All right everybody welcome back to the number one podcast in the world, the All-In Podcast. With me again today, Chamath Palihapitiya, your chairman dictator. How you doing brother, how you feeling?
Doing great, fresh off the holiday spectacular.
Oh good times. And then getting ready for a little ski. You and I will be doing a little skiing together with Friedberg. That'll be quite nice.
Friedberg, I don't think you've skied with me and Jason. Jason is an excellent skier. I mean I've heard his... have I? You Jason? I don't think I have. His brother is excellent too. They're both...
Josh, the Black Bomber, is good. Yeah, yeah. Shout out to Josh the Black Bomber. It's gonna be... he's got those hips. He's got skiing hips. They kind of shift left, right, right.
Yeah, child, it's kind of like when I... the hips are wider than the shoulders. Yeah, it reminds me of... I went to the Tom Ford... I went to Tom Ford to get my suit. I'll do that in just a second. But with us again, of course, you're cackling Sultan of Science, Friedberg. How are you doing?
Have you guys seen that clip of the guy with the fake bum that runs around the city? Yes, with security guards. It's like some sort of a crypto put-on or something. It's hilarious. This guy, he's got like a big Brazilian butt and he just runs around in tight tights. You find a clip of this guy? Oh my God, it's so ridiculous, so funny.
All right, with us, the cackling... with his afterglow from the holiday spectacular. Let's call it what it is, it's the Christmas Spectacular. We're going to pick a side. Friedberg, how did you like our Christmas... why are you being anti-semitic, bro? How dare you! How dare you! You can have the Hanukkah special with your two specials. And now with us in the Red Throne, it's Fit Sachs. It is stylish Sachs. It is... goes to work every day in Venture Sachs. His name is Keith Rabois. How are you my brother, welcome.
Great, great Jason, thanks. Happy to be here. You know, it's great being more fit and more fashionable. With Sachs, it's a pretty low bar, so I'm really excited to drill.
And as we love about you, you've got a little American exceptionalism, supremacy, dare I say. You don't f with dictators.
That's true. I don't really love dictators. They're not good for society, they're not good for America. But you know, it's not always America's job to fix all of that.
All right, well listen, what about running companies? Should company CEOs be dictators?
Yes, actually. So I believe in the founder mode, the Brian Chesky founder mode. I held a conference in New York recently that Brian was nice enough to speak at, called 'Hiring: The Art of Hiring for Founder Mode'. So specifically for people who subscribe... founders that subscribe to that view, how do you hire people and how is that different than what you would hire in a standard, you know, monstrosity of a company like Google or something.
Yeah, good founder mode in New York, by the way. Just history, if I remember correctly. Lots of good founder mode in New York. J-Cal, do you want to give Keith's background?
Of course. Went to Stanford with the boys, Sachs and Peter Thiel. Went on to do PayPal. He had a stint at Square. He started a bunch of other companies. Founders Fund. He worked... he went to LinkedIn. That's how it all started. LinkedIn was pretty key. Like, Reid left PayPal, started LinkedIn. I joined him.
So yes, that's true. And then after that I went back with... back to the PayPal days to Slide, which is on the... as of history, we don't have to talk about that. But then I did jump into Square as the 20th employee and helped build a pretty good company. Yeah. And then Founders... I got lazy, you know, became lazy, you know, decided to be a VC in 2013. Spent six years at Khosla Ventures, five at Founders Fund. The last year, almost last year now.
Before we jump in, I actually have a question for you. Starting already. How does that happen, Keith? How do you... you're at Founders... sorry, and then you get... what, like what pulled you to go and work with Vinod and then what pulled you back? Like how does that process work? Because these things are typically meant to be sort of forever jobs.
That's true. So I, you know, had the benefit of having Vinod on the board of Square, which I think is typically how executives wind up turning into VCs, is you forge a relationship with board members. So like for example, Roelof Botha who runs Sequoia had Mike Moritz on his board. Roelof was our CFO at PayPal and Mike recruited him. So that's a very common... same thing, Ravi at Sequoia today was the COO and CFO of Instacart. Again, same thing, Mike recruited him into Sequoia. So I think that's typically how people become VCs. I always knew I wanted to be a VC since 2003. I was a very active angel investor as you know, even when I was concentrating on all these other jobs, I was writing a lot of checks. And so anybody who's writing a lot of active angel checks probably has in the back of their mind, one day I might want to be a professional investor. We could talk about the merits or demerits of that, but like the goal was pretty clear in my mind. And then at some point I think you have to make a decision, what do you want to be in life. You know, venture has long time horizons. It is a job for life, like 15, 20 years is pretty much what you have to commit to. So you don't really want to start venture when you get too old, because 20 years, you know, you'll be like Donald Trump age.
Yeah, so I can run for president. I can run for president in 25 years or something. Keith, why did you leave Founders Fund to go to Khosla?
So Khosla was great. I spent six years there. The truthful reason why I left, it's kind of funny given COVID and how history changed, is I hated commuting to Sand Hill Road every day. We were one office, period, in office every single day. And I felt like the future of investing was more in San Francisco than in Palo Alto at the time. And I just despised sitting in a car 45 minutes each direction. Turns out, you know, COVID changed everything, how people do their work. Like we're recording this by Zoom. Before COVID, we'd probably all be in the same studio recording a podcast like this. And so, but the Vinod and the team was very inflexible about it. And Founders Fund was located in the city, obviously. I knew Peter since college, as Jason alluded to. And I decided that, you know, it was better for me. I remember talking to Sam Altman and I said, am I crazy for changing funds mostly on a commute basis? And Sam said, you're human. And every single study of human happiness is it's inversely correlated to your commute time. It's like, there's nothing wrong with being human. In any event, there are a lot of similarities between FF and KV. Both are great funds that have put up, you know, incredible returns, have funded iconic founders and companies. But they're very different. KV is involved as early as possible and FF is a momentum investor and is maybe the best in the planet at being a momentum investor. So almost every successful investment of Founders Fund over eight funds was invested at $500 million or more in true valuation. And almost every single investment at KV in eight funds was like the seed or Series A investment with very few exceptions ever. And so Anduril and Ramp were the only exceptions at Founders Fund. And at KV, the only exception would be Stripe, which I led in, you know, 2013 or so, which is an order of magnitude higher valuation than any KV investment, initial investment ever. So KV is much more an input-driven organization. Founders Fund is much more output-driven. And you know, there's great technology companies that are input-driven, think Amazon, Apple. And there's great technology companies that are output-driven. So you can choose, but certain people are going to be better in some environments and other people are going to thrive, you know, in other environments. I fit in really, really well at KV. You enjoy the early stage, you enjoy year zero, year one, year two. I'm very good at it. You know, I think I prefer to invest as early as possible on a keynote deck only. Like if I meet a founder and there's a keynote deck, there's no product, there's no metrics, that's my sweet spot. Because I also know nobody else in venture is good at that. Nobody else is still active in venture.
What's the secret? What's the secret from a keynote to a check?
It comes down to founder assessment at the end of the day. The only data point is, is this founder capable of building an iconic company? Period. And I prefer to compete when there's no metrics, because all the metrics are going to do is confuse you. That said, there's a lot of investors who are very good once there's product metrics, financial metrics. And so I have to compete with people who are pretty good at what they do. So I'd prefer to go as early as possible. And then secondly, I like company building. Like I think part of my role is to help the founder increase the amplitude or probability of success. And I enjoy that. At FF, that's very controversial.
Yeah, right. Yeah, the founder reigns supreme and everybody else is there to get out of the way, right? Yeah, I've had both KV and FF as investors, lead investors in both Climate and at Ohal now. So I know both firms really well. And it's really... I always... people always ask me about the difference between the two. That's always what I get to. It's like Founders Fund, they have this kind of mantra, they find great founders and just get out of the way, let them run. And they don't want to be helpful, that's not their objective. They feel like if they have to be helpful, it's not the kind of founder... I mean, Keith obviously speaking outside of yourself. And then at Khosla, as you know, Vinod has been extremely... and the whole team there, especially Climate, have always been extremely helpful. So adding board members, introducing commercial partners, being like very traditionally proactive, participatory VCs on the board. Very different, both very valuable. When I had a board issue at Founders Fund, and there were some board members that did not like my strategy, had issues with what I was doing with the company at Climate Corp at the time, Founders Fund actually stepped up and protected me. And they got the board, the rest of the board together to protect me in a way that was like actually at a very kind of crucial moment for the business. And as a result, we had a massive exit within a year.
I saw Brian Singerman is leaving. So does anybody know which ambassadorship he's taking? I mean, the timing's a little interesting, is it not?
I don't know. He's going to compete with our friend Kenny Howrey.
Yeah, Ken Howrey. Where is he off to next? Hopefully some great destination. I'm sure we can all crash. Yeah, something warm this time. Okay, Sweden's a little bit much. Sweden. I'll send in my wish list for you. Yeah, let's go like maybe like is there like Turks and Caicos or something? What about an embassy tour? We should do an embassy tour this year. St. Barts, do they have an embassy there? St. Barts, yeah, that's a great idea. They don't, unfortunately. It's a French protectorate. But well, you know what, everything's on the table now. We could make them the 51st, second, third, or fourth state. I mean, we're in the game right now. Canada is coming on board. Did you not want to roll in the administration yourself?
No, you know, I love politics. If you follow my Twitter feed, I pay a lot of attention. I used to be involved in politics before I got into tech. However, what I realized about where I am in my career in tech is if I stop doing what I do, I'm never going to come back. Like technology is rapidly emerging. We're going to talk about all the latest developments this week. Like you can't take your foot off the gas and the network building parts of venture for two to five years and come back when you're like 50 years old. And so I felt like I'm not ready to give up on venture. I'm in like the prime of my venture career. I'm only 12 years in actually, J-Cal. So figure five, 10 more years is the sweet spot. And so I'd like to see the companies I was involved in grow up, become public companies, etc. And I didn't feel like I could ever come back if I quit. At some point, when I like to get involved in politics? Probably yes. But it's a decade out.
Well, the household's involved. Big announcement, your husband Jacob is joining the administration. Maybe you could tell us a little bit about that. Obviously very proud of that.
Yeah, it's extremely exciting for him, obviously, for the country. I think which is he's going to be the chief economic officer really for the country. His job is to build foreign policy from the business standpoint. Which if you think about it, what's the foundation of power in the world? It's economic success. Why did the United States win World War Two? Is we had an economic engine that could outcompete Germany plus Russia plus Japan. We could build more tanks, you know, blah, blah, blah, etc. And so the economic engine is critical to this administration. Obviously Trump understands that. We had a great three years under his first administration, as he likes to say, best economy ever before COVID, which may be true. And we need to rebuild American strength. And Jacob's job is to export that philosophy. And sometimes you can build economic strength through working through foreign affairs. And so that's his main job, is to be the primary point person under Secretary of Economic Affairs. And then they've got a bunch... the Democrats and the W people added a bunch of other things to the title. It used to be just Under Secretary of State for Economic Affairs. And they added like environment and all these politically correct things. So hopefully they'll subtract all that stuff and just go back to Under Secretary of State for Economic Affairs. And interestingly, what's turning out to be interesting as Trump assembles this group, I love to get the panel's thoughts on it, is not everybody thinks the same. Jacob's position on TikTok, which we'll get to in this show very different than some other people in the administration. And even Trump himself flip-flopped a little bit on that. So what are your thoughts as we get started here just on that assembly of people, you know, including Sachs obviously who couldn't be here this week but we'll be on future episodes. There's your announcement folks. What are your thoughts on that, the sort of diversity and opinion in the administration and how that all sorts out?
I think it's very obvious watching from afar that the way Trump makes decisions is he likes to ask a lot of people a lot of different questions and then he makes the decision. That's why to some people the media... he is very unpredictable, is he doesn't just take one source of input. And so you can never totally predict the output. But he arrays an interesting cast of characters and listens to them. Like so for example, I haven't spent that much time with him, but in so far as I have, he would go around the room and ask every single person at dinner, what's your view on X? And literally go around the room of 28 people and listen to every single person. So I think that's how he makes decisions.
X being a topic, not the website X. Not X.
Yeah, everybody knows what X... I think he likes X. J-Cal, any thoughts on this? The wider team as we see it get assembled. We obviously don't have Sachs here, he joined the team, but just your thoughts on the collection of characters and executives. Here's an interesting tweet that I saw. Nick, can you just share it with the guys? Oh, net worth of each one. Now the reason why it was interesting to me was not the net worth per se, but I think this is the first time that I can remember in modern history, at least that I've been in the United States and following US politics, where such an enormous number of business people have been motivated to come and work inside of the administration. And I think that it creates this very interesting contrast and compare. I think that the Democrats would never have assembled a group of people like this, even though the Democratic party has a version of this chart that they could have made. There's a lot of extremely talented business people that support the Democratic party. The problem is that they believe it's deeply unfashionable to get strong, competent business people to take a pause in their business career and come work in government. And you almost look down on people that are successful. Whereas the Republican alternative here, if it creates a movement so to speak, so that subsequent presidents tap folks on the shoulder, I think we'll be much better off. And the reason is pretty simple. I think that the United States economy is too complicated to be managed by theoreticians, by folks with random PhDs and absolutely no working experience in the real world. And when you bring those people in to oversee those PhDs, I think you probably get better outcomes. So I hope this becomes a standard, which is ask these very talented, clearly demonstrated successful people with judgment to hit the pause for a year or three or five, whatever it is, step into government, help the country, and then go back. And this was what the founding fathers, Dave, actually prescribed. This is what they wanted. They wanted people who were in business to do a tour of duty to serve their country and then to get out. They were not interested in career politicians.
Correct. I've said this a number of times, but all of the founding fathers had jobs, had professions, and they stepped in to serve their country as a civic duty, participated in the process of executing the responsibilities of government, and then stepped out and went back to their private lives. I think it is such a more powerful model for government than people who choose to be politicians to represent people as a living, because it creates extraordinarily nasty incentive structures if that's the model. Which is, for example, to curry favor with private industry participants and then go cash that favor in after you leave. And I think that this alternative where you have people who are... everyone looks at them, oh they're all billionaires and so on. They're actually... because they're independently wealthy and they have enough money than they'll ever spend. I think Larry Page once said you can never spend more than a billion dollars in your life no matter how hard you try. It's literally impossible. People think like, oh you could spend all that money. Actually when you buy stuff, most of the stuff you buy are capital assets that you end up selling later. It's very hard to spend at that level. So when you have people that are truly independently wealthy, their motivation is actually quite different than someone who's trying to make it from 100K to 500K of net worth or 50K to a million of net worth. And I think it actually creates a higher degree of freedom and it aligns the people much more in the long-term outcome of government rather than their own personal interests. And they're just smarter. So I'll give you a simple example. Maybe we'll talk about this later, J-Cal, I'm not sure. But when I saw the DOJ's theoretical guidance on the Google antitrust matter, their idea is to divest the browser. And I kind of scratched my head thinking, would any reasonable business person think that that was the right remedy? Meanwhile three weeks later, Google's like, here's a super chip in quantum computing, here's a quantum computing that breaks the world. And I thought, how is it that these folks are so disconnected from reality that they don't understand what's actually sitting inside this company? And I think it's in part because they don't know the right questions to ask. And the reason they don't know what the right questions to ask is they've never worked in the real working world. We have a professional class of politicians and their understanding is 10 years old. But it's not just politicians, this is also bureaucrats. So my point is these folks need to get off the sideline and work in a company for a while, know the ballgame. They'll be much better able to guide these regulatory agencies if they actually just know what's going on. So if the right answer is some antitrust issue with a company where you need to divest, wouldn't it be great where like a hundred smart businessmen looked at that and said that makes sense?
But let me give you the counter to that, J-Cal, because the counter to that, which comes up a lot, just so you can like frame the response, is why are all these people coming out of pharma companies to regulate pharma? Why are all these people coming out of big ag companies to regulate big ag? Why are all these people that come from energy companies coming to regulate energy? The common refrain is business people are basically bringing business interests into the government by transporting themselves into these regulatory bodies versus having career politicians or what you call bureaucrats be kind of independent regulatory authorities. So what's the response in that context to that refrain?
They're absolutely right. And that's how it should work. The United States can no longer afford to be a bleeding piggy bank for bad ideas. So yeah, like if a bureaucrat thinks the right thing to do is to divest a random browser to fix Google's monopolistic tendencies, that's not a remedy. Or spend tens of billions of dollars on a high-speed rail like you were talking about earlier this week. This is not logical, it's not meaningful, it's misguided. So if what we want is kindergarten soccer where everybody gets to touch the ball, that's what we are getting right now, which is not useful. So I would rather have a business person with a direct point of view. And by the way, with the level of transparency, the big issue I guess Friedberg that that would create is could these people advantage themselves somehow to make more wealth? But the reality is that would be so obvious and laid bare. What happens today is they burrow at this mid-level of an organization and they do exactly this, but it's not laid bare. So I'd rather be transparent where some guy tries to take the government for $500 million and we castigate that person than what's happening today, which is you slip in the back door, you get paid four, five hundred grand from a company, then you come back to the government, then you go back. Nobody knows who these people are, nobody knows the decisions they're making, and they're altogether misguided because they're not grounded in an understanding of the real economy.
Keith, where do you fall?
Yeah, well, I share... actually you're both right in some ways. If you look at who Trump's picked, these successful people, they're not typically being assigned to industries they came from. So it's not like he's taking drug... you know, he's actually taking the opposite. Like think of RFK for example. So actually I think you can take successful people who have proven themselves through merit. Like I think that's one of the other benefits of the real world, is the only way you get ahead is you're in a Darwinist experiment with other people that are comparable. And to be successful you have to out-think, out-work, etc. And that shows up ultimately in promotions and net worths and various other metrics. So Trump has taken a lot of successful people and I think we want a society where we aspire for our kids to be successful. We want to emulate successful people. That needs more... that will yield more success. Like having Elon involved in the government will yield more success than, you know, if you penalize successful people, you stigmatize it, you get less of it. So I think if you transplant successful people into industries that they're not from and that they have no interest in going to after the government, you might get the best of both worlds. Because I can see some of the critiques of, you know, you're regulating your friends' companies and you're going to make money later. That said, most of Trump's people are not going to do that. You can also pass laws, like you know, you can't lobby, you can't work for X years after. There's also this great data point, I think it's in the last 60 years, Trump is the only president whose net worth went down after office. Every other president that, you know, took a relatively modest net worth or mediocre net worth and turned it into the stratosphere. So you think about the president as the signature example. It's great that Trump is setting the opposite illustration.
Well, I mean, we've discussed this on the other pod, Keith, a couple of times, which is domain expertise can be an anchor for a founder. You know, you got a founding team that works in the hotel business, they're going to look at something like Airbnb and say this will never work. You got somebody who worked in transportation, they're going to look at Uber and say that'll never work. Look at PayPal, if they worked in finance and they did say to you and the team, that's never going to work.
Yeah, I mean, I think it's critical in venture to not really fall for that trap. I always mention that I don't like people with expertise typically as founders. I think... and when I do diligence and call experts, I only ask one question, which is what is metaphysically impossible about this working? Like is there a law of physics that I don't understand that makes this actually impossible? And if they can't isolate a very specific principle or fact that makes it actually impossible, then I just ignore everything they say and write a check. Yeah, because it's just all vibes and opinions, etc.
Well, they're experts in a prior world, right? They've learned why not. And this is actually like to combine a couple topics here. The reason why Trump is so effective... so the most interesting question to me over the last year was how is this guy who everybody in the media and everybody in the legal groups of various things is trying to attack and hate, and all these people publish these books, why is he on the precipice of being elected president of the United States twice? You must have a superpower or two. Most people do not get elected president of the United States twice. And most of the people who are attacked by everybody who has power in the establishment definitely do not get elected president. So what it came down to, and I interviewed a lot of people who are critics of him but knew him well, like ex-cabinet people that don't like him, comes down to he just asks a lot of why. Like why do we do this? Why do we have to do it this way? Why have we done it this way? And it turns out in politics and in DC, most of the answers are pretty mediocre or weak or poor or haven't been rethought for 20, 30, 40, 50, 60, 70 years. And so he just constantly dives in and says why, why, why, why. And that's actually what predicts success for founders, is in a domain they don't know anything about, they're just like why, why do we take these hotel things for granted in the Airbnb case? Why should they be so expensive? Why should scarcity prevail in New York for four months of the year, etc.
All right, let's get to our docket. We got a ton of stuff to get to. Google's new quantum chip is super impressive. Friedberg and I were talking about that on the group chat on Monday. Google announced its latest quantum chip. It's called Willow. Here's the chip if you haven't seen it. It's beautiful. It was fabricated in Google's new chip plant in Santa Barbara. They started this project back in 2012, their quantum computing project. And the headline basically is Willow performed a standard benchmark computation under five minutes that would have taken today's fastest supercomputer 10 septillion years, or 10 to the 25th power, which is billions of times older than the universe. If you don't know what quantum computing is, Friedberg will expand on it, but basically computers are binary, you've heard this before, one and zeros. Quantum uses qubits, you know, those are zero, one, or both at the same time. And Google got a 5% pop. They're up 13% in the last five days, probably on the other news that Gemini 2.0 is out as well, which is unbelievable. I've been playing with it. What do you think, Friedberg, of this big announcement, Google's announcement?
Google's announcement is a paper published in Nature that follows a pre-print they actually put out in August. So this news has been out for a little bit. There's obviously a press cycle this week around it to kind of make a big thing about it. But it is a very kind of important milestone in the evolution of quantum computing. So do you want me to kind of talk about quantum computing again? I think we've talked about this in the past.
I mean, maybe a brief primer for people, but like what does this mean practically? I think what people want to know is when do these things actually have an impact in the way say NVIDIA's GPUs have had.
Yeah, the big breakthrough here is that the whole basis of a quantum computer is called a qubit, or quantum bit. It's radically different than a bit, a binary digit, which we use in traditional digital computing, which is a one or a zero. A quantum bit you can kind of think about it as a wave function. It's sort of a quantum state of a molecule. And if we can contain that quantum state and get it to interact with other molecules based on their quantum state, you can start to gather information as an output that can be the result of what we would call quantum computation. And that sounds complicated, but what it really means is that instead of doing kind of binary computation where we're adding numbers together or doing kind of other traditional arithmetic, there are really interesting functions you can do with qubits. Qubits can, for example, be entangled. So two of these molecules can actually relate to one another at a distance. They can also interfere with each other, so canceling out the wave function. And then when you read it out, you get a result that is basically a very, very complex problem that is solved through this quantum interpretation. It's really hard to highlight how different this is from traditional computing. So quantum computing creates entirely new opportunities for algorithms that can do really incredible things that really don't even make sense on a traditional computer. They're not possible to kind of resolve on a traditional computer. And sorry, let me just state one thing. The quantum bit needs to hold its state for a period of time in order for a computation to be done. And so the big challenge in quantum computing is how do you build a quantum computer that has multiple qubits that hold their state for a long enough period of time that they don't make enough errors that you can actually do a computation with them. So what Google was able to demonstrate here is they created these, call it logical qubits. So they put several qubits together and by putting several qubits together they were able to kind of have an algorithm that sits on top of it that figures out, hey, this group of physical qubits is now one logical qubit. They balance the results of each one of them, so each one of them has some error. And as they put more of these together, what they were able to demonstrate for the first time ever is that the error went down. So when they did a 3x3 qubit structure, the error was higher than when they went to 5x5, and then they went to 7x7, and the error rate kept going down and down and down. So this is an important milestone because now it means that they have the technical architecture to build a chip or a computer using multiple qubits that can all kind of interact with each other with a low enough fault tolerance or low enough error rate that they can start to do these quantum calculations. This is a big area of opportunity. One of the very interesting areas that a lot of people are talking about is in cryptography. So there's an algorithm by a professor who was at MIT for many years named Shor. It's called Shor's algorithm. And in 1994, 1995, I think around that time, he basically came up with this idea that you could use a quantum computer to factor numbers almost instantly. And all modern encryption standards, so all of the RSA standard, everything that Bitcoin's blockchain is built on, all of our browsers, all server technology, all computer security technology is built on algorithms that are based on number factorization. So if you can factor a very large number, a number that's 256 digits long, theoretically you could break a code. And it's really impossible to do that with traditional computers at the scale that we operate our encryption standards at today. But a quantum computer can do it in seconds or minutes. And that's based on Shor's algorithm. And if you want, there's some great YouTube videos that describe Shor's algorithm and how it works. But it's like mind-blowing when you look at it. It's like this really like non-intuitive but simple set of steps that when you put them together on a quantum computer, it's like this thing can instantly figure out all the factors and then you can break a code. One of the things that this highlights is that in a couple of years, theoretically, if Google continues on this track and now they build a large-scale qubit computer, they theoretically would be in a position to start to run some of these quantum algorithms like Shor's algorithm. And so we're now kind of spitting distance or a couple of years... it's not really clear, is it three years, five years, seven years, but a couple of years away from having computers that theoretically could crack all encryption standards. And there are a set of encryption standards that are called post-quantum encryption. And all computing and all software is going to need to move to post-quantum encryption in the next couple of years. So there's like this big kind of push now to like how do we do that, how do we accelerate it.
I saw Sundar post it. I saw it in my feed. I ended up missing my next meeting because I had to figure out how long will it take for us to crack the encryption standards that we use for Bitcoin. Nick, here's the answer because I was so tilted by this idea. So if you think of Willow as essentially like one stable logical qubit equivalent in a chip, we need about 4,000 to break RSA 2048 and we need about 8,000 to break SHA-256, which is the underlying encryption framework for Bitcoin. So I think you're right. I think we're in the sort of like the end game two to five year shock clock.
No, I mean, I think what'll have to happen is some of these chains will need to obviously reimplement something at a pretty foundational level. The weird thing, as Friedberg says, is like the Willow chip's error correction gets better the more of these things you start to use together. Now, there are some really big problems inside these chips, like logical interconnects are very complicated. If you put two chips on a board, like the chip-to-chip communication is complicated. This is all stuff that we haven't figured out how to do. But this is a big deal. And I was really like, my God, what's going on here? Other projects at Google are finally landing. You have Waymo and you have this now. I mean, Project Loon might be gone, but you know, I think those projects, we're going to see a couple of them change the world.
Yeah, just to give you a sense on the numbers, like Google's target for fault tolerance on a quantum chip to make it logically useful is 1 times 10 to the minus 6. Right now this Willow chip is kind of running at 99.7%. So it's still a few orders of magnitude away. They have a long way to go in getting the fault tolerance low enough to actually build logical gates using qubits that can resolve kind of computational output. And so there's still a build cycle ahead and that pathway is a little bit unclear. But what they've shown is this almost feels like the Shockley transistor moment. It's like, you know, here's this transistor. Now everyone's like, you have a lossy transistor and then you'll figure out P-N junctions, you'll figure out all of these ways of just like getting the error correction down. But by the way, this reinforces what you said before, which is it's hard for an outsider like us to comprehend what's really happening inside of Google because the business they built was able to fund this. I mean, and I went down a rabbit hole because I'd never heard of who this guy was that runs this, Hartmut Neven. He's in Santa Barbara. They have a whole team in Santa Barbara. They've been running for like 10 years. He has his own law, Neven's Law. And then I went down the rabbit hole of that. But what's amazing is so valuable for humanity, Google had the money to fund him for the last 12 years.
Exactly. And the greatest money printing machine of all time is paying dividends. Yeah, but isn't it great to know that Google takes these resources from search and sure, maybe there's waste and or maybe they could have done better with the Black George Washington or maybe they could have done better with YouTube, but the other side is they've been able to like incubate and germinate these brilliant people that can toil away and create these important step function advances for humanity. It's really awesome. DeepMind is on that list as well. Keith, what are your thoughts? DeepMind?
Yeah, yeah. So I think first of all, I think there's a long time before this becomes a commercial product or application of any sort. So you know, it's great that they're taking money, but think about it like almost like Stanford takes money or the US government funds basic research. In some ways this is at least a decade out kind of thing. There's another... I mean, this area way beyond my expertise, but I've been talking to a lot of smart people because I do do financial services innovation and obviously encryption is pretty critical, whether it's Bitcoin or other places. And there's a couple concerns. One is it's not even clear that you can verify that this is true. By the way, like computing to explain sort of the magnitude of difference, standard computing would take 10 to the 25th years to verify that what Google announced is accurate. So there's a chance that it's not even true for the thing, for the sampling test they ran.
Yeah, the 10 to the 25 number of years, that's the big I think hole in the whole RCS benchmark that they use, that it only is... it's a framework that only a quantum computer could theoretically even... so how you know the answer is correct is I guess the question. It takes that long to solve. And then to be practical, like so assuming you solve all this and it's accurate and blah, blah, blah, you make it fast, all second, then there is the post-quantum computing encryption, which you know, a lot of people, a lot of things, a lot of important things have switched over to. So you have historical communications that were encrypted under an old paradigm that would be vulnerable. And you know, every year that goes by, like the embarrassment level or the threatening level of old historical communications will probably have some decay function or some half-life. So if it takes another 10 years, communications that were drafted 20 years ago, yeah, there'll be some embarrassing things and blah, blah, blah. But the more time it takes, the more safe, you know, sort of private communications and exchanges will be. So I think that's positive. Third is there's a question of order of magnitude here. You mentioned you need like three orders of magnitude sort of improvement. Is each step function, you know, incrementally easier and faster, or is each step function, you know, 10 years? And I don't know that anybody knows the answer to that.
That's right, that's right. Yeah, a lot more work here to be done. You're not buying any quantum computing stock yet?
Not yet. We have looked at KV, you know, talk about like technology-forward, you know, VCs over the years. I've sat three partner presentations and we've never really pulled the trigger. There's other reasons, like including like even if you have quantum computing, you have to rewrite software on top of it from a different... it's a completely different world and who knows, nothing maps, nothing maps at all. So you're starting from scratch. So you have an application layer which might be actually an interesting business opportunity.
Yeah, how are these things actually going to be coded and how are developers going to interact with them? If at all, maybe by that time it'll just be AI running. How do you build a compiler? Who the hell knows? How do you build a language properly? These are all complicated.
Yeah, who's gonna write the basic? Who's gonna write like the Microsoft Basic?
The interesting thing is there's a lot of work that's been done in the space. Like thinking about quantum computing and quantum algorithms is like an entire branch. People do spend a lot of time thinking about this and working on this. And there are ways you can kind of simulate and test and start to build out models for how you could utilize quantum computers. But obviously we just don't have, you know, industrial scale systems at this point.
There was one Interstellar Marvel Easter egg in their announcement that I wanted to get your thoughts on, Friedberg. Google said that this massive jump in performance, quote, lends credence to the notion that quantum computation occurs in many parallel universes, in line with the idea that we live in a multiverse. So is that somebody in PR is high AF or reads too much science fiction?
You know, the crazy thing about quantum physics is such a mind... have you guys taken quantum mechanics? Like have you... not? I have. Yeah, I remember the summer I took it, like the first quantum mechanics class, and I was like, glad it was a summer course. You really have to like think like pretty deeply about what you learn in quantum mechanics. There's just nothing about it that's intuitive. Like the way we kind of think about the world is not the way the quantum world operates. In the case of a qubit, as soon as you measure the qubit, it collapses to a value. If you try and measure it, if you try and look at it, it goes to zero or one. The probability by which it goes to zero or one is defined by the quantum state right at the moment you observe it. It's just such a mind... so effectively this thing is existing in a superposition in multiple states at the same time until you try to observe it. And that's the case of quantum mechanics. So what's kind of happening, I think, in that language, J-Cal, is nothing novel was kind of discovered or represented. That's just quantum mechanics. It's a mind... and you could go watch hours of YouTube videos if you want to like get taken down the mind rabbit hole of quantum mechanics and realize like one thing I've always found fascinating about this discipline is that looking at a qubit changes it.
Like it understands it's being observed. There's a slit experiment and if you try and observe a light as a particle versus a wave, it actually changes what happens, what the outcome is of it being a particle or a wave. Same with electrons. The thing about quantum mechanics is the observation of a particle changes what happens.
Serious question. Serious question. Here it comes. Here, buckle in. When you look at the quantum bit, can you get a better idea of the scale of Uranus?
Let's move on. No, let's move on. I was doing a joke. He was queuing up a joke at the same time.
No, I was thinking about Schrodinger's cat. That's like another ridiculous thought experiment that when you... you go the same concept. It's the same... the quantum state of the cat is it's both in the box and not in the box. You don't know whether it's in the box until you open the box. And then you open the box and there's an X probability that it's in the box, X probability it's not in the box. But when you don't see it, it's both. It's both.
And if you're a cat lady, you have three of those boxes. And I'm a dog person.
Well, we got more engagement from Keith on that science corner than we have from... so he's more open science than... I need to... they both said this is stupid and I'll never touch it. Except Keith was kinder and more articulate in getting there.
Sachs would have just been snoring. Yeah, he would have done this, he would have done his move where he goes, stupid, and then like he would... next topic.
There's an advantage of Monday partner meetings is I get to watch the science fiction stuff, you know, every week if I don't really understand it. But like a decade of watching science fiction, you pick up some tricks.
You play chess with Peter Thiel while that discussion is going on?
Actually, so I don't play chess at all, ever. Okay. The reason why is if I do something, I want to be really proficient at it and I don't have the time.
Got it, got it. Also, you have a life. You have a life.
Yeah, I like to do other things in the real world. A big, big shout out to Gukesh, my Indian friend, 18 years old, new world champion. I saw.
Champion. Yeah, new world champion. Did he play Magnus? Is that...
Every brown guy that's done any random useful thing in the world, we all know each other. We're in a huge group chat.
Oh, is it really? Yeah. What is the name of the group chat? Isn't it like the top 10 tech companies?
The group chat's name is 'What Can Brown Do For You'.
What can Brown do for you? Okay, there it is. Also, UPS is filing a trademark infringement case. Hey, speaking of chip news, Apple is making its own AI server chips for internal use. A report just came out that Broadcom and...
TSMC are helping them develop AI inference chips. You know, inference chips like Rock, Chamath, and there are obviously GPUs like Nvidia GPUs. Those are like the giant dump trucks that help you build large language models. These inference chips are kind of like speeder bikes, you know, motorcycles quickly getting you the results from those same ones. It's called Balra, Btra, I don't know what that's in reference to. Mass production in 2026. They don't plan on selling the chips, they don't plan on cloud computing. The reason they're doing this obviously is because they really want the iPhone to be the interface and they have planted their flag that they want to have privacy and have AI working off of your local device and not having access to your data but having a compelling AI experience.
Gosh, my iPhone does not work. I'm sorry, I'm just going to say it. Okay, I don't know what happened.
You upgraded your software is what happened. You're on iOS 18.
It doesn't work. I after three years I upgraded to the newest phone, I upgraded to the newest OS. The phone doesn't work, meaning like to call people. I can't call my wife anymore, I can't call my kids anymore. The phone bricks constantly, my photos app doesn't work. It is just really bad. And I think for a company of this scale, I don't understand how it does not go through a more complicated test harness that catches all of this. I'm not trying to complain but because I know it's hard for them and I know it's complicated and but it's really bad.
You're not the only person. People are freaking out about the interface changes, on photos crashing is a major thing, and Apple Intelligence just doesn't work. So it does seem Keith that Apple has gotten off their game of making polished stuff to race to try and I guess catch up to their perception of you know AI being a disruptive force at the interface level, i.e. your phone or desktop. What are your thoughts on this new story about them doing more chips? They've obviously had great success with the processors and phones, now the M4 incredible. If you haven't tried the Mac Mini, best computer for the dollar in the world right now. But what are your thoughts on Apple?
So the most important thing about Apple is to remember it's vertically integrated. And vertically integrated companies when you construct them properly have a competitive advantage that really cannot be assaulted for a decade, 20, 30, 40, 50 years. And so chips, classic illustration, go all the way down to the metal and build a chip that's perfect for your desired interface, your desired use cases, your desired UI and nobody's going to be able to compete with you. And if you have the resources that you know because you need balance sheet resources to go the chip direction, it just gives you another five to 10 year sort of competitive advantage. And so I love vertically integrated companies. You know, I posted a pin tweet, I think it's still my pin tweet about vertically integrate is the solution to the best possible companies. But it's very difficult, you need different teams with different skill sets and you need probably more money, truthfully, more capital. But Apple's just going to keep going down the vertical integration, software, hardware, you know, all day long. And there's nobody else who does hardware and software together in the planet, which is kind of shocking in some ways.
Is there a world class company, a company that's world class that's both software and hardware other than...
Yeah, maybe Nvidia. Well, may not really. Could they do a world class UI? You know, maybe. Maybe there's a foundation, you have a different vision, maybe a different team. Not clear. Tesla's close, I guess. I'd say the software's good.
If you define software as it touches a consumer...
