DeepSeek Panic, US vs China, OpenAI $40B?, and Doge Delivers with Travis Kalanick and David Sacks

I mean, what I'm hearing about these buildings is that they are super, super empty, like next level empty. And let's just say, I'm really glad I don't hold it like I'm an owner that has a bunch of leases to the federal government right now.

The government is such a reliable client that they're all on one-year leases. So people don't do what they do with startups, which is force them to do five or ten years, because they know, hey, this company could go out of business. They're just like, yeah, yeah, we're just on a rolling year over year lease, so you can actually just cut these. It's going to flood the market.

Well, that seems like the crazy thing that nobody is thinking about, which is in this push, this physical built inventory has so much value built up in the 401Ks of individuals to the balance sheets of huge pension funds. But that value could be very different.

So the reason why this is happening is like you're seeing this chain of thought, you're seeing the several layers, and then it's catching it after the fact. So we know that this is distilled from some other model.

And every single person I've talked to basically has agreed that there was some distillation here from OpenAI. Now, that doesn't mean it was the only thing going on here. I mean, to be sure, the DeepSeek team is very smart and there were some innovations, but also there was some distillation.

You go through the white paper, you see what it is they did, what they innovated on, the science behind it, the thoroughness, and you're like, these guys are badass. It does not feel or sound like somebody who took something, just when you get through it.

And the actual advantage is going to be in the IP and owning content. And the really smart thing to do would be for somebody to go by Reddit, Quora, the New York Times, the Washington Post and Disney and take all that IP and then not allow other people to use it, sue the hell out of them every time they try.

Tesla has an extraordinary advantage that they were really pressure to put cameras on everything years ago, and that gives them this ability to build models that do self-driving. So I think that there's a lot more data advantage that arises in certain industry segments than others, and that's where the moat will lie, and that moat will allow you to actually build better products that get you a more persistent advantage in gathering more data.

At some point, the amount of data becomes the long pole in the tent. At some point, the quality of the algorithms becomes a long pole in the tent, and more compute is not going to change that.

At the end of the day, if model performance continues to improve, get cheaper, and it's so competitive that it commoditizes much faster than anyone even thought, then the value is going to be created somewhere else in the value chain.

And this is where I think, again, apologies to the NVIDIA bulls, but it's going to create a more heterogeneous environment. And the reason is because there's too much money and risk on the line to go through a single point of failure. A chip, a high-level framework to get to that chip, that's nuts. So I think like that, kind of like Emperor has no close moment is upon us.

Gavin Baker came on this podcast and said, this is the fastest deprecating asset in the world, was a large language model. He's been proven right. They're not worth anything. They're all going to be open source. They're all going to be commoditized, and that's for the best of humanity.

Here's the one thing on the NVIDIA thing that I would counter with a little bit of what's been said here, is like when AI gets cheap, you know what's going to happen, guys? There's going to be a lot more AI, right? I don't think... I think the price elasticity on this one is actually positive. So as the price goes down, the revenue usage, everything's going to go up.

But then there's like this dark horse that nobody's talking about, which is, it's called electricity, it's called power. And all these vehicles are electric vehicles. And if you said, yeah, I just did some like quick back of the envelope calcs, if all of the miles in California went EV ride sharing, you would need to double the energy capacity of California.

That's super interesting, Travis. That's like, it's almost like the idea that we all talk about today is data centers and data centers need their own power substations.

But there is clearly a ton of these chips going into Singapore. I don't think anybody knows where they end up. And the question is, what does America think about that? And why did we implement these export controls in the first place? And if there's a simple back door, how do you want to react?

And so if we do cut off access to NVIDIA chips, we do cut off access to US exports, are we not kind of recognizing that the second order effect of that is that China will take IP that they've stolen, copies that they've made to Travis's point, and develop and build out their own fabs and they'll find ways to copy the ASML technology.

Well, it seems like there's some degree of relationship between the Stargate announcement with Masa and Sam standing up there with Larry and then Sacha showing up in the conversation as well. And this raise and the idea that more hardware, more infrastructure faster creates a moat. And I guess that's the real thing you have to believe, which becomes harder to believe in the context of what happened in the last week.

I think it's for three years is the license and they just did this blanket license for every book. They didn't look at yourself. They didn't look at how desirable it was. It was just like a blanket deal. Everybody gets $2,500 bucks per book for three years. And I think I'm going to just do it just to support proper licensing so that people can start going down this path.

So video, I think you can recognize that Google's YouTube content library is probably 100 to 200 times larger than the rest of the internet combined.

I will tell you once again, after our visit in DC last week, there was not a single member of Congress that I spoke with who views cutting to be a mandate for them in the laws that they're trying to pass. They all have a very different kind of agenda than DOGE.

If it was really hard to hire people and they could even make it harder to hire people, do they fight bureaucracy with bureaucracy that it's harder to spend, harder to hire people, harder to procure certain things that you're supposed to spend money on? You can reduce this spend through a lot of very interesting nuanced rules that they're in control of.

This is the naming and shaming of government waste that's actually going to work. And the DOGE account on Twitter is doing it. They're basically saying, hey, we're giving foreign aid for this project, for that project.

And if you want to see what happens when you have unlimited land, if you live in Austin and you see the distance between San Antonio, Houston and Dallas and Austin in that triangle, you get 30 minutes outside of the city centers. There's just unlimited land and there's less regulation. And you know what's happened? Housing prices and rents have come down two or three years in a row. So this could happen in other major cities.

So, but what happens is when you get really, really good at copying, and that time gets tighter and tighter and tighter and tighter and tighter, you eventually run out of things to copy. And then it flips to creativity, to creativity and innovation.

Robots need actuators. Do you know what you need for an actuator or a permanent magnet? You know what you need for a permanent magnet? Rare Earths. Who's the rare earth king? X China. Greenland.

I think all the pressure right now, I think, is on meta. Because I think meta has to show up with the next iteration of llama that beats and exceeds Gemini, that exceeds R1. And I think that that is going to be crucial for us to have a counterweight to whatever China is going to put out after this.

Yeah, so there's a thing called Jevons Paradox, which kind of speaks to this concept. Satya actually tweeted about it, which is the economic concept where as the cost of a particular use goes down, the aggregate demand for all consumption of that thing goes up. So the basic idea is that as the price of AI gets cheaper and cheaper, we're going to want to use more and more of it. So you might actually get more spending on it in the aggregate.

But both of them will pale in comparison to the third layer of this onion, which is the IT and the services and the spend. And what I mean by that is when you read how the department is set up, at the center and nucleus of every single one of these DOGE teams is an engineer. And I think the reason is that they can get into these systems of record and start to trace where the money is going.

There's two deflationary things that we need. One is DOGE, and two is where AI is going to take us if it really does its thing, and that will keep us in an okay spot economically. But this spend has to go or we're in Greek territory, if that makes sense.

Watch the D'Aulio interview because this is exactly the topic he covers. As we end up needing to refinance this debt, the rates climb, the appetite isn't there, and it becomes a spiral. That's why we have to cut fast in terms of the deficit to basically attract the market.

So we don't have a lot of room here where you can walk rates up to 5.5%, 6% without a lot of things starting to break.

So like we're getting to a place where these vehicles are provably safer than human driven vehicles. So, yes, there are mistakes, but they're just provably safer and people are just getting used to it. And that's a big part of the cycle. So I think we're getting out of the hysteria and we're getting into like, yeah, it's just great.

Yeah, Microsoft is hosting their version of R1, which means they are actively subverting their partner, OpenAI, and pushing people to a cheaper model.

You guys are taking a very strong point of view that open source is definitely going to win, that the leading model companies are all going to get commoditized, and therefore, there'll be no return on capital and basically continue to innovate on the frontier. I'm not sure that's true. ... But I think it's a little premature to conclude that there's no reward for being at the frontier.