and turns in the legislative process. It's definitely true that you don't want to see the sausage getting made. But anyway, I think we're on a good track right now.

1:09:34Good. Fantastic. Great.

1:09:36Erik Torenberg:Pete Buttigieg went on All In recently, and you guys talked about the left's identity crisis, and he's hoping for more of a moderate center left to emerge. At the same time, we see Mamdani in New York. I'm curious what you think of, where are you seeing in terms of what is the future in terms of for the Democratic Party in terms of it? Is there a more moderate presence or is it kind of this Mamdani style, woke populism? I mean, it certainly seems to me that Donnie and, I don't know, like the woke socialism seems to be the future of the party. I mean, that's where all the energy is in their base.

1:10:11I mean, I don't want that to be the case. I'd rather have a rational Democrat party. But that seems to be where their base is, where the energy is. And you don't really hear Democrats within the party trying to self-police and distance themselves from that. You saw, I mean, all the major figures in the Democrat Party have endorsed Mamdani. So, yeah, I mean, that's where that party seems to be headed. I think that partly it's where their base is at. I think partly it might be a misread of, it could be kind of like a partial reaction to Trump where they feel like, you know, establishment politics kind of failed.

1:10:55And so they need a populism of the left to compete with a populism of the right. And so I think that's maybe part of the calculation for why they're going in this direction. But I don't, you know, I fundamentally, I don't think it works. I don't think socialism works. I don't think the, you know, defund the police, empty all the jails policies work. so you know I think we're about to get another you know case a teaching moment in New York unfortunately it's not going to be good for the city but you know we've seen this movie before but yeah that's where I mean it does appear that's where the Democrat Party is I don't completely get it I mean other people have made this observation but they do seem to be on the 20 % side of every 80-20 issue

1:11:43you know opening the border you know the soft on crime stuff you know releasing all the repeat offenders and and just sort of this anti-capitalist approach you know which I think will be disastrous for the economy I mean but this is kind of where the party's at right now it's a little scary because it does mean that if we lose elections in places where we do lose elections, it's like, you know, you could end up with something really horrible, not just like, you know, we're not just playing in the 40-yard lines anymore in American politics. And that is a little bit scary. Yeah. And I do think that, you know, if it weren't for Donald Trump, I think in a way we might already be there.

1:12:28You know, I think, you know, but we have to make sure that

1:12:35this, the Trump revolution continues.

1:12:40Erik Torenberg:Lastly, we were just talking about New York. Recently, in an episode all in San Francisco, you endorsed bringing the National Guard. Benioff had his comments. He sort of went back and forth with those comments. I'm curious if, speaking of teaching moments, I'm curious if you see San Francisco as savable in some sense and what needs to be true to get there, if so. Well, Daniel Lurie is the best mayor we've had in decades. So I think he's doing a very good job within the constraints that San Francisco presents. So the mayor job, unfortunately, we have a weak mayor in San Francisco. I don't mean him.

1:13:17I just mean like the way it's all set up. The Board of Supervisors has, you know, a ton of power. And over time, they've been able to kind of transfer power from the mayor to themselves. And then, of course, you've got all these left wing judges. I mean, it's just amazing to me that there's a case right now. This is a case that galvanized me several years ago, the case of Troy McAllister, who was a repeat offender who killed two people on New Year's Eve. I think it was like 2020. And he was arrested four times, you know, in the year before that he ended up killing these two people. And he had a very, very long criminal history.

1:13:59He had committed armed robbery before, stolen many cars. And he should have been in jail. He should not have been released, but he was basically released thanks to the zero bail policies of Chase Abudin, who was then the district attorney who he got recalled. There was a huge outcry. I mean, even in San Francisco, for there to be a recall of a policy, I mean, you got to be like seriously left-wing to basically alienate San Francisco. And Chase Abudin managed to be so far out there that he alienated even San Francisco. and yet I don't know why Tori Mikhailovich isn't sentenced already and in jail for 20 years plus but his case is still pending through the courts never ending and there's a left wing judge who's considering just giving him diversion basically means you just get released maybe with an ankle bracelet or something that's insane so I mean that's what we're dealing with in San Francisco I mean like crazy left wing judges who want to release all the criminals and you know And so I just wonder, like, is Daniel up against too many constraints?

1:15:00And therefore, I know he doesn't want the president to send in the National Guard, but maybe ultimately it would be helpful. But in any event, I think the president has agreed to kind of hold off on that out of, you know, Daniel had a good conversation with the president and asked him to hold back. And, you know, the president agreed and is giving him time to implement his solutions. And look, if Daniel and his team can keep making progress and fix the problems without the National Guard having to come in, then so much the better. We'll just see if, and I know he wants to, and like I said, he's the best mayor we've had in decades.

1:15:38It's just a question of whether he'll be too constrained by the other powers that be in the city. David, thank you so much for coming on the podcast. Thank you, that was fantastic. Thank you, David. David, it was a great day. And thank you for the work. we as much as anybody appreciate the work that you've done to fix the things in the past and put us on a great road to the future well thanks I appreciate what you guys have done as well so thank you for for your support everything you're doing so appreciate it

1:16:07Erik Torenberg:definitely thanks for listening to this episode of the A16Z podcast if you like this episode be sure to like comment subscribe leave us a rating or review and share it with your friends and family For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at a16z.substack.com. Thanks again for listening, and I'll see you in the next episode. As a reminder, the content here is for informational purposes only. It should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund.

1:16:48Erik Torenberg:Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com forward slash disclosures.