All-In with Chamath, Jason, Sacks & Friedberg
00:28:40 · Chamath Palihapitiya
The minute you sort of transition from a million to like multimillion dollar deals, and this data sort of confirms it, it's a much more thoughtful pitch, It's much more cross functional inside of a company. And you have to show some form of ROI or total cost of ownership advantage, right? So what's interesting about this, Jason, is 1,900 companies have been able to make the case. That's what I would say. I think there's a ton of experimentation, and I think about 1,900 companies can clearly see an ROI where they can now start to rip in big checks. Now of that 1,900, a big portion of those are gonna be AI natives, right, folks that are venture funded. So you have to strip those folks away. And then what's left over is probably a couple of 100 Global 2,000 type companies. So I think the ROI case is still a little speculative, but the potential is there. And as long as the potential is there, I think the market's gonna kinda price it up. So now that's revenue composition. So then the next thing I think about is capitalization. And I said this before. I said, Ant needs to have 200,000,000,000, and I really hope that they actually get close to $2.50. First of all, let me just say, the CFO of Ant, Krishna Rao, has done an unbelievable job. The fact that he, entering June, already had $125,000,000,000 is unbelievable. And there's a chart I didn't include, but their total net burn to get there has been like $9,000,000,000 or $10,000,000,000 It's just infinitesimally low relative to the market cap. So I thought that they had a lot less cash than this. So when I said they need to raise between 200 to $2.50 and they need to price closer to a trillion, I was assuming they had $30.40, 50,000,000,000 on the balance sheet. I was wrong. So these guys need to raise between, I would say, 80 to 120,000,000,000 to get to that 250,000,000,000. And I think in order to do that, the price is probably now gonna come in between 1.3 on the low end to 1.7 on the high end. So call 1.5 the midpoint. So if I had to price the IPO just eyeballing this, I kinda think it'll come in around $1.05 if I had to if I had to just kinda guess. And the other thing that I noticed is how much cash Alphabet has and also how much cash Meta does not have. I was shocked to to see that Meta had negative 1,200,000,000 of cash.
00:31:05 · Chamath Palihapitiya, Jason Calacanis, David Sacks
This must be a mistake, but if you look at the 10 q's as of the end of September, this is what it shows which [00:31:11] S0: Net cash? Actually? Net cash? [00:31:13] S1: Maybe it doesn't include short term investments for some I'm [00:31:16] S2: gonna take [00:31:16] S0: a look at Meta's numbers [00:31:17] S1: Yeah. Right doesn't make sense. [00:31:18] S0: Yeah. I'll I'll tell you in one second. [00:31:19] S1: But Chamath, your larger point is is right that Anthropic, like you said, over a 100,000,000,000 of cash they're sitting on, they've burnt very little of the money that they've raised. Again, their company's been a model of capital efficiency. They're about to raise a 100,000,000,000 in this IPO. I think they've got about a debt facility with another 80,000,000,000. So you add it all up, and this is a company with over 300,000,000,000 of dry powder or or it will soon have that. So you've got all these, you know, Anthropic bearers who are saying they've made all these CapEx commitments in the future that they're never gonna be able to live up to. Well, actually, this secures those commitments because Yeah. They've got the capital now to basically back up all of those compute orders, all the forecasted CapEx spending till, I don't know, 2030?
00:31:19 · David Sacks, Chamath Palihapitiya, Jason Calacanis
[00:31:19] S1: But Chamath, your larger point is is right that Anthropic, like you said, over a 100,000,000,000 of cash they're sitting on, they've burnt very little of the money that they've raised. Again, their company's been a model of capital efficiency. They're about to raise a 100,000,000,000 in this IPO. I think they've got about a debt facility with another 80,000,000,000. So you add it all up, and this is a company with over 300,000,000,000 of dry powder or or it will soon have that. So you've got all these, you know, Anthropic bearers who are saying they've made all these CapEx commitments in the future that they're never gonna be able to live up to. Well, actually, this secures those commitments because Yeah. They've got the capital now to basically back up all of those compute orders, all the forecasted CapEx spending till, I don't know, 2030? [00:32:06] S2: You're exactly right. And because they only have to raise 80, right, or 90 or 100, that's a lot different than trying to raise one fifty or one seventy five or 200, which is where I thought they needed to be. And so the demands they're gonna put on the capital markets into the IPO are gonna be less, which means that they'll have more pricing power. They'll be able to manage the float better. All of these dynamics, I think, give you a constructive read going into the IPO. Okay, now let's move on because I think here's my biggest takeaway. [00:32:37] S0: Meta's net cash is negative two. It is 80,000,000,000 of cash and short turns and 82,000,000,000 of Oh,
00:32:44 · Chamath Palihapitiya
[00:32:44] S2: god. Wow. Okay. Go back to this. What is my big takeaway? It's bigger than it. I'm gonna build on what Sacks said. The entire United States economy is levered to the AI complex. So very narrowly, we're talking about seven or eight companies that sets the tone for the entire country. And whether we like it or not, that is where we are. Why do I say that? One, the most important companies in the world are in a massive spending binge. Right? These were highly profitable, highly cash accretive, highly cash flow generative businesses that have said we're gonna put the foot down on spending because we believe in what's coming into the future. That's what drives GDP and it's what drives growth. Okay. Next chart. Now as they do that though, they deplete their cash and they have to raise debt. Okay. And this is what you see. All but Microsoft... By the way, what an incredible job Satya has done. He's halved his debt while everybody else has, you know, just gone to an unbelievably crazy high number. So the the AI complex now owes $344,100,000,000,000 dollars to the market. And you'd say, okay, why is that important? The problem is this. These companies are raising so much money, it starts to crowd out the capital markets. And the most important part of the capital market that it starts to crowd out is the appetite for government treasuries. And what you can see here is that when you look at these AI firms, the amount of money that they need to raise through the end of twenty seventh, it's 30% of all of what treasury is about to issue in that same period. So there, whether we like it or not, they are going to start competing for demand. Isn't this nuts? It's like you have seven companies that are crowding up the treasury market.
00:34:42 · David Sacks, Jason Calacanis
[00:34:42] S1: You know, Chamath, a lot of people are looking at that number and they're trading these stocks down based on that. I kind of view it the opposite, which is I don't... These are smart companies. I don't think they'd be making those kinds of investments unless they thought there was ROI there. And so [00:34:57] S0: Well, obviously is ROI based on the token usage and the fact that only one or 2% of people in corporate America are even using these tools. We are greatly underestimating the uptick here. Claude hasn't even launched a bot yet, a Grok bot. And OpenAI just launched theirs and it's in like a a small use case when a 100,000,000 or 200,000,000 white collar workers Right. Subscribe to, say, the Office Suite. Right? The similar Office three sixty five thing happens in corporate America. Everybody's got five agents running. I think the utilization of these things is going 500 x. The token usage [00:35:31] S1: is I think that's right. Then [00:35:33] S0: x. That means we're gonna have Yeah. Not enough compute, and everybody's got the build out completely wrong. There won't be enough. And people are gonna look back on this moment and say, why didn't you build more compute? Why didn't you spend more on CapEx?
00:35:33 · Jason Calacanis, Chamath Palihapitiya
[00:35:33] S0: x. That means we're gonna have Yeah. Not enough compute, and everybody's got the build out completely wrong. There won't be enough. And people are gonna look back on this moment and say, why didn't you build more compute? Why didn't you spend more on CapEx? [00:35:47] S2: You're absolutely right, Jason. The problem is the regulatory pushback. The the amount of approvals and the ability for utilities to find the staff and the ability to actually turn these things on and then the ability to get the capital equipment you need, it just isn't there right now. So we as a country are sort of clogged up. We can't do it even if we wanted to do it.