All-In with Chamath, Jason, Sacks & Friedberg
00:45:29 · Jason Calacanis, David Sacks
[00:45:29] S0: Alright. [00:45:30] S1: But I think that they had to know when they published that pacing letter that they're not gonna get the whole world on board with pacing. So the whole thing was sort of an exercise in virtue signaling. But in any event, I think what it shows again is I do think that it's possible that an anthropic doom or split is coming because there's no way for them to maintain their lead as the number one superintelligence company without continuing to advance the frontier very rapidly and to continue to pursue recursive self improvement. And that is something that the doomers are most afraid of. Of all the of all the various risks, right, they are most worried about a breakaway superintelligence. So I do think that this is the beginning maybe of a divorce between Anthropic and the doomers, but we'll see. [00:46:22] S0: Okay. Let's get back to your breakdown, Chamath. You had the the greatest revenue, greatest business ever built, yada yada. They have a ton of cash. They have the cash for the build out. They're gonna raise some cash in the IPO, and they are... They... All of this bond activity is crowding out treasuries is where you left off, I believe. So let's continue.
00:46:41 · Chamath Palihapitiya, Jason Calacanis
[00:46:41] S2: So I think I think you have to go to these risk factors now and think if you're gonna price the IPO or if you're gonna buy the IPO, how would I decide to buy the IPO? And I think at the $1.04, $1.05, $1.06, it's kind of priced fairly, so there's no deal. But they're giving you an entry price into the future. So then you have to sort of have a view on the future. And I think there are two risks. The first risk was what I showed you on their revenue composition, which is how long does it take for Ant to show those 10,000 customers the ROI math that they will need to move from less than a million to single digit millions to tens of millions, right? That's one very simple thing that you can check quarter after quarter after quarter. As those numbers swell, the reason they will swell is that they'll have defensible use cases and white papers and analyses that make it very straightforward for a corporate infrastructure to sign off, a multi person executive team to sign off on a multimillion dollar spend. So that's an ant risk, and I think that you can price that risk. The second though is what I teased here, which is the risk you cannot price, which is this market risk. The AI complex has gotten so big that it now competes with US treasuries. Why is that an important thing to note? And why does that create market risk? Nick, if you just go back to the last chart, please. So when you look at this, what does it mean for treasuries having to compete with Facebook and SpaceX and Anthropic and OpenAI for money. [00:48:26] S0: Dollars, yeah.
00:48:26 · Jason Calacanis, Chamath Palihapitiya
[00:48:26] S0: Dollars, yeah. [00:48:27] S2: Well, it means that somebody is going to have to pay more. Now, let's play out one example. If it's the hyperscalers that have to pay more because people believe the flight to quality and the durational risk of the government is better, then all of the money that the hyperscalers and the AI complex and Anthropic and OpenAI have to raise will have to come in at a higher coupon. If that's true, then Friedberg's chart is also true which is that those rates cascade through the ecosystem. The neo clouds will have to pay more. All these other folks have to pay more. What that means is that you increase and you pull forward the risk of defaults, which we talked about last time. So you have this negative reflexive cycle there. Let's say the opposite is true. Let's say that, you know, the AI complex is able to raise money at reasonable rates, and it's the US Treasury that has to actually go through an auction and pay more. Now you have the broad based cost of borrowing goes up because every other part of The United States economy is levered to the twos through fives and ten year complex. That is a huge market risk that I don't understand because I've never seen before. [00:49:47] S0: What is the market risk? Explain it just crisply here as we as we wrap. What is the market risk? [00:49:53] S2: If interest rates go up because the US Treasuries have to pay more for people to buy their bonds [00:49:56] S0: Got it.
00:49:56 · Jason Calacanis, Chamath Palihapitiya
[00:49:56] S0: Got it. [00:49:57] S2: Yes. Then everything else in the economy has a higher cost of borrowing. That has negative implications. If the opposite is true, the AI complex has to pay more, and then there's a bunch of negative repercussions narrowly to the complex. The problem is we're trying to buy an AI stock. So many roads lead to downside risk more than upside risk. Now there are versions in which this all works out and everything is off to the races. But I guess my structural takeaway maybe, Jason, is we're entering this very weird phase in The US economy where we've seen this before and we're seeing it now. This complex is too big to fail. And I think when you start to see these guys representing 40, 50% of all capital market equity and debt flows, which then in turn represents 30, 35, 40% of all treasury issuance as well that this competition happens, these guys are too big to fail, which means that there's a different problem at hand, which is a more systemic problem. So I'm not saying that there is. I'm just generally bullish.
00:51:03 · Jason Calacanis
[00:51:03] S0: This is confusing to you as a market participant who's on the inside. I get it. What I'll say is I... You could actually argue the opposite, Chamath. This is the greatest business ever created. It's an American business. The American economy is still the greatest economy in the world. You could argue versus China, etcetera, but we are running the table on super intelligence. And if you look at the history of the greatest franchises ever made, I I I did a little bit of research and and just this is first seven years of revenue to to back up what you're saying here. If Anthropic hits the targets they've set out, you know, ballpark here is getting to a 100 and then $300,000,000,000 in revenue, eventually 600,000,000,000 in revenue. They're well on their way. They're at about a 100,000,000,000 in revenue this year, which is like a third of a Google, you know, a quarter of a... Of an Apple. And you look at the cumulative revenue in the first seven years of the best franchises America has ever made, which would be Amazon, Google Search, cost per click search, Friedberg, Alma Mater, and the iPhone franchise, it's gonna become clear that the three best franchises in the history of business in my mind, iPhone, Google cost per click search, and Amazon, which will... This doesn't include AWS. This is just books and retailer. You you put the books into the the the AWS into it until later years, so it gets even more interesting. It's possible Anthropic's business is bigger than the top three franchises in the history of business put together, and that is something we've never seen, which means you have no choice but to buy American debt and this debt if you're a global participant. Where are gonna put your money? In France? You know, in China? Can't put it into
00:52:47 · David Sacks, Jason Calacanis, Chamath Palihapitiya
[00:52:47] S1: China. I'm confused. [00:52:48] S0: Yeah. [00:52:49] S1: Haven't you been saying for like the past year that open models are gonna eat Anthropic's lunch? Well Have you changed your tune on that? [00:52:56] S0: In the face of new evidence, you would have to say that they are lowering the prices and the opportunity in the enterprise is is so great that they're not being dramatically impacted by it. You will see anecdotally startups and enterprises exploring it, but it's obviously not enough now that we know their numbers that it's slowing them down. It's not slowing them down yet. Not debating revenue traction. It's still the biggest risk factor, but if you're [00:53:28] S2: I'm not debating revenue traction at all or business quality. What I'm saying is there are moments where there's systemic risk in markets where everybody goes risk off. And I think that what I am saying very explicitly is I've not seen in the last fifteen or twenty years the last time we came close to this was in the GFC, where you have a narrow part of the economy represent basically all of everything that's happening in the capital markets. And all that means is that everybody has to pay a lot more attention. It doesn't matter what side of AI trade you're on, whether you're long it, whether you're short it, I don't think that's important. I'm saying something more structural, which is about 10 companies collectively to fund one thing will be competitive with global governments on borrowing. I don't know what the implications of that is because I have not seen that.