All-In with Chamath, Jason, Sacks & Friedberg
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.
00:36:08 · Jason Calacanis
[00:36:08] S0: Friedberg, you know, the the other issue here is if we are not spending enough building this out and the country, a large percentage of of of the country believes in socialism and is against the oligarchs, both Republican, independent, and Democratic oligarchs, this is is what they think of us and of the leaders in our industry and other industries. This is really dangerous because we're not gonna be able to to build out the compute we need. And what does that do to the entire industry in the next three to five years if we if we can't build out this? And how do we turn that narrative around so people are like, yeah, we should have data centers? I have a view that humans try to organize into groups, organizations to try and create power that benefits the members of that group. So, you know, we form tribes. We form communities. And in sense, governments are a form of an organization. It's an organizational coalition of individuals to achieve an objective for, in the case of a democracy, the majority of the voters. And as a result, organizations in a in a world of, you know, call it pseudo limited resources, compete with each other for those resources. Nonprofits, for profits, governments, they're all effectively competing for resources because the individuals that they represent, the interests of are gonna be served if they get more resource, they get more power, get more influence. So to some extent, the power of AI and the influence it enables in terms of media, in terms of capital accumulation, in terms of changing people's minds, in terms of aggregating resources through its competitive capacity, productivity, etcetera, makes it a bit of a threat to government organizations. And so to Chamath's point, if one of the manifestations of that is that AI is now accruing more interest from capital than governments, governments aren't gonna wanna let that happen. And the governments, whether they're right or left, are gonna fight for the AI to become either part of the government and the government to subsume the AI or control the AI organizations. And this is why I've kind of argued the case. I think that you're gonna end up seeing compute get regulated in the future where compute capacity is going to be assigned by government, and they're gonna pass laws to try and do that. Post production, that is.