All right everybody, welcome back to episode 290 of the number one podcast in the world. It's the All-In Podcast. With me again, it's the core four. David Friedberg is here, Chamath Palihapitiya and David Sacks calling in. I am your host, Jason Calacanis, and we have a full docket today. I'd be remiss though if I didn't ask everybody for their fondest memories of the fifth annual All-In Summit produced by Mr. David Friedberg. David, do you have any thoughts? How do you rate your performance as executive producer of the All-In Summit?
You know what we didn't do? What we forgot to do at the end of day two? We didn't give a big shout out to our production team, to Kimber, to Lisa, to Nick. I think we... No, Jason. Okay. I thought we should have brought him out, but I just want to give a big shout out. The team backstage absolutely crushed it as always this year. And then I had a great time. Actually, you know, my favorite part is going to Universal Studios. You just get to have a good time. It's great. Just great.
I am reliving my childhood. Shabbat with no trauma.
By the way, shout out to our friends at Dongi. I got one of those coffee machines that we had at the event. I put it in my kitchen.
You know what I got? I don't know if you guys saw, but there was a water machine in the VIP area. Well, that is a zero plastic water machine. It goes through super filtration. No microplastics in the water. I have one now in our office. Thank you very much to them. I appreciate it.
Amazing company. Sacks, do you have a favorite moment from the show?
Well, I think the highlight of the show, the thing that we'll remember for a long time, was the president calling in during Jensen's talk. And I think Jensen's overall content and demeanor really helped calm down this national panic over AI. It felt like we were the center of this national conversation. And I think it happened very organically. You remember there's basically been this push for the last few weeks leading into the summit to convince everyone that humanity was going to go extinct unless we did exactly what the Democrats want and stop all AI development. And then, you know, we had first Satya came out and kind of calmed everyone down, and then Jensen did the same thing, and the president called in and did what he did best, which is seize total control of the narrative that I'm sure these doomer groups have been carefully planning for weeks and kind of thwarted that whole operation.
Nerds, enough. Get back to work. You have a super intelligent... Trump intelligence is now the term. We're going to call it Trump intelligence going forward. But I think you make a good point. A lot of people wanted to know, Friedberg, if this was planned. Was the President Trump calling planned, Friedberg? Take us behind the scenes.
Basically, Jensen was connecting with him right backstage and said, 'Hey, call me back.' And then he called him while he was on stage. There was some texting going on.
Yeah, it was completely spontaneous.
It was spontaneous. Yes. It was not like a planned thing where Jensen was like, 'Hey, let's do a whole thing.' And so that was pretty amazing to have this conversation that Jensen was waiting for from the president happen live. And clearly this was the topic du jour in DC as well as in the news and the media, and it was amazing to see it all happen on stage with us. And yeah, just to be clear, I thought it was a bit... and I was like, well, put him on speakerphone. And Jensen says to me, 'How do you do that?' And I just handed him... I always keep an extra mic there in case somebody's mic goes out. Just put them on speakerphone, put the microphone...
President Trump, the funniest president in history, funniest politician in history. Did you notice, Sacks, that he drops a one-liner through a speakerphone perfectly, perfectly? Jensen makes the greatest chips. Everybody tries to reverse engineer them. Impossible, impossible. But he can't figure out how to press the speakerphone button. Okay. I was just like, how does he do it? How does he do it? It just drops the perfect line. But Chamath, in all seriousness, the nerds were losing their mind last week and the adults came, daddy came, Elon came, Jensen came, all the adults in the room came and they just said, 'Listen, if you have software that's defective and not ready to put in the world, maybe don't put it in the world and make it a little bit, you know, as you like to say, less brittle.' So your thoughts on where we are in this national discussion which went from slow down to maybe just release non-brittle, resilient software.
Well, I think that there was this classification that happened last week between up-and-coming organizations that want to call themselves labs, but are in fact companies that have P&Ls and shareholders and have to abide by the same rules that everybody else does. And then the sophisticated companies that have lived in scrutiny for many decades and have learned the hard way the process of making things robust and the cost of making things not robust. So what do I mean? On the one side you saw, in many ways it's like curious times creates curious bedfellows, right? You have the cohort is Satya, Jensen, Sacks, Zach, Elon, the president, Lina Khan. We have product liability language... strange fellows indeed. We have this product liability perspective in the United States, it's meant to prevent companies from doing things that they're not supposed to do, especially if they know that those things could be harmful. And on the other side, it's folks making the thing that were being, I think, a little naive and basically saying, 'We're not a company. We're a lab. Protect us.' And I think the mature response is, 'You should have internal controls and you should robustly test things.' And what Zuck said earlier and what Elon has said in the past is we're just under a lot of scrutiny. And so when things aren't perfect, we just slow things down. Elon has done that with FSD. You said this, Jason. He could have been at FSD three or four years ago, but he has publicly stated, 'We can't afford it because every accident that Tesla incurs is magnified a thousand x than what any other company would incur, and so we just have to go slower.' Zach last week said, 'We were about to roll out Muse, which looks like one of the most successful product launches in recent memory, has huge implications actually, which we should talk about,' and he had to slow roll it. He and Alexander, who I was talking to last night, had to slow roll it for a couple of months to get it perfect. So it's all within your control. It's just what do you choose to do? And I think that was the most interesting observation. We have to stop calling these companies labs. They're companies and we have to be judged on the same standards including product liability.
Yeah. And there was a lot of coverage of this moment, Sacks. Interestingly, some of the fake news media were like on a popular podcast and then they play the clip, but they're just afraid to say the name of the podcast. Pretty hilarious.
I think Chamath is getting us into the first topic here already, which is whether we're going to have individual responsibility as our north star or some sort of collective action. And the thing that always works the best is individual responsibility. Whether it's at the level of individuals or companies, the relevant decision to make in every case is should we ship this product? Not can we get the whole world to agree. And the problem with talking about these collectivized approaches is that they diffuse accountability away from the actual decision maker. And I think people sort of feel this, you know, like this week you had Dario and Sam go to the United Nations and say we need some sort of global AI governance. And it kind of reminds me of like the billionaires who fly to Davos in their private jets and then rail against climate change. You know, there's something fundamentally sort of unrealistic and kind of out of touch about it.
Hypocritical. And it's like, guys, look, what we need is for you guys to make smart decisions about what to release. If a product is unsafe, which is to say it's unreliable or behaves unpredictably, then don't release it. And stop looking to some sort of global governance as the answer. Because if you guys don't get this decision right, it's not going to matter what the United Nations does. And by the time the United Nations agrees on anything, we're going to be much further along in this whole journey. So, there's something just very weird about the way that the principal actors in this keep talking because it really feels like they're trying to push off the responsibility.
Well, there's a theory going around here and I think it is worth us discussing here that the Frontier Labs are covertly...
Companies. They're companies.
They're companies. Yes. Let me just finish the...
No, no, no, but your point made a really good point that I want to make sure we just don't miss.
Yes. Yes. And when you call them labs, they sound like nonprofit entities, and it's not true.
Okay. So, the corporations making these products are looking for President Trump to specifically give them what the internet companies had with Section 230, which is shield them from liability. And that there is a consideration inside the Trump administration, the 47th administration, that maybe there could be some leverage put on these companies that they would give 10% of their equity to the sovereign wealth fund of the United States, etc., and then that would result in them being given some pass when it comes to their liability. That's an insane thing to do. It's like giving some plane company that gives 10% of their equity to the US government the ability to not be responsible for their planes falling out of the sky. But what is your thought on that conspiracy theory? I'm sure you've heard it, Sacks.
You're making it sound like this is the idea of the Trump administration. That's not true.
No, not the Trump administration. This is what the Frontier Lab corporations are pitching to them and that there might be, the rumor is there might be some people who are open to that in the administration. Again, this is all a back channel.
Here's what we know is that in the past week, you had virtually every Trump administration official come out and say some version of what I just said, which is first and foremost, the AI companies have to take responsibility for their own products and that we will not waive product liability. I think Speaker Johnson said it, the congressional leadership said it, Bessent said it in the most recent interview. Everybody said if your game is to get a waiver of product liability or antitrust liability, if you're trying to form a cartel, if you're trying to collude, forget about it. We're not going to do it. So, I think they completely threw cold water on that whole idea. And remember what President Trump said is he just tweeted today, we have the DOJ. That's a guardrail. The administration is a guardrail. The administrative state, civil lawsuits, criminal lawsuits, all these things are there as potential liability to make sure that you make the right risk-reward tradeoff.
And again, at the end of the day, if those guys release an unsafe product, it's not going to matter what the United Nations agrees on. So, we need them to internalize the responsibility.
Are they... Listen, come on. Be candid with me. You got the inside goods here. Are they trying to lobby for that? Do you think they are lobbying to get this protection? Yes or no? Come on.
Well, I have heard, this is not like first-person experience. They have not asked me like, 'Hey, we want a product liability waiver,' but I have heard from people in Washington that they have been seeking something like that. It's hard to pin down, right?
Yeah. Okay, fair enough. Friedberg, your thoughts here as we are going to get into the first story here with the token maxing and the prices going down, but I'll give you the final word here on what America should do in terms of dealing with the corporations that are pretending to be labs who cannot take ownership of their own Frankenstein creations, which I think JD Vance, you know, I thought had a spectacular appearance. He was crisp and looked quite presidential if I was going to describe it. You threw a lot of fastballs and he knocked them out of the park. By the way, fast, you know, home run hitters want fastballs. You can't hit a fastball if it's out of the strike zone. So, I gave him the three hardest questions I could think of and he proceeded to knock all three over the fence. I think there was... JD's excellent. Listen, I mean, no, on the Sunday shows, they played the clips of the questions I asked him. Bang, bang, bang. Friedberg, right over the fence. But, you know, he said basically, if you're creating Frankenstein, here's an idea. Stop. And then he added, if you've already kind of let the cat out of the bag, then create anti-Frankenstein. Basically, create the safeguards.
Yeah, it makes total sense. I think Zuck gave a good interview on this. They took their time doing this Muse release this week. They said they wanted to get it right. They wanted to make sure that it was safe, that it didn't give people capabilities to do bad things. That's the responsibility that they took as a corporation. Anyone that's outputting a model should take the same responsibility.
This is an organization that understands it, having paid a series of fines from Cambridge Analytica to recently...
We have a lot of laws that make it illegal to do a lot of things. All right, let's move on here. We have laws.
By the way, can I add like one philosophical point to this? So I think that implicit in, let's call it, the Dario position, that let's call it the regulated free market that we have, his fundamental contention is that that will lead to a race to the bottom, that competition jeopardizes safety. It's in all of his blog posts and many other people reflect this idea that competition equals lack of safety, and that is implicitly a critique of our economic system. It's basically a left-wing critique of our system and it goes back a long way. I remember back in the days of the Cold War when we really had this duel between two different systems. Do you want the sort of free market system or do you want the communist system? A lot of people made the claim that the capitalist system would do things like jeopardize safety and beauty, that our buildings would always be uglier because the greedy capitalist wouldn't want to spend a dime on beautification or good architecture, things like that. In fact, it turned out that the Soviet system was the one that produced the cold gray landscapes. Why? Because people want beauty. They want safety. And therefore, if you have a well-functioning market economy, then it gives people what they want. And obviously, the American system won out in that battle. So, I just fundamentally disagree with the idea that competition means lack of safety. As Zuckerberg and Jensen were saying, there are huge incentives on both the upside and downside to be safe. On the upside, no customer wants a product that is unpredictable and unreliable, that doesn't do what they say. No enterprise wants an agent that's going to leak their data or hack a competitor. And on the downside, as the president made clear, they've got tons of liability, product liability, civil liability, administrative liability, criminal liability. So, I just firmly disagree with this idea that competition is a bad thing. Competition is a good thing that can be harnessed to get the right result. And just to build on that, Chamath, our friend Nikesh from Palo Alto Networks, friend of the pod, he released in the past week or so Unit 42. He's building, there's a business opportunity here to build a product to do continuous cyber defense. And also a friend, George Kurtz from CrowdStrike, he also released Falcon, his new product to do cyber defense. Chamath, if these guys in the Frontier Labs corporations were so concerned about cybersecurity, why didn't they ever release a cybersecurity product and Palo Alto Networks and CrowdStrike are on it like they will?
That's probably more in the second topic that we'll talk about, which is as the models essentially cluster in terms of capability, there's no differentiation, and so they'll be forced to move up the stack. But let's wait on that for one second. You have a point here you want to make and then we'll go to the first.
I do. The point I wanted to make is more philosophical and sociological, which is the last time we heard the word lab in the social consciousness was during COVID. And there was a lab that was responsible for a leak of a virus that then killed 15 million people all around the world and caused $45 trillion of damage. It's the Wuhan lab. And I think it's important to recognize that there has been zero transparency or culpability around this. And I think part of why people are comfortable calling themselves a lab is because of that fact. That a lot of these young people that work at these places lived through this and saw absolutely no responsibility taken by the lab that caused this leak. And now we're talking about leaks of different kinds. And we have organizations and corporations that try to fashion themselves as labs as well, but they're not labs. These are corporations. I just want to remind everybody, these are for-profit corporations that have absorbed hundreds of billions of dollars of debt and equity, that have thousands and thousands of shareholders, that have trillions of dollars of market cap. And if I were them, I would not want to call myself a lab at any cost. And I think if you saw the recent speeches that they gave at the United Nations, they're still using that terminology.
Yeah. They are not labs. These are for-profit corporations that are subject to product liability risk and they should act accordingly.
Yeah. I mean, and we've had a conversation here for a year about this. Like if this stuff is so dangerous, you don't have to release it or you know my proposal like know your customer, give logs.
Do not compare yourself to the Wuhan lab.
It's, well, Chamath, it's bad PR, but also I do think it's part of their like virtue signaling routine where they just don't want to say that we're companies. We have a for-profit incentive. They always want to say that we're either a research institution or they say things like we're a public benefit corporation, which no one really knows what the hell that means. So, it's this patina virtue signaling that obscures what's really going on.
It tries to obscure the word corporation, but legally you're not allowed to hide it. I think they should have... when they... we are all running corporations, All-In, albeit very small, but mighty is a corporation. I think we should call...
This is the All-In lab where we discuss different formulas.
No, we're experimenting with ideas. This is a meme workshop.
Lab. These ideas are getting so dangerous that we don't want any liability for our opinions. Welcome to the All-In Lab podcast.
Here we... Topic zero, Friedberg. Is there a mindset in scientists' minds that you know needs to kind of have a hard stop and then the corporation kind of takes over? Maybe they could put the labs on the side here and then say, 'Hey, these are the adults doing the corporation stuff.' What are your thoughts here if you were going to architect how Anthropic operates in the world? And maybe you could speak to scientists' views of the world versus capitalists and management teams.
I don't have a good answer for you on that.
Okay. Well, you're doing it. You're the answer. Look at...
Oh, let me kick off the first topic. What I wanted to do was just take a step back and look at the insane flurry of model releases happening.
I think the pace of model releases happening on both the open-source side and the premium side, the Anthropics, Groks of the world, is unfathomable right now. The list is insane. And just like the last 10 days, September 9th, DeepSeek 4.1 Flash gets released. $20 for a million tokens output if they're hosting it. Key Value Cache from V1 of DeepSeek, remember what a big deal DeepSeek was when it came out. The key value cache then was like 390,000 bytes. Now it's 890. Insane drop, insane efficiency improvements. On September 20th, Qwen, which is the Alibaba model, comes out, version 2.1. It's an open weights model that outperforms Nano Banana 2, which is Google's big breakthrough, insane image generation model. This thing is free, open-source. You can put it on your desktop computer and run it at home to generate images for free. And it's made by Alibaba. Xiaomi put out MIMO on September 22nd, two days ago. MIMO Pro performs on par with Claude's Opus 5, which is like this insane model that everyone thought was going to change the world and break the internet, and GPT-5.6 across most benchmarks. It's a 309 billion parameter model. It is entirely open. You can download this model and put it on your server and run your own instance without paying anyone any money except for the cost of running the server. This model called Bonsai 2 came out on September 17th by Prism ML. This is actually a fork of Qwen, which is another one of the Alibaba models. It's a 27 billion parameter model. 98% of the performance of the big Qwen model. It's 5.9 gigs in size and you can run it on a local computer. You can have an Nvidia chip or have a good Mac Studio computer and you can run this insane model on your desktop computer for free. And then the big crazy models, the big closed-source models, Anthropic releases Opus 5.5 on September 22nd. OpenAI Astro comes out with Soul and Luna on September 23rd. Grok 4.7 comes out on September 21st. Meta Muse comes out on September 22nd. Any one of these stories would have broken the internet a year ago and they all happened in the last 10 days. You now have an entire catalog of open-weight models to generate visual information, to do VLA where you can actually instruct it and it can control a robot. You have models far beyond the most advanced LLM from a year ago that are open-weight that you can install and run on your desktop computer. We are past the point of Bernie Sanders put the superintelligence away. It can never be allowed in the real world. This stuff is out. The open-source, open-weight models are free. They are on the internet. You can go and download them and you can run them on your computer at home. I don't know in what world we think we're going to have a police state that's going to come bang down your door, take your desktop computer from you and test it to see if you're running an LLM on your local computer. The efficiency wave is here. And the pacing at which these models are coming out now, all of this stuff happened in the last 10 days. It's just mind-blowing. We're now in this kind of frontier space where things are accelerating. The performance improvements, the cost decline, AI is becoming so performative and so affordable. It is going to be ubiquitous and we are all going to benefit from it. This is not just about Anthropic and OpenAI with the closed world making billions of dollars selling enterprises hosted models. There is so much proliferation right now. So I just thought it was worth taking a step back to recognize where we are because in the context of we have to stop the superintelligence, we have to shut down the data centers, you don't even need data centers to do 90% of what you can do with AI. You can download it on your computer for free today to do what was the most advanced technology in human history less than a year ago. It's all here today. And I thought it was just worth taking a beat to step back and make sure we all recognize that as we get into this debate about these quote labs or corporations. I don't know if it even matters anymore. I think open source is here and I think that the pace of improvement is such that this is only going to drive productivity.
Yeah. And maybe we are seeing the AI wave underway right now. The productivity wave, the productivity boom.
Yeah. And to consumers, they don't care what model they're using. We've spent the last three years geeking out about this. And then Grokbot comes out and then Muse comes out from Meta. And I've been using both of these products. And it's the first time that a normie, a normal person in the world, it's not meant to be derogatory in any way, can get value from AI. If you look at how we all looked at this, running corporations, investing in them, we took a different approach to like, okay, maybe this is going to retire, you know, some positions, maybe this is going to add some positions here or there, but now you can like with Muse connect to everything instantly and actually get real work done in the world if you're a normal person who wants to get the benefit from AI. We will be turning a corner, Friedberg, and I think you laid it out perfectly. We're going to turn a corner, I think, at the end of this year, where moms, our uncles, people are going to start using Muse and Grokbot, which are growing very quickly, to just solve real world problems for them. And they're going to go, 'Wait a second. I could never afford a chief of staff. I could never afford a personal assistant, an executive assistant. Now I get a free executive assistant.' It's going to blow people's minds, Chamath, in the next couple of months when they start using these products. And the bottom half of America in this K-shaped recovery experiences some benefits. Your thoughts on what's happening here with these models? Have you started playing with it? Because you were, you know, originally a technologist. Have you loaded these models on your computer? Because I'm playing with it on my MacBook Pro and it's awesome.
Let me maybe give you the answer by explaining something. So I think what we're seeing is that these models are converging and clustering, which is to say that they're now within margin of error. And so the thing is there's so many of these models that are roughly the same at different price points. So where is the edge? There's still edge and the edge is in the harness that you use to wrap the model. So if you think about it as like you have a model that's like a brain but you need to embody that brain with arms and legs and hands and eyes to do work. That's how you identify a model. Okay. And you make it agentic, that's what that phrase means. And there are all kinds of different harnesses that the industry has invented to make these models more agentic. And there's still a lot of edge there. So at 8090 we have a labs function and we've been ripping and tearing apart all the different models with all the different harnesses just to see how they perform and they are wildly variant in terms of cost and quality. So just to kind of build on Friedberg's point, you have the models that are converging, the harnesses are wildly different and so their performance is all over the map and so now companies and people have to sort of navigate what are you willing to pay for. I sent this tweet to Nick, if you can just put it up here, and I don't know if this is instructive or accurate, but what this shows, and this is the case for Anthropic, but it's probably the case for a lot of the closed models, is you're starting to see this massive revenue concentration, which is a few folks consume all of the highest and most expensive tokens. And I think if you take what Friedberg just showed to its logical conclusion, those folks at the top of this table are going to be under a lot of internal pressure whether it's from their finance teams or whether it's from their CFO or it's going to be from shareholders to explain why as this clustering happens they are not moving down to cheaper and cheaper models. Now, you may choose to go down to cheaper and cheaper Anthropic models, so then Anthropic keeps the revenue, but there's also risk that you may do what Friedberg just said and just go to an open source model and just host it yourself. So, we're in like a very complicated part of the cycle, which is the first version of the AI trade was relatively simple, which is you're just selling tokens, you're wrapping the tokens, you're passing it through, and there was enough disparity that there was value. I think that that's going away. It'll force OpenAI and Anthropic to go up the stack. There is no choice. You can't sit there and serve a token that has diminishing value because then all the subsequent value is getting absorbed and made by people wrapping your intelligence token. You will have to do that work. And so, Jason, that's why they will have to go and do cyber. They'll have to go and do law. They'll have to go and do customer support. All these things that we weren't sure whether they were going to compete, these trends may force them to do that. And I think then that sets up a very interesting setup for their IPO.
Just to back all that up, Sacks, the Frontier Lab corporations, Anthropic and OpenAI, they both released models this week at 50% less token prices. And their IPOs are looking like they're both going to get delayed. Anthropic just targeting a $2 trillion valuation, OpenAI 1.2 trillion. Sam already said OpenAI plans on doing 2027 because of safety concerns. And Anthropic, which was supposed to file and go out in October, the report from the Wall Street Journal is that the IPO will happen in November or may be delayed even more. Here's your Polymarket. Will Anthropic go public in 2026 with our amazing partner Polymarket? Shout out to my guy Shane. Peaked at 96% earlier this month that Anthropic would go public this year, but now it's fallen to 76%. Is this like a cell phone here, Sacks? The leading model companies need to go public to get capital to do their buildout and now they're delaying their own IPOs. Please explain how any of this makes sense. And if you were a major investor in one of these companies or on the board of them, what would you be doing or instructing these founders to do to get these companies to go public and get that capital they need to continue the AI buildout?
Oh, well, I think that we know from our friends that the investors in Anthropic are pulling out their hair about what's happening right now. Forget about the fake whistleblowers who were there for like a few weeks and then left. You have current leadership in the company saying that there's a greater than 10% chance of causing human extinction and their own product is unsolved in this area. So think about the risk factors that's creating. How do you IPO with your own management of the company saying that? Then you've got I think other evidence of I don't know what to call it except corporate schizophrenia. You've got Dario putting out this essay saying we need to pace...
the frontier days before they launch Claude 5.5 and set a new frontier. I mean, he must know when he's writing this essay that they're about to release a product that will extend the frontier. So, at a minimum, it's hypocritical, but maybe it's even worse than that. Then you have them publishing an essay about the biorisk associated with AI and how that needs to be stopped. And then meanwhile, they announced a new biolab in San Francisco, a new wet lab.
They started a lab after telling us that there's a 10% chance of us all dying.
Sachs, let's just pause here for a second. Is this a dereliction of duty as the chief executive officer of Anthropic to sabotage your own IPO? You're supposed to be acting on behalf of your CEO of your shareholders. This to me seems like if we were the board, if the four of us were somehow magically the board of Anthropic, we would replace the CEO. We would put the CEO in the lab and we'd find a CEO who knows how to run the company and not sabotage it. He's literally sabotaging his own company.
I think there's an element of that and I think investors are pretty nervous about giving the founders or Dario specifically super voting shares. There's a story in the information about that that there's an active debate right now about whether to give them super voting share.
Explain what those are, please, and why in this context this is critically important. Our audience may or may not know what those are.
Supposedly, the founders of Anthropic only have about 2% ownership each of the company, which in the grand scheme of things is a relatively low number relative to what other founders typically have at time of IPO. It'll still be an enormous amount of money, you know, tens of billions of dollars, but that is the case. Super voting shares basically say it separates the economic shares from the voting shares in the company and gives certain people the right to control the company even if they don't have the economic ownership that would usually be necessary. It's a pretty common thing. I mean, Larry and Sergey, I think maybe were the first prominent founders to get super voting shares in Google and Zuck. It can be a stabilizing thing for the company because it means that as long as the founders are there overseeing things, they're not going to be subject to, you know, like takeover attempts, things like that. But on the other hand, it requires a tremendous degree of trust in those founders because they effectively can't be removed no matter what they do. And you just have to wonder if in this case that's earned and warranted. I have to say that even for someone like me who isn't necessarily advocating for a lot more regulation, I kind of get nervous about the idea of Anthropic opening a wet lab in San Francisco. I mean, I was great timing. I was thinking about moving back and I don't know if I want to be I mean like can you just put it a little further away? I think we've all seen this movie before.
Yeah. Offshore maybe. I don't know. Put it on an oil rig or something. What I would say is that if I were on the board, I would keep Dario as a CEO. And the reason is that he's clearly demonstrated that he can build a unique culture and position against the otherwise most formidable corporation competitor, which is OpenAI. And he's done that and he's come from behind. And I don't think you should undervalue how hard that is and what that takes. So he's done that and he's built he's built essentially the greatest business ramp in all time. I think the thing that I would probably do if I was on the board is fix what Sachs just said, which is there's now a bunch of incremental liquidity risk to the company. And I think if you take the 20-year view on Anthropic, that corporation needs hundreds of billions of dollars to fulfill their ambitions. And I would solve for getting that as risklessly as possible. And I think there's only two things that you can do. The first is you have to throw everything in and the kitchen sink into disclosures. The problem is that that will make what is an otherwise dense and impenetrable S1 even more dense and impenetrable. Okay? So, you can kind of like superficially cover your regulatory risk. But the way that it actually gets translated in the market is you're just going to have to water down the expectations of the IPO sellers and create a much larger margin of safety for the IPO buyer. And that's effectively how you find a market clearing price for this, Jason, which is to essentially say, and don't bear with me, I'm just giving out rough numbers, right? Even if you think that they're on a hundred billion run rate, what would otherwise in a very clean sheet IPO maybe would have been a $2 trillion market cap, now you know, you're at one or less. And the reason is the hedge funds and the pension systems and the long only mutual fund complexes who have a fiduciary responsibility to their sources of capital will justify all the risks by essentially asking for a lower and lower price. And I think that's what you're going to see. I think you're going to see a much more moderate and reasonable IPO motion here. And it's probably going to clear at a much lower price than anybody thinks. And I do think that what Sachs says is the reason why. But I think it's good for Anth because it clears all this noise. It forces them to just be a corporation and then run the business. And I think that they'll do great. Look, I'll be honest with you. Like I've tried to recruit against Anth. I can't. It's impossible. The comp that they give is incredible. The business ramp is so compelling. It's like when you're in a head-to-head with these guys. I have not won a single bake off for folks. I wish I could say that I did, but I have not. And it's hard for a startup. So, they are a magnet for talent. OpenAI is a magnet for talent. But these other risks are going to weigh on the IPO and the only way to flush them is to just bring the price way down.
Yeah. And Friedberg, when we look at the risk factors in an S1, those are perfunctory. Those are disclaimers. Typically, you get the SpaceX one. Oh, what if Starship doesn't work? What if there's competition, it's kind of check boxes. In Anthropic's, I think we're going to be looking at something totally different, which is, hey, we and our employees are quitting saying this is going to kill humanity. We have massive regulation. We're asking for regulation. And by the way, we we're doing biology work and we're launching a lab. So do you agree with Chamath here that the S1 is going to have an actual risk factors and disclaimers that are material against the IPO, Friedberg?
I think this customer concentration point ties to the earlier comments I made about the proliferation of incredibly performant open-weight and open-source models. And the reason is Anthropic puts out the best models for life sciences today. I run a life sciences R&D organization. We use their models. They're incredible. They're better than other models. And so we want to use them. When it comes to writing code, to writing software to do internal workflows and run operations, we can use other products to write that code for us. And we do. And I think that that's likely the way the market is going to develop. And I think we're starting to see that proof come out in the market. And you're seeing it in this customer concentration point. Extremely high value technical engineering, math, life sciences, those really hard technical problems. You want to have these top tier, top-shelf models, and you're going to pay a huge premium for them. And you're totally going to make money doing it because the value is extraordinary. And this has always been my case about AI. AI is not so much about the value of replacing old stuff. 99% of the value of AI is about enabling new stuff that's never been possible in human history. And I think that's where Anthropic and OpenAI are going to make their money. Separately, I think OpenAI is going to make a lot of money in consumer and Anthropic maybe to some extent as well. But in the enterprise setting, I think the money comes from creating new frontiers, discovering new enzymes, which Anthropic announced this week, that can cure human disease, and developing new technology, new engineering systems, making things that have never been possible to be made before. And I think that's the premium value, and it's the premium price you'll pay for those closed models and that premium model. But that's a different business case than taking all of enterprise separately. I think most of the enterprise applications are going to be run using these open-weight models and code is going to be written with cheaper models and so on. I don't know why you would go to a higher-end model to write code when you can do it for free and everyone in the organization can write code basically for free. And so I think Anthropic's bigger issue is this customer concentration question and is it really a premium product that they're selling in the market and that's where they take the market. That would be kind of where I think the market is headed right now and would be the biggest risk factor. This whole thing about oh it's gonna end the world and whatnot. It's like dude just make sure your product doesn't end the world and you'll be fine. That would be a good first step here like Mark is doing at Meta.
I mean it's an incredible company. The execution has been extraordinary. The ramp of revenue, Sachs, has been extraordinary. But when you start to look at the impact of open source, we had a couple of viral charts come out, 70-80% of the token usage are those dark tokens I mentioned six months ago here on this pod that are not tracked, but some people can track them on routers. Those dark open source tokens are now the majority of tokens. And can I just give you a stat on that, Chamath? cuz what you just said is really important, but there's a stat that I think in the last 12 weeks alone token use has flipped from 80-20 closed versus open to 80-20 open versus closed. I don't think we've ever seen in 12 weeks I don't think we've ever seen a tidal wave of charts in the history of all technology markets. We've never seen anything like this. And that is the biggest risk factor for Anthropic is they were first out the gate to get the enterprise on AI to build tools and whatnot. But as this market shifts to open source and open weights, boom, here it is right here. Look at this.
This is the Vercel chart that went viral this week. So this week 12 weeks, oh my god, crazy.
If you look at this chart, this I think is what blows the lid off the door on what needs to go into these S1s. And that's why I walked through all those open-weight releases at the start of the show or this segment is it's not just that they're there, it's that they're proliferating now. There's so many more of them coming out and the pace of improvement is extraordinary and they're now in VLA for robotics. They're in image generation for image and video. So the open-weight open-source models are now being used for all of the broader AI applications. The premium stuff I will say is still the best for narrow use cases. Yes, for engineering, for highly technical, highly complicated tasks and workflows and problems, solving Navier-Stokes, solving mathematical problems, solving biology problems, that's where these models absolutely perform and people will pay a premium of, I would say, close to infinity dollars for that premium application set. So, it doesn't mean that their market is destroyed. Yeah, it means that we're seeing a bifurcation in the market where the majority of use cases of AI go towards these open source open tokens. And premium models are still going to proliferate. Yeah.
The question then is in the distribution of tokens in these frontier corporations, what percentage are those tasks versus what percentage are fungible tasks to open source? And if the answer is more than 60 or 70%, you have to discount that revenue. If the answer is only 10% and 90% of all of the revenue is being generated on absolute frontier use cases, they're going to be fine and they're going to be off to the races.
Yeah. And but otherwise, it's a thing where you're fighting just people's mis- or lack of education, right? Because as they see their bills, hand it to Sachs here. Yeah. Go finish your thought and then I'm going to hand it to Sachs. No, just move the move the workloads where they belong and save the money.
Yeah. And so Sachs, um I made a chart here before the show here, but here's your um sweet spot for the last 100 days of models, which um Friedberg, you did a good job of teeing up. And what you'll see is like yes, the Clouds and the Astros up in that right-hand corner cost a lot and they deliver a lot. But then you start going down and you start to see Muse and GLM and Kimi and then on the left you start seeing GLM from Zhipu and Mimo and you're starting to see well the Chinese this is all hosted right, Chamath. I mean, it's important to note what you're showing here is the hosted price, but if you run it yourself, the cost on some of these is less than 10 cents for a million tokens. Yeah. So, you'll pick up then the compute, you pick up the bandwidth, all that other stuff. But, Sachs, the issue here to Chamath's point is the vertical language models, the small language models are going to do 80 or 90% of the tasks that many corporations need. And then we get to AI sovereignty. Do you want your super intelligence? Shout out President Trump. From intelligence chat DJT. We need people to use those models so they have sovereignty. So you're not giving your data to the frontier models so that they don't get that tip of the spear super intelligence edge which is why people are disengaging. So your thoughts on maybe this is going to start to impact the velocity of Claude and OpenAI tokens. What does your business sense tell you, David Sachs?
Well, look, wearing my hat as an investor, I'm more optimistic about the frontier intelligence business than I think you guys are. I think that Anthropic and OpenAI right now are a stable duopoly for frontier intelligence because they have a pretty significant lead over all these other companies and they are able to charge a premium for that. I fully understand that the majority of tokens will go to open models or commodity intelligence. However, there is a I don't know meaningful percentage of the market. I don't know whether it's 10%, 20, 30, whatever that will pay this huge premium for true frontier intelligence. There's a lot of customers that either need the best or they just want to know they have the best. You know, they don't want this DIY approach or they could be in a very competitive market. Let's say you're a hedge fund. You can't take the risk that your competitor has a better model than you do. So there's a lot of circumstances I think where they will continue to monetize the frontier at a premium and this is why you're seeing their revenue keep growing even though they're losing token market share. Furthermore, you got to remember that over the next year or so something like 60% of the worldwide compute that's being added is being added for these two companies. So to the extent that compute gets scarce and we're kind of in a compute crunch, just the fact that they've made these huge investments, they're building out so much capacity and they have those economies of scale and remember they're bringing down their own prices very quickly as well. I think that gives them a pretty big advantage. But look, these two companies are on a hamster wheel. You know, the moment where they stop being frontier, they go to zero, right? And we know the frontier is maybe only 6 to 12 months ahead of the commodity portion of the market depending on capability. So, you know, again, if they slip, if they fall off that hamster wheel for 6 months, then they're in deep trouble as a company. And that I think is a central risk factor that's going to have to be priced in. And this is where I think that frankly their government affairs efforts are miscalculating badly. I can see why they they're going for regulatory capture, right? because being on a hamster wheel gets really tiring. They probably think, hm, like, let's try and bake in our moats. Let's try and slow everyone else down as well. But I think they've miscalculated because if they actually get all the regulatory controls they want, if they create this new federal department of AI, it's going to slow them down enough that they will no longer be frontier. Everyone else will catch up to them. Especially because a lot of these open models are being generated by Chinese companies who are not subject to our jurisdiction. And the Chinese have made abundantly clear they are not slowing down. So think about it. They are lobbying for things that could slow them down and knock them off the frontier in which case their business goes to zero. I you know it's hard to understand.
They're flapping the competitors in this race and they're asking hey can you pull us over and inspect the engine, Chamath, and that makes no logical sense. On top of that, Chamath, you have very significant competition not just from the Chinese but you have Jensen and Nvidia. You have also Microsoft, Satya at Google and Musk at Zuckerberg's house. They're all embracing open-source models and they all have hosting now.
Yeah. Can I just go back to what Sachs said which is a really important and nuanced point which I just want to double click on. He said, "Imagine you're a hedge fund and you need the absolute latest and greatest because you are worried that one of your competitors has it." This is a really interesting question because it's about game theory and your P&L. So now you're in this game of chicken with your competitors. You need to use the best because you're afraid that they could use the best and out-compete you. But what is the problem right now? What we know is that you can consume an inordinate amount of tokens, right? We jokingly call it token maxing. That cost is completely not levered or attached to your revenue. It's just not. And so all of a sudden, you have this very weird dynamic where you're like, okay, well, am I supposed to use this latest and greatest thing that's 10 to 20 to 30 times more expensive than a generic thing? That thing isn't tied to my revenues, it's not like I can pass that through, right? So, if a hedge fund only makes N number of dollars per month of profits, there are a lot of scenarios where they can become break-even to unprofitable. Now, take a different example. Let's just say that you sell a fixed good at a fixed price. Yet again, I think you have this example where you could use the latest and greatest and if you're not able to pass those costs through, inflate your cost to absorb the cost of that service, you're in a very tough spot. So, I'm not sure, Sachs, I agree with this because I don't see the pricing power of these companies to both pay for a ton of these super expensive tokens and also pass that through to their customers. And if you can't, they're just absorbing it and you're going to see it in lower margins.
And to build on that, Sachs, I'm going to drop it back to you. If you take Jane Street, very famous trading firm, they've publicly announced 19 billion dollars in cloud capacity contracts. CoreWeave, 6 billion in cloud commitments. They also invested in that company and then 13 billion with Crusoe. They are building their own infrastructure and they're embracing open source. So that speaks to Chamath what you're saying. They're are they hedging their bets? They're going to spend tens of billions of dollars on their own compute and they're going to use the frontier models they seem to when you do the game theory, you know, saying, "Hey, let's embrace our own infrastructure, Sachs."
Well, look, I think when your use cases become more mature and, you know, you can get by with cheaper commodity intelligence, then obviously you'll try and build that out again if you have the sophistication level to do it. I just think it's easy to underestimate how convenient it is just to use the the frontier. And again, these companies are very rapidly bringing down their prices, too. But anyway, look, we we've talked about this. I think at the end of the day that look, there's no question that open-source is a huge risk factor to Anthropic's S1 and it has to be right up there with, you know, the risk that they're going to end humanity or something like that. But again, I I come back to the fact that I think the fundamental problem with this company is that it's schizophrenic. I mean, I think they need a psychiatrist, not a banker. They keep doing things that are hypocritical and oxymoronic. On the one hand, they're saying pace of frontier as they release a new frontier model. They say that biorisk can end humanity as they open a wet lab in San Francisco. They say well their business depends on them staying ahead of the commodity models and they are advocating for a federal department of AI that will definitely slow them down perhaps to the point where they get commoditized. So you have a fundamental I'd say like breakdown happening in the leadership of this company where they are advocating for things that are likely not in their interest. Now there's a lot of people who say it's just regulatory capture and that is true but I think that the reg capture is the government affairs people trying to rationalize the schizophrenia and make it work to their advantage. I'm not sure that it fully computes so to speak.
Yeah. Let me ask you guys a question. What do you think would be the method by which like a ban on super intelligence? Bernie Sanders proposed this bill to ban super intelligence and you know the Dems take the House, they take the Senate and then maybe in 28 take the White House and you end up in a world where this sort of thing is so weirdly political, which it shouldn't be. I don't understand how we ended up in a political party divide on progress. It's they ask for it is the reason they asked for it. No, I there's It's it's so awful and weird that you're anti-progress because of your political party. The whole thing is not objective. It's a bunch of weirdly distorted worldview thinking to try and create an opponency to the individuals that you don't like. But it's very weird. Anyway, my point being even the Republicans, you're hearing murmurs about, well, maybe we should ban data centers, ban AI. So Sachs, let me just ask you, what is the pragmatic path with all of the open-source open-weight models being out there? Is there even a pragmatic path to do what everyone's stating or talking about or Bernie's talking about, which is to ban super intelligence, to stop AI, to turn it off? Is there even a way to do this? Like what would happen if this law passed tomorrow? What do you think would happen is my question.
If Bernie's bill passed tomorrow, everything would stop because the way he defines artificial super intelligence in his bill, you could argue we've already hit those thresholds. I mean, the way, you know, it's basically just saying that models have Yes. at a certain capability level. And I think it's arguable whether we've already reached it or not. And so, it's a very loose definition. And then on top of that, he's got 20-year prison sentences for developers who violate the law. So no one's going to want to take the chance.
So what happened? So think about that chilling effect. Do you think people delete open-weight models off their desktop computers? Do businesses have to go remove code from their systems? Do do all these people lose their jobs?
Listen, let me let me tell you that the Democrats want to do to AI what they did to crypto. They're going to drive the whole industry offshore. They're going to basically drive all the innovators out of the country.
Goes offshore. Goes off. That's literally where I was going with it is like just move your company to Singapore. Move it to Zurich. Move it to a geo cuz that's where people are embracing open source and are embracing super intelligence.
This is literally where my head goes. I'm like, you can't stop AI. You can't just tell people a class of software can't exist. In my head, I'm like, okay, if the US passed a law that said this class of software cannot exist. I would move to another country. Other people would like like isn't that give up their citizenship and move to Singapore? That's the answer. people literally you would be taking.
Did you guys see that Xi spoke at the White House today and he said, "I'm going to invite 100,000 young Americans to come and join China." Yeah. Come and see what we're doing here. Like it's it's a very interesting moment where our people are saying, "Let's stop progress, technological, economic prosperity, the opportunity for everyone in that K-shaped economy to lift themselves up because open source AI enables everyone to increase productivity. It is not AI for the billionaires. It is AI for the everybody. And then we're gonna turn that off. And then meanwhile, you've got China saying, "Come over here. Come and see what it's like over here where everyone gets to use AI and everyone gets our playbook." Friedberg brilliantly stated, "It was our playbook to get the top Chinese scientists, the top European scientists, the top scientists and thinkers and mathematicians in India, in Germany, and invite them to come to the United States." That was our playbook. China's taking our playbook. And then they're going to try to get investment will be the obviously the next shoe to drop here is President Trump. 30 seconds at the United Nations renaming AI to super intelligence.
The United States also totally rejects any attempt to construct a globalist scheme to control for the artificial intelligence being spoken of so much now here and after officially called super intelligence changing the name. The very same people who said we'll all be dead in 12 years because of global warming. These are the same people that are now saying that AI is going to kill us all, that robots are going to attack us.
Well, he had a really good line. We we cut that off too short. He said that we're not going to like basically confer regulatory authority on some globalist institution.
Well, I mean, it's a good framing, right? Globalist and global warming is a way to look at the damage that did. The ring leaders of that globalist institution are Norway and Canada. Did you see like the leaked text messages? There's like a group chat where like the the head of Norway was texting Mark Gurman and he's like, "Yeah, let's do it. We're in." And I just I just read it. I was like, "Oh my god, this is with their Frontier Labs." Oh, I'm sorry. They don't have any. Oh, with their Frontier Corporations. Frontier Corpse.
All right. And then here is General Bessent in the Super Intelligence Army. 30 seconds. would give him his shine.
Imagine these labs came out or one lab in specific a sitting employee came out said there's a 10% chance of an extinction level event but then the labs also said take the liability off of our hands and we will not do that. It is humans who are responsible not the AI the Hugging Face incident the that is responsibility of the OpenAI management not a bunch of agents these labs need to take responsibility for themselves they can slow down anytime they want to.
And finally blast from the past your pal Chamath President Obama is getting in on.
If we are thinking about AI just in terms of how do we cure cancer or get better energy you do that without having agentic AI and having it just roaming free in the internet. The reason you are doing that is because you have to market a product that people will pay money for. That's a misalignment between what our society needs and the commercial imperatives that these companies are facing. Not because necessarily they're trying to do bad things, but because they've got to justify these valuations.
Friedberg, your thoughts here on the three folks here? I know you're a big Obama fan. Go ahead, Friedberg. Get in there. Baseberg. You know, there's like a whole movement now in the subreddits that Friedberg has become based in his recent appearances here on Baseberg. Well, you've revealed your Baseberg. Baseberg is now coming up. Go ahead. Give us your based opinion here. Go ahead. You and Tyler Lance. These words honestly just they made me like emotionally distressed that if he's a leader that people listen to and he doesn't really articulate accurately what's going on. It's sad that we've lost the plot. I think it's sad that we aren't all kind of holding hands saying my god the future is here and we all get to leap forward and we get to bring people up.
