All-In with Chamath, Jason, Sacks & Friedberg
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.
00:53:28 · Chamath Palihapitiya, Jason Calacanis, David Sacks
[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. [00:54:17] S0: To the point, Sacks, that you made, in challenging me, which is great, their revenue is slowing down dramatically. You know, their quarter their over quarter revenue is decelerating. So, obviously, it's on a [00:54:28] S1: big number. So We don't know q three yet. I mean, the scuttlebutt on x, and who knows if we can totally believe this, is that things did slow down in q three a lot, but some of that may be attributable to the fact that they eliminated 99% of distillation. Right? So they voluntarily took a big hit to the revenue [00:54:45] S0: From people stealing from them. Yeah.
00:54:45 · Jason Calacanis, David Sacks, Chamath Palihapitiya
[00:54:45] S0: From people stealing from them. Yeah. [00:54:46] S1: Yeah. To prevent the copycat models from from basically distilling them. So there was that. And then I think the scuttlebutt is that since they cut their token costs considerably, which was done pretty recently, now the demand has reaccelerated. So Yes. [00:55:03] S0: Jeb and Sacks in full effect. Yeah. [00:55:06] S1: Yes. It seems like they're back to resuming their previous growth after a couple of hiccups in q three. But I think the thing that's really impressive is just that the way they're able to cut their token costs, it's not just because they're giving up pricing power. Right? It's not that they're losing margin. They're actually gaining margin. The reason they're able to do that is because all the algorithmic improvements [00:55:29] S2: Efficient. [00:55:30] S1: They're making in order to make their models much more efficient. [00:55:33] S0: Yes. [00:55:34] S1: And Now here... Yeah.
00:55:34 · David Sacks, Jason Calacanis
[00:55:34] S1: And Now here... Yeah. [00:55:36] S0: Go ahead. Just just to dovetail with that, Sacks. What's happening with the models is even more impressive. The... They're lowering the price of tier two and tier three models. Right? Your your Sonnets, your Opus. Those are getting cheaper, but enterprises are saying that's enough for me. So as they make that cheaper, then businesses get more value, they solve more problems out of it, and they don't feel the need to be on the latest greatest fable. If you're all hollow, maybe you need that to do science. If you're a mathematician, you need it. If they can keep making their second and third run models this much cheaper, 10 x cheaper each year, the Jevons paradox is gonna get even more pronounced because enterprises will use it more. Token cost matters. Right? We're sitting here with the token max and cost.