Is Anthropic a Cult? AI Beats ER Doctors & Recursive Self-Improvement | This Week in AI E12

22:22Do they have to tell you, hey, I'm recording this and I'm taking my notes here? Or what's the best practice? I'm going to assume a patient consent form because all it does, like all it does, right? There's billions of dollars going into this and it's deeply sophisticated. But all it does is it takes the notes of what's happening and really narrates it and dictates it into the EMR, into Epic, really. Got it. And so I assume there's no different from a privacy concern perspective than the fact that they're already taking notes on you, which I'm sure you're signing off at some point either way. Got it.

22:54It might be in that input document you signed right on the way into VIN. My whole family are physicians. And there have been various forms of recording for 30 or 40 years, right? Because doctors want to dictate back their notes. And I mean, this is years ago. And they would actually do recordings back then. So I'm assuming this hasn't been challenged in court. So it's probably OK.

23:13Naveen Rao:I guess that is always the thing. We have such a litigious society. There are all these lawsuits are like a two, three, four percent drag on GDP is one of the stats I've been seeing float by on social media. I don't know what ambulance chasing and all the litigation going on has caused. But I think it's something in the range of one, two, three percent of GDP goes to lawyers suing people, of which who knows what percentage is actually valid. I mean, some percentage is valid, I'm sure. But if it's 25 or 50 percent or 100, I think we probably all agree it's towards the lower end number. But yeah, this to me feels like we're going to, in short order, be able to process many more people and get them healthier quicker and reduce mistakes.

24:00Naveen Rao:Yeah, that's I mean, I think everybody's goal. the next question i have trey and naveen is i have a superpower function whoop eight sleep i mean i am dialing all these things in a lot of people use aura and i'm ai first right and i'm i'm patient led i'm a biohacker i guess at this point but like a junior one at best when is that data and these conversations with my physician going to connect, Trey? Because that, to me, feels like the other piece of the puzzle. I've been studying Whoop and Function Health and all of these software products. Whoop just added the ability to do blood labs. Whoop added a fitness program in it.

24:50Naveen Rao:They obviously have other things. They check. they have a, a approximation of your blood pressure. The FDA sent them a nasty gram about like, Hey, you can't do that. They were like, we're doing it. It's got a disclaimer, you know, sue us. And then you got RFK Trey, you know, basically running amok at the FDA. He's running amok. I'm happy about the dives. I'm not sure about his position on all the vaccines, which he seems to be. Um, but Trey, when do, when do we get that connected? And is that something you're working on or is that something you're going to wait for the marketplace to tell you hey we're ready to get blood panels and connect it all because the er the uh the electronic record what is it erp the emr the electronic medical record system emr yeah and epic seems to be the 800 pound gorilla and the most hated company in the world i why is that why it's like a three part question here.

25:49Naveen Rao:Why are they so hated? And what's the state of affairs there? And then when do I take my first person experience and plug it in with my doctor? Because in Whoop, there's a feature to like create a report and print it out as a PDF or send it to your doctor. So that must be, you know, if we're building that proactively in the Whoop for biohackers, I got to think the doctors are going to want to ask you for that at some point. So I mean, there's two kind of like exchanges, right? There's exchanges between providers and there's exchanges like that you're talking about, which I think is much more like a patient led.

26:22Let me fetch my records. So there's a thing called the FHIR protocol, F-H-I-R. And for you to be a valid legal electronic medical record system or electronic health record system, EHR, which Epic is the largest and the most well known, you have to conform to this protocol. So you could start an app tomorrow that says, hey, when you log in and you give me consent, I can fetch your records via FHIR. And so you can do that. And honestly, there are good record fetching mechanisms. And honestly, there's even some company that does a really good job of enabling other digital health companies to help the patient fetch the record.

26:55So this is a pretty good ecosystem. It's not a business that we're in by any means. I'm almost amazed. I was amazed when I did Function, to be honest, that it didn't pull any of the records. I think the main reason I would have expected it to was because insurance basically covered none of my function, which sucked. Sorry. You know, but it just was like, really got to pay like 600 bucks out of pocket. And then my mom clowned me because showed me that basically if I had just gone to primary, so there's a, if I had gone to primary care, it would have been free. So neither here nor there, but as soon as they start wanting to deal with insurance, they're going to need to know, okay, well, did he get a lab last week?

27:30Because we're not going to, you know, insurance isn't paying for this if it's not happening next week. So I'm always trying to look for like, what is the business driver of it? My guess is that function feels like they have an incredible product without a bunch of like garbage junk data that will come from when you found yourself in an ER eight years ago. That's probably the most realistic take. But specialists, right, if they if you go to that hospital and they send you into rheumatology, specialists are absolutely fetching your records. In fact, you'll get rescheduled if they don't have them on time.

28:00Right. And and even though that's an API, by the way, it's an API of a bunch of unstructured documentation that they have to fetch. They're using Tenor for this to then parse all that information and say, is insurance going to let me see this patient? And that's sort of the battle and the litigation. That war is sort of the one that we are in the middle of. But yeah, you asked the question about Epic. I can circle back to it. If you have thoughts on that side, otherwise talk about Epic. It's always fun. Yeah, I actually have a buddy of mine in Dubai in the UAE who has put together a set of clinics called, his clinic is called Metabolic.

28:34and they've actually done exactly this where um you kind of sign a consent form when you come in and become part of their system and they issue you like a loop um and several other things and basically when you come in everything is there downloaded you come into the first uh office visit there's a whole ai summary just on a screen that a doctor kind of goes through with you and kind of lets you interpret and then says this is the course of action we think you should take we probably need to do this test or you need to do this better or whatever, right? They kind of, it's sort of like assisting you and interpreting the results, but it's exactly what you're talking about.

29:11It's non-clinical data. I think the problem in the U.S. has been just the liability. Like if I start using, you know, aura ring data, like, well, was there some kind of user error? Do they put it on somebody else? They put it on their dog. I mean, where's the data coming from? And I think that's been the problem in the U.S. is just this, like you pointed out, the litigious nature has created a very conservative culture in healthcare.

29:32Naveen Rao:I have an idea. When I run for president in 10 years, I'm going to come up with a new concept. It's called informed waivers. We'll workshop it. There's a better name where everybody involved in going on a ski trip can sign this document and they actually don't get to sue. You know, when you sign that document that says you can't sue us if you die doing helisking or whatever backcountry skiing and then everybody sues anyway i want to create a document that actually does that so if you go to one of these doctors and they're like hey you want to do peptides hey you want to give us your data it's going to be yolo it's outside the system we're just going to have like speaking of like dubai in the middle east they have free trade zones like shenzhen in china they have a zone in the UAE where you're going to be able to gamble.

30:25Naveen Rao:Again, Sharia law, but they're building a win. They have an area for the news and the media to operate in Dubai without censorship. If somebody wants to in that area say something critical about the kingdom, I believe they can. If you're a Reuters journalist, you're kind of protected because they're like, listen, we want Reuters journalists and New York journalists to feel like they're not going to get imprisoned here. So there's a little area. I think that economic free zones, like Hong Kong was back in the day, We need something like that for advancements like this to occur. Same thing with crypto, right?

30:56Naveen Rao:People are like doing Isle of Man or whatever for their crypto, Zerg. We need something like that for healthcare in America. I just say we call it Austin. If you come to Austin, you land at the Austin airport, you've now come into Joe Rogan territory, Lex Friedman, Tim Ferriss territory. You can do whatever you want. It's a free tech bro healthcare service. Well, I think to make that really work, so that has to be paired with some kind of individual incentive. I think this is why like these betting markets work so well is that they're predictive because you want to make money. So you have a direct incentive to be correct.

31:33And the same idea here, like there has to be some direct incentive to not want to cheat the system and actually, you know, give the correct data to the doctor. You know, like I think right now there's some weird incentives probably baked in because of the whole ridiculousness of insurance that people might cheat the system. And that's why you have all these liability rules, right? I actually don't understand why you'd want to do that, but I'm sure there's some scenario.

32:00Naveen Rao:All right. Talk to me about electric medical records. And if you want to follow up on DeVeen's comments, you can, Trey. You ever sued anybody for a ski trip, J. Cal? No. No? Have you been around it? Have you seen it happen? Because I feel like it is one of these things where you hear about it all the time never actually seen somebody like go the distance i know someone who got sued for hitting somebody on a on a ski slope yeah actually i do know somebody gwyneth paltrow a friend of mine and gwyneth i heard you know got hit in the back and the guy landed on her and like wouldn't get off her it was a little bit weird and then he decided he would like get into this long lose lawsuit he lost obviously that was a weird one But I've seen a couple of pretty hardcore collisions.

32:38But yeah, I think people do sue for this.

32:43Naveen Rao:I mean, I understand it, but I do think there's got to be some or maybe there's got to be caps or something. I don't know. Just feels like we're far too litigious. back to the uh yeah on the on the emr side like i think it's almost a uh it's a very tricky problem i i think people take off so much of their frustration in general uh with the health care system with basically two people the payers and epic generally because they're like the two things that are the largest most money producing entities in the system um you see a lot of crazy stuff but you also see a lot of crazy stuff on like mom and pop businesses that you would never even think.

33:20And honestly, sometimes you see more crazy stuff on that side where there's like real rackets going on is everything to do with like complex therapies. Like there you have the person that gets paid, the person that pays and the person that's supposed to measure how much gets paid all the same, all are basically all the same entity or they own the entity and they have to have a firewall, but they all know anyways. So that's where I think, you know, there's probably more ire that should be drawn. The, you know, some of the middlemen that you're not really supposed to speak about or, you know, you'll end up getting a skier hit you in the back on the way down accidentally.

33:54Like, honestly, even I'm a little scared, to be honest, to speak about some of the, you know, that side of the business. But that's like where I think more public attention should be spent. It's like these insurance companies that own drug companies that own the pharmacy benefit managers that decide how much to pay for a drug. And oh, by the way, if you get sent to your script, your pharmacy that they want to go, they can actually just block you off and say, actually, you can't go there. You have to go to our pharmacy because we make the drug and we pay it. So we know that we can just pay ourselves more.

34:27It's an insane, insane racket. And that's where like more public attention should be. But, you know, there's a bill in Tennessee that will hopefully get passed that's going to make that illegal. So let's watch closely and hope that becomes sort of a national thing.

34:40Naveen Rao:If we were going to disrupt Epic, and we'll go on to the other stories of the week in a moment. But if we're going to use the venture capital playbook, how might we disrupt a company like Epic and make an AI first version, Naveen? If you put on your thinking cap, your strategy hat, what would be the, you know, obviously like bottom up SaaS is like a classic technique, you know, let the small players, you know, from a bottom up user tool, et cetera. I don't know if that would work or not here, But what comes to mind? We're sort of hitting around this main point, but really all the data that you have about your healthcare is context that's useful for making decisions.

35:21And I think the way Epic has been designed is actually for human consumption, right? It's like, okay, so I can ingest some documents. I put it into some table or some format that I can send it to insurance providers and then other healthcare providers. Great. That's fine. It existed for its purpose. But now what we want to do is actually make all of that data consumable by AI. And how do you do that? Well, I think there are actually, we're learning a lot. I mean, my time at Databricks from before, like, how do we make data consumable? Well, companies like Databricks are doing this. So I think actually making, ingesting that data, putting it into like an embedded form, where now you can start to consume it as part of an LLM and make it really efficient and fast.

36:07prioritization of that data. Maybe recency matters, but also relevancy matters. Like, okay, you had a chronic disease that you're diagnosed with 10 years ago. That's important even today. Whereas, you know, maybe you broke your wrist 15 years ago and that's not super relevant. So kind of some prioritization, but making it consumable by AI. And I think that's what Epic has sort of been tiptoeing into a little bit, but it's still tiptoeing. It's not good. And this is the classic case, right? We're seeing this in a lot of like legacy apps. they like make that one little incremental step better but like the guy who rethinks the whole stack is the one who's going to win and i think that's that's what you're getting at make it consumable as context that's relevant to an lm i think trey we're going to get you in trouble here

36:46Naveen Rao:because you got to work with these people but i give you permission i don't yeah i give you permission to torture entire business and all business relationships by being on a podcast go Go ahead. Look, the key thing is I won't, we're like the ultimate Switzerland with EMRs. So I will never say anything bad about them. What I will say though is how you disrupt it, you can almost ask them and you can look at their terms of service based on the apps that they allow. So what are they most conscious of? Let's say they are most conscious of somebody that is replicating the data that they have and taking away the clinician experience.

37:22All right, so if you didn't know what Ambient Listener was, I'm gonna like clue you into a kind of interesting and fast story. There is like the most VC darling company and they're just complete legends. Dr. Shiv Rao, their CEO, this is a bridge. Okay. $5 billion company, raised the latest round with Andreessen and IVP and a who's who. By the way, Andreessen also invested in their number one competitor, Ambien. So they're both sides of the game and it's like, all right, what the hell's happening here? Whatever. So, and bridge is the VC darling and their epics darling. And they're doing such a good job.

37:56You got friends out the wazoo, obviously, that work there. And they're really like owning that clinician experience. Now, the problem is you can't own it too much. And that's, I think, what ultimately was felt was, wait a minute, there's a scenario where, Naveen, what you're saying is, if we are pulling the records in this hypersynthesized modality, so the clinician no longer even needs to look at some tabular system that's organized for their eyes, but is actually just an assistant that's co-piloting that knows everything so they can quickly ask a question dynamically. It's like, that's the ideal experience.

38:26Maybe, you know, they have one, they have one earbud in, they're talking to you, they're treating you, you know, they're trying to figure out why, you know, what ridiculous peptide Jake Allen was killed himself with last week. And they're, you know, trying to treat him while they're, you know, dictating it back to themselves. So Epic basically kicks them out of the marketplace, comes out with their own competitor. And now you have like the ultimate war of health tech right now, which is between, you know, these, uh, now wait, did that happen?

38:51Naveen Rao:They kicked out a bridge. They, they, well, they took them out of their platinum premier sponsorship, you know, they used to do like a big rev share and it's, they, they broke that off. They broke that off. So they, they are speaking with their, with volume saying that experience is the most coveted, like we need to own this experience. Um, wow. And I think it's, to all your points, like that's, that's the best way is to own the either, You either have to own the patient experience through the records or you have to own the clinician experience. And reality is you're better off owning the clinician experience.

39:21Naveen Rao:We had Shiv Rao on This Week in Startups episode, let me look at it here, episode 1784, The Next Unicorns. That was released in July of 2023, if you want to see it a couple years ago. And I just had him on a recent episode, which I think we published to the This Week in AI feed. uh yeah so he was on this week in ai uh and he is yeah pretty formidable guy naveen your thoughts um yeah i mean i will say one thing epic has been a survivor they they have survived many different tech transitions like they're pretty tenacious and they do exactly what you just said like they'll come out they'll they'll they'll come out with a product that's sort of good enough and leverages their channel uh that out competes the new shiny thing so i will say they they have survived these kinds of things before.

40:11And what's her name? Judy, I think the CEO, she's pretty damn focused and tenacious.

40:17Naveen Rao:And it's a very closely held company. They have 80 % of records. They have a huge margin. I think they have about a 40 % margin because it's closely held. It's not public, I believe. It's very hard to know what's going on over there. I think the AI Scribe plus an open source medical record system. That could be super disruptive. So if you made an open source system that anybody could use, Epic is kind of like duct taped together from what I've been told. You have to do crazy integration. So the way they make their money is not just selling the software, but it's a hundred million, 500 million to implement this stuff at your hospital chain.

40:58Naveen Rao:So they're just pulling out massive amounts of capital. what if there was an open source project that shiv and other note takers and everybody else said hey we're going to invest in this open source platform open standards open platform and just make epics margin their opportunity just make the platform so cheap and they they have only 40 or 50 percent of the hospitals use epic but those hospitals represent 80 or 90 percent of the patience so they claim that oh we got tons of competition that's because it's too expensive and too kludgy from what i've read and there's people who are experts on this that aren't named jason caliganes who have said this and you could just man sweep the table i think on an open source version over the next decade he's the guy to do it by the way yeah he was because he was only two weeks ago by the way he's one of those guys you know how jensen's got the uh you know the leather jacket and that's the whole bravado i was at a conference the other week and i felt like a dork because I was wearing my blue suit with everybody else's blue suits.

41:59Naveen Rao:Yes. And I see Shiv walking up and I'm like, God damn it. He's done it again. Like samurai black jacket and sweatpants surrounded by a sea of suits. And it's just like that. Love it. If there's somebody that's going to do what you're talking about, J. Cal, I mean, send him your PDF. Here you go. Get them to go pitch launch. He'll do it. All right. Here's an interesting one. Let's go big picture and then we'll go to the hyperscaler CapEx. How close are we to recursive self-improvement? For those who don't know, this is, hey, AI systems improve themselves. I have systems doing this right now. I have open AI, I have open claw agents who go out every week and they look for new best practices in a vertical and then add it to their skills MD file.

42:42Naveen Rao:Okay, fair enough. But what we're talking about here is LLM's doing it. One of the co-founders of Anthropic, Jack Clark, said AI systems, quote, AI systems are about to start building themselves. He says 60 % probability on fully automated AI R &D with no human in the loop. It's very important that we state that part. With the Frontier models training its own successor by the end of 2028 this would de facto mean naveen that the people building llms right now will be replaced by the llms they are building in but two years 60 chance do you believe that you take the over or you take the under if we were gambling You take the over or the under?

43:34Naveen Rao:I'll take the under. You take the under. You think even 2027, next year, we could be sitting here and no human in the loop. Yeah. Explain to me your thought process there when you were thinking in bets. Well, I think we're already doing that to some degree, but I mean, there's still some human in the loop for guiding things, but what that human does has already been, they're already using AI assistants to do that process. us. Like I will say personally, when I do research right now, I just tell it what I want in English and it sort of runs the loop for me. So I'm effectively doing that already.

44:09And really the step from where we are right now to the next step is not that big. We've sort of laid the tracks to get there because we already have the AI assistant that can go from this is what I want to this is the output. We already have the data gathering, all of that being automated. And now it's just connecting those pieces together. That to me feels like a year long effort. I mean, just because I think, I mean, look, somebody that's not doing research actively right now, I mean, we'd be so curious to hear what does it look like to, and what does one of your prompts look like? Like, what does that even look like to engage like a research level prompt?

44:44I mean, is this like a page? Is it a paragraph? Is this a sentence? I mean, I think, you know, at first it'll be pages, you know, and then it'll get less and less over time and eventually we build the next version so i mean this is if you look at my twitter uh you know bio i basically said i want to build stuff that learns how to build other stuff to me that has been actually that recursive definition of intelligence is actually the only definition of intelligence that matters is can a species build something that can learn how to build itself and and i think you know we did that uh like biology did that i think we're building machines that are now capable of it.

45:21I think it won't be great at the beginning. It's going to be kind of shitty. So end of 28, I think we will have recursively self-improvement. I don't think it'll be very good. I think it'll be another couple of years before it becomes really good. So call it 2030.

45:35Naveen Rao:Here is a very interesting chart from my friend, Tim Urban, wait, but why that we were all talking about years ago. He wrote this blog post in January of 2015, 11 years old. This is now almost 10 and a half years old. What does it feel like to stand here? Human progress, time. And you have this gentle curve slowly going up. Humans are making a lot of progress, industrial revolution, internet, semiconductor, and there's a little human there. And then something boom happens. That boom that happens is AI and it's super intelligence. But here's what it feels like normally. And I think now we are directly in this moment in terms of the prediction, which makes it super hard.

46:19Naveen Rao:I think we now all think it's fait accompli. Yeah, Trey? It feels really hard to ignore. I mean, it feels really hard to ignore. And it feels like, I remember thinking people were out of their minds. They were saying 2027 that like, you know, 80 % or 90%, I think there's some great Dario quote of like 90 % of software development will be done by, uh, AI. And that's like not even an insane statement to make anymore. Right. Like, uh, by 27 and it actually looks like it might happen by the end of 2026. Um, and it's already happening at like 80, we're like 82 % right now this last week. And we're like a 70 person engine team building real industrial grade products, moving patients along.

46:53And it's like 70%, 80 % plus. Um, so yeah, it feels not totally insane. Um, and it feels exciting.

47:01Naveen Rao:yeah uh dario who is um loves to make predictions dario modi anthropic is the queen of uh predictions here he is always that's our king queen whatever um he's he's always out there you know with the scepter uh you know saying here you hear you quote we essentially have claude designing the next version of claude itself not completely but most of it quote i have engineers with Anthropic who say they do not write any code anymore. I just let Claude write the code and edit it and look it over within Anthropic. That means designing the next version of Claude itself. And yeah, MiniMac says M2.7 is their first model deeply participating in its own evolution.

47:52Naveen Rao:So you now have multiple people on the frontier saying this is happening. And then even me in my modest way with agents, you know, me asking a human, hey, can you get better every week at this task? To me, it seems silly. Like the human's a human. It's just not going to remember to do it. If they do, they have to be motivated. They have to have initiative. My Lord, it's just so annoying to do it with a human. I just literally wrote a skill the other day where I said, every Sunday, I want you to go out and look at the best practices on social media, these six platforms, and how people are using social media more effectively to build podcasts and programs, et cetera, and do clips and write threads and gain followers and get likes and go viral.

48:43Naveen Rao:Tell me every Sunday when you do this deep research on each of these six skills, tell me what changed and what you implemented, then go test it for the week. I mean, that's just mind blowing for somebody who's been building content for 30 years on the internet. Like, has it taught you anything that you didn't know? Like recently? Yeah. The one shotted moment was it said to me, uh, one week, uh, somebody who works for Mr. Beast explained this week in a podcast on marketing that they use AI to make 50 different clips. Then they use this service that works with a panel of YouTube users, just humans, to show them different YouTube pages with videos to click on.

49:34Naveen Rao:And then they put those 50 different thumbnails in there to narrow it down to which ones get clicked on the most. then they take those five or six then they a b test those on their channels and then pick the winner and i was like wow that's like there's a tool where you can like a b test two headlines and two or three thumbnails built into youtube and then it just goes with whatever's best just like nail chimp did 10 years ago with like the headline of your newsletter you'd give it an a b test here's my first headline here's my second whichever one gets the biggest open rate you know so you send to a thousand people which everyone gets the biggest open rate sent to the next hundred thousand they're doing like a panel before that now they produce one video every two weeks so they really have some thoughtfulness but to then go spend they must be spending thousands of dollars maybe ten thousand dollars running that panel it's almost like they're running a test audience like they used to do for movies and people would write on the card i don't understand the ending or like i don't understand what happened in blade runner and then the studio was like okay Ridley Scott nobody understands this movie Blade Runner can you please put voiceover in to explain what the replicants are and to explain the ending and to explain to people that you know Deckard is a replicant spoiler alert and there he's like I don't want to explain that so then I met Harrison Ford and I'm talking to Harrison Ford sorry I just have a little name drop it's the greatest story I went to fall through Harrison Ford yep I heard so I'm at this party with you You heard the name drop.

51:07Naveen Rao:Boom. I did. I did. So I'm talking to Harris Ford. I said, Mr. Ford, I just want to thank you for my childhood. He goes, son, you're making me feel a little bit old here. And I said, no, you know, I'm just, it's just really an honor to meet you. It meant a lot for me. Han Solo, but very specific. And Indiana Jones. My dad bought me a bullwhip when I was a kid. And I used to sit there in the backyard in Brooklyn and hit grapes and, you know, try to smash things with this like actual bullwhip. It's just like such a big part of my youth. So thank you. Oh, that's incredible. I said but I wanted to ask you about Blade Runner he's like okay kid and I said if it's annoying I would he's like no did he say kid yeah he kept calling me kid that's awesome his greatest moment of my life was five years ago it was that like when they opened the gigafactory at Tesla in Austin he was there in the VIP I'm in the VIP hanging out and somebody actually took a video of me talking to him like I wonder what they're talking about here it is folks this is my Harrison Ford I said, I heard that Ridley Scott and you were like admonished by the studio that nobody understood the film and that Deckard was in fact a replicant.

52:11Naveen Rao:And they were sending replicants to retire replicants. It adds like a whole level of nuance and that they force you to, you know, in order to get paid or whatever, to do these voiceovers. And that you then went in and read them in a sarcastic voice. the year is 2019 Los Angeles replicants human robots that nobody can explain and that you did it sarcastically he's like son I'm gonna stop you right there it's a true story however you know more about this film than I do and I was the lead

52:50it's like

52:51Naveen Rao:got a look at the Harrison Ford Irish accent in there basically it's a Harrison Ford Irish accent son I was the lead in this film and you know more about it than I do the greatest he just read his lines I guess anyway I had a point about that story somewhere along the way yeah but I just don't know what it was but you got to meet her I think it was going to replicates self-improvement self-improvement of replicates is just there is that one-shotted moment where you're like oh my God, it's obviously happening. A big part of that, of course, is now we had a moment in time where people realized, throw more hardware, throw more data at a language model, get better results.

53:44Naveen Rao:This has led to a crazy estimate. The estimate now from Brian Nolak of Morgan Stanley. He raised his hyperscaler CapEx forecast again. He said$805 billion in 2026. Now he says it's going to be$1.1 trillion in 2027. So$805 billion this year,$1.1 trillion next year. This estimate grew by$100,$200 billion, up$40 billion for this year, up$150 billion. So up a total of 200 billion. Here's a graph showing historical CapEx spending that went viral this very week. It is extraordinary to look at. And I guess my question, and obviously Sachs has been talking about this is a huge tailwind for the U.S. economy.

54:37Naveen Rao:And this is only like five hyperscalers here. My question, Naveen, are we going to get to diminishing returns? are the returns on capital even possible here if you go if you look at this we're talking about going into the j curve with these four or five players five players you're talking about going into a three four trillion dollar loss and then having to make it back so i guess there there's two questions here diminishing returns coming because of folks like you making things better or language models getting self, uh, we're getting recursive to our prior story, then making the need less, or is the, uh, the demand curve, which we're seeing right now where anthropic is going down and anthropic is going down and right.

55:27Naveen Rao:Limiting people. Is this demand going to continue for some number of years and we never catch up? Well, I think the demand will continue. Uh, but I think there's actually a bigger point here that something interesting is going on is so all the things we talked about a moment ago where you're saying like, yeah, AI just does it better. And, you know, you can throw more data at it gets better. It turns out a lot of problems in the world can be solved through gradient descent. Okay, so a lot of economic value of what we do is really just honing away at something like think about it, like, you know, I'm a guy who knows how to, I don't know, whittle something and I could I could I could make figurines.

56:02And so it's just this honing aspect, which just got better and better over time. And that created economic value at one point. It created economic value and it created purpose for those individuals. Now we're in this weird place where we're almost solving that through CapEx. Okay. So the thing that kind of scares me right now, and I don't have a good answer to is these things I feel are not just, it's not a game of return on invested capital. It's like I'm putting a trillion dollars in, I'm going to get 4 trillion out in some timeframe. I think we're reshaping the economy and how demand actually looks and how supply actually looks.

56:40And it's going to create some weirdness for individuals and how we participate in that economy. I actually don't understand what it is. You actually said something right at the beginning of this podcast where you said, you know, AI is the last thing.

56:56Naveen Rao:Last final boss. Is it the final boss? Like, is that really true? Are we going to, are we done with a demand-based economy? kind of i don't know unpack it unpack it unpack it give me some real world examples here of that scenario where it is the final boss and then give me and then i'll trail have you give the argument for it not being the final boss well okay so actually since we've been talking about health care i think we can stay in that one in that realm for a little while like i think all the things that we do as a health care process like there's a standard of care the way a doctor has to treat a patient it has to be defensible you have to go through this kind of chart you know of like, I looked at this, I looked at that.

57:35And you know, that whole thing is automatable. Like, there's nothing human about that. In fact, humans are kind of shitty at it. So let's just use machines to do it and do it perfectly. Okay, so now what does that? What would a human go to a doctor for? Why should I go to a doctor? I think actually humans might still go for it, go to a doctor. And I think there's some other aspect here that each human might be willing to pay for. And And that's to understand something about another human's lived experience. Like I want someone to empathize with me and feel something that I felt and I will pay for that.

58:08And I don't know if that's automatable. And so I think our economy might completely shift away from this sort of like utilitarian aspect of like honing something down and buying that honed product because that's done by machines and it's free. Now it's about like, there's something that isn't about honing. It's about an experience of another human being and connection.

58:27Naveen Rao:So the value of the product is delivered not through the product because that will just be solved by machines all the way down. At zero cost, effectively. At zero cost. So then what is left? Well, based on what you're saying, what's left is the human intention behind the directive the machine was given and the final product experience. Trey, an example of this might be, we look at calories. We live in a post-calorie world. You look at me and you start talking about calories immediately? No, you look great. You look great. Listen, I lost 40 pounds. Road.co slash twist. Go, and they're not the sponsor of this podcast, but I'm a spokesperson for Road.co slash twist.

59:11Naveen Rao:Get on your GLP, and I lost 40 pounds. That's what made me feel better? No, I'm just kidding. Sorry, we were saying probably the skinniest one here. I mean, you are. I mean, Naveen and I have black t-shirts. and we got cannons. I don't know what's going on under your Carhartt jacket there, but we'll see. Fair enough, fair enough. Fair enough. We'll see what's going on. Little fat kid syndrome. Sorry, I... No, we're... We, as part of this week in AI, we all lift at the end of the show, so we're going to just get our kettlebells and do a little lifting at the end. But if you think about calories, we do live in a post-caloric world in some ways.

59:43Naveen Rao:There are more calories available. Yes. Sometimes a dictator can block people from the calories, but there's nobody starving in America unless they're mentally ill. There's some other aggravating factor. Now, I know some woke people are going to be like, no, no, there's victims who can't get calories. I call BS. In the modern world, there are calories everywhere, and they cost pennies a day to feed people. And people take calories and throw them in the garbage at the back of grocery stores every day. That settlers in the West would have think, they would think the garbage at behind an HEB was the HGB.

1:00:23Naveen Rao:That to them would have been extraordinary to be able to just pick from the stuff thrown away every day in people's garbage. So let's put that aside. And if we look at what people do for calories, they're picking it based on the aesthetics. They go to a Michelin star restaurant. They pick it based on the vibes. They go to Starbucks or, you know, flat white or fuck off that pop up in london because they like that cheeky nature of ordering a flat white there we pick our calories based on aesthetics and vibes and virtue signaling and just flavor profiles there's nothing to it other than the story naveen trey what's your take here we've already done like we have an example already moving there yeah you're already moving there.

1:01:11Naveen Rao:Yeah, I think we're there. I guess my hottest take on the subject is just that like, we think about work so often from the perspective of this like white collar, high level, you know, Naveen style work where I'm thinking, I'm jamming, I'm like moving. And it's like all these, all this tooling is so good for that. And yet like 98 % of production system are like, production systems are like just deterministic and like need to happen the same way every single time. And where my like skepticism often is like, it seems like the bottleneck to a lot of growth and the bottleneck to be able to satisfy all the demand for all the goods out there and being a truly like post-demand society.

1:01:46Like that's where you're getting that J. Cal's like, how do you get a post-demand? It actually seems like, and Naveen, you're focused on this, I think on some of the like real world things. It seems like the, it's like the physical stuff that will actually get us there. The, you know, person that needs to carry the box from the warehouse into the truck, because it's literally more cost-effective to hire a human doing that than it is to lay a belt that goes and does that. And really only Amazon operates at a scale where they actually can have it go right on the truck and things like that. That's sort of where my, like, you know, put the fries in the bag, bro.

1:02:15Like, you know, brain goes on some of this stuff where I'm like, is the demand really that we need more intelligence or is it just that we need like more factory belts or you're saying, hey, we'll get there because we'll have robots that actually can do that last bit? Yeah, I was going to say, aren't those one of the same? to me. I mean, I'd be curious. I mean, I would be curious. I can, will you be able to get that so cost effective that it can literally do the like pickup and move it? You know, is that better than just laying a belt? It will be cheaper than building a belt. Well, I think this is what the recursive self-improvement is about.

1:02:45Like you're right today. That is true. Cause you know, there's still a lot of humans involved in the supply chain of building a robot, but what if that starts getting automated? It comes down to really just the price of the machine to physically dig up the ore and then assemble it, that starts dropping really fast. Then I think you're just going to outprice a human every time. In 50 years, I think you're going to outprice a human every time. So a human is not going to be the economically most efficient choice, but I think there still will be humans doing stuff. Yeah. The percentage of goods that, J.Guy, you're talking about, where you'll pay extra for the the vibe, the service, the feng shui or whatever it is, like that will be a very minuscule percentage of of the actual goods that you consume.

1:03:29Like I'm probably not going to get my Dixie cup, you know, with its extra dose of microplastics on the top. I'm noticing, you know, I'm not going to need that to be like human welded probably. Right. So you might.

1:03:40Naveen Rao:I mean, if you look at I mean, it's interesting. You could almost take the other side every time we have the discussion because humans are buying, like women are obsessed with this Stanley mug. Oh yeah, I've seen those. It's been bizarre to me. God damn it, you Stanley mugged me. That's right. And it's like, I'm like, guys, Stanley makes power tools. And they're like, no, they make mugs. And I'm like, is this like some kind of like men are from Mars, women are from Venus, like a big put on or something that Stanley made this to troll people's wives so that they let their husbands buy power tools because they have an affinity for the cup.

1:04:19Naveen Rao:I don't know the background of this, but pull up and show this producers. Like, here's the Stanley Cup. What is this about? There's a pink cup with a thing. Women, this thing sells out. Women talk about it. It's like a tumbler. My wife has one. It's heavy. Is that why? I don't know. Is it to get reps in? I don't know. I asked my wife. I saw it too, and I'm like, Stanley, what is that about? And she's like, oh, that's like the cool thing to have. And I'm like, why? It just is. Do you remember when camelbacks with the little mouthpiece were like the big thing? Right? Isn't this just like that? Like, isn't this going to go away too?

1:04:54Right? Either way, to your point, you absolutely Stanley mugged me. I Stanley mugged? Maybe every piece. Yeah, maybe Stanley mugged me. All right, there you go. I Stanley mugged.

1:05:02Naveen Rao:You got one. Stanley one-shotted. Stanley shot it. The thing that I'm very curious, I need to get out of this time with Naveen here, is, and you, J-Cal, is you've got the greatest marketing machine in Anthropic, and the Mythos seems to be now, like GBD 5.5, seems to be the same level or better of what they're purporting Mythos to be. Is the Mythos release hubbub, oh, it's too powerful, makes people too uncomfortable, the J-Cal model, is the only reason they're not releasing it because of... I caught it. I caught it stray. I got you. You got to get a little stray in there. It's way too dangerous.

1:05:40Is it just because they're GPU constrained and they actually are going down and we're seeing that left and right too? Or is it actually the fear? Naveen, what you're doing. I think they have used fear as a very, very effective marketing tool. And I don't think this is an exception. I mean, I know a ton of people in the company. From what I can hear, it is just another really good model. And to be completely fair, I think some of the media treatment of it has been way more than what Anthropic has said. okay like anthropic actually hasn't said like it's a danger to humanity they said well there could be a practical danger because it could cause some cyber issues like that's really been their message but that kind of got blown out of proportion a little bit um so i i think i just want to be fair to what anthropic has said here now but i think they have a very effectively used fear and um and sort of like uh put themselves in this category being the trusted ones and it's been really great for them.

1:06:36I mean, I think their models have been great. They've been very good. I like to your point though, I don't see them being that much better. In fact, Claude itself at coding, we're seeing that Codex often is better at certain tasks than Claude is, but somehow Claude became the default, you know, programmer tool. And I think they've just been really good at saying like, this is what we focus on. And, you know, it actually, what's interesting to me, just sort of zooming out, it goes to like consumers buy a product because of why the person builds the product, not necessarily what the product is many times.

1:07:08And that's what I feel like is happening here. I mean, look, my Twitter feed is still software engineers, Twitter feed. It seems like Codex has taken over. But J. Cal, what was your anthropic? I need to get that out of you.

1:07:22Naveen Rao:I actually have a hot take. I have a hot take. I think this has to do with the gravity of the entrepreneurs leading each of the frontier models. If you are a P-Doom score of like 70, 80 or above, in other words, you're predicting Doom and that AI is really dangerous, Terminator, you know, delete all the humans because somebody asked me to cure cancer. Quickest way to keep humans from getting cancer is to get rid of humans. I just eliminated all the humans, right? That whole scenario. If you are P-Doom 60, 70, 80, you self-select. And if you're like liberal and anti-Trump, you self-select working for Anthropic.

1:08:06Naveen Rao:That's where you feel at home. If you're that P-Doomer and you're anti-MAGA, anti-Trump, Kamala Harris, whatever, that vector of person, Berkeley, whatever, no offense to Berkeley, but that's sort of contingent. No offense. the Berkeley Stray. If you're the opposite of that, if you're, I think I'm, I'm low P doom, I'm low P doom, low P doom under 20 % P doom, you go work for Elon because you want to be multi-planetary. You want to win. You want to do those high level missions. I want to make humans multi-planetary. And I want to explore the most important questions and discover the answers to those questions with Elon.

1:08:54Naveen Rao:I want to work 80 hours a week. I care about the work. I care about solving big problems. So you go to one of those two places. And there's a third place you go. If you are a marauding capitalist who wants to write in their journal, will this get me to 1B? And I donated$100 ,000, but I didn't actually donate it. And you're a marauding capitalist who wants to maximize the returns on your RSUs, on your stock options, you go work for Sam Altman. And it doesn't matter what your PDOOM is. What matters is how much money did I make? How quickly did I make it? So we've seen all this dancing around. And then there's also go work at Google with Sergey.

1:09:38Naveen Rao:And that's like a, it's independent. You could be somewhere in the middle. You could be. I think it's more well aligned. It's more well aligned with the Elon side. Yeah, I would say it's more Elon, but still you, you got a, you got a little researcher in you and it's like a safe place to work. They're not going to run out of money. So that's like the safety school, just a safe place to go. It's like your Stanford. You want to go to Stanford. You want to stay in academia. You go there. So over the last five years, everybody's just moved to where they belong. I think that people at Anthropic actually believe because they're so P doom 70 80 90 percent that they are these Jedi monks who are protecting society they believe this it's not marketing to them for us it looks like marketing from the outside because we're like okay it's really dangerous but we're using the other ones and it does the world the sky hasn't fallen there they believe Jesus is coming that they are the chosen ones that they will be saved because they've accepted AI Jesus into their hearts and the rest of us are all going to die in brimstone and fire and burn in hell for eternity because we don't accept AI Jesus.

1:10:52Naveen Rao:They believe it. Now, how do I know this is true? I've met people from all these companies. Put it aside. If you look at this specific issue of cybersecurity, security. AI, there are 5 million cyber experts in the world. Of those, some percentage are elite. Let's say 10 % of them, 500 ,000, maybe 1%, 50 ,000. There aren't enough of those people to go get all the errors, and there's nobody paying them enough money to go find all the problems with software. People are too busy building software. They're too busy making money from software that's where the money is there's not enough money in cyber and you have to choose that if you want to be like you're working on the wall like the people who what is the wall called in yeah the wall in game of thrones the wall yeah like you go to the north and you go work on the wall like that's another group of like night watch the watch those are the knights of the watch cyber is knights of the watch they just want to go there and wait for this terrible thing to happen it's happening in the next hundred or two hundred years so we just got to wait on the wall to protect society.

1:12:00Naveen Rao:That's cyber people. There's just a small number of weird people who do that. Now, what if you had an unlimited number of them? What if you could take those 50 ,000, 500 ,000, 5 million of those, and you could just add two or three zeros? That's what an LLM does. If you have an agent working relentlessly on the long tail of software, because people only work on the high surface area, high surface areas like Oracle databases, Windows, web servers, CRM systems, they're working on the high surface area where the money is. nobody ever gets down the long tail well arguably there's still the same people on the wall but you just have millions of white walkers coming towards you that will explore every freaking crevice to correct yes so now you just have in this cambrian explosion of cyber experts yeah they're gonna find all the bugs that nobody else had the time there wasn't a big enough bug bounty to go find those white walkers and eliminate them so it is true that that software did find more bugs it's not true that it's cataclysmic that's not cataclysmic these are small white walkers it's just like it's like little zombies from walking dead you just hit them with a pike boom you're done you get a 10-foot spear and you can just take them out from the top of the wall they're not material but the people at anthropic they're like the height of the high council of the jedis they believe that they are bringing balance to the force.

1:13:21Naveen Rao:It's just a different mindset. They're monks. Okay, so I got to stop because it's making me all worked up. Sorry, guys. Thank you for coming to my TED Talk. But I 100 % agree with you, actually, that tracks pretty strongly with the people I've talked to. Now, so you're talking, there's two different things here. One is sort of the external facing marketing, which is what I think they have done very well at. I think then there's the other side, which is the internal facing the people who work there. So 100 % agree with you on the people. now do you believe that daario in his heart of hearts believes that he is a monk oh yes i believe i think he believes more than anyone i mean i think we've both seen people have moderate success with way less success than that get to their heads at 100 times the level right sure yeah and they're not ushering in super intelligence right it's just weird because i've known i've known daario for a long time uh kind of from almost academic circles and stuff like that And this, what do you think you have a better perspective?

1:14:17Naveen Rao:Does he actually think he's the chosen one to bring AI Jesus to earth and save humanity? I mean, has he been one-shotted? He might have been one-shotted now. I don't feel like he was that before. I think he was a smart technologist and he was passionate about what he was doing. But I think maybe you're right. Maybe he has gone down this path of like, no, I am actually the one who's here for a purpose. Maybe he thinks he's AI Moses. Maybe he, he, he has the commandments. and he's going to bring Jesus down. He's the Ark of the Covenant. Anthropic is like the Ark of the Covenant. Lightning's gonna come, fire, brimstone.

1:14:52Naveen Rao:I think they actually believe it. I think they're all one-shotted. Oh, they do. They all have these delusions of grandeur. Totally. No, it's very weird. There's people there that I have known for a long time. Again, from the academic world, like 10, 12 years ago. And I talk to them now and they're like, you know, because I told them the plan of what we're doing on conventional. They're like, well, why are you doing it? I'm like, what do you mean? They're like, well, all that's going to be solved by AI in five years. I'm like, you legitimately believe that AI is going to build its own physical hardware and figure it all out in five years.

1:15:23They're like, yeah.

1:15:23Naveen Rao:They're like, is it nihilism or is it like the pitulation? People have been like this, like literally in the 1960s or 70s, Buffett famously said the best thing that ever happened to him was everybody believed in the efficient market theory. And then in the early 2020s, I remember everybody was telling me, oh, Trey, why are you building a web to startup, like trying to solve, you know, it's all, that's all going away, man. It's all going to be this different thing. By the way, this one might be totally right. And I could, you know, look like a dork, but Hey, nobody will be listening to it anyways, if that happens.

1:15:52So, um, but the, uh, I, it seems like people have been justifying inaction for effectively as long as, as long as humanity has been around. Um, cause it's kind of hard. I mean, I mean, honestly, why are you doing it, man? Like, aren't you tired? Like it looks like you had a great, why don't you just, you know, you, you've always got a little bit of cheddar.

1:16:09Naveen Rao:We should all just fuck off and go to kawaii yeah just take and surf and just accept the fact that ai jesus is coming and whatever happens between now and ai jesus is irrelevant it's irrelevant we are all going to be dust in the wind it's he's coming we should just all drink the kool-aid then let's just fucking drink it and yes right that's what we should do this should be jones town it should be jones town at a global scale. We should all drink it on the count of three. Thank you for listening to This Week in AI, P-Doom 100. Nothing matters. Drink the AI Jesus Kool-Aid and we will be the chosen ones.

1:16:52Naveen Rao:Naveen, Trey, two amazing guests. This Week in AI, episode 12 is in the can. We'll see you all next time. Bye-bye.