David Sacks: jason where are you that is that a virtual background or oh right that's place i i did

SPEAKER_02: look architecturally familiar to me it is architecturally significant we'll bleep out

SPEAKER_06: that beep house but yes i am you know this is like top three or four of uh places i like to

SPEAKER_08: be a house guest you know like i'm in rotation right now my house has your kato kayling through our friend group basically you know i'm just a great house guest people like to have breakfast with me people like having me around so i just find myself in mansions around the world hey nick do

SPEAKER_11: you have an updated picture of kato kaylin is he still alive and kicking he's alive for sure he's got to be 70 or something right he's got to be he was on one of those reality tv shows with dr drew i

SPEAKER_13: think a couple years ago what does kato kaylin do he's a good hang he's yeah there's a lot of these

SPEAKER_17: people in la you know like they just hang they kind of hang they set things up oh my god oh

SPEAKER_14: is that current yeah he's 64 now wow almighty that's incredible how did he survive he's got an instagram account i'll tell you how he survived see no evil hear no evil exactly because i didn't see

SPEAKER_29: nothing all i know is hey listen man you gave me a pool house snitches get stitches i didn't see

SPEAKER_41: anything what did you see nothing all right everybody welcome to your favorite podcast the all in podcast

SPEAKER_43: episode 168 david sachs can you believe it we've made it to 168 episodes with me again the rain man david sachs how you doing buddy good yeah i heard you got a big talk coming up give it another speech

SPEAKER_41: yeah yes do you say talk yes i'm giving a talk all right get ready for that uh all of the gop fans out there all your sax fans you got a big keynote coming from sax next week also with me of course

SPEAKER_43: the sultan of science formerly known as the queen of quinoa he's got another crop he's uh growing

SPEAKER_06: david freeberg how are you doing how's the crops how's the fields how's life in the fields where's

SPEAKER_47: cold open not a cold open these are intros oh intro i'm glad you're not producing there's a reason why

SPEAKER_49: i'm the executive producer go ahead how's your um how's your crops how's the how's life in the fields

SPEAKER_51: it's great got a great team making progress tech is awesome having a lot of fun it's great back in the

SPEAKER_43: ceo seat huh and of course the chairman dictator who's becoming completely insufferable because he invested in a company seven years ago that is absolutely crushing right now called grok we talked

SPEAKER_47: about it last week you're back you're back chamath everybody is talking about grok you're you're on

SPEAKER_54: uh cloud nine it seems crocker crock crock crock crock crock bitcoin bitcoin bitcoin crock crock i mean it is interesting how your book just literally whatever chamath's book is that's his mood

SPEAKER_58: it's just bitcoin 60 grok well so the honesty level is going to be through the roof now

SPEAKER_61: oh right it's going to be running for governor and buying the hamptons again the truth bombs that chamath is going to drop now there is nothing like peak zirp chamath i mean are we going back is

SPEAKER_65: are we back right now on paper what is your stake in grok already worth let's we're not talking we're

SPEAKER_67: not we're not talking about that's so uncouth it's so uncouth but he's buying the hamptons and

SPEAKER_14: he's probably gonna buy what has it been uncouth on this podcast to talk about about wins our wins or assets these are not any of this stuff these are not i agree with that it's not a win we have

SPEAKER_73: not count you never count your chickens before they hatch that's absolutely right i am not counting

SPEAKER_78: any chickens don't book the win yes there's a lot of hard work to do there's a lot more people to sell products to to build products by the way developers by the way on grok just this past week

SPEAKER_79: in the queue the waitlist tripled now there's almost 10 000 developers that's a big deal oh that's crazy that's a great sign i think the most important north star metric for these developer platforms is basically that as goes the developers so goes the platform

SPEAKER_78: you can kind of count on some amount of pull through because some of those developers just statistically will land really important products they'll consume more apis they'll just consume more stuff it's just all goodness because if you have 9 000 or 10 000 people just again waiting in line

SPEAKER_83: once those guys get in somebody's going to create something magical that's the great part of having a

SPEAKER_43: platform it's like people just take it and they build on it while you're sleeping something amazing can just get built and you get some amount of the uh credit for that another thing that's really interesting is the number of developers is increasing i've seen two or three founders recently just the last couple of weeks who were previously idea founders who are now have taught

SPEAKER_47: themselves to code so you know this there's one percent of the you know whatever number of

SPEAKER_43: millions of developers in the world i think it's going to like double or triple so that the pool of people who are writing code i think is about to grow very meaningfully i mean you guys you

SPEAKER_22: guys saw the release from the white house where they were like we don't want you to code and c c plus

SPEAKER_43: plus anymore yeah that was very interesting i mean they were talking about memory leaks and like this

SPEAKER_83: is i guess the source of most memory leaks therefore the white house wants you to learn to develop in memory safe languages oh great awesome yeah so why are they involving themselves like they got nothing

SPEAKER_92: better to do yeah i mean they have an opinion on uh you know preventing security leaks all right

SPEAKER_43: listen the top issue this week is the same issue as last week google's gemini dei black eye continues we covered this woke ai disaster last week it's kind of funny i was watching cnbc and they had a hard time describing the problem the woman just i guess didn't want to call it what it is it's a racist ai you type in text and it gives you the opposite or just culturally insane responses so if you put in

SPEAKER_47: you want a picture of george washington from google's gemini or sergey brand you might get back like a benetton style diversity ad with like george washington being black or sergey brand being asian etc and so this has caused um a bit of a kerfluffle here in the industry to say the least the stock is

SPEAKER_43: down five percent since we talked about it last week and uh sundar sent a memo to the gemini team of course when they write these memos to a team it's written to the entire world because you know it's going to get leaked and so you're writing as such it might as well be a press release i'll give uh two quick

SPEAKER_98: quotes here and then i'll throw it to the besties because there's so many questions that we have to

SPEAKER_99: address quote number one i know that some of its responses referring to gemini have offended our users and shown bias to be clear that's completely unacceptable and we got it wrong and to be clear

SPEAKER_47: it wouldn't show white people especially ones like george washington or just somebody who is obviously

SPEAKER_43: caucasian and so the next quote will be driving a clear set of actions including structural changes to me structural changes means we're going to lay off a bunch of people and we're going to get

SPEAKER_47: rid of the dei group that's that's a new map that's a newfound motivational riff quote in my mind

SPEAKER_101: freeberg will sundar survive and is google too broken to fix i'm just going to ask you since you work there i don't mean to make it uncomfortable but what are the chances sundar survives this and what are the chances that google can be fixed and produce great products quickly that delight users

SPEAKER_103: i don't know how to answer the sundar will survive because it's kind of an idiosyncratic organization

SPEAKER_105: there are a couple of founders who have super voting shares um and ultimately comes down to their decision and the direction they want to take the company and i have no insights into what they individually think so um frankly i've spoken to a lot of folks who are investors in google over the last week and a lot of folks are just deeply frustrated and angry um on a number of fronts the business really there's you know three businesses inside of google there's you know search and ads there's youtube and there's cloud and the rest of it is kind of noise and to give you a sense of how big these businesses are right youtube did 10 billion a quarter roughly cloud did 10 billion a quarter they have this devices business and subscriptions business does about 10 billion a quarter and then search does about 50 billion a quarter and the margin on search is much higher than any of those other businesses and so the search margin the ad revenue on search is you know probably a hundred percent of the true operating profit of the business so the real threat to google is more are they in a position to maintain their search monopoly or maintain the chunk of profits that that drive the business under the threat of ai are they adapting and less so about the anger around woke and dei because most of the investors i spoke with aren't angry about the woke dei search engine they're angry about the fact that such a blunder happened and that it indicates that google may not be able to compete effectively and isn't organized to compete effectively in ai just from a consumer competitiveness perspective so you know investors are banging the table and in the past we saw this with meta i think it was towards the end of 22 if you guys remember and it was a similar situation investors were like why are you investing in vr and ar this is crazy why do you have all these people that are getting overpaid and everyone started to write off the stock and the stock took a big nosedive for a period of time just like google's is right now and then the changes came and much like google there's an individual with super voting shares who basically said you know what i am going to step in and we're going to make these changes and we're going to fix this organization and we're going to right size and we're going to focus on the product winning and since then meta stock is up a tremendous amount 5x since then google shares are down about 10 percent over the past two weeks by the way i was one of the stupid people to sell meta around

SPEAKER_08: that time and your thinking was that they just can't get out of their own way and the god king is

SPEAKER_105: it's it's another yeah it's exactly it's another one of these idiosyncratic problems you don't know what this individual is thinking and what he is individually going to do the point i'm making is that at google now something has to give because the noise is so loud the board is hearing this left and right investors are banging the table analysts are banging the table and i'll tell you a couple anecdotes internally employees are now banging the table a story i a story i heard this week was that someone stood up in a meeting and said a couple of weeks ago if i had stood up in this meeting and said we can't show black people in the image generation at the rate that we're showing i would have been cast a racist and i didn't have permission to do that inside of the organization but today and everyone's like you're right you would not have been able to stand up in the organization and say that but all the tenor has changed inside of google with a lot of the employees that i've spoken with who are now saying i can stand up and i can say that this group called responsible ai has too much power and it's a one-sided asynchronous problem where they get to come in and say we need to change this and if you step up and disagree with them you are deemed a racist you are deemed you know culturally

SPEAKER_115: inappropriate which is easier to keep your head down it's easier to keep your head down in this kind of a circumstance and keep collecting your rscs and all of a sudden you wake up one day and you

SPEAKER_117: see the blunder that happened last week yeah and so now internally people are waking up and saying we

SPEAKER_105: need to change this and i heard that that's made its way up to the higher ranks at google and they're very actively you know so there may be a moment here where google stock which currently is trading at just 17 times 2025 consensus earnings which is cheaper than all the other big tech companies by far and it's still growing core business is growing cloud is growing 20 search is growing 15 all these other businesses youtube's growing 20 a year it's a growth business that's very profitable and um it's trading at a very cheap discount so there's you know of the bull case is now's a great time to buy because it's so cheap and there could be this moment where you know you see some of the changes that are needed internally to get the ai products to where they need to be to maintain the lead that is

SPEAKER_118: inherent because of search so that would mean sacks it would require because we're using zuckerberg as

SPEAKER_47: an example now we could also bring twitter and x into this it will require founder authority to come in there and make these changes it would require larry and sergey who have the super voting chairs to come in there and say hey this is all changing enough of this do you think there's any chance of that happening or is google just too broken to fix and they're gonna just lose this opportunity and it's microsoft under steve baumer missing mobile and cloud well to quote jefferson the tree of liberty must

SPEAKER_124: be refreshed from time to time with the blood of patriots and tyrants and i think there's something analogous here i mean you have to if you're going to refresh this company you have to go in and you got

David Sacks: to go and make major cuts not just to rank and file but to leadership who doesn't get it and that's the only way it's going to get fixed do i think that larry and circle you're going to come in and pull an elon and go deep and figure out which 50 or 20 of the company is actually good and doing their jobs probably not but is it possible that they could make a leadership change yeah it's possible probable i don't know i mean i've heard that the company is the way it is because they like the way it is i mean that they're part of the problem in effect they don't see they don't see the problem or at least they

SPEAKER_125: haven't until now maybe they'll get the wake-up call what do you think chamar watching while this

SPEAKER_129: happened i think it's basically a small cadre of a thousand people that have built literally the most

SPEAKER_78: singular best business model and monopoly ever to be created on the internet and a whole bunch of other people that have totally transformed this organization as sac said into ability and a platform to reflect their views and so i don't not a shareholder of google and outside of the tools i use i don't think i really have much voting power so i don't and i have so many alternatives now so i actually think like the i don't really care that much i guess is the point i think that the

SPEAKER_79: employees should care and the shareholders should care and they should come together and vote and i think sax is right i think the company is the way it is because they've chosen to be that way and i

SPEAKER_78: think freeberg is right which is that there's a small group of people who have been protecting and breathing life into the single greatest business ever built ever in the history of business

SPEAKER_79: but now we need to have a confrontation amongst all of these three different groups of people and they

SPEAKER_122: need to make some decisions let me put a few data points in in play here jcal and this all this all

David Sacks: speaks to the problems being let's say deliberate as opposed to a glitch or an accident so first you have sundar's letter to the company which there was a very interesting tweet by lulu cheng uh meservi who does comms at activision and she writes a blog called flack she said quote the office she's a comms expert just for the audience she's a comms expert yeah so she kind of graded sundar's letter and it was scorching she said the obfuscation lack of clarity and fundamental failure to grasp the problem are due to a failure of leadership a poorly written email is just the means through which that failure is revealed so that was one reaction mark andreessen had a series of posts indicating that the ai was programmed to be this way again it's not like a bug it's more of a feature and that it's not an accident this is this is happening because because they chose to be this way and in fact he goes further and says that these companies are lobbying as a group with great intensity to establish a government protected cartel to lock in their shared agenda and corrupt products for decades to come wow i mean again that's a really scorching critique here and then you know the the question i would ask is who's been fired for this i mean imagine if i don't know one of elon's products had a launch that went this badly do you

SPEAKER_143: think no heads would roll no heads have rolled and so you have to kind of wonder well what if it's a

SPEAKER_111: structural issue sex i mean i i the point does resonate with me that there is a group internally

SPEAKER_105: and i think it's called the responsible ai team at google and this team's job is to enforce those principles remember that we brought up last week that they've defined and so they go in and they're like well you know if you just render an image of a software engineer and all the images are just white guys in hoods that's inappropriate because there are plenty of non-white people you need to introduce diversity so then the programmers say okay we'll go ahead and overweight the model and make sure that there's diversity and you can't say no because otherwise you are deemed a racist so who's the

SPEAKER_117: individual that's responsible given that structural circumstance that exists within the organization it's more of a cultural and structural problem to me than you know one i guess ultimately there's

SPEAKER_148: leadership that's lacking but actually i i agree with that to some degree let me describe how i think it

David Sacks: works so what what i've heard about google is that every meeting above a certain size has a dei person in it i mean literally probably so it's kind of like in the days of the soviet union their military the red army would have in every division or unit there would be you know a commander or lieutenant

SPEAKER_145: and there'd be a commissar okay and the commander reported up the chain and the commissar reported to the party and the commissar would just quietly take notes in all the meetings of the unit and if the commissar didn't like what the lieutenant was doing lieutenant would be taken out and shot okay now that's kind of a dramatic example but the point is that in every large meeting at google you've got this dei commissar who's like quietly taking notes i'll point out that at google the only person we can ever remember to get fired was james damor who was an engineer who complained about the political bias at google in other words he was a whistleblower about the very problem that's now manifested he's the only person you can think of to get fired at google google was mocked on the show silicon valley it was called hooli but remember this yeah that they saw the guys and nobody ever got fired because it's a company where it's impossible to get fired unless you blow the whistle on the political problem and i think that if you're sitting in those meetings with a dei commissar present and you know or you have suspicions that the ai product is not working right are you really going to speak up and risk the fate of a james day more of course you're not right so you're right freeberg that it's a structural problem that there's probably a low-grade fear that's pervasive through the organization and no one's willing to say the emperor wears no clothes the woke emperor knows

SPEAKER_156: wears no clothes because they don't want to why stick your neck out you may not know you're going to

SPEAKER_99: get fired but you know you're taking a chance three years ago on twitter nobody would talk about certain topics related to dei because it was in the aftermath of george floyd and people just did

SPEAKER_158: not feel comfortable even calling out something minor that was unfair but no i would say they didn't

SPEAKER_145: feel comfortable until bill ackman broke the seal on this just uh like a month ago where he really went after dei i mean because remember the part of the reaction to bill ackman was like wow he's really going there even though everyone's saying that like basically agreed with him and knew that he was making a correct point but people were still afraid to like again call out this this woke emperor yeah

SPEAKER_99: and the way this works for people who are not super aware you have a language model and you know you write a bunch of code but then there are guardrails put in and then there are red teams and people who

SPEAKER_47: test it and so at the very least even if you were trying to do something with great intent as you pointed out friedberg hey you know if we pull up a doctor it doesn't shouldn't necessarily always be a white guy there are other people who are doctors in the world somebody should have caught it in

SPEAKER_162: testing they probably did jason and they didn't report it who wants to report that problem that's

SPEAKER_165: an interesting rub yeah they didn't miss it they didn't miss it they didn't have the guts to

SPEAKER_78: report it you have to build somebody built a reward model or people a reward model was built for the reinforcement learning from all the humans and their feedback so these decisions were explicit the question that is that you guys are framing is was this though a case where it was explicitly imposed on people and people felt a fear of pushing back or did they just agree and say this is a great decision and these rewards make a ton of sense and the whole point is that i think what this is highlighted

SPEAKER_79: is that's the truth that google needs to figure out and they need to figure it out quickly because what

SPEAKER_78: is going to happen now is it's we i know i think we talked about this a year ago all google needs to see is 300 500 basis points of change and the market cap of this company is going to get cut in half

SPEAKER_79: okay because there is only one way to go when you have 92 share of a market and that is down and so the setup for the stock is now that people are looking at this saying okay if i see 92 percent go to 91 or 90 or 89 that's all that has to happen and people will say the trend is to 50 percent and you will price this company at a fraction of what it's worth today so i think it's really critical this is the moment that the senior leadership that really understands business can separate it from politics and decide is this a thing of fear where there's one rogue group that's run amok or is this what we believe because if it's the latter you just got to go with it there's nothing you can do because you're not going to replace 300 000 employees or however many google has but if it's the former sax is right you're going to have to some heads need to roll and they need to tell the marketplace that this was a mistake where a group of rogue employees got way at way too much power we were asleep at the job but now we're awake they're fired and this is so they have two choices but in in all of these choices what i'm telling you on the the dispassionate market side is if you see perplexity or anybody else clip off 50 basis points or 100 basis points of share and

SPEAKER_78: search this thing is going straight down by 50 by the way unless cloud takes off right because the other

SPEAKER_105: hedge that google has is gcp and the tooling that they've built in gcp can enable and support and be integral to a lot of alternatives and competitors to what ultimately might be searched so i think there's also a play here in thinking about some of the hedges that google has implicitly built into the business i'll just say one more thing on this structural point i kind of thought about this as when i started speaking to people internally about how this happened from a product perspective it felt a lot like when you talk to a lawyer as you guys know you're making a business decision and there's some risk i mean think about travis building uber and the lawyer will say it is illegal you need a medallion license to do what you're doing in the city and travis is like well you know what i'm going to take that risk brian chesky and airbnb he said you know what i'm going to take that risk and the problem is that like a lawyer's job is to tell you what you can't do to identify all the peril of your of your action and then you as an executive or a business leader or a manager your job is supposed to be to take that as one piece of input one piece of data that you then make the informed business decision about what's the right way to build this product what's the right way to build this company and i'll take on some risk and i think one of the challenges structurally inside of google is that product leaders and other folks were never enabled to make the decision that there were these as sax pointed out kind of like policing type organizations that were allowed to come in and veto things and the vetoing or make unilateral decisions and those vetoing on whether it's waiting or or some you know training data set or output that ends up killing the opportunity for the smart business leader to say that doesn't make

SPEAKER_170: sense we can't this is where this is where having founders in the organization every day

SPEAKER_08: changes everything because the founders would say hey we we're here to index the world's

SPEAKER_43: information we're here to present the world's information we're not here to interpret it we're not here to win hearts and minds we're not here for a political agenda but there's a group of people there who it's apparent think that they're there to change the world that google is a vehicle for them to make social changes in the world and you know that's art and there's other ways to do that and just paradoxically like hamilton making the founding fathers diverse and doing art you know that can win tony's in that context you could win tons of awards and acclaim and make incredible beautiful art but on the other side like people are not looking for google to do that they're looking for google to give them the answer and the data and then these people are thinking it's our job to

SPEAKER_47: actually interpret the data for you as we kind of touched on last week so uh this is i think look i

SPEAKER_148: think you guys are really close to the bullseye here but i would just refine slightly what you're saying so here's how i think it happens i i don't think this is a rogue group i actually think this is a highly empowered group within google i do agree with you yeah yeah i think what happens is sundar

David Sacks: says from the top that we're going to be on the forefront of diversity and inclusion because he personally believes that and that's the way the social winds are blowing and they think it's good for the company on some level okay to implement that mantra or that platitude really hr hires a bunch of

SPEAKER_145: dei experts okay lots of them i think the company has like this huge hr department and a lot of those people are basically fanatics i mean they're their chosen career yeah they're trained marxist basically and so they're the commissars and they're sitting in all these meetings and again they're the ones taking notes and they're the ones who push the company in a certain direction but you have to then go back to senior leadership and say it's their fault for letting this happen because they should have made a course correction they should have realized what was happening they should have realized that through a combination of bias and through this sort of like overly empowered hr team who are pulling a legal card i mean freeberg's right about that they're saying that our point of view is the law which isn't true but they're basically pulling the legal card and pushing the whole organization in a certain direction it was up to leadership to realize what was going on and make a correction

David Sacks: and the the thing that you're seeing now is that in the face of what's happened the statement that we got really doesn't cut it one of the use the word problematic yeah exactly they're describing it as a glitch or a bug it's not yeah it's a much deeper problem and so therefore you give it gives no confidence that the solution is going to be pursued in as comprehensive manners as necessary

SPEAKER_178: yeah i think it's just a that that memo is a tip off that there is a 20 000 30 000 person rift

SPEAKER_87: and a reorganization and they're just going to keep cutting the dei group and they've already

SPEAKER_179: meta and google have cut the di groups a bit i don't know if it's about as much about cutting as

SPEAKER_105: much as it is about empowering if you said to the product leaders you can make the decision dei and responsible ai and whatever other groups they're going to inform you on their point of view but they're not going to tell you what your point of view is pulling the legal card they're saying this

SPEAKER_150: is the law they're saying that that's what needs to change right if you don't do things the way we tell

SPEAKER_145: you google is going to be hit with a civil rights lawsuit that's what they're saying oh well i mean

SPEAKER_105: let's see if leadership can overcome that threat but i think that's exactly the threat that is keeping

SPEAKER_149: the organization from resolving this problem or could keep the organization i think it's that but

David Sacks: i also wouldn't underestimate the bias so you know everybody there not i shouldn't say everybody but it's a very liberal culture right it's a monoculture so when you're swimming in that much bias it's hard to see right yeah when everybody is left to center i mean just look at something like political contributions right it's 90 something percent are democratic i mean like high 90s so it's just a a liberal bubble basically and so right when everybody's liberal it's very hard to see when

SPEAKER_143: you know the results are way off center as well also if you if you give people this job like how are

SPEAKER_47: they what are they going to do every day friedberg if they've been given the job dei and they've been given the job to do trust and safety they're looking to fill their time and make an impact

SPEAKER_185: you gotta i think maybe have less of these people i honestly think it's about cutting people you know

SPEAKER_105: sean mcguire is a partner at sequoia and he used to be a member of the team at google ventures when what's called google ventures and he did a twitter post do you guys see this yeah where he said when he was at google he was told by his manager i'm not really supposed to tell you this it could get me fired but you're one of the highest performing people here but i can't promote you right now because i have a quota my hands are tied you'll get the next slot please be patient i'm really sorry it

SPEAKER_149: ultimately led sean to leave google and uh you know the rest is history he's a partner at sequoia now

SPEAKER_179: you're saying because he's a white male because he's a white male yeah and so

SPEAKER_47: the you know i'll be honest yeah no i had the same thing happened to me on aol when i was at aol and shabbat was there at the same time the whole organization was white men from virginia whatever and they gave me an svp title and i said well i want the evp one and they're like you know what we can't have any more white males in that position right now we have to like get some more women and people of color in that position and they told me you'll have the same comp and bonus but we just

SPEAKER_105: can't give you the title jama do you think these like race and gender driven quotas make sense for hr departments to try and enforce upon managers to make to increase diversity i mean is that a good

SPEAKER_149: objective for an organization to have this is like a topic a lot of people i've heard kind

SPEAKER_77: of flip back and forth on hi there is no company where i have majority control where i have an hr

SPEAKER_78: department you don't have an hr department no say more why i think that it's very important you should go to a very respected lawyer at a third party firm someone very visible an eric holder type person and you should work with that law firm and retain them so that you have an escape valve if there are any kind of serious issues that that need to be escalated so that you can get them into the hands of a dispassionate third party person who can then appropriately inform the board the ceo and investigate so that that covers sort of all the bad things that can happen then there are buckets of i

SPEAKER_79: think good things one one important set of things is around benefits my perspective is that the team should build their own benefits package that they want they should understand the p l of the company that they work for they should be given a budget and in in my companies again what i do is i allow

SPEAKER_78: committees to form and i ask those committees to be diverse but what i mean by diverse is i want somebody

SPEAKER_79: who has a sick partner i want somebody who has a family i want somebody who's young and single so that the diversity of benefits reflects what all these people need they go and talk to folks they come back and they choose on behalf of the whole company and there's a voting mechanism then when it comes to hiring i think what has to happen is that the person that for whom that person will end up working for it's the head of engineering it's the head of sales those are the people that should be running the hiring processes i don't like to outsource it to recruiters i don't like to outsource it to hr so when you strip all of these jobs away hr doesn't have a role and what is left over is the very dark part of hr in most organizations which is the police person the policeman right the what what is sacks called the commissar that is why everybody hates hr i've never met a company where that is a successful role over long periods of time they are this conflict creating entity inside of an organization that slows organizations down so that allows me to empower individuals to actually design the benefits that they want to hire the team that they want and i let them understand the pnl in a very clear transparent way and the results are what the results are you want more bonuses hire better people and then what i do is at the end of every year i talk about this distribution of talent and i make sure we are identifying the bottom five or ten percent they need to be managed up or they must be fired every year and it does not matter how big the company is you must manage up or out the bottom five to ten percent and in some cases i'm talking about one person because it's a small company and in other cases i'm talking about 30 or 40 people so just hire the best person for the job no you eliminate hr yeah you empower the team make that make allow them to make their own decisions measure it hold them

SPEAKER_08: accountable right so if you have a salesperson who just hires their i don't know 15 sorority sisters or fraternity brothers whatever it is and it just becomes not a diverse group well hold on it is what

SPEAKER_79: it is that still may be diverse this is my point like the the thing is that like there's different

SPEAKER_78: ways to sell there's different sales motions there's the sort of like elephant hunting kind of sales model there's the dialing for dollars thing so even those 15 sorority sisters the way you

SPEAKER_79: describe it could actually be diverse my point is that kind of superficial marking based on immutable traits will not yield a great organization instead it's you're empowered to hire whomever you want just know that at the end of the year we're going to measure them your bonus their bonus the

SPEAKER_202: company's performance performance yeah performance i mean frank sleutman said this and he he got

SPEAKER_99: barbecued at some point he said i don't have time to do this diversity stuff by the way in in my

SPEAKER_79: company's like for example like when you do sock 2 compliance you have to generate these reports okay especially for some of our customers some of our companies that actually show the diversity of our team and when we measure them on the immutable traits that whatever they represent as their gender whatever they represent as other dimensions we are incredibly incredibly diverse anyways but the way

SPEAKER_143: i've never seen a startup that isn't diverse you know silicon valley attracts such a diverse mix of

David Sacks: people you know what do we know about success factors for startups number one the ones that are successful have a cultural meritocracy number two they're non-bureaucratic and they don't have too much gna basically overhead in the company gna now all those things are contradicted by having a large hr team or especially a dei organization right they add bureaucracy they add overhead

SPEAKER_210: and what's that pips performance improvement they cut into well pips are great i pip people all the time does it work i mean i i know some people are just like these pips don't work if you're an

SPEAKER_79: unperforming member of the team and you've been identified in the bottom five or ten percent we have a responsibility as management to coach you up or to get you to an organization where you're not in the bottom five or ten percent that's the right thing to do for people you do that by being very transparent and writing it down you are not good at these things you're underperforming in

David Friedberg: these things fix them or you will not be here that's a very fair thing to tell somebody yeah look

SPEAKER_148: how you want to implement your own meritocracy i think there's different ways for founders to do

David Sacks: that the point is you want these companies to be a meritocracy you don't want advancement in the company to be based on factors other than skill merit hard work things like that performance we know performance we know that's a bad bad path to go on i think a lot of founders don't understand

SPEAKER_145: that dei is not something they have to do they don't have to have a dei organization this has somehow become a thing it's it's not required and i think people are realizing like why would you do that

David Sacks: why would you create this large bureaucracy in the company that undercuts the meritocracy that

SPEAKER_145: adds a lot of costs and that slows you down none of those things that will help your company what you need to have i think chamath laid out some really good best practices you should have an outside law firm that i would say is you could call it hr law but i would just call it employment law i would say like a non-ideological partner an expert in employment law who sets up your company correctly and to whom you can take a complaint if if an hr complaint gets raised through the chain of your company you do have to take it very seriously and that's be a proper investigation and that's probably best handled by an outside lawyer so get that outside lawyer and then by the

SPEAKER_79: way always there's never a case where your co-worker should know the intimate details of any of those and that's what also creates this horribly rotten culture in hr where these people act like gatekeepers of secret information salary information bonus information and then all of the other things oh you know did you know this person did this with it's terrible to have that inside of a company it should go to a dispassionate third-party person whose job it is to maintain confidentiality and

David Sacks: discretion yeah while investigating the truth yeah when hr is too powerful in a company that's a red flag at the end of the day hr should be an administrative function their job should be to get people on boarded sign their offer letter and their confidentiality and invention assignment agreement and set them up in payroll and get them benefits and that kind of stuff it should fundamentally be an administrative function and if it starts getting more powerful than that it means there's been a usurpation you

Chamath Palihapitiya: don't even need people for that like you have software that does that now and it's all automated

SPEAKER_210: you know you send them a link you go to your favorite you know hr site and boom it's done yeah i don't

SPEAKER_141: think you need a lot of people doing this anything you want to add to this discussion freeberg as we

SPEAKER_119: as we move on to the next topic i think that unfortunately the term diversity equity inclusion

SPEAKER_105: has been captured along as chamath points out a single vector which is this immutable trait of your racial identity or gender and i think the more important aspect for the success of a team for the success of an organization is to find diversity in the people that comes from different backgrounds different experiences different ways of thinking and so i i'm not a huge fan of race-based metrics or gender-based metrics driving i'm generally more oriented around be blind to those those those variables and focus much more on the variables that can actually influence the outcome of the

SPEAKER_47: organization yeah one of the great paradoxes of this as well is we are moving to a much more multicultural mixed race society anyway people filling out forms a lot of our kids you know are could pick two or three of the different boxes on a dei form it's not going to make much of a difference in the coming decades all right issue two google go splashy cash it's licensing deals for training data and it's now becoming a bit of a pattern google we talked about i think just last week had done a deal with reddit for 60 million dollars that's reportedly per year today stack overflow is now using its overflow api to train gemini no word on the contract value i did get some back channel that it's a multi-year non-exclusive deal according to reds s1 they have already closed 200 million worth of ai licensing deals over the next two to three years so yeah maybe it's going to be 75 million a year 100 million a year who knows how big that business can get we're going to talk about the s1 from reddit in just a moment and uh this is on top of all the other licensing deals that have occurred axel springer and open ai you remember that one and opening eyes and talks reportedly with cnn fox and time to license their content that comes on the heels of that blockbuster new york times opening a lawsuit that we talked about i don't know 10 episodes ago and opening eyes lawyers are trying to get that one just to give you a little update on it they're trying to get that case dismissed saying that the new york times hacked the chat gpt to get certain results and that the new york times took tens of thousands of tries to generate the results yada yada and they said here's the quote from the filing from open ai the allegations in the times complaint do not meet its famously rigorous journalistic standards both open ai and google and gemini have been furiously guard railing their systems as we talked about as well to and stop copyright infringement like trying to make pictures of darth vader and that kind of stuff jimav you've talked a little bit about your tac 2.0 framework maybe you could talk about what you see happening here with all these licensing deals and

SPEAKER_78: what it means for startups in the ai space well just to maybe catch everybody up tac is this thing called traffic acquisition cost and you can see it most importantly in google's quarterly releases which is that what they realized very early on at the beginning of the search wars in the early 2000s is that they could pay people to offer google search people would use it and then it would generate so much

SPEAKER_79: money that they could give them a huge rev share and it would still make money so i remember jason when

SPEAKER_78: you and i were at aol this is the first time i met omid we were flying back to california we were both in dulles at the same time in like 2003 or 4 and that's when omid did the first big search deal between aol and google and it was it was i want to say hundreds of millions of dollars back then where google pays you up front you have to syndicate google search and then they clean it up on the

SPEAKER_79: back end with some kind of rupture so what's incredible is that that process has escalated to a point now where for example on the iphone it's somewhere between 18 and 20 odd billion dollars a year is what now google pays apple so that's the traffic acquisition cost 1.0 rule tac 1.0 and i just

SPEAKER_78: said that we should call this tac 2.0 except now what google is doing is instead of paying for search they're actually paying for your data and saying give it to me so that i can train my models and make it better and i think that that's an incredible thing both it's very smart for google

SPEAKER_79: but also it's great for these businesses because it's an extremely high margin thing to do when you have a really good corpus of data that is very unique so in the case of reddit that 60 million dollar deal i didn't i looked through the s1 to try to figure out whether it was a multi-year deal or not it wasn't totally clear but the point is that you know google's paying

SPEAKER_78: reddit 60 million bucks and jason you just said that they're they've done a couple more of these things that's incredible this tac 2.0 thing is amazing so if you're an entrepreneur building a

SPEAKER_79: website or building an app that has really unique training data or really unique data you'll be able to license and sell that and that'll be an incremental revenue stream to everything you

SPEAKER_43: do in the near future that's amazing that's what time 2.0 is it's going to be incredible for the entire uh content and community-based industries you think this could sustain content creation where

SPEAKER_122: advertising has become very difficult sax i guess my question to chamath would be do you think this

David Sacks: is going to be available to small websites they'll somehow be some sort of program or because i mean reddit is one of the biggest sources of content on the entire web right it's like a top five traffic site with tons and tons of user generated content yes i think like a small publication would be able

SPEAKER_78: to make these types of deals yeah and in fact i think like if you go back to search 1.0 that's exactly what these small companies were able to do which was in a more automated way they were able to basically partner and in that example what they would say is here google why don't you just run your ads on our page right and that was sort of in that web 1.0 world so google had solutions for the largest companies on the internet all the way to the smallest and in this tac 2.0 world i do think

SPEAKER_79: that that it works in that way as well the problem in the in that world if it's a small website that says here's my training data the question is how do you attribute how much incremental value a model derived from it versus something else and so i think that that part has to get figured out and so you know what google will be able to pay you will probably be pretty de minimisly small if you're small right now so you know to your point if the upper bound is 60 million for reddit then the average website is going to get a few hundred bucks but that still may be a good start and when google figures out how to monetize this stuff or somebody else where then they can give you back some way to make money i think i think that there's a real monetization

SPEAKER_43: here really do you took the other side of this but now that you see the market-based solution

SPEAKER_87: starting to emerge what do you think of this market-based solution you think it's a got legs

SPEAKER_105: well i'm not convinced that this looks like tack in the traditional sense where you're basically buying a continuous stream of traffic and then you're helping to monetize that traffic that's effectively what google did in the ad syndication business and does today that business makes about 10 billion a quarter at google and they're paying call it 70 to 80 cents on every dollar back out to the owners of that traffic the folks where that traffic is derived from i would say that this looks a lot more like the content licensing deals to build a proprietary audience which is effectively what netflix did they paid studios for content apple does this they have proprietary content that they pay producers to make and they put on apple tv amazon does this and so on this is a lot more like that where there are content creators out there whether that content is proprietary like the new york times or user generated like reddit and what they're trying to do is acquire that content to build a better product on google search and i'm not sure how you get paid a continuous licensing stream for that content once you've trained the model the content gets old it gets stale at some point in a lot of cases like news and then eventually if you don't have a high quality continuous stream of content it's not worth as much anymore to give you guys a sense humans generate in total well let me just give you some stats there's about a million petabytes of data on the internet today and humans are generating about 2500 petabytes of data new data per day right now remember i shared a couple weeks ago youtube's generating about two petabytes of data per day half of all data generated is never used so this is like records and files and stuff that gets put on files log files get stored somewhere never accessed never used the majority of the rest of that data is not in the public domain it's not on the internet so there is a lot of data out there what some people might call dark data to train on and i think that as the identification of better sources of training data and the value of training data right now we're in this kind of shotgun approach we're trying to blast out and you know source lots of content lots of data just like over time netflix got better at figuring out what content to buy and what to pay for it and they're the best at it i think so too will google and others figure out what data is actually particularly useful what it's worth and what to pay for it and so there's a lot of data out there to go and identify to mine to pay license fees to get access to whether those are continuous license fees or one time is still tbd that's a key issue yeah so i think we're still a little bit early to know if this is like you know a continuous model like attack type business or if these are sort of chunky type deals and we don't really know what the real value is yet and that all changes over time and remember the the rate of data generation is increasing so while we're generating 2500 petabytes of data per day as a species on the internet that number is going up every day and so every year all the old data becomes worth even less so this is all changing fairly dynamically and i think there's a lot still to be figured out on what the monetization model will be for content creators and and how that's going to change over time yeah and it's a really good

SPEAKER_47: point some things will be like the sopranos or seinfeld or simpsons where that library is worth a fortune and people will pay a billion dollars a half billion dollars some someone's no one's no

SPEAKER_78: one's paying a lot for old nfl games you know nick founded by the way reddit's licensing deal was 203 million over it says two to three years so let's assume it's call it three just to be safe so it's about you know 60 65 million dollars a year it doesn't say whether the deal with google is exclusive wow so

SPEAKER_122: they could do it they could do that same licensing deal multiple times that's interesting and none

SPEAKER_83: of these are exclusive it seems this is what i don't understand why why don't you do head deals

SPEAKER_78: like with folks like reddit where you actually do it exclusively like it seems like it's more valuable to spend a multiple of this number for for one of the big seven who have tens of billions of dollars of cash anyways and block the other players and block everybody else that just seems so much

SPEAKER_111: smart gets capped if i'm reddit i don't want to do that deal yeah reddit may not put it on the table yeah because then my multiple is capped like the the way i can monetize my content is now set and i'm done yeah investors are going to get bought red and investors are like oh you're worth five times

SPEAKER_87: ebitai you know that's it reddit core stack overflow they're going to just get taken out and this is i

SPEAKER_244: think this is going to be the new model did around actually didn't core raise uh 50 500 recently

SPEAKER_47: i think they're going to get taken out i i i think these businesses will become too valuable because they do have ongoing content that just keeps getting generated to run you started web

SPEAKER_111: blogs right yeah and i like everything and but think about the value of that content today it's negligible like it was very valuable at the time yeah and as time went on more content was being created a hundred times a thousand times ten thousand times more content that started to overshadow the value of that content at the time the acquisition was done it made a ton of sense but all of a

SPEAKER_117: sudden two years later particularly with the rate at which data is growing on the internet

SPEAKER_118: it's like does it make sense to buy any content anymore so you well on the other side of that is historical content could be worth a lot of money especially some could be yeah so if you had

SPEAKER_47: the charlie rose archive as an example what is you know he's probably interviewed kissinger 10 times and he's interviewed kissinger for you know 10 hours i've got two almost 2 000 episodes of podcasts i've done with startups over 13 years like some of those are good right yeah

SPEAKER_185: this being a startup's archive is going to be worth something at some point right and i don't think

SPEAKER_105: it's about 60 million but what are all baseball games worth right like i mean

SPEAKER_99: yeah they're not really watchable and i don't think the data from them is particularly important so i agree on that one but historical stuff yeah we don't know but and i just question how much of

SPEAKER_111: reddit's content is actually like long-term valuable versus like they're covering a topic and

SPEAKER_117: they're talking about interesting stuff and then it's a really a year later it's a really really

SPEAKER_258: excellent point yeah and we'll figure that out okay and that's why i think it's like it's the early

SPEAKER_117: days of knowing how to value all this content particularly for llms and so we don't really know yet over the next year this will all start to become clearer but it's it's the same thing

SPEAKER_260: happened in music licensing yeah right but if if all the content creators kind of unionize

SPEAKER_122: then it might increase i don't know if that's possible kind of like them yeah like music industry has

David Sacks: ascap and other socialists well i'm not advocating for this but the point i'm making is if they can't unionize then there's a lot there's just a huge number of vendors of content and so models will need to buy some but as long as they can get some they don't need to have all and therefore it's basically highly competitive among suppliers and there's a very limited number of buyers so that tends to

SPEAKER_127: this is why the news industry should have always had a federation because they could have just

SPEAKER_47: said to google hey we're going to de-index ourselves from the google search engine and so you won't have the new york times washington post la times you're just not going to have any of us unless you give us x y and z and they were just too stupid and not coordinated to do it music industry the exact opposite you you try to do anything with the music industry they're going to come down on you like a ton

SPEAKER_122: of bricks to this day i see what's really interesting yeah if all the um old school legacy

David Sacks: newspapers and magazines magazines and so on had basically formed their own whatever association association yeah that would have been powerful

SPEAKER_99: yeah i mean that's what murdoch wanted murdoch saw it clearly he was like you know google's the

SPEAKER_47: enemy here they're going to take all of our revenue and they're going to get all our customer names and we're not going to even know the names of our customers all right issue three klarna crushes customer careers with ai you may have seen this trending on x and twitter and in the press if you don't know klarna they're a swedish vintech company they do that buy now pay later stuff i think they were the originators of that online and they put out a press release with some really eye-popping claims ai assistants are now doing the work of 700 full-time agents at corner they moved issue resolving times from 11 minutes with humans to two minutes with ai and customer satisfaction is on par with human agents and it said its resolutions are more accurate than humans creating a 25 drop in repeat inquiries that tracks and so far their ai which they built with open ai has had 2.3 million conversations accounting for two-thirds of klarna's customer support service chats klarna estimates its ai agent will drive wait for it a 40 million dollar increase in profits this year we could talk a little bit more about klarna and their valuations but freeberg what do you think this means if we're in year this is the start of year two of chat gpt as like a phenomenon let's say what do we think year three looks like

SPEAKER_111: i think the tech the techno pessimist point of view is oh my god look at all these jobs that are getting

SPEAKER_105: lost i think the optimistic point of view is that that company has all of that excess capital now to reinvest in doing other things that capital doesn't just become profits that flow out the door and everyone's done with that money and that money just gets put away in a sock that money gets reinvested and that money gets reinvested in higher order functioning work and that's really where there's an opportunity to move the workforce overall forward which is what i think is super exciting and and i'm super positive about we've seen this in every technological evolution that's happened in human history from you know the plow in agriculture to automobiles to computing and to now ai that you know humans moved from manual labor to knowledge work to now ideally and hopefully more creative work and so i do think that it isn't just about eliminating jobs and making more money but it's about enabling the creation of entirely new class of work whether that's prompt engineering or you know building entirely new businesses that simply can't exist today or perhaps even downscaling businesses where you no longer need to have a 10 000 person organization smaller organizations can be stood up as startups to start to replace large functioning organizations so i don't know i think it's a time of great opportunity i know that some people would view it as being highly shocking i think it's inevitable that human knowledge labor where the job of the human is simply the ingestion of data and then communicate an output of data seems like it will eventually be replaced by computing somehow and this is happening now in an accelerated way with these llms so i think that what we should focus on and think about is what are all the new businesses all the new jobs all the new

SPEAKER_149: opportunities that are just couldn't have existed 10 years ago that are now emerging that are very

SPEAKER_118: exciting as the workforce transitions sacked you by this techno utopian view of this all these jobs that

SPEAKER_47: are going to obviously be retired are going to open up the opportunity for these humans to do even better work at klana or do you think it's just going to go straight to the bottom line well it sounds like

SPEAKER_124: they're able to eliminate a lot of frontline customer support roles by using ai which is what i would expect yeah i think this is a very natural application for ai you know it was already the case that you could pretty much find answers to questions by searching the faq things like this this this is an even better way of doing that so so look i i believe that this will be a big area for ai is saving

David Sacks: on again i use the word frontline customer support because the way that customer support is typically organized is there's level one level two level three the more difficult queries or cases get escalated up the chain depending on how hard they are and i think the ai will do a really good job eliminating level one it'll start to eating to level two but you're probably going to need humans to deal with the more complex cases now the question is where do those displaced humans go i think there's going to be new jobs new work that's always been the history of technological progress and one of the things you're already seeing is a whole bunch of new ai companies that are exploiting this technology and they need to hire people so i basically agree with freeberg that you will elevate people's work by automating away the less interesting parts of people's jobs and then creating more

SPEAKER_111: productivity and more opportunity by the way just to use your just use your example sax so imagine if all the level one support people some chunk of them can now do level two support and so the customers are

SPEAKER_105: going to get greater hands-on care more customers will get access to a higher level of service the organization can afford to do that they'll be more competitive in the marketplace because customers feel better taken care of i just think that's how the organizations get leveled up as new technology kind of shows up like this that's a great point and then those folks can have a much deeper level of

SPEAKER_149: interaction with their customers than they are today just answering basic questions more complex and then

SPEAKER_47: people might get better at the software and they might discover new features that you might be able to redeploy those people if you look at coffee like i don't know it was 40 years ago you went to order a cup of coffee it was decaf or regular coffee milk and sugar those are your four choices and and now you go order coffee i don't know if you guys have used the starbucks app or the you know i just had the sweet green ceo on the pod and man that you can the fidelity and the and the nuance of what you want to order is absurd where do you think this is all heading because there is the issue of displacement how people how quickly people can re be redeployed and if we're seeing in year two

SPEAKER_08: customer support and developers getting 10x what other categories do you think we're going to see fall next i think the truth is that as you said the real world applicability to ai was not last year

SPEAKER_78: so i think we're really in the first five or six weeks of the first year so you consider that year zero that's year zero that was sort of like the you know where everybody was running around building toy apps group of concept this is one of the first few times where you're seeing something in production where there's measurable economic value and the important thing to note about that is that it's not just what it means for clarna but what it means for everybody else so if you look at everybody else for example here's teleperformance which is a french company that runs call centers they lost 1.7 billion dollars of market cap when that tweak went up about 20 of their market cap so this is this is the real practical implication yes clarna replaced 700 people and they saved 40 million of opex but teleperformance while they were just doing their everyday work lost 1.8 billion of their market cap at the exact same moment and so what does it mean

SPEAKER_79: i think that what clarna should do is open source what they've built and the reason is that you want to give companies like teleperformance a chance to retool themselves with the best possible technology so they they can actually preserve as many of the jobs as possible because at the limit if every single company is able to implement something that is as economically efficient as what clarna did teleperformance doesn't exist and there's 10 billion dollars and 335 000 employees that will not have a job yeah and so for clarna the reason to open source it is twofold one is they don't lose anything because you will still need to train it on your own data and so there's no disadvantage that clarna will have right they're just saying look i built this on top of gpt here's what it looks like and that production code can be used by anybody else go for it but it has to run on your own data that's a very reasonable thing so i think it has the benefit of both a setting a technical pace that can help them attract better employees and more highly qualified people who find the scope of work even more interesting and b i think it's on the right side of history with all this ai stuff where it's allowing everybody to sort of benefit in a way that is the least destructive but i just wanted to show you that the destruction was quite quick and it was pretty severe and if two or three other big companies launch these kinds of tweets after real measurable results

SPEAKER_289: teleperformance will be a one billion dollar company in short order there's a third reason

SPEAKER_124: i i think it's a brilliant idea for carna to open source this this tool because it's not their business right this is something they did as a as a productivity improvement they get the benefit back to them of the community working to advance that technology so they don't have to put more

David Sacks: engineers like advancing the ball on their customer support ai totally they can just re re merge in

SPEAKER_124: the changes that the open source community comes up with yeah and since they're not in the business

David Sacks: of selling ai directly there's no reason not to do it like jama said so i think it's kind of brilliant yeah this is meta strategy by the way i mean they should be building this on met his open source products and apple's open source products right sax yeah well so what what medicine what zuck said on the last meta call is the reason we open source everything is because we don't directly sell ai we create products that ai makes better so by open sourcing this we allow the community to advance

SPEAKER_145: the ball and we get to reincorporate those changes so it's a very smart strategy for companies that aren't

David Sacks: directly selling the ai now you know if you're if you're like brett taylor's new company sierra obviously you're not going to open source it because your whole business model is to create a

SPEAKER_47: proprietary solution yeah but then to chamat's uh you know 80 90 whatever he was talking about uh with his you know incubator concept and you know these things it's a company it's a company okay um is

SPEAKER_128: it 80 90 or 90 80 i'm sorry 80 90 yeah 80 90. is there a third word that comes off of it or just gonna call it 80 90. got it okay 80 of the features at a 90 discount so back to that like what does this

SPEAKER_43: mean if these things are getting to freeberg your point about the pace and the pace of these things is it going to improve 10 a year or 10 a month if it's improving 10 a month we're going to get to 98 of queries done this year if it's doing 10 a year okay we're going to get to 99 or 98 of queries in

SPEAKER_185: four years in other words this is happening folks and it's happening at a blistering pace by the way

SPEAKER_78: think of it's so not just teleperformance which is a it was a 10 billion dollar now a 7.58 billion

SPEAKER_79: dollar usd company but think about zendesk right zendesk was a i think a 8 to 10 billion dollar 10 yeah it was a 10 billion dollar take private in the hands of pe the entire zendesk workflow could be replaced by a handful of these open source agents where all of a sudden people can eliminate a lot of opacs i think the i think the thing to keep in mind here is where the world is going has always been to try to lower cost and the original foundational principle of sas was that there's these line items in on-prem software that are just extremely expensive over time very hard to justify right and so when people move to sas from on-prem they were looking for cost savings that was the initial thing now yes it's actually not cheaper anymore but it's much more feature-rich so you get a lot more value in sas etc etc but the point of these ai agents and bots and workflows is that it'll reintroduce the concept of cash of cost savings of this idea that you can have cheaper faster and better and the more

SPEAKER_78: that that stuff is open source my gosh i think it just makes it very hard for companies that have

SPEAKER_06: point products to survive yeah we i was talking to a friend of mine josh moore who was the city head of

SPEAKER_43: uber in new york and he launched his own note-taking app he's writing it himself and he's obsessed with

SPEAKER_47: this concept of building a billion dollar a unicorn company with one employee and this is something that a lot of people have been talking about my friend phil kaplan from distrokid built a very large business in district a unicorn with a very like i think low single digit number of people this could be the future of you know efficiency you you could build if you catch fire with a really hot company that gets

SPEAKER_304: a million customers it's absolutely the future it's absolutely the future and then if you think

SPEAKER_43: about our jobs in terms of capital allocation well how much capital does that founder need do they need to dilute 10 20 30 they're not going to need to dilute 60 70 80 percent a one-person company should

SPEAKER_129: be able to spend less than a few hundred grand to get to product market fit in the next few years

SPEAKER_124: yeah i mean that's that's kind of what we're seeing just to go back to your question jacal like where does this go next yeah please i think it's it's it's really interesting to speculate about that so

David Sacks: what clarna seems to be talking about are email-based customer support cases i think where this is going to go next is to phone 100 and these call centers use what are called ivrs these interactive voice response systems but they're very rigid it's a lot of pre-recorded messages and it says push one if your problem is this push two if your problem is this everyone hates those things yeah i think where it goes next is you'll call up the call center and you'll get a a voice that sounds like a human just talk to you yeah and you won't even necessarily realize that you're talking to an ai because they're already these ai companies that can do generative voices any language any accident oh and they're fast now

SPEAKER_311: and they're fine yeah and multi-language think about that just localizing them across the globe you

SPEAKER_08: know you want to launch your product in japan by the way did you guys see there's a meta demo which

SPEAKER_78: i thought was really cool which was it was run on llama 70b but it was a real-time translation tool where the person was speaking in hokkien chinese and the and the other person was speaking in english and they were able to understand each other but sax to your point when that person calls for example b

SPEAKER_79: of a now spanish is not a language it's actually many dialects and many many many different accents right depending on which country you're from like the accent that you hear in spain is totally different than the accent in el salvador or the accent in chile or argentina and so wouldn't it be amazing where you you call your b of a app it picks up your accent and your tonality and it responds with the person of that exact same accent and tonality that is incredible well i'll take it

SPEAKER_47: to another level you call it recognizes your number it knows what you're doing in the software it knows the problem you've had it knows the last three times you called and how long you've been using the software and it anticipates like okay i know this person has a windows machine and it's for you know still five years old and it's like are you still using that same five-year-old windows machine yeah we know it's a bug with you know windows whatever uh you should probably upgrade i mean it's going to know the entire context of this and so it's going to just get it could be more

SPEAKER_316: efficient than a human could ever be the best customer support interaction i had was i called jp

SPEAKER_78: morgan chase because i had an old credit card that i had had for 20 years and i think that they had

SPEAKER_22: outsourced it to somewhere in the caribbean and this woman picked up the phone it was so cool chamat what is the problem man and i was like oh this is the best and i had this whole conversation

Chamath Palihapitiya: with her for 15 20 minutes nothing to do with the phone uh nothing to do with my credit card rather it was great she's like yeah man you want to cancel your card i was like yes please no but you could

SPEAKER_78: do celebrities the best celebrity voices yeah jcal do the djt okay let's let's role play uh you're donald trump okay and i and i am jp morgan hi mr president chamath you're huge you've got big spending

SPEAKER_326: every time i go see chamath i go see chamath i go in amazing mr president i would like to cancel my

SPEAKER_327: credit card sir okay you don't want to cancel it we've got a great apr 3.9 but for chamath you know what he's my sri lankan friend how much do we love sri lankans okay huge and not jacal nasty nasty man

SPEAKER_329: jacal very nasty yeah it's like a dog dog okay some people say tds how much do we love our sax sexy

SPEAKER_327: great mar-a-lago i go to sax's house his house huge huge house almost as big as mar-a-lago

SPEAKER_333: not quite i gotta work on it because i haven't done it for years that's really good it's really

David Sacks: good okay have you seen that guy there's a there's a new like impressions guy who's amazing

SPEAKER_336: he does have seen him he's on howard stern all the time right he does the howard

SPEAKER_338: this is another kid matt freed friend yeah yeah yeah yeah he does howard back to howard

SPEAKER_340: it's hysterical yeah that video is good too hold on this is what he has multiple trump

SPEAKER_342: on other trump impressions so like i'll tell you what zach there are so many people that try to do

SPEAKER_349: but you see the failed alec baldwin baldwin comes out on snl which used to be a lot funnier back of the day with jerry jones but he goes like this he goes we've got a great show

SPEAKER_345: i don't do that i never say boo pretty boo i never say stephen colbert he comes out like i know

SPEAKER_353: a dot dot dot dot dot dot dot dot dot dot china i don't say the dot dot dot dot

SPEAKER_349: and the last one is jimmy failing fallon he touched my hair like a dog and jimmy fallon he goes okay

SPEAKER_350: we're rolling okay i don't do these moves they're all wrong so that's a little yeah that's an

SPEAKER_358: incredible impression let's see him doing uh howard you gotta see him do howard's turn it's

SPEAKER_361: so next level the other one he does that's incredible but subtle is uh stanley tucci how are you by the way robin you look beautiful right right thank you thank you right is this still you up

SPEAKER_366: howard it's me up yeah right because when i start talking to robin after you leave i get crazy you

SPEAKER_371: know right can we just talk about this right or wrong right right right right right howard left or right right right right right right right on red right right right right right it's so great he is

SPEAKER_376: killing it i think we have our halftime act for the all-in summit 24. oh for sure oh my god yeah he'd be amazing i love stanley tucci by the way he's great oh you got to see this kid stanley tucci

Chamath Palihapitiya: have you guys watched uh the stanley tucci on hbo where he cooking yeah where like he goes to

SPEAKER_383: italy it's so great it's so great he does it on tiktok too he just randomly cooks something and

SPEAKER_358: he's like i'm gonna make a frittata i have some leftover gnocchi and i'm just gonna i do watch him

SPEAKER_385: on tiktok thanksgiving is a special time i'm in london celebrating so today i'm making stan stuffing good and also sugo di carne or as it's known gravy now the thing about stuffing is you might use a traditional white bread but in my household i use a homemade focaccia because i'm a town in on both sides and nothing tastes better than bread with a little mani nada sauce it's a time for gratitude and giving thanks enjoy your holidays and thank you very much felicity good that is really good he's so good he's

SPEAKER_391: so good all right listen i don't know how to keep the show going here but three two okay issue four

SPEAKER_43: reddit's s1 is kind of fun let's break it down everybody 2023 revenue 804 million up 21 percent year over year they're still losing money uh net lost 91 million in 2023 they lost 159 million in 2022 so they're cutting the loss free cash flow is negative here's a chart of their

SPEAKER_47: quarterly revenue and cash flow so they're kind of bouncing along the break even mark as you can see there in the chart they got a wonderful gross margin because they don't pay to produce the content

SPEAKER_06: unlike the new york times or netflix and so an 86 gross margin up two percent year over year their daily active unique 76 million up 27 year over year average revenue per user is incredibly low three bucks and 42 cents and their daily active unique users uh here you can see another chart growing nicely quarter over quarter they got a billion two in cash most interesting probably uh and could be challenging to execute on is their direct share program they're going to carve out a bunch of

SPEAKER_47: shares in the ipo to sell to their most active mods those are the moderators the people who run

SPEAKER_08: the uh different channels or subreddits as they're called what could go wrong what could go wrong

SPEAKER_316: and uh but they're going to invite you to participate on it on a rolling basis unqualified retail buyer pool does not exist in the reddit mods except maybe the reddit participants what they're

SPEAKER_47: doing yeah i think they'll buy the uh i think they'll buy after the lockup comes up but let's just get started here i think you looked at the s1 a little bit freeberg and you had asked me to put on the docket because you were you were digging into it anything stick out to you or thoughts on the

SPEAKER_119: business overall no i mean i wasn't pulling i just asked if you guys had read it um right hey um hey

SPEAKER_404: i think i made a funny joke read it accidentally i'll let you guys go on for a minute go ahead

David Sacks: tell me when you're ready sorry it was a good pun too bad it was accidental no it was it was intentional i'll give you credit it was intentional we'll give it to you so i think

SPEAKER_119: the the thing about reddit if you could pull up the chart with the quarterly average daily active

SPEAKER_117: user data this was a business that the last couple of years everyone was like had flatlined because it

SPEAKER_105: was only growing five percent a year in terms of usage and then all of a sudden in the last two quarters so starting in late summer early fall of 23 so just six months ago the usage started to climb pretty significantly growing 15 and most in the most recent quarter 27 year over year absent that growth story it's a really challenged business because a business without much growth gets value typically on a multiple of the cash flow that they're generating and you know there's less upside and all this kind of optionality goes away that's kind of a key point i i don't know i think like for you to make an investment at a five billion dollar valuation here you've really got to believe that the growth continues at this rate and it doesn't revert back to the mean growth rate of the last couple of years of basically five percent which is roughly flatlined the other challenge they have is that there are poos only in that kind of three dollar range which is like less than 10 percent of where facebook is at and the data that facebook collects on their users gives them the ability to do much better targeting on ads and therefore monetize their audience much better than reddit has been able to do to the order of over 10x and then if you look at the arpu number how much they've been able to grow that metric it's also you know been a little bit flatlined so this business i think is a real question mark i mean you could argue it's probably worth in the best best case in the two to three billion dollar kind of valuation range and then you have to believe the bull case that the growth continues or accelerates from here and they have a plan to address the arpu problem they have other paths for monetizing their audience than what they're kind of doing today what do you guys think

SPEAKER_51: this thing's worth do you buy it if it goes out at three billion or five billion i think the first

SPEAKER_78: question which you nailed that a buy side investor will ask is what happened in the last two quarters

SPEAKER_129: that was different than the last 15 quarters that's going to be a very important question i think

SPEAKER_199: they're going to have to have a very buttoned up answer for that right and if they can point to

SPEAKER_78: very specific repeatable things i think that'll be good the thing that they this ipo if it goes off in the next four weeks they won't have to wait but if it doesn't get off in the next four weeks they'll have to update the s1 probably with q1 and so you'll see whether this thing is a trend or whether it was a one-time thing do you know what it is well the growth in the logged out is probably largely because typically if you use it on a phone it tries to force you to use the app right so that you can be in this logged in experience and if you just turn that off you can get a lot more logged out because reddit gets tremendous rank authority from google so if you just if you just turn that off i think that you'll have a lot of logged out customers and that will grow very quickly and so maybe it's a decision that they'd rather have the top line number grow than have logged in users grow but the logged in user growth has still been pretty healthy it's basically doubled in the last three years so but to your point freeberg if they said or our business is really only these 30 odd million logged in users it would be worth a lot less than saying 75 million i think it's i think you're right it's kind of like in the mid you know kind of two three four billion dollar range the the big problem is the arpu because these are not users that represent sort of facebook's bread and butter

SPEAKER_199: kind of a 40 dollar arpu lives in a good suburb in the united states and is monetized like crazy

SPEAKER_122: i just don't think that's what these users are but you can see that as a challenge or an opportunity because if their arpu is only 10 percent of facebook's there's a lot of headroom there to grow

SPEAKER_199: it if those users become economically more valuable arpu is actually down two percent year over year

SPEAKER_47: at sax the issue with this user base is they're incredibly sophisticated internet users who don't click on ads and are kind of anti-ads as opposed to you know the the general population on a facebook

SPEAKER_149: or a generic service and it's anonymous so you don't know who the user is which is how facebook has such incredible demographic targeting capabilities there's been a lot of conspiracy theories long con theories

SPEAKER_06: that came up sacks that we were talking about on group chat maybe you could summarize this long game that was played by sam altman and the allegedly founders of reddit to wrestle control of reddit back

SPEAKER_124: from their free-risk corporate owner kind of nest well this was a post by yishan who is a former ceo of reddit that was published back in i think 2015 and he kind of lays out what i think happened or i mean he says at the end just kidding but if he's a former ceo describing these events he must be describing something he knows about i would just think but in any event what happened is that reddit was sold for only about 10 million dollars a year after it launched so like really really small and i think that it kept growing and the founders realized maybe they made a mistake or that this was actually a bigger property and so they started scheming on how to get condi nass to spin it back out and so yishan lays out the steps they went through they recruited a ceo who they kind of pre-agreed on

David Sacks: then they had that ceo demand options specifically in reddit from condi nass which meant that condi nass had to create a separate cap table for it and then once they had a separate cap table as a subsidiary of condi nass then they could sort of pressure to have like an outside investor bought in for the expertise that just happened to be sam altman and his fund and you know eventually like step by step they worked it to the point where they got condi nass to spin out the company and i guess this plan worked now it should be said that the largest shareholder in reddit according to the s1 is condi nass or condi nass parent company so no one's going to benefit more from this plan if you want to or scheme if you want to call it that than codi nass it was a smart thing for them to do to spin out reddit to allow the employees to have options and then i would say to bring back the founder steve huffman as ceo several years ago so yeah he's great it worked out for everybody you

SPEAKER_162: know who knows if it was all premeditated so they own 30 and it goes out for 5 billion they got 1.5

SPEAKER_246: billion and they paid 10 million for it so that's just like a web this is like a web 2.0 2.0 no it

SPEAKER_06: launched in 2005 yeah it was a 2.0 it was the same time as like weblogs inc and delicious and flicker

SPEAKER_87: and all that that whole cohort of little web apps that used ajax and other things that you know the

SPEAKER_260: web was just getting faster and there were a lot of users well anyway congratulations it was smart for condi nass to do the spin out and give up 70 in order for to have 30 of what's going to be a multi

SPEAKER_99: billion dollar ipo great outcome for everybody all right issue five apple doesn't have a fast car

SPEAKER_06: project titan is dba dead before arrival apple as you know has been working on an electric vehicle for a decade self-driving as well they've invested billions in the project according to bloomberg and apple was targeting 100k price point basically going after the model s plaid with fsd company had 2 000 employees working on this project it was called titan then they had designers from austin martin lamborghini porsche according to the report most of the team will be transferred to apple's generative ai division we talked a little bit about maggie their um generative ai image language model there's

SPEAKER_83: going to be some layoffs it's unclear how many what does building a car have to do with building an llm

SPEAKER_444: well they were yeah so they weren't just building a car they were all in on self-driving and not

SPEAKER_83: having a steering wheel so i understand i'm just saying it doesn't make a lot of sense that 2 000 employees that were specialized in building a car all of a sudden now become the ai team

SPEAKER_99: it would be more like the full self-driving team is probably getting those ai jobs and the rest are probably going to lay it off with incredible packages but what do you think sex i was always

SPEAKER_124: skeptical that apple was even working on a car it's just a very different kind of product than anything else they make and so i never really treated it that seriously that they were going to make a car

SPEAKER_122: so i'm not i'm the surprise to me is not that they canceled this but that the that it was even true

SPEAKER_06: that they're working on in the first place yeah no it was there were reports of them having test tracks and everything it was pretty well established and you could see that people from tesla and other

SPEAKER_452: places had does it say why they actually killed it no this is just a report and the speculation is that

SPEAKER_06: they're going all in on ai they just see that as a much better future well i think it's more core to what they do i mean the car never seemed that core no and there were reports and elon's talked about it publicly so we're not speaking out of school here or anything but that elon and apple had and tim cook reportedly had talked or there have been overtures that maybe tesla was going to get bought and elon's been pretty clear that during the model 3 rollout he was considering selling it to apple that would have been a smart acquisition if they had done that can you imagine all the apple showrooms having a model s in it or something or a model y i mean boom they were just sold so many of them and and having

David Sacks: the apple operating system on that display well wait was it before the model s came out or the model

SPEAKER_127: three it was model three was the time i think they were talking seriously yeah remember like no one

SPEAKER_278: really believed in the model three till it came out and started selling like hotcakes quite the opposite

SPEAKER_98: they thought it was going to kill the company right all right everybody score the rain man david

SPEAKER_06: sachs chairman dictator chamath polyhapitiya and the sultan of science david freeberg i am

SPEAKER_461: the world's greatest moderator and we'll see you next time bye bye

SPEAKER_475: bye

SPEAKER_483: you you

SPEAKER_486: you you you