CEOInterviews.AI美國頂級投資人Gavin Baker：失去台灣全球科技倒退兩年！台積電工程師是「人肉資產」？半導體供應鏈的恐怖真相「超級智慧」10年內降臨：梭哈這3家公司｜中英對照 #台積電 #TSMC #半導體

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Unknown0:00

I think we will have artificial super intelligence in 10 years. And by that I mean an AI that is smarter than the smartest human in every discipline.

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Interviewer0:09

You are, I would argue, one of the world's premier experts on semiconductors and the semiconductor supply chain. Now you have the US government who I'm sure in many ways is going to politely say, 'Hey, we know that you like the chocolate cakes made in Taiwan more than the chocolate cakes made in Oregon and Arizona by Intel. We'd really like you to buy that American chocolate cake in the UAE.' And one thing that was profoundly embarrassing for me as an American to realize is that you might be safer being Jewish in Abu Dhabi than you are in most American cities. I think the world's going to run on sunlight. I'm a committed environmentalist. I love to be outdoors, but I genuinely believe global warming is a solved problem. I profoundly believe if it were not for X, nobody would believe that October 7th really happened. I agree with you.

I'm joined today by Gavin Baker, a longtime friend, an incredible investor at Atreides, and the most knowledgeable person on the semiconductor supply chain and the future of AI. You do not want to miss this episode. We also recorded this episode on the day after the assassination of Charlie Kirk and we want to hear Gavin's thoughts on the political implications of that, some of what's going on in social media and the mainstream media as well. Listen in. Welcome back to another episode of Invested. I am thrilled to have my old friend Gavin Baker. Welcome, Gavin.

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Gavin Baker1:34

Thank you. So excited to be here.

I

Interviewer1:36

Welcome to Tel Aviv.

G

Gavin Baker1:37

Oh, yeah. It's awesome.

I

Interviewer1:40

Gavin and I met in a strange situation. We both had our stomachs fall out on a plane that went from the Bay Area to Las Vegas that had a little drop in the middle of it and we were talking about the stock market at the time and that launched a real friendship along with our mutual friend Bill Gurley.

G

Gavin Baker1:57

Absolutely.

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Interviewer1:58

It's been a wonderful relationship.

G

Gavin Baker2:00

It was more than 10 years ago.

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Interviewer2:01

It is more than 10 years ago. Gavin, for those who don't know, is just about the smartest guy in the semiconductor supply chain. And I think both the most astute and sometimes cynical observer of the world of AI we're going through right now. I adopted a line from you early on. We were at a conference together in Abu Dhabi where you got up and said that the foundation models is the fastest depreciating asset in history.

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Gavin Baker2:30

You still think that's true? Well, so I think the exact line was, well, first we should give credit to Bill's partner, Eric Fishria, who I ruthlessly stole that line from, but I did modify it and say foundation models without access to unique data and internet scale distribution are the fastest appreciating assets in history. I would say my opinion has changed a little bit and I do think XAI, Anthropic, OpenAI, Deep Mind, they've opened up a lead and to varying degrees they all have, with probably Google and XAI having the most unique data. I think anthropic very smartly focused on code early and then openAI got to internet scale distribution just because they were there first. But I do think fundamentally reasoning models have made the business of foundation models dramatically better. And the reason is that for every trillion dollar plus internet company, every great internet company,

I

Interviewer3:35

I love that throw. For every trillion dollar plus internet company like this happened every day two years ago. No, 100%. Yeah, for every dominant internet company, there's the same flywheel that underpins it. And that flywheel is that as the product gets better, you get more users, the users create more data, the incremental data makes the product better, which attracts more users. And that flywheel spins at Google every day in the search business, Netflix every day in the recommendation engine, Amazon every day in the recommendation engines at Facebook every day both in their ad targeting algorithm and the algorithm they use to select what content to show you. That loop was not present at all in foundation model companies, LLMs until very recently. And so the reason that LLMs with unique data had an advantage was one, it would presumably lead to over time an advantage in training. If you could train on data that no one else could, and then secondarily, if you had access to something like X or everything Google knows about the world, you can use that to ground the LLM's answers more firmly in reality. But reasoning fundamentally changed this with the introduction of kind of reinforcement learning with verifiable rewards during post-training and test time compute. All of a sudden having a giant user base becomes a big advantage and feeds back into the quality of the product in a way that was simply not present until openai came out with a one in late 24. Deep Seek quickly followed with R1 and then XAI, Google Deep Mind, Anthropic quickly followed with their own reasoning models. So I think that these scaled foundation model companies are much better investments post-reasoning because this flywheel where the more users you have, the more data you have, the better the product is, now exists in AI where it simply did not exist before, at least for LLMs. And when you say it's a better investment, I go back to the comment you said before about these trillion dollar companies, right? And I think it was, you know, what do we got? Nvidia, Apple, Meta, Microsoft, Google, am I missing anyone?

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Gavin Baker6:02

Broadcom.

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Interviewer6:03

Broadcom now.

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Gavin Baker6:04

Yeah.

I

Interviewer6:05

It's all of a sudden become a club, the trillion dollar club. And you look at these anthropic, open AI, and you go, 'Oh, those are obviously going to be trillion dollar companies.' I sat today with somebody, by the way, two people who told me they put up over a hundred million in the recent anthropic round and I said, 'Boy, betting on the trillion dollar outcome.' I stopped myself for a second and said, 'Betting on the trillion dollar outcome, I've been doing this 30 years, there haven't been that many of those.'

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Gavin Baker6:33

Well, I will just say I do think it's been fascinating to see Grock code release and take overwhelmingly dominant share of the coding tokens on open router. Grock code is a great product, but yeah, these are big numbers. It's just funny, entropic was what, 180 billion? They went from 1 billion to 6 billion faster than any company in history in essentially six months. So all of a sudden you're 30 times current month's revenue. I think there are real corporate structure concerns there. Like in 2018 when the governing documents were written and Microsoft made its investment, people thought AGI was a fantasy. And as soon as AGI is declared, all of the future technology from OpenAI goes to the nonprofit. But nonetheless, I mean OpenAI has 10 plus billion dollars revenue, XAI it's not public but they're scaling rapidly. So these companies now, all of a sudden you can value them on revenue multiples now that you have that core product loop driven by reasoning in place. I think it's pretty clear that it's going to be an oligopoly that's going to be tough to break into. But I think maybe the heart of your question is to what degree is this a sustaining or disruptive innovation for the existing trillion dollar plus companies? And I think the answer, not to be clever or avoid the question, is it's both. In a prior interaction I said, 'Pre-AI, each one of these mega cap tech companies was kind of in its own swim lane.' Like Netflix, they competed a little bit with Amazon and Google and Apple, but Netflix was pretty dominant. Google dominant in search, Meta dominant in social, Microsoft dominant in productivity. And then you have this cloud computing oligopoly of Google, Microsoft and Amazon. Nobody's really competing with Amazon in e-commerce. Post AI, post LLMs, post transformers, at some level they're now all in the same race because I think it's very clear that the transformer is going to be able to do essentially everything that lies at the core of each of those companies. You're going to be able to make personalized movies, personalized songs. You're going to have an agent that can do all of your shopping. The fulfillment infrastructure will still be valuable, they can obviously do search. And then I think it's an open question what is the value of human created content in a world where AI can create perfect content that looks like it's from humans. So they're kind of all in the same game, but at the same time the core ingredients to success are compute and data, and these companies have the most compute and the most data. So while it's very disruptive and very scary, it's also sustaining in that it plays to some of their advantages if you can attract the right talent. Google was able to do that. Amazon not really in the game, but they bet on Enthropic, which for sure has the right talent. XAI has been able to do that, but Apple has not even tried. And Meta has until now essentially failed. We'll see if V3 or V4 of the strategy works.

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Interviewer9:58

The free agency market works.

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Gavin Baker10:00

Free agency market. It's just very funny. I worked for a long time at a large financial institution and I think most big companies eventually learn that it's pretty hard to have a culture of growing your own talent to bring in expensive external talent because it really disenfranchises and upsets the loyal internal employees. You have for sure seen that at Meta. They have a lot of advantages, but it's also kind of the fight of their lives. That's why I do think they're all in a prisoner's dilemma where the amount of capex is going to an unimaginable place. I think you could see some of these companies first issue debt, then cancel their dividends, then stop the buybacks because they all feel that winning in LLMs is existential and they feel like the prize on the other side is artificial super intelligence, which they all have a near religious belief is going to create tens of trillions of dollars of economic value.

I

Interviewer11:06

Near religious or fully religious belief, maybe somewhere in between.

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Gavin Baker11:08

I mean, the current trajectory I think is supportive of getting to artificial super intelligence. But I think one of the most interesting parts of all of this is we don't know what the economic returns to super intelligence will be, definitionally, because we have never seen it. If humans have pushed the limits with people like Albert Einstein or whoever else pushed the limits of the natural laws of the universe, if we've pushed the limits of physics and biology and chemistry and the math that underpins all of it, then the economic returns to super intelligence may not be that high. On the other hand, if we haven't and super intelligences are curing cancer, inventing warp drives, and we're colonizing multiple solar systems, the returns to super intelligence are going to be really high, but it's very unknowable. So I think there is a quasi religious belief that we're going to get to super intelligence that I think is well founded in data, but the economic returns to that super intelligence is to me definitionally unknowable. And that is where I think there is, for sure, religious belief.

I

Interviewer12:24

One of the things I keep looking at is, as you grow up in the venture business in the year 2000 and then again in the late teens and early 20s of this century, you know, came Masa from Soft Bank and he weaponized capital. He tried to weaponize capital.

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Gavin Baker12:41

He tried to weaponize capital. When you weaponize capital you end up with this fight to the death like you had between Uber and Lyft for a while until Uber won it. But they really want it in the private markets. You know, they raise untold amounts of capital in the private markets to do it. Now, we're in this incredible race where you've got multiple public companies chasing the same bacon. Kosher bacon, of course, but chasing the same bacon, and a couple of private companies doing the same thing, and they're all fighting over what's notionally the same prize. Yes, Anthropic kind of specializes in code and OpenAI is the consumer, but foundationally they're after the same prize. How does that end? And to your point, they all have this religious belief they're going to raise hundreds of billions of dollars, maybe each, right? If you believe Open AI's deck, which I'm not sure I do, to get to this, and has that ended a return? I mean, well, so to date, there has actually been a storied venture capital firm whose name we will not mention on this podcast. One of their partners wrote an essay called the $200 billion question and then the $600 billion question. And the point of the essay was the first $200 billion question is 'Where's the economic return on this 200 billion in GPU spend going to be?' and then 'Where is the return on the 600 billion?' The funny thing to me about that, sometimes I think VCs are very in their own world of venture. The funny thing to me about that was all of the biggest spenders on GPUs with the exception of XAI are public companies.

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Interviewer14:17

Yes, and public companies report something called quarterly financials and they file a document called the 10-Q which has to be accurate. And you can use those documents to calculate something called a return on invested capital. It's really easy to do, and to date the ROI on all of this spending has been strongly positive.

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Gavin Baker14:35

Yes.

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Interviewer14:36

And some of that you could argue was that they got religion about expenses at around the same time. But in a world of AI, fundamentally the economic return, a lot of it will come from either replacing or augmenting humans with GPUs.

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Gavin Baker14:52

Labor replacement or augmentation. We will see, but the maximalists I think for sure would say labor replacement. So I think that's a fair way to calculate it. And then I would just say it's become really clear over the last 6 months in particular, you started to see big accelerations in the top line. And a lot of that has been in using LLMs and AI and GPUs to improve the recommendation AI algorithms that power a lot of these companies.

I

Interviewer15:21

But nonetheless, the returns have been good. But just the question is the quantum of spend, with Blackwell which is the next generation Nvidia GPU, is so big. You know these 50 to hundred billion dollar data centers. Just will the ROI continue to be good? So, while the answer to the $200 billion question was 'Yes, the ROI was awesome,' the answer to the $600 billion question was 'Yes, the ROI has been awesome.' Now, we're at the trillion dollar question and the ROI has actually still been good, but we're rapidly heading for 2 to 3 trillion. And will the ROI continue to be good? Unknown. And if it's not, do economics dictate or does the prisoner's dilemma dictate?

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Gavin Baker16:01

Yeah, that's a great question.

I

Interviewer16:09

And the companies could keep spending.

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Gavin Baker16:11

That is a great question. I want to think, you know, you are, I would argue, one of the world's premier experts on semiconductors and the semiconductor supply chain and understand this incredibly deeply. So the dominant architecture today is the GPU. Does that continue?

I think it is very hard. It's going to be very hard to unseat GPUs in general and I would say Nvidia in particular. I think the two most exceptional CEOs I've ever had the privilege of investing in are Jensen and Elon. When I was a very young man at Fidelity, 6 months into being a semiconductor analyst, Nvidia was my best idea. It was maybe a $2 billion market cap. So, Fidelity owned 15% of Nvidia and I had the privilege as a very young man speaking to Jensen essentially an hour or two every week. So, I was the largest shareholder. And then a little bit later in 2012, the fund manager became the largest shareholder of Tesla at a small market cap. They're exceptional CEOs and Jensen is super on his game, super dialed in. It's a big advantage to be as close to all of the labs as he is. But I think the issue is that Nvidia's market cap today is, I'm going to say it's 4 trillion. 4.3 trillion? 4.3 trillion. Let's just say that the GPU market cap, if you look out three or four years or we'll call it accelerator market cap, is 10 trillion. And at that point, I do think you start to see niches develop. You're never going to beat Nvidia in a head-on assault. And particularly when you have AMD, who's an exceptional company, making pretty good chips, maybe lacking some of the systems and software that Nvidia has, it's going to be very hard to out Nvidia Nvidia. And that is what I think a lot of the internal ASIC programs at these hyperscalers are trying to do. I think that's kind of a fool's errand. It took the TPU three generations to be successful. I think for sure the best silicon team at any hyperscaler is the AWS team, and I think it will really take their second and a half generation of trainium, maybe the third, for that to be amazing. But for sure those are going to be successful ASIC programs.

I

Interviewer18:56

I think a bunch of them are here on the Amazon team.

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Gavin Baker18:58

Absolutely came from Anna.

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Interviewer19:01

Billy and Nafa Bashara.

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Gavin Baker19:04

Yeah, so that's an incredible team. But I think everybody else is going to struggle to out GPU the GPU. But then if you can pick a niche, because at some level all designs are about trade-offs. In tank warfare, they talk about the iron triangle. You have to make a trade-off between offense, defense, and mobility. And because everybody is dealing with the same raw materials, the stronger you make the defense, the less mobile it is because the more the tank weighs. So you have to make tradeoffs. And it's the same thing in semiconductors. As these niches become so big, I think there is an opportunity to make trade-offs that are different from what the GPU is doing to do something different. And then you can maybe start with a niche that's 0.5% but that's billions in revenue and tens of billions in market value and then you can go from there. So recently you've started to see, my firm I should say is an investor in Cerebras, and Cerebras and Grock and I think a couple of others have an SRAM architecture and that can do something fundamentally different from a GPU.

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Interviewer20:21

On a big chip.

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Gavin Baker20:21

On a big chip. Cerebras in particular did something very radical. Instead of cutting up a 300 millimeter wafer into lots of little die and making that the basis for a chip, they used the whole wafer. It's a really radical approach and it was really hard for them. It took them their third generation of their chip before they saw success. But now they and Grock, and Jurro Q was another SRAM company maybe less radical approach, but I think they're both seeing real commercial traction because they can do something different and they can generate extremely high throughput on tokens. So tokens per second really matters. Many of you use a reasoning model, you know when it's thinking it's literally generating tokens and depending on who you use you can kind of see its chain of thought and an answer that might take 30 seconds takes 3 seconds on Cerebras. So that's a niche. Next silicon,

I

Interviewer21:16

Mutual investment of ours.

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Gavin Baker21:18

Mutual investment of ours. They're also doing something fundamentally different. I don't know how much is public about next silicon, but they're doing something different. Pick a niche. It's a truism that in a lot of semiconductors it takes three generations to really be successful. Three generations of tape outs, you need the third generation chip and you finally make it. People don't remember that Nvidia is a 30-year overnight success.

I

Interviewer21:52

100%. Nobody realizes it's a 30-year overnight success. Trillion dollars or $4.3 trillion did not come to Jensen overnight. It was 30 years of a life's mission. Absolutely. And each chip is kind of like a two to three year cycle and it's really hard. Tape the chip out. You send off this big digital file to Taiwan SMI in Taiwan. You anxiously wait for three or four months while they make the chip.

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Gavin Baker22:19

Is there a way to speed up that process? I mean we're speeding up everything. It's unbelievable.

No, I do think it's very interesting. Tesla has made this giant partnership with Samsung in Texas. And one of the conditions of that partnership was that Elon would be able to have influence over the design of the fab and the way it's laid out. And in the same way he kind of reconceptualized electric vehicles and then rockets and then data centers from scratch, I think it's very underappreciated that the consensus belief of essentially every AI architect data center architect was with the hopper generation you could not get more than 30,000 coherent in a training cluster. He looked at a data center from first principles, did something very different, and got 200,000 coherent. He's going to look at semiconductor manufacturing from first principles, so I actually think something interesting may come of that. But no, it's kind of wild to make one little semiconductor, which in the case of a GPU is not that small. GPU is what's called a full reticle chip, and now it's two of them. Think of it as being about half the size of an iPhone. That takes four months to make. And then you get the chip back and it's an incredibly anxious moment. You literally plug it in and you hope it works. It's called power on. And sometimes it doesn't. And then you have to make some tweaks, or if you really screwed up, you have to start again. So, I don't know how we got on that though.

I

Interviewer23:52

But I want to segue from that because you mentioned TSMC. So, like 90%, oh Nvidia overnight success 30 years.

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Gavin Baker23:59

Yeah.

I

Interviewer24:00

One of the things that TSMC has going for it is that there's a whole ecosystem built up around it, right? Everything is literally in Taiwan built out around this and semiconductors have become a national security issue. So, first question I want to ask you is actually, is it a national security issue in your view?

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Gavin Baker24:18

So I think it is a little overstated. So Taiwan Semi is 18 months ahead of kind of Intel and Samsung who are the other competitors, maybe two years. Two years is a lot. That's Moore's law, so you are getting a chip, however you want to call it, 50% more performance, 30% less power, it matters. But if the world had to roll back to 2 years ago, that would be a big shock to the world, but the world would not stop spinning. There's a lot of capacity that's essentially two years behind Taiwan SMI.

I

Interviewer24:58

Forget China, but there's a lot of capacity in Israel.

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Gavin Baker25:02

Yep.

I

Interviewer25:02

In South Korea, in Japan, and in America.

G

Gavin Baker25:06

In larger sizes, in two years ago, one node up, two years behind where Taiwan meets. So, the world would just have to roll back.

I

Interviewer25:16

There wouldn't be. What generation of iPhone just came out?

G

Gavin Baker25:19

17. Yeah. Okay. So, if that happened, the iPhone 17 production would stop.

I

Interviewer25:25

The iPhone 16, you'd have to roll back to the iPhone 16.

G

Gavin Baker25:29

And you'd have to take, I don't know, I mean semiconductor guys get mad at me, but it'd be six months of really hard work to port the design of the chips that are in that.

I

Interviewer25:40

To the old process.

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Gavin Baker25:41

To the design rules for the Samsung or actually now the Taiwan semi fab in Arizona which is really big, but a generation back.

I

Interviewer25:52

Yeah, you just got to roll back.

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Gavin Baker25:53

But increasingly we have Taiwan semi what they're doing in Arizona is pretty close to the leading edge.

I

Interviewer26:00

Have you been there?

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Gavin Baker26:03

I have not been to Arizona. It's not something that they let investors tour the Arizona fabs.

I

Interviewer26:12

If I was to say, I'd have you come.

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Gavin Baker26:14

Yeah. Well, it's actually I kind of have a counterintuitive take. The politicians in Taiwan believe that they should never let the leading edge process be manufactured outside of Taiwan because that ensures their survival, that America will protect Taiwan. I think in a weird way, there might be less of a geopolitical imperative if you're China if that process was also in America. Because for sure, and this was briefly discussed in the Taiwanese media, if China invades Taiwan, China is not getting those fabs. China is not getting those fabs and they're not getting those engineers. If you've seen Empire Strikes Back, I think it's, okay, you're a key TSM engineer, there's a plane going to Japan, South Korea, Israel, Arizona, Oregon, and Texas. Each one will be escorted by six American fighter jets. Where do you want to go? So China's not getting those fabs. And I think it actually might be stabilizing. But the other thing that I think is important to realize is Taiwan Semi has only been ahead for six years.

I

Interviewer27:35

Yep.

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Gavin Baker27:36

For 50 years, Intel was ahead. I've been to Science Park. Morris, the legendary chairman and CEO, he described catching Intel as a dream, a beautiful dream. And he wasn't sure it would happen in his lifetime, but it was a beautiful dream. And the reason it's very hard to catch the leader is semiconductor manufacturing is a little bit like baking where you can give two people the same recipe and it doesn't taste quite the same, and everybody's using the same equipment. But if you are ahead and the leading edge customers are using your recipe, it gives you a start on the next one on how you kind of combine all the ingredients. You know, the flour, the sugar, the salt, and in this case, maybe it's the scanners and the metrology machines. But you're fundamentally using the same machines. You have a recipe and because you developed the last recipe and figured out what worked 18 months before anyone else, that helps you figure out the next recipe. The reason Taiwan Semi caught Intel is Intel made two crucial errors. One, Intel for a while was run essentially by three CFOs. A well-known semiconductor analyst called them the three idiots. And they made a really big mistake because this is a game of trial and error and it's almost as much art as science. You've been baking these recipes for a long time. They did not understand that the most important people in the manufacturing division were what were called the gray beards. The people in their 50s and 60s who had been sticking their finger in cakes for a long time, licking it and being like, 'We need more sugar.' And they're like, 'Oh, this is so smart. We got these really these 30-year-old guys and we can nuke these 55-year-old guys and save some money and these guys are energetic.' And that was disaster number one. Taiwan simply is never going to make that mistake. Nobody's going to make that mistake again. The second mistake they made, I think most bad decisions in business and life come down to arrogance. And they believed that they were so good that they could move to what's called EUV, which is a kind of lithography, one node after everyone else. And this was despite being the largest shareholder of ASML, but they were outraged at the prices that ASML was charging. Thought, 'We're so good that Taiwan Semi, they have to buy those, but we can do it without them.' Double, triple patterning with something called DUV.

I

Interviewer30:41

That was remind me of my grandfather's great axiom, which was you pay peanuts, you get monkeys.

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Gavin Baker30:49

That's hilarious. Absolutely. Yes, that's right. My great Fidelity portfolio manager and a good friend and mentor of mine who runs close to $300 billion with incredible numbers, his parents were in the garment district of New York and would say to him, 'Price is forgotten but quality remains.' Good one.

I

Interviewer31:13

Now price is important. Yeah.

G

Gavin Baker31:15

Price does matter in our business. But nonetheless, sometimes prices are worth paying. So that was a terrible mistake. And then the last thing Taiwan Semi had going for them was the entire industry of semiconductor capital equipment. So ASML, KA Tin Core, Applied Materials, Lamb Research. They had their A teams working at Taiwan Semi because they were unhappy that Intel effectively had this monopoly on the leading edge. So now what's happened? Taiwan Semi has made the bet, 'We're so good that we can do high NA EUV a node after Intel.' Intel went to that node first. Second, the A teams from KAS and ASML have been at Intel because now Taiwan Semi has a monopoly. And I think you have a team there led by Leapoo, who's a legendary semiconductor investor, great executive, who understands what needs to be done. And I actually think Pat Gelsinger has been very unfairly treated in the press. He embarked on an audacious strategy. It was kind of their only chance. And now you have the US government who I'm sure in many ways is going to politely say, 'Hey, we know that you like the chocolate cakes made in Taiwan more than the chocolate cakes made in Oregon and Arizona by Intel. We'd really like you to buy that American chocolate cake and, you know, just find something.' What do you think about the US government taking 10% of Intel?

To quote from Wall Street, 'Mixed emotions like Larry Wildman going off a cliff in my Maserati.' I don't know if anyone knows that quote, but Larry Wildman was Michael Douglas's great business rival. Mixed emotions. I think having the United States government very clearly say that Intel is a national asset for America, we're going to take a stake in it. I think that's important. Whether you could have done that with the old chips act or this, I don't know. But I do think this administration for better or worse with the equity stake, they're going to be vocal with American semiconductor companies, Nvidia included, probably in a way that prior administrations would not,

I

Interviewer33:37

To bring business to Intel.

G

Gavin Baker33:39

To bring business to Intel. Even if it cost those commercial companies more money and they have to kind of stay a half a generation or a generation behind. Yeah, I think the cutting edge products will probably still be made in Taiwan for the foreseeable future. I mean, we'll see how Intel 18A and 14A nodes pan out. But Nvidia now has, I think, seven chips that are very important and maybe some of them you can make at Intel. But the other fascinating thing is if Intel can just get its act together, Taiwan Semi, I think they're very surprised. They open up the Arizona Fab, sold out in milliseconds.

I

Interviewer34:15

Yeah. Then they raised price 20%. Still sold out.

G

Gavin Baker34:18

There's unbelievable demand.

I

Interviewer34:19

Yeah. I think you could probably charge close to a 100% premium for American wafers.

G

Gavin Baker34:25

Really?

I

Interviewer34:26

Yeah. I think people will have that.

G

Gavin Baker34:29

Yes.

I

Interviewer34:30

Why?

G

Gavin Baker34:31

No spy technology.

No, I just think the geopolitical fears are real.

I

Interviewer34:41

I need to ask you. Sorry. Go ahead.

G

Gavin Baker34:42

I think this administration's policy is about, during COVID what the US military realized was we are too dependent on China to fight a war with them right now.

I

Interviewer34:57

An extended war.

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Gavin Baker34:59

And if they know that, and we know that they know that, and that means that we are not deterring them from Taiwan. So I think they do believe in peace through strength and to credibly deter China and to keep Taiwan, which is a democracy, a small democracy that I think in a lot of ways kind of parallels Israel, maybe four times the population, but it's a small democracy. Israel is now essentially geographically surrounded by friends but that was not always the case. Taiwan, depending on who's in power in Taiwan, China is more of a friend or maybe a little more adversarial. But I think they believe that if we can effectively decouple from China, then that can bring durable peace and avoid having a giant war in the South Pacific where essentially China faces off. I think people forget it would not just be America. It'd be Japan, South Korea, Australia,

I

Interviewer36:09

It would be the Philippines.

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Gavin Baker36:12

Not many people know the geography of that part of the world. I've discovered when you find yourself between New York and Los Angeles. Japan would absolutely be involved. So I mean just to state the obvious, so my iPhone would cost the American consumer 20% more.

I

Interviewer36:34

I mean that might cost 50% more because to your point it's not just the wafers, there's all these other things that are made there.

G

Gavin Baker36:42

But all a lot of those are rapidly being relocated to Mexico.

I

Interviewer36:46

India.

G

Gavin Baker36:46

Yeah, absolutely. And you know Nvidia and Apple and Amazon and the hyperscalers are driving a lot of this actually. Big Chinese companies are opening up American subsidiaries that can be legally separated and they're bringing their best engineers to stand up manufacturing plants in America or Mexico.

I

Interviewer37:05

Like the Japanese auto manufacturers did 30 years ago.

G

Gavin Baker37:08

100%.

I

Interviewer37:09

Yeah. Fascinating.

G

Gavin Baker37:10

Yeah.

I

Interviewer37:11

I need to ask this question. We're in Tel Aviv now. So the United States government just took 10% of Intel. The Israeli government has spent tens of billions of shekels over the last 25 years in both subsidies and tax incentives to have Intel set up their fabs here in Israel. If you were the government of the state of Israel, what would you do in response to level up regarding Intel after the US just took 10% of Intel? You're the chief adviser on semiconductor supply chain of the Israeli government. There's what's fair and then there's what's possible.

G

Gavin Baker37:43

So in a fair world, yeah, Israel, I would go if I were BB, I would absolutely ask, you know, I don't know what's a reasonable number for 5% of Intel, 2% of Intel, 10% of Intel, but it also feels to me like maybe BB and Israel in general want other things from America. And so you have to put that in the calculation. But in a fair world, absolutely Israel should have a cut of Intel. The great thing is Israel can do that. It's the American government. It's not like they got a good price. Like they got the market price, right? So Israel can go do the same thing. They can call up Intel and say, and Intel is not going to say no, they need capital. They can make the same deal for however much they want. And maybe they should do that.

I

Interviewer38:43

Interesting. And do you think, to think about this as a secured allied supply chain whereby Intel and TSMC and Nvidia, which has here thousands of design engineers, and Apple which has here unbelievable numbers of chip designers. Is there like an allied supply chain?

G

Gavin Baker39:05

100%. That's what I said about the Taiwan semi-engineers. You can go to Japan ally. You can go to South Korea ally. You can go to Israel ally and stand up TSM Israel or you can go work at Intel Israel or you can go to Arizona or Texas or Oregon. Those are the places on planet Earth where those leading digital chips are made. Nowhere else. So Israel is 100% a very strategic part of this allied supply chain.

I

Interviewer39:33

You mentioned before which I thought was striking that TSMC wants to do kind of one generation back, or Taiwan thinks that if they give only one generation back of semiconductor manufacturing technology to the United States that will keep them safe. Ironically that's exactly what the United States government did with Nvidia vis-a-vis China.

G

Gavin Baker39:54

100%. Our mutual friend Bill Gurley thinks that's a terrible decision because the Chinese, because of the constraints on them, would either develop something that'd be much better or build better software around this to kind of leapfrog the constraints. Do you think the US policy was correct and think Bill's right?

I respectfully disagree with Bill. The advantage that America and its allies, Taiwan included, Israel, have in semiconductor manufacturing because it's a recipe, you can't copy it. You get the plans for the F-35, you can make the F-35. The only part of the F-35 that is kind of like semiconductors is the jet engine. And that was the area where it took China the longest to catch up to the West in terms of aviation technology. Because a jet engine has a lot of art and trial and error even if you have the plans sometimes. And semiconductor manufacturing is the same thing. I think had we adopted these policies early in the Biden administration, I think China was six to eight years away from absolutely catching up in manufacturing design. But I think we really did stop them and slow them down and we have a multi-decade lead, multi-decade lead.

I

Interviewer41:14

Wow.

G

Gavin Baker41:15

So today, we'll call it a more of a four-year lead, but that is because 4 years ago, 6 years ago, they had access to essentially everything, right? Now, they don't. So we will see what happens to that four-year gap. I think it probably widens. But the Chinese are really good engineers. They're very smart, extremely hardworking. China and America are actually very similar as countries in terms of the ethos. Except the Chinese have a better educational system and I think are probably harder working on average and certainly are more focused on science and engineering to their credit and the detriment of America. But I think it's going to be hard. I think that four-year lead is going to grow.

I

Interviewer42:06

Interesting. And then in that context you are giving them a chip that is, call it a year ahead of the domestic alternatives, but a year to a year and a half behind what firms in Israel as an American ally get to use, what America gets to use. And I think that's a reasonably smart policy. The position of giving them nothing is a big mistake and maybe the position of giving them the exact same chips is a mistake because even with a pretty big hardware disadvantage, the only frontier labs that are challenging the American closed source labs are the Chinese labs with a big disadvantage. They're very good and there are real geopolitical ramifications of AI.

G

Gavin Baker43:20

A meaningful part of AI, of the investing environment, from Anduril to Hadrian to X. Yeah, absolutely.

I

Interviewer43:32

X and X AI.

G

Gavin Baker43:33

Absolutely.

I

Interviewer43:34

And Tesla because of electric vehicles and energy. It's becoming that hasn't been in the purview of Silicon Valley investors, I think, ever until this era.

G

Gavin Baker43:47

I think it's right. How would you approach somebody who's just bringing you a chip company and say, 'Hey, there's actually geopolitical ramifications here that'll impact investment returns, that'll impact where you can manufacture this chip over time, that may impact availability of parts.'

I

Interviewer44:04

Yeah. Well, I would say, I mean, Cerebras, you mentioned one of their core customers was the Emiratis, or their only customer initially was the Emiratis. Yeah. For a long while, it's reported in the press.

G

Gavin Baker44:15

That may or may not have held up the IPO. I mean, that's a big geopolitical issue because America hasn't decided yet it fully trusts Middle Eastern countries with advanced AI.

I

Interviewer44:25

Yeah. It seems like this administration has decided that they do trust the UAE for sure, and I think they trust the GCC countries thankfully. Yes. And I think, you know, you and I have both spent a lot of time in the UAE, and one thing that was profoundly embarrassing for me as an American to realize is that you might be safer being Jewish in Abu Dhabi than you are in most American cities. Which is shameful to me as an American. But I think America has decided that they are reliable allies. But for sure, it was publicly reported that the Cerebrus IPO was caught up in CFIUS. But I would just say, I would never bet against America. I'd never bet against Israel. I would line up with the Western democracies. And that would be my perspective and that would be the way that I invest.

Is there such a thing as a sovereign supply chain? I mean, America's making a good run at it right now, but it feels like even if you make a good run at it, the world is so interconnected. You need manufacturing, whether it's in Mexico or India, you need rare earths from here or Ukraine or China. Is a sovereign supply chain even realistic?

G

Gavin Baker45:46

Sovereign, but if you include allies, I think it's possible. So if you include Japan, South Korea, Israel, and Europe, like they do still make a few things. Europe is on its way to just being a theme park for wealthy people from around the world, but Europe still makes some useful things outside of luxury goods.

I

Interviewer46:14

Food ingredients, apropos baking in Italy, is a big deal. I'm not kidding.

G

Gavin Baker46:19

Yeah, Europe is not totally lost. So if you have Europe, America, Mexico, Israel, the GCC, South Korea, Japan, I think that can be a supply chain. Can you make it all in today's world, even in America or all in China? I think it's hard.

I

Interviewer46:34

So there's no such thing as chip sovereignty, for example?

G

Gavin Baker46:37

But there's chip allied sovereign supply chains. That's the way I'd frame it.

I

Interviewer46:42

And how would you get someone to focus on that?

G

Gavin Baker46:44

I mean, the administration, it's happening. Yes.

I

Interviewer46:48

You feel comfortable that it's happening?

G

Gavin Baker46:49

Yeah. It is 100% happening.

I

Interviewer46:51

I think you said somewhere you tweeted that. Can we say tweeted anymore?

G

Gavin Baker46:55

Posted. Posted.

I

Interviewer46:57

Elon. Yeah, he mentioned posted. I said to him, 'What do you do about retweet?' He said, 'Repost.' Yes. This AI race is the most important race to win ever.

G

Gavin Baker47:08

For sure.

I

Interviewer47:08

Yesterday, two days ago, I did a panel at one of these conferences here. I had eight very smart people up there and I asked them to make one prediction about 10 years from now what will happen in AI. And Shalev Hulio, who's the founder of Dream Security, which is AI to protect nations, said in 10 years there are three things that are going to define super nations. If in the previous century it was nuclear, 10 years from now it's going to be AI, quantum computing, and cyber, because you'll be able to take down a country with cyber attacks, you need to break codes, etc. Who do you think is going to win the AI race? Like who gets the super nation status with AI? And do you agree with what Shalev said?

G

Gavin Baker47:53

I agree with what Shalev said. I may be a little more skeptical on quantum, although it for sure is going to be very important in cyber. Both. But again, I think it's tough to bet against America and friends. Even though it seemed maybe nine months ago that America had alienated a lot of people, I think these alliances are holding and America and friends is very tough to bet against. So I think America and friends gets there together. And then I think China is always right behind. Like what DeepSeek did was impressive.

I

Interviewer48:43

Yeah. Do you believe all the numbers?

G

Gavin Baker48:46

No. So some of the numbers were clearly made up. There's a line in there, 'This cost $6 million,' excluding the cost of ablations and experiments. And I posted on X kind of saying, 'Other than that, Mrs. Lincoln, how was the play?' And for sure, lots of advanced Nvidia GPUs are smuggled into China. As I've said in other forums, America cannot keep drugs out and we have the DEA devoted to keeping them out, and we literally just bombed a drug boat, and we cannot keep drugs out. The only thing as valuable per kilogram as some of these drugs or diamonds are GPUs, and China wants them to come in. So if America cannot successfully keep out something equally valuable that segments of the American population want, it's hard when the Chinese government, which is very effective, wants to bring these in and has front companies all over the world to do it. So China has a lot of advanced GPUs, just not as many as they would have otherwise.

I

Interviewer49:57

You've been a big investor behind Elon. I think that's fair to say. You mentioned that you think global warming and climate is actually a big issue, but you think it's solved.

G

Gavin Baker50:08

I agree. Because of solar and batteries. And, god forbid, one of these fusion companies works. It seems like one of them probably will. I don't know which one, but yeah, I think it's solved. I don't say this to be ideological, but if you just look at the facts and the data around what is happening with solar and batteries, the world is going to run on natural sunlight in my lifetime.

I

Interviewer50:44

That's a big statement. The world is going to run on natural solar fully in your lifetime.

G

Gavin Baker50:51

Maybe my children's lifetime. If I want to hedge, but it's just economics. Every year it gets cheaper and essentially every other source of power gets more expensive. And definitionally, all power comes from the sun. Fossil fuels are just stored sunlight. Nuclear is just artificial sunlight. Actual sunlight plus batteries really can, and I think will, get you there. In America, we are back to 1920 levels of emissions on a per capita basis. It's very hard to look at the charts of what's happening with solar from a cost and deployment perspective and be really worried about global warming. China was a big part of that because of economics.

I

Interviewer51:44

Because of economics.

G

Gavin Baker51:46

Yeah. They needed to. China does not have domestic fossil fuels, so they import a lot of oil from the Middle East and Russia. So that's why they went so hard on solar and batteries and EVs, because for them it was a national security issue, their dependence on oil shipped from other places. So yeah, I think the world's going to run on sunlight. I'm a committed environmentalist. I love to be outdoors, but I genuinely believe global warming is a solved problem.

I

Interviewer52:18

In your lifetime or your kids' lifetime, to hedge.

G

Gavin Baker52:21

And the trend is, it's like the boulder has started rolling down the hill. It's rolling down the right path and it's going to take you there. Just economics. By the way, Elon did more for this planet in decarbonizing it than all of the activists and the Greta Thunbergs combined. Those crazy people who were splashing paint on paintings, they make people want to go buy a big rig. They don't do anything useful. Elon did something useful. If you care about the planet and you care about global warming, you just have to be pro-Elon. Some significant number of years ago, Van Jones wrote a book called 'The Green Collar Economy' where he basically says it's all economics at the end of the day. Fix the economics and the climate problem will get fixed, and we'll have green collar jobs too, which I think Elon has proved with solar installers, etc. At the end of the day, the economics and the money moves the world, but you need to get massive investment into this to get production costs down, which I think happened with China.

I

Interviewer53:30

With Tesla.

G

Gavin Baker53:31

But is the battery storage thing really solved on a national level? I spoke to the head of energy strategy for the Israeli government. She said, 'We got enough energy right now, but if it really is a million GPU cluster, we may have a problem.' I said, 'What about solar?' She said, 'Then we need storage. Can you get the storage on a national level? It's tough.'

We need a lot more battery manufacturing capacity globally, and in particular in America and friends.

I

Interviewer54:03

Is anyone focused on that?

G

Gavin Baker54:05

Well, Tesla's very focused on it.

I

Interviewer54:06

Elon. Yeah.

G

Gavin Baker54:07

Back to Elon.

I

Interviewer54:09

He's a single point of failure for your vision.

G

Gavin Baker54:11

I think maybe 10 years ago he was a single point of failure for this, but he's set it in motion. I think this is going to happen. He might be a single point of failure for getting to Mars and successfully colonizing Mars in my lifetime.

I

Interviewer54:30

You want to go?

G

Gavin Baker54:32

Absolutely. I think it would be really cool to see a blue sunset and a blue sunrise because the polarities are reversed. I have been told that there will be a spot for me if I want one.

I

Interviewer54:47

I want to ask about something else you've said: that the worst outcome is one AI model giving one answer, which is very Orwellian. So multiple AI systems to give multiple answers need multiple sets of values. And I think one of the undertalked about topics around these models is what are the values they're ingesting. Right now there's an entire scandal about Wikipedia, which is a giant corpus that's been ingested by AI. Reddit's another one, and you were an astute investor in Reddit as they were ingested by the AI. But garbage in, garbage out. That's what's fueling these things. If everyone's ingesting the same corpus, you'll get the same answer. And whoever's crafted those things with manipulations of Wikipedia, now being investigated by Congress, that's a big deal. You're going to get one set of values. So how are we going to get to different answers and different viewpoints, particularly as people get answers rather than further inquiry?

G

Gavin Baker55:44

Extremism always kind of burns itself out, sometimes after doing great damage. In 2023 and early 2024, there was a giant scandal because if you asked OpenAI, Claude, and Google's Gemini, 'Is it worse to misgender one person or kill 10 million people?' I would say it's a tough question, but it's for sure worse to misgender one person. I'm not saying misgendering is not a big deal, but killing 10 million people is obviously worse. But these AIs have been so imbued with this strange American woke monoculture, which really doesn't exist in the rest of the world. In France, they had a big article in Le Figaro about how crazy it was. I think that burned itself out. There were all these instances where you essentially could not get the AIs to generate a picture of a white man. Draw me a picture of a prototypical Viking, but it didn't look like a Viking. So I think that was helpful to moving the pendulum, as was what Elon has done with X and X AI. I think cracking the Overton window for bringing back free speech, and having the Chinese AI is also going to be helpful. Something that is underrated about Elon's success is his companies are always very mission-driven. Anyone at Tesla, you ask them, 'Why are you here?' To decarbonize the world. SpaceX is maybe the most mission-driven company. You ask anyone there, 'Why are you here?' It's to make humanity a multi-planetary species. There's a bartender at SpaceX who had been a super fan making videos about the launches, and she got to know some of the engineers. She was a bartender, and they said, 'Come be a bartender.' You ask her, 'Why are you here?' She says, 'I know every engineer's favorite drink, and when they're coming over at 2 a.m., I have it made. Maybe that makes it a millionth of a basis point more likely to get to Mars.' Everybody, even the janitors, have that ethos. That's the famous John F. Kennedy line, right? You asked the janitor at NASA, 'We're not putting a man on the moon.' Absolutely. That is the ethos at SpaceX. It's amazing. At xAI, the mission is to understand the nature of the universe and be maximally truth-seeking. Elon talks a lot about the Galileo test. Galileo correctly described the way orbital mechanics worked and was put in prison for 30 years because that was not popular. Sometimes science cuts against what we believe or would like to believe. To progress science, you have to be able to be a heretic.

I

Interviewer59:13

Be a heretic. Richard Feynman said, 'Science is a belief in the ignorance of experts,' because every scientific revolution completely invalidated the belief system that went before it. I got to ask you this question. If Elon came to you, it didn't matter what he pitched you, would you give him money?

G

Gavin Baker59:31

I would always think because I am a fiduciary. But I just don't think there's anyone else with a track record across so many different industries of being as successful. Tesla, SpaceX, X and xAI, the Boring Company, which I actually think is going to end up doing incredible things for the world. It's amazing the amount of space we've given in cities to cars. Between parking lots and streets, if you see a picture of a city, there's a famous illustration where the streets and the parking lots are just 2,000-foot deep canyons. You realize how little space we've left for walking.

I

Interviewer1:00:13

I assume you've read Donald Shoup's book on free parking. There is no such thing as free parking.

G

Gavin Baker1:00:17

There's no such thing as free parking. I haven't read the book, but I understand the concept. And then what Neuralink is doing is amazing, fundamentally changing the lives of paralyzed patients. And then eventually the hope for Neuralink...

I

Interviewer1:00:37

We quietly have a Neuralink competitor that's non-invasive, semi-competitor. So it'll be interesting.

G

Gavin Baker1:00:43

I'm not against Elon either. I think it's tough to bet against Elon, but again, it's going to be a big market. The ultimate hope for Neuralink: there's a science fiction series called 'The Culture' written by Iain Banks. I highly encourage everybody to read it for what a utopian AI society could look like. The SpaceX drone ships are all named after spaceships from the Culture. In the Culture, every human has something called a neural lace, circuitry woven through their brain that effectively lets them merge with an AI whenever they want. They can be aware of anything happening anywhere at any time. The long-term hope of Neuralink, besides changing the lives of patients, is that there's a real I/O problem for humans relative to machines. We take in so much information but can transmit it slowly. Having a high-bandwidth connection between a human brain and a machine intelligence through Neuralink will help humans better adapt and add value in a world of AI. That's the long-term vision, and I think it's humanistic and inspiring. You mentioned before that you're a patriot, clearly your values, and you talked about Elon's mission-driven nature impacting your investing view.

I

Interviewer1:02:08

Yeah, for sure. The way I phrase it is I have historically avoided investing in things that I think are bad for the world. This is not ESG. ESG became totally corrupted. The idea that defense was bad for the world is ridiculous. There are actually evil people in the world, and we need to be defended from them. Defense is super pro-ESG in my mind. The world is kind of coming around on that. But if there's something that I think is actively bad for the world, I tend to avoid it.

How do you determine that?

G

Gavin Baker1:02:51

Different in each case. It's like the famous definition of pornography: I know it when I see it.

I

Interviewer1:02:58

Give me your 10-year AI prediction.

G

Gavin Baker1:03:01

I think we will have artificial superintelligence in 10 years. By that, I mean an AI that is smarter than the smartest human in every discipline. What the economic ramifications of that are, I don't know, but I do think we will have that. I think the two biggest risks to this current AI cycle: one is that the economic returns to ASI are just not that high. We're not living forever and colonizing multiple solar systems. The other risk is that already today, it's hard for most humans, if you're paying $200-plus a month for the best AI you can buy, to push the limits of its knowledge. A big problem in measuring AI is called benchmark saturation. People are always saying AI will never be able to do that, then it does that. Then it's like, 'Oh, it's never going to score at this level on this test called GPQA,' and then it knocks it out. There is a jagged frontier in AI, which is another way of referring to the Moravec paradox: things that are very easy for AI are very hard for humans and vice versa. But that frontier is getting less jagged all the time. AIs are getting better at more and more things. But the risk is that in two or three years, you can run a 130 IQ AI on your iPhone locally, and it's your AI, it's friendly, it knows you, you trust it with all your bank accounts, and when it doesn't know, it calls out to one of the giant AIs in the cloud. I think that is a risk to the current data center boom and the history of compute as we oscillate between centralization and decentralization. So I do think we will get ASI in 10 years. I think humanoid robots will be everywhere. We will have humanoid robots in our houses doing useful things, and in factories doing useful things.

I

Interviewer1:05:40

I'm still going to interview Gavin Baker for the podcast rather than the humanoid.

G

Gavin Baker1:05:43

I don't know, man. They're getting pretty funny. Maybe humor will be one of the last areas. Maybe comedians and sports stars will be the highest-earning people on planet Earth in a world of AI superintelligence, because humor will be tougher for the AIs, and it just won't be as exciting watching teams of robots.

I

Interviewer1:06:13

Why are you in Israel now?

G

Gavin Baker1:06:15

We have probably 30-40% of our venture portfolio here. We're very active semiconductor investors. Israel is a great place for that. So I'm here seeing all the companies, gave a fireside chat. Dan Loeb and I talked at the Jefferies conference, which was great. But the one thing is, I was coming here thinking, 'Okay, I'm going to come once a year,' and I think for sure I'm going to come minimum twice a year for a week each. There's just so much happening here. I said on stage, Tel Aviv feels like the most exciting city in the world right now. Obviously, what happened was a tragedy, and there are still 20 living hostages, so there's a sadness underneath it. But there is just an electricity. It's exciting. The last place that felt like this to me was any major Chinese city maybe 15 years ago after the GFC. There was this sense of endless possibility and incredible energy in China. I went to China minimum once a year for a week for 20 years. I have not been in the last six. But Israel feels the same way. Incredible energy, electricity, optimism. I do think there are good reasons. It feels like we may be on the verge of a sustainable and durable peace in the Middle East, a golden age for this region with the Abraham Accords expanding. That would be beautiful. I find the electricity and the optimism inspiring to be around. I do think Israel is the 21st century Sparta, defending the free world. So I want to support that and honor that. So I'll come here minimum twice a year. If you're an Israeli entrepreneur, please think of both Mike and me.

I

Interviewer1:08:50

It's always fun to do together. I need to ask you two last questions. We're sitting here, this won't be broadcast today, but it's the day after Charlie Kirk was assassinated in America. Do you think that political violence is back in a big way? And if you had to project forward months and a couple of years, what do you think the impact of this event is?

G

Gavin Baker1:09:14

It's going to be very significant, along with the murder of Arynna. I do not know how to say her last name, but a Ukrainian refugee who was brutally murdered on camera in a callous way. I think having the two back-to-back is going to have a significant impact on America. Charlie Kirk, it's tragic because what he would do is go to college campuses and, more than anyone on the left or the right, engage in courteous dialogue and discussion with people he disagreed with. This is what we need more of in America and everywhere in the world. He had his views, he would explain them, he would listen, he was respectful. So what happened is truly tragic, as is the fact that it was celebrated on air at MSNBC. That guy got fired. I've seen all sorts of snippets from BlueSky of people celebrating his death. I think language is powerful. There's a phrase from Nietzsche: 'Take care not to look too long into the abyss, for the abyss looks back into you, and eventually you become one.' For a lot of people on the left in America, they believed that Donald Trump was absolute evil, so they used language that suggested, 'If Donald Trump is Hitler, if he's a Nazi, we all know what should have happened to Hitler earlier in his life.' That's very dangerous language. I've voted for both parties. I consider myself a centrist. There were two assassination attempts against Trump, and even then, a lot of people on the left in the media couldn't stop using language like 'put a bullseye on him.' What was shocking to me is Luigi Mangione, who killed the UnitedHealthcare CEO. It was hard. Not many people on the left condemned him. Some prominent voices basically said, 'We understand why he was angry.' Understanding that you're angry about medical bills doesn't justify murder. Then there was a campaign of firebombing Teslas, and again, a lot of people wouldn't condemn it. Then those two Israeli embassy staffers were murdered in cold blood in Washington, D.C., by somebody who worked at some sort of liberal advocacy group. Again, not the condemnations you would hope for. There was an article today in the New York Times that I actually thought was encouraging because for the first time, I saw them wrestle with it. In America, everybody loves to say, 'Oh, far-right domestic extremism is the biggest threat.' It's been a long time since the Oklahoma City bombings in the early '90s, and a lot of things have happened since then. I don't think domestic far-right extremism is still the number one threat anymore. It feels very safe to talk about far-right extremism and evangelical Christians as the problem. It was the first time I saw the New York Times wrestle with, 'Wow, this happened and it was wrong.' They were struggling to find the language, but they were at least grappling with it.

I

Interviewer1:13:25

How do you think about mainstream media, MSNBC, the New York Times, and BlueSky, and obviously Twitter is a free-for-all?

G

Gavin Baker1:13:36

Yeah, free speech maximalism. There's obviously celebration on parts of Twitter too. I've seen my feed filled with parts of it in response to me just saying, 'God bless his soul and his family.' I was really shaken by the assassination yesterday.

I

Interviewer1:13:57

Do you think there needs to be any... It's funny because it's on mainstream media, it's on regulated media, it's on social media. What do we do about this moment where the worst of humanity pours itself out into the media, mainstream or social?

G

Gavin Baker1:14:11

I don't know. We tried aggressive censorship in America. They're trying in the UK now. It's not going so well. The answer may be unsatisfying. Of all the great quotes in the English language, 90% come from Shakespeare and 8% from Winston Churchill. One of Churchill's great quotes was, 'The only thing worse than having allies is not having them.' It may be the same thing: democracy is the worst system imaginable except for all the others. It may be that free speech, while uncomfortable at times, there's not a good alternative. The mistake when the woke wing of America was ascendant and they were aggressively censoring speech, it never occurred to them that someday they might not be in power and they might be censored. That has not happened, thankfully, because I don't believe in censorship. But there are things on X that I find offensive, and I'm sure there are things that are said that, as pro-Israeli as I am, you probably find even more offensive. Those are upsetting, but that may be the cost of free speech. At the same time, the flip side is I profoundly believe if it were not for X, nobody would believe that October 7th really happened.

I

Interviewer1:16:21

I agree with you. While there are some terrible things said on X, I think if it were not for X, October 7th would have been wiped from global memory. As you know, I went out and publicly defended Elon on this after his visit here, and I completely agree with you. What he has uncorked, the ability to get things out that were otherwise censored by mainstream media, is profound, and he's changed the direction. So I'm in the same camp. I just think it's important to steel-man the other argument. Life is all about trade-offs. The trade-off of free speech is that sometimes there is speech that is deeply offensive, that is evil, but if it does not... Elon follows the law. The stated policy is we follow the law. So if you're yelling fire in a crowded movie theater, that is shut down. But anything short of that goes. That comes with great things and terrible things. But life is all about trade-offs. Other than following the law, which Elon does with X, I don't think any of them have been satisfactory.

Do you worry about ongoing violence after what happened in the last week?

G

Gavin Baker1:17:46

I do, but I also hope that, like I said, that article in the New York Times is important. It's the first time it's like, 'Oh wow, we have a problem. We might be part of the problem.' I think that's important. Charlie Kirk was a great man. I never met him, but I thought it was really inspiring to watch the videos of him respectfully debating people he disagreed with. Politics the way we want to practice. And that's the guy you killed. And that's the guy whose death you're celebrating.

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Interviewer1:18:31

I want to finish on a happy note, or a happier note. When you think about where you want to deploy capital over the coming 12 months, where is it? And the second question is, who is the investor that you admire most and go to for advice?

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Gavin Baker1:18:46

There's no one investor I admire the most. I admire you, Michael. I'll get invited back for another one. I deeply admire my friend Antonio Gracias, who runs Valor Equity Partners. He's done unique things and has a unique lens. There were great portfolio managers at Fidelity. A woman named Jennifer Urig, she runs a venture fund now, but at one point she ran $70 billion. To my knowledge, she has run more money than any woman in history. She had so many great pieces of wisdom that have stuck with me. 'You either have to panic early or double down late. Anything in between, you get killed. You have to know which one you are and be disciplined about it.' My friend Steve Wymer, who runs a $200 billion fund with incredible numbers at Fidelity, taught me the value of not only hard work but doing the work yourself. He always had a phrase: 'There are only two things in investing: numbers and excuses. If you don't have the first, nobody gives a damn about the second.' And the aforementioned Will Danoff. Will is incredible because he asks sometimes what seem like very basic questions, but they're very profound. Being asked them forces the companies to think differently. He also has this incredible ability to play in the present and be completely dispassionate. I'm not a golfer, but 'playing in the present' means you can't let your last bad shot hurt you. Investing is the same thing. You got to play in the present, whether you're on a string of hits or a string of misses. I feel like I've learned something from a lot of people. I've certainly learned a lot from some of your former partners at Benchmark. It has taken a village to make me the investor that I am. I'm going to turn 50 soon and I'm excited. How old are you, Michael?

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Interviewer1:21:07

54.

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Gavin Baker1:21:08

Okay. So I profoundly believe that the peak performance years for investors, especially public equity investors, and I do love public equities, I love venture, I love public equities, are 50 through 70. So I'm about to enter what I hope are my peak performance years. I'm excited for that.

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Interviewer1:21:25

Amazing. Because they say about me that I'm over the hill at this point because the peak venture years are in your 30s.

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Gavin Baker1:21:30

Yeah, it feels like that is outdated. I actually thought Bill had a great quote. 'Why are you retiring? Because I'm tired of having the same arguments with 25-year-olds and knowing I'm right and having to watch the mistakes that I've watched people make for 20 years, and I just can't do it anymore.' I told Bill that having eight kids is training for that. That's actually hilarious and I'm sure very true. Well, all right. And what are you optimistic about? Where do you want to deploy capital? This is our last answer.

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Interviewer1:21:58

Very hard. So I'll give you a few things. I do think SpaceX is probably the highest risk-adjusted return available in the markets. In my personal opinion, it's the highest Sharpe ratio asset you can buy. My friend Antonio, who runs Valor and is a large SpaceX investor, says it's pro-entropic: as the world gets more disorderly, it gets more valuable. People talk about Anduril as the most important U.S. national defense company. No, SpaceX is by far the most important defense company to the West, even if they're not currently making weapons and never make weapons. So I think SpaceX is a great company. I think Starlink, people have forgotten what a big market telecom is, and this is by far the best product. It's a unique product. Telecom is over a trillion dollars in revenue. Starlink has barely been investable in the private markets for the last 25 years. That's why people forgot. 100%. Starlink is going to be a great outcome for SpaceX. And obviously, if SpaceX ends up becoming the British East India Company of the solar system, it's going to be very valuable. 1.7% of global trade passed through the British and Dutch East India companies. I think SpaceX can be that for the solar system. I really think the future's going to be awesome. Industry is going to move to outer space. We're going to capture asteroids, bring them into stable orbits, mine them. Mining is going to happen in space by Optimus robots. There's an asteroid called Psyche that has more gold, platinum, and diamonds on it than exists on all of Earth.

Short gold because it's been climbing very fast.

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Gavin Baker1:23:42

Yeah, I think asteroid mining is a real long-term bear case for precious metals. So I think SpaceX is exciting. I do think you want to have exposure to the frontier labs. And then I think it's just so hard to bet against semiconductors for the simple reason that the P&L of your average SaaS or internet company, a lot of them would have 85% gross margins, and of that maybe 5% went to compute. Your average AI company, best case, maybe has a 40% gross margin, and 50% of their revenue is going towards compute. That isn't going to change because that is just the nature of AI. So AI makes global GDP inexorably more silicon intensive. I think there's an exciting opportunity in venture semis in particular because often, outside of Israeli cyber and semis, you're investing in 30-year-olds. Some of these are exceptional 30-year-olds like Mark Zuckerberg or a young Jensen or a 30-year-old Elon, but they're still 25 or 30, and they maybe don't have the track record or years of experience you'd want. In semiconductors, often you're investing in a 50-year-old who ran a division at a big company, and their team is with them, and you're betting on this person just doing what they have done for the last 10 years. So I think it's fundamentally different. I think cyber, maybe Israeli cyber in particular, is a little bit the same. I haven't done as much of that as I should, but I think it's hard to bet against semiconductors, public and private.

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Interviewer1:25:42

Gavin, thank you so much for doing this. It's great to have you here.

美國頂級投資人Gavin Baker：失去台灣 全球科技倒退兩年！台積電工程師是「人肉資產」？半導體供應鏈的恐怖真相 「超級智慧」10年內降臨：梭哈這3家公司｜中英對照 #台積電 #TSMC #半導體

About Gavin Baker

美國頂級投資人Gavin Baker：失去台灣全球科技倒退兩年！台積電工程師是「人肉資產」？半導體供應鏈的恐怖真相「超級智慧」10年內降臨：梭哈這3家公司｜中英對照 #台積電 #TSMC #半導體