Amazon’s “Age of Efficiency,” LLM distribution, AI wearable worries, and more with Elad Gil | E2197

24:19One of the major stories we talked about through the COVID era was how many people Amazon hired to build out its warehouses as e-commerce took off during that period of economic disruption. now we're seeing the other side of that and a lot of long-term bets by the company come good great news for amazon shareholders all of us here who have 401ks pretty tough i think jason looking ahead for the people who currently uh feud their families on 19 an hour amazon warehouse jobs what's your take lad uh seems conservative to me but what are your thoughts on automation robotics yeah purpose built humanoid yeah it's interesting it feels like um for a long time robotics is one of those areas that was always going to happen and didn't quite.

24:58If you looked at the installed base of robots, it was in the hundreds of thousands of new robots per year, largely for automotive and very specific industrial applications. It seems like now we're going through a sea change. It's funny actually, if you ask what's a robot, your dishwasher to some extent is a robot. A lot of things that we take for granted now are robots. In the modern era, the things that are really emerging now are obviously some of the things that were just mentioned relative to Amazon, but also even self-driving cars and Waymo and Tesla and what's happening there, those are robots, right?

25:27Those are cars that drive themselves. There's a lot of startups right now, Pi and the bot company and a few others who are all building next-gen sort of foundation models for robots. And so it seems like within the next couple of years, we'll see a lot of these things substantiate. And there's sort of two questions that come to mind for me. One is what proportion of the winners will be incumbents versus startups? So for example, if you look at self-driving, there was two dozen self-driving companies, but the winners arguably are Waymo from Google and then Tesla, right? Two incumbents actually effectively have so far at least won self-driving.

26:00There's cool companies like Applied Intuition and others who are providing pieces of this, but, you know, CarOS and other things. But I think that's sort of clear winners at least so far, those two. And the robots, it seems like Tesla will be won, right? Through their Optimus work. And then the question is, who else? Is it a startup? Is it another incumbent? Is it an incumbent who buys a startup? Is it at home robots, which a lot of people are working on, which I view would be kind of awkward. There's like a robot in your living room and you walk in and it's like mopping or something. I'm joking.

26:31Or is it an industrial application or B2B, which is sort of the Tesla Optimus sort of view? And so I think it was this big question of who wins and why, and then what are the first application areas on top of that? Yeah, it was pretty obvious to me. I saw Andy Jassy speak at a private event, I don't know, a couple of months ago. And, you know, he was pretty bullish on AI. And then a day later, he did this public missive where he wrote, hey, AI is going to transform everything. And we could see different team sizes. That was like, to me, when a CEO that's sophisticated doesn't write that memo without a reason.

27:11He was telegraphing internally, externally with partners. hey you know this is going to result in less jobs and um i was on the bulwark podcast a political podcast and i said you know um i don't see a world in you know the next 10 years where a human being touches a package at an amazon factory or to your doorstep here's here's the quick clip jason do you want to just run the clip yeah it's a little self-indulgent but sure let's uh it's this is literally your podcast you're allowed to be self-indulgent don't want be too self-indulgent here quoting we'll stop you anyways here's jason quoting himself this is where things could get really nutty um and we're already starting and that's where like the doomsday scenarios terminator ones kind of come out of that group um so what happens if you know all drivers go away uh well every self-driving car is four full-time jobs and every uh humanoid robot in a factory is five jobs, maybe six, because those jobs you can work for maybe seven hours as a just physical limitation as humans were driving.

28:17You can work a 12-hour shift. And those are going to be here, folks. And before 2030, you're going to see Amazon, which has massively invested in this, replace all factory workers and all drivers. The idea that when you order something from Amazon, a human would touch it at any point in that supply chain is insane. It will be 100%, you know, robotic, which means all of those workers are going away. Every Amazon worker, all those jobs, UPS, gone, FedEx, gone. Every all of those are going to be gone. And those companies will be more profitable. And when you order something, it's going to come faster and cheaper and better.

28:55And your Uber will be half as much. But somebody needs to retrain these people. And that's actually a very vast. What do you think about job displacement? allowed um obviously i have strong feelings that this displacement is coming um i don't know if anybody disagrees with that i guess we're all just gonna debate timelines three years five years seven years ten years do you think we're gonna have societal issues with uh job displacement we're already seeing computer science graduates having a hard time recently getting jobs uh and i think most people are attributing it to AI, making the senior people more productive.

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30:50Yeah, I mean, I think any technology wave definitely has job displacement that comes with it. And so then the question is, what do you do from a retraining perspective? How do you think about social safety nets? And then also how well you governed? If the you know, if we were governed remarkably well, I'd say, well, we'll figure it out. And we'll start for governed really badly, then it's probably a different story in terms of the degree to which you end up with different forms of unrest or outcomes, depending on how much jobs are placed at what speed and then how much of a safety net or retraining or other things you provide.

31:22So I think it's a pretty complex thing. But I do think that it's pretty clear in certain areas that you're starting to see shifts in terms of labor, particularly around customer support, maybe one of the earliest places that I think ends up getting impacted to some of the points made earlier. Yeah. I think your point - Go ahead, Alex. Oh, just Salesforce said they're saving 100 million a year now on automated customer support a lot. Just to back up your point, it's a place where people are finding enormous cost savings already, which of course impacts jobs. Yeah, and if you have like a temp or outsourced labor team or you've partnered with somebody about it as a company, you're more likely to be willing to cut that back than if it was your own employees, right?

32:02And so often when you have these outsourced or delegated systems, you're more willing to shut them off. And so that could be some of the savings without actually changing official employee headcount. But it changes the virtual set of people that you've hired. And I think that's why we're not seeing it in some cases as much, right? It's kind of hidden because of the way that it works. That's such a good point. Yeah, you're outsourced it already. So you're just ending a contract. You're not doing a plan shutdown. So in the United States, you have that - It's not visible. Warn notice. The warrant notice.

32:32Like, warrant notice. Like, you don't have to warn anybody. It's like, yeah, I just got rid of a vendor. And I wonder if that has a pass through where you still have to do a warrant notice. Putting it aside, I will say, just have this realization as you're talking about, I now, as a default, do not go to, you know, the manufacturer's website to get an answer. I go to an LLM. Why? The LLM has indexed all the Reddit threads, Quora threads, Twitter threads, you know, message boards of people solving the problem on their own before the company even knows there's an issue. And you, so I think most organizations probably don't even know what their true customer support requests are.

33:22Yeah, yeah. And there's companies like Decagon obviously helping with that. And then I think there's two other implications of that or implications of all this. One is there are certain countries that should be impacted sooner rather than later from an employment perspective that we're not actually thinking about, right? Because there are certain types of jobs outsourced to specific regional hubs. India, Philippines, et cetera. Sure. And then I think the second thing, and this is a point that Nikesh Arora at the C &P Alta Networks has brought up with me in the past, which I thought was a really good insight He said this quite publicly that they're using AI tools and foundation models and everything else to iterate on product because customer support in some cases, not all, just means your product isn't working good enough or the UI is hidden or something else is going on.

34:03And so to some extent by iterating on product faster, you're going to cascade into support as well from that perspective. Essentially, if you have bots fixing every problem for you automatically, your support loads you go down. And so there's all these really interesting sort of second or third order things that, you know, are really interesting to speculate on in terms of the future world. It's really interesting to see the number of people employed at these companies stay the same as their earnings go up. Exactly. And this is why. Yeah. We've never seen that in our lifetime. And this is, if you were going to think about where to park money in the world, I was hearing somebody who's like super liberal podcaster who hates America and Trump derangement syndrome, the whole thing.

34:49And he's like, I'm taking all of my money out of the United States. Not you, Alex. I was going to say, dude, I'm sitting right here. I was wondering, you just got doxxed. Yeah, exactly. You don't have TDS. You just have a love of democracy. It's slightly different. And I'm a capitalist. Yeah. And he said, I'm just putting it. I think the United States is on the decline. I gotta put my money in Europe and every other thing." And I was like, Mm, anarcho-capitalism would argue the opposite. If, in fact, people are going to deploy this technology aggressively in the most vibrant capital market on the planet, the United States, we could see Amazon, to my point earlier, like, what does Amazon look like with no delivery drivers?

35:39What does it look like without, with, you know, delivery times cut in half and running 24 hours a day? What does that even look like? Yeah, eventually it's just Jeff Bezos and a bunch of bots. I mean, back to the one-person, billion-dollar startup. Like, maybe it's a, you know, 10-person, trillion-dollar startup at some point if it's that efficient. And here in Texas, they're delivering stuff from Amazon warehouses so fast that I'm like, I don't need it that fast. They literally are like, would you like this from 4 a.m. to 8 a.m. or 8 a.m. to, you know, 10 a.m. And I'm like, it's 10 p.m., sir.

36:23I don't need it. I'm ordering a cable. It's 10 p.m. It's bigger tomorrow. That's okay. Don't ring the doorbell. Extra leisure. Yeah. And like, literally the drones are coming. Like if you live on a ranch or something like that, I mean, the drones are going to be the ultimate. How crazy is it that Larry and Sergey bought every robotics company for five years, what, 10, 15 years ago? And then they sold them all because they couldn't figure out an application for it. I mean. Yeah, they were so far ahead on so many things. And so I think a lot of creditors do in terms of being really advanced on the curve.

37:00And, you know, there's the old saying that, I mean, there's two different things I think that apply here, but one of them is just that, you know, A, the features here is just not coolly distributed, and B, you know, often it's less a matter of who, but when. And this is a good example of a when, right? They were just too early. and I think they've been remarkably early on all sorts of things. They experimented with delivery. They experimented with internet using weather balloons. They experimented with satellites. Because eventually I think they sold their satellite company to Planet Labs or somebody, right?

37:35But they had satellites. They had everything. They were just too early on so much. So kudos to them for trying. And it's like a venture portfolio. You only have to hit on one and it looks like Waymo will be that one of the other bets. The Loom project was too close to Earth. Turns out low Earth orbit better. You look at Google Glass, that might actually be landing soon in the form of these Ray-Bans that everybody can't shut up about for meta. So they could have kept going with that. I also think their Chromebooks and the Chrome operating system is eventually where AI lands. Like if you think about what will be the starting point for every AI journey, where do you think that will occur?

38:21Do you think it's voice and wearables, phones, dumb terminals? A new operating system, where do you think the end game is for mass consumption, mass interaction of AI? Yeah, I think it depends on how good the companies are who are currently providing all our hardware because the default state is they should win. Now, the question is, are they going to win, which I think is a separate question. And one could argue that there's been very little on-device innovation in AI. And then the question is, is that because they're waiting to see what works? Is it because they're investing and it takes time to build client applications?

38:59Is it a lack of imagination? And so I think there's this broader question of why has so little AI been built into these devices so far? And in some cases, you look at something like Siri, it was never the best voice-based system, et cetera. And so there's a broader question of why is that? And in some cases, it's to protect users. So for example, Apple has a very strong data privacy policy, which means that they don't have a lot of data that they normally would have for training that Google has. And so it's been purposeful. But now in the AI era, should that still apply or not? Or how should you think about it as a company?

39:33I mean, I think those are very interesting, probably ongoing questions in terms of where does that AI future come from? The default should be the devices you use today or the devices that should be the launching point for AI. Whether that actually happens, I don't know. I mean, what do you think? Yeah, I've been thinking about Apple a lot. They are very good at making hardware. One of the greatest things they ever did was get off of other people's chipsets and just make their own, right? That's been kind of the revolution, and they can make devices that are higher margin, more powerful, leapfrog everybody, low battery consumption, solve so many problems for them.

40:07These laptops they build are unnecessarily powerful and unnecessarily long battery lives because they've just optimized so well. So they actually have an advantage in that. And then there will be a time when people have their LLMs come up in, you know, lawsuits and discovery and Sam will be more than happy to turn them over. He said, like, don't put your stuff in here, folks. Like we will have to hand them over. You know, I think that's good that he was honest about that. so encrypted on your device uh with an apple phone apple mini apple you know m17 whatever they get to you could actually run the llm locally all the you know context window could be run locally on all your items and it could be running in the background indexing your photos without ever putting them in the cloud like google and having your photos you know train Google's LLM, which I don't think you really want to do.

41:09And Zuckerberg will do that in a heartbeat, obviously. So I think they have a potential there. Yeah. Yeah. It's a really interesting question because if you look at search as an analog, and I don't think it's the correct analog, right? But if you look at it as an analog, basically Google ended up paying Apple tens of billions of dollars a year to use its search instead of developing its own. And it was all margin, right? You'd have to hire all the engineers. You didn't have to implement all this stuff. You literally got paid money to just distribute somebody else's search. Effectively, it seems like that's the path that's been taken so far on LLMs or on foundation models.

41:41And then the question is, is that the right approach or wrong approach in this era? Because you're not just searching for things. It's not just a way to interface with the web. It's the way to interface with everything. You're shifting the set, the framework. But from a deal perspective, that deal worked so well that I wonder if that's part of the framework that they're thinking. So I have no inside knowledge I'm just saying if I had gone through that historical arc, maybe that's how I'd be thinking about things. And it may or may not apply to this different world of like AI doing sort of all these various tasks for you and agents suddenly spawning up.

42:12Like in the agentic world, that's a very bad strategy potentially. I'm so bullish on Apple making a big AI purchase. I just think they should just take out whatever LLM doesn't stay in the top three. They should just take out Perplexity's great user interface. They really know how to build slick interfaces, the Comet browser. And my lord, just since the antitrust case, think about how much traffic they could spill over to DuckDuckGo, Brave, or Perplexity, or anybody in that kind of zone of excellence. It would be extraordinary for those companies. Yeah, I led Perplexity's first round. Wow. And Arvind is one of the most impressive founders I've worked with in a really long time.

43:02Like just a complete, he's incredible at hiring, incredible at execution, highly strategic, morphed into a very commercial person. I mean, when I met him, he was at OpenAI as a researcher, right? And I actually met him because I think he reached out to me on LinkedIn and said, hey, I'm working at this lab at Berkeley and I joined OpenAI like eight months ago. And this is when nobody was doing generative AI stuff, right? I think I funded him in August 22 sometime. And so we started meeting up weekly and just brainstorming. And, you know, he obviously came up with perplexity. And that's what he wanted to do and what he wanted to pursue and all this stuff.

43:40But I've just been impressed by how he's really just ramped so quickly on so many areas. So it's been a very impressive journey to watch. Are companies sniffing around perplexity, trying to snap it up a lot? I don't know. I'm not on the board there or anything. So I'm a humble and buster. Look at Alex trying to get this breaking news. I like it, Alex. Well, no, I'm just, I mean, Jason's been talking about some snarping up. Tell me all your darkest secrets. The difference is - What is the worst thing that happened in your childhood? Let's talk, you know. No one cares about my secrets a lot. That's the difference.

44:12My secrets are newsworthy. No, but I'm more just asking the general point of like how much interest is there from the incumbent technology companies towards AI startups? Because we've seen some acquisitions, but Jason keeps seeing these interesting possible combinations. And I don't see as many of those in the market as we would expect. So I'm just kind of curious about the temperature or the appetite for that kind of dealmaking. Big M. Yeah, I think it's because, you know, the FTC has continued to be reasonably anti-large tech acquisitions. And that was started into the Biden administration with Lena Kahn and others.

44:45And I think that's just been continued into this administration. So I think it has as much to do with kind of a purview of how the government may intervene. And that's not just the US government. It's also the EU. It's the UK, right? The Figma deal was scuppered by the UK. It wasn't the US that did it. And it almost feels like there's this regulator round robin, where these different groups are taking turns in terms of who's going to scupper which thing so it isn't the same party every time. They must be on a group chat. They're like, we're busy with stopping the totally inconsequential Figma Adobe deal.

45:16Why don't you guys find an inconsequential robotics purchase by Amazon for a$2 billion company to block? And it's like, how does the UK have that much power though, Jason? Like the UK is this little bankrupt block off the coast of Europe, which is a natural economic block. I said this publicly many times. They should just ban you from using Adobe and Figma products in the UK forever and just punish them for blocking it. They should just say, like, okay, if you're going to block it, we're not going to sell to your citizens. They can go use some open source project. Hey, speaking of interfaces, we have this sesame round, which I'd like to go to.

45:52But before we do, I think it would be good to look at a poly market. Will Tesla beat their quarterly earnings? So I chose this, Jason, just to let everyone know, because we're getting into earnings season and, you know, I'm a big dweeb for the public markets. And I thought it's interesting that as we see sports betting and prediction markets come together, it's important to keep in mind that also people use these for what we used to use the stock market for, which was a surprise to me. Because why would you bother to use a different vehicle for that? But people seem really into it. Yeah. 80 % chance they're going to beat their quarterly earnings.

46:24I think you could really do well on these prediction markets by looking at the historical data. Almost every company tries to sandbag these earnings, right, Alad? They're always trying to underestimate them so they can beat them. So beat is almost always the default case. But this is an interesting, if you were a large shareholder, I guess that you could use these prediction markets in some way to hedge. you know just like sometimes people collar stocks or something like that or getting a little extra juice how do you think about putting aside just this one specific one which you're welcome to comment on uh what do you think about these prediction markets becoming just so um quickly integrated into our lives i was using one to gamble on uh the emmys and made a little bit of money watching the emmys and then i did i was watching a boxing match i won again so obviously these things are amazing since i've won two times in a row if i lose then i have a different opinion but for now my confirmation bias is these things are awesome they're fantastic yeah um yeah you know it's interesting because this is one of those concepts that's existed for years and there was crypto projects to do another and finally it's working between polymarket and calci um and really if i look at it it feels like there's two or three big use cases right there's basically sports and sports betting.

47:45Yep. And they took what was a really complicated interface. Not, uh, they did three things, right? One is suddenly it's available in every state when it wasn't before because sports betting was regulated on a state per state basis. They simplified the UI dramatically, right? It used to be what's the spread and the point thing and the, this, and all this complex stuff versus who wins? Yes, no. So they simplified the UI. It's like swiping left, right. Um, and then there's kind of like, um, uh, you know, that, that global liquidity pool where you're suddenly reaching a much larger mass. of people.

48:13And so you have way more crowd wisdom and that sports is a huge area. Politics when there's the political season is obviously a big area. And I'm going to argue the stock market is just a prediction market, right? It's the same thing. And so I always wonder, where does this go? Can you start buying stocks or shares that are basically collateralized via crypto? Tokenized shares. So basically tokenized shares through these markets at some point, like do these things converge? Are they completely separate? In which case, a lot of the financial speculation will continue to be the actual markets and this becomes more sports and politics.

48:52So I've been kind of wondering like, where does this whole world go and what sort of financial instruments emerge either on top of this or does it go the other way, right? The New York Stock Exchange announced that it was investing through ICE, I think it was $2 billion in Polymarket. do eventually the stock markets effectively become these prediction markets? Because they are in some sense already. Yeah, I think if you want to own the underlying asset, you buy the stock. And if you want to speculate and get extra juice on more acute, specific, time-based moments. Options. It's option trading.

49:30It's like option trading. But you're doing it in a simple way. Yeah, it simplifies options way down. Yeah. And that, I think, is the real innovation here is you've collapsed these really complex speculative things, sports betting options, et cetera. And you've turned them into a yes, no. Yeah, this is when you're in the professional gambling circles and you are like the bottom rung of it, as I am. And I watch people try to do side bets, what they call string bets. they make them very complicated, which for the people who are the sharps, who are constructing these between the poker sessions where they drop them out, it's like those option traders, they're coming up with some really interesting synthetic thing they want to do, like Michael Burry and the big short or whatever.

50:15And then there's somebody at Goldman trying to make it more complex to try to get an edge. And they're all just trying to get some little edge on it. And you're right, the simplification of it. you know, will open AI raise money at a billion dollar valuation in the next two years? Well, I can't own, um, open AI shares. It's too complicated or people want 10 % VIG on it. You know what? I'll just bet on that. It's the same, you know, it's like, okay, it's a 60 % chance. Great. I can make, you know, whatever percent more on my money, I'll take it. Yeah. It's a, it's a transition from blogs to tweets, but from a financial speculation perspective perfect analogy perfect shorter form fewer calories you do more of them and then more people do it easier to participate everybody can do it etc yeah okay let's talk about the sesame raising 250 million dollars because i don't know what sesame is yes i thought you might not so this is a company that came out of stealth back in february it's done a couple things one it's built voice first ai and its first two models that i put out earlier this year jason were popular enough that they racked up 5 million minutes.

51:23But what's interesting about this company and why I wanted to bring it up on the show today is they're also working on hardware. They're building glasses for you. And I have an image here from their, oh, let's call it their lab or their office. It doesn't really show us much, but the idea here is back to the point about Google Glass being early is that Sesame wants to give you some hardware that lets you chat with your personal AI agent or assistant or friend or whatever you want to call it on the go. And they're taking the hardware approach to it. And I think that explains the amount of capital here.

51:50Just as background, how did they manage that? Well, they're founded by Brendan Uribe, the co-founder of Oculus, and also the former CTO of Ubiquity 6, which was an AR startup. So they have a lot of that AR DNA in their veins. Interesting. So they worked at Ubiquity, so they understand AR, $250 million. And exactly how is the device going to work? Is there a demo of this device out? Have they made a video of it? Very, very little. The Verge got to try it and talked about it a little bit. And that's where that image came. And I do have another one from the same post, but it's pretty, pretty nascent.

52:29In fact, this company is only putting out the beta of their iOS app now. They're actually taking applications for the beta of their iOS app. So it's very much under wraps, if you will. But the idea is, and Sequoia wrote about this in a piece explaining their investment, Jason, is that it's not just another AI voice chat, like your chat GPT instance, for example, it's supposed to be more of like a collaborator with you and with a focus on how it handles speech to make it seem natural between you and maybe your AI. One thing I'm sure you've noticed is that if you chat with GPT-5 and you make any sound while it's talking, it just stops to give you space, which makes it almost impossible to converse.

53:07So I'm hoping that what they're doing here is making more natural communication with AIs, more personalized AI, and then making it functional on the go without having to opt into the Zuckerberg, I would say, spyware empire. What are your thoughts on wearables, Alad, and this idea of like, it's persistently monitoring what you're doing in the world and what could only be described as the most creepiest Truman show concept ever, but the benefit. Seriously, you like it. I love the Truman show in a dystopian way. That's cool. Yeah. I think, have you guys ever read this book called Accelerando? I have not.

53:48It's like a book. It's a book with wonderful concepts. I think the book itself is a little bit roughly written, but the basic idea is it's the, you You know, it's like the decades leading up into the singularity where you have this technology discontinuation and, you know, eventually at the point where every 10 years you accomplish more than all of human progress. And then eventually every year you accomplish more than everything ever before that, et cetera. And things keep accelerating. And in it, they have this notion of glasses, which are effectively a form of external memory. They're an agent.

54:21They act on your behalf. This book was written maybe 20, 25 years ago. Yeah, 2005. Very sort of word looking, yeah. And one of the really cool questions that it raises is if so much of your memory and all these agents and all these things you do is actually loaded in your device and you lose your device and somebody else puts it on, how much of your personality or how much of your memories or how much of your abilities is it absorbing as you sort of augment as a human and you externalize stuff? And so I always thought that was a really interesting, almost like conceptual book. Like again, there's lots of really interesting ideas in that book.

54:54And this was one of them and is one of the earliest versions of, you know, glasses and human augmentation and all that kind of stuff. So it's this interesting old concept that seems to, again, people are iterating against. William Gibson had a similar concept in his Virtual Light, Uduru, the bridge series of like San Francisco dystopian future. And he had this thing called God's Little Machine or something. It was like a little Zeppelin that flew above you in like a three-quarter shot, like The Sims, recorded your entire life, indexed it, and you could pull it up and say, oh, when did Eli and I first meet?

55:32Or what was it like when I, you know, the first date I went on with my wife? And you could just kind of replay everything. And then you have, of course, Strange Days, the Catherine Bigelow film, where you can put on a neural headset and record your experience. Then somebody else could put it on and live stream your experience and or relive it. So these ideas are there. And it really goes to show how much of our consciousness and processing in the world is done visually. And that whole system could be the unlock for intelligence and consciousness in some way. is what some of the, you know, biology, yeah, I'm sorry, strange days, and it was called the SQUID, Superconducting Quantum Interface Device.

56:17Thank you, producer Claude, for coming to the rescue here. I do have some concerns about these things or being always on and recording everybody all the time. I don't know if I'm gonna win that battle though. You have concerns about this? No. You know, I'm in general a very paranoid person, So I always have concerns. But I think that it just comes back to utility, right? I think one thing that's been proven to us is people fluctuated between willing to sacrifice privacy in order to get access to more stuff. That was Google Gmail, right? There was all these concerns around Google reading your email, reading it, not really, but a machine reading it to generate ads.

56:56And that was an issue. But then, you know, hundreds of millions of people adopted Gmail. And then Facebook, some of the people had concerns about their own personal data and privacy. And I think for a while, Facebook actually was doing fine on it. And probably what happened is, because I sold my first company to Twitter and that was around 2009. And so this was right as Facebook started paying attention to Twitter. And I always wonder if there's some alternate timeline or history or something else where instead of trying to go after Twitter and media and public content, Facebook leaned into its strengths.

57:26Because at the time, it was a very trusted privacy brand, right? It was your identity and it was your friends and your friend group. and it was viewed very differently. And what if they'd gone into banking and payments? What if they'd gone into healthcare? What if they'd gone into all the things that were privacy native? Almost what Apple ended up doing. That's a very interesting alternative timeline for Facebook. And maybe they would be the trusted identity. Yeah, I don't know, but it's an interesting concept, right? Of like, they decided to go after Twitter. What if they decided to go after banking?

57:53At that moment in time, when they were very trusted, it's like, you know, they had all your stuff, but that was fine, right? Because it was just your friends seeing it. It was your social graph. It was closed. They weren't trying to serve you ads. Zuckerberg, in fact, hated advertising. That was like he thought it was terrible. He didn't want to have ads on the service until at some point somebody told him, well, you can make it free and get billions of people to use it. And he was like, okay, fine. And then Sheryl Sandberg comes and the rest is... And this could have been an alternate timeline.

58:23Maybe you would monetize your payments. And this has happened a few times, right? I've talked to some of the people who worked on the early browsers, and it was the same thing they're like is it going to be micropayments or ads and they ended up going down the ads route but there's an alternative universe where it was like micropayments right and you'd pay maybe not i mean the technology wasn't there as the founder of a short-lived micropayment startup back in 2000 and whatever you know i mean credit cards weren't weren't there i think the idea was good but i think we needed essentially you had one you had a micro payments startup oh you did not you did a startup yeah you were it's called it's called contenture we founded it tech crunch wrote about it we launched got customers and then we failed and i had to go back to college oh okay wow you were just too early i kind of feel like yeah they were doing the brave attention token for a while that didn't take that's right yeah uh bat there's been a couple of shots at this and you know one of the things i've learned is when we just talked about it with, you know, Sergey being so ahead of the curve that he was too ahead of the curve.

59:26And then probably some accounting wonks were like, we're seven years into this, Sergey, like, let's pull the plug. And he was probably like, all right, fine. When if he had just stayed till year 11, it would have been like, oh, okay, now we own low earth orbit satellites. We have Starlink. Which was Waymo, right? Yeah, which was Waymo. But yeah, they could have had a couple others. So again, very forward thinking company. I think they don't get enough credit for that. I think this is where like Sergey and Larry just need to say, we will be willing to lose money on projects for 20 years, not just seven.

59:58And we don't care what you think. Remember they were doing Google fiber. And I think that one got deprecated as well. That would have been fascinating if they kept going along and pulled that string. Cause then you'd have fiber plus, uh, satellites, you'd have fiber. We'd have flying cars. Basically everything would be done. Well, and we can invest anymore. Well, exactly be like Google's world. But also that was like, Larry had to go off balance sheet and use his personal balance sheet to do. He did three of them. I think he hawk, right? Kitty Hawk. Was he also in Archer? I think he might have also invested in Archer.

1:00:34He was in at least two of them. Just fascinating. How close being too early is but I'm always encouraging founders to look in that startup graveyard. I think actually micro payments as silly as it sounds built into a social network a browser for content you know this might be like sub stack or you know a youtube competitor might be able to do very well with this where you could set your what if you could set your browser to just say if i watch more than one minute of a youtube video send the person one penny and uh if i watch you know a I have a penny for every second I watch of anything. And if I, you know, if I stay on a new, a document and I scroll down to the end, yeah, give them a penny.

1:01:20There's a lot of people who might buy into that if there was some reward for it. And I know what that reward is. Well, I mean, that was kind of what we were trying to build, Jason. So it was, back then you couldn't do one penny, so you would put in$5 to your Contention account. And then as you went around the internet, we would hand out the money to people that you visited that had our integration. And people kinda liked it, but it was hard to get any sort of momentum. Think about stable coins. Like I wonder if stable coins are the unlock here. What do you think about stable coins? They could be fractional.

1:01:48Yeah. I've been long interested in them. I mean, it's interesting to see some of these second order effects of those now, right? In terms of the biggest holders of treasuries in some cases, amongst the biggest holders are stable coin companies. So it's been fascinating to see both their growth. I remember when Tether came out initially, everybody thought it was super sketchy or very uncertain in terms of the assets they're actually holding against the money. And now obviously it seems like they're pretty collateralized between a mix of like gold, Bitcoin and treasuries. They've done a great job cleaning it up.

1:02:18Yeah. So, you know, it seems like it's going to be a really central thing in general. And I think one of the things that people have underappreciated about crypto, particularly people in the US, is the degree to which globally, for example, that people don't have access to dollars because you're not allowed to buy a government. And this is a way to buy dollars. And this is a way to do simple transactions, like all the stuff that we take for granted here. but it also shows the path forward with tokenizing shares and tokenizing you know things we've been talking about for years it feels like are finally going to happen so it's a it's a very exciting era i feel here we go tether is according to producer claude tether 127 billion in treasuries as of q2 2025 number 18 global ranking ahead of south korea and circle 18 billion is in the top 30 yeah yeah it's very under discussed how many treasuries are actually held by crypto companies now and so one of the biggest buyers of u.s government debt is the crypto industry like think about that what are the implications of that in the long run if crypto gets 10 times bigger and that 120 billion goes to 1.2 trillion what does that mean in terms of the u.s government government's relationship to crypto how should we think about that yeah super interesting who's your It's kind of like the China relationship.

1:03:37It's Tether. It's Tether. Tether's your daddy. Power is your daddy, I guess, in that case. Well, and the interesting thing about Tether is, yeah, they did have that really spicy. I'll use the word spicy. I don't want to get sued here. But they were banned in a lot of regions, a lot of like regional action taken against them, a lot of questions about those reserves. And they have gone like on a five year process of cleaning all that up. And there's like, I think they have, according to the bill, the stable coin bill that Saks was involved in, or talked about on the pod a bunch of times. I think they have a three year window to clean everything up in order to participate in the United States.

1:04:16So Circle's got the clear lane along with, I guess, their partnership with Coinbase, but they have to tether, is gonna clean up. And the guy, Paolo is his name? Paolo, yes. Who was like living in some non, you know, the speculation was like, none of the executives were available and they were living in jurisdictions where you couldn't be deported or picked up by a red notice. I don't know how much is that true. There were a lot of tethered truthers out there, you know, speculating. Um, but them figuring out how to go legit. If these stories of illegitimacy were in any way true is like a story for the ages.

1:04:52That's going to be the next storkin movie, I think. Yeah, it's pretty good. Um, I think one of the most under hype players in crypto right now, perhaps, is Stripe, who I think have been doing amazing things in terms of stablecoins and bridges and all the rest of it. And, you know, I first invested in Stripe in 2010, I think. So it's been kind of a long road. But what an amazing next act. I mean, obviously, the payment stuff is going to keep going and the SaaS stuff will keep going. But I think what they're doing in crypto is super interesting right now. They're never going to go public. bridge and everything else.

1:05:25No, they're never gonna go public. This is my new prediction. Polymarket. I just think that they, uh, perpetual perpetual options. There's hyper liquid. Well, here's the thing. If you have that fluid of a market, if you're an expert in transactions and commerce, what's to say they couldn't build and you know, the infrastructure to let people who are qualified purchasers trade in and out of their private company and then slowly buy back all their shares based on massive profitability and then have a black box company that nobody understands what's going on there it's a tremendous advantage and the colson brothers are uh unique in their perspective of the world i don't think they're particularly driven by some outrageous um you know, personal net worth on a public market and the traditional accoutrement of being an entrepreneur.

1:06:25They seem very mission driven and have very specific principled things they want to work on, you know, like their think tanks, their science think tank, et cetera. So that could be amazing. I mean, I'm trying to think of the equivalent of what's the largest private entity. Yeah, there's a couple of them. There's like Coke Industries, there's Cargill, there's a bunch of Yeah. It's kind of interesting. Bloomberg, right? Yes. Tons of cash and it's private. So I think people under, um, appreciate it. You know, Europe, like a lot of the market cap is actually these, uh, middle shot private companies in Germany, for example, these family businesses.

1:07:05VTOL, Swiss based, Dutch multinational energy and commodity trading company. Yeah. Revenue,$400 billion. dollars yeah isn't coke isn't coke like coke is number five 125 billion cargill should be on there like there's a bunch of these cargill number four 160 i'm trying to find a tech one wow way number 10 i didn't know that they were yeah i mean i guess byte dance is a private that company yeah yeah hey a lot on the uh on the stripe stable coin points i agree very much that they're, they're leading, they bought, uh, was it bridge for 1.1 billion and they just announced tempo their, their own kind of blockchain or L one for, for stable coin payments.

1:07:51And I'm not asking for internal information here, but like, what do you think they're trying to do with that? Is that just to make a better foundation, better rails for stables to fit into the kind of existing e-commerce world, or are they trying to solve a more, I don't know, fundamental issue with stable coins today that is not well served by existing L ones and L twos. Yeah. I, you know, I think it's best to just look at what the company says about all this stuff, because I don't want to over-interpret or misinterpret what they're trying to do. I think fundamentally, if I look at what they've been building as a company over the years, it's really this focus on providing a piece of global infrastructure.

1:08:26Like Patrick used to talk about it almost like container ships and that enabled global commerce for the world. And so I think they're very mission driven around this interconnected web of commerce is not good for the world. and how do we help make it really easy for people and in particular developers to build things against that. Absolutely extraordinary. What else do we have on the docket here? We got maybe one more story left in us. What do we got left? Because we have a lot here, why don't we talk a little bit about the fracas, Jason, with Anthropic and your bud, David Sykes? Oh, that's spicy.

1:08:59We also have the OpenAI browser, less spicy. Let's go for the spice. okay let me just pull that up real quick i gotta find i have some thoughts on it i'm shocked i'm shocked that you do not believe this but i have opinions i know for better or worse it's good it's good all right so uh anthropics dario amade wrote a public post this week responding to his critics but to understand what's going on we have to go back in time a little bit to the one big beautiful bill. Jason, we discuss here on the show that there was a provision that eventually didn't make it in, but that would have banned states from having state-level AI regulations for a period of 10 years, ended up getting voted down 99 to 1 in the Senate.

1:09:42Fast forward to recently, Jack Clark, another co-founder of Anthropic, wrote a post, a summary of a talk that he gave in which he said that he thinks other stakeholders in the world should have a bit of a say in how we build AI as we build it. He's not a doomer. He's definitely an optimist, but he thinks that we should listen to other people. And then your friend David Sachs comes in and he says that, quote, Anthropic is running a sophisticated regulatory capture strategy based on fear mongering. It is principally responsible for the state regulatory frenzy that is damaging startups. Fast forward through some back and forth and other people weighing in.

1:10:14And we got Dario's open letter essentially saying, hey, what the hell's wrong with you guys? We love startups. We work with them. We're in favor of a federal standard. And this has become such a big deal, such a back and forth that CNBC is covering it. And so, Jason, I'm incredibly curious why we have left the era of founder friendliness and we're now seeing venture capitalists attack some of the most successful companies in the history of startups. You know, this industry left its boutique phase when Facebook hit scale. Facebook just had far, far too much impact on society, elections, our children, Instagram.

1:10:52I think that was the end of the innocence. just if I were to pick, you know, a demarcation point of when we became so big that we couldn't be looked at as the weirdos in California building cool stuff. And then it became, oh, how are these things damaging society? We should be questioning everything about AI. We just did today talking about Amazon and job displacement. We should be thinking about kids using these products. We should be thinking about people getting one-shotted and getting, you know, and we should be thinking about the truth and the search for truth. I think all these things are valid discussions.

1:11:27I think what's at stake here is there is covert,

1:11:33I don't know, lobbyists and covert political actions to try to regulate things. And that does make me nervous. I just want to see all the evidence of it, if that's actually happening or not. And I told Sachs this. He wasn't too pleased with me a lot, But if this is the most important technology of our lifetime, why wouldn't states have a right, in the format of the United States of America, to, you know, chime in on it? You know, if they... kids access to it, or how it's used in healthcare, how it's used in terms of job displacement. What's your take on all this? Yeah, I think at this point in time, and I think industries evolve over time, and the nature of how you regulate those industries should evolve with it.

1:12:22But early on in industries, it's a bit of a disaster to let each incremental state chime in on how to regulate it. Because fundamentally, there's a handful of states that effectively by fiat govern what the rest of the country does, whether the rest of the country adopts things or not. It's almost a flip. Why should California be able to govern AI for everyone in the US, which effectively almost happened through the Scott Wiener bill. So I actually viewed on the other side of this one where I think the states should not intervene for now. it should be federally mandated. There are both national security reasons to do that.

1:12:55There are national competitive dynamics to drive that. So, uh, you know, my view would be, um, and, and this literally almost happened, right? California was gonna try and regulate how the rest of the country deals with AI, which is a really bad idea. So, um. And it was based on the number, the amount of compute you have as if that is some sort of. Well, the question is, why should California regulate it for at all, A and then B for everyone else? Which is, I mean, it would have been national, which means it would have been global. So should California have the right to set national or global AI policy effectively?

1:13:30Yeah. And the car example is a good one. And so that's one where I happen to be in favor of it. So when you look at these, it's always. It may have been the right thing to do. The question is, should California have been able to do it? In other words, correct? Yeah, I was in favor of it. Yeah. Yeah. Yeah. It's like, let's separate the, do we agree with the thing? Yes. From how should that thing get done? Right. And I think those are two separate things. Yeah. And that's what I've been trying to parse in my head. Cause I, you know, yeah, we should have higher gas standards and who cares if cars cost a little more, we, you know, having smog over cities and people losing, you know, months to years off their life and, you know, asthma and all this kind of stuff.

1:14:09Yeah. It's obviously a tragedy of the commons. It's a good thing that California did that in my mind. But should Texas be forced to not buy the trucks they want that have the hauling power and the price performance ratio that they want? I picked Texas as a place to live because I like less regulation. And so it really does come down to the operating system of America, where the states are supposed to have some sovereignty, but they have to super oppose it against, well, if we are, in fact, in a global race with China, can we can we afford to slow ourselves down and that's like a very interesting this is probably there's a global race with china and then there's the um there's the political side there's the military side of that there's the economic side of that there's the political and cultural side of that and so i i disagree as well with hey we should have every country on the planet we in on how ai models should get built in the u.s i think each country should have its own sovereign ai model.

1:15:07And there's lots of ways to accomplish that. If I was running a country, I'd be very interested in that. I want my cultural values represented in local models and things like that. So I agree with that. But the flip side of it is, if anything, perhaps the last few decades have shown us that perhaps we don't need to solicit everybody's opinion on everything, both in the context of the company and the context of a country. And so this is almost a throwback to things that haven't really been working, it feels. Yeah. If you were to put this against high-speed trains, Alex, like there's a reason why we don't have them in America because everybody gets to chime in on the high-speed train and then the high-speed train, you know, is like, you know, it's...

1:15:48In other countries, they're like, high-speed train, zhu. Has to be a straight line. Yeah. Or else it can't go fast. And, you know... But in China, there's been a lot of studies discussing how both province and central planning has led to a dramatic overbuild of economically inefficient high-speed rail and so we can all give a thumbs up to the shanghai beijing line why not but when you see the what is it eight eight pillars and eight cross beams there's some model that i'm translating poorly here for how to build high-speed rail in china and it's led to a lot of misplaced spend and so i agree that we should have the drivers of that spent now Like that's often also corruption.

1:16:26That's a bunch of stuff. It's not just. But if you want centralized power a lot, if you don't want people to have sayings, you're going to end up with a central power. Well, really what the question is, is what are the things that should be regulated by what level of government? And that's, that is something that has been established and adjudicated in the U.S. for centuries now. Right. And that, this falls into line of those things, which is how much should states be able to govern on their own overall technology progress for the U.S. and for the globe. And that's effectively what this issue really is, right?

1:17:00Interstate commerce. Not just interstate commerce. It's effective de facto regulation of the entire country. Right. No, I'm saying that because it's that, it should fall prey to that, and therefore it could be limited in that way. Exactly. Exactly. But what's interesting, though, is we're talking almost about the wrong foe here, because I think this is why anthropic is you know being dragged into a bit of the mud here but the the the provision to blant to block state level ai regs was voted down nearly unanimously in the senate and partially because republicans from the south wanted to protect local industries so how do we get congress to listen to this perspective and do something intelligent and pass something that will preclude or maybe just do better than state level regulations because Dario said in his letter that they disagreed with the idea because, um, a blocked action without offering a federal alternative.

1:17:50So how do we get to one? How do we fix Congress? I mean, there, there is, there is this, um, I, I, I'd say three things on it. One is I tend to stay away from politics. I'm the least, uh, cogent person to ask about how to fix Congress or how to change, you know, like I'm, that's not the world that I tend to spend time in. And, you know, I do think there's a number of different approaches that we've taken in the past or historically to federally mandate things. And one route is executive orders where they can be applied. The other route has been acts of Congress. You know, there's three or four routes that are just standard.

1:18:27And the question is what best applies here? And then I think it's back. There's also the meta issue of where do states cross the boundaries in terms of the areas that probably shouldn't apply to them? And is that a legal framework? Is that something else that already exists? And how do we interpret, you know, the existing legal structures of the country relative to some of these topics? I think that's the granular piece that you're talking about a lot, I think is the key piece of this. Which downside, what concern do we have over AI that is not addressed by an existing law? If you were to go in an AI and you ask it right now, how do I build a chemical weapon?

1:19:07How do I build a biological weapon? says, Hey, I'm not going to do that. It's already been solved by the teams. They've self-regulated. So, okay. What's the next piece? Oh, um, how do we deal with, uh, you know, I don't know, the terminiers stuff. The bioweapons stuff is so overstated. And I feel like that's the way that some of these companies have been trying to, uh, cause distress and fear and regulators and others because the reality is all the protocols for building a virus you can release, et cetera, are on the web. Yeah. I mean, I worked as a biologist for almost a decade, right? And all these web protocols are out there.

1:19:46The real issue is buying the equipment, using it, actually doing things in an intelligent manner, ordering all the logos you'd need, et cetera. So the extra information content, in my opinion, isn't high. And the hard part is the physical world stuff. And so whenever people raise that as an example, I view it as kind of a red herring where it's purposefully raised in an attempt to cause fear in people so that they'll react and regulate something. So I do think those are bad, bad examples that people tend to use. And it's purposeful, I think. I agree. And I always ask people, tell me the next one.

1:20:21Tell me the next one. Let's just get granular here for a minute. I have one like IP protection. I think that that should be done. That should be self-regulated by the industry. which they're starting to do, they're starting to say, hey, even if you don't agree with how Sam's doing it at OpenAI, he's saying with Sora, hey, if you're like, you know, the estate of Elvis or Martin Luther King, we'll be gracious and turn off the ability to make Martin Luther King saying inappropriate things. And they did. They didn't have to go the legal route. Sam said, we're good people. We're going to be aggressive in letting people do things, but we're also going to be reasonable in turning them off.

1:21:00I disagree with the approach. I think they should always get permission, but okay, fine. He took a different route. He'll get the legal exposure. But yeah, this is a situation where we have to get into each one. And I was just thinking when you were talking about, you know, bombs and I was like, remember fertilizer bombs? Everybody was like, oh my God, you know, the internet's causing this, the Tor network, you know, dark lab, everybody knows. And it's like, you still gotta get the fertilizer. Every piece of, every bag of fertilizer has IDs in it. like in the chips from what I understand. There's like some secret way that they watermark every bag of fertilizer.

1:21:36So if you blow something up and then if you buy them, you need to register and they've got some, you know, I mean, who knows how the government is implementing this after the 9-11 because the first, before 9-11, they tried to blow up the World Trade Center with a fertilizer bomb. They succeeded in blowing up Oklahoma City, two different groups of terrorists, domestic and international. They solved this problem. I bet you they have like ways of tracking fertilizer where like the second the person leaves the fertilizer store, there's like a camera on their license plate. They're being tracked by a drone.

1:22:11Like the government took this seriously. There's so many like simple solutions to this. So yeah, that's why I stopped fertilizing my garden. I was worried that I get tracked down. Yeah. So you laugh, but the only time I've actually gotten pulled out at the airport and put into a small room was after going home to oregon to my parents house and i was walking around the backyard a lot and i popped a uh some sort of test a tsa for possible fertilizer and they like i've never been treated as a criminal quite like that they're like is there anything in here that's explosive i'm like i don't know weed but please don't find that and it was so oh sorry we're live uh edit that out i guess um but it was just it was so surreal but it can catch you and They literally asked me, like, have you been doing gardening?

1:22:56I was like, no. How's that relevant? I didn't know what they were talking about. You were like, I've been helping startups grow. I don't get it. I've been gardening this time. By spreading manure. Yeah, exactly. All right, listen. This has been another amazing episode of This Week in Startup Salon. Thank you for joining us today. What a great guest. Where can people find you? I mean, you got a Twitter account. You're pretty active, yeah? Yeah, Twitter. They can find me. at a lot go and I'll talk to her to be on. Thanks for including me. All right. And we'll see you all next time on This Week in Startups.

1:23:29Bye-bye.