I had this thing with my oldest son where I don't know if it's all kids but he's 13. he doesn't know how to answer the phone not to save his life oh oh he picks up the phone huh hello and so and so I said listen from now on when you call me I expect a certain way that you pick up the phone and that's going to be practice for you how you interact with anybody else and vice versa says well if I call you you have to pick up the phone
and if you don't I'm hanging up right away so yesterday he calls me and and I'm like Tremont speaking you know it's like hello speaking Dot hi honey he calls back hello speaking dad hung up again we did this three more [ __ ] times and then finally I said when will you get it through your head can you please just answer like if I say hello to my speaking Hey Dad it's your son or Hey Dad it's and it's unbelievable and he's like well
none of my friends pick up the phone like this and I'm like oh my God like don't they think they need to have verbal communication skills it's unbelievable and then when I call him he picks up the phone oh what not even hello huh it's like a grunt minimal efforts like the minimum minimum number of syllables it's it's embarrassing are you kids like this or is it just my kid actually I don't think I've heard him pick up at
the phone I need to test that [Music] Rain Man [Music] [Music] Jay Cal was on Twitter calling me out for not denouncing the Chinese balloon a strong enough language although I don't think he understood the language I was using um did you understand what the word errant means what did you think it meant I you know I do understand yeah it generally means Strang of course yeah and traveling in search of Adventure at least according to
Merriam-Webster so I just thought maybe you're being a little but I know you're a Duff so but it was a little dovish thinking they were just off course I think you'd think they were off course or they were doing it deliberately you buy that it was off course genuflect go genuflect Jacob go go go so I knew Jacob would have to join in this Nationwide panic over this balloon I have no panic over yeah Jacob I got some really bad news for you
there are these things called spy satellites everything oh I know it's obvious people they've been sending these balloons over here for a while I just thought your framing as it was errant it's such a hair brain scheme to send a balloon flying over American territory that the Occam's razor explanation here is that they somehow lost control over it and these things are not steerable so like my guess is
that it probably wasn't deliberate just because of how stupid a plan it would be and how like obvious it would be but it could be I don't really know what I do know is that the whole nation got in a lather and a tizzy and started hyperventilating about this balloon and it just shows how reflexively hawkish the media is you know it's like hey can we just wrap up this war in Ukraine before we start another war with an even more the media
superpower the balloon got more intention than us blowing up north stream exactly okay well hold on we're ready to jump injured no what I would say about that is uh the media Insight is the valid one I was just responding to the errand and I was curious if you actually thought it was an accident I don't think it's an accident I don't think there are acts well I think it clearly was off course and problematic so you know I don't know about the
intentionality of it I I think I think it very well could have been intentional but I tend to think because it's such a stupid hair brain scheme like I almost given the benefit of the doubt not because they're not capable of spying I'm sure obviously sure obviously they're spying on us just like we're spying on them that's what yeah we both do but I it seems like such a stupid way because it's made for TV moment you have
to understand the nature of live television why the media overreacted to it it's ongoing so because it it's not final it's like a live event occurring like when kids are trapped in a mine those are the best stories for CNN because you can keep updating people and people keep turning the TV on to check on the status so this one was just made for CNN because obviously we're going to shoot the thing down and obviously you can interpret
into it if it's an accident or not and just gives them something to talk about on a slow news week but it is interesting I think your point that is interesting is is the nordstream story correct or not why is that not being covered it's not being covered because there it's not an ongoing story so that just shows you you know I don't think that's right I think it's not being covered because the mainstream media
already took aside on this oh so remember cynical yeah well it's not it's not just cynical so when when Nordstrom got blown up the administration came racing out with the line that the Russians did it that they this was self-sabotage and by the way the media repeated this endlessly this was the media line and it never really made sense to anyone who's paying attention because first of all this was an economically vital asset to Russia
second it was their main source of Leverage over Europe was there control over the gas Supply it's the idea that they would shoot themselves in the foot that way just to somehow what show how crazy they are it never really made sense anyone was paying attention and the fact that the administration the media so quickly raced to that conclusion suggested that it was maybe a cover story because if we had nothing to do with it you would just be more
neutral and say yeah we don't know what happened but they had to like promote this line that well the Russians did it which just never made any sense and now cyhurst has come out with this story so it laying out in great detail how we did it it's not just saying we did it it's laying out who did it and how and the steps and all that kind of stuff and just so you guys understand who this guy is he's this legendary Pulitzer
prize-winning journalist he's like 86 years old or something like that now but he broke during Vietnam he broke the story of the milai massacre which the military denied until he proved it uh he broke the story during the Iraq War of the Abu gray prison abuses which again the media the military denied until it was undeniable these Pulitzer winning is all you really need yeah basically another covert military action
and look we don't know for sure whether it's true or not but it looks it looks pretty bad do you think that Europe knew do you think that the Europeans were told that the Americans were going to go and blow this thing up if that's true by the way the Administration has said clearly this is a false statement I think the specific code was this is pure fiction the Ukraine would be the most likely uh person to do disability you
got to look for means motive and opportunity they don't have the opportunity to go down the story I don't think I don't think the ukrainians have the capability to do an undersea Mission like that ah interesting the Norwegians do and the story maintained that we did it with them the British do story didn't say whether they were involved or not so no my guess is that if this was a covert U.S activity it was
kept to a very small group which is why it'll be hard to prove more definitively than this the other side of the argument is this is such a provocation and the administration saying it's fiction so what is your response to that sex like would the U.S do something so provocative or would they have somebody else do it and would Norway do something so provocative it seems an extremely uh it seems like an extremely offensive
technique as opposed to just backing the Ukraine to defend itself against Russia's Invasion here's the thing before The Invasion Biden at a press conference said that if the Russians invade Nordstrom would be no more and they asked him well how can you make sure that that's a deal between Germany and Russia we're not involved and he said we have ways we have ways distrust me it'll happen separately Victoria Newland is our deputy secretary state
said something very similar about how we would stop nordstream if the Russians invaded and then after Nordstrom got blown up blinken at a press conference said that this was a wonderful opportunity and was extolling all the benefits of this and then Victoria Newland had a congressional hearing said that I'm sure we're all very glad that it's a hunk of metal at the bottom of the sea again extolling all the benefits and we've
discussed the benefits on this program of now we've shifted the European dependence on Russian gas to dependence on American gas so the fact the matter is the administration kind of telegraphed what they were going to do they had the capability to do it and they had the motive to do it so it's certainly a plausible story you're right that we can't know for sure it's a single Source depends on the credibility of Psy Hersh
but as it stands right now whose story do I think makes more sense probably Psy hershis you believe Sai harsh over the spokesperson for the CIA who wrote the claim is completely and utterly false just to be clear well these these same people denied Abu Gravely you believe they deny everything okay they deny that um NATO expansion anything to do with the you know breakout of this war yeah I mean this is one of the situations where
we can't possibly know yeah you make a good point jcal which is this if true and look I'm not saying I don't know if it's you're leaning towards believing it I lean towards thinking it's more plausible than not okay uh because also
like who else could have done it and who again who had the motive means an opportunity but you make a great point which is if we did it it's an incredibly provocative act it's basically perpetrating an act of war against a
country that has thousands of nuclear weapons Biden promised us at the beginning of this war that he would keep us out of being directly involved so this would directly contradict what he said at the beginning of this war so I think it's a very scary situation here yeah I know yeah if the US didn't do it like why don't we find the real killer I actually have this I have the theory here's my theory the CIA knew how to do it
Biden uh wants to do it the Republicans want to do it obviously the the people who are the most pro-stopping Nordstrom have been the Republicans they've LED this charge uh even more than the Democrats so it's it's a bipartisan issue stop Nordstrom bipartisan issue hands down I think the CIA probably knew how to do it and just like we equipped the Ukraine to do it we might have facilitated the Ukraine and a collaborator UK
Norway some Freelancers you know we have those freelance uh former Navy Seals that operate perhaps the CIA just said to the Ukraine here's a you know Black Ops group if you wanted to engage them you could feel free to do so which would then split the difference between what Psy is saying what the CIA is saying which is typically where the truth lies is probably between what this investigative journalist of note has
said and what the CIA is denying the CIA probably has plausible deniability that's my opinion well if you could find a source for that story J Cal that lays out in the same level of detail that Hirsch has laid out in terms of the meetings that occurred what was approved when how they did it uh the you know when they did it the explosives they use the divers they used it goes into a fair amount of detail incredible detail
right but you're you're trying to put what you just said which is basically you inventing a story on the same level as Russia's story yeah I think yeah I understand but he actually has a lot of detail in his story yeah he had he had
umpteen sources there was a lot of people that were willing to tell the story no no I don't think that's actually the case I don't think it has umpteen sources and there's no on the record there's one main source there was one
main source yeah but Who provided a ton of detail I don't know exactly how much he was able to directly corroborate with other sources I don't know that the other thing I wonder sax is he with this one-store story he has a collaboration with the New Yorker and anybody would if this was a really well sourced and you could back it up kind of story they would love to have the ratings for this story there's a blockbuster story
or as it happens a long time which we learned was it through the Valerie plan Affair which is that these major news Publications will some sometimes have a back Channel back to the National Security apparatus when they have something like this and the message was you can't hit print on this yeah in which case possibilities too he goes and just self-publishes himself which wasn't really even an option a few years ago no yeah so I mean this
is this is the raw shock test of raw shock tests you have the media you got the CIA it's fodder for a great movie when I go back to Jay Cal is I think you can lay out some theories about let's say you know the polls did it or maybe ukrainians with the British or something yes you could lay out those theories but the media wasn't willing to entertain any of those theories when this news broke what did they do they blame the
Russians and that story made no sense but they said it so definitively they just for the source on that I'm looking for Nick if you could pull up the source of the administration blaming the Russians I just want to make sure we're active at a press conference yeah by the Russians now they didn't push it that hard what was interesting is the bite Administration set up but they didn't keep coming back to it but the
media really ran with it and when people on both the left and the right like people like Jeffrey sacks on the left and Tucker cross on the right basically started a question whether the U.S could have done it they were accused of being conspiracy theorists and you know Putin Stooges and all the rest of it and now all of a sudden Here Comes Seymour Hersh with a pretty detailed story lending Credence to that point of view
yeah it just may indicate we don't know everything that's going on with this war and um I think the longer this goes on the more dangerous it is Freeburg you have any thoughts on geopolitical issues and who might have blown up north stream uh what are your sources saying Freeburg what are your sources and science quote are saying speculation is best left to the future I don't know about the whole speculating on what could have been done
in the past by someone those are conspiracy theories and little things they're not they're not actually conspiracies North stream was blown up you understand that right like there's no doubt I'm saying Theory oh yeah Jay calistheory is this you've got to bring data to the table Yeah pure speculation you got to bring data to the table to make it uh by the way speaking of which Radix Sikorski who is a Polish
Diplomat I think he was like their foreign minister when Nordstrom blew up he tweeted a photo of it saying thank you USA oh which was one of the reasons why people thought that okay like yeah of course the US did it you know who has the capability to do it who has the motive to do it who said they were going to do it and who benefits who benefits who is conducting NATO exercises in that region right three months ago yeah exactly and Jeffrey
sacks pointed that out on I think it was a CNBC interview before they basically stopped him because he's not allowed to talk about this on you know Network TV apparently but he basically pointed out they were like us radar signatures in the area President Joe Biden declared that this is from Bloomberg that a massive League from the north stream gas pipeline system in the Baltic Sea was an intentional act and that the Russian
statements about the incident shouldn't be trusted it was a deliberate Act of sabotage and now the Russians are pumping out disinformation lies Biden 12 reporters Friday at the White House so he didn't exactly say the Russians did it he just said it's an act of Russia what's that the media did you could do one of these montages where it was like Russian sabotage in fact he said it was an act of sabotage you
should actually look at what Biden said everything he said is absolutely true if the US also did it correct yeah every single sentence that Joe Biden said is 100 true whether we did it or whether Russia did it it was a deliberate Act of sabotage by us think about it if we did it we know they didn't do it and then we have to be like careful about suggesting they did it what are the Germans think because this is the
Germans pipeline this so if we blew it up that's also an uh explain to me you're thinking on the chessboard of our relationship with Germany if we blew it up would they not also see that as a hostile act this is why I asked if
Europe knew because I think you have to tell Germany that it's going to happen and I think the quid pro quo with Germany is some amount of Guaranteed Supply that the U.S directs into Europe so that they know that their long-term
LNG Supply is intact so that they become ambivalent right there's a point of indifference where the Germans say okay we don't know when this thing is going to get turned back on and we don't know about the implications of it are here's what our demands are meaning our energy Supply our energy needs are and so as long as the United States can say look worst case we have stuff in the you know spr that we can give you
there's probably a point of indifference where the Germans say okay we're just going to turn around and not say anything and I'm curious did the Germans say anything when this happened I'm looking for the jury I was literally
just typed to Nick what was the German's position on this because that's interesting too that's a tell well yeah if you're breaking this down like a poker hand we're trying to figure out if you construct this hand right pre-flop
it's like you know where both of these folks are right okay there was a really interesting video that a guy named uh Matt orphelia who puts together these really funny videos he put together these montages of media reactions to things and what he shows is that you know you can have like 20 different media outlets and they all use the exact same words and when he Clips it together you can see that the reading from somebody's
talking points and it's not really clear who and and basically if you look at his video here on who blew up north stream pipeline you see that there was like a party line from the mainstream media on the stuff the Nordstrom too we will bring it into it what how would you how will you do that I promise you we'll be able to do it the Nordstrom pipeline I mean I said it's most likely Russia Russians sabotage on its own infrastructure it's
a common sense matter I think it's Putin's way of sending a message what guten is saying To Us by blowing up this pipeline is look I can blow up a pipeline everyone knows that Putin did this himself who are these Talking Heads without the correct proof yeah I think logic and Common Sense will tell you that without the evidence Russia was behind the incident we can say it for sure who sabotaged the nordstream 2
pipeline I had enough it's nonsense come on you know it's these Talking Heads who have no first-hand experience it's fantastic it's fantastic all his videos are like that where like he has one on the hunter buying laptop as well where again he's got like 20 different Talking Heads and and media Outlets all portraying it in exactly the same language Sunday morning shows you hear the same narrative from each side how does that
actually get coordinated each side builds those bullet points emails there what do they call them um surrogates they email all the surrogates and say just keep saying these things over and over again to codify yeah so what's up group it's a WhatsApp group and they're just like say this over and over again how does it work sex I think it's partly talking points memos I go out to chat groups I think it's also just people
looking on Twitter and then there's like certain Keynotes that they follow and they know okay this is the party line because such and such key person is saying it and they take their cues it's that uh memetic memic effect that you guys always talk about people yeah the memetic yeah the thing to understand is that all the prestige Outlets repeat the same party line and have the same perspective yeah you got you gotta do your own search for
information this is the beauty of sub stack actually that's why sub stack is so important is it actually gives you disruptive yeah alternative because like you've got 10 different mainstream media networks or newspapers and magazines but they all have exactly the same talking points except you know maybe Fox News is kind of the one exception although even Fox on the whole Nordstrom thing you saw that a fox can
be pretty militaristic and they had the same generals basically blaming the Russians for this on Fox yeah Germany's position is just hey everybody uh this is sabotage so that's it sabotage I think you asked a really good question there about the German interest in this right now the German economic interest and the German foreign policy interests are not aligned what's clearly best for the German economy is to have cheap natural gas powering its
Industries even if it comes from Russian Pipelines and they no longer have that anymore in fact they may never have that again so they're going to pay a very high price economically maybe forever and remember their their whole economy is based on industry they're a very industrial power so if this war drags on for a long time I think Schultz might be in some political trouble precisely because he's gone along with the Americans on this
and there is there is a growing political opposition to this war inside of Germany War fatigue is a real thing and this thing's got to wrap up at some point any uh final thoughts Freeburg I don't you didn't get too involved in that conversation but what is uh any any game theory from you no okay there you have it folks Sultan of science checking in what's the problem you don't want to criticize the establishments
is it predicted why don't you have my position on this is it because I'm trying to understand because I don't think anyone I'm not I'm not pro-establishment I think you know that I think I'm I'm just analytical around the fact that I think there's a strong orientation towards conflict and I think there still is I don't think that there's much of an incentive or a motivation to back down because this conflict creates a significant amount of
debt owed back to the US it creates a potential future asset stream creates a realignment of power everyone's looking externally as internal you know economic conflict and wealth disparity issues arise and economic growth is challenged and inflation is soaring it's a great place to you know address one's energy so I think all of this stuff is detailed analytical Shenanigans around who's saying what or who's doing what I think
the underlying thesis and the underlying River that's flowing is one that's like looking for external conflict I think the same is true with the US and China and you're talking about the military-industrial complex is going to benefit massive limits the longer this drags out the more the conflict in Taiwan heats up the more we're going to invest in our military we often talk about these things as if they're like top-down like
master plan driven and as we all know like there are more Ouija board driven it's a bunch of guys that got their hand on the Ouija board and they're all just had a little too much caffeine you know and in this case I think it's just more about like everyone's a little anxious and the anxiety's leading to a desire for more conflict we're not happy at home if you're happy at home you're not looking externally for
conflict that's true in nearly every developed Nation on Earth today that's it I don't know it's pretty simple I like your position I think it's great take I think it's a great thing I think there are a lot of interests who benefit from war and I think the foreign policy establishment is funded by those interests and it's kind of wired for war at least in terms of the reflex right even something as relatively harmless as
a balloon I saw that becomes like a casus bella it's like people are ready to go to war against China over that I saw a couple military leaders give a talk a few months ago it's in a private thing so it wasn't on public record with the
establishment no yeah I was at the establishment Gathering where the establishments oh this is the Illuminati did you genuflect twice going in because I'm genuflect on each knee then they give you the bag of capitalism
yeah what was striking to me in this particular thing where these guys were being interviewed on stage at like a dinner thing and they were so oriented around their next steps in escalation and I think it speaks to the point Zach so like none of them were thinking about like where are we at today how do we de-escalate what is this going to get there was no conversation at all from anyone about resolution or de-escalation with every
single one of them it was all about like my orientation for getting bigger going deeper going harder going stronger making this thing bigger and I think that was really scary to me because I didn't I didn't hear anyone having a conversation around like how do we everyone was thinking assumptively it was going to get bigger I like the Ouija board you have to follow the financial incentives when the last time we looked
at this right Leon Panetta and all these other guys who were screaming for war they were getting paid by the military-industrial complex I remember when Lloyd Austin was nominated as defense secretary he had some conflict issues because he was just on the board of Northrop Grumman or one of these big military industrial companies and so of course these generals have to push for war because as long as they're girding
forward they're guaranteed to have for them a very lucrative job once they leave the military the Ouija board though sacksaw and I'll throw to you maybe you can keep this metaphor going the media's got their hands on it they want ratings you have the energy industrial complex in this German conflict who seeks to benefit massively if people invest in Renewables or you find other you know oil you know off Norway Norway's oil is
one of the largest reserves that's untapped so you have this Ouija board media energy and the military industrial complex all moving it at once maybe you can speak to that everyone wants to move it to the side of the Ouija board that says escalate there are very few people that are that have the energy to move it to the other side that says de-escalate the escalation means less energy more less investment so yeah we're gonna go
escalate you know who warned us about the military-industrial complex yes Dwight D Eisenhower Supreme online during World War II wins the war Patriot war hero top General becomes president Republican president and is his departing address warns us that yes we need to defense industry but they become a vested interest in favor of foreign interventions of war and in 1960s where's the interest on the other side of it I can tell you this the American
people don't want to be in a war with Russia I don't even think most American people want to send 100 billion over there they want to send 100 billion to their cities to fix crime and all the other problems homelessness everything yeah if you've never seen that farewell address from 1961 it is well worth watching you can find it on YouTube just search for military industrial complex Eisenhower and he and this is a person
who was part of the military industrial complex saying watch out for this it was a very impressive yes he was in the machine he helped build the machine welcome to the all-in podcast with us again David the dove sacks chamath polyhapatia and the Sultan of science who is on his podcast or my God so many podcasts are doing the Sultan of science is in hot demand what are all these podcasts you're doing Freeburg holy science
podcast pulling you in I did a podcast with Brian Keating last week who was really kind enough to reach out he's had some awesome guests he's a cosmologist at UCSD Professor down there and we were supposed to record that day and then we canceled I think last minute right yeah yeah I was only supposed to be on with him for an hour and I'm like oh well my next thing just got freed up so ended up doing like three hours it was I
was so I was like exhausted that day so I look really hungover on the video and probably par for the course stumble a lot yeah but no Lex Friedman for you so chamath and I have done Friedman Alex Friedman but you have not he's invited you yet Lex has Lex invited you no no he's not here's my invitation what's going on here collect all four Lex what are you doing all right let's know Davos and no luxury Moon what's going on you remember
anti-establishment what's going on no I'm too anti-establishment sucks that's you know mistress nobody nobody's inviting this quartet to anything well full stop we're not doing it all in life from Davos it's not happening folks sorry they don't stop that heat hi Grace I don't want to be part of any club that would have be as a member and they also don't want you there anyway so yeah it works out for everybody it does fill me
with like a rage where I actually might agree to doing the all in Summit again by the way proposal coming your way this weekend if you want to really really really thumb your nose at The Establishment yes let's do it set it during the exact same dates and times as an establishment conference oh the altitude and then invite all the best guests so that they are they come to ours Justice establishment conference you could cut
the anti-establishment oh that's a tagline let's come up with a tagline that just tweaks everybody list we should create the anti-list you know they have their like establishment list we should have the anti-list that's
a good point I like the anti-establishment start with them I have a great Vanity Fair establishment thing story okay I snuck on that list they put me on that list a decade ago let's pull it let me find a link go on the most incredible
thing about it is that when you go to the event which is kind of a cool event we all had photos taken by Annie Leibovitz oh and I have a montage of some of the people that took photos that day that's pretty cool me Aaron Levy Priscilla Chan Bezos bunch of people but I look like a toy I was about to say is just before you had just what you had the dad bod and nose fashion sense yeah it was like yeah oh look he looks great
here it is yeah basically I had no stylist it was like glasses it was like a year or two post Facebook it was not a good look for me not yeah yeah but that's not that bad I'll show you the picture Tom Ford that was your time he's doing the jeans Blazer thing which is like a really tired look for a Silicon Valley three skinny jeans though it's like a little three skinny jeans yeah that's not so bad just don't pull up the
chamoth pictures when he's wearing like oh my God you know his Macy's shirt if you do the Google search you put the images before 2011 you will find some photos I wear the same thing every day for four years five years is brutal oh oh my God what is that's awesome we gotta break this down yeah see this is when the sweater game was not tight this is like sweater 1.0 game it says I didn't know what I was doing back then stop but take these
pictures off please look oh he's also got the watch subtly peeking out this is back when he was like oh I got a Rolex ooh that's a picture but anyways yeah this is what the watches were only five years out of zero I don't know if that watch guys or two but yeah same story same same Jake out same same same all right well listen all right listen I got an Apple Watch and I'm gonna upload oh geez yeah there's the dad vibes
wow that must have been from yeah Mayfield 13 14 years ago wow God you had no style I really didn't it was rough it really is rough I mean don't pull up pictures of me I was fat yeah yeah pictures of me eating egg sandwiches all over the Internet oh yeah chubby Jacob oh man look at that face there he is oh that's plus 20 pounds let's keep this going search Wars Microsoft versus Google okay it's been a rough couple
days for Google we've all seen it Google and Microsoft both did live demos of their new generative AI yada yada yada you guys all know about Chachi PT but now Bing is integrating it into their search engine getting there before Google and Microsoft CEO Satya nadala he is going ham he looks great he's fit he's wearing a tight t-shirt and he is saying he's going to make Google dance dance Google dance he is getting up in
their business and uh listen he is in a distant second place so it makes sense on the other hand uh Google's AI demo was frankly a bit of a disaster poorly received stock that dropped 12 since this event and and their presentation did not include the chatbot Bard because in search because it wasn't working it seems like there was an error in it when they said what new discoveries from the James Webb Space Telescope can I tell my
nine-year-old and Bard answered that it took the first pictures of a planet outside our solar system which is false which of course we all know about chat gbt it's only right half the time and it's a little woke on the margins
so um anyway there was a screenshot circulating today which is probably false but it says the following me and a bunch of co-workers were just laid off from Google for our AI demo going wrong it was a team of 168 people who prepared
the slides for the demo all of us are out of jobs I can't imagine that's real uh but if it was that would be a hardcore moment for Google to fire a bunch of people for screwing it up listen you worked in the belly of the Beast Freeburg what are your thoughts on being poking the tiger and telling Google dance you know Sundar dance you know what's interesting is Google's had like an incredible AI competency particularly
since they bought deepmind and it's been predominantly oriented towards kind of you know internal problems you know they demonstrated last year that they're AI improved data center Energy Efficiency by 40 they've used it for ad optimization ad copy optimization uh the Youtube follow video algorithm so what video is suggested to you as your next video to watch which massively increased YouTube hours watched uh per
user which massively increased YouTube Revenue you know what's the right time and place to insert videos in YouTube or insert ads and YouTube videos so you know AutoFill in Gmail and docs so so much of this competency has been oriented
specifically to avoid this primary disruption in search obviously now things have come to a bit of a point because you know this alternative for search has been revealed in chat GPT and you guys can kind of think about
search and you know we've used this term in the past Larry and Sergey the textbook that they read you know one of the original textbooks that's used in um internet search engine technology is called information retrieval information retrieval so information retrieval is this idea that you you know how do you pull data from a static data set and it involves scanning that data set or crawling it and then creating an index
against it and then a ranking model for how do you pull stuff out of the index to present the results from the data that's available based on what it is you're querying for you know and doing that all in a tenth of a second so you know if you think about the information retrieval problem you type in the data or some rough estimation of the data you want to pull up and then a list is presented to you and over time Google realized hey we
could show that data in smarter quicker ways like if we can identify that you're looking for a very specific answer we can reveal that answer in the one box which is the thing that sits above the search results like if you said what time is it you know what when does this movie show at this theater so they can pull out the structured data and give you a very specific answer rather than a list from the the database
and then over time there were other kind of modalities for displaying data that it turns out or even better than the list like Maps or shopping where you can kind of see a matrix of results or YouTube where you can see a you know longer form version of content and so these different kind of um you know information retrieval you know media were presented to you and it really kind of changed the game and created much better user satisfaction in
terms of getting what they were looking for the the challenge with what this new modality is it's not really fully encompassing so if you can kind of think about the human computer interaction problem you want to see flight times and Airlines and the price of flights in a matrix you don't necessarily want a a text stream written to you to give you the um you know the the answer that you're looking for or you want to see a visual display of
shopping results or you do want to see a bunch of different people's commentary because you're looking for different points of view on a topic rather than just get an answer but there are certainly a bunch of answer solutions for which chat DPT type you know natural language responsiveness becomes a fantastic and better mode to present answers to you than the Matrix or the list or the ranking and so on now the
one thing that I think is worth noting I did a back of the envelope analysis on the cost of doing this compared to chat GPT so so Google makes about three bucks per click you can back into what the revenue per search is a bunch of different ways one way is three bucks per click about a three percent click-through rate on ads some people estimate this is about right about five cents to ten cents Revenue per search
done on Google or anywhere from one cent to 10 cents even if they don't click the ads because one out of 100 people click an ad and that's where the money comes from so let's just call it five cents right and you can assume a roughly fifty percent margin uh on that search which means a fifty percent cogs or cost of goods or a cost to run that search and present Those ads so you know right now Google search costs them about you know
call it two and a half cents per search uh to present the results a recent estimate on running the gpt3 model for chat GPT is that each result takes about 30 cents of compute so it's about an order of magnitude higher cost to run that search result than it is to to do it through a traditional search query today which makes today today that's right and so so that's the point like it has to come down by about an order of magnitude
now this is a this then becomes a very deep technical discussion that I'm certainly not the expert but there are a lot of great experts and there's great blogs and sub stacks on this on what's it going to take to get there to get a 10x reduction in cost on on running these models and there's a lot related to kind of optimization on how you run them on a compute platform the type of compute Hardware that's being used all the way down to the chips
that are being used so there's still quite a lot of work to go before this becomes truly economically competitive with Google and that really matters because if you get to the scale of Google you're talking about spending eight to twenty billion dollars a quarter just to run search results and display them and so for chat GPT type Solutions on Bing or elsewhere to scale and to use that as the modality
you're talking about something that today would cost 80 billion dollars a quarter to run from a compute perspective if you were to do this across all search queries so it's certainly going to be a total game changer for a subset of search queries but to make it economically uh work for for these businesses whether it's Bing or Google or others there's a lot of work still to be done the great part about this chamoth is that Bing gave 10
Billy to uh our friend Sam and Chad GPT to invest in Azure uh which now has the infrastructure and we'll be providing the chat GPT infrastructure to startups or corporations big companies and small alike so that 10 billion dollars should do enough to grind it down between software optimization data optimization chip optimization and Cloud optimization yes you would think so or no the ability to run this at scale is going to happen because
we're getting better and better at creating silicon that specializes in doing things in a massively parallelized way and the cost of energy at the same time is getting cheaper and cheaper along with it when you multiply these two things together the effect of it is that you'll be able to run these models the same output today will cost 1 1 10. as long as you ride the energy and compute curve for the next few years so that's
just going to naturally happen I have two interesting takeaways and one is maybe a little bit of a sidebar so the sidebar is if you guys were sitting on top of something that you thought was as foundational as Google search back in 1999 would you have sold 49 of it for 10 billion dollars hard though I think the answer is no I think the answer is no not in an environment where you have unlimited ability to raise Capital this
is something that we've said before which is that chat GPT is an incredibly important innovation but it's an element of a platform who will get quickly commoditized because everybody will compete over time and so I think what Microsoft is doing is the natural thing for somebody on the outside looking in at an entity that has 93 share of a very valuable category which is how can I Scorch the Earth and so Microsoft effectively for 10 billion
bought almost 50 percent of a tool and now we'll make that tool as pervasive as possible so that consumer expectations are such that Google is forced to Decay the quality of their business model in order to compete so that as Friedberg said you have to invest in all kinds of compute resources that today are still somewhat expensive and that will flow into the p l and what you will see is that the
business quality degrades and this is why when Google did the demo of Bard the first thing that happened was the stock went off 500 basis points we they lopped off a hundred billion dollars of the market cap mostly in reaction to oh my God this is not good for the long-term business that's not good for the long-term business on a mechanical basis when you get an answer you don't have to click the links no right now if you look at
Google's business they have the best business model ever invented on Earth ever for for-profit company it just Reigns money this is a business that this year will do almost 100 billion dollars of free cash flow it's a business that has to find ways and we kind of joke but they have to find ways to spend money otherwise they'd be showing probably 50 or 60 percent ebitda margins and people would wonder hey wait a minute you can't
let something like this go unattended so they try to do a lot more things to make that core treasure look not as incredible as it is they have 120 billion of cash this is a business that's just an absolute Juggernaut and they have 10 times as many employees as they need to run the core business I don't know what that is but my point is that it's an incredible business so that business will get worse if Microsoft takes a few
hundred basis points of share if meta takes a few hundred basis points of share if 10 cent does if a few startups do Cora by the way launched something called Poe which I was experimenting and playing around with last weekend if you add it all up what Satya said is true which is even if all we do collectively as an industry is take 500 or 600 basis points of share away from Google it doesn't create that much incremental
cost for us but it does create enormous headwinds and pressure for Google with respect to how they are valued and how they will have to get revalued and that's what happens so the last thing I'll say is the question that I've been thinking about is what does Sundar do right so what's the counter measure yes this is what I was going to get I think the counter measure here if I was him is to go to the board and say guys we're going to double tack
right so attack is the traffic acquisition cost that Google pays their Publishers it is effectively their way of guaranteeing an exclusivity on search traffic so for example if you guys have an iPhone it's Google search that's the default search in the iPhone Google pays Apple this year the screen negotiation for that deal could mean that Apple gets paid 25 billion dollars for giving away that right to Google so if these Google
does all these kinds of deals last year they spent I think 45 billion or so so about 21 when you think about that Google basically paid Apple which was working on search technology they were working on a search solution they paid them to stand there and they're paying everybody so I think the question for Google is the following if you think you're going to lose share and let's say you go to 75 share would you rather go there and actually
still maintain your core strangle hold on search or do you actually want 75 share where now all of these other competitors have been seated well you can Decay business model quality and still remain exclusive if you just double the tack and what you do is you put all these other guys on their heels because as we talked about if you're paying Publishers two times more than what anybody else is paying them you'll be able to get
published to say hey you know what don't let those AI agents crawl your website because I'm paying you all this money remember that right so do not crawl in robots.txt equivalent for these AI agents and I think that that'll put Microsoft and all these other folks on their heels and then as as you have to figure out all this derivative work stuff all these lawsuits Google will look pristine because they can say I'm paying these guys double
because I acknowledge absolutely this is a core part of the service so that's the game theory I think that has to get figured out but if I was soon I love the second part because hold on let me get saxophone yeah I love the second part chamoth because in this clip I'm about to show Nile Patel from The Verge did an awesome interview with Satya and he basically would not answer this question at least to my satisfaction which is
hey what do the Publishers get out of this you've ingested our information how do we get paid watch this clip it's very telling the answer or even in the chat session but if I ask the newbing what are the 10 best gaming TVs it just makes me a list why should I the user then click on the the link to the verge which has another list of the 10 best gaming TVs well a question but even there sort of say hey who added these things come from uh
and would you want to go dig in like that yeah even search today has that like we have answers they may not be as high quality answers they just are getting better so I don't think of this as a complete departure from what is expected of a search engine today which is supposed to really respond to your query while giving them the links that they can then click on like ads and such works that way in my mind there's a
terrible answer he needs to address how they get paid he punted the answer and just said Hey listen search works this way Saks will the rights to the data will will Google just say to quora hey we'll give you a billion dollars a year for this data set if you don't give it to anybody else they should maybe sax the strategist let me hear your strategy here you are now CEO of Google what do you do I think there's maybe even a
bigger problem before that which is I think the whole monetization model might change so the reason why Google monetizes so well is is perceived as having the best search and then it gives you a list of links and a bunch of those links are paid and then people click on them now I think when you search an AI you're looking for a very different kind of answer you're not looking for a list of 10 or 20 links you're just looking for the answer
and so where is the opportunity to advertise against that I mean maybe you can charge like an affiliate commission if the answer contains a link in it or something like that but then you have to ask the question well does that distort like best answer like am I really getting the best answer or am I getting the answer that someone's willing to pay for this is your key Insight the fact is if Google gives you an answer you don't
click on ads Google has had a very finely tuned balance between hey these first two or three paid ads these might the paid links might actually give you a better answer than the content below them but in this case if the chat GPT tells you hey this is the top three televisions these are the top three hotels these are the top three ways to you know write a better essay you don't need to click you have to give an answer and the model is
gone the paid link is still a subset in that case so at Google we used to have a key metric was the bounce back rate so when a user explains yeah so when a user clicks on a result on the search results page we could see whether or not they came back and searched again and so that tells you the quality of the result that they were given because if they don't come back it means they ended up getting
what they were looking for and so ads that um performed better than organic search results which means someone created the ad paid for it and the user clicked on it and didn't come back and came back with less frequency than if
they clicked on an organic result that meant that the ad quality was higher than organic quality and so the ad got promoted to kind of sit at the top and it became a really kind of important part of the equation for Google's
business model which is how do we Source how do we monetize more search results where we can get advertisers to pay for a better result than What organic search might otherwise kind of show and so it's actually better for the user in this case than say just getting an answer for example I'm looking for a Playstation 5. I don't want to just be told hey go to Best Buy and buy PlayStation 5. I want to be taken to the check account page to
buy a PlayStation 5 and I am more likely to be happy if I click on a result and it immediately takes me to the checkout page and Best Buy is really happy to pay for you to get there because they don't want you looking around the internet looking for other places and a lot and we we can't convolute all sorts of queries not all search queries are hey you know what's the best dog to get to not pee on the floor or whatever kind of
arbitrary question you might have that you're doing research on many search queries are Commerce intention related I want to buy a flight to go somewhere I want to book a hotel to go somewhere I want to buy a video game system Etc that series of queries may have a very different kind of modality in terms of what's the right interface versus the chat GPT interface where yeah there's a lot of kind of organic results that
people sift on the internet for today and and and and the question earlier can be resolved by Google doing a simple analytical exercise which is you know what's it going to cost us and what's going to give the user the best result and that's ultimately what will kind of resolve to the Better Business model it's really measurable I think on jamoff's point you know today Google pays Apple 15 billion dollars a year
to be the the default search engine on iPhones on the uh Safari browser that's only about a quarter of Google's overall tack the majority of Google's traffic acquisition cost is actually not being paid for search a good chunk of that is being paid to Publishers to do AdSense display ads on their sites and Google's rev share back to them for putting ads on their sites so you know the TAC number I think maybe you kind of want to move
the needle but the majority of Google searches don't come through the default search engine that they pay and it might be on it it might it might move the needle a bit but I don't think it really changes the the equation for them my comment is more Tac has to become a weapon on the forward foot number one so if you're going to spend 21 of your revenue on Tac you should be willing to spend 30 to 40 percent to maintain the
93 market share I don't think what you want to see is your profit dollars Decay because you lose share it's rather better for you to spend the money and Decay your business model than have someone decayed for you at this point apple is really the only tack line item I understand I'm not talking about today I'm saying take that idea you have an entire sales team whose job it is right now to sell AdSense right you have an
entire group of people who know how to account for tact and how to think about it as a cost but if you're basically willing to say out of the 100 billion dollars of free cash flow I'm willing to go to 80. or 70 billion of free cash flow combined with the 100 billion of short and long-term Investments I have and I'm going to use it as a weapon and I'm going to go and make sure that all of these Publishers have a new kind of
agreement that they signed up for which is I'll do my best to help you monetize you do your best by being exclusive to our AI agents right so you deprive other models of your content on your pages because that will get litigated and there is no way just like again if you say Do not crawl you're not allowed to crawl if you're Google or Microsoft researches so I mean so this is going to happen for these agents it's unrealistic to expect
that it won't so my point is Google should do this and Define how it's done before it's defined for them because right now people are in this nascent phase where everybody thinks everybody's going to be open and get along and I just think that that's unrealistic it's a really important kind of philosophical question first off like Google today just so people know on AdSense is typically paying out 70 cents on every
dollar to the publisher there's you know it's a it's a it's a pretty you know generous and it's it's the way they've kind of kept the competitive mode you know wide and kept folks out of beating them on third-party ad Network bids because they bid on everything and they always win because they always share the most Revenue back so they they own that market with respect to acquiring content you know the the internet is open it's an open protocol
anyone can go to any website by typing in the IP address and viewing the content that a publisher chooses to make available on that server to display to the internet and there's a fair use policy and there's you can you can type in this IP address I think 15 or 20 or 30 of the pages on the internet right now are apps that are closed Facebook's close Instagram I'm talking about the open internet right so like the content
on the internet but I'm saying the open internet matters less and less yeah I don't know I mean look you're right maybe there's there's the enhancement of the models but my point being that if the internet is open and you and I spent a billion lifetimes reading the whole internet and getting smart and then we were the chatbot and someone came and asked us a question and we could kind of answer their question um because we've Now read the whole
internet do I owe licensing royalty revenues to the knowledge that I gained and then the synthesis that I did which ultimately meant excluding some things including some things combining certain things and the problem with these llms these these large language models is that you end up with a hundred million a billion plus parameters that are in these models that are really impossible to deconvolute you don't know we don't
really understand deeply how the neural network is the the model is defined and run based on the data that it is constantly kind of aggregating and learning from and so to go in and say hey it learned a little more from this website and a little less from that website I'm not saying it's a practical impossibility I'm saying when you look at Transformer archive texture today every llm that you write on the same
Corpus of underlying data for training will get to the same answer so my point is today if you're a company the most important thing that you can do especially you have a one trillion dollar plus market cap that could get competed away is to figure out how to defend it and so all I'm saying is from the perspective of a shareholder of Google and also from the perspective of the board of director or senior executive or the CEO this should
be the number one thing that I'm thinking about and my my framing of how to answer that question is build a competitive mode around two things one is at the end which is how much money and what kind of relationship do I have with my customers including the publishers and can I give them more so that number two is I can affect who they decide to contribute their content to so you're right let's assume that there are
five of these infinite libraries in the world you mean non-public content how important and also public how important is it if quora says you know what guys I've done a deal where my billions of page views and all of that really rich content core has incredible content Google's paying me 2 billion a year and so I've decided to only let Google's AI agents crawl it and so maybe when there are questions that quora is already
doing a phenomenal job of answering I think it does make a difference that Google Now has access to quora's content and others don't right for hot minute they did have access to the Twitter fire hose and that was the premise was we
could get this Corpus of data that we can have in a very limited restricted way they paid Twitter a lot of money I don't think that those deals exist anymore Twitter I mean you guys might know better than I do but I don't think
they exist anymore here's where chamont I think you're right um and maybe Dave I think you're being too forgiven these models know where they got the data and they can easily cite the sources and they could easily pay for it and if you want go ahead you're absolutely right the video In The Wall Street Journal where Satya was interviewed showed a demo and you're exactly right they actually showed Jason in the search results yes
but it made no sense because it's like how do you know that those are the five most cited places that resulted in my page rank technology or the authority of the website or the author but let's pause for a second here there is a company called neva.com I'm not an investor none of us are it's a former googler they have 78 employees I think according to LinkedIn I just typed in what are the best flat panel TVs here's the result and as you see
sentence by sentence as it rewrites another person's content it links with a citation just like the Wikipedia does and when you scroll to the bottom of it it tells you hey this is from Rolling Stone this is from Best Buy this is from ratings and if that answer is good for you and you trust those sources those people should get a commission every time there's a thousand searches and you come up you should get a dollar every
time your data was used these sites should sue the Daylights out of Google and forget how to say they can't do it is not fair use because in fair use you have the ability to create derivative works on future platforms and you are taking this person the original content owner's ability to exploit that and you are co-opting it and you're doing it at scale and that is against fair use you're not allowed to interfere with my
ability to make future products David you know this as an attorney the problem with that lawyer sorry all right well I play one on TV in this podcast the problem with that idea just from a product perspective for a second is that if you limit how they can tokenize to just being all entire sentences the product will not be that good like the whole idea of these llms is that you're running you know so many
iterations to literally figure out what is the next most best word that comes after this other word and if you're all of a sudden stuck with blocks of sentences as inputs that can't be violated because of copyright the product will not be as good I don't just don't think it'll be as useful correct these are also not deterministic models and they're not deterministic outputs meaning that it's not a discrete and specific answer that's going to be
repeated every time the model is run these are statistical models so they infer what the right answer could or should be based on a corpus of data and a symphysis of that data to generate a response to a query that ref that inference is going to be you know assign some probability score and so the model will resolve to something that it thinks is high probability but it could also kind of say there's a chance that this
is the better answer this is the better answer and so on and so when you have like you have in the internet competing data competing points of view competing opinions the model is synthesizing all these different opinions and doing what Google search engine historically has done well which is trying to rank them and figure out which ones are better than others and that's a very Dynamic process and so if as part of that ingest
process One is using some open openly readable data set that doesn't necessarily mean that that data set is improving the quality of the output or is necessarily the answer from the output correct let me just give everybody a quick four Factor education on fair use and here it is from Google's actual website because they deal with this all the time and when you look at that the nature and purpose and character of the work including whether
such use is not profit or educational purposes so that first test of fair use is hey if you're using it educationally and you want to make a video that is criticism of Star Wars prequels or how to shoot a shot like this Quentin Tarantino if it's educational it's fine and Court's typically Focus I'm reading here from Google on whether the use is transformative that is whether it adds new expression or meaning to the
original or whether it merely copies the original it's very obvious that this is not transforming if they're just rewriting it the nature of the copyright is pretty transformative to me I don't think so they're coming out with entirely new content they're just rewriting it they're not actually adding anything to it would be fine if a human does it it's not because it's pretty cool listen Jacob thank you I think the rights issue is just like
the cost issue which is a problem today maybe but it's going to get sorted out but here let me finish new technology waves that are this powerful don't get stymied by either chip costs or legal rights issues They Do by Leo it's 100 YouTube got stopped dead in their tracks and the only way YouTube and Napster got stopped in the tracks I predict this is going to get stopped dead in its tracks with YouTube level
this is different and Google was enabled piracy and then they had to build tools disagree with jcal I deeply disagree with you I think both you guys you guys I think they think that all that costume let me read you number four well he's gonna stay in the way of the AI no it's going to stay away happening AI is happening like let's move the conversation for it I actually I want to tell you that's my point I would like to make my point we don't
your amateur lawyer opinions I am going to give my point I don't give a [ __ ] if you want it or not the effects 500 bucks an hour for pretending to be alone before from you here it is okay take it easy Mr Sub better call jaycalif time you've done this the effect listen to this the effect of the use upon the potential market for or value of the copper work that harm the copyright listen to this very important
yeah it takes over the world like Skynet Jacob's gonna be like I thought we'd stop this with rights listen to this AI is not going to be stopped but companies using AI to steal content will be effective use is that farm the original copyright owner's ability to profit from his or her original work by serving as a replacement for that works is the one okay great okay you made your point and you may be right get to Marjorie Taylor green for you
let's chew up Marjorie Taylor green no no hold on hold on how much did you weigh I have something I have another aspect of the AI thing I want to talk about besides just this like internal rights issue that you're going on all right better call Jake I'll go so I I had an interesting you know AI experience this week and I I think we're all going to start having these stories to make a script of how to talk to your
kids every week there'll be some new like use case that you see that you're kind of Blown Away by the use case I saw this past week in a product demo was they were showing me like an Excel spreadsheet like a very complicated it
could sell spreadsheet modeling and financial asset and they had a plug-in to a chat GPT type Ai and so they just asked it they typed in what does this spreadsheet do and it spit out like a one paragraph explanation of what the
spreadsheet did and it was really good I mean because me just eyeballing the spreadsheet I could not have figured out like instantly what that thing did it would have to take me like a while to figure it out it told me here are the key inputs here the key outputs so that was number one then they they did something I think even more interesting which is they said give me the formula that tells me when the yield is above
two percent and this and that and that and the chat GPT spat out a formula that was like perfect Excel logic that was something that you know URI could never figure out right you need like a super pro user of excel to basically know how to do this stuff so it spit it out and like boom it worked instantly they copy and pasted into the spreadsheet and you could basically like the spreadsheet was much more advanced now so what it got me
thinking about is that we're going to have these little assistants everywhere you combine that power with Say speech to text right because we could have just talked to it it would the speech to text would transcribe the instruction spit it back out and you're gonna have these like little personal digital assistants in applications I think you know it's pretty obvious to see how AI could replace call centers with you know
having the front line call center operator be instead of being a human it could be like an AI but this is actually even before that like you could actually I think in every single application that we use there's going to be an AI interface and like a it is probably gonna be voice based where you can just say to it hey I'm trying to accomplish this like how do I do it can you just make it happen totally and it's going to be
really powerful actually I have an idea I was hanging out with Andre karpathy and I gave him this following challenge so there I was so there I was I said if you had to build stripe I said how many Engineers do you think
it would take you and how long would it take you to build a competitor I was just just a thought exercise you know it would take hundreds of millions of dollars and years now imagine you could you were feeling threatened by stripe
imagine you're a large company Visa Mastercard just as an example you can now actually get one or two really smart people like him to lead an effort where you would say here's a couple hundred million dollars to compete with stripe but here are the boundary conditions number one is you can only hire five or ten engineers and so what you would do is you would actually use tools like this to write the code for you and the ability to
write code is going to be the first thing that these guys that these things do incredibly well with absolute Precision you can already do unit testing incredibly well but it's going to go from unit testing to basically end-to-end testing and you'll be able to build a version of stripe extremely quickly and in a very lean way so then the question is well what would you do with the two or 300 million you raised
and my thought is you use it again as tack you go acquire customers you go to customers and you're like well listen if Braintree is gonna charge you one basis point over Visa Mastercard and or sorry 100 basis points and stripel 50 you know what I'll charge 10. margin destruction margin destruction and this is going to make everything what's so interesting you can take any business that's a middleman business I think this is the
point any middleman business right now that doesn't have its own competitive mode can be competed against because now you can take all of those input costs that go into human capital you can defer that have a much smaller human capital pool and push all of that extra money into traffic Acquisitions Silicon Valley of being more efficient this is going to lead to that efficient benefit of all of this is economic
productivity because the End customer that's using that tool that you just mentioned they now have a lower cost to run their business and their total net profits go up and this is what happens with every technology cycle it always
yields greater economic productivity and that's why the economy me growth and that's why I just want to see it so important that's why technology is so important to drive economic growth not debt we've historically used Financial
engineering to drive economic growth we need immigration energy and innovation drive this what about China yeah what about China wait what are you talking about what we're just immigration is is AI making it harder and harder to make humans productive so you want to like bring in no millions of Labor yeah one human can can do the coding that 20 humans would do before assuming they're skilled enough to use the AI guys go
back to go back to like traditional Capital easier than programming go back to traditional capitalism for a second so please go back because the striped example is another good one so if you have this business model right how does the ecosystem get efficient right how do we create more opportunity to use freeburg's language well the only way that it really happens how does cost go down is that certain entities become big
enough that they can drive the prices down right an Uber a doordash or whomever says yes I need payments capability so Braintree give me your best bid checkout.com give me your best bid at the end give me your best bid strike give me your best bid you compete it Down Right Amazon comes in Walmart comes in they do it in physical cpg Goods they do it online they do it for all kinds of Technologies but you've never had an internal form
that can create hyper efficiency and and basically create customer value like this thing can because this thing can allow let me show you an example Julian 10 companies to get created that can do the work of 10 000 people hold on let me show you two things these are two aha moments I had this week this first one is called Galileo AI it was just a tweet you describe the design of it here they say an onboarding screen of a dog
walking app incredible and you type that in and it gives you a welcome screen that's like a seven out of ten then it says oh a way for people to change their name phone number and password you know that classic screen on any app I need to change my thing boom it gives you that well then at the same time that people are making text to ux user interface beautiful here this stuff will get dumped into figma but then
there's a GitHub co-pilot which if you haven't seen we all know it here this is allowing you GitHub and GitHub co-pilot GitHub is bought by Microsoft another one of Satya and nadella's incredible Acquisitions this guy's like the new Zuckerberg I mean what a what an incredible person to come after bomber who's just so effective at what he's doing as you're writing your code it fills in your code it knows what you're writing
just like in an email and it's a smaller subset of information than email email you could write anything you could be you know talking to a lover or a business person whatever here when you're doing programming it's a much finer data set these two things are going to come together where you're going to be able to build your MVP for your startup by typing in text and then publish it you're not going to need a developer for
your startup that is transformative in the world let me ask you guys a question do you think that this leverage and I I argue this is all about like Leverage it's one person can generate X units of output more Yep do you guys think that this commoditizes and puts at risk sex in particular like all of Enterprise SAS because it becomes such a commodity to basically build a business that does something now or does it create much
higher returns for investors because you invest so much less Capital to get to a point of productivity with that business or revenue of that business than was needed before I'm not sure I tend to think that if it gets easier then everything becomes more competitive so right I don't know but so value gets competed by the way I would slightly disagree with the characterization does it scare you as an investor and I I don't know I
mean like for example in that demo we just saw what does the AI do it exports the new design assets to figma format because that's just making it faster so if you can create a SAS product that becomes a standard everyone's still
going to want to use it I mean there's like really good reasons for that so I don't know I don't think I don't think business software is going away I also don't think that like you're not going to need to hire Engineers because
co-pilots is going to do it for you I think what co-pilot will do is make your typical engineer more productive right yes they had some graphs around how like copilot reduced coding Time by 50 right so I think you'll be able to get a lot more out of your developers I think that's sort of the key is a lot of the drudgery work gets taken care of the answer Freeburg to your question is I think more startups more Niche startups
will make better products and then you'll just have many more folks entry price matters it'll be poorer returns well entry price matters too if you're investing at 5 million like I do in companies when they're just on napkins and you know back of envelope there's plenty of room if you have a 200 million dollar exit that's a 40x but there could be a lot of new categories too like a lot of new categories the electrical industries that get
disrupted like we're thinking about just software displacing software it could be software displacing like industries that aren't even soft video games I think the entire video game industry is going to get completely Rewritten with AI because you're not going to have a publisher anymore that makes one game that everyone consumes you're going to have tools that everyone creates and consumes their own game you guys want to
watch this cool clip it's 58 seconds long go ahead this is a music clip day here on all in but I thought it was really cool is this AI turning you into Eminem this is what the world's waiting for I hope it's you doing I'm naturally Eminem like but this is a only in your anger this is the future the future a sound I'm getting awesome and on the ground What's That Eminem at David Guetta playing Eminem a track with Eminem's voice right yes
something that I made as a joke and it works so good I could not believe it I discovered those websites that are about AI basically you can write lyrics in the style of any artist you like so I typed write a verse in the style of Eminem about future Rave and I went to another AI website that can recreate the the voice I put the text in that and I played the record and people went nuts all right it's that is nuts it's nuts
so here it is folks whoever makes the best Friedberg Eminem hybrid rap with David sacks as the hype man's getting a free VIP ticket to all in Summit 22 there are going to be a lot of interesting mashups that get created like for example you'd be able to create a movie where let's say you want to make a western you want John Wayne to star in it I mean you obviously get the rights but let's say you win a state but no
actor ever goes away you could there's gonna be a database of all of them but if you wanted to make it it's going to be better you're going to be writing the script as you write the script the AI is going to be showing you that scene in real time and you don't have to publish it right that's the rainy day it'll just change in real time yeah just like Instagram and Tick Tock basically democratize like everyone's
ability to create and publish content this takes it to a whole nother level where the Monopoly that big um production houses have because they have the big budget so they can afford to make a big movie if that cost of making a 10 million movie goes to ten thousand or a thousand dollars of compute time anyway one sitting in their studio in a basement can start to make a movie and it really changes the landscape for all
media not just movies music video games and ultimately the consumers themselves can create stuff for their own enjoyment and maybe the best of those products wins but but having each individual here's what's going to happen this
become a lot more like the music industry I mean remember anyone can really create a song now and they do and people do go viral on Twitter upload it on distro kit and it's on Spotify did you guys see this article in the New
York Times that was kind of throwing some shade at the CEO of Goldman Sachs David Solomon yes look great in the picture but I didn't read it because I figured it's hate they were talking about his his side gig as being a DJ but specifically they called out a potential conflict of interest and it's related to this because I guess he had gotten a license to a Whitney Houston song and he remixed it and released it on Spotify
and her biopic is about to come out and they thought that there could be this perceived conflict because Goldman works on behalf of the publishing company and my thought was along the lines of what you guys said like why is this a story meaning David Solomon should be able to go to any website license the song Make it and then submit it back to them for them to approve because the quote in here that that matters is the company
that licensed it said we are in the business of making sure this body of Music stays relevant so obviously you want Whitney Houston songs Michael Jackson songs You Want John Wayne you want these people to live on in culture because it's part of our culture look at this subhead David Solomon brushes off DJing the better way to maximize it will be like this go and use it create a derivative work let us see it if we like
it so like Guetta should be able to just give that back to Eminem If Eminem's cool with it he should be able to ship it and just be done what a non-story like the New York Times is just so anti-billionaire so David Solomon brushes off DJing as a minor hot hobby that has little to do with his work at the bank but his activities May pose protect it's like what are they writing about is there not something more important than
this do we think that David Solomon or any CEO of any major Bank on Wall Street would put their job at risk running one of the 20 or 30 most important institutions in the financial architecture of the world to license a Whitney Houston song that they can play at Coachella I mean does that come pass the smell test no no and and just for the record iconoclastic David Solomon you're going to be doing the opening night DJ set for
all in Summit 2023. the Griff the grift is on let's get him these bombs hates them you got anybody that New York Times hates on you got a slot you got a slot that's it that'll be our lens here Dave Chappelle Dave Chappelle for sure one thousand percent I mean he looks good he looks like he's living his best life it's a finance news somehow it just like offends them that a corporate CEO could well that anybody's happy birthday
I think it's kind of cool this guy Punk PJs yeah yeah [ __ ] yeah let me do his thing I've always wanted to be a DJ yeah oh yeah spin the one and twos after party and we'll use AI to help you out yeah when I should have been learning how to DJ I was playing the violin you should get up there and earlier violin under a DJ said I played violent for 10 years we can play a duet together I played in an orchestra oh my God I
never knew this never again this is all kind of Revelations Happening Here by the way here is my most uh pull up that first chat GPT I gave you this was an aha moment me and sax were doing our weekly Mastermind group sex and I get together we kind of like co-mentor each other here was uh something that blew us away um during our Mastermind group this was a chat GPT I did this one because I was trying to figure this out how do I make
my spouse and kids feel heard and then judge if you did give us a great one give them your full attention number two empathize number three validate their feelings there you have it Zacks just put that into yourself let me use this as an example what public so so that's obviously the aggregation and synthesis of lots of different self-help websites how do you describe attribution of that answer to a particular content publisher
honestly serious question fair use derivative work I think it is an opportunity there there's no monetization yeah you say that because you hate content provides but here I tell you this is publishing I think the GPT the chat on this one no I they know who they got it from consists of lots of websites it's a very smart synthesis it's not pulling a result from someone's website it's like read hundreds of websites and it's like average them
bulldogs for the average it's that's complete [ __ ] they could say as we ingest this stuff this is how it's being done and then you could publish it when you publish it you say hey where do we start is that what you're saying no I'm sorry it's not [ __ ] that is what you said is exactly how it's being right and and Jake out if let's say that the AI is using 100 different websites and synthesizing 100 websites what's the
incentive for the marginal 100th website to say well opt me out unless you pay me totally right open AI will just be like okay finals we'll just work with the other night and this is why content providers is my best piece of advice you ask a question I'll give you the answer content providers as a group need to get together and fight for their rights New York Times Madison right to party no fight for the right to get paid and to survive
and say as a group either give us these terms or don't index us all different content creators absolutely you unionize all of them they should be a united front like the music industry why do you think the music industry gets paid by Peloton anybody because because there's five of them get together and they fight for them and you could organize but there's millions and millions of Publishers I think the point here is
that technology is fundamentally deflationary here's the next great example correct where the minute you make something incredible costs go down but also frankly revenue and profit dollars go down in the aggregate doesn't mean that one company can't husband a lot of it and do incredibly well like Google has done but it's just going to fundamentally put pressure on all these business models which is why I think it's important Google
should go and they should cannibalize their own business before it is cannibalized for them freebar final word here's another way to think about it I think that if this goes as we all predict and everyone's saying it's gonna go it is more likely than not that many of these quote content Publishers that aren't adding very much marginal value are going to go away then you could see the number of content sites offering
self-help advice and how to do this and how to do that 95 of them go away because all of that work gets aggregated and synthesized and presented in a really simple easy user interface that makes them completely oblivious and I'm not discrediting the value that many content Publishers provide but the um you know the requisite at that point to be valued as a quote novel content producer is going to go way up like the
offset to that though is it's so much easier to create content because of the AI we have this company copy AI where even before this chatgpt stuff you would just go there and say I want to write a blog about X Y and Z you just give it a title and it spits out a post and then they'll actually give you 10 different blog posts and then you just select the one that is the direction you want to go and you keep doing you know human selection
how does new intelligence get put back into the system that's based existing purpose system no you have like a corporate blog so you publish it to your corporate my point is if there is now some new information in the world who is going to add that to the Corpus if everybody is just stealing content and rewriting its have always had a desire to create most people create for free there's a head of the long tail that actually gets
compensated the rest of the long tails traditionally gotten nothing and they do it because they want a free day it's kind of like now the creation is gonna explode because it's so easy Beethoven listened to Haydn and then Beethoven
novel Symphonies and his Symphonies were incredible and he built on the experience of listening to Haydn the same is true of how content is going to evolve and it's going to evolve in a faster way because of AI and this
content is not just being retrieved and reproduced it's being you know synthesized and aggregated and represented in a novel way I want to answer that please chat if chat TPT takes a Yelp review and a you know a Conde Nast Traveler review and they represent it based on the best content that's out there that they've already ranked because they have that algorithm with pagerank or Bing's ranking engine and then they republish
it and then that jeopardizes those businesses that is profoundly unfair and not what we want for society and they are interfering with their ability to leverage their own content is profoundly unfair and those magazines and newspapers it's possible YouTube is a great example YouTube was going to get shut down Sequoia and the YouTube founder sold it to Google because they were so scared of the Viacom lawsuit and how well it was
working against them they thought this is this business will never fly if we don't have a big partner like YouTube like Google to support the lawsuit they they won the lawsuit or they settled it because they were able to do content ID and allow content creators the only reason YouTube exists is hold on let me finish it's because they let content creators Watermark and find their stolen content and then claim it and when they
claim the stolen content they were able to monetize it that's what's going to happen here there'll be a settlement where they are going to be able to claim their content I will bet any amount propose a bet you've seen these AIS that generate images right like stable diffusion and like Wally or whatever you literally just tell it I want this image in this style and boom it's done and it would take an artist weeks to produce that and
you can do it in five seconds and you can tell the AI give me 20 of those and then you just keep iterating and in five minutes you've got something mind-blowing so the fact that it's so much easier to create content you can do the same thing with the written word the people who need to be compensated jcal if they don't get what they want they may just go away but they'll be 10 times or 100 times more people here's how you
are thank you for bringing up this example so that I can prove how wrong you are Getty Images is suing stable diffusion at the moment here is what the [ __ ] at stable diffusion did they train their AI on Getty Images with the watermarks on them and they've been busted and they are dead to rights now and they're going to pay a hundred million dollars or more to Getty Images for stealing their content and allowing
it to be republished in a commercial setting those images don't look too good to me stable diffusion copied the Getty image work okay I think I think stable diffusion is bigger problem is they can't do noses and ears and eyelids uh that looks like a bigger problem anyway shout out to stable diffusion for stealing Getty image content so funny Mozart influenced by hide it not Beethoven Sorry by the way there's a real nobody cares interesting topic
about AI that we don't have time to get to this week but I think we should put it on the docket for next week which is should AIS be trained to lie super important because what's happening right now yeah the last thing I'll say on this from my perspective maybe we can jump on after this is this is the best thing that could happen for all of the monopolists in technology because Microsoft taking five or six hundred
basis points of share is the best way to ensure that the FTC has zero credibility in going afterwards or anybody else in Texas right those those all of those things I think are DOA so in some ways actually Google leaking five or six percent of the market share is a really good thing because the FTC is rendered Toothless in making any certainly understand that that's such a good point I mean it's it's kind of a good news bad
news scenario with this whole thing the good news is that the Google monopoly's finally been cracked the bad news is that it's Microsoft and even bigger Monopoly that's the one that's done it but it just shows like how vulnerable all these big tech companies are TBD and they may all end up competing with each other everyone everyone's got a tactical Nuclear weap now and we don't know where it's going to get pointed and who's
going to set it off and where and like the Weaponry has completely changed yeah the Weaponry totally changed and to prove how wrong you guys are here is the Verge here's the other lawsuit open source I've been tracking this you people haven't you guys need to watch what's happening right now co-pilot GitHub chat GPT and Microsoft are being sued by developers because co-pilot was built off of stolen content these lawsuits are just beginning and
they'll make it awesome licensing fees this will be a transitory effect and it won't it won't change the Dynamics of where this is going over the long time change the Dynamics of YouTube in the long term so let's keep going I don't know they're doing pretty good we have a portfolio company called Source graph which is building and um why don't you just put your logo page up if you're going to go through the whole point no
they're I mean they're building something similar but it's it's opt-in you just opt into the you know you just get all your customers to opt into it okay let's move on you want to move on you want to do the Chromebook would be a great chat let's talk about it next week though I think yeah I think there's more time I don't know about you guys but I found it one of the more profoundly disappointed saddening states of the Union I've ever seen
why I think it was you know we often kind of focus on the one-year cycle of what the state of the union says but I think what's more important is how much the data that's coming through in the State of the Union supports the more scary long-term cycle I've talked about this a lot on how scared I am about uh kind of where uh where we're headed with respect to the the US's ability to fund its financial obligations and
the the scary moment at the State of the Union besides Biden's inability to kind of articulate much very well which was honestly a really discouraging sight to see was you know when he talked about what you
know the Republicans are trying to cut Social Security and Medicare the U.S treasury put out a projection uh which I tweeted last week uh originally shared on Twitter by Lynn Alden this is the U.S treasury's forecast of uh debt held by the United
States over time and the assumptions in this forecast are we've got a certain amount of debt today and we're running Social Security and Medicare forward without cuts and so what happens as we make these Social Security Medicare payments and we accrue and pay interest on the debt that we hold today and we don't change the tax rates in this country and this is what happens so it's a runaway kind of debt scenario in the
U.S by definition has to default at some point because you cannot tax every dollar of the economy at 100 at some point and so you know there are two ways this can go the first way is you have to cut back on these major kind of you know expense commitments that naturally balloon over time and that is Social Security and Medicare and the other one is that you just tax a lot more and when you tax a lot more economic growth gets
affected and it makes it really hard to eventually pay off that debt and the debt continues to spiral so I think what we saw was number one the announcement by Biden hey Republicans are the ones who want to cut Social Security Medicare and they all screamed and they said no way no way we'll never do that and a lot of them did interviews afterwards and said it's total BS and Biden would say that which I think supports what the polls have
shown which is on both sides of the aisle people do not want to see Social Security and Medicare cut in any way right now that means you can't and you guys saw what happened in France where they pushed back the retirement age by two years and there was effectively riots across the country I don't know if you guys saw this a few weeks ago we didn't talk about it but it was pretty brutal pretty ugly and so this is a real cost that's coming
bare it's coming bear in the United States not just with the publicly funded Social Security and Medicare programs but also with a lot of the private pensions that are going to need to get bailed out with the same Federal money because they're not going to let those things go bankrupt and that's another trillion plus of liabilities so you know that that cost is going to balloon and the only solution at that point is to
introduce massive tactics and so they proposed this billionaire tax this tax on unrecognized capital gains it is literally if you keep Social Security Medicare where they are and you don't pay down the debt and you don't grow the economy fast enough you have to introduce significant tax hikes across corporate um uh and um the individual taxpayer base um and so you know it really again if you zoom out it really indicates this
steepening curve that the U.S has to climb its way out of and as you tax more there's less to invest in the economic growth the government is a far worse investor in economic growth than the free market and that means that we can't grow our way out and grow GDP enough to ultimately cover our debt obligations and this is is what dalio dalio's book that I mentioned in 2021 was so kind of importantly sharing this is a multi-hundred year cycle and
the last couple decades get really nasty and this chart which is a forecast from the actual U.S treasury highlights the problem and the comments made at the Congress that's in front of the Congress this week by the president of the United States indicates how serious of a problem this is going to be because no one wants to cut these major cost obligations that we have coming to you aren't you and the Republicans you want
to cut Medicare and get rid of it is that what Biden said you guys want to get rid of it what was that kerfuffle about with your uh who's the person on your squad who's yelling and screaming out at the president of the United States no that doesn't matter that was just sort of but who is is that Biden was basically trying to take a page out of Bill Clinton's Playbook when Bill Clinton lost the midterms in 94 he basically triangulated
to the center and he did two things he started going for kind of um small ball he started playing small ball politics it was like school uniforms and things like that that were relatively unobjectionable and that regular middle class people could get behind and then he basically posed as the defender of entitlement programs back then he um in 96 he ran against Dole by portraying Dole he went all the way back to Dole's
vote against Medicare this is what the Biden team is teeing up for the re-elect in 24 is they're talking about things like curbing Ticketmaster fees and fixing right turn red lights I mean seriously like total small ball okay they're gonna try and pretend like he wasn't the most radical tax and spend Progressive over the last two years we've really ever had in American history they're going to try and make
everyone forget that and just talk about the small objectable stuff and then he's also going to again pose as the stalwart defender of entitlement programs which are very popular and it's and and partly they're doing this um they're ready I
think getting ready for DeSantis on this because if you read so in the political analysis on this and uh Josh Barrow had a good column and Andrew Sullivan had a good column talking about this that way back when
DeSantis was in Congress and he was like a backbencher he voted for you know some Republican budgets a Paul Ryan budget that had some of this entitlement reform in it so they're going to try and portray him as against Atomic reform now I don't think it's going to work because all he had to say is like listen that was a long time ago I wasn't voting for cutting entitlements I just voted for my party's budget um that's irrelevant I can tell you I
will not cut entitlements so any smart Republican is going to take entitlement reform off the table because it is a total third rail and they will lose and I think Trump had the right instincts on this and I'm sure that any major Republican will have the right instincts on this you see them why they're throwing Rick Scott under the bus Rick Scott had this proposal about having entitlements go from being sort of
permanently entitled to being something that gets voted on every year and the rest of the Republican caucus is like hell no we're not touching that and they can't run away fast enough from Rick Scott so free Burger is right there is no appetite for entombment reform and I would tell any Republican if you want to do entitlement reform it's got to be bipartisan you've got any thoughts you got to do what Ronald Reagan did which
is join hands with Tip O'Neill and Moynihan and you jump off the cliff together do not stick your neck out on this turn off any thoughts on the State of the Union writ large no Marjorie Taylor green yelling liar at the present
um no okay well that's the most boring statement I mean like both sides uh engaged in a lot of like weirdness I mean Biden was like bellowing at various points in his speech it was quite bizarre and you're right there were some
Republicans in the audience who were bringing like jackasses and it's unfortunate because I think utterly utterly disappointed I think if the Republicans had just calmed down I think Biden's sort of weird mannerisms where he was like practically yelling it was like Abe Simpson you know old man yelling at the cloud and yeah they they do a good job of like right at the moment of self-immolation they let him off the hook totally it's really
incredible Republicans just they have no impulse control right when they could just be quiet sit there calm quiet and let Biden do the damage to himself they just cannot I like McCarthy I like McCarthy telling Margie telegrange and Mary let me tell him that other glider guy to get the hell out of here listen it's always been hard to control backbenchers that's just the reality that does not speak for the entire party
how do you uh how do you guys feel about being taxed on your change in net worth from year to year you mean a wealth tax wealth tax yeah the uh if it's a if it's for billionaires totally cool if it's for centimillionaires or deck of millionaires absolutely off the table we want those people to grow their wealth and invest the billionaires yeah sure is that what you think is going Freeburg yeah so hard to execute on what
are you supposed to do like I would love to see a website where you have a piece of yarn you know those those sites yeah and then you have like a little uh pin and you kind of push the pin out and the other one has to go in you can't have it all you can't have low taxes and have these entitlement programs and have this level of spending it's impossible you have to tax that's the only way or you have to cut the entitlement programs or you have to
cut the spending well you're you're right about that free bird but let me tell you why the American people think it would be ridiculous to cut their entitlements they've watched as Washington spent eight trillion dollars correct on forever wars in the Middle East they just watched as Biden spent trillions enriching the Pharma companies on a fugazi that didn't work they've just watched as hundreds of
billions went to climate special interests the Democrats we talked about that let me think about it brilliant hold on they've watched as trillions of dollars have gone to the donor class and they are going to rise up and say the hell with you if you cut off our social security that we paid into for decades while enriching all these special interests yes I don't advocate for any of these points and the bailouts of corporations in the
great financial crisis yeah right the cons I think I think I think it's just an analytical certainty that you know you gotta zoom out and stop thinking about the yearly cycle and the election cycle on this stuff and just look at where we're headed over a multi-decade cycle okay and there's just no resolution to this problem what happens the way we're all oriented right now huh if there is a wealth tax let's just say on billions
let me just say one thing sorry Jacob let me just say what do they do they leave the country well that did happen in France by the way I think 40 of the people that were taxed left and then they came back they would violate our constitution that's that'll be it'll be um litigated for sure yeah if you can get the cost of energy in this country to drop by 50 to 75 and you can increase energy capacity by 10 to 20 fold then you have
a Fighting Chance because you can actually grow the economy out of the problem and that's really where I am optimistic and excited about opportunities like fusion and you guys can make fun of me all you want but if we can get to a point where we can increment energy capacity by an order of magnitude there is economic growth that will arise from that from all these new Industries and these production systems and that's how we can grow our way out
of the debt entitlement tax problem where one of those three things has to give in the absence of that you know what the cheapest source of energy is today Fusion three cents a kilowatt hour Vision you mean no it's Fusion it's the sun using solar panels there it is yeah the problem tomorrow honestly let me just say this one thing the problem is can you scale energy capacity by 10x and can you do it fast enough and
that's the real testicle while creating jobs that's the real techno economic question right like I posted a link in my reading list today this week you guys can go look at it the most prolific distribution of fusion technology is China actually deploying solar on every single Rooftop in China the United States could do it too and you will 10x the power available well yeah I mean they are entering it'll be zero they're
increasing their I mean it'll happen in the next years it's just sometimes we want to create intellectual complexity I I love these different forms of fusion I just think it's a 50-year traj to get it because even I'm not betting I'm not betting on it I'm just saying it's there is a there's a I was agreeing with you I'm just building on your point to say it's actually happening Fusion is what is actually creating abundant zero cost
energy today yeah and so look if we can increase energy capacity in this country by 10x energy production capacity by 10x and we can do it in the next 20 to 30 years on every rooftop if we can we have a path out of the entitlement tax debt problem otherwise one of those three things is going to give and it's going to be ugly the thing that we are lacking right now is not actually the generation capability
which is incredibly cheap but it's really scalable storage and once we figure that out which is actually the real technical bottleneck to Abundant zero cost energy we'll have your boundary condition met and we'll have it well before different forms of fusion are commercializable France had an exodus of an estimated 42 000 millionaires between 2000 and 2012. uh and really the and before yeah for 12 years and then they were uh reversed
they were just losing the tax base so violently they had no choice what's going to happen in California it's happening in California already with San Francisco right it's happening already yeah they're stupidly telling
people that this wealth tax is going to have a 10-year look forward so everybody I know is at least talking about hey could this happen in the next 10 years because if it might happen five years from now we got to leave now because if
I wait they're going to chase you they're going to chase me yeah specifically you they hate you no I mean it's it's uh it's a problem it is a serious let me tell you I mean it's a freeberg's point uh it's not just Ray dalio uh the great uh political satirist Peter O'Rourke who died last year he wrote that American politics is defined by the formula x minus y equals a big stink where X is what people want from government and Y
equals what they're willing to pay for government and that difference is basically the big stink and the Java politicians is to manage that stink and the problem is the politicians have not been doing a good job managing it and they increasingly do a worse job managing it so yeah at some point it's going to blow up yeah you guys want to hear a crazy statistic I was pulling this out the other day you know what the
budget per capita is of the city of San Francisco so how much the city spends per year divided by the number of people that live in the city well we know it's a couple of billion dollar budget we know only a couple of hundred thousand billion dollar budget yeah and there's 800 000 residents it's eighteen thousand dollars per citizen per year that's how much the city of San Francisco spends a third of that of money by the way 30 of it goes
to or 25 goes to Public Health Care Now when you look at that eighteen thousand dollar uh budget per capita it is more than every single state of the union on a per capita basis except Oregon and North Dakota which have very weird uh budget so San Francisco spends more than every other State per capita it spends more in aggregate than 16 U.S states and the federal budget per capita is fifteen thousand dollars the federal
government's budget per capita is fifteen thousand dollars so San Francisco spends more than 15 states and spends more per capita than every other state except two and spends more than the federal government per capita and I think that really highlights and and you need to tax the base to do that and now we are seeing San Francisco is the largest population of Exodus and population access of any City and business Exodus of any city in the
United States that is your predictor that is your predictor of where this goes right in Miami Florida peaked by contrast has no state income tax they just rely on property taxes sales tax which California has as well there is a a income tax and cap gains tax of zero in Florida and they seem to make it work 880 000 people uh was the peak in San Francisco 2018 2019 2020 and then in uh 2021 815 so it's gone even further some people think
it's down to 650 now I think it is pretty hard to track but yeah well you have a lot of people who owned homes there and maybe own second homes because let's face it it was a well-heeled group of individuals living there and a lot of them just still have their places but they've left and then they're in the process of selling the point the point is increasing the tax rate is a great short-term solution but over the long
term if that budget per citizen isn't brought in line there is no way to tax the base enough without causing the tax base to leave forget about what my anyone's personal opinions are that's just the economic reality of what happened in France it's what's happening in San Francisco there's a lot of great predictors in history of where this has happened and so something has to give or you have to have a miracle like an energy Miracle
but you know we'll all keep investing for that all right everybody this has been an amazing amazing episode of the all in podcast 115 episodes for the dictator Sultan of science and for the pacifist David the dove sacks I am the world's greatest model Creator Jay Cal and we'll see you next time bye bye love you Besties we'll let your winners ride Rain Man [Music] besties [Music] somehow [Music] [Music]