All In - Episode 174 - Show Notes

Jason’s out - hurt his tooth eating ribs

Fridberg: Announcing All-In Summit 2024 in Los Angeles - September 8-10, 2024

Chamath went to an AI conference with Jonathan Ross, founder of Groq AI.
Chamath: Groq could have 50% of the world’s inference compute by the end of next year. Nvidia is following the Intel playbook by defining a metric that defines the market. Intel picked clock speed, which isn’t actually super important to the end user.
“All major cities are crumbling”…lots of petty crime, drugs, etc. Paris is failing - it’s become lawless and dangerous, knife robberies are high.
Sacks: All the biggest US cities are blue and they have done liberal experiments that are failing horrifically.
Friedberg: Went to Google NEXT conference in Vegas. 30,000 people in attendance at the Mandalay Bay. Tons of companies there that have build products on GCP. There is a race to the bottom on commoditizing things like data storage. The cloud is a wide-open, competitive market right now.

March CPI numbers came in higher than expected at 3.5%. People thought they’d be coming down by now but they’ve stayed high causing things to get more expensive. How does this effect the election?
Sacks: Bad news for Biden. The country was expecting rate cuts and they aren’t looking likely now. Rate cuts could be delayed until July or August now. New narrative is that rates are going to be higher longer and might even increase.
Friedberg: Larry Summers predicted that this would not be a quick rebound and he nailed it.
Sacks: Biden would be in a better place if he’d heeded Larry Summers advice about inflation being sticky. The cost of borrowing is going to higher for longer, housing prices will come down, car payments will be higher, and consumers will feel like they’re worse off. People should be feeling better off because GDP has been growing but they aren’t because prices are higher. If we see a rate hike before the election, Biden is toast.

How influenced is the federal reserve by the election?
Chamath: One of the fed governors plagiarized the work that got her the job. The fed has become increasingly politicized even though it’s supposed to be a neutral body. But if citizens are displeased with the economy, they will vote out the sitting president. Is this random or a systemic set of decisions? Turns out it’s decisions. There is a structural disillusionment in this administration.
Friedberg: The administration is probably going to announce a series of loans forgiveness, subsidies, and stimulus to boost the economy before the election which will lead to worse inflation down the road.
Sacks: Commercial real estate is in a bad place after having borrowed at high rates. A building in St Louis sold for $3.5m that in 2006 sold for $205m. CRE is in a bad place. $1T in debt is getting added to the national debt every 100 days. We may be at the end of a 40 year trend of interest rates dropping that started in 1983.
Chamath: why the disconnect in the market? Markets still hitting ATHs despite the inflation report. Commodities are up 30% since beginning of the year. Other countries are becoming increasingly uncomfortable with the US and the dollar.

AI is going to increase productivity in the long run and may be the only hope for sustaining GDP growth over time. Adam Schiff proposed a bill to regulate content generated by generative AI models. The bill makes anyone developing these models to submit lists of training data sources to the government.
Sacks: This is too soon for this legislation. We need more legislation to define Fair Use before we get too far into regulating content for AI. Entrepreneurs are working on solving this issue. Why did Adam Schiff introduce this? He’s a prodigious fund raiser representing Los Angeles and he’s doing this to appeal to Hollywood.
Chamath: Google didn’t sue OpenAI for using 1b hours of content from Youtube for training so why should smaller players care?
Friedberg: The models learn from the data they’re trained on, just like humans learn from all the input we receive. Just like musicians learn from other songs and musicians then adapt it, so will these models. Find a better process for determining uniqueness.
Chamath: Should you not have the right to protect your creations? If you put together some words in a particular order that has meaning to you, shouldn’t you be able to protect that from being claimed by someone else?

Small Drones have been attacking targets in the Suez Canal and in the Ukraine theater. What do you think about this, how does this impact warfare?
Sacks: drone are ubiquitous on the battlefield. You can’t leave cover or loitering drones will hit targets. The Russians have spun up jammers to stop the drones. The US has been using $2m missiles to shoot down $2,000 drones.
Friedberg: Carriers don’t make sense anymore. We need to go smaller and get smaller air defenses.
Chamath: Invested in a company that makes sail drones to collect data. Already being bought by the US Navy and has ADM Mike Mullen on the board. investors have an obligation to invest in future war tech that will make the military safer, cheaper, smaller, and better.
Friedberg: The DoD is increasingly interested in partnering with Silicon Valley companies to build warfare tech. Is this a good thing or bad? Some companies think it’s bad and unethical. Others are winning bad by taking military contracts. Investors who include defense companies in their portfolio will outperform those who don’t.
Sacks: The military spends a lot on R&D with very little to show for it. We aren’t getting good value for our dollars, we need a disruption in the defense industry to speed up the development happening there. The battlefield of the future will be more automated and less human.
Friedberg: 79% of lithium battery production comes out of China, only 6.3% from the US. EMP may be used to fight drones and take out electronic systems.
Chamath: The military doesn’t have a choice but to automate. Enlistment is at an all-time low and has dropped drastically since the 1980s. We need to move to a military of unmanned autonomous vehicles.
Sacks: If the US starts using EMPs, the enemy will hardened their drones against EMP. It’s a temporary measure. Planes and vehicles will need anti-EMP tech.