Welcome to We the Builders, special edition of our show for Hill and Valley.
Silicon Valley kind of woke up to the fact that the government can play an outsized role in influencing how we might be able to operate and do business.
I believe that we're in a new Cold War with China that we absolutely have to win. 70 years of warfare has been land-based. Now we're moving into this maritime space. There's absolutely no incentive for an insurance carrier to invest dollars into making you healthy today.
If you want to just focus on deregulation, it becomes us versus somebody else. So, how do you think that the landscape has shifted? We're in a pretty profound moment. There's never been an empire that's been in the late stage that suddenly got a technology like AI. Hardware's cool again, and national security's cool again.
David, welcome to We the Builders, special edition of it. This is a tour-along podcast and we're doing 10-20 minute interviews. Okay. For the show. Um, good seeing you again.
Well, thanks for having me. Yeah.
We did the event back in SF a couple years ago called Building Atoms and back then it wasn't as sexy for Valley folks to be in DC or investing in hardware wasn't as, um, I would say, every firm wasn't hiring a defense partner. Yeah. Right? So, how do you think in the last like, you've been 2 and 1/2, 3 years that the landscape has shifted?
Well, I mean a lot changed with the Biden years. Prior to the Biden years, I think Silicon Valley largely ignored politics. Largely. And people were kind of heads down building their business. They didn't want to get government money. They just wanted the government to leave them alone. And they just wanted to go operate and build their business.
And under the Biden years, I think is when Silicon Valley really felt like it came under attack. All types of businesses in Silicon Valley felt like they were being regulated, restricted, generally attacked by the government. And Silicon Valley kind of woke up to the fact that the government can play an outsized role in influencing, affecting how we might be able to operate and do business. So, then everyone was like, 'Shoot, we got to get involved in politics. We got to hire a government affairs person.' And everything changed.
So, now a lot of companies, whether you're even a software company, hardware, you're not coming to DC to try and make lots of money selling to the government, although some people are. Generally, it's more about like, 'Hey, I want to have freedom to operate. I want to be able to run my business. I want to be able to operate.' It's deregulation, seeking deregulation.
It's yeah, preventing regulation that's going to stop the business or preventing policy changes.
Policy changes. Yeah, so I mean and this is becoming a very contentious issue because, you know, even though technology generally is a productivity driver for the economy, when you have like such a massive productivity gain in such a short period of time as perhaps we're seeing with AI right now, AI has become the perfect acute attack vector.
It's almost like the new climate change, like it's a social phenomenon to hate AI. And to dislike AI, and it's like socially normal to want to attack AI. And so I think there is a real sense in Silicon Valley where people see the benefits of these technologies and how they can be profoundly valuable for the workforce and increase productivity and increase income and increase purchaseability of things, that they have to kind of show up here and tell that story because policy makers are very new to this.
And it's almost like when the internet came around, like no one knew what the internet was going to do in 1992. And that's when Bill Clinton came to office and he made a bunch of changes to make sure that everyone understood that the internet was like a real thing and it was going to make a big change in the world, and here's how, and here's the benefits, and here's why, and then they helped enable that. Right.
And I think there's a moment right now where we're probably on the wrong side of that in terms of public perception and public policy development as it relates to AI.
And then there's all the other stuff that goes on that I think is like autonomy and, you know, driverless stuff, and I mean there's just so much regulation and, you know, everything from drones to driverless cars to biotech. We just did a panel on biotech. That people like everything's accelerating in a way that you have to make sure that the policy exists for you to build a business. Or if it doesn't exist, you're not being stopped and, you know, it's like harmonious to building and not counterintuitive to it.
Yeah. One thing you've been, I think, very, I guess you've been a student of the rise and fall of empires with Ray Dalio. And I was studying the history of the Medici era around the Roman Empire time and the Fuggers around the Austrian Empire times. And the fall of every empire almost looks the same. Just overspending, which you've been very vocal about as well. So, and you had Ray over recently as well. Where do you think we are in that cycle? And one of the topics at the forum was the next American century.
Yeah, I mean there's a big prediction in these cycles around external conflict and internal conflict, which are vectors that we see rising at the moment. Right? So, the prediction in Ray Dalio's book is that you have more internal conflict. We've seen a lot of this, state versus state, red versus blue, you know, city versus state versus country.
And the external conflict. I mean, whether it's Ukraine, China, Iran, these are all expressions of the end of an empire or the late stage, I would say, not the end, but the late stage of an empire that is economically strained because of debt.
So, you know, since President Trump took office, I think we've increased the national debt by 2.8 trillion dollars. And our national debt is now 40 trillion dollars. And the 10-year yield, I think, is climbing to over 5%. So, the government is going to pay, you know, 2 trillion a year just in interest on the existing debt. Right. And that makes it extraordinarily difficult to provide basic services or meet the obligations for retirees and things like social security and all these other.
Meanwhile, we're talking about offer more, offer more, more services, more health care, you know, less taxes, which doesn't quite equate. And so under those challenging economic conditions, you see people say, 'I'm not getting what I paid for. There's theft, there's fraud. People fight each other, and people go on fights elsewhere.' So, that's kind of where we're at now.
You know, every story is written until it's rewritten, and so, you know, this is the story of today. And we're in a pretty profound moment where AI could rewrite the story in a way that we've never contemplated in the past. There's never been an empire that's been in the late stage that suddenly got a technology like AI.
That would allow you to 100x productivity. Right.
Where everyone could suddenly get the things that they're seeking their government to provide to them without using the government to do it, where you could use more productive means to do it through AI tools. Where AI could create new industries, new economic expansion, make things more abundant. So, there's this moment where we're at a very kind of historically interesting crossroads where the United States could, we could see all the energy infrastructure in the world get blown up in the next week or two and we'd be in a really bad place.
And then on the flip side, we could exit that conflict, sign a deal with China, and let AI create an economic boom that we've never seen before, and everyone in the world would benefit from that. And it's like which path does he choose? You know, that's kind of the moment that we're at.
The kick, I guess, like argument a lot of people made at the Winning AI Race Summit that you hosted in July as well. I was there for it, which was that, you know, with AI, maybe there are like productivity gains we haven't seen before and that can offset the 2 trillion a year sort of, you know, deficit we have. But where are we 6 months on? Or I guess...
Well, I would actually say AI's overperformed relative to expectations 6 months ago. I mean, Claude Code and Claude Co-work and Claude Bot, some of the publications in scientific research and discoveries that are being made in silico on nearly every front, I think AI's outperformed because people were like, 'Oh, we're seeing companies spend a lot of money and not get any value.' I think that changed in the last 3 months.
In the last 3 months, I think it became apparent to any company that's using Co-work or tools like that or code tools, say, 'Holy crap.' Like there's a moment where you can see everyone's eyes change when they've actually used some of these tools.
And they actually experience the productivity gains and the cost savings and the acceleration. It's not about cutting jobs at all.
In every case, these companies hire more people because of what they see. In every case. I've not seen a case where someone said, 'I'm firing a ton of people because AI does this thing.' And in every case, it's like AI creates extraordinary leverage on people. And there's this economic kind of moment. And then at the same time, I think there's been a lot of these things that are side quests like Iran and other things that maybe get us into trouble.
But roughly we're on the right track as 6 to 9 months on. I think like if the ball just keeps rolling with AI and we get data center expansion, energy expansion, the economic expansion will be there. It's just so obvious at this point.
And is there also like an...
And by the way, there's all these industries like people don't even appreciate. Like if every human being got one or two robots, like we all own a car. And we take it for granted that we all own a car. Like what if...
You're bullish on humanoids? What if we all had...
I'm huge on humanoid robots. I think that I invested in Figure AI. I'm also like bullish on... Yeah, I mean, I've no comment on that business, but I would say that like each of these companies has the potential to be something pretty extraordinary.
What's the case for and against? Because all sorts of these cases get made for like a human form factor of...
So now imagine this. 20 years ago, no one contemplated the idea that millions of young Americans would be making income living on generating content on YouTube, X and Instagram.
Right, that's fair. Or creating products and selling them on Etsy, Shopify, and maybe eBay was a little bit ahead of the time, but or eBay.
Yeah. So millions of Americans make money creating content or having stores online through Shopify, Etsy, Amazon, eBay, and they're selling stuff to each other. And there's a broad economic kind of mobility that happens when that happens. Because you're no longer stuck working for eight bucks an hour at McDonald's, you can now grow yourself out of that low-wage job that you have.
And that's what those tools, those platforms enabled. I would argue that the robot is going to be the biggest platform we've ever seen for economic mobility.
I guess one near-term example of that is if Tesla enables FSD, like whatever 6 million Tesla vehicles on the road that are there, they're instantly now...
That's possible, but again, I still think you're thinking like fixed number miles driven last century. So now imagine everyone has a robot in their garage. So just like you have a car in your garage, you have a robot in your garage. Your robot can work 24/7 and it can understand language. Right. And you can tell the robot, and the robot, by the way, with AI agents can run a whole bunch of processes offline.
So you can say to the robot, I want you to build a bicycle store for me. And I want you to make bicycles and create an Etsy store and sell the bicycles online. And then make the bicycles and let people pick and choose custom bicycles that they want to buy. So that robot gets to work. And a couple days later, you've got a robot store stood up on Etsy. It's, hey, I build a custom bike for kids. It's $200 for a bike. It's way cheaper than any normal bike.
That individual is now making $100,000 a year with their robot in their garage that they probably bought for 30 grand. What if you could finance that robot? So you pay, you know, five grand, 10 grand a year.
Right. You're going to pay it off in...
And you're making 100 grand in revenue selling your robot parts and you're, you know, you're 50 grand in profit. Everyone will have that opportunity to come up with an idea on what can I do with a robot? I can walk around the neighborhood. The first people that get robots will walk around the neighborhood and be like, do you want my robot to mow your lawn, trim your trees, clean your gutters, wash your windows.
But you know who'll do that? The people that are doing those jobs today. So instead of doing one house at a time, that individual can do three or four houses at a time with his robot.
And they're working 24/7.
And they're working 24/7. So the cost comes down, but it creates economic expansion for everyone and enables economic mobility for everyone. The robot becomes like the new platform akin to what Instagram and YouTube and TikTok and Shopify and Etsy may have been in the past. It's a huge productivity unlock.
So as we see this start to happen, as all these stories come out of small businesses taking off in robotics, that's when I think people will realize the value of this and not focus on job loss from last century's jobs.
And that's perhaps also the case for reindustrialization because if you have some fraction of people buying these robots and like they start producing some stuff, it's like just cheaper to start producing some of this stuff like in America than... Maybe that's the path, but any like reindustrializing was one of the other topics of the conference. Like what are your thoughts there? Where like there are all sides of the argument there on what needs to happen.
First of all, we're behind where we need to be in energy production and we're behind where we need to be in manufacturing capacity. So those are still big laggards relative to I think where we had hoped to be or wanted to be. Still solvable, but there's just a lot of layers of resolution needed.
Just to wrap up, what do you think would need to happen there on that front?
So, you know, you don't want to overcapitalize too quickly because then you inevitably create incentives that don't have a market check on will this actually work. Right. Something has to make money to work. Right. So you don't want to just pour a bunch of money into building factories that will go to nowhere because they're like last century's factories. So you have to allow the market to work.
So deregulation is probably the best thing that can be done in that sense. Like, you know, you can file in California these CEQA lawsuits and stop production of anything or development of any site, any real estate site for anything under CEQA. So those are the sorts of things where I think you need...
