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It is Tuesday, April 15, 2025.
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We are live from the temple of technology, the fortress of finance, the capital of capital. This show starts now.
4:51
We got a great show for you today folks.
4:53
We're doing a little bit of a mini uh deep dive on China. That's brother behavior. Brother behavior.
4:56
Lots of brother behavior going out throughout this story.
5:00
Uh the size gong, an homage to Chinese culture, all that they've built.
5:04
But now, unfortunately, relationships with between the US and China are degrading, have soured with a trade war.
5:10
And so we want to take you through it.
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And uh it starts with a very stupid question, but uh on this show there's no dumb questions because we are in golden retriever mode.
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Uh and that dumb question is how did we get here?
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Because um you know, you learn about World War II in uh in high school or middle school.
5:29
And in World War II, I remember going to war against the Japanese, not the Chinese.
5:35
And China was actually the US's ally.
5:38
And then of course it flipped at some point.
5:40
And if you're, you know, if you've studied history, you know exactly what's going to happen in the story.
5:44
But there's a bunch of interesting uh anecdotes and uh turns and debates and uh a lot of different historical milestones that actually led to the relationship uh degrading and then building back up and then degrading again.
5:56
And so I want to take you through the full eb and flow of the USChina relationship to kind of understand how did we actually get here because we used to be partners with China.
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Like we fought the Japanese with a good thing going.
6:08
We had a good thing going.
6:09
Um, but obviously, uh, the trade war has broken out.
6:12
Thank god it's not a hot war, kinetic war.
6:14
But, um, it's interesting to know, uh, all the history here.
6:19
And so that's what I wanted to dig through today.
6:21
But first, switch your business to ramp. com. Time is money. Say both.
6:24
Easy to use corporate cards, bill payments, accounting, and a whole lot more all. Uh, fantastic.
6:27
Uh, anyway, let's move on.
6:30
So, um, I've I've always been I've always been interested in this.
6:36
How did the relationship initially sour?
6:39
Of course, uh the history here is that during the World War II, the US was allied with China's nationalists against Japan.
6:46
But after 1949, the communist revolution created a new reality.
6:48
And by the late 1940s, Americans viewed the loss of China to communism as a geopolitical blow amid the the emerging cold war.
6:58
This set the initial tone of hostility.
7:00
Um, so, uh, in October of 1949, Mao Zidong's Communist Party won the Chinese Civil War, founding the People's Republic of China, PRC, in Beijing, while Chang Kaisk nationalists fled to Taiwan.
7:14
So, our guys in China, yeah, left mainland China and went to Taiwan.
7:19
That's why we're on Taiwan's side, basically.
7:20
Uh, but it's crazy that this has been going on for 90 or 80 years now, and we're still in the Yep. We still are guys.
7:28
We still like China, but we just think of China as Taiwan. Yeah.
7:31
And that's really the the the the initial uh split there.
7:33
China views Taiwan as China. Yes.
7:37
Taiwan as China. Yes. little bit different but but basically uh the US refused to recognize the People's Republic of China PRC uh and continued to recognize the ROC in Taiwan as the legitimate government of China which it seems like almost edgy today to be like oh like Taiwan is the real China like that's
7:58
something that NBA players don't say right uh but it makes sense in the context of oh well we were fighting the same war with this government the the the nationalists nationalists uh we were fighting with them, then they just kind of lost their civil war and they're in exile, but they're on an island that's like kind of over there. It's all the same. So, we're on the same It's all the same.
8:17
So, we're on the same One thing that's unique about this dynamic is that the People's Liberation Army, the Armed Forces of China serve the Communist Party.
8:25
Yes, they do not serve the country of China as a just purely a nation. They serve the party.
8:33
And in America, that would be crazy.
8:35
It's like the Proud Boys serving at the pleasure of MAGA basically.
8:37
Yeah, that's that's dramatic.
8:40
Or or simply the Marines being on the side of the Democrats. Yeah. Exactly. Exactly. Or the Republic.
8:46
If either of those happen that would be like would be like whoa. Okay.
8:50
But it's a one party system and that's the nature.
8:52
And if you have an issue with it, the army comes after you and you know takes care of you.
8:55
And so obviously like the threat of communism is the defining theme of the cold war and the US adopts a containment policy.
9:06
And so uh this was an attempt to diplomatically isolate and economically strangle the new communist government.
9:12
Uh still very heavily driven by trade and tariffs and who who who does deals with who.
9:16
Uh Washington encouraged allies to shun Beijing.
9:18
Americans were prohibited from travel or trade with China.
9:22
There was no trade whatsoever with China and China was kept out of the United Nations with Taiwan holding China's UN seat and so then allianc frustrating China frustrating. Yes. Got to give them that.
9:35
And so uh to contain chi communist China, the US bolstered alliances around Asia.
9:39
They did security packs with Japan, South Korea, the Philippines, Australia, New Zealand, and support for Taiwan.
9:45
So from the Chinese perspective on the mainland, they're kind of surrounded.
9:49
They have this alliance with Russia going but it's very tenuous.
9:53
Uh in the 1950s the US began providing military and economic aid to French Indo-China Vietnam and later directly intervened in Vietnam.
9:59
The Vietnam War of course partly aimed at curbing Chinese communist influence in Southeast Asia.
10:04
Now we go to the Korean War 1950 to 1953.
10:07
The Korean War was the first bloody clash between the US and the PRC.
10:12
In June 1950, North Korea backed by Stalin and later by Mao invaded South Korea.
10:17
When USled UN forces pushed north towards the Chinese border, Mao sent hundreds of thousands of Chinese people's volunteers to fight USUN troops in Korea.
10:26
Uh the war was brutal, resulting in uh 36,000 American deaths and a hund hundreds of thousands of Chinese casualties and ended in a stalemate.
10:36
Uh that's why why you know Korea still split to this And it's so wild to think of we we think of the American involvement in foreign conflicts as you know World War II, Korean War, Vietnam, then you get into the Middle East, but thinking about the Korean War happening immediately following Yeah. World War II.
10:54
Like there was b little to no break, right?
10:56
And also, I mean, people still think about the the Vietnam War about Vietnam.
11:00
And really, it's a battle between China and America. Yeah.
11:06
And same with with Korea in many ways.
11:08
Uh and so and if you if you uh there's a fantastic documentary on Front Line, I think it's NB uh PBS about the Chosen River Valley uh battle, the Battle of the Chosen in Korea and it was it was like 20 degrees below freezing. Everyone was freezing.
11:23
It's just like one of the most brutal wars ever fought or battles in war ever fought. You should go watch it.
11:28
Uh so Mao touted that China had fought the American superpower to a standstill, reinforcing his regime's legitimacy.
11:34
The US came to view the PRC as direct military adversary.
11:38
So this is kind of the nadir of uh US China relations like they're openly fighting and uh seeing each other as rivals. Was spreading fake news.
11:49
He famously said the US was a quote unquote paper tiger that could be defeated by determined revolutionary forces.
11:57
A propaganda line to bolster Chinese morale despite the war's costs. Yeah.
12:01
Paper tiger looks dangerous.
12:01
Not actually dangerous in reality.
12:04
That's the whole thing with the paper tiger.
12:07
But we're more like a bio-engineered Yeah.
12:11
So things uh continue to heat up after Korea.
12:15
The there's the US Taiwan defense pact in 1954.
12:18
Uh soon after the Korean armistice, the US signed a mutual defense treaty with uh with the the Republic of China in Taiwan pledging to defend Taiwan against PRC aggression.
12:30
And this is kind of the foundation of like this idea that like we have Taiwan's back still to this day.
12:33
Uh it all started back then.
12:36
American naval patrols in the Taiwan Strait began effectively drawing a line that Mao's forces dared not cross.
12:41
And there's still this debate about oh should China be doing military exercises in the straight and can they go beyond this?
12:47
I believe they had little to no navy at all them being China, right?
12:53
They've they've developed the Navy over time, but it's certainly not it sort of pales in comparison to the US Navy, uh, which has continued to plague them in various ways.
13:05
And so throughout the 50s, the Taiwan Strait continued to be a flash point.
13:09
The PRC bombarded the ROC held islands near the mainland, provoking crises in 1954, 1955, and 1958.
13:14
The US responded with forceful warnings, even hinting at a nuclear retaliation to deter PRC invasion of Taiwan.
13:22
And so this whole this whole America trying to get China not to invade Taiwan has been going on for 70 years now.
13:30
Um the crisis subsided with neither side fully escalating to war, total stalemate, but they reinforce Beijing's view of the US as determined to block China's unification with Taiwan.
13:40
And so the the mainland China says, "Hey, those guys, they they they lost the they lost the war. They lost the civil war.
13:49
Historically, this was all one place.
13:52
You know, it'd be like in their view, it's like Robert E.
13:54
Lee hanging out in Hawaii."
13:56
And it's like, "No, that's that's our thing."
13:58
Like, get him back on our team. Funny, right?
14:00
It's like I mean, I don't I don't think that that's legitimate, but I think that's kind of how they see it.
14:05
And so, uh, there's more ideological warfare during this revolution phase.
14:10
Fierce rhetoric prevailed.
14:12
US leaders spoke of the PRC as part of the red menace and Chinese state media vilified American imperialists for encircling in and threatening China.
14:20
And America was kind of encircling China in the sense that you know you got Japan, you got Australia, you got the Philippines, there's a lot going on in that in that in in that area.
14:28
Uh there was no official contact between Washington and Beijing.
14:32
Beijing instead each sought to determine to undermine each other.
14:34
the US via embargos and support of adversaries in China and China via sponsoring revolutionary movements in Asia.
14:42
And that's that's been we we should actually ask Jordan about this later on the show, but this sort of common thread between the in the USChina relationship is that there has never seemingly been great comms between the two leaders. Yes.
14:54
Or really much of either.
14:57
So it's like we're doing uh you know now we're doing trade on a massive scale.
15:01
You would think over the last, you know, 30 years, which was relatively stable. Yeah.
15:06
In the history of USChina relations, you would think that there would be sort of more open comms.
15:11
The president could call up uh Xi, have a conversation, work stuff out.
15:17
They're, you know, it's always super controversial.
15:21
Like I remember this idea that like Donald Trump would go and meet with uh Kim Jong-un in North Korea was like deeply controversial.
15:27
But I'm I'm genuinely pretty pro comms.
15:32
I I think communication is is is like the only thing that stops kinetic warfare often.
15:38
And so it's it's very important to have these these uh these rivals communicating and ideally like humanizing each other and realizing that if they if if they if the relationship sour enough like both countries will suffer.
15:50
Uh but uh but it is it is incredibly diplomatically controversial with all these different scenarios of like uh we would like to invite you to invite us to have a call with you.
15:59
Like that's something that actually that happened over the weekend. I think it was Saturday.
16:05
It was like you know the White House just pick up the phone and call each other.
16:08
Come on let's just call each other. Send us text message.
16:10
Get on signal you're fine.
16:13
Uh so in the 1960s there's this strategic opening the SOS Soviet split.
16:19
And so uh even as China remained hostile to the US, a rift grew between the PRC and its urile ally the Soviet Union.
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By the late 1950s, Mao resented Soviet policies and leadership.
16:32
In 1960, the USSR withdrew advisers from China amid disputes over ideology and the direction of communist development.
16:40
Tensions escalated into armed border clashes between China and the USSR in 1969.
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And so uh this gives us some backstory here.
16:47
So in the early 1960s um it was actually 1959 to 1961 I will say that communism was not working yep well in China.
17:00
And so a lot of these issues you know probably stemmed from the USSR basically saying like whatever you're doing isn't working because 30 million people have died of starvation in like a two-year period. Like figure it out.
17:14
Uh, and they basically told them skill issue.
17:16
Yeah, you got to keep going.
17:16
You got to do more communism, but didn't learn the lesson there.
17:21
We're going to try some other stuff maybe at this point.
17:24
Um, but this split meant that by the late 1960s, Beijing saw Moscow as a greater threat than Washington, especially because of the border.
17:31
Like they they Russia and China have a border right there.
17:34
And so if conflict brews, it's really really dangerous.
17:36
So the US notice notices this growing feud and views it as a strategic opportunity.
17:43
President Nixon and his adviser Henry Kissinger later exploited this rift to wedge apart the communist block aiming to befriend one to isolate the other.
17:52
Nixon wrote of playing the China card against the USSR.
17:55
Uh thus as the revolution era closed the stage was set for an unlikely thaw.
18:00
China isolated and threatened by a superpower neighbor the Russians.
18:04
uh and the US bogged down in Vietnam and seeking an exit.
18:07
Both had incentives by 1970 to reconsider their uh their relationship.
18:11
And so uh the Ray Pont starts 1971 to 1979.
18:14
And there's this funny term pingpong diplomacy uh because the whole thaw of this relationship began on the ping pong table. You love to see it.
18:24
Many relationship deals get done. Yes.
18:26
I think there's a lot of relationships of mine that I could improve by playing pingpong. I I I completely agree.
18:31
Uh so in 1971 April, China invited the US table tennis team to Beijing during the world championships.
18:39
American athletes became the first official US visitors to communist China and their goodwill visit captured global attention.
18:46
Finally like the global populace is saying like oh well like they're getting along and they're playing ping pong.
18:52
Like maybe things aren't so bad after all. Pretty cool.
18:55
It's a really wild setting to be a pingpong player.
19:01
not even a pro ping pong player because I don't think it was even then much of a maybe like a full-time thing.
19:06
maybe like a full-time thing. you you were maybe uh doing some other stuff on the side and you you get tasked with going to communist China and being the first Americans to be welcomed into uh but this is I mean the the Olympics throughout history have been like hugely
19:22
geopolitically important moments with with that ice hockey story where the Russians come play the United States or you know all the stuff that happens in Germany like there there's all these times when when these kind of like silly sporting events act as like olive branches ways to bring people together. Bring people together realize that hey
19:40
Bring people together realize that hey blood enemies. Exactly.
19:43
If we can play ping pong with each other, we can we can maybe do a little bit of trade.
19:47
And so behind the scenes, this is what's interesting.
19:50
Behind the scenes, speaking of comms, Nixon had long harbored a plan to engage China.
19:55
In July of 1961, Nixon's national security adviser, Henry Kissinger, made a secret trip to Beijing to confer with Premier Joe and Lie.
20:03
This covert diplomacy paved the way for a breakthrough announcement.
20:07
And the way they pulled this off was really crazy.
20:08
I think he had to go to like India and then through Tibet and then into China. He couldn't go directly.
20:13
No one knew he was there.
20:14
And it was like this very controversial, very highly risky move.
20:18
Both from like a security perspective, but also just from a public perception perspective because of course America's been beating this drum of like we're enemies with China.
20:25
And if you want to change that, you can't just come out all of a sudden and say, "Hey, actually we're going to be friends."
20:31
Uh you have to work up to that.
20:32
and if you don't have any cards to play, uh there's not really going to be that much support for it.
20:37
So, uh in October of 1971, a few months after, uh Kissinger and Joan Lie start talking in China, the United Nations voted votes to seat the PRC as the legitimate representative of China, expelling Taiwan's ROC from the UN.
20:51
The US opposed this uh at the time, but did not prevent the outcome, which was kind of like, you know, horse trading a little bit.
21:00
And so then in February of 1972, the next year, Nixon actually goes and visits China.
21:05
And there's this incredible opera called Nixon in China by John Adams that you should definitely go see if you haven't.
21:10
Uh all about this trip and how like what an incredible culture clash it was and how uh how kind of ambitious it was. It's fascinating. I was in China in 2016. Yeah.
21:20
And let me tell you, there was a culture crash and that was that was in Shanghai, right?
21:27
The most westernized part of China. Yeah.
21:30
after decades of aggressive development and you know plenty of you know foreign companies setting up there operating etc.
21:39
So in the 70s visiting communist China had to have been truly truly wild.
21:47
I mean it's like less than 10 years after the two countries were losing tens of thousands of soldiers in direct conflict essentially. It's like, yeah.
21:56
Not to mention, even in 2016, if wherever you went as a foreigner, you would have people taking pictures of you because it was just so foreign that it was like seeing a giraffe walk down, you know? Yeah. Uh, Melrose, you know? Yeah.
22:12
So, Nixon goes to Beijing in 72.
22:12
Uh, this he becomes the first US president to ever set foot in mainland China.
22:17
He spent eight days in China meeting chairman Mao Zong and holding talks with Joanne Lie.
22:24
Uh this is called the week that changed the world reflecting its its strategic significance.
22:29
The two cold war adversaries begin bridging a 23-year gulf.
22:34
The image of the staunch anti-communist Nixon Nixon shaking hands with Mao was iconic. You can see it there.
22:40
Uh a dramatic realignment of geopolitical relationships in the Cold War.
22:46
And imagine just the dynamic here around translation. Oh yeah. Right.
22:49
Like trying to negotiate and and repair a very damaged, you know, geopolitical Yeah.
22:58
geopolitically, you know, one of the most significant relationships and you're having to do it all through a translator.
23:03
Even that dynamic is is shocking.
23:07
So there's a few things that come out of these talks.
23:08
The US acknowledges the one China principle.
23:13
the that China the Chinese on both sides of the Taiwan Strait maintain China is one and Taiwan is part of China while not explicitly endorsing Beijing sovereignty over Taiwan and both nations expressed opposition to hegemonic amii to hegemonic ambitions in Asia implying a common interest in containing Soviet power.
23:32
So uh Nixon's really kind of like saying like okay guys you both have a claim here we're going to recognize both of your claims but really let's focus on the Russians. Yeah. And so nice spin. It's called a spin. It's good spin.
23:44
Uh so this laid the diplomatic framework for improving ties without resolving all the differences at once.
23:49
And this served both nations interests for China facing a hostile Soviet Union.
23:54
Better relations with the US offered security and access to technology.
23:58
Since uh the US and the Soviet Union were in the space race developing a lot of advanced technology, China was falling behind.
24:04
As a as a partner, the United States could kind of backfill that where the Soviet Union wasn't.
24:09
And for the US, aligning with China would pressure the USSR, who was the Cold War's primary foe, and help the US extricate itself from Vietnam.
24:16
And so Joan Lie uh said he gave a toast and he says, "The Pacific Ocean is big enough to accommodate both China and the United States."
24:26
Uh this quote encapsulated hopes that the two great nations could coexist peacefully despite ideological differences.
24:32
Uh so uh the uh the next few years, this ocean's big enough for the two of us.
24:37
It is basically what it is. Basically, yeah.
24:39
So, following uh Nixon's trip, Sino-American relationships warmed gradually, albeit short of formal diplomatic ties.
24:45
There were high level exchanges and people-to-people contact.
24:48
Scientific, cultural, journalistic exchanges began, ending decades of mutual isolation.
24:52
Uh the US began relaxing trade restrictions on China.
24:57
And so, in 1973, the two governments opened uh liaison offices in each other's capitals, de facto em they're embassies, but they didn't call them embassies because that's like a little bit too much.
25:07
They don't want to rush into anything. It's all very slow.
25:10
It's like they were engaged. Yeah.
25:10
But not they're just dating.
25:12
They're uh what what do they call it?
25:14
Uh uh it's not like cold launch, hot launch. Isn't that soft? Soft launch.
25:19
They're soft launching the relationship.
25:20
So uh after Mao's had to after Mao's health had declined, there's some political turmoil.
25:28
The cultural revolution ends and then Mao Mao dies in 1976.
25:30
This gave way this gave way to the rise of Deng Xiaopen, a reformist leader keen on modernizing China with foreign help.
25:37
And so a very big pivot in the politics of China at the time.
25:42
Uh this leadership change in the Chinese side made made full repro more feasible by the late '7s.
25:48
And so in the early 1970s there was a shift in dynamics.
25:51
Nixon leveraged this leveraged the China opening to pressure North Vietnam which relied on Chinese and Soviet support into peace accords.
25:59
So that kind of ends the Vietnam war.
26:01
Meanwhile, the Soviet Union alarmed by US Sino closeness, China, China, America working together pursued uh calming down like control arm arm arms control agreements with the United States and the and this is kind of the beginning of the end of the cold war.
26:18
And so China benefited as well the threat on of a two-front uh confrontation with the US and the USSR.
26:24
Like that would be the nightmare for China if they wound up fighting America and Russia at the same time.
26:28
And so the culmination uh came at the decade's end.
26:32
In September of 1978, President Jimmy Carter and China's leaders uh agreed to establish full diplomatic relations effective January 1st, 1979.
26:40
The US formally recognized the PRC and severed official ties with Taiwan.
26:46
This meant the US acknowledging Beijing as the sole legal government in China.
26:51
after something like 30, 40 years, they say, "Hey, you guys won the civil war 30 years ago.
26:59
We're going to recognize that you kind of run the place."
27:00
And they kind of do, so it's not that unreasonable, but uh you know, they have a little bit of size on Taiwan. They do. They do. And they won. Yeah.
27:07
What what what is uh what is underrated is like is like the geographic and population is is so desperate.
27:14
But at this time like in terms of technology, military, economics, Taiwan is still very dominant and and and doing very well and and holding its own.
27:24
Uh so as part of the normalization, Washington affirmed the one chi one China policy recognizing the Chinese position that there is but one China and Taiwan is part of China.
27:32
In return, Beijing accepted that peaceful resolution to the Taiwan question would be pursued. This was left ambiguous.
27:38
So they say, "Hey, you want to put it would not be pursued fully." Yes.
27:44
Uh I mean, you could still hope for that.
27:47
That's kind of what happened with Hong Kong.
27:49
It was like not super violent, but it wasn't great.
27:53
There were a lot of protests, but that's kind of the idea.
27:57
It's hard to see the protest, but it doesn't seem like Taiwan wants to go that direction.
28:00
But, you know, what would be a peaceful resolution?
28:02
I mean, I guess Taiwan could say, "Hey, we want to be part of China. We're cool.
28:06
we're voting for it dip uh uh democratically like that's the nature of democracy.
28:10
You can vote to join an authoritarian country.
28:14
I guess would be weird though.
28:17
I'm not sure I I have no uh hard info here, but I'm sure that China has made a bunch of efforts to organically turn Taiwan Yep.
28:26
to the point where they just vote to join.
28:28
That's the Hong Kong playbook, right?
28:29
It's it's it's it's uh you know uh political support for pro-China, pro- mainland leadership uh in the government and then eventually more and more uh ties, diplomatic ties until there's they they kind of merge.
28:43
Um and so there was the Taiwan Relations Act in 1979 uh to reassure Taipei and Congress.
28:50
The US passed the Taiwan Relations Act in April of 1979, allowing continued commercial and cultural ties and obligated the US to help defend Taiwan.
28:57
Taiwan. uh this act while not a formal treaty with Taiwan effectively guaranteed US support a point that Beijing grudgingly tolerated but viewed wearily and talk about again is a is a bit of a strange dynamic to be like we've got we've got comms we have a relationship but by the way Taiwan is
29:15
part of China but we will also defend Taiwan against with our lives if you try to touch it it's kind of a weird dynamic that they're playing both sides here but that's the only way that geopolitical finess forward yeah so in 1979 9 Deng Shoping visits the United States which is a groundbreaking trip for us for a Chinese leader. Deng charmed Americans
29:33
Deng charmed Americans famously dawning a 10gallon cowboy hat at a Texas rodeo symbolizing the new uh the new friendship.
29:41
He sought US investment and technology to jumpstart China's modernization.
29:45
Uh Deng declared China needs to catch up with the modern world at the Texas at the Texas radio.
29:52
No, I don't know if he said that at the rodeo, but uh he said he toasted to the future of the friendship with President Carter and he declared that there should be peace in the Pacific.
30:00
These optimistic notes underscored the sense of a new chapter.
30:03
Look at that photo of of him wearing the 10gon cowboy hat. We need 10gon hats.
30:07
And and interestingly, uh Cin Ping did something similar where he visited some farms in in Iowa, I believe, or uh and when when he was much younger.
30:16
And uh there are these great cultural moments as as as as high stakes as these relationships are, you get the feeling that like at at some point like these are just bros hanging out like drinking.
30:28
Have you seen the picture?
30:30
Have you seen the picture by the way of she in 1985 in uh Okay, I'll try pull that up. Send it to Ben.
30:37
We'll we'll we'll throw it up.
30:38
Uh so by the late 1970s, the US and China were in fact tacitly allies against Soviet expansion.
30:45
They shared intelligence on Soviet military moves in China benefited from limited US technology transfers.
30:48
The Soviet invasion of Afghanistan in 1979 further united Washington and Beijing in opposition.
30:55
Uh and so this was really the transformation of the relationship.
31:00
Two ga two decades of isolation has officially ended.
31:03
And so in the 80s and 90s we're talking about reform, more economic opening and deepening engagement.
31:09
And so under Deng Xoping's leadership, China embarked on sweeping economic reforms.
31:14
Uh in the late 70s and 80s, moving away from Mauist utarchy, Beijing welcomed foreign trade, investment, and technology.
31:21
Special economic zones were set up to attract overseas capital and millions of Chinese students were sent abroad, many to US universities to study science and management.
31:31
And this was the beginning of let's check out this picture. By the way, this is Xi.
31:35
This is Cinang in San Francisco.
31:37
San Francisco with the Golden Gate Bridge.
31:38
fantastic bridge just smiling having the time of his life.
31:41
He forged lifelong friends on that trip to Iowa.
31:46
Uh it was an agricultural in another world he stays here, gets into YC, builds a SAS company.
31:51
We'd be looking at a completely different world.
31:55
Completely different world.
31:55
Ah the road not travel sometimes.
31:57
Anyway, um so the US the US enthusiastically supports China's reform and opening policies.
32:05
American businesses and technology poured into China seeing vast market potential.
32:08
It was a great deal for American businesses because they just have a massive new market.
32:12
Uh and this isn't even to talk about the the supply chain which we'll get into later.
32:15
The US government facilitated scientific and cultural exchanges.
32:19
Bilateral trade exploded from a negligible amount in 1980 to tens of billions by the end of the 80s. Popped.
32:26
Um by 1984, Deng could famously declare to get rich is glorious.
32:32
reflecting China's new pragmatic embrace of wealth and markets, a quote often attributed to him.
32:36
So very different from the from the cultural revolution, the the the communist mindset that I think people put on China in the 70s.
32:45
Um and so during the during the 80s, the US and China found common cause in opposing Soviet aggression.
32:52
They cooperated indirectly in conflicts like the Soviet Afghan war.
32:54
The CIA and the PLA coordinated to funnel weapons to Afghan guerrillas fighting Soviet troops.
33:01
That turned out to be a bad decision, but but they were working against the Russians at the time.
33:06
Of course, this you know the the all the weapons became the the like the training ground for the Taliban. It was very bad.
33:13
Anyway, it was a little bit Reagan even went as far as to export them some military equipment. Yep.
33:20
That is one of the most sacred bonds that two countries can have in many ways.
33:25
It's dark, but it's true.
33:26
Yeah, despite his anti-communist rhetoric, um Reagan was committed to further normalizing ties with Beijing.
33:33
I mean, we we we'll talk about Bill Clinton's perspective on China and what the internet would do to bring democracy to China, but this has been a thing since Nixon and it continued through Reagan is uh I can fix her. I'm built different.
33:46
Once they see how America works, they're going to once they get a little taste of our rockets, they're going to want to go full full capitalism. And this is interesting.
33:54
In 1982, the US and the PRC signed an agreement where the US agreed to gradually reduce arm sales to Taiwan, uh, which was aimed at plating China, though the US kept selling defensive arms per the Taiwan Relations Act. Yeah.
34:09
So clearly, uh, again, they just can't, uh, pretty much impossible to pick a side and everybody's just sort of kicking the can down the road. Yeah.
34:17
On on the big, uh, question. Yeah.
34:19
And so, uh, by the mid1 1980s, thousands of American companies were doing business in China, and China's economy was growing at doubledigit GDP increases.
34:32
You love to see double-digit GDP increases, folks.
34:34
And hundreds of thousands of Chinese students and scholars were studying in American institutions.
34:38
So, there were a lot of people-to-people bonds, of course.
34:40
Um, both sides largely viewed the relation the relationship as mutually beneficial.
34:46
The US saw a vast new market and a potential partner, while China gained access to capital and advanced knowledge.
34:50
Um but there were some frictions.
34:52
Uh there were some ideological differences.
34:53
American leaders occasionally pressed Beijing on human rights and political freedoms, a theme that continues to to till today.
35:01
And there were trade imbalances.
35:01
U China's exports to the US were growing faster than imports because China was still not a consumptionbased economy, highly savings driven.
35:09
And so this US trade deficit with China, while modest then was beginning to draw attention.
35:14
And of course now it's like front and center.
35:16
It's like the most important uh dis point discussion point in the US China relationship.
35:20
And then of course there was the Taiwan issue.
35:21
Um let's move on to Tienman Square and the butchers of Beijing. This is 1989.
35:25
Uh the booming 1980s relationship came to a sudden crisis in mid 1989.
35:31
Uh over a million Chinese led by students gathered in Tienman Square calling for de democratic reforms and an end to corruption.
35:40
On June 3rd and 4th, 1989, China's communist leadership ordered a military crackdown.
35:45
Uh PLA troops opened fire on the protesters, killing hundreds to possibly thousands of unarmed civilians.
35:52
And the world watched in horror because photos like this were uh disseminated in American media.
35:57
And so, President George HW Bush publicly condemned the violence and suspended military sales and highle contacts with Beijing.
36:05
Congress imposed sanctions.
36:05
Uh, Chinese officials were hit with travel bans and bilateral aid programs were frozen.
36:12
Washington and its allies essentially put the USChina relationship on hold.
36:16
Uh, during in 1992 during the US presidential campaign, Bill Clinton criticized Bush for being too lenient on Beijing after the massacre.
36:25
And this is what's so fascinating about the USChina relationship is that it's not strictly a left-right issue.
36:31
We talk about this with ch uh Trump put tariffs on China during his first uh administration.
36:38
Biden kept those in place.
36:38
And so it's not like oh the the the Republicans are the China hawks or the Democrats are the China hawks.
36:45
It's always going back and forth ping ponging based on what's actually happening because that's kind of the nature of geopolitics.
36:50
Um and so uh Bill Clinton accused uh President Bush for being too lenient on Beijing after the massacre massacre, accusing him of coddling the butchers of Beijing.
37:05
This strong remark reflected widespread American revulsion at the Chinese regime's behavior in a sense that the US should not conduct business as usual with a government that crushed peaceful protest.
37:14
It's very anti-free speech.
37:14
How can we do business with them if they're not embracing the most basic of our what we see as human rights?
37:22
Um, privately, Bush sought to preserve the strategic relationship.
37:26
Just weeks after Tianaan, he secretly sent uh Brent Snowcraftoft to Beijing to meet Deng, delivering a personal message that the US wanted to maintain ties despite public outrage.
37:38
The secret diplomacy kept from Congress at first showed Bush's desire to sustain the engagement framework, albeit under criticism.
37:43
So the the TMN events chilled but did not permanently rupture USChina relations.
37:49
The sanctions and global approbium uh isolated Beijing for a short period but China's importance and the underlying strategic economic interests led to gradual resumption and of engagement in the early 1990s.
37:59
And so at a certain point Bush is saying like yes they're violating human rights over there but it's really far away and we're making a lot of money so we got to stay the course.
38:08
That's basically what happened.
38:09
So, Bill Clinton comes in and he moves from post tenement isolation back to a policy of constructive engagement with China, which again, like complete flipping from from the from the campaign promise of like the butchers of Beijing, I'll never do business with them.
38:24
And then all of a sudden, he's like, "Well, I mean, we could probably do a little bit of business.
38:27
We could probably get a little bit of business, just a little bit of money."
38:30
Uh, so uh Clinton initially tied China's trade status to human rights. Interesting dynamic.
38:36
I think there was a continuous belief that if you could get China to adopt free market capitalism that over time uh you know the free market would guide uh China to a system that was I don't know who knows if it would ever been long-term aligned with US interests but the uh I do believe that you know everyday citizens of every country in the world don't have uh this sort of general Um, I don't want to generalize this too much, right?
39:09
But like people in China don't have as much of a, you know, the sort of geopolitical power players, you know, want want people to believe like this is like, you know, citizen on citizen conflict, but it's really not. Yeah. Right.
39:23
It's like every every individual wants to, you know, further their own life and, you know, live in a sovereign country.
39:30
Um, I mean, when you think of like America's Bill of Rights and like free speech, that is very much aligned with just capitalism.
39:36
And so you would, it does stand to reason that if you get a country to go full capitalism, full democracy, free speech and human rights will kind of follow.
39:47
But that's not always the case.
39:49
And that's where we get to this like state hybrid com uh hybrid capitalism that's that's eventually developed.
39:55
Um, and so Clinton, he's he's channeling the art of the deal here.
40:00
He's saying, "Hey, China, we're going to trade status to human rights improvements.
40:04
Uh, your trade status is going to be linked to human rights improvements."
40:09
In 1983, he threatened to revoke China's most favored nation trade privileges.
40:12
This came up on the All-In show uh last week.
40:17
if if human rights didn't improve.
40:19
However, by 1994, he dell uh human rights from trade, concluding that engagement was better was a was a better strategy to influence China.
40:25
So, he is saying, you know what, I'm not going to break off trade if you don't if you don't clean up the human rights stuff.
40:34
Instead, I'm just going to focus on increasing trade and that I think that will lead to human rights improvements, which is it is somewhat reasonable.
40:40
It didn't really play out, but to some degree it made sense.
40:44
degree it made sense. Um yeah, this pivot acknowledged China's rising economic weight and so there's just a certain amount of pressure and this is the pressure that's been building and building and building where it's like decoupling every single US businesses putting pressure on the admin to say hey we want to be doing business there we
40:59
need to have a uh you know actual uh you know relationship uh government to government totally for us to confidently go and do business there every step that the relationship that the trade uh that the trade relationship grows makes it more painful to break off and so there's going to be more pressure and so high level visits between US and China continue. 1997 Chinese president Jang
41:19
1997 Chinese president Jang Jin made a state visit to the US and in 1998 Clinton traveled to China for a summit symbolizing the full normalization after Tianan Clinton University.
41:32
They're back but there are some security crisis.
41:34
The Taiwan strike crisis happens in 1995 when Taiwan's president Lee uh was allowed to visit the US.
41:41
Beijing was furious, seeing it as a US breach of the one China policy.
41:45
China conducted missile tests near Taiwan to intimidate the island ahead of its first democratic presidential election.
41:51
Clinton responded by deploying two US aircraft carrier groups to the vicinity in a show of resolve. The crisis subsided.
41:57
Taiwan's election proceeded, but it was a very hot and tense moment.
42:01
Uh, and then there was the Belgrade embassy bombing in 1995.
42:03
During NATO's air war in Yugoslavia, US bombs mistakenly hit the US the Chinese embassy in Belgrade, killing three Chinese journalists and diplomats.
42:15
Washington apologized profusely, calling it a tragic error due to an outdated map.
42:19
Many Chinese believed it was intentional.
42:21
Anti-US protests erupted across China.
42:23
US consulates were besieged by angry protesters and angry demonstrators.
42:28
The incident badly strained relations.
42:30
And then there was also a lot of surveillance and spying accusations during the late 90s.
42:34
Uh there was fear of Chinese espionage.
42:36
Uh allegations of Chinese theft of US nuclear secrets at Los Alamos surfaced in 1999.
42:43
Uh this injected some distrust but it didn't halt the engagement.
42:48
Everyone's making too much money.
42:48
And so trade overdrive begins during uh when China is enters the World Trade Organization.
42:55
This is a centerpiece of late 90s engagement.
42:57
uh China really gets integrated into the global economy at this point.
43:02
Pu Clinton pushed for a landmark trade deal to allow China into the WTO in in 2000.
43:06
He signed the US China relations act of 2000 granting China permanent normal trade relations.
43:14
This is the PNTR that came uh up on the all-in show again.
43:17
Uh this paved the way for China's WTO entry in 2001.
43:19
And so, uh, the US believed that WTO membership would bind China to global trade rules, open China's markets to foreign goods and investment, which kind of happened, but not for social networking and tech companies, which we'll get into.
43:33
Um, and Clinton argued that by embracing China in the WTO, quote, "The United States is exporting freedom by sending China a message that economic freedom can ignite demands for greater political freedom."
43:45
So, you get richer and then you start saying, "Hey, I want some free speech. I want a yap.
43:49
I want to start a podcast. Yeah, I got money.
43:51
Uh, I can I can afford a SH SM7B now.
43:54
So, you're not going to censor me, China. Let me Yeah.
43:58
Um, so the US becomes China's key market and China becomes the US's key manufacturing hub.
44:05
By the late 90s, China's export-led growth was heavily fueled by the US market.
44:10
China ran large US large trade surpluses while Americans got lowcost goods.
44:15
This is the happy meal of the of the late 90s.
44:17
uh US manufacturing sectors like textiles, toys, and electronics began to feel the impact of Chinese competition, but US policy remained firmly committed to economic engagement.
44:26
And so the late 90s were often described as a honeymoon period for the USChina relations.
44:31
Um aside from some hiccups, uh Janja spoke of constructive of a constructive strategic partnership with the US and Clinton toasted to China's peaceful rise, a term China itself later adopted.
44:45
Uh however, unresolved issues persisted.
44:48
The US cons continued pressing China on human rights.
44:50
Uh there was the treatment of Tibet.
44:53
Uh you might have remembered the free Tibet movement that a lot of Hollywood actors were involved in.
44:56
Uh and uh you know just a general lack of democracy.
45:01
Uh China's military modernization uh began albeit from a low base which the Pentagon watched closely.
45:08
Uh in 1996, US Defense Secretary William Perry uh raised concerns about China's missile buildup.
45:12
And by 2000, a congressional Cox report warned of Chinese nuclear espionage.
45:16
Uh but despite such concerns, the two countries keep engaging with each other.
45:21
So post World Trade Organization entrance, China's economy absolutely takes off.
45:27
Uh the sustained 10% annual the context here for me personally is being born in the 90s. Yep.
45:36
the 90s. Yep. growing up at this time where US China relationships you know is you know this honeymoon period trade is accelerating uh it feels like China is opening up and modern modernizing uh I had this dream as a young child of being an international businessman like I just
45:55
had this idea of like uh the the thing to be was a guy wearing a suit with a briefcase doing international business and so as I got into school once I got to college I still had this sort of idea that uh China was going to be an important market for US tech which I was interested in. So I started studying
46:13
So I started studying Mandarin. Yep.
46:14
I studied abroad in China, got in at effectively like a YC equivalent in China and realized very quickly that China, the Chinese market, despite what was being marketed broadly, had no interest in foreign really foreign businesses being involved on the ground in China at all.
46:38
And it really just it completely I basically slammed into a wall and within two weeks realized that like this is not a place that US technology companies are ever going to do business.
46:48
But it was I I felt like I was sold a very very different dream. Yeah.
46:53
There was still this idea on the ground even people that were optimistic that hey like Google's banned but like there's still going to be there's still tons of opportunities here. Yeah.
47:02
Um this was the lack of reciprocity.
47:05
So by the late 2000s and especially in the 2010s, US officials and business leaders accused China of failing to reciprocate the openness that it enjoyed from the west.
47:15
So there were market barriers.
47:17
China maintained high barriers for foreign countries in many sectors like finance, telecommunications, media even as Chinese firms freely accessed US markets.
47:26
Uh now that's that stopping.
47:30
But for for all of the 2000s and 2010s, any Chinese company could come here and sell DJI drones and Tik Tok and all sorts of stuff.
47:39
This was really a cell phone because it was how long did we have to go where like you said US firms were being effectively stonewalled in China, but no one kind of realized it. Yeah, it was rough.
47:52
Uh so foreign companies in China face joint venture requirements, equity caps and favoritism towards uh stateowned enterprises.
47:59
You need to set up this something called a variable interest.
48:04
So when so when I was there there was a foreign I was I was helping you know I was like an intern for this foreign startup. Yeah.
48:10
And there had to be like a a n you know Chinese person that was an equity holder in the company that did no work. Yep.
48:20
They were not involved with the company at They didn't even have a board level role.
48:23
It was just basically effectively a wealth transfer to someone local.
48:28
And then that person was like and and the the reason for that uh is is not just the economic reason, but it's an influence thing.
48:36
It's like if you come in here and you do anything bad, this person is basically like they can take all the assets of the of the of the Chinese entity at any moment. Yeah.
48:45
It's but but also it it puts the represent the Chinese representative in a weird spot if the the foreign firm is not acting in the interests of the party in China broadly.
48:56
And then there was also intellectual property theft.
48:57
The US became alarmed by widespread IP theft and industrial espionage attributed to China.
49:04
Uh American firms reported being forced to transfer technology as the price of market entry.
49:08
So hey, you want to sell that car here?
49:10
We got to see the blueprints basically.
49:12
Um, and then there were stateback hackers uh implicated in theft of trade secrets in uh 2014.
49:20
That's such a crazy dynamic.
49:20
I want to enter this market.
49:23
Give us the exact playbook to give us the codes to Zion. Really?
49:28
Uh, in 2014, the US indicted five Chinese military hackers for cyber espionage against US corporations.
49:33
And of course there was uh uh accusations that Beijing was manipulating its currency to keep exports cheap.
49:40
A stance that led the Treasury almost to label China a currency manipulator on multiple occasions and eventually it did so briefly in 2019.
49:49
Uh there was also the lack of political reform like everyone was hoping that the economic growth would help liberalize China politically but that just did not materialize.
49:57
In fact, uh if anything, China became more authoritarian and Cinping became essentially a dictator for life.
50:03
Uh and so uh the CCP had no intention of loosening its monopoly.
50:08
There was no two-party system. There's no one else.
50:12
And this was like a core assumption of the US engagement strategy was that hey, we're going to take this leap of faith.
50:16
We're going to bring you into the global economy and we're going to expect that you evolve into a democracy over time.
50:22
Because China was on that track for a little bit and it didn't happen.
50:24
to give China a little bit of credit.
50:26
We were doing the same thing with with Taiwan and basically saying like, "Yeah, you're the one China, you know, we're we're on your team. Let's do this together."
50:35
Simultaneously selling, you know, weapons to uh Taiwan, everybody was everybody was two timing. Yeah.
50:40
And so during the Obama era, uh this is the beginning of a tougher stance.
50:44
Uh so pivot or rebalance to Asia.
50:47
In 2011, the Obama administration announced a strategic pivot to Asia, devoting more diplomatic and military attention to the region.
50:54
This was partially to reure re reassure Asian allies in the face of China's growing assertiveness.
50:59
Uh Secretary of State Hillary Clinton in 2011 outlined a policy in an essay titled America's Pacific Century calling for an increased US engagement across Asia as a counterbalance to China's influence.
51:12
Uh this included st stationing Marines in Australia, strengthening ties with other Asian countries and moves and these moves were controversial.
51:21
Beijing definitely viewed them with suspicion.
51:22
Uh there were also uh the Trans-Pacific Partnership which was a standard free trade agreement with Asia-Pacific nations but not China.
51:29
So there's a new trade deal that advantages everyone but China.
51:34
Uh the TPP aimed to set rules on labor, environment, and stateowned enterprises, implicitly pressuring China to reform if it ever wanted to join.
51:42
And so they basically structured this trade deal to say, "Hey, you got to follow all these different things that you're not doing right now.
51:49
Oh, turns out everyone just happens to do this except for you.
51:52
Why don't you come on reform and then you can join because it'd be great.
51:55
You'd, you know, you'd have more free trade."
51:56
So as China became more assertive territorially, especially in the South China Sea, the US pushed back diplomatically.
52:02
In 2010, Secretary Clinton stated the US has a national interest in freedom of navigation in the South China Sea, which irked Beijing.
52:10
In 2015, US Defense Secretary Ash Carter publicly warned China to halt its island building and militarization of reefs in the South China Sea, saying the US opposed turning these features into military outposts.
52:24
China was basically like, "Uh, we'd like some strategic islands, so we're going to make them."
52:27
Um, uh, the Pentagon began regular freedom of navigation operations near Chinese claimed areas, which, uh, I'm sure people are familiar, which is basically just, you know, navigating boats through those areas. like we could be here. Yeah, show of force. So, uh power projection.
52:43
The US often with EU with the EU and Japan brought cases to the World Trade Organization against Chinese practices uh i. e.
52:52
China's export restrictions on rare earth minerals which they're doing again now critical materials for high-tech products led to a joint world trade organization complaint in 2012.
53:03
While the US won some rulings, China sometimes complied minimally or found workarounds.
53:07
Annual strategic uh and economic dialogues were established to air grievances and press China on issues ranging from currency reform to market access.
53:16
Uh there was very little sort of progress during this time. Yeah.
53:19
They also host the Daly Lama uh which is very controversial to China.
53:24
They don't love what he's pitching about universal rights.
53:28
Um but Obama kind of frames this as uh this is uh you know general strategic uh like a general strategic and economic issue.
53:37
Uh by Obama's second term, US rhetoric had sharpened.
53:41
Officials openly talked of China as a strategic rival in certain domains even as cooperation continued on climate change and and Iran's nuclear deal.
53:48
And then in 2012 2013, this is when Cinping uh really takes over.
53:54
uh he becomes the general secretary in 2012 and president in 2013 and he centralized a lot of power and championed the Chinese dream of national rejuvenation.
54:03
They did a domestic tightening make America great again campaign. Yeah. Yeah. Yeah. Yeah. Basically.
54:11
And so they did a military buildup.
54:13
The PLA got a massive overhaul in budget increases.
54:15
Uh Dick Cheney was uh not super happy about this.
54:18
Um and then uh C uh Cinping launched industrial policies like made in China 2025.
54:24
It's now 2025 and it seems like mission accomplished guys.
54:28
Yeah, to some degree look they were he was focused on semiconductors, AI, 5G and they're still not on the I would argue that they're not on the leading edge of semiconductors although they're making great efforts.
54:39
They are not, you know, Tyler Cowan yesterday was was very uh behind on AI a lot clear which is that they're behind on AI.
54:46
The most exciting AI projects they have that are public are trained on American models.
54:50
They're doing well in smartphone manufacturing, 5G for sure, uh and then electric cars to an increasing extent, drones certainly.
55:01
So important high-tech sectors, but not the key foundational technologies necessarily, but they're certainly working on it and investing very very heavily.
55:08
And uh in 2013, China began the vast Belt and Road infrastructure project across Eurasia, extending its economic and political influence.
55:16
Another point of US concern seen as Beijing creating a sinoentric order.
55:21
Y again people have been very uh sort of concerned, afraid, annoyed, frustrated with sort of belt and road initiative.
55:29
initiative. Y but at the same time I do want to give them a little bit of credit that the US has just you know aggressively done many similar things over a long period of time sometimes with different structures right you know the you know the the IMF and some of
55:45
these sort of like more uh global organizations are are oftent times carrying out a lot of those efforts but still and so Cinping starts talking about the century of humiliation that's from 1839 to 1949 when China was subjugated by foreign powers vowing the great re rejuvenation of the Chinese nation. Uh and so he is arguing that
56:05
Uh and so he is arguing that China should no longer be pushed around or play second fiddle.
56:10
It would reclaim its rightful place as a great power, the kingdom under heaven, the middle kingdom.
56:17
Uh this fueled a more assertive foreign policy.
56:19
China became less willing to hide and bide, which was Deng Xiaoping's old mantra to remain low profile.
56:25
And so several incidents of detering relations uh started to emerge in the mid2010s.
56:30
There's cyber espionage clashes uh in 2015.
56:33
There's a massive hack of the US Office of Personnel Management.
56:38
I actually know someone who was in the database at that time and all of their stuff got leaked because of this. It's kind of crazy.
56:43
And they and they was it made public or uh I'm not I I I think it might have been made public. I'm not actually sure.
56:49
But basically, if you worked for the federal government, all of your personal data was was leaked to China.
56:55
Uh, and this was w this is widely attributed to Chinese actors.
57:00
Uh, the US accused China of hacking companies.
57:02
Obama and Cinping reached a 2015 accord to conduct economic espionage in cyerspace, which helped briefly, but distrust remained high.
57:10
And so, there was also a standoff in the South China Sea.
57:13
Uh by 2015 2016, China had built and militarized artificial islands with runways and missiles and in disputed waters.
57:20
The US responded uh with more uh with more navigation operations. That's right.
57:29
Procedures, I believe, phone ops. Yeah.
57:31
And rallied allies to condemn these actions.
57:33
Uh and I remember there's some very viral YouTube videos about like China's artificial islands because it's just like I how are they doing that? We don't do that.
57:41
That's a crazy idea to just go and like build an island.
57:43
Um, but it makes a ton of sense.
57:45
If you need to project power, you build an island, you kind of control it, and then you can put a a tank or a turret or missile or a plane on it.
57:54
Uh, and so uh, the economic dialogue starts stalling.
57:57
Uh, annual talks are yielding only incremental uh, Chinese concessions, which frustrates US negotiators.
58:03
Market forces, market access for US firms remain restricted.
58:07
By 2016, calls grew louder in a in Washington that engagement had failed to change China's behavior.
58:12
At this point, Obama was frequently uh saying please, which was he would ask China to play by the rules of the international system, warning that if it didn't, the US and others would enforce those rules.
58:27
Chinese leaders, meanwhile, accused the US of trying to contain China's rise and not respecting China's core interests like territorial integrity, the whole big Taiwan thing.
58:35
Uh but um but needless to say saying you know yeah and so then of course 2016 Trump gets into office.
58:45
Uh there's the hundred-year marathon book that's very informing of China's strategy.
58:49
And Trump is way way more aggressive in the rhetoric.
58:52
He says they're stealing American jobs.
58:54
Uh he's going to he says he's promises to get tough on China and demand reciprocity.
59:00
And this uh did resonate with a lot of American voters in industrial states.
59:04
And that's a big part of why he won the job loss, you know, the various Yep.
59:07
you know, firms, manufacturing, you know, companies that had basically been shut down due to not being able to be competitive with China for various reasons, that was still fresh on a lot of people's minds, right?
59:18
If if even, you know, if somebody had a family business that had shut down 10 years ago, Yep.
59:24
and Trump gets into office and starts talking like this, that family is not forgetting that that happened. Totally.
59:30
And so, uh, we're talking about a Chinese trade war today.
59:33
Uh, it's actually trade war, too, because the first Chinese trade war happens in March of 2018.
59:40
Uh, Trump announces tariffs on 50 billion worth of, uh, Chinese imports.
59:45
And then Trump eventually widens that to 25% tariffs on about $250 billion in Chinese good, which are industrial components, electronics, etc.
59:55
and additional tariffs on the rest roughly 300 billion consumer goods at 7 and a half%.
1:00:00
Um virtually all Chinese exports to the US were hit and the administration justified these ne as necessary to counter economic aggression and massive trade imbalances.
1:00:09
So Trump has been beating this drum of of economic warfare with China is happening.
1:00:15
I'm going to lead the charge again and again and again. He's back in. He's doing it again.
1:00:19
It's not this should not be unexpected.
1:00:20
And so China retaliates placing tariffs on tens of billions of dollars of US exports targeting politically sensitive products like soybeans uh agriculture goods and autos.
1:00:30
For example, when the US levied $ 34 billion in tariffs, China responded with 34 billion on US goods.
1:00:35
Trump escalated raising tariffs from 10% to 25% on 200 billion of goods.
1:00:39
Beijing answered with its own increases.
1:00:41
And so there's this tit fortat spiral that rocked global markets and stoked recession fears.
1:00:47
By 2019, bilateral trade volumes fell.
1:00:50
Supply chains began adjusting and companies in both countries felt pain.
1:00:53
American farmers in particular were hit were hurt by lost exports and Chinese manufacturers faced higher costs and un and uncertainty.
1:01:00
And so now we get into revenge.
1:01:03
Uh co came uh immediately after this. Yep.
1:01:08
Uh there's you know uh we won't get into uh co on this podcast.
1:01:15
I think it's more relevant to stick with the uh the crackdown on Chinese tech, specifically Huawei and ZTE.
1:01:21
So uh the US banned government use of Huawei and ZTE products, citing espionage risks, and this was the big 5G debate.
1:01:30
Uh the US also pressed allies with mixed success to exclude Huawei from their 5G networks, portraying it as a Trojan horse for Chinese spying.
1:01:38
Of course, like if a 5G tower is intercepting all internet traffic, it's going to be pretty easy to spy, especially if it's unencrypted stuff.
1:01:46
So, uh, Huawei responded with lawsuits.
1:01:48
Um, but this tech decoupling aimed to protect US national security and technological leadership in the face of China's rapid advances.
1:01:56
And so, uh, in the in in 2018, the US Justice Department charged Chinese intelligence officers and hackers in several cases of economic espionage.
1:02:06
and the US passed more laws to tighten scrutiny of Chinese investments, especially in tech startups.
1:02:11
Uh, sanctions were also imposed related to human rights.
1:02:13
Uh, the US sanctioned officials involved in Shing Jang's ma mass detention of weaguers and for undermining Hong Kong's autonomy.
1:02:23
Uh, China angrily counters sanctioned some US lawmakers and nos.
1:02:28
And this is from the US Department of State website.
1:02:30
says, "Also required of every company in China, a branch of the CCP is nested within Huawei's corporate structure."
1:02:38
Uh, and they say Huawei has deep ties to the Chinese Communist Party and military and it's a privately held company, which is interesting, too.
1:02:46
So I think the uh American you know companies and politicians at this time that that sounded the alarms were absolutely correct that just strategically cannot you know the US cannot rely on telecommunication infrastructure from a privately held company with ties to foreign military which is a political adversary.
1:03:08
And so Trump is getting much more aggressive against about China in America.
1:03:13
Simultaneously, Chinese officials are starting to use sharp rhetoric against the West.
1:03:17
And they call this the wolf warrior diplomacy.
1:03:19
And so, uh, the foreign minister Wang Yi blamed Washington for the worsening relationship relationship, accusing it of McCarthyism.
1:03:28
And, uh, there's some crazy wolf warrior like tweets and quotes out there that are really, really aggressive.
1:03:34
Uh, and it sounds just like Trump, but from the other perspective.
1:03:38
It's very much like this is a failing country. They're the worst. It's very funny.
1:03:41
Uh and so of course there's a lot of uh propaganda and conspiracies around COVID 19.
1:03:45
Obviously that that that sour the relationship but most people are super familiar with this.
1:03:49
Um and so uh in 2020 uh in July the US Secretary of State Mike Pompeo delivered a speech at the Nixon Library titled Communist China and the Free World's Future.
1:03:59
He bluntly stated the old paradigm of blind engagement with China has failed. We must not continue it.
1:04:05
We must induce China to change.
1:04:07
Pompeo proclaimed, "The era of engagement is over, citing China's unfair trade, human rights abuses, and aggression."
1:04:14
He called the He called on the world to join the US in resisting the CCP's ambitions.
1:04:17
This was essentially an obituary for nearly 40 years of US China policy and set the ideological groundwork for a new time, no that communication had entirely broken down. Yeah. Right.
1:04:29
This happened after Tanaman Square.
1:04:36
And anyways, this story is still unfolding. Yeah. Yeah.
1:04:39
And it kind of brings us up to today.
1:04:40
I mean, obviously, uh, Biden kept a lot of pressure on China and now Trump has escalated things to, uh, what feels like 11.
1:04:48
Uh but we have three great guests today uh breaking down various aspects of the USChina relationship, what's going on in Taiwan, but we're starting with a more optimistic take on how to support Taiwan with a satellite that will provide internet.
1:05:05
And so we are joined by the founder and CEO of Astronis.
1:05:09
And welcome to the show, John. How you doing?
1:05:12
Hey guys, how's it going? It's great. Thanks for having me. Great to have you.
1:05:17
Congratulations on the announcement.
1:05:19
Uh would you mind just giving us the uh the highlevel announcement uh and and even just like a little breakdown of Astronis and uh what uh how you describe the company on day-to-day basis. Yeah, of course.
1:05:33
So, uh today we had this very cool announcement.
1:05:36
You can go check it out on uh on Bloomberg and some other some other places.
1:05:40
We announced a new satellite for Taiwan.
1:05:43
And this is a special kind of of dedicated satellite in a high orbit that is called geostationary orbit.
1:05:50
So, uh this is a very special orbit.
1:05:53
It's been around for um you know been around since the beginning of the space age, but essentially allows you to park a satellite over a country or region of the world and provide continuous service with just that one satellite or um Oh, wait. What the hell? Oops.
1:06:10
You look and sound good to us. Sorry.
1:06:13
Am I my my something glitched on my Zoom but is all good? You guys can hear me? All good. Yeah. Okay. Excellent.
1:06:19
Um so you can provide this service with just one satellite or in some cases a couple of satellites parked up there and essentially uh create this this backbone in the sky. Yeah.
1:06:31
And this is really important in a case like Taiwan, which I'm I'm sure we'll get into. Yeah. Sure.
1:06:37
Uh can you give us a little history of the company and uh because I know you launched satellites before and you I we I've heard about Alaska and a and a few other countries.
1:06:46
Um what has the roll out been now that you're kind of in the commercialization stage of the company? Yeah.
1:06:53
So we started the company coming up on nine years ago. An overnight success. Overnight success.
1:06:58
We love an overnight success on this show. Congratulations. Uh we love to see it.
1:07:05
Just a quick quick 9-year journey. Good job.
1:07:08
Honestly, incredible timeline. Yeah, it's incredible. I appreciate that. Yes. Yes. We did. Yeah.
1:07:12
We just sprang into being with this, you know, beautiful manufacturing.
1:07:17
It just snapped your fingers for it just fully formed. Just magically appeared.
1:07:22
So, uh, we started the company actually to do this one thing which I, you know, I always like to joke there no pivots.
1:07:28
We started with this exact thesis in mind and then we just have been you know grinding away executing on that all all the way through but it is you know do a next generation satellite design using all the latest small satellite technology but in high orbits which have a number of benefits and a number of use cases that are they're very different from I'm sure what you you know you and your viewers have heard about in lower earth orbit.
1:07:54
Yeah, like Starlink and one Webb and some others that are in lower Earth orbit have a lot of advantages um and uh high orbits have their advantages as well and that's for both commercial and military and defense applications um which we are are also now charging ahead on.
1:08:13
So um we started the company uh you know on on some early uh commercial customers that we found and now you know fast forward today we've signed contracts for you know more than uh more than 10 of these satellites commercially.
1:08:26
We also have a number of US government defense programs uh that are there in work as we speak.
1:08:31
So there's a there's a lot going on.
1:08:33
Um but this one this was an important important one for us. Yeah.
1:08:37
Can you talk about your neighbors in geostationary orbit?
1:08:38
I I I saw on your site there's $15 billion dollars worth of these satellites being sent up every single year.
1:08:47
So there's other people you talk about kind of like Yeah. What else is up there?
1:08:52
Is it like the Hubble telescope?
1:08:53
Like like how high are we talking? Higher than the ISS.
1:08:57
Like really explain it like we're five.
1:08:59
Explain it like we're actually. Yeah. No, no, for sure.
1:09:01
So it is about a hundred times farther away than than lower Earth orbit.
1:09:05
Um it's about a tenth of the way to the moon. Mhm.
1:09:06
And as as you as you said, there's about uh $15 billion worth of these satellite large satellites launched to GEO and other high orbits every year.
1:09:17
Um but historically those have always been giant behemoth satellites that cost hundreds of millions on uh really for the commercial side is in this like few hundred million range.
1:09:29
And then on the military side, the satellites cost over a billion dollars per satellite. Wow.
1:09:36
sometimes multiple billions per satellite.
1:09:38
So, we're talking and we're talking huge satellites the size of like a double-decker London, you know, big red London bus, that kind of that kind of size.
1:09:47
Um, and then they're really designed to do uh everything from, you know, broadband communications.
1:09:52
This is where all broadcast satellite television has always been from.
1:09:56
And then there's some important national security missions uh up there as as well.
1:09:58
And so the 15 billion is total between commercial and military.
1:10:03
Um but you know I mean it it is a huge number.
1:10:06
It's just like it's one of these very big industries that isn't talked about a lot.
1:10:12
And so we said hey we there's nobody really taking a new approach here.
1:10:15
Feels like we could go do something really interesting and and perhaps quite valuable.
1:10:20
And t talk about today's uh announcement and the significance of it.
1:10:25
I imagine this is not the kind of partnership that you started working on in Q1.
1:10:28
It's probably something that's been in the works for a really long time.
1:10:32
Like what what what what you know what's even like the timeline to make something like this happen?
1:10:37
Do you do you have oneclick checkout?
1:10:38
Can Taiwan just go please just buy now? Yes, exactly. Buy now pay later. Um no no for sure.
1:10:43
It it it is a longer longer sales cycle for you know hund00 million plus uh deal but obviously worth the worth the effort.
1:10:54
This is so this is a commercial contract with uh a telco called Chunwa Telecom.
1:10:59
It's the largest telco in Taiwan.
1:10:59
They have about a $30 billion market cap.
1:11:02
Um seven or eight billion a year in annual revenue.
1:11:07
So it's very I mean this is a big country big uh uh big company, right?
1:11:11
It's it's like in that Fortune 500 class of company.
1:11:13
And they among uh other things in addition to managing you know operating the cell tower networks for Taiwan they also manage the undersea cables uh for Taiwan.
1:11:24
They also uh manage uh satellite connectivity for the government of Taiwan.
1:11:30
So they have a you know they have a big footprint there as you would expect.
1:11:34
And so working with them, you know, going back, I don't know, at least a year, maybe closer to 18 months ago on where this could be, you know, this valuable asset for them.
1:11:46
Um, and then, you know, sort of going through the I I would call it all the normal enterprise sales, uh, activities from there, right?
1:11:54
You have to get together with our technical teams with their technical teams, hash out exactly what the the technical specifics are of the satellite and then the the network around it.
1:12:04
Um, and then, you know, of course, hammering out the the business terms.
1:12:08
So, it's a it is a big deal for us.
1:12:10
Um, uh, and I think a big deal for Taiwan.
1:12:13
You know, this is something they very badly need, as I'm sure you guys, uh, you know, as I'm sure has not escaped your attention.
1:12:22
Uh, what what does it actually take to get the satellite up to geostationary orbit?
1:12:26
Uh assuming you guys are partnered with, you know, SpaceX on the transport side, but what are what are all the different kinds?
1:12:33
Is this uniquely unlocked by SpaceX and dropping launch costs?
1:12:37
I'd love to know kind of the general trend in mass to orbit and how that's enabling the business. Oh, 100%. Yes.
1:12:44
I mean there's no question space when SpaceX came along and really dropped the launch costs in a big way with the Falcon 9.
1:12:50
Um you know that enabled a whole array of of you know just like new new space opportunity most we like I said we've seen most of that in lower earth orbit but uh absolutely still the case for us in in higher earth orbit.
1:13:06
I think the difference is it's a lot higher orbit the the higher orbits it's a lot harder to get to.
1:13:11
So, you have to uh have your own onboard propulsion.
1:13:14
The rocket doesn't actually get you all the way there.
1:13:16
That's what I was getting at. Yeah. Yeah.
1:13:17
So, in lower orbit, the rocket just drops you off where you want to be and you deploy satellites and there's satellites in in lower Earth orbit that have no propulsion uh extra propulsion on board at all. They don't need it.
1:13:30
Um the we are quite the opposite.
1:13:32
So you get dropped off in this transfer orbit, but it's really on us and any other satellite that goes to GEO to do the rest of the propulsion ourselves uh and and get ourselves the rest of the way up to GEIO.
1:13:46
So that is where we had to really design the whole satellite system around this electric propulsion system.
1:13:52
We use an ion thruster, very high performance.
1:13:54
Um that allows us to, you know, essentially um have all the fuel on board that we need in the size of of a couple tanks that that are basically look like, you know, a couple of scuba tanks, right?
1:14:06
So it's like that that size of tank, that much xenon gas, which is the propellant, and we can actually get all the rest of the way there up to geo.
1:14:15
So um you know between between that and a sort of more recent technologies I think what we're doing today just wouldn't have even been possible technically until um you know coming when around the time we started the company eight nine years ago um because you you really had a few of these pieces coming together including the the electric propulsion.
1:14:36
So yeah it is it is a it is a more challenging orbit to get to for sure. Interesting.
1:14:43
How did you get into this?
1:14:45
I actually don't know your background before you started the company.
1:14:51
Uh, I'm I'm an aerospace engineer. I'm a space guy.
1:14:53
I've been a space guy since I was a kid.
1:14:54
Did my degrees in a space engineering.
1:14:56
Uh, worked at some big satellite programs.
1:14:58
Uh, worked at, you know, a couple of the big defense contractors, which I will remain, you know, remain nameless for this, but suffice to say learned that was, you know, not what I wanted to do with the rest of my life working at the big uh defense primes and you know seeing how they operate.
1:15:18
I think there's also um you know there's something there that that we just we got to fix.
1:15:22
You know we got to fix for the country or we're going to be in serious trouble.
1:15:25
So yeah um no better way to do that than than starting our own company. Yeah.
1:15:29
We talked to Ian Cinnamon over at uh Apex Space and he was talking about building a satellite bus or platform for low earth orbit satellites kind of uh almost acting as like a supply chain partner to speed up uh you know delivery to low earth orbit like smaller companies that want to get going.
1:15:49
Uh you started the company so long ago.
1:15:51
I imagine that that thruster is is in house. You built all this.
1:15:54
Are there any other partners other than SpaceX that have been helpful to you as you've built out or or what does the modern space economy and and landscape of partners look like as someone's building a company like Astronis?
1:16:10
Oh, that's a great question.
1:16:10
Um, so true, a lot of these a lot of these pieces were not in place when we started the company.
1:16:16
Um, but as these pieces come along, we absolutely take advantage of them.
1:16:21
So that includes uh you know more rockets coming online. Sure.
1:16:23
Um you know some of them have have or have have um more uh what we call delta V to to get to the to the higher orbits.
1:16:33
Uh that also includes some of these uh transfer vehicles.
1:16:37
So what we call you know orbital transfer vehicles.
1:16:38
So like impulse space impulse for example.
1:16:40
um you know, no question as those things come online, we can we can take advantage of those and use that uh to really to to I mean, not to benefit us, but to benefit our customers, right?
1:16:51
We can get a satellite, they're faster, they get the you know, faster time to market, they get the the spacecraft and their service that much faster.
1:16:59
um if they uh um you know if if if they come online and and do the the kinds of things that we're talking about uh the orbital transfer vehicles then we have more fuel on board which means a longer life to the satellites.
1:17:13
So a lot of these there's there's a lot of great opportunity to you know come in and and add pieces to the to the ecosystem for sure.
1:17:22
Are you expecting Starship to change the business?
1:17:24
Um, I know Starship's going to be able to dump out like way more mass in LEO, but does it also make to get does it also make getting to GEO easier because it's just a bigger rocket?
1:17:37
Um, well, it'll it will uh I believe it is is heavily LEO optimized.
1:17:40
So, using it, we will most likely it's it's not strictly necessary.
1:17:47
We we we don't have to do this, but um we will most likely want to use one of these orbital transfer vehicles. Sure.
1:17:53
And I think that's that's actually like part of the genesis of of you know why Tom started Impulse Space was he saw this like uh you know this this real need there.
1:18:03
Um but uh it will result in lower launch costs, right?
1:18:09
I mean which just really benefits everyone.
1:18:10
I I I think it's a huge um it's going to be a huge boon to the to the industry.
1:18:14
Uh and you know I very much looking forward to to uh to it flying. Yeah.
1:18:22
flying. Yeah. Can you talk a little bit about uh how a modern telecom company delivers internet because I imagine uh Chungwa Telecom has cell phone towers and maybe some 5G stuff and then also maybe now they have geo satellites and
1:18:39
those plug into the rest of the system or or are they or are they trying to specifically create like we're going to sell you a separate product that's a satellite dish that will interface with this geo internet product and it's like a completely different line. Just like,
1:18:52
Just like, you know, I have a Verizon plan on my on my iPhone.
1:18:56
I also have a Starlink terminal for when I travel.
1:18:58
They're two completely separate uh products and networks and bills.
1:19:03
Um but but what but how how are the telecoms thinking about providing kind of a a 360 experience to the customer? Yeah.
1:19:11
So for a for a telco, we are providing what what we call trunking and back haul, right?
1:19:16
So trunking is exactly what you'd imagine, a giant pipe that allows them to bring, you know, huge amounts of data, pipe huge amounts of data from point A to point B.
1:19:28
Uh and then back hall is uh in in their case, imagine you have cell towers out in remote areas and you need those cell towers are acting like any normal cell tower and to the end user, they don't know the difference, right?
1:19:42
They're just their cell phones connecting whatever cell tower they're closest to.
1:19:44
But if the cell tower is in a remote area, it doesn't make sense to run a fiber line to that cell tower.
1:19:49
And so you need to do that back hall length that is connect that cell tower to the network through some other way.
1:19:56
And satellites are a uh you know a a a very uh advantageous way to do that especially in certain cases.
1:20:03
Um I think what we've seen with a lot the Telos that we work with uh like Chungwa Telecom is they really um yeah they they do see it as a as a very separate kind of uh of need and and product offering than uh what people might get at their homes with uh whether that be their their terrestrial provider or a or a uh or a LEO provider like Starlink.
1:20:30
Um what they are really looking for is dedicated capacity that is set aside for their exclusive use and it's on these uh what we call SLAs, service level agreements um you know guaranteed uptimes where they they and they know it's there whether they are using it or not.
1:20:48
It's just always guaranteed to be there for them.
1:20:53
Um and then on top of that you imagine what I mean you can just think about what kind you know what some of these customers fortune 500 customers might want in an enterprisegrade offering. It's security.
1:21:03
Um, it's, you know, a lot a lot of the, uh, customization.
1:21:09
So, understanding exactly what the, uh, the different endpoints of the network are, exactly what equipment is used, and, you know, getting to work with us to pick that equipment, if they have a preferred vendor, uh, for that networking equipment, and then really just having this insight and transparency into exactly what's happening on their network at any given moment.
1:21:28
So among other things, they know where their data is going and where it's not going.
1:21:33
Uh they know uh for example that their citizens internet traffic is not going up to a satellite and then landing in some other country outside of their control where maybe they don't you know they don't trust that country.
1:21:43
They they just don't know what's what's happening to that data.
1:21:46
So that's where we've seen this uh this need out in the market for a a true enterprisegrade offering that has this kind of uh all these all these aspects to it. Um, yeah.
1:21:59
How do how do you think about scope creep when you're sending a, you know, multiundred million dollar, hundred million dollar satellite up into the air.
1:22:06
Everybody in, you know, traditional software is familiar.
1:22:08
You start building something or you start scoping something out and you're like, "Oh, what if we added this button or this feature, things like that."
1:22:14
I imagine there's a huge incentive to try to scale capabilities and and offer a bunch of capabilities, but at the same time, like you kind of needed to do matters. Yeah. Every ounce matters.
1:22:24
And there's like one or two things that are critically important. Totally.
1:22:27
Uh for the sort of value of the product. Totally.
1:22:29
I you know when when the uh when the customer asks for something and they know there's uh you know there's like a hund00 million contract there waiting, the sales guys always want to say yes.
1:22:46
So So you got to figure out ways to help them say yes to things without, as you said, you know, giving giving in to this like um uh you know giving giving into this temptation to just like customize everything. Yeah.
1:22:59
So we have a standard satellite design.
1:23:00
We have a few pieces to it that are that are essentially modular.
1:23:04
So um you can sort of plug and play a few different things like like Lego blocks for slightly different customer configurations. Um but that's it, right?
1:23:13
we draw the line there and then there's only so much that we're willing to customize the design and you have to you know at some point you have to say no like hey uh if if if we were to totally customize this thing for you it would be the cost would you know balloon way beyond what what you are you know what what you're willing to pay here.
1:23:29
So um I I think that's uh I think that's worked well for us.
1:23:32
you know, we've sold, like I mentioned, a lot of a lot of satellites of of this uh using that approach.
1:23:38
And I think um you know, yeah, there's there's there's always ways to to make it work. Yeah.
1:23:42
I love the the the meme of uh you know, the sales guy the sales guy just promised like dinner.
1:23:51
Yeah, of course we can do that.
1:23:51
You want to just be able to go up and back whenever you want. For sure.
1:23:54
Yeah, we'll make it happen. Yeah. Yeah.
1:23:56
You want it to land on the moon and then come right back. Yeah, obviously. Yeah. Little bit different.
1:24:01
I don't I mean well I guess I don't really know in enterprise software land but I can imagine that happens all the time and you know it's like um sometimes they just have to put up with it but it's a little harder to like build a totally different satellite design physical satellite hardware some extra software features. Yeah.
1:24:23
No, I totally get with the with software.
1:24:24
It's like, okay, you know, this engineering team is going to have to spend, you know, uh, two days over the weekend like, you know, shipping this, but it just doesn't quite work the same when you're sending nine figure payloads to space.
1:24:35
Um, can you talk about uh security kind of like risks in um in geostationary orbit versus low Earth orbit?
1:24:45
Are you far enough away that that that it's like a you know maybe a more secure environment or or less risk or are the risks still kind of very real? Yeah.
1:24:57
So I mean I'm I'm going to be a little limited in what I can go into here since I do have a a security clearance.
1:25:02
um the the there are different uh threats to uh higher orbits and geospatial orbit than there are to lower earth orbit and different different count different counters to those threats.
1:25:16
Um I think what I would say is that uh you know our plan is uh and and what we're executing on is we're building many of these satellites.
1:25:23
We're spooling up our production here in this building um to build, you know, many dozen build and launch many dozens of these satellites, including we'll have onorbit spares.
1:25:34
We'll have satellites that we could bring in um and and and add to uh the you know, add to the network or or replace if if a satellite was lost for whatever reason.
1:25:44
And you actually imagine, I mean, that actually is an easier problem to solve than uh an undersea cable. Yeah.
1:25:53
fiber optic cable being cut.
1:25:55
That fiber fiber optic cable is being cut.
1:25:57
You you just think about the difficulty to replace that.
1:26:00
You have to actually get, you know, a ship to roll that out over um Oh, hold on.
1:26:07
Thousands of miles, right?
1:26:07
Um I I somewhat related to that, but probably something you can talk about.
1:26:12
Uh in terms of space junk, we hear these stories about like, oh, the ISS had to dodge some satellite debris.
1:26:18
Uh is is that a problem for you?
1:26:22
Do you have systems and thrusters that can turn on if you're detecting something or is it clear enough that it's not really an issue at this point? No, it's true.
1:26:31
I mean it it it it occasionally it's it's much more it's much more rare in geo than in in LEO these days but the orbital uh you know the the the orbital um you know space uh like airspace but space space is being actively monitored at all times by uh the US military.
1:26:54
They actually do this, you know, your taxpayer dollars at work.
1:26:57
They do this and broadcast to the entire world if they believe there could be a collision between two space objects. Mhm.
1:27:06
Uh and they they called it a a conjunction event and you get a conjunction warning and you on you know on board like we do have thrusters on board, rocket thrusters that we could use to do these evasive maneuvers and get the satellite out of the way if we really believe there was a a real risk of of some kind of collision there.
1:27:23
Like I said, quite rare in GEO.
1:27:25
Um not I mean certainly not unheard of, but uh rare for you to to get one of those warnings.
1:27:35
um more common in LEO, but that is just becoming a reality in uh you know in the space environment now.
1:27:40
I mean that's just a reality we're going to have to all deal with. Makes sense.
1:27:43
Uh speaking of undersea cables, uh it's been 10 years working on this.
1:27:47
Can you take me through what the next 10 years might look like?
1:27:52
I know that a geostationary satellite uh is mostly in the case of an island nation mostly going to act as backall between cell phone towers on that country.
1:28:01
But is there a future where uh instead of going through an undersea cable from an island in the Pacific to mainland America uh you could actually do the back hole back haul in space between two geostationary or uh satellites.
1:28:18
Is that something that's possible even or or I know it might not be as fast but well that is the you that is the use of this Taiwan satellite today actually that we announced today. That's right.
1:28:31
Um, it will actually have a couple of different, you know, it will be able to provide service on the island.
1:28:37
Um, but it will also be able to be a relay to locations off the island in the case that all their all their fiberlands are cut and they would otherwise just be totally out isolated from the outside world. Right.
1:28:47
Seems really really important.
1:28:49
That is that is very important.
1:28:51
That is very real concern.
1:28:53
You can imagine if you were just getting your communications, you know, piped in Yep.
1:28:57
with these undersea cables and then one day uh someone accidentally drags an anchor across you know all of them. Yep.
1:29:06
Um that you would you could end up very isolated and and in fact completely unable to talk to the outside world. It's very scary. That is very scary.
1:29:15
Very scary scenario for for a country like that. Right.
1:29:17
Um and there's a and there's a lot there's a there are many such countries uh that that have these concerns.
1:29:23
Now the world is a more complicated and and I would say dangerous place than it than it was um in the past and so you know we have this is where we have seen uh a significant demand for this this kind of service.
1:29:39
Now do you have do you have any insight into how Taiwan and the Taiwanese government views civil military fusion?
1:29:46
We've we've heard uh from Palmer Lucky that uh you know every boat that's built in China needs to be able to be built to military specs.
1:29:54
Um obviously you're doing a commercial deal here, but how does Taiwan think about that?
1:30:00
I feel like in America if if AT&T does a deal, the government's like or the DoD is like, "Okay, cool."
1:30:06
Like, you know, that's kind of its own thing.
1:30:08
Uh Taiwan might have a different positioning, but what is your take on how the Taiwan government views civil military fusion?
1:30:16
Yeah, that's a good question.
1:30:16
I mean, this this is this is a commercial um this is a commercial deal. Yeah, sure.
1:30:23
And is one of our commercial satellites coming off our our commercial production line.
1:30:27
I think what I would I think what I would say is that um you know where we've seen interest from the DoD it is actually also for these same satellites off of that same production line.
1:30:40
They are very interested in this dual use uh type of scenario where they actually get to benefit from all the private capital that we've raised.
1:30:47
We've invested that into this production capability.
1:30:50
So then therefore, you know, we're using it commercially.
1:30:53
we're using produce and then if we use that same production capability to produce satellites for them then they get a much lower price point than they would otherwise if they just like all this investment had to come in to stand up a whole new production line just for a military uh you know a new line of military satellites.
1:31:09
military satellites. So that is where right that that's the benefit of of dual of a dual use technology like they are yeah getting that benefit way they just wouldn't otherwise and I think um places like Taiwan they they saw the they saw
1:31:26
the benefits from that also they saw our US military contracts they know that we have uh designed something that the military is interested not in some upgraded you know super uh you know turbocharged version of what we have
1:31:39
today but but what we actually have today and they are they're basically getting that same thing right so that is I I maybe that's slightly a different way to look at it but there's definitely you know we we are definitely seeing a closer
1:31:56
um you know amount of overlap of of our commercial industry and the and what the DoD is looking for than ever before I think in in the US as I'm sure you guys are seeing with a lot of companies you're talking to for sure uh I'm a big fan of the moon. I want to go to the
1:32:08
I want to go to the moon.
1:32:10
I want to be able to listen to podcasts on the moon.
1:32:12
Are you going to be able to help with mooncoms in the future? Uh 100%. Yes.
1:32:16
Um we actually Yes, we we have an early um NASA study contract.
1:32:24
We're studying that for NASA.
1:32:27
Uh NASA's going to need every everything that we have in that like every space service we have for Earth, we're going to need another copy of that around the moon.
1:32:35
We're Moon's going to need its own GPS.
1:32:37
Yeah, Moon's going to need its own comms networks, uh, both, you know, moon to moon, uh, you know, lunar surface to lunar surface comms as well as relays back to Earth.
1:32:47
Um, there and then they're going to need all these transportation systems.
1:32:50
I think with the moon, the the most interesting story that nobody is talking about is we have a real space race with China happening as we speak and it's very concrete.
1:33:03
There is a series of craters on the moon that we know have water ice trapped in them and there these are permanently shadowed craters on the lunar south pole.
1:33:13
Um, and it is extremely valuable real estate.
1:33:18
Like those that real estate and those mineral rights, if you want to call it that, enormously valuable because you can use that water to create rocket fuel, which you can use to then use the uh have the moon be this um this stepping stone to other places in the solar system.
1:33:34
and whoever gets there first and really decides we're going to actually we're not just going to plant a flag, we're going to pl we're going to put down a fence base. Yeah.
1:33:42
And we're going to say this is our uh lunar property.
1:33:48
Like whoever does that first um they there's you know there's no reason they to not believe they they will just maintain that forever for all time, right?
1:33:58
I mean it's currently totally green field.
1:33:59
Now, if if all the nations on Earth agree to not do that, which I they essentially did through an international treaty, I'm sure the US would abide by that.
1:34:08
But if China decides to just flout that treaty and ignore it and just go land and start grabbing territory there, um we would be it would be incredibly dumb for us to uh let them charge ahead with that and and miss out and let them get there first.
1:34:26
So, um, and this is this is like I mean China just landed a new lunar sample return mission that allows them to demonstrate all the technologies needed to essentially do human missions, do other types of of missions for uh to for all the things I'm talking about.
1:34:40
And honestly, we just we haven't been talking about it enough because we're we're we're sort of letting China just go out and do all these things in space without even calling attention to it.
1:34:51
I mean, I I honestly I mean, I think I think our new NASA administrator, uh, Jared Isman, who's going to be absolutely fantastic.
1:35:01
I think I I suspect he will talk about it once he gets in the seats.
1:35:05
So, we've been waiting for him to get Senate confirmed.
1:35:09
Um, I think you'll see other uh folks in the space industry start to talk about it because it it's a it's a big deal.
1:35:15
like we need to start getting um you know about the moon.
1:35:18
We got to get Do you think in some way la last question then we'll let you go.
1:35:23
Do you think in some way you know calling the you know the space force the space force kind of like allowed people to not take it at like it doesn't in many ways I think the name sounds cool but I think a lot of people didn't feel like it was a super you know serious initiative when it actually it absolutely is something that you know should be mass you know continued to be invested in massively and taken more seriously.
1:35:50
Um, oh, I I mean I I you know I think and I mean I mean more like the broader social media reaction to like oh like you know great we have a space force versus no this is absolutely a new frontier of defense and warfare and and it should be taken more seriously than ever. Yeah.
1:36:09
I mean it's important to you know keep in mind the space for in government terms space force is still very new right it was uh these things take a while to get established and and also um you know essentially to to really put forward their mandate.
1:36:23
I also would argue that under the past the previous administration things were a little muddled in exactly what their their mandate would be.
1:36:30
Um I think under the Trump administration has been it's very clear uh their mandate is to counter the um uh all of the uh activity and I would say aggression that we're seeing from China and space and we're going to see them um you know I think we're going to see a lot more from space from space force in the near term here.
1:36:49
So um you know yeah I I think I think you know so I think stay tuned on that and then um you know we will also and I think we'll also see an increasing amount of coordination between our civil space community NASA and the space force than we have in the past.
1:37:10
And again, that's going to go back that I take it back to, you know, what China's doing on the moon.
1:37:16
There's they they have no, you know, not only do they have coordination.
1:37:20
I mean, there's there's just no divisions at all between their military space, civil space, and even their commercial space.
1:37:28
It's all just one big industry blob of of activity that's, you know, we can't even draw lines there.
1:37:35
So, I think to counter that, we are going to see more cooperation there.
1:37:39
it and I think people will start taking it very seriously very soon. Great.
1:37:43
Well, thank you for starting the company 10 years ago and for uh yeah, congratulations.
1:37:50
Congratulations on the milestone.
1:37:50
Kind of a right place, right time story.
1:37:53
Really when I think about 10 years in the making years in the making.
1:37:54
Anyway, uh this is fantastic. Thanks so much.
1:37:59
Congratulations to the whole team. Cheers. Have a good one. Right.
1:38:00
And we have Jordan coming on. I'll be right back. Perfect.
1:38:03
Uh Jordan, when you're there, welcome to the show.
1:38:06
We're excited to catch up. Talk China.
1:38:08
There's so much to talk about.
1:38:12
You're in the right business.
1:38:14
You're here at the perfect time. How you doing, Jordan? Can you hear me? Let's bring him in. Are we on? We're on. How you doing? I'm pissed off, John. What's happening? I'm not happy.
1:38:29
This is This is the You should be celebrating.
1:38:31
This is the best time to listen to China Talk.
1:38:34
If you're not listening to every single episode that you put out, you're falling behind.
1:38:37
And so it's got to be just a bull market in every single stat you're tracking.
1:38:42
No, except for except for America.
1:38:45
Except for the America stat that I'm tracking, which is the only one that I care about, John. I want to win. I want to industrialize.
1:38:53
I want a golden age for America.
1:38:55
But what we are seeing now is 2015 warriors era execution of how to lose a trade war.
1:39:01
But what about uh uh reframing it using to use a metaphor like imagine playing like a beautiful beautiful violin concerto on the Titanic as it sinks.
1:39:11
Like that would be uh laudable, right? Yeah.
1:39:13
It It's really fun to play a violin until your conductor gets thrown in a van and sent to El Salvador.
1:39:21
This is the world we're living in, John. Oh no.
1:39:23
Uh well Jordan, it's great to see you. Yeah. Good. Yeah. Good to have you back. You came on with a bang.
1:39:32
Um m maybe we could set the table like like how have you been processing the the the tariffs?
1:39:37
Uh have you been on a roller coaster or is it have has it just been black pill the whole time? It's all the way down.
1:39:43
It's all the way down the way down.
1:39:46
Look, I want to believe I really want to believe.
1:39:50
I was going to give him a chance.
1:39:51
I was sitting there, you know, January 10th like look this guy, he's got some moves. He's got some moves. Okay.
1:39:59
He wants to change the way R&D gets funded.
1:40:02
He wants to bring manufacturing back.
1:40:04
He wants to fight a trade war with China. I mean, like, sure. Okay.
1:40:09
I you can you can I'll put in some table stakes for that.
1:40:12
But what we're Can we start Can we start with the uh Can we start with the research, John? Let's start with that. Start with the facts.
1:40:23
Xiinping would cut off his left hand for the basic research university industrial complex which America has which no other country in the world can hold a candle to until 20 until late 2025 where every single good STEM PhD and STEM uh and STEM professor who who can get a job
1:40:46
anywhere decides they're [ __ ] sick of this and doesn't want to live their life terrified that they're going to be taken away from their family and their research and, you know, their all their professional opportunities because they got a [ __ ] traffic ticket. And this
1:40:57
And this is the world we're living in now.
1:40:59
John, you went to Northwestern, right? Nor Eastern. 40 40 visas already.
1:41:02
40 people's lives [ __ ] ruined because um uh Marco Rubio thinks that it's cool to um to pick fights with biotech and CS PhDs. Yep. What are we doing here? Okay.
1:41:21
What about let's go back to the initial trade war with China led by Trump 2019 tariffs kind of go in this tit fortat spiral 34 billion on on US goods 34 billion on Chinese goods we were discussing it at the top of the show starts with 50 billion rookie numbers
1:41:41
then 250 billion um what is your postmortem on the 2019 US China trade war the 2019 US trade it was kind of a and and you can sort of write it off because the US economy was growing and we weren't picking a trade war with every other [ __ ] country on the planet. But is it is it possible that we
1:42:00
But is it is it possible that we land in the same place and in the next four years you're like, "Well, yeah, we can write off the first two trade wars, but the third one's the real bad one, right? Is that possible?" Here's the thing. Here's the thing, John.
1:42:13
Jordy, tell me about what the risk-free rate is and why it matters for capital investment. Yes. Yes. Yes. It's very high.
1:42:22
Have we Have we done that yet?
1:42:22
We talked about the basis trade. It's not looking good. Well, yeah.
1:42:26
Joe Joe uh Joe Joe was was talking earlier with with Tracy specifically about uh in the the the US bill being potentially the greatest export that we could ever have.
1:42:40
And I think that's an interesting uh positioning.
1:42:42
Uh can we talk about your your audience are is you know deep state people.
1:42:50
No I I was going to go I was going to go towards this is by his own definition he says he's cash for the deep state. Okay.
1:42:56
This is not me making it up.
1:42:58
This is what his his words.
1:42:58
It's great of freedom and democracy. That's what we're Yeah. Yeah. Yeah.
1:43:03
Um what what's the re what's the reaction from your business audience right now?
1:43:09
Are they still at a standstill?
1:43:11
Is it, you know, we can't make any decision because we don't have full clarity on what the world looks like in 90 days?
1:43:18
You know, look, it's not it's not going to be 90 days.
1:43:23
It's going to be four years because this man likes to be in the headlines more than he likes literally anything else.
1:43:29
So, he is going to keep doing things that put him in the headlines. He can't take wins.
1:43:34
He was handed different Yes. Yes.
1:43:39
He was going to be in the headlines next month, but it could be because he's fighting with Rosie O'Donnell, right?
1:43:43
And that has a different wouldn't do to have him pick fights with Rosie O'Donald.
1:43:49
That is the timeline that we should all be rooting for. We need Donald Trump.
1:43:53
If you want to take it all out on me, I'm here.
1:43:55
I'll I'll I'll I'll be the sacrificial lamb for America's basic research ecosystem.
1:44:03
If you want to pick if you want to pick a fight with a shitty podcaster, I mean like you know it's it's we've got we've got a brain drain of America.
1:44:10
We got a capital drain of America.
1:44:12
We got a geopolitical drain of America because he wants to be buds with Putin and take over Greenland.
1:44:18
And oh by the way, we are selling the best chips we have to China because Jensen spent a million dollars to have a burnt steak at Mara Lago.
1:44:26
I mean, it's like truly we're just checking off box of dumb thing to lose this tech war.
1:44:32
Yeah, we we uh can you can you talk about the decision that that kind of flew under the radar?
1:44:36
Was this Friday or I don't even know if it was yesterday at this point, but uh Nvidia is allowed to export the uh what is it? The H um H20.
1:44:46
So, it's an inference trip which um skirts right under the export control regulations.
1:44:55
And Biden didn't do it cuz he's an idiot.
1:44:57
And now Trump isn't doing it because he likes getting, you know, people to pay a million dollars to have dinner with him.
1:45:03
There is no reason Nvidia does not need the money.
1:45:06
It's like $2 billion of revenue.
1:45:08
Like they will be just fine without it.
1:45:11
But we're living in this timeline where if you you know Yeah.
1:45:16
So I if it's two billion in revenue then well it's only two billion of AI data center capacity and that's not enough to build a GPT5 level model and so it's irrelevant.
1:45:25
Like those two things can't be the same, right? Yes and no.
1:45:30
I mean it's like okay sure.
1:45:30
So like what are what are what are our like uh okay super intelligence. Yeah. Yeah.
1:45:38
I mean I mean the the the steel man here is that you like like Yes.
1:45:43
is that you like like Yes. You don't want them building super intelligence GPT7 level models like you know the the the the project Stargate the $500 billion data center cannot be built in China but yeah take $2 billion fine-tune GPT outputs it's still going to talk about Tianaan and you have deepse which
1:46:00
is basically an American model v or manis which is clawed like vended into China and that's actually we were talking to Tyler Cowan yesterday about this he was saying that this is a win for American hegemony because the Chinese leading models have American and preferences baked into the weights at a very deep level. Yeah. I mean, if we're Yeah.
1:46:15
I mean, if we're if we're um if we're thinking that our models are going to democratize China, I mean, that's a that might be one or two steps too far away for me.
1:46:28
The way the way this playbook, John, is the way we kind of already are, which is sell all the chips into Malaysia, and if Chinese companies want to sort of run their cloud out of Malaysia and Singapore, then okay.
1:46:39
and we can shut it off if and when we decide we want to shut it off.
1:46:44
But selling chips directly into China, there's no upside to it.
1:46:46
Um because if you're just opening yourself up to this like whole other universe of risks of maybe these $2 billion of chips actually do end up being enough to fast follow and you know compete with like a a totally [ __ ] up meta and a open AI who doesn't let a hypersailer hear you say that 2 billion could ever compete with 65 billion in capex. That's ridiculous. Can you break down?
1:47:10
We need to spend 65 billion this year. Billionillion.
1:47:13
They're all spending 65 billion.
1:47:15
Every single hyper see next quarter just what that $65 billion number is going to be looking like. I mean higher. Probably higher.
1:47:20
I wish I not he's not a GI pill. He's so black pill.
1:47:29
His timeline is so extended.
1:47:29
Uh we're talking 20 200 at this point. 2080 2080.
1:47:35
Uh I want to so so we covered uh earlier on the show the the sort of uh venture capitalist version of the history of USChina relations.
1:47:42
So like sort of high level you know trying to trying to get into the dynamic.
1:47:46
Uh there was um a few days ago uh April 11th the US told China to request a shei Trump call.
1:47:56
This was reported uh which is sort of a funny you know it's just a funny way to go about trying to get you. Yeah. This is crazy. Here's my number.
1:48:07
I mean, just call, right?
1:48:10
I think we're just pick up the phone and call.
1:48:12
This No, but but talk about talk about the history.
1:48:15
This is how this is how you do negotiations.
1:48:17
But this isn't unique to Trump.
1:48:18
Like this was the same negotiation that we saw with Reagan, Nixon, Clinton, like like the the the whole politics of diplomacy have always been extremely convoluted.
1:48:27
And there's never been an era where it's been like, oh yeah, this it was the Democrats that always just picked up the phone and called.
1:48:31
It was always the rep school Republicans.
1:48:33
It's like Trump's just repeating the playbook of the last 60 years of US China diplomacy in my opinion.
1:48:39
John, have you done a video about uh Chen? No. If if not, you should. Okay. Okay.
1:48:44
So, he um is a Sorry, let me get the Okay.
1:48:51
So, born um born in China, came to the US to study at MIT in 1935.
1:48:58
He was got a clearance during World War II, was a part of a lot of classified work, was best buds with Vanavar Bush, um, you know, part of America's missile program, uh, in the early days.
1:49:11
1950, McCarthy shows up and blows up this guy's life. He says, "You know what? [ __ ] it.
1:49:16
I'm going to move back to China and proceeds to, uh, turn into the father of China's nuclear um, and intercontinental ballistic missile program."
1:49:26
And this is the playbook that we're currently running now is we're taking all of these smart people and telling them they're not welcome here.
1:49:36
And this is I I I am so sure of it.
1:49:39
And it's just like it's just ripping me up inside that 10, 15, 20 years from now, we're going to see companies founded.
1:49:46
We're going to see weapons developed by people who at a sort of hinge moment in their life, you know, 30 some odd years old, they're thinking about where they want to build their life.
1:49:55
their life. They're thinking about where they want to start a family and they see that you know this country is not open to them and and it's just like we have this founder cult in uh in in Silicon Valley right of you know the 10x
1:50:10
engineer like there are going to be a handful of people who are going to end up kind of determining the future of technology and the future of the world and we're taking on risk which we really don't have to by telling all these people. No, I I agree with all that. Uh
1:50:22
No, I I agree with all that.
1:50:22
Uh that's not uh about communication and picking up the phone, but also uh also uh China uh they they do have Tik Tok, they do have DJI, they do have Unitry.
1:50:35
Like they have the companies already.
1:50:37
Like it's not like they're they're like, "Oh, we haven't thought to build a competitor to Facebook or Instagram."
1:50:43
Like they've done it successfully.
1:50:43
Like like like we're in we're in a competition now. Exactly. We're in a competition.
1:50:49
So we can't be [ __ ] around anymore again.
1:50:50
Yeah, we're going to have four more years of [ __ ] around and it's it's just dumb.
1:50:54
And like I still I still think we're going to pull it out.
1:51:00
Like I still I still have faith.
1:51:02
You got to believe, right?
1:51:02
But it's we're going to be sitting here in in six years being like, "Oh yeah, we can totally sweep that one under the rug."
1:51:09
But this one's the real deal. I really hope not.
1:51:12
We can I really I really hope you're right, John.
1:51:15
I want to live in You should You should You should hope that we're right about this. No.
1:51:21
Uh but but talk talk to me going back to my original question.
1:51:24
Maybe it's not maybe it's not as exciting for you, but I think it's just interesting.
1:51:28
Uh what's up with you know the US and China never being able to consistently have you know clear comm direct communication between you know the White House and Beijing. Yeah.
1:51:44
Um, you know, I think there's a there's a really interesting arc of the way that the Chinese government has sort of viewed US China interaction over the past 15 years in a way that's different for really the second half of the cold war.
1:52:02
war. So from like you know uh postworld war II Stalin up until really the Cuban missile crisis the US and China the US and Soviet Union weren't really talking and then you had the Cuban missile crisis people got really freaked out and both countries realized that eh it
1:52:18
actually probably behooves us to be able to interact with each other in a more straightforward way as opposed to you know finding like business people and like you know ambassadors handing people notes because we don't have like good uh sort of leaderto leader comp uh uh interactions. And then um even though
1:52:34
And then um even though there were scares uh for the rest of the the the Cold War, at least there was enough of a kind of uh uh muscle memory in terms of these two uh countries interacting with each other that that people started to get a better understanding of uh uh you know what strategic intentions were.
1:52:53
So the Chinese government I think like first off does not price in the risk of an accident turning into something really horrific nearly as much as the Soviet Union did over the course of the Cold War.
1:53:09
and they see that, you know, the the the Biden administration and the Trump administration uh and and the Obama administration as well like understand that this is can be a scary thing and they see it as a [ __ ] to negotiate with.
1:53:25
So, um, if you're if you're not worried about like, you know, planes, uh, uh, hitting into each other and you think you can get something out of, uh, you know, setting up like regular dialogues or calls or what have you, then um, you know, you're going to you're going to put it on one of your five asks.
1:53:45
But the the sort of the other thing that I think, you know, she's looking at when he saw what happened to um uh Zalinski in the in the White House, right, is like, you know, uh you I think that the the the um willingness to assume like interpersonal risk um is a lot lower for that system.
1:54:06
And they want to have stuff a little more baked out before you kind of like do one of these like leaderto leader conversations. So, whatever.
1:54:14
They'll talk at some point.
1:54:15
Like, I don't know if they're going to like end the trade war.
1:54:19
Um, I'm not really sure what like the aims are.
1:54:21
Um, because it seems like they changed a lot over the past two weeks and they'll probably keep changing.
1:54:27
Um but uh yeah, it's just hasn't really been a priority um for the Chinese government because it's a thing that they think they can squeeze us on is is the just us wanting to have these conversations to you know one one of the thing that that's repeatedly come up in our conversations is just the nature of you know US tech companies broadly being banned from doing business in China.
1:54:53
everything from, you know, Google to Meta, others, and a lot of the people that come on our show are not even allowed to travel to China because they're in anything defense, aerospace related. Um, sure.
1:55:06
On the ground in China, do they uh do does the government or the the military, I don't even know how much of this information would ever appear online and available, do they laugh at us for allowing Tik Tok and DJI and Uni Tree?
1:55:21
Like do you think it's silly?
1:55:21
It's like you're tariffing our you know cheap toys but then you let us sell you still let us sell DJI drones.
1:55:28
You still still let us distribute brain rot to 100.
1:55:30
Like is it a funny thing to to them because to me it's a terrible irony and that like we just can't get a Tik Tok ban across the line or we can't we haven't been able to get them to sell it yet.
1:55:44
And um and again like these sort of uh industries and products that have you know extreme national security risk, you would think those would be the easiest things that the United States could make a sort of collective decision on that would um so I'm curious what their sort of like reaction to the the silliness of it all is. Oh yeah.
1:56:02
Laugh laugh laughing their way to the bank.
1:56:06
I mean, like, look, there there there is there is definitely like some trade war [ __ ] that needs to be happening.
1:56:12
Step one, Tik Tok and DJI.
1:56:14
You said it yourself, Jordy.
1:56:14
I mean, it's like I would love for there to be a like really wonderful globally competitive supply chain that uh America can can create the sort of autonomous drones that um uh Ukraine has been able to to to leverage.
1:56:30
and even they still have to um uh buy stuff from China because there's not enough um uh there's not enough there there exchina um but instead uh we're kind of going in a very different direction.
1:56:43
So yeah, I mean it's you're you're totally right, Jordy.
1:56:46
It's just um uh there's there's not a strategic vision um that we're seeing out of uh this political moment.
1:56:55
Um, and I think they're um, you know, not to put China 200 feet tall, like there's definitely things that they're not they're going to do wrong.
1:57:06
Uh, and their economy isn't perfect and their sort of like techno-industrial complex is not perfect.
1:57:12
Um, but they figured out a lot of this manufacturing stuff and Yeah.
1:57:17
So, so the one thing that's clear very very good at manufacturing.
1:57:19
I don't think anybody disagrees on that.
1:57:21
Um, how do you judge like what do you look for to understand, you know, if China was really suffering right now from these new tariffs?
1:57:32
We wouldn't know about it, right?
1:57:34
It would be it's sort of like it's not like they're going to come out and start saying, you know, talking to the people publicly their stock market, right? Yeah. Sure.
1:57:42
But but like there's a lot of information control in the same in a way that that's not necessarily the case.
1:57:49
Like if a US business is being affected by the tariffs, that person's going to go on LinkedIn and Tik Tok or they'll come on TBPN and they'll say like, "Yeah, my costs are up, you know, whatever 300%."
1:57:59
And unless they're coping really hard. Yeah.
1:58:02
Um but how how do you try to judge the the actual impact of the tariffs in the in the domestic, you know, you know, the the Yeah.
1:58:16
I don't think it's as as it's as opaque a system as like um you know the the the the CIA um and different corners of the US government were having these like big drawn out debates in the 1960s 1970s and 1980s about how large the the Soviet um
1:58:34
economy was because they were saying like okay let's say they spend 10% of GDP on um uh you know on defense so like you know what's the base that they're doing this off and Um, it was really hard to figure out how big the how big the Soviet economy is. I don't think
1:58:49
I don't think it's that hard to figure it out today.
1:58:52
As as John said, we have uh trade data, we have the stock market, we have, you know, quarterly earnings from from all these companies.
1:59:00
And I think there's like enough out there of like chatter of people saying like, "Oh [ __ ] I got laid off because of the trade war."
1:59:07
um that like you know you'll you'll you'll be able to pick up the the the atmospherics just in the same way you you can by having uh you know reading Joe Eisenthal's Twitter feed, right?
1:59:18
What about uh what about uh kind of the the new ally ships that are building?
1:59:23
I mean you obviously you were very upset about like you know America kind of potentially frustrating trade partners like Canada, UK, Australia, France like we shouldn't be pushing them away.
1:59:34
Uh some of that subsided.
1:59:36
Uh it still feels like in general if we're going towards a more bipolar world uh and you're and you are creating some sort of broad western alliance like you're going to put the five eyes together.
1:59:47
You're going to put NATO and America together.
1:59:49
Uh but who is who's on China's side?
1:59:53
I've been worried about like a China, Russia, Iran coalition forming.
1:59:58
Are there other countries that are starting to flip into uh Chinese allyship more seriously post trade war?
2:00:06
Yeah, I mean this is a really interesting thing is like the reason that China wasn't really able to capitalize um during trade war number one is because they were feeling their oats and they thought they could still do wolf warrior diplomacy and and bully other countries around um even though Trump was sort of like [ __ ] on on them in their own way.
2:00:27
And it'll be fascinating over the next few years to see whether or not they take they sort of learn from that experience and take a more consiliatory approach and and you know don't uh try to like uh you know nickel and dime these countries uh in order to really potentially win them over.
2:00:45
But uh you know Southeast Asia like okay I guess like we we did 76 76% tariffs on Vietnam and then we cut it back.
2:00:53
Like who knows where we're going to go with that.
2:00:55
But the the the it's it's it's two things.
2:00:58
it's it's two things. It's like are we going to go to China or are we just going to cut trade deals with every other country ex the US so that we're going to you know the the sort of like the free world exus is going to have
2:01:10
this you know thriving inter uh uh you know thriving trade ecosystem which we're just not going to benefit from um because those supply chains won't run through um the US or our consumers won't get to benefit from or our exporters won't get to benefit from. So um you
2:01:25
So um you know there is like there are a lot of like intellectual risks here.
2:01:30
There's the intellectual risk of like thinking China's 100 feet tall and you know we're we're we're shot and there's no way we can compete with these companies.
2:01:38
U but there's also the the intellectual risk of thinking America is 200 feet tall and we are like you know we're still only 25% of global GDP.
2:01:46
Um, and that's that's a whole lot of GDP out there which is going to be thinking about what to um, you know, what to do and who to trade with and where to invest and um, I have a question.
2:02:00
What is the So, China blocked uh, orders of Boeing aircraft to their national airlines.
2:02:08
Are we going to see uh, they're going to go?
2:02:12
Yeah, that would be cool. They prefer the ER.
2:02:15
Do you have do you have any sense of of uh I'm assure I'm I'm assuming that uh China's been aggressively trying to clone uh various you know US commercial aircrafts for years.
2:02:27
Is that as advanced as the automotive industry uh in China or is it a is it a ways behind? Yeah, it's interesting.
2:02:37
That one's kind of been like the final frontier.
2:02:39
Um uh it has been a clear national priority for a very long time.
2:02:45
Um, and jet engines are really hard apparently, even if you layer on industrial espionage and like an enormous amount of state support.
2:02:53
My guess is that like the reason it has taken so long for COMAC to um to get its [ __ ] together and and build competitors to Boeing and Airbus is is probably the fact that it is state-owned and there are just like poor incentives going on versus the sort of free market free-for-all that you saw in the electric vehicle industry just attracted better talent, more capital.
2:03:18
Phone companies moved over into cars and they're not doing that in planes, right? Yeah.
2:03:24
So, I think there's, you know, and there's like relatively limited upside.
2:03:28
It's like a national prestige product as much as it is a capital uh, you know, a capitalist endeavor um to make these jets. So, we'll have to see.
2:03:35
I mean, I'm like, look, if they can't do it, the the orders will just go to Airbus and like that sucks.
2:03:42
Um, but it is what it is.
2:03:45
Um, and I think, you know, these that industry in particular there there's so much like geopolitics baked into it that I'm not shocked that that was that was what on the, you know, first list of like things to um uh things to start cutting from a US import perspective. Last question.
2:04:02
You seem pretty blackpilled. How's Dylan Patel doing?
2:04:07
Have you done a wellness check?
2:04:07
He seemed pretty blackpilled when you talked to him a few days ago.
2:04:10
Uh, what's his mindset like right now? I wish him the best. I don't know.
2:04:15
I think he's it's just uh like like I thought AI would be our out.
2:04:24
Um, but if we're going to sell them all the chips and we're going to screw up the like American P capital base that we're banking on to fund uh all this AI expansion and we're going to throw away the AI diffusion role such that like the chips are actually just going to end up going to Saudi Arabia and Qatar and Brunai.
2:04:47
um then you know it's it's just we're just taking on risk left and right and like we might be able to pull it out but it's some uh uh it's it's it's hard to watch.
2:04:59
Thank you for letting me have turn this into the Jordan therapy session.
2:05:05
We're going to leave you the white pill one way or another. Okay.
2:05:07
Oh, I I just had a question of like where does where does the Middle East really sit in all of this, right?
2:05:14
Uh it feels like in many ways uh you know we cover business and technology in many ways the relationship between the US tech industry and uh Saudi Arabia you know Qatar UAE is you know thriving just due to the the capital flows but you know uh how do they think about uh even picking you know I haven't seen themselves inserting themselves into the story over the last couple weeks and I'm sure that's for good reason.
2:05:47
Uh, but I'm curious how you see them as a player in all this. Yeah, it's interesting.
2:05:51
I feel like I feel like their diplomatic system like knows how to play the klepto kleptocracy game much better than Canada or Europe.
2:06:00
Um, you know, they got their reps and sets when it comes to dealing with, you know, family dynasties and whatnot.
2:06:07
Um, so they're smart to keep quiet.
2:06:10
I think um uh you know the the diffusion rule um that the Biden administration put out at the very end was really a play to force them to pick sides.
2:06:20
And basically the the deal was like look if you want access to the future.
2:06:24
If you want access to compute then you really got to play ball with us and you got to play ball with our AI cloud providers and our sort of like broader uh defense ecosystem.
2:06:36
And if you're going to um you know have too much China AI in your um you know in your national bloodstream, then we're going to reconsider whether or not we're going to let you um you know buy chips and access our models and whatnot. So we'll see.
2:06:49
This is a regulation which I think is going to be a really interesting bellweather.
2:06:52
Um because it was a very clever um uh hinge to sort of force the Middle East uh government and the governments and the money that came with that to invest in the Western as opposed to the Chinese uh technology stack.
2:07:09
And look, if they're if they don't love what they're seeing, maybe they'll be more excited to if they a don't love what they're seeing and b we take away the jack that we had um around them, then you know, you could see them starting to to wiggle in other directions and and take um and take side bets on a pot that they may have had to have gone allin with us uh if it wasn't for um all the craziness we've seen over the past few months. Got it.
2:07:35
Very last 30 second question.
2:07:37
30 second question. U how real do you feel the yield coming out of TSMC Arizona is or is it marketing to the admin that hey we're doing what you want uh and Nvidia coming out and saying they're going to make blackwell chips in
2:07:55
the US you know it's hard to judge whether how it's hard to understand how real it is when when you know we know that uh people get excited about oh we're going to produce$500 billion dollars of of blackwell chips in the in the next 5 years I think is what they were saying. Uh which sounds amazing but
2:08:10
Uh which sounds amazing but uh in this current dynamic when there's so so many different conflicts and um so much on the line it's hard to know what's marketing and what's like actual you know you know uh it's a it's a good question.
2:08:29
My my rule of thumb is like you can't lie to the SEC.
2:08:31
So just like wait for the filings.
2:08:33
Um, but look, there everyone's everyone's trying to figure out how to get on this guy's good side and maybe this is something that might work.
2:08:43
Um, so, uh, you know, I like it's a it's a it's an interesting sort of like policy trade-off.
2:08:50
Like would we rather have cheaper AI hardware that like Microsoft and Amazon can buy?
2:08:56
Would we rather have it be in the US?
2:08:58
I mean like if it if if the sort of pressure is forcing more stuff to be built in America like there are pluses and negatives from that especially um if we're doing like accelerated timelines and like the prices are going up and I think this is applies to TSMC as it much as much as it does lots of other industries.
2:09:18
So look like they're like they're more pot committed than almost any other any other company in the world.
2:09:25
Um and they don't really have an out um for for this.
2:09:27
So, they're going to do everything they can to, you know, make uh make Arizona work and make the relationship with this administration in this country more broadly work.
2:09:36
this country more broadly work. But I'm almost more concerned about the other uh the other companies who don't have as much money to burn and you know have other options when it comes to setting up manufacturing plants and finding sort
2:09:47
of like end uh uh you know and end users to sell to that are just going to look at what they're seeing now and like nah we can we can we can open that up that playbook again and see um see what else is what other countries and loca loces are on the agenda. All right. Well, fantastic. Fantastic. A All right. Well, fantastic. Fantastic. A spirited debate.
2:10:05
Uh, we'll figure this out.
2:10:08
We're We're built different.
2:10:10
America's going to be fine.
2:10:10
Don't worry about another thousand-year reign. It's all good. Just relax.
2:10:15
Just Just put out great podcasts. Cash in while you can.
2:10:19
Since China's in the news, tell people where they can find Chinat Talk. Give the pitch.
2:10:26
pitch. China ch China talk media China talk media China talk one word your favorite podcast app I promise you I'm not that negative most of the time it's like 8020 good vibes there's some great stuff on there and we appreciate you coming by golden retriever mode yeah
2:10:44
activate golden retriever mode be a little bit more positive and uh and all right we have another guest next we have another guest no no that is not family friendly get out of here we'll talk to you soon thanks Thanks for stopping by, Jordan. Bye, Jordan. This is great. I Bye, Jordan. This is great.
2:10:57
I missed I I missed that completely.
2:10:59
Uh yeah, he did a he did a little uh little squirt gun to the head motion. Not good.
2:11:07
Never not not family friendly on this show.
2:11:09
Anyway, um I'm going to hit the sound.
2:11:11
We got Aaron Gin coming in the studio.
2:11:13
He's written some absolutely banger takes about China GPUs.
2:11:16
Uh he's been called the GPU whisperer.
2:11:19
And uh there's a fascinating article I want him to break down for us.
2:11:24
He wrote this in January 22nd of this year.
2:11:25
It's time to build America's cyber nuke.
2:11:28
We desperately need a deterrent to stop wars before they start.
2:11:32
I want to hear him explain it.
2:11:34
Aaron, welcome to the show. How you doing? Hey. Uh doing well. How you hear me? All right. Yeah.
2:11:38
Yeah, we can hear you fine.
2:11:40
Uh would you just uh give us a little walkthrough of your background?
2:11:44
Uh what you do, how you got to the place you are in today?
2:11:46
Um no, that's a good question.
2:11:51
uh you know say like the Lord works in mysterious ways.
2:11:55
Uh so so we actually started this project this is my fourth company.
2:11:57
We started this project actually as a uh help you leave the cloud don't be cancelled and so what we found out is that data centers didn't have like a software stack to help monetize customers.
2:12:09
So they didn't they you know basically they imagine like you're a merchant selling t-shirts and Shopify didn't exist. Mh.
2:12:14
And so then we started building this and then when the GPU crate started the data centers were like we need something to run this stuff and then we were there and so we started that four years ago and so like I can I can we had the right customer in mind.
2:12:29
Uh but in terms of like a lot of the other stuff that happened with the space I it just had this really nice marryment of like I've been working in public policy for over a decade as well.
2:12:36
policy for over a decade as well. have a foundation in DC policross think tank and also been like doing like political stuff on the side and then just so happens that like AI is the fastest you know regulation in Silicon Valley history and people view it as if uh you know it's regulated under missile technology law that's how it's regulated
2:12:53
right now so so people in DC literally view that Jensen is selling weapons of mass destruction to other countries and so that's why they use the word diffusion proliferation right those are nuclear weapons words so those are this is not a this is not like in interns of politicians they don't view this as if you know you're selling just fun little gaming gear to to to different countries. Um so uh so yeah so that's
2:13:13
Um so uh so yeah so that's how we got into it and you know now we're uh in I think over a dozen countries we are in 50 data center or something like that doing hundreds of millions of dollars a year in transactions.
2:13:24
So um so yeah so we think GPUs are going to be everywhere and uh kind of has reached that its gate velocity uh there's not really much the US government can do about it at this point. Yeah.
2:13:34
Uh how did you react react to the new Nvidia deal that got announced in the last week?
2:13:39
You know, another two another2 billion dollar chips uh of chips to uh China.
2:13:42
You think it's Oh, you mean the the H200?
2:13:47
They're talking about the the reshoring thing with TSMC and Foxcon. Which one?
2:13:50
The first the first part. Oh, yeah.
2:13:52
The Well, I Well, I think it's positive.
2:13:54
Uh because I I think that the approach that Americans have to understand is that the way that China and so like I'm a Chinese exile.
2:14:03
My family fled communist China.
2:14:05
We fought for uh the KMT and uh then during the cultural revolution half of my whole family got murdered in China and so fled to Taiwan and then here.
2:14:11
So, you know, I'm I'm a I'm a hawk of all hawks.
2:14:15
Uh and then my foundation also broke the story.
2:14:18
If you remember the Chinese Chinese government buying land near the air bases.
2:14:21
So, like my my policy foundation like broke that story.
2:14:27
So, um, and like I was telling John that, uh, all like a bunch of like Chinese ambassadors blocked me on Twitter and because I was like harping on it came from a lab, it came from a lab, like sort of sort of thing.
2:14:36
lab, like sort of sort of thing. uh and but but anyways like the I think that the Americans like uh like to think the world works as if western kind of frameworks and philosophy and and a lot of if you like the history of Chinese and the way that they have accelerated
2:14:52
their uh innovation curve which is by the way like not we sort of treat that postNixon era kind of frameworks is like how they we got schooled the pattern the pattern of China has always been to steal technology from other people And uh and so if you look at even how they got the first nuclear weapon. So the way
2:15:09
So the way that they got that and this is just just a quick side story because I think it's helpful for for uh the west to understand just how how they work.
2:15:16
So uh if you remember uh Eisenhower was asked would we ever use a nuclear weapon against China to defend Taiwan and that actually whole story was planted by the Chinese because China was trying Mao at that time.
2:15:31
that time. Matt was so crazy that even Stalin was guy Stalin was like that dude is freaking nuts and he kills his own people at too much right like he goes way too far you know I just do a couple million he's doing tens of millions right so so Stalin was like absolutely not we're never giving you nuclear weapons ever right because you're crazy
2:15:48
and and so the Chinese basically invented this narrative and story planted in DC uh created this line within the state department that like well they could invade Taiwan and so then got to the media and then Eisenhower was asked and And uh then it was posted and he said, "Yes, we would use a nuclear weapon to to defend Taiwan." So then what Ma does, he goes
2:16:05
So then what Ma does, he goes back to Stalin and he goes, "Hey, do you want have America on your borders?"
2:16:10
And Salin goes, "No, I don't want that, but I don't want to give you nukes.
2:16:15
So what I'll do is I'll send Russian scientists to China to just co-develop a nuclear reactor with you, but just don't take my secrets." Right?
2:16:22
Then five years later, they have a nuclear weapon, right?
2:16:24
So, so they've done that with nuclear submarines, they did that with fighter jets, they did that with uh SAMs, they did that with aircraft aircraft uh technology.
2:16:34
So, this is just like a long line of history of like how they kind of work as like a country.
2:16:38
So, but but when you're in an environment when they have 10 times the number of engineers as we do, uh they have a relatively centrally organized government that can execute big initiatives.
2:16:50
Uh but it's it's still a highly federalized government.
2:16:52
highly federalized government. was in the Shanghai province and Shanin province the governors kind of like all work separately like like in America like they are all they're hyperfederalized but but generally they come up these like kind of big initiatives and big plans and so when it
2:17:07
comes to like GPUs we have to realize that they are very much closer than we think like like the reason why iPhones are built there is because it's so technically complex to build an iPhone that we can't do that anywhere else it's not because it's cheap the cheapest place to build things is Mexico like
2:17:23
just by labor hours but Mexico doesn't have the technical capability of doing that and so when we have the the situation of GPUs we have to understand that that it's not just like we can actually protect this technology for that long it the actual modes around the information symmetry that we have as a
2:17:39
nation towards China on the advancement of chips is much smaller than than we think and I think it's like under 12 months so if you think they're like five years away I can be sympathetic to the airports controls but they're under a year the goal is to win the goal is to reach just skate blocks. They like up on
2:17:52
They like up on Hero, right?
2:17:54
They brought everyone in Los Alamos not to be secretive.
2:17:56
It's because we had to win.
2:17:59
We had to be first because whoever was first defined the entire era of what nuclear weapons uh became.
2:18:05
And so that and and then we actually, by the way, cut off all of our allies, too.
2:18:09
We we took the mathematicians from Britain.
2:18:11
We said, "Hey, yeah, we'll share everything."
2:18:12
And then we made the nuke and then we cut them off and then they went to go build their own nuke.
2:18:17
So, so it's it's kind of the same situation where building GPUs is actually much easier than the US government thinks, which is why it which is why Amazon's doing it, Microsoft's doing it, Facebook's doing it, Broadcom's now a trillion dollar company.
2:18:30
And the second is that their actual uh ability on the foundry side is much is more like a year or two behind.
2:18:38
So in that scenario, it becomes where we need to distribute our technology like a Boeing asset to as many places in the world that wants to take it because then that becomes our footprint that we control that we can continually express and influence that other country.
2:18:52
Otherwise, Huawei is going to show up and is going to be like, hey, my thing is like, you know, 80% is good, but it's cheap and I'm not going to cut you off from the most important technology wave in in, you know, in in the next 10 10 15 years.
2:19:04
And that's a pretty compelling argument if you think that you're another country and and so that that's why I think this reorientation has to happen around where we actually are as a country in terms of how far we are ahead.
2:19:14
But also we can take advantage of that because the stuff is like quite easy to deploy compared to like CPU infrastructure and as well as the world wants it.
2:19:22
Um and and the the most recent controls are a little bit dishonest because if you if you go look at the January 15 ruling ruling uh it it is it adds Greenland and Portugal and Poland and Finland and adds Greece and it adds basically everywhere in the world but 19 countries.
2:19:42
So do we really think that Greenland is going to diffuse GPUs to China? No.
2:19:46
It's because they have cheap power, right?
2:19:49
power, right? So it's turned into this like protectionism thing where we're like we have to protect our companies and I'm like wait a minute like I thought this was about China like so now we're like doing this to like protect and like isolate and so one reason why we we have lost the LLM race on the open source side is because because we've
2:20:06
done stuff like that and and I think that's putting us again another disadvantage about another advantage for Huawei because Huawei can be like hey I had the leading open source models China does it's it's it's unquestionable and now I have a chip that's designed for So, so like we're putting ourselves in kind of a really difficult position and also a difficult position for Nvidia. Uh
2:20:23
Uh because the reality is like this is the goal where we have to achieve this game philosophy first like with the nuclear weapon.
2:20:29
Uh not like we can hold off this wall and like play these games with countries and just slow them down.
2:20:34
In reality, it's like we just need to win.
2:20:38
We need to stop like messing around and trying to do these kind of stupid games.
2:20:42
Can you give a hyperabridged version of your uh your version of AI 2027?
2:20:44
like what does hitting escape velocity look like?
2:20:50
Uh kind of like a potentially like a white pill like what does winning look like?
2:20:54
Uh I think Americans have the largest GPU cluster in the world uh as a deterrent.
2:20:59
That's what I mean by the nuke button.
2:21:00
And and that's a game of deregulating energy.
2:21:03
Kind of like the other things that I think are more widely accepted.
2:21:05
Uh like to me it's all energy should be acceptable.
2:21:08
We can build on federal land. All that stuff's great.
2:21:11
Um, and we also need to we need to resource semis.
2:21:13
But I think the way you resource semis is not randomly tariffing stuff and then providing exemptions when you have a lobbyist that is convincing enough to go to the white house.
2:21:22
I thought I thought we were supposed to be opposed to that as I guess not now.
2:21:25
So we should focus on deregulation and then subsid sub subsidizing actual development here.
2:21:30
So then giving tax breaks for people to use the Intel foundry or TSMC's foundry um to like like restore.
2:21:37
So so I think it's building large GB plus in the world.
2:21:39
I think is being the production house for all advanced semiconductor work.
2:21:42
Uh but then also having like so the way I would view that is like a new Monroe doctrine that America is not going to you know rebuild uh the supply chain for fans and servers or fiber optic cables or anything like that like all that stuff even that is not in China because China is too expensive to build there.
2:22:01
So that's why they put it in Thailand, Malaysia and these other countries.
2:22:04
But we can put that in like a Mexico.
2:22:05
we can put that in like a Mexico. we can put that maybe you know we're outsourcing prisoners del Salvador maybe we can build fiber optic cables too so like we can we can have a new Monroe doctrine of like reassuring everything within this hemisphere and I think that's more of like a reasonable and
2:22:20
also quite more achievable task than just saying everything has to come back into America and then and then the the next part relates to open source where uh we have to just get better at at this and and we haven't gotten better I believe because protectionist measures that were mostly secondary effects. I
2:22:38
I don't think they were primary operating for that.
2:22:41
I think it's kind of more of a secondary outcome.
2:22:42
But that's going to be how the space wins.
2:22:44
It it's it's going to be a myriad of models.
2:22:47
Models being used for wide different purposes, models that are highly specialized and then kind of a separation between like platform as a service companies to help you run comp models and then infrastructure.
2:22:56
And so the infrastructure part we can actually win at because we're generally like good at we're good at um the face.
2:23:02
We're good at energy, but we're not good at power, if that makes sense.
2:23:07
We're really good at like finding stuff and exploiting it out of out of the ground or or building different types of energy frameworks.
2:23:14
We're not really good at power.
2:23:14
And and I think that that's where the rest of the world power you're defining as like converting that energy source into, you know, basically transferring that energy into chips, right?
2:23:25
And like into the actual, you know, cluster effectively. Yeah. Yeah.
2:23:30
Yeah, because you think that like power in our in our country is is deregulated, mostly der say it's highly federalized.
2:23:36
So, so just because the federal government says you should build power plants doesn't mean Virginia is going to do it, right?
2:23:43
And and that's designed to protect our rights as as a nation.
2:23:47
It's designed to protect the rights of a state.
2:23:48
rights of a state. that the state ultimately is in charge of these things and has uh there's the reason why anything that's not enumerated in the constitution is given to the states is because the enumerate powers is designed to protect the states from big actions
2:24:03
down do all these things uh and that's what's created actually a very stable political environment and I do think I'm opposed to terrorists in general but I think people are kind of overreacting they think that it's the end of the
2:24:14
world and everything's going to be done I was like if America's that fragile like a lot of bad stuff is is going to happen either way because it's just not going to be one person that's going to take down our system because you know and I voted for Trump
2:24:27
but and I don't believe that just from an ideological perspective but also just the nature of our country if you look at the history of our country it's been through worse and has survived because of the system and the our ethos that we've built. Um, so, so when it comes to
2:24:38
Um, so, so when it comes to like this situation, I think it's uh I'll I'll quote a I'll I'll butcher a quote because he's he's way better than me, but um there there was a there was a prime minister in England who used to say that and that America is not good primary actor but an excellent secondary actor.
2:24:59
It wins secondary, never wins primary.
2:25:02
And and it's because we don't generally rise to the task that's in front of us.
2:25:06
to kind of like go play around Netflix and kind of like mess around for a while and like spend money on energy that doesn't work and you know kind of basically BSing and then all of a sudden something happens and then we're like we got to go to the gym we have to win and we're going to win.
2:25:21
We're be [ __ ] ruthless, right?
2:25:21
And and then we like show up, right?
2:25:23
And and the rest of the world's like, "Hey, pay attention. Pay attention." And we're like, "Why?"
2:25:28
Like there's a new episode of, you know, Love on the Spectrum.
2:25:30
So that's what it show, you know, like and Yeah.
2:25:34
And and I and so so I think that that's well I think the interesting the interesting thing right now is is and I'd be curious to get your take here.
2:25:39
I'd be curious to get your take here. We we had uh Jordan from China talk on just earlier and I was asking him I was like do the Chinese laugh at us that we don't ban Tik Tok and DJI and Unree and all these companies that are just obvious
2:25:53
national security threats that like you could just end and it would be controversial but you know it's hard to argue it's it's genuinely hard to argue in in favor of allowing these companies to operate here when they wouldn't allow the same companies to operate. Um I I
2:26:06
Um I I want to kind of unpack something.
2:26:10
Uh uh one thing my sense is that you have a much greater fear of a US adver adversary like China with super intelligence with the biggest cluster in the world than super intelligence by itself right so like you're is it is it true that you're sort of like pdoom involves you know China winning the AI race and then you know using that to exert you know power and influence over us and the rest of the world.
2:26:38
us and the rest of the world. It it's more of a um uh it's more of like losing soft power revolency I think of it as a let's think maybe like a metaphor to help like so let's think about airplanes so Boeing is a national security asset right it exists at the pleasure of the
2:26:58
US government right and so it's not you know obviously we don't own it right but it's clearly something happened we would do something so same with like swift right same with the US dollar uh that's why the bond stuff is the most concerning out of the tariff uh drama is the behavior on long-term bonds. Basically, the US liquidity is
2:27:13
Basically, the US liquidity is declining, which is like a very scary kind of thing because we are the default reserve currency.
2:27:19
And uh being pegged to the dollar and so the social influence is what creates wealth for America that uh being the policeman of the world doesn't mean just like where y'all live and where I live, the police aren't here in my house right now.
2:27:33
But it's it's the fact of like they run it.
2:27:35
And if when we run the free world, everyone gets wealthier, we get more powerful and more meaningful, and we can continue to bring people out of poverty, introduce human rights, all these like great things that I think God has chosen America to be a representation of to the world.
2:27:48
Um, and so I view more like like uh China is not a kinetic country and it it has kinetic abilities. Totally true.
2:27:58
But the most meaningful war that China's ever fought is the Indoena war was a couple thousand people.
2:28:04
That's it in the history of their country and and they've done proxies that that that's true.
2:28:07
Not at the scale of Iran, but you obviously North Korea is the biggest proxy and they played a little bit in Southeast Asia, but they're pretty racist as a country.
2:28:16
So, they don't really consider all the Asians equal.
2:28:17
So, it's just more of who's on the border.
2:28:19
Uh like China is mostly CCP is mostly interested preservation and insulation.
2:28:24
Like that's what they're interested in.
2:28:27
what they're interested in. and and and so because we express a mimemetic desire to be expansionist because fundamentally the western philosophy is expansionist this is based on Judeo-Christian frameworks about being evangelical and being free free orientation I think it's
2:28:41
also the way humans are designed uh to be freely uh in commerce with each other um that presents an adversarial view to China but fundamentally China like like I would give you another very very specific example too like the number of amphibian uh shipping vessels to take people from mainland to Taiwan, they have around 20 20 or 30. They're
2:29:01
They're actually capable of crossing that.
2:29:04
So if they're planning on invading, you don't do 20 or 30, right?
2:29:08
And the number of military you need is it's actually Pentagon.
2:29:12
Hasn't Palmer talked about, you know, commercial fitted to serve the purpose of an invasion.
2:29:21
But again, see that's asymmetric.
2:29:21
So like China thinks asymmetrically.
2:29:23
They they don't think they think in in the manner of how do I get something to happen towards my favor without ever having a fighter bullet.
2:29:30
That has been their entire foreign policy since existing like the Stalin example.
2:29:34
How they got submarines, how they got uh fifth gen fighters, like how they actually infiltrate Silicon Valley like like that they're everywhere in Silicon Valley.
2:29:42
Like that's totally true. They've taken RP.
2:29:43
Was that asymmetric or is that symmetric? Asymmetric.
2:29:46
Like like so it it that's the way they think about the world.
2:29:50
And so for example like she had to took out huchintow right publicly.
2:29:54
Why is because the way the CCP works is like when it's confronted with a significant adversarial problem like like outside of of the country what typically happens is they replace the president or the premier and so was the most logical person to actually come and replace she.
2:30:12
replace she. So the asylum if you look at also there are some all of a sudden there's a bunch of people in the central committee and standing committee that have disappeared now they have that like have gone somewhere it's because if the history of the CCP is that when it's
2:30:27
confronted with a challenge like TNM square someone all of a sudden that person just disappears it get it they get sidelined in the standing committee and and and that is the pattern of how the the the act because it's interested in the preservation of its party does a
2:30:40
war increase the likelihood of preservation or decrease like like it decreases like like every war does that so because you don't know who's going to win so so they'd rather play asymmetrically because it's more of an assurance that they are going to win because we as a country are not very
2:30:54
good at that asymmetric takes advantage of our western ideas so don't I I how do you think about American soft power in the context of you know the the two highest profile consumer AI products that I think are are top of mind right now are Manis And I'm saying that in a very American. Manis, man, and manis and deep sea. Deep
2:31:16
Manis, man, and manis and deep sea. Deep deep.
2:31:21
Uh and and you know, we had Tyler Cowan on the show yesterday and he was basically saying, you know, you know, these companies are basically trained on western models and by nature of that they the sort of western thought is baked into them and that's some form of soft, you know, soft power for the west.
2:31:40
But I I just don't want to go back to the B example.
2:31:42
I don't want France to have Huawei gear.
2:31:45
I want it to be Nvidia gear because that's an expression of America.
2:31:48
So that that's what I want.
2:31:48
And and and that that's that's the mitigation thing of like if if we allow them to continue to asymmetrically take over the world through the a new belt and road initiative.
2:32:00
The first one failed it because they because they couldn't actually fund it as a as a society and the delivery of their products was actually pretty bad.
2:32:08
Um going you mean like roads that roads that are you know basically cracked in half and like dams that don't work and fall apart when you try to pull up your pants and and it's everywhere in if you talk to like I've been to Africa.
2:32:23
You can see some stuff behind me from Africa.
2:32:26
like you talk to them there there's cars there with Chinese letters and stuff and they everyone in Africa says it's garbage stuff that they had to fix locally.
2:32:33
So it just it just was a failed experiment.
2:32:35
But they're they're generally very good at uh this kind of focus manufacturing to then to export to create to create asymmetric influence.
2:32:45
Uh like that that's their goal and and I'm more I'm more interested in how that sort of as it relates to AI a footprint of Huawei similar as responded with with uh ZTE that how that would negatively impact our ability to influence foreign policy in Europe or in South America or Africa like that.
2:33:02
That's more of my concern.
2:33:04
Not that they're going to invade Taiwan.
2:33:05
I just think that that's like a very American western way of looking at the situation.
2:33:08
looking at the situation. when the Pentagon says that it would take the entire people's uh people's republic army to to take like the entire not not not 80% 120% including reserve to run Taiwan if they actually if they did or would it be easier just to have a manurian candidate manurian candidate
2:33:28
like like like flood the airwaves with like fake AI you know stuff into Taiwan and try to flip a party there is an entire party dedicated to closer relationships in Taiwan in the Taiwan Parliament so why would they invade It's just an American way of responding because that's how we respond when like someone's like, "Hey, they punch us." We're like, "Hey, I want to freaking
2:33:44
We're like, "Hey, I want to freaking launch missiles from a fate and like destroy your country, right?
2:33:48
That's like we the way we we think about the world."
2:33:50
It and it doesn't mean that like again I'm a hawk on China.
2:33:54
I'm a hawk on China. just like what is the enemy and and I think we are appealing to the enemy but these export controls and regulating AI trying to do these polarif diffusion rules treating AI as if it's a weapon and regulating as such that enables the manus and the
2:34:09
deepseek to like to like to be prolific right so that's why we're not doing open source is because all these like regulation stuff is happening on on in the west and China's like whatever we'll just diffuse the model and like you know everyone go to town right? Uh that we
2:34:23
Uh that we won the internet because we were free and open.
2:34:27
China's winning AI because it's free and open, not because they care about that.
2:34:32
Mark Zuckerberg are like a word he's he's trying with Llama 4.
2:34:36
It's been a mixed reaction, but he is trying.
2:34:39
Can you talk about, you know, something I find fascinating is the companies that feel extremely significant right now to US national security.
2:34:49
uh Huawei, you know, the the Tik Toks, uh Uni Tree, DJI, they're all private, right?
2:34:56
And I'm assuming that that's like, you know, there there's various reasons you'd want to be private.
2:34:59
One is they can access plenty of capital.
2:35:00
But another obvious reason is that if you don't all your metrics can be made up, you can be doing all these things.
2:35:08
You can be taking all the state funding, right?
2:35:11
Like you can just basically directly serve the state in a way that it just becomes much harder.
2:35:15
Uh do you expect companies uh you know not not financial advice or anything like that but do you expect companies like you know Huawei and and DJI and Uni Tree all these critical companies to just stay private forever?
2:35:30
Uh like sure I mean I I think of it as again going back to like China is such a massive country it's very federalized.
2:35:37
federalized. So think of it as the Chinese people are very different than the CCP clearly and and so when China has something very successful like a deep sea phenomena what happens is that the CCP co-ops it but everything up to that point is China like the Chinese people like because we we you know
2:35:56
speaking for my dad's Chinese like it like they're very industrious uh they're very driven uh people it's just part of the mindset but al also you're very skeptical it's a very actually low trust society uh similar to like India and some other uh Asian countries and so
2:36:09
like you know my dad's in CDs he doesn't like the stock market like you know he doesn't trust banks and stuff like that so it's kind of like his natural like kind of like framework of the world and and yeah yeah and so so but but the desire to be industrious is like it's
2:36:23
innate to the kind of orientation around what it means to have a Chinese philosophy and and so when the C when CB adopts stuff like that it's like to get to the next level as a company you have to get join the communist state apparatus and so everyone who's like a big company is co-opted in. But to say
2:36:37
big company is co-opted in. But to say that and this is where it's different than um like Linist style communism is like it's like they're they Mao adopted I mean I 100% oppose communism but you got to be fair about what actually happened like Mao took that as an
2:36:53
authoritarian concept and just pressed it down on the people like it it's not a they're not purist in any sense that they're they're they're almost like a bit like rationalists like they because they they like they want to be powerful and they want to stay in power. So if
2:37:06
So if the ideology has to change, it will change. Yeah.
2:37:09
Um and and so that's where they let many of these successful companies in China that are, you know, okay, as the New York Times says, flooding the European markets of cheap goods.
2:37:18
Now it's like what they're flooding our markets with cheap goods.
2:37:20
Many of those are done by just Chinese entrepreneurs like like no state interaction.
2:37:25
But anything that's extenduating beyond the state and a meaningful national security like an industry that is related to national security like the CCP is utterly in control of that. Mhm.
2:37:33
control of that. Mhm. Um but you you have to understand the the ideology the like where it came from then understand theological framework of like where they want to go with it rather than treating it as if like like I personally don't believe for example that China's
2:37:48
interested in spreading communism and and they don't have a common turn like Soviet Union did to spread communism like they're interested in preservation and and so that is not a type of a country where you're like you know they're going to go to war by any chance like yeah they're in fact they're very
2:38:05
hesitate they're very hesitant to war um and if you read a book you read a book about like a history about China there's a common pattern in history of China which is self-implosion they've done it like four times um so like they also know that too like it just ends up being
2:38:22
where like so you know this all kind of falls apart right and uh and I I love a book uh by it's by Rodney Stark he said that um China invented gun power at the same time as as Europe did and China put it in uh in fireworks to scare off ghosts and Europeans put it in a barrel to shoot a bullet. Yeah. Right. And so Yeah. Right.
2:38:42
And so so that that it tells you like very industrious, very, you know, um driven in terms of ethos, but it doesn't always land a plane.
2:38:52
And that and that's what I'm leaning into is like yeah, Huawei will make something cheap.
2:38:56
we'll make something alternative to Nvidia, but like let's like not give them the rope where they're like, you know, America is opposed to proliferation as opposed to exports as opposed to open source is like like you're giving them all the the fuel to be like come to China, we'll give you AI even though it's not as good.
2:39:14
Yeah, that that idea of like mimemetics, mimetic rivalry in geopolitics is fascinating to me because I don't know if you've read Wong Huning's America's America against America, but it was this book that basically uh they sent an emissary to the United States.
2:39:28
He looks around and he determines that America will implode.
2:39:33
And it's and it's clearly like their own anxieties about implosion uh you know, writ uh but America is undefeated and we're not going to implode.
2:39:42
It's the last thing happen.
2:39:43
Yeah, it's a it's a I think it's closest thing to heaven.
2:39:47
Like, you know, it's a great it's an awesome uh my family loves being here and uh it it's been an immense blessing.
2:39:54
My my grandpa came here with nothing.
2:39:55
Well, this interview has also been the closest thing to heaven.
2:39:57
It's been been fantastic. Do you have a hard stop? Do you have a hard stop?
2:40:01
You want No, no, I don't. Yeah.
2:40:03
I got I got a couple more questions.
2:40:05
Uh one, what does having the largest cluster, right?
2:40:09
this like supercomputer, you know, super weapon in and uh in some ways what does that actually look like in practice?
2:40:17
Is it run by, you know, who who sort of operates it?
2:40:21
Is it a network of clusters?
2:40:24
What does that actually look like in your view?
2:40:27
Yeah, I I would say be run by form of energy uh combination of mist uh be deployed in a place that's undisclosed and it's used as mostly as training in our own side as in our own military on like uh advancing their own capabilities of understanding what LM can do, understanding like how compute can work at scale because like LLM are again super cool.
2:40:48
We all use them every day.
2:40:50
But it's really the paralyzed computing that it changes the way which warfare works and that when you have the ability to scale that that amount of computing power at a single moment.
2:40:58
Uh it it makes all types of as which mostly target towards asymmetric sort of attacks on us.
2:41:04
Uh we have to be able to understand like what that actually means at that scale.
2:41:08
And so it's not it's not Stargate that's clearly for open AI.
2:41:11
that's clearly for open AI. It's not like the DoD sect should like email Sam like hey can I can I borrow this for you know like it has to be something that we own we control that is like is part of the people's power and and the point of that also is a deterrent saying that if
2:41:26
you people will do something bad with AI that that is inescapable it's it's part of the fallen nature of humanity that we take great things and we uh apply uh maladaptive uh adjustments to it and and so we have to just be prepared for that and and what that attack means. I don't
2:41:44
I don't think we fully understand yet.
2:41:45
We have theories around it.
2:41:47
Uh but I I I believe that it's going to be some form of attack on our infrastructure that's not designed to handle this form of of sort of computing power targeted us.
2:41:55
So it's mostly used with a deterrent.
2:41:57
Um and and also kind of show our footprint as like we are going to be the best at this.
2:42:02
Uh and you know taking a small slice of the uh how how the budget going to be five trillion just to like say that we're investing F-35 F-35 cost about a trillion one trillion investment by the United States.
2:42:17
Uh a lot less to copy it actually.
2:42:20
Turns out we write off all the R&D costs.
2:42:24
It's actually a pretty great plane. Yeah.
2:42:26
And that's say it's like it's like you lean into going back to the bad mises thing and I know you like Gerard.
2:42:32
So like it's like it's like we just lean into so much of like what China's really China is really good.
2:42:37
Like why are we shocked that deep sea captain like literally like like how look at t-sh look at like one to many that's what China does best. Yeah.
2:42:44
So so like we actually two trillion two trillion you two trillion. Wow dude.
2:42:49
Um uh I guess on this one question I have is uh again because this conversation is top of mind uh but Tyler Cowan yesterday was was very excited about AGI coming in the next couple days.
2:43:05
We don't know exactly what he meant fastest timeline fastest fastest timeline uh extremely extremely uh AGI social network open launching a social network.
2:43:15
Um, but I I want to I I like this conversation's been uh tremendously fascinating.
2:43:20
I'd love to get sort of your personal definition, how you look at, you know, AGI and then what your what your timelines look like uh around it.
2:43:34
Um, so I could answer this differently, but I think it's more uh honest is that if you don't know what you're looking for from a uh primmaaccia perspective, you don't know how to measure it.
2:43:47
So, how do you measure if someone's intelligent? Is it SAT?
2:43:51
Is it I mean, is it is it do they make money? Is it that they're wise? Good people? Yeah. Funny. Right.
2:44:00
And and I think that that's where the AGI problem hits a wall, which is like what am I even measuring against?
2:44:06
Like like when when it happens when every single one of those tests, which are by the way just random picked out of a hat and the like 100% across and it still doesn't fully work. What do we do? Right?
2:44:18
And and that that's the funal anthropomorphic question is which is a metaphysical question of like this is why it's so fun.
2:44:26
I have a background in philosophy and theology.
2:44:28
It it's like what does it mean to be a person?
2:44:31
What does it mean to actually represent intelligence?
2:44:34
And many people who push a asi agi they have a very piss poor understanding like they didn't read lock.
2:44:41
They don't they don't know who Decart is.
2:44:42
They don't Rouso is a stranger like they've read some Nichi because it was cool in high school.
2:44:46
because it was cool in high school. But but there there's very little understanding about the the the longevity and the history of what we have valued as a just a social creature and the evolution of of our of our culture to say like what is meaning and purpose and intelligence and even the
2:45:03
epistemology of there's a difference between information data numbers and knowledge like all those from epistemological perspect are completely different things right like knowledge is a discrimination of information data is a series of numbers And and if you look at people pushing AGI and ASI, they typically one have a very low view of humanity. Like their
2:45:23
Like their anth their anthropology is like we're robots.
2:45:27
We're a reductionist thing like we're all biology and and which is like kind of been rejected since the new atheists have fallen aside and they kind of have like have all those presuppositions built into it versus a person like me who's like I'm I'm an evangelical Christian like I don't have that view of humans.
2:45:43
I think that there is an immaterial part of our nature.
2:45:45
Uh numbers are immaterial, data is numbers.
2:45:50
Like it's pretty logical to believe that like we are ourselves an immaterial.
2:45:54
There's something about it.
2:45:54
Therefore, I can't actually put it in bits and bites.
2:45:58
So, AGI and ASI, I think, is a trope to kind of make an interesting angle.
2:46:01
The other thing is, yeah, it's marketing and there's there's conflicts and it's hard to find somebody that works in AI, you know, that that obviously is intelligent on, you know, however you want to look at it, that doesn't have at least a $10 million, you know, position riding on the AGI marketing, you know, like this this sort of like it's almost here, like it's coming type of thing.
2:46:23
And so that that's why I was it's not like I I just don't believe it doesn't mean it's not going to be valuable.
2:46:29
That that's the confusion. Yeah.
2:46:30
is that if you if you create this trope, this red herring that's not going to be there, you then false flag, build a bubble and it all it's bad for everybody.
2:46:38
I I think I think Elwins is a as founders fund would say uh is that I have a Star Wars view of the world, not a Star Trek view of the world.
2:46:47
And that technology is a is a positive adaption of the human capability to extend its arm further.
2:46:54
And it only helps humans become more human things.
2:46:56
And and so a lot of the AGI ASI talk is it's really built on presuppositions of a negative view, a negative anthropology that is not only been disproven over and over again philosophically and the theologically but it just doesn't bear itself in the science.
2:47:10
Like it it the mind itself is as an example you can go back in the 80s and 70s and 50s there were like the mind is this.
2:47:19
is this. we have fully discovered what the mind is and then 10 years later it's like we don't know what the mind is like it continues to expand and and I think that relates to unless you can actually pinpoint and understand what intelligence is on the anthropology side
2:47:32
you're not going to be able to ever measure AGI or have any interesting anything else Jordy oh I'd love to keep going for another hour but we'll have you back on again soon this was great this is fantastic I'm sure we can go way deep yeah this is really fun thanks for coming on yeah we Talk to you soon. Thank you so much, Thank you so much, Jeff. God bless you guys. Bye. That's great.
2:47:52
Uh well, let's rip through some timeline.
2:47:54
Uh this might be a world record for a number of size gongs this uh this show. Let's hear though.
2:48:01
Activate golden retriever mode.
2:48:01
Not quite size gong, but close.
2:48:03
Uh there's some good sound effects.
2:48:06
The soundboard's back in business, folks.
2:48:07
Uh brought to you by Brought to you by our very own Ben.
2:48:11
Ben personally recorded these sound effects. It is his voice. It's his voice. founder mode.
2:48:20
Well, speaking of founder mode, uh Sam Alman was in founders mode yesterday when founder founder mode yesterday when uh it it broke that OpenAI is exploring a social network arena with AI features.
2:48:33
Uh can't imagine it's probably going to be absolutely flooded with Studio Giblly pictures.
2:48:38
Um but what is your take on the OpenAI social network?
2:48:41
will you be uh they're they're trying to rival Elon Musk's X the Verge reports and uh on one hand makes a ton of sense to get more distribution more time in the app means more use I understand I understand uh Sam and the OpenAI team wanting network effects I feel it feels potentially like a huge distraction to try to go compete in consumer social which we've just seen time and time again.
2:49:13
Yes, they have massive distribution.
2:49:15
They're on the home screen of hundreds of millions of people.
2:49:18
They have, you know, in the same The wild thing is I don't I don't know how many how many X uh weekly active users are.
2:49:26
Uh I think it's I think it's actually around the same size like 500 million or something like that.
2:49:29
So X has the same advantage in terms of launching a a foundation model uh you know consumer app as in many ways as OpenAI does having building a social network.
2:49:39
does having building a social network. I just think it's uh LLMs seem to be more intuitive to build because you have this sort of black box the model and then you have this like easy interface on top versus a social network which is like
2:49:54
how are you going to seed it right seeding it with 500 million weekly activives from look at the lesson of Google circles like Google had a billion people using Google every single day to search for things people did not necessarily want to share their search results into Google circles it was this copycat. It
2:50:10
It never had every advantage in that race against Facebook when they launched that product in 2010.
2:50:21
I know a lot of people that run great deep research reports.
2:50:23
I would I would probably follow follow Tyler Cowan on the OpenAI social network and when he finds a really great deep research report, he's spent 10 minutes waiting for that to come back and he's put out a deep research report.
2:50:38
if he were able to with one click make, hey, make this one public.
2:50:41
Uh, this is an interesting finding.
2:50:43
Or some of the OpenAI friends we talked to who said that uh they do deep research reports on just what towels I should buy.
2:50:49
All right, that was one of the examples.
2:50:51
Or what what refrigerator should I buy?
2:50:52
Instead of needing to wait the 10 minutes, it's already in my feed.
2:50:55
And it's also this curation and discovery of I'm scrolling and I see Aiden posts, hey, there's this deep research report on washing machines.
2:51:04
I might just click into that.
2:51:05
I like the idea of building a social feed into the existing product because I would love to if you have the opportunity to prompt something, find something interesting, share it to a feed. Yep. That's very interesting. Yep.
2:51:18
I don't like the idea of trying to then build this sort of competing social network with its own agree like new, you know, are we sharing what are we sharing there?
2:51:29
Is it if it if it's funny if it's it's a social feed built on top of the app that again that feels odd.
2:51:35
Uh but at the same time like right now the flow is you go into OpenAI chat GPT you figure out that studio Giblly style is a great prompt for any image you upload.
2:51:46
Uh and then you screenshot that and post it on X and say here's the prompt.
2:51:50
Midjourney kind of hack that by creating the discord.
2:51:53
So you can see what other people in the midjourney discord are prompting.
2:51:56
you can copy paste it, change one word, all of a sudden it's a cyberpunk dog instead of a cyberpunk cat.
2:52:02
And that gets you started on the flow of of prompting midjourney.
2:52:04
Uh I could see that being kind of interesting.
2:52:08
Um yeah, but uh yeah, it'll be very interesting on how this actually gets integrated, but uh there's already a share button on every chat chat um uh interaction and I do share them with people sometimes.
2:52:21
Hey, I I for the show I I I turn this into, you know, some bullet points, share it with you. You can go right in.
2:52:27
You could keep continue prompting.
2:52:29
Uh I think that there's something there.
2:52:30
Um but it could also going and purely just trying to beat Elon Musk because you're annoyed that he's suing you is seems like it could just be a shot across the bow. Yeah.
2:52:41
Hopefully there's something deeper there because I actually think it's much easier for X to build an LLM. Yes.
2:52:44
and chat chatbot than it is for OpenAI to build a thriving independent social network.
2:52:53
And even though they have the app installed everywhere, uh it does like there is a set amount of time on an app.
2:52:59
There's only a set amount of screen real estate for a button.
2:53:00
You know, uh Elon in the X app puts the Grock button down at the bottom by default, but there's only really six slots for there.
2:53:08
So, if you're putting that Grock button there that you're taking away from a different feed or messages or notifications, other stuff, there's trade-offs here.
2:53:15
Um, it could also just turn into an Instagram clone where people are just sharing endless studio giblies, uh, ultimately just flexing on each other.
2:53:23
And the best way to flex is with a PC Philippe Nautilus that's uh, from bezel. Go to getbaszel. com. Look at this. Boom.
2:53:30
With a Tiffany dial on the Nautilus.
2:53:32
You take a picture of that. Yeah.
2:53:35
You buy You You buy a PC.
2:53:35
You throw it through Studio Giblly filter. It's no longer cringe.
2:53:39
You're no longer flexing.
2:53:41
You throw it on the Open AI social network. That's brother behavior. It's brother behavior. Uh, go to getbzle. com.
2:53:46
Anyway, Notion mail, similar AI company launching a social network.
2:53:52
Now, notions launching an email.
2:53:54
Project management launching email.
2:53:56
We've been talking about this.
2:53:56
I was saying I want someone to build a new email client from the ground up with AI at the forefront of that because I've been very dissatisfied with the Gemini experience in Gmail.
2:54:07
Even just my Gmail experience, I have like four different inboxes now.
2:54:12
It's not really filtering stuff.
2:54:14
Notion was super quick to launch integrate LLMs within the product, which makes a ton of sense on the core product, but then I think that they might be in enough of a founder mode, enough capital and engineering to actually roll this out and make this great.
2:54:28
So, I will definitely be trying this when it becomes generally available.
2:54:31
It might be generally available now. Yeah.
2:54:32
And it's an interesting concept.
2:54:33
So, uh, in the marketing launch email, it says the inbox that thinks like you.
2:54:37
One fascinating thing about notion is if you're actively using it for project management, life management, business, it has so much context on everything yep in your life, right?
2:54:51
That's the scary thing to me because like if Google catches up, I have way more data stuffed in Google in sheets and docs and drive and I don't want to port everything over to notion because I'm not potentially is a is a better data source.
2:55:06
If you're a notion user, if you're a core notion user, so it's extending 100% if you're a builder.
2:55:12
I know people that build their whole life on notion.
2:55:16
They have different workflows for every single project.
2:55:18
They're all in on Notion.
2:55:19
This is going to be a fantastic experience for them.
2:55:21
For me, I'm kind of stuck because I'm like locked into Google's ecosystem. I want them to catch up.
2:55:26
They're not really doing it.
2:55:27
Well, Notion's tool is integrated into Gmail right now. Gmail. Yeah.
2:55:31
So, it sits on top of that at least.
2:55:33
Um, but I would love to just be able to have my email be processed for me while I'm sleeping on my EightLe. So, go to eight.
2:55:40
combn 5year warranty, 30 night 30 night risk-free trial, free returns, free shipping.
2:55:45
I I I hope I did well because I think I dialed it in.
2:55:48
I got had a brutal night. 99. Let's go. There we go. 99. I fig the routine. I dialed it in.
2:55:57
I was like, I'm falling asleep within 30 minutes of the average of the last three days. The rolling average. That's their algorithm. Seven sleep. Autopilot cooked. I felt great. I feel great today.
2:56:08
Nothing like going into a three-hour show with a 99 on the eight sleep score. So, go get big numbers. Um, go do it.
2:56:15
Anyway, uh, I hope you enjoyed our deep dive on China.
2:56:20
If you're looking to follow more of the breaking news with China, please go to Poly Market.
2:56:24
They have a bunch of great great uh, markets about what's going on with the Chinese economy, what's going on geopolitically, what's going on with tariffs.
2:56:30
Uh, you can check it all out at polyarket. com.
2:56:32
Um, anyway, uh, you have to do two pilgrimages in your 20s, going to Japan, going to Switzerland.
2:56:38
Neither of those I did in my 20s.
2:56:41
Uh, but what do you think is are those worthwhile pilgrimages? Have you been to Japan?
2:56:48
I've not been to Japan, but I'm still in my 20s.
2:56:50
But you were in Switzerland like four months ago.
2:56:52
I have been to Switzerland a bunch.
2:56:54
It's my favorite country that's not the US. Yeah. By a long shot.
2:56:59
It's just It's a perfect country. Yeah. Well, it really is.
2:57:01
Feels like being the entire country feels like being on a tour golf cart. Yeah. A golf course. Yeah.
2:57:09
Um uh well Sam Ross uh sharing some big news from numeral tax.
2:57:15
Q1 was a big year uh was a big one here. Boom.
2:57:18
Big in terms of revenue customers filings our team and of course pieces of mail deliver received by our virtual inboxes.
2:57:24
Here are just a few of the highlights.
2:57:26
They 3x their number of customers in Q1 versus Q1 last year.
2:57:27
The sales team is crushing quota.
2:57:30
They hired 22 new uh numerals which is what they call themselves.
2:57:35
They opened a new HQ in SF.
2:57:37
They announced the series A by Benchmark and they rolled the dice at Shop Talk.
2:57:41
And they sponsored the world's number one show, TBPN, thank you for sponsoring us, Numeral. Thank you, gentlemen.
2:57:47
And if you are, you guys, Nal, if you have sales tax, put it on autopilot. Head over to Numeral HQ.
2:57:53
Spend less than five minutes per month on sales tax compliance. Um, just do it. Just do it.
2:57:57
Uh, this was a funny post by Sam Alman.
2:58:00
He says, "Be you work in HFT.
2:58:03
Shaving nanconds off latency or extracting BIPs from models have existential dread. See this tweet?
2:58:10
Wonder if your skills could be better used making AGI.
2:58:11
Apply to attend this party. Meet the Open Eye team. Build AGI."
2:58:16
So he's trying to recruit highfrequency traders.
2:58:18
Maybe uh he saw what happened with Deep Seek because they were a bunch of high frequency guys, right? A bunch of quants.
2:58:24
Uh said, "Hey, time to optimize the models.
2:58:26
Let's get our inference costs down."
2:58:28
And now he's going to try and pull some people from Jane Street.
2:58:31
Jane Street has a monopoly on Dwark Cash Patel ads apparently, but not for long. Sam's got to buy some.
2:58:38
He's got to pay out Dark Cash to start running some job ads because uh it's one of the few shows I've ever seen Jane Street add on uh advertise on.
2:58:45
But uh it's pretty pretty it's working pretty well, I guess.
2:58:48
Um but uh yeah, this is interesting that uh the that the the next challenge in AI will be, you know, these inference optimizations. The GPUs are melting. We've heard this.
2:58:59
The products are growing.
2:59:01
They have the product developers.
2:59:02
They're in San Francisco.
2:59:03
I'm sure they're pulling in plenty of those people.
2:59:04
The B the And if you love OpenAI, just take a take a breather on Gibli photos.
2:59:09
We know you're still doing them. Take a two-day break. Take a two-day break. Get some breathing room.
2:59:16
Go rent a wander till they can get some. Yeah. Find your happy place. Find your happy place. Find your happy place. Find your happy place.
2:59:22
Book a wander with inspiring views. Hotel night success.
2:59:27
Dreamy beds, top tier cleaning, and 24/7 concier service.
2:59:30
It's a vacation home, but better.
2:59:32
Wander really is an overnight success.
2:59:33
It is because when you go there, when you stay there, you spend the overnight and you become a success. Yes. Yes.
2:59:38
And every night is a success at Wander.
2:59:41
Um, this stuff on the stuff on Meta with the FTC is just wild. So, uh, break this down.
2:59:46
Meta is in a battle with the FTC and uh they basically are claiming we're indistinguishable from any other app which uh Shield says is correct.
2:59:56
And he pulls a document that they're using Tik Tok, Instagram reels, YouTube shorts.
3:00:01
We can't have a monopoly. It's a commodity.
3:00:05
You can't have a monopoly on all.
3:00:07
Everybody's got a short form video feed. Uh and it's true.
3:00:09
Uh convergence across apps. Yeah. Just got there.
3:00:12
Um kind of mogging Snapchat by not including them.
3:00:17
Yeah, but yeah, I mean it really snap and some other there's a I mean there's a best practice for building a social app now.
3:00:22
I'm sure OpenAI has taken notes if they want to go this direction.
3:00:25
vertical videos, algorithmic feeds, likes, comments, shares, inboxes, and messages.
3:00:31
And then you add long form, short form, monetization, comments, and show notes, and all these different stuff.
3:00:37
And uh all these different competitors, Tik Tok, Instagram, reels, shorts.
3:00:41
They've all kind of done the best practice across everything.
3:00:44
across everything. and the platforms have become pretty commod which is one of the big reasons why uh people shouldn't be complaining about Tik Tok potentially going out of the app store because the Tik Tockers will be able to pop over to Instagram reels YouTube shorts go viral with the same content
3:00:57
and have a similarly sized business very quickly so I think when you hear the stories of like businesses are built on Tik Tok they will be destroyed it's like realistically most businesses are on all three so long to ban and they'll make and and they'll move over you had time to reduce platform form dependency. Yeah. But if you think they're going to Yeah.
3:01:15
But if you think they're going to win this case, if you think they're going to lose the case, why don't you go get some exposure on public.
3:01:19
com to metastas investing for those who take it seriously. Not financial advice. Not financial advice.
3:01:24
I'm saying John is just demonstrating that uh public is a platform with multiasset investing, industryleading yields, and there's millions of happy users. Yes.
3:01:32
So, um, but speaking of investing, Kyle Harrison, uh, uh, quote tweet, someone says, "Is backing competitive companies allowed now in venture?"
3:01:43
And shows, uh, what's going on at the foundation model level?
3:01:47
Uh, Sequoia is in four foundation models, OpenAI, Thinking Machines, XAI, and SSI.
3:01:55
Light speeds in four, index is in two, Tiger's in two, Code2's in two, and Dre's in five. Five.
3:02:00
OpenAI thinking machines XAI Mistral and SSI. Wow. It's a party one. It's a party. We got It is a party.
3:02:14
Sixway party round for GTA 6. It is. It is odd.
3:02:17
Like the model layer commoditizing.
3:02:19
Maybe you just want to buy all the commodities that I buy by by all the oil companies, I guess.
3:02:23
But maybe they wind up going different directions and open AI becomes social network and thinking machines becomes a I don't know like B2B SAS company or something. Who knows? Uh we'll see.
3:02:34
This next post is amazing from MKBHD. Yep.
3:02:40
He is talking about nominative determinism which we are big fans of on the show.
3:02:44
CEO of Nintendo America, Doug Bowser. Great great name. Strong name.
3:02:49
Fastest sprinter of all time. Usain Boltz.
3:02:52
COO of Starbucks is uh Roseland Brewer. Yep.
3:02:58
World record chili pepper breeder is Ed Curry.
3:03:01
CEO of Capital One Bank is Richard Fairbank. Fairbank.
3:03:04
BBC weather meteorologist Sarah Blizzard. Yeah.
3:03:10
Underrated is uh the nominative determinism that people kind of impose upon themselves.
3:03:14
Like when I grew up, there was a weatherman named uh Dallas Reigns and he named his kids after cities.
3:03:23
So it was like Austin Reigns was his son.
3:03:25
And uh I forget there was my son is now the mayor of Austin. Yeah.
3:03:28
Or weatherman or or weatherman. Fake news.
3:03:32
Uh so you can you you can keep your your kids in the family business by giving them a name that will determine their future potentially.
3:03:38
But uh nominated so much fun.
3:03:41
Uh anyway, uh let's move on to Gavin Baker.
3:03:44
He says, "Savage that former meta AI researchers are explicitly noting on their resumes they had nothing to do with Llama 4.
3:03:50
There's a member of technical staff over at OpenAI.
3:03:53
Joined February 2025 on uh re reinforcement learning, frontier research, and post training.
3:04:00
And uh previously this scientist was at Meta doing AI research and says that they were working on generative AI.
3:04:07
Llama 2, Llama 3 have not been involved in llama 4 at all. Interesting.
3:04:10
I mean there's been a lot of debate over like is Llama 4 oversold?
3:04:14
Is it really that as bad as people say, but this is another data point of like, oh, maybe it's a little bit uh rough over there.
3:04:22
But Zuck's in founder mode, I think he will figure something. Don't bet against him. Don't bet against him. Let's go to Amy Woo.
3:04:27
She says, "Founder secondaries at the series A are becoming the norm again.
3:04:30
We are back to 2021 fundraising heat." Founder known.
3:04:37
The funny thing is I thought you were going to go size gong on that. Went with founder mode.
3:04:40
We actually don't have size gong on. No, we don't. We don't.
3:04:43
Well, size gong for all the series A secondaries that are happening.
3:04:45
No, I just think um this is one of those things that's controversial but ne never default bad.
3:04:52
I think it just comes down to sizing and traction. Yep.
3:04:56
Um, I don't think there's anything wrong with founders, yeah, selling a few hundred grand of secondary so that they away.
3:05:04
It's not going to change how they approach the business.
3:05:09
It doesn't it's not like they're retiring.
3:05:10
I think some, you know, when we did in 2021, the secondaries that were happening were on another level where it was, you know, a founder selling 50 to $200 million of secondary.
3:05:23
And it's like, okay, that's like an extremely material exit, and they're going to by default be in a very different mindset after that point.
3:05:30
I mean, uh, the the coreweave guys sold I think like a hundred million or more, uh, I think like eight or nine figures of secondary before the IPO.
3:05:40
Core is still trading at 40 bucks a share.
3:05:43
Like $18 billion company.
3:05:45
Like seems pretty stable.
3:05:47
It hasn't sold off like crazy. But it's no John. Am I John? It's down.
3:05:56
I thought it was I thought it was up and then down.
3:05:57
I went lifetime coreweave. Oh, okay. Sorry. Sorry. I was looking. Yeah. Yeah. No% today.
3:06:03
Like it's not it's not having a good day.
3:06:05
But but if you look at the year, it priced at 40 to 60 and then it's down at 40.
3:06:10
Like it's like kind of in the trading range.
3:06:12
It doesn't feel like it's like originally meant to be priced at around 60.
3:06:17
People were saying it was going to be a $30 billion company.
3:06:20
It's a$19 billion company.
3:06:22
But that doesn't sound but that doesn't wreak like oh the secondary like poison this.
3:06:26
Like they're not taking it seriously. Like I don't know. At least not yet. We'll see what happens.
3:06:29
Um but uh I mean the other thing is that like there are founders who are clearly doing their life's work.
3:06:35
They're you know years into building the business.
3:06:37
It's very serious business.
3:06:39
makes revenue, even maybe some profit, and they come out to do a series A later, and then yeah, there is some secondary uh but for life for lifestyle reasons, maybe they have kids, maybe they need to buy a house, like there's a bunch of different reasons why if you don't have a high salary, great credit as a founder, like you might need some secondary to pay for that.
3:06:56
So, uh mixed bag, all depends on the circumstance, but congratulations if you sold a bunch of secondary.
3:07:00
Uh Signal says, "Every visual medium from concept art to fashion design to advertising to architecture is now downstream of text prompts. remarkable. Yeah, it's true. This is just good point.
3:07:13
Been using uh wife's been using chat GPT to like imagine uh interior design stuff around the house.
3:07:21
It's like it's not perfect, but it's doing maybe 70% of what you would hire an interior designer to do in the early stages, right?
3:07:33
Everything other than sourcing. Yeah.
3:07:35
Ryan Peterson sent me a like a meta poster which was uh he generated a flexport poster ad for every single city that they operate in.
3:07:44
So he had like 50 posters that would be extremely complex to make.
3:07:48
Uh then he put them all on one poster.
3:07:50
So it's this big like poster that you can print out and show all of Flexport's like footprint.
3:07:54
And then he just liked the prompt so he made me one and he just sent me one for for Lucy which was really cool.
3:07:59
Uh, and he was like, "Oh, yeah.
3:08:01
You can just print this out.
3:08:02
Like, don't go bigger than 18 by 24, but it'll look great."
3:08:03
And I was like, "Thanks, man. That's great." Uh, very fun.
3:08:07
Uh, anyway, do should we do the SBIR stuff that you were you were getting texts about?
3:08:11
Big changes in the pipe for the SBI STR program.
3:08:13
All Air Force topics in the current batch just got removed.
3:08:18
Uh, so there's an email uh from DI DoD SBI topic removals.
3:08:21
And you had some extra context about this.
3:08:25
Of course, SBIRS are the small business uh uh deals that happen pre-program of record for defense tech companies.
3:08:33
You get a little bit of money from the DoD, but it's not uh it's not a sustainable source of revenue, but it's a great way to fund the business in the short term.
3:08:42
Prove that there's at least some demand to get through the application.
3:08:43
Followed up with Adam uh I'm gonna butcher Wallenowski. Sorry, Adam.
3:08:50
He was formerly at Anderoll, Nvidia, and Yale.
3:08:55
He's now over at uh uh Fid Labs.
3:08:55
Um and he says, "Yeah, there there are four major releases of cyber topics per year, and the second one for 2025 was due to begin accepting proposals next week.
3:09:06
The two big agencies in that solicitation were Navy and Army, sorry, Navy and Air Force."
3:09:12
Then the CBER update email announced around 1 p. m.
3:09:14
yesterday uh that all currently posted Air Force topics are being removed and no longer eligible for proposals.
3:09:21
And um that ends up being significant because in total that would have amounted to around $135 million of awards which would have gone uh uh in some part to uh early stage uh defense tech founders.
3:09:35
So uh and there's also followon awards uh so that that could be another two 200 million uh awards that were canceled.
3:09:44
So anyways, um there's reform happening around CBER and just general changes the acquisition process and so uh thank you to Adam for flagging this.
3:09:55
Yeah, that's very interesting.
3:09:56
Well, we have uh Delian coming on the show Thursday.
3:09:58
We have Sham Sankar from Palunteer coming on the show Thursday and I'm sure we'll stack a whole bunch of other interesting folks.
3:10:04
Uh so we should dig into that topic more on Thursday. Let's do it.
3:10:07
But other than that, I think we're good to wrap up.
3:10:11
Thank you everyone who tuned in and listened to this show.
3:10:13
Uh we really appreciate you having a lot of fun with this and uh just trying to up the quality by uh just 5 10 100% every single day.
3:10:22
Compounding compounding compounding is just the most powerful.
3:10:26
It would not be possible without uh the you know we we've you know John has been very upfront. This is corporation. Yes.
3:10:35
Uh this is corporate media. Corporate media.
3:10:37
So thank you to ramp uh public polyarket wander bezel numeral and adquick.
3:10:42
You guys are fantastic and um go support them.
3:10:45
Go support them and we willing see you tomorrow. Looking forward to it. Cheers.