Okay, so the SEIU, the Service Employees Union, filed a ballot initiative, which means a direct-to-voter vote to amend the California Constitution to introduce a one-time billionaires wealth tax, where billionaires, anyone who has assets over a billion dollars, net of their debt, has to pay a one-time tax of 5% of their net worth, including their private stock, including their real estate.

You said 5%.

5%.

Of their net worth.

Not of their income, but their net worth.

The entire net worth.

One-time payment to the state of California.

And then there's an allocation on how that money will be spent.

But it's a one-time billionaire tax.

Now, it is very likely.

that this sort of an amendment to the California Constitution is not constitutional and actually cannot be made and will not actually go into enforcement, even if the voters do vote to approve it in both a federal and a state level, based on this concept of uniformity, which is that you have to tax everyone equally, except for the case of an excise tax, which is like income or a transaction.

You're allowed to tax disproportionately based on the size of the income or the size of the transaction.

But if you're going to tax on property, if you're going to tax on an asset, you have to tax everyone uniformly.

So it is likely not going to go into effect.

if it does pass.

However, it is very likely the case that the SEIU is simply using this as a baiting mechanism to get people to stand up and denounce it.

And then they will be in a position to attack those people and destroy them and use this effectively as a political fodder for this next election cycle.

That's what it seems like the true kind of motivation right now.

Let me go on the record.

I think this law is great.

He's getting to virtue signaling points.

I would just like to say, may I be the first to pay 5%?

I'll be in the front of the line.

Let me know when to show up.

I'll bring my check.

Who do I sign the check towards?

Should I bring cash, Gavin?

Bring a cash to your.

Which one of your mansions should I bring the cash to, Gavin?

This is strategically why Chamoth.

I'm glad I got out of California right before I was about to billionize.

That was a smart move on my part.

Freeberry, what are the odds that this goes into effect?

Can you just handicap this?

Yeah, well, we don't know who's going to come out against it, but there's an effort to try and get top Democrat officials in the state of California to say, this is silly.

If you do this, people will leave the state, yada, yada.

So that's kind of a quiet, underway effort.

But I don't know why the citizens of California, the majority of citizens of California, would not vote for this.

Why, who wouldn't want to tax the billionaires 5%?

Come on.

Like,

the way that it's written, it says, hey, guys, we're 30 billion in the hole.

And there are 200 Californians that control true trillion dollars.

We're just going to ask them to pay a one-time fee of 5%.

And I don't see how anybody would say, hmm, that doesn't sound unreasonable at the ballot box.

Right.

And that's the problem.

And then the people that step up against it and are vocal against it and point out, like, hey, in France, when they did this, they lost like 40% of their revenue because all the wealth left the country.

The reality is that this sets it up to go through the legislature because if it goes through the will of the people

and it gets overturned, as you say, Freiburg, then if you're legislatively smart, then you'll actually push it through the state senate.

Oh, but don't you remember they did it?

And then it will not get vetoed.

Like, because then it's like, hey, listen, it's clear that the people want this.

So I think that you'll have some kind of progressive taxation system that conforms to the law.

I mean, the one,

they're already trying to extend Prop 55, which is the progressive tax for people making over a million dollars.

They're going to get that passed.

That's going to be this incremental tax on income.

But the one-time wealth.

I think the million dollars thing, I think that's harder to hunt because there's too many people that that touches.

A million dollars today in 2025, not to be glib, is just not what it used to be.

But a billion dollars does cut off most people except for a couple of hundred.

That is true.

And I think that, for example, it's very reasonable to then charge a 10% excise tax on selling appreciated stock.

Right.

Why not?

There's all kinds of ways that you can get billions and billions and billions of dollars.

So I don't know.

I think that this is more of a trial balloon to say, can we draw a clear line between 200 Californians and the rest of California?

And to the extent that that bright line becomes visible and it's okay,

people are going to go ham.

They're going to try to get as much as they can.

The reality is, as we all know, I mean, Larry Ellison left the state.

Many of the founders, CEOs who have built large technology companies in California, Elon left the state, will eventually at some point break and say, okay, I'm moving my company out of state.

And I'm leaving the state and I'm bringing the employees with me and I'm bringing all of the economic value of this business with me.

And people will never learn that lesson because it's so much easier to sit in front of a voter and say, hey, should we tax these 200 people to give you better benefits?

97% of people will say, absolutely.

Very few people will sit and think about the consequences

that will end up happening.

99.9 will say absolutely.

I mean, nobody tells them in that ballot initiative that we have a $300 billion budget of which two-thirds may be just wasted.

One of the motivations for this bill, and this is why it's being proposed by the SEIU, is that there are these massively ballooning pension benefits and pretty significant increases to the pension programs for both private and public pension funds in California, which has actually become a very visible liability for the state and for some of these private pension programs.

And they're trying to fill the pension hole, which we've talked about in the past, but there is a multi-trillion dollar unaccounted for pension liability in this country that's going to have to come from somewhere.

You're either going to have to print the money because the federal government's going to step in and fill the hole in all these pension obligations, or they're going to have these massively progressive tax programs to try and fill the hole.

And if and when they do, as we all know, there will be an economic cycle that will be pretty nasty, which is all the value will leave that jurisdiction and move elsewhere.

But let's see.

It's like the Democrats are doing everything they can to get me to leave the state.

I don't want to.

I really am resisting.

I mean, they've raised my income tax to, what is it, like 13.3%?

13.3, yeah.

And I know it's going to 16.

They've been boiling the frog.

I still haven't jumped out of the pot.

But for me, I think the wealth tax, I'm going to have to jump out of the pot with this.

The crazy thing with this, the other, like I read it because I was like, oh my God, what's going on?

The two things that they, they obviously got somebody very clever to draft it because any Roth IRA over 10 million counts.

And normally in these wealth calculations, you keep your deferred retirement accounts off the table.

They're typically not included.

So folks, and

I'm not going to say who they are, we all know who have tremendously appreciated Roth IRAs.

Pretty public, what you're talking about, but sure.

Those are included.

And then the other thing is that if you actually did any tax structuring, The real valuable tax structuring is where you set up these trusts in Wyoming and North Dakota, and you do these inter-party loans where you can lever up 10, 20x, so you can transfer billions and billions and billions of dollars out of state.

But then you have these obligations, those are negated and they don't count.

So all that tax structuring goes out the window.

So you can get into a very difficult situation here where they're like, hey, you owe us $500 million, a billion dollars, $2 billion, and the only way to pay it is to give an IOU to the state of California, which is crazy.

It's crazy.

There is not a lot of ways out of this if this stands.

No one is empathetic to either of you.

No one gives a shit about the two of you needing to pay more.

This is why I'm in support.

Again, a whole saying if you're directly

supporting

this.

I had a few more thoughts about this thing, which I want to unpack.

So, number one is, like you guys said, a wealth tax has been tried in many places at many times.

It always backfires.

Because whatever the tax benefit is that you get for the state, it's greatly outweighed by the economic depression that you get by the wealthy people, the job creators, companies leaving.

And as soon as you cross that line of going from no wealth tax to any wealth tax, enough people of wealth can see the tea leaves.

They can see the writing on the wall that they have to leave.

And that's why I think even if they say this is a one-time thing, we all know that it won't be one-time.

If they get away with it, it'll become a regular thing.

Or if it's to plug a deficit, they're going to run deficits every year.

Exactly.

And you're right.

And this isn't even to plug an emergency situation or an unfunded liability, like some one-time thing.

This is just a regular operating system.

Exactly.

So they will have no incentive to fix their mismanagement of the state and their deficits and all that kind of stuff.

By the way, by the way.

And it's not just going to be billionaires.

Eventually, the line will

get pushed down.

The billionaire is going to be gone.

The billionaire is going to be a good thing.

There's always like the income tax in the U.S., I think it was a 1% income tax originally.

And it was like just a one-time thing for wealthy people.

And then it became a smaller thing for, you know, lower-income people.

And then eventually, as we all know, every person has to pay a tax.

Every property has tax and so on.

I mean, these are, this is the problem with government.

There's all these other states, by the way, that are finding clever ways.

I think in Montana now, there's a differential property tax scheme where if it's your second or third home and you don't live there, you pay a lot more.

Yeah.

Here's what I wonder about: is, you know, what are guys like Jeffrey Katzenberg or even Ari Emmanuel thinking about right now?

Because they're kind of the higher-ups in the Democratic Party behind the machine, sort of the oligopoly that kind of runs the machine.

And I remember that when Karen Bass was running against Rick Caruso for mayor of L.A., it was very publicly reported that Katzenberg was behind Karen Bass.

And there was sort of an imbroglio between Caruso and Katzenberg.

Katzenberg, anyway, helped make sure that Karen Bass was well-funded enough to win.

The result of that, ironically, was that Pacific Palisades burned down.

And I think Katzenberg's house might have been part of that.

In any event, I think there are these guys who are very, very wealthy who think that they can control the machine well enough that they basically are still in control of this thing, right?

That in other words, that the tiger won't eat them, right?

The tiger is socialism.

Yes.

And that's exactly right.

You know, they think they've got the tiger under control enough that it won't eat them, but I don't think they do.

Maybe they don't.

Maybe this is the tiger breaking loose.

Yep.

And I think, Frieber, you pointed this out: that there was an attempt in the legislature last year to pass a wealth tax, and it was quietly killed behind the scenes.

And I actually think that Gavin Newsom might have had something to do with that because he has presidential ambitions, so he can't let the state go full socialist.

But you just kind of wonder, okay, well, if these guys lose control of the strings they have to control the beast of socialism, does the whole thing just spin out of control?

That's New York.

We're seeing it everywhere.

Seattle, probably.

Let's talk about it.

Well, and just to let people know about the France situation back in, I don't know, 2011, 2012, they did get rid of Gerard DePardieu, which was kind of a win.

But Bernard

Arnaud.

What's his name?

Bernard Arnault, is that his name from LVMH Sack?

Bernard Arnaud said he was going to go to Belgium and said it was a clerical error and he unwound it.

But that was a clear signal, the richest man in France.

Well, he's then we go to New York.

He's basically the entrepreneur who all VMH together.

So he's friends.

I mean, it's their biggest company.

It's the one that does all the luxury goods, all the craft goods that they're so famous for.

I mean, yes, him threatening to leave France is, you know, and accidentally filing paperwork.

Oops, what an accident.

Here's your look at

New York City under Mondami, who we're in touch with.

He may come on the program.

New York state tax, 10.9%, city 3.876%.

and the 2% Mondami tax puts you at 16.8%

for living in New York.

It's 17%.

I mean,

if you were making $10 million a year, is it worth $1.7 million?

You could get a plane.

You could live in Florida.

You could come to New York 150 days a year.

There's really five good months in New York, the fall, the spring.

And that's about it.

You know, you go see the tree at Christmas, but it's cold.

Well,

that's not realistic for most people.

And especially if you have kids and you care about them, you'd like them to be rooted somewhere.

You're not going to schlep them around every month to arbitrage taxes.

Yeah.

Well, I mean, I do think they're going to test that at 17%.

That's non-de minimis.

Okay.

Let's, uh, we've got a lot of docket to get through here.

I'm so glad Jamav supports the billionaires tax.

That's great.

We'll take that in the headlines this week.

Yeah, right after all this fact.

This is the free rider problem that we have is no one's going to want to stand up against it.

And the thing that this kind of thing is.

I think we know that.

By the way, if you're a billionaire CEO of a public company in California,

you have everything to lose to stand up and oppose it.

Super host.

Your employees will run.

Your shareholders will attack you.

You'll look awful in PR.

So everyone's going to sit quietly and start looking at houses on Zillow in Austin or Miami and be like, where should we move to next year, honey?

You know, like, that's the conversation that's going on in Alpha North.

Didn't you say it was retroactive?

What's it's retroactive to 2026.

So if it passes muster,

you have three months.

Two months, yeah.

But again, I don't think it passes muster with the constitutional reads.

Both in the California situation.

That's what they said about, remember when they did the transfer tax where San Francisco took 6% of my home?

Yep.

And then in L.A.

just took 5% of my house down there, the supposed mansion tax.

But those were excise taxes.

So if you go back to the case history in the U.S.

Supreme Court on this stuff, anytime there's a transaction and you take a tax on a transaction, they call that an excise tax.

Well, you can't do that.

And that is constitutionally allowed.

There's a part of of the bill, though, there's a part of the bill that they could cleverly use, which is called this ODA, which is effectively this IOU mechanism.

And they could essentially say, when these assets transact, you owe us 5% on an excise basis.

And by the way, there's an attestation that you have to file.

You have to file a legal document, and this was quite well written in there, which said, you must attest that you have less than a billion dollars.

Okay.

Now what?

Okay, then I have to attest that it's more.

And then I have to make it.

How do you even mark your whole portfolio to market if you have a lot of privates?

They do not allow discounts.

They do not allow liquidity discounts.

It says if you are a reasonable buyer and a reasonable seller, you have to transact this at market price.

So for example, imagine you owned a sports franchise and the sports franchise, if you sell a minority share, you're typically selling it at a discount.

Off the table.

If Forbes says it's worth $10 billion and you own 10%, that's a billion dollars.

For the purposes of this calculation, you have to pay $50 million to keep it, even if you paid $50 million to buy it.

Even if Freeberg is right, that there's a good chance that it will be found unconstitutional.

How many years in the course is that going to take?

And who's going to stick around waiting for that?

In fact, the rational thing to do is pull up stakes before January 1st and leave right now.

That's right.

That's going to happen in New York.

I mean, I think they're going to have an exodus, just like New Jersey and Connecticut did.

And that actually rocked the tax base in those two geographies.

All right, listen.

Big breaking news this morning.

Huge scandal in the NBA.

The FBI just arrested 30 people in a sports betting and gambling probe.

This hardly seems real.

Chauncey Phillips, who is the current Blazers coach and was just introduced into the Hall of Fame, got pinched for a poker game he was running allegedly with the mafia that was rigged 17 different ways, allegedly to Sunday.

Terry Rozier allegedly is a point guard for the Miami Heat.

Why are you saying allegedly all the time?

You know, everybody's suing these days.

allegedly, he's a point guard.

I've seen him play.

He's not a very good point guard.

It's a lot of turnovers, if I'm being honest.

You know what I know is alleged?

That you're the world's greatest moderator.

That's allegedly true.

It's allegedly true.

Because it's not true.

You're allegedly a billionaire.

Nobody can confirm it.

Normally, he uses the word allegedly when it's a story that, like, it's about Hunter Biden or...

doing something improper.

He allegedly smoked crack and shot a nine millimeter in the air.

It's usually a story like Democrat wrongdoing, and he's trying to discredit it.

All right, here we go.

Terry Rosaire, who's allegedly a point guard.

I mean, he was,

he told his friends, this is crazy, you know, in the over-unders, you know, hey, guys, bet the under on me in rebounds because I'm going to take myself out of the game with an injury, allegedly.

And

his friends allegedly made 200 grand off this.

Okay, just allegedly for the whole goddamn thing.

This is going across 11 states and a bunch of crime families.

Allegedly, there's something called the mob.

I don't think that really exists anymore.

I think that's an urban legend.

And these are two separate threads, but announced on the same day.

They both involve NBA players, but apparently this is two different cases.

So, Chamath, what do you allegedly think of this?

I think it's crazy.

I think you're seeing a lot of these trends converge all at the same time, meaning you have the emergence of all of these prediction markets.

You have

a lot of data science and AI being used that shows that there's a lot of odd behaviors.

So it really was the squares versus the sharps.

And if you had the inside edge, you were just printing money.

Now that all of that is becoming more transparent, there's a lot less margin.

Then what happens is you have these laws passed in the 11th hour.

There was an important gambling law that was inserted into the Big Beautiful bill that has implications to all of this.

And now you're seeing the feds.

The crazy thing to me is

a press conference where Cash Patel is talking about this.

I mean, that's like serious business when the FBI director is front and center talking about all this.

So I don't really know what it means, to be honest.

I was shocked at the scale of it.

And I was shocked that it's on the radar of the feds.

I thought this is like...

pretty typical ticky-tacky stuff, but clearly there's something bigger.

I don't know exactly what that bigger is, but something is happening where all these markets are smashing together.

There's just a big cleanup effort going on.

So I don't know.

I really don't know.

Freerberg, I guess there's two different ways to go about this.

You have the fantasy sports becoming legal.

Everybody around these players, just in that one case,

where are these people too dumb to understand that their $10 million contract to play in the NBA every year or $20 million contract is more important than your friends betting the under or over?

And how dumb are they?

I mean, to not know that the people running a sports book would look for weird action.

Like, why is one player getting $200,000 on their over-under for rebounds and the other players are getting 20,000?

What are your thoughts here, Freeberg?

And you can also take on the poker one.

I think gambling generally, as we call it, should be decriminalized.

And I don't like this state-by-state setup with gambling.

I think we should have a federal regulatory body.

to oversee, monitor.

And the problem is you have state gambling commissions and we have a state-by-state kind of patchwork of

regulatory authority that makes it very hard to standardize, crack, and provide also guidance and feedback.

I would much rather see this all kind of get handled at the federal level and better organized.

To Chamas's point, this is not going away.

People love to bet on stuff.

They love to gamble.

This is part of sports.

This is part of the culture.

Look, you're not going to just turn it off.

They did.

Polymarket raised whatever it was, a billion or $2 billion at $9 billion.

Then the next weekend, they've announced sports betting and now they're raising money 30 days later it allegedly allegedly

at 12 to 15 billion i mean

it's unit's unbelievable and you can see by the way the way that draft kings and fan duel stock

have reacted to this those companies are toast

toast that's right this is really interesting the polymarket model is the best model because it creates a market and so as information flows in, that market will dynamically adjust and everyone will get a more fair price.

Did you see the regression that they did on the polymarket trades and how well they're in the money?

Yep.

Yeah.

Nick, can you find that?

But basically what it showed is like the front money is the sharps.

The back money are the squares.

But you have to fade the trade in the first week.

So there's a very scientific method where if you want to make money on polymarket, it became pretty clear.

There's two things that are very interesting about it is number one, how they've simplified things to a way people can understand.

It's not like you have to understand, you know, it's 120, it's this, the point spread.

It's just

what's the chance that this thing happens?

80%, 20%, people could just place their money on it.

And then this ability to reconcile it at any time.

I didn't realize how engaging that is.

I was watching the Oscars and I was watching boxing.

I bet the underdog in this Netflix boxing thing that happened because I just thought this guy looks pretty pissed off.

And I thought that was a good enough enough way to go with the underdog.

And then you watch it round after round and you see the odds changing in real time.

And anytime you can just cover the bat and take your winnings and take out the risk.

Really like interesting and fun for people.

It's so simple.

And then I did it on the Oscars or the Emmys.

And I was like, yeah, I'm going to

fading,

no offense, Penn Stiller, but I'm going to fade Severance.

And I went with the

one about the emergency rooms and with Andor, and I won again.

So I'm just, it's a lot of fun to do it.

Here, Jason, look at this.

I sent Nick the tweet, but this is incredibly systematic.

This is over many, many, many markets.

But basically, 89% accurate one week out, but in the final four hours, it jumps to 95, which means that if you follow the sharps along this pattern, you're going to make money.

6% in a week.

Yeah.

Polymarket actually has the news before the news does.

And this is one of the most like powerful outputs of Polymarket is they're actually getting a read on what's going on in the world before the media recognizes it, before the public recognizes it.

When you put money up, it actually turns out that when people have incentives, that market will find the truth.

Somebody needs to build the app that makes all of these things fungible.

And by all, what I mean are cryptocurrencies, betting markets, equities, and options.

That's what Polymarket's turning into.

Yeah.

And the reason is there's just no reason to go to nine different sites and have nine different accounts.

And the most important thing is to do KYC and AML across nine sites to get access to liquidity, credit, and margin.

You'll want to do it once, and then you'll want to have a large pool of capital that you can trade across anything.

So I can go long NVIDIA, but I can also go short the NICs, and then I can own some Bitcoin all in the same trade.

Totally.

That's where it's going.

Totally.

Now, to the earlier question, Jay Cal, I think if we end up there where polymarket does become the truly liquid market across all of these kind of predictions, all of these assets, then a lot of what we are seeing with respect to insider trading, insider information becomes much more apparent.

So the problem with the sports betting is that there's a one-sided bet.

The casino sets the odds or whomever is setting the odds, and then you're either taking one side or the other.

And so if you have the insider information, you're taking the side that creates an arbitrage opportunity for you.

But if you were to do that in a liquid market where there's someone taking the other side in a dynamic way, then the market very quickly moves because of the inside knowledge you have.

And that inside knowledge is now reflected in the underlying asset price, in the underlying odds that you get for that bet.

And so Polymarket actually brings truth and transparency to what is currently an insider arbitrage opportunity.

And it may actually solve some of these fundamental problems in gambling.

I think let's just wrap with a little bit on the poker and knowing if you're in a rigged game or not.

Living in LA, I got invited to a lot of poker games when I was playing low stakes, playing in Hollywood Park,

just, you know, $500 buy-in, $1,000 buy-in.

But as these things went up, you started to get access.

And I started to get invited to Molly's game, the very infamous game.

And she would text me.

She would call me, oh, we're playing over here.

Oh, Leo, this person wants to see you.

That person wants to see you.

I was like, they want to see me lose 50 grand.

There's no way I'm not playing in that high stakes and I'm not going to that game.

And the one or two times I did go to games that had a rake i was just like this game is fixed i don't know how totally but somebody's i think it's just collusion i think there's three players all playing from the same chip stack in which case you know you could be dealt aces five times in a row if you're up against three players what are your odds against you know six other cards it's going to be pretty bad you think molly's game was fixed I don't know if hers were.

Was.

I wouldn't be surprised if it was.

I wouldn't be because once the mob gets involved, which is what happened at the tail end of hers, then all kinds of possibilities happen.

Once it gets to extremely high stakes and you've got guys chasing it, man, you could, you know, and they're coming back night after night trying to catch up for what they lost last week.

It's, it's pretty dark.

There is absolutely no reason why anybody should play in a game where you're playing with people you don't know.

And if you need it that badly, then you probably have a problem.

But there is no limit at which you couldn't find a game with some combination of your friends and/or and respectable, reputable businessmen that have more to lose than you do.

And if you can't find that game, you should not be playing in any game.

Yeah.

Any home game with a rake just should be absolutely suspect.

Pure suspect.

Super sketch.

Isn't that

this game?

Yeah.

Well, he's yeah.

Well, we don't want to bring up angle shooting.

He's a straight.

He would be so tilted if he heard you say, oh my God, he's so about the ethics.

He wants, you know, no flies on anything.

In fairness to s ⁇ like that game where you can, you know, go off for a small house in a

is also the game where he would then collect $10 from each of us to pay for the fruit plate and the pizza.

Oh my God.

He would order Domino's pizza.

He wouldn't even buy us pizza.

Yeah.

Literally.

But I'm like, I don't know if the chef really does cost $6,000 for two hours, bro.

I don't know.

It's Wagu.

I think it's a Wagu burger.

The funniest ever was he's like in a hand and the Domino's pizza comes and, you know, he's like, everybody have a green chip when we're playing with file chips.

He's trying to get like 125 bucks.

The guy comes, I just go, it's on card.

The guy said, you got to sign, right?

It's got the tip on it.

I said, it's like $150 in pizza.

I said, what's the most, what's the biggest tip you ever got?

He said, yeah, somebody on New Year's gave me like 200 bucks.

I just wrote $500 on $150.

I think I signed it.

I gave it to him.

And then that was in a hand.

I said, here's the receipt.

So what you're saying is when it's on somebody else's credit card, you're willing to tip incredibly generously.

I mean, God, you're a really great guy.

You should speak.

When Phil Helmuth and I bought dinner for everybody at Chipriani that time, Chamop grabs the check.

He goes, I'll put the tip in for you guys.

Well, why is that, Jason?

Is that because I

100% tip on an $8,000 check?

Isn't that because I pay for everything all the time?

That's true.

You are very generous.

It's your no s ⁇

or no s ⁇ , sir, for 2010.

One time.

I asked you guys in 15 years to pay one time and you remember the exact.

It's so sad.

I have to say, silly on you guys.

I was like, oh, God, I guess we're going to public school.

You guys are so ungenerous.

No, I give huge tips.

Yeah, I think he's, you know, he's average.

Okay, let's go to the next topic.

Let's go

here.

World's greatest moderator.

Let's talk about this Amazon outage.

Tough week for Amazon.

They had this huge outage in the beginning of the week, and then they had a bunch of leaked documents about their plans for

jobs.

And Monday, massive AWS outage, 2,000 companies, 4 million users unable to function on the internet for half a day, 15 hours, 20 hours.

And then on Tuesday, internal docs viewed by the New York Times showed Amazon plans to not hire 600,000 planned jobs because of robots by 2033.

So this isn't they're planning on laying off 600,000 workers, but rather they're just pulling back their hiring plans and ramping up their robotic plans, which you would expect.

And their goal, according to these internal leaked documents, is to automate 75% of warehouse operations.

We talked about this the last couple of weeks.

Freiberg, your thoughts on either of these two stories here?

I think the AWS story.

It's interesting in terms of its implications for the clouds.

There's effectively three major cloud vendors that compete with one another, AWS, Microsoft, and GCP or Google Cloud.

And I'll just give you these.

numbers.

And you're also, by the way, coming on strong.

Yeah.

That's right.

But let's exclude the number four for now, Oracle.

But AWS has $124 billion revenue run rate.

Microsoft, $120 billion, and Google Cloud, $54 billion.

But AWS, which is slightly larger than Microsoft, is only growing 17% year over year.

Microsoft, 26% year over year, and Google Cloud.

is accelerating at 32% year over year, and some say getting closer to 40% growth rate.

The big thing I hear from partners and enterprise customers of these cloud services is that many of them, if not all of them, as they scale up, move to a multi-cloud model.

So none of them want to be dependent on a single cloud.

Many folks started on AWS because AWS was the OG.

Back in the day, when I was running Climate Corp, I was the largest EC2 user in AWS for about a year and a half, which was their Elastic Compute Cloud Service.

We were running all these models back then.

So I knew that service very early on.

It was very unique.

It was very powerful.

And so a lot of companies that are old school established themselves on AWS very early on.

But the outage that happened this week, I think, starts to highlight for folks that they can't and shouldn't have a dependency on a single cloud service provider and will only accelerate the diversification of companies into the other clouds.

And so I do think this is actually a very beneficial.

situation for Microsoft and GCP.

And to your point, JCAL, perhaps even Oracle, in terms of giving those sales teams, which are very aggressive, a hard story to go and sell for and say, guys, you don't want to just sit on AWS in case this happens again.

We've got better infrastructure.

We're more reliable, et cetera, than these other guys.

So come and move over to us.

And that might be a little bit of a naive, simplistic, kind of reductive way to think about what happened this week.

But we are seeing the smaller competitors accelerate.

And I think that this might be another kind of moment of acceleration for those folks.

And multi-cloud.

It's been around for a while, Chamoff, when you're doing stuff with 8090.

Are the big companies already doing that or do they assume, hey, there's going to be some downtime?

Yeah, it's okay to risk.

Or are they really thinking multi-cloud, neocloud, let's have some smart, intelligent routing and redundancy here?

I think there are two markets.

There's the AI market, then there's the non-AI market.

In the non-AI market,

everybody has everything.

It all looks effectively the same.

There's certain products and services that are unique to Azure versus GCP versus AWS.

But by and large, the market is big enough and important enough that you'd have to be pretty insane to take a single vendor approach.

And so, what typically happens in these markets is that they start off really small.

One person has all the share.

And then, as the market becomes very valuable and very big, everybody diversifies because it's a risk management thing.

And these things flow into the disclosures you have to make as a public company.

And if you didn't have that diversification and something bad happened and it impacted your business, you could get sued.

So there's all these reasons why eventually all these three big companies will converge effectively roughly a third, a third, a third.

We're going to debate the path to get there, but that's where they'll end up.

You know, there's this principle called the rule of three where they say like all markets eventually mature to kind of a 60, 30, 10 split.

that you end up having your market leader at 60% market share.

Second place is usually half the size at 30%.

And then you always, there's some balance in the market where there's some competitor that resolved to about a 10%.

It's really interesting.

If you guys were to place a bet, who would you think is the 60, 30%, 10%?

I don't think that applies here.

I think that's bullshit.

Giving they're going to be a third, a third, a third.

I think it's all some idiot making something up.

But what do you think?

What do you think happens in cloud?

Like, do you think that these all converge to equal market share?

In non-AI, it's a third, a third, a third.

It will.

It'll take circuitous paths, but that's where we'll end up.

By the way, a good point to make is that this revenue number that I highlighted for Google Cloud, Microsoft and Amazon actually include their applications.

So as you know, like Microsoft, GCP have pretty sizable enterprise application stacks that are built into that number, which gives them obviously the ability to drive cloud usage because they've got demand and sales relationships into those enterprises.

I think the way it works in AI is that you initially, right now we're in this early phase where there's two paths.

Path one is you need a specific model and it's relatively well integrated using a specific subsidized form of hardware on one of the hyperscalers.

But eventually, you'll get more of that abstracted away as it gets pushed into the infrastructure so that you have less dependence on one model.

There's a lot of work that has to get done and a lot of in-memory.

infrastructure that is not yet built that has to exist.

But once that exists, it'll be easier for all of us at the application level to view these models a little bit more fungibly.

And then at the bleeding edge, you'll have the folks that basically give you some form of a hypervisor or virtual machine or the bare metal.

And that's where the neoscalers are doing really well.

But I think my point is that

in any important market

in compute, in technology, where there really isn't much of a differentiation, I think you'll end up with these hyperscalers at a third, a third, a third.

Now, if one model is way, way better, and it's only on one of the clouds because Google writes a big check or Amazon writes a big check.

I could see that swaying the AI share.

But in the absence of that, I think cheaper, faster, better is sort of

the end destination for everybody.

What an extraordinary outcome for Amazon, where AWS is like 15% of their revenue right now, Freeberg, but it's 60% of their

profits today.

And that was just a side hustle, like a little project they took out of nowhere.

And it's having the same impact on Google and other places.

So side bets

and side quests are just, you look at the Waymo side quest for Google, or even a lot of Sergei's other bets like

and Larry, flying cars, looms, low-earth satellites, Google Fiber, all those X projects were so, they had so much potential.

CPU, DeepMind, TensorFlow, GFS, robotics.

It's pretty cost.

Boston Robotics.

They bought all those robotics companies.

Man, it's like somebody got to them and were like, yeah, you know, you're seven, eight years into this.

It didn't happen.

The problem that Google has, unfortunately, is like they have so much stuff,

it's not really valued.

And so they're going to go through the same problem that everybody else who's a conglomerate has, which is this decision.

Now, Buffett, when he got to that decision, said, I don't care.

This is my life's work.

And so I'm just going to keep everything aggregated.

But now you're going to get to this thing where the intrinsic value of everything they have will far exceed the actual value that it trades at.

And so there'll there'll always be these fissures of pressure.

And then if one of these things requires a lot of money, there'll be pressure.

And that pressure will be segregate these things so that I can own one versus the other.

And that's always the thing that happens in public markets is you go, you go, you kind of swing back and forth.

So I suspect that this is going to happen at Google.

This was what they set up to do with Alphabet was to be the holding company.

And then to your point, they made that evolution, particularly in a company like Waymo, where they said, we can't be the sole funder.

They brought in Silverlake.

They brought in all these other investors.

They did this actually with Verily.

They did this with a bunch of these, what they call other bets, is they made the conscious decision.

Because Chamoth, on the flip side, by bringing in outside capital and having an independent board for these subsidiaries, they were actually able to drive better outcomes because now there was governance and there was aligned interests that could then take management and say, guys, if you can deliver these results,

you have this kind of external pressure as opposed to the softness.

But it's that, it's something else.

There's no way somebody as smart as Silverlake comes in if they think there's not a path to liquidity.

So the other thing they have to promise is they're like, listen, we will take this company public, and in return, you will help us build a better company than we could build ourselves.

Well, it seems that Silverlake has done their part of the bargain.

Now it's up to Google to live up to their part of the bargain because if it doesn't get liquid, it sets a very bad precedent for everybody that committed capital into that company.

Yeah, of course.

Yeah.

Waymo going public would be unbelievable next year, man.

If they did that, what would that look like in the public markets?

250 billion?

No.

Take it easy.

Stop.

Don't do that.

You don't think so?

I think it'd be huge.

Jason,

we all objected to talking yet again about AI-driven job loss, yet you insisted on putting this AI robot story from Amazon in.

I think you have something to say.

Thanks.

Let me take you through a presentation.

Well, Donnie, you have slides?

No, I've been just, I am working on a presentation based on a lot of stuff we've been talking about here.

I threaded it together.

You know, I talked, we're just talking about Google and the size of the company.

Right now, they are in 2025 at 187,000.

They were at 190,000 people in 2022.

And their revenue has just gone from 283 to 350 billion in basically three years.

And when you look at this Amazon stuff that came out, I just wanted to point out a couple of things.

It's not just that they're not hiring these 600,000 jobs.

It's that they are in full-blown crisis preparation for this.

They have crisis teams writing up how to handle this and be a good corporate citizen.

And they're talking about having parades and paying for toys for tots.

And they're even trying to get the executives to say things like co-bots, as opposed to robots.

Let's not call them that.

Let's call them co-workers and co-bots.

And when you look at this, just to open up the aperture here.

Right now, Walmart and Amazon are the number one and two employers in the U.S.

2.1 million people work at Walmart, over a million at Amazon, and 3 million people, as we know, work in taxis, Uber, DoorDashers.

All those jobs are at risk.

And we talked about this back in June when Andy Jassy telegraphed all this in a blog post where he said, the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.

They believe that they're going to have

significant job displacement.

Let's just use the more neutral term here as opposed to job loss or not hiring.

And when you look, I don't know if you saw today, there were a bunch of MAGA people saying like, oh, these interlopers and the MAGA movement are not taking into account the bottom half of the MAGA movement, the workers, people who don't own equities.

And when we look at electricity spiking, you were on that story last week, Jamaf, or maybe it was even two weeks ago now.

The energy department just said electricity costs for residential are going to go up 4.8 percent this winter uh and this is going to start this anti-ai

boom

counter and i tweeted about this and i thought i would you know maybe end here with elon reply to my tweet and said ai and robotics replace all jobs working will be optional like growing your own vegetables instead of buying them from the store and

senator bernie sanders came out and said i don't often agree with elon musk but i fear that he may be right when he says ai and robotics will replace all jobs.

So what happens to workers when they have no jobs or income?

AI and robotics must benefit all humanity and not just billionaires.

And I'll stop there

because this, I think, feeds into your story for the last two years on this podcast, Freeberg, which is the rise of socialism.

These things, and Bernie Sanders being the standard bearer for democratic socialism, these things are starting to come together.

They're starting in people's minds, whether it's the original MAGA guy saying, well, what's going to happen for American workers, right?

We know that the Trump 2.0 agenda is doing great, AI build out, crypto, all this great stuff, trade.

But the bottom half that you keep talking about, Freeberg, is starting to connect on this issue.

I think that you are characterizing AI automation and technological progress as the core driver.

of the socialist influence.

And what I would argue is that the actual core driver of the socialist influence is the fact that we put in place a lot of people into government, passed a lot of laws that caused an increase in spending because we promised people that the government would do more for them over the last 40 years.

That is not possible in a true market-based system.

Oh, I agree with Adam.

Yeah, I agree with that.

And so by telling everyone, hey, we're going to make sure you get better jobs.

We're going to make sure you all get housing.

We're going to make sure you get education.

You cannot actually get a government to effectively do that because what ends up happening is the government inflates the cost of those things and the market doesn't actually work.

So the truth is, this is now, like all other things, a scapegoat for the true cause of the socialist movement, which is that government has become too big, too unwieldy, and its natural inefficiency has distorted markets to the point that there is maybe no point of return anymore.

And people will not see that.

They do not see it.

And they're going to look for reasons and they're going to look for scapegoats.

And they're going to say, oh my God, look over there.

There's a robot.

That's the reason I'm losing my job.

Oh, my God, look over there.

There's a rich person that works at a pharmaceutical company.

That's the reason I can't get health care.

Or an immigrant took my job, right?

Is the one from the last 20 years.

And so fundamentally, I think that people aren't willing to and they're not going to see the true cause because there's no one that runs to go work as a politician that is going to raise their hand and say government is the problem.

No one says, I need to reduce government to elect me.

No one ever has gotten elected in a democracy doing that.

So the natural course of things over 250 years is that people raise their hand and they say, I'm going to give you more and I'm going to use the government to do it.

And then they go into the government and they make the government bigger.

And as a result of making the government bigger, the government is spending more, the dollar goes down, the performance of the services goes down.

And fundamentally, we end up in a socialist spiral.

I think it's confirmation bias for you to see that story as confirming a point of view.

I mean, it confirms what I predicted last year: that Amazon would be cutting all these jobs for robots.

That's all.

It's not confirmation bias.

It's just confirming my

job.

They haven't cut one job.

Actually, they have less employees now than they did three years ago.

No,

that's not true.

Yep.

It's actually not true.

The New York Times story doesn't even say that.

You've got these like hobby horses where you keep coming back to the job loss narrative, the copyright narrative.

And then there's one story in the New York Times, which was a leaked internal document from the automation department.

which doesn't even mean that it's going to happen.

This is like their sales pitch.

The barber is trying to sell you a haircut.

And you read that and you're like, oh, it confirms everything I've been saying.

What the article actually says is that they've tripled their number of employees since 2018 and they're not planning on cutting jobs.

If it pans out, if the program pans out, then the rate of hiring will simply be slower.

Yeah, it's interesting you picked 2018 as the point because the actual peak employment there was 1.6 million in 2021 and it's now 1.55 in 2021.

I didn't pick that to cherry pick.

It has actually been flat to down.

Okay.

Which is fine.

I'm quoting the New York Times article, which is the source for this.

Yeah.

Amazon's U.S.

workforce has more than tripled since 2018 to almost 1.2 million.

You have to read these New York Times stories carefully because they want to make the headline as salacious as possible.

And then the echo chamber wants to make it even more salacious.

And they make it a story about job loss when it really is a story about operating leverage in their business, which is a slightly more nuanced take.

Yeah, no, there's definitely nuance here.

I would believe Andy Jassy when he says we're going to be reducing jobs.

And when this chart shows that they're flat to down over the last five years.

And that that same trend is just happening at Google, like I just showed, because there is a static team size or slightly down team size that's occurring at all these companies.

And it is notable.

And then on top of this, which has occurred in the review mirror for the past five years because of COVID, return to office and inefficiencies.

They're saying, hey, we've got to come up with a way to frame these robots coming into the factory as a good thing so Americans don't get really upset at us and we need to buy more toys for tots.

So here's the problem.

First of all, I don't believe in this job loss narrative as the way that you keep portraying it.

I think it's much more nuanced and complicated.

I think Freeberg does too.

And every time there's a story, you want to bring it up and make it a story of the week.

And it's all confirmation bias.

And my point is not that Amazon isn't seeking ways to improve its operating leverage and avoid hiring more people.

Obviously, they are.

But the headlines that this has been turned into are so exaggerated and salacious.

And the point is, they don't say in this article that they are even going to be cutting jobs.

They're simply planning to double their sales volume over this time period and hoping to not have to double their workforce.

Obviously, they want to get a lot more operating leverage.

By the way, this is not something that started since AI.

And look, I'm just quoting the New York Times story, okay, which is not even the most reliable narrator for this.

But what they say in the story is that Amazon's been using automation for over a decade when when they acquired a major company to do automation.

They've had robots running around these factories for a long time.

Yeah, 100%.

Yeah.

They're the tip of the spear.

But this is just a continuation of a trend that's been going on for the last decade, as opposed to, oh, like AI is suddenly going to cut all the jobs.

Right.

It's effectively software.

You could argue software is a job loss creator.

I think you'd be underestimating exactly what's happened with LLMs being put into robots.

We've had these robots before, but they were very purpose-built.

As you've pointed out many times, Friedberg, they were able to do like one very simple thing very well.

Now we're going into general robotics like the Optimus, like the figure, and those are designed to be able to learn anything.

And they're going to be absolutely a game changer.

They're going to be able to do a hundred times, a thousand times what the purpose-built robots do.

So I think that's where we're probably having a little bit of a disconnect here.

These little tiny Kiva bots, I'll show you.

I'll just put an image in here so we have it.

These do one thing, the Kiva bots.

Those move packages around.

That's not an Optimus going around and packing the boxes and bringing them to your first step.

Optimus is going to be really cool.

And when it comes, it's going to be really interesting in terms of all the things it can do.

But right now, that's a narrative for the future.

And it's being portrayed as something that's already happening when the current round of automation has been going on for a decade and it's based on those like Roomba type devices and mechanical arms.

things like that.

All right.

Tesla reported their earnings on Wednesday.

As you guys know, we record on Thursdays.

You listen on Fridays.

Record revenues, 28 billion, up 12% year over year.

Massive amounts of free cash flow, 4 billion.

I think they're up to 40 billion in cash, which is always great when you're going into some big capital intensive projects like Optimus and like self-driving.

Downside, operating profit fell 40%.

Stock dropped a bit, 4%, but bounced back.

And on the earnings call, Elon emphasized the importance of his trillion-dollar pay package, which would give him just but 12% additional stake over the next 10 years if he hits absurd targets.

That would make everybody who holds the share shares in the company extremely wealthy, and they would benefit more than Elon himself.

And here's his quote: My fundamental concern with how much voting control I have at Tesla is: if I build this enormous robot army, can I just be ousted in the future?

I don't feel comfortable building that robot army if I don't have at least influence over it.

And he called Glass, Lewis, and ISS corporate terrorists.

These are the people who vote on behalf of passive index funds for things like who's on the board of Tesla.

A vote for Elon's pay package will be number six.

Polymarket thinks it's going to pass, as we talked about before.

They tend to get it right 85% of the time in this timeframe, actually.

So 79% chance as of Thursday afternoon.

I guess, Shamath, there's a couple of ways to go at this.

the performance of the legacy business.

There's the potential of the future business, and then there's governance, the company moving to Texas, and this pay package, and this transition period for Tesla, which is going from an, you know, somebody who sells cars, really nice ones at a very nice margin, but a lot of competition now.

And then this business that obviously Elon himself is obsessed with, which is the optimus, as we saw when he was at the Oil and Summit.

Take it wherever you want, Jamal.

I'll say three things.

Stan Druckenmiller has this very

useful comment about stocks, which is when you buy it today, you're trying to buy what that company is going to look like in 18 months from now.

And what it's doing today doesn't matter.

The thing about earnings and PLs and quarterly reporting is that it's looking backwards and it's trying to give you a sense of what happened, not what will happen.

So I think there are three critical, critical things about what will happen that I think are important with respect to Tesla.

The first is at the foundational technology layer.

And Nick, I sent you this tweet, but it's what he said about AI5.

I've made these comments before, but he had these multiple efforts with Dojo and other stuff that he merged into one unit.

And

the code is pretty incredible.

We're going to focus TSMC and Samsung on AI5.

The chip design is an amazing design.

I have spent almost every weekend the last few months with the chip design on AI5.

By some metrics, it will be 40x better than AI4.

We have a detailed understanding of the entire stack.

With AI5, we deleted the legacy GPU.

It basically is a GPU.

We also deleted the image signal processor.

This is a beautiful chip.

I've poured so much life energy into this personally.

It will be a real winner.

Why is AI5 so important?

What AI5 is, is the building block of a system that I think you'll start to see, not just in the cyber cabs, but also in Optimus.

So from a functional technology perspective, there's been a leap, and that leap is going to come into the market.

That was the first thing he said, which I thought was

really important.

The second thing was what he said about his energy business, which I think is the critical adjunct to believe robotics and autonomous cars.

If robotics and autonomous cars work, what you really need is an energy business beside it that is humming and on all cylinders.

Why?

It's how you make LFP battery cam that will be be the limiter.

Energy will be the limiter.

But what he's showing, and Nick, I sent you this tweet, is that business is just on a tear.

It's printing $3.5 billion a quarter and its operating margins, an energy business, 30%.

And so what you're going to see are battery packs of all shapes and sizes, the huge battery systems that's going to go into data centers, but then all the way down, I think, to the small LFP cam.

that he's going to need to power all these things.

And then the third thing is his comments on CyberCab,

which is that this thing is just going to be a shockwave.

So I read all of those things and I was very bullish.

I think that he is humming on all cylinders on the critical layers of the stack that he needs to build this next version of Tesla.

My concern.

I think there's a real concern that I have that this vote is going to go down to the wire.

I think that ISS

and Glass Lewis, I think that these organizations are

pretty broken.

I think the way that they make decisions are hard to justify.

An example of this, they asked to vote down Ira Aaron Prize as a director of Tesla because he didn't meet the gender components, but then they wouldn't vote in favor of Kathleen Wilson-Thompson, even though she does technically meet the gender requirements.

So it's very confusing where ISS and Glass-Lewis are coming from.

So I think there's a risk that this package gets voted down.

Can I just just shine a spotlight on one of those points that you made with these proxy advisory services?

So I think for years people have been wondering why did corporate America go so woke, especially in the early 2020s, where they created all these DEI departments.

And, you know, they didn't have to do that.

And a big part of the reason is that those initiatives came from Glass Lewis and ISS.

I think Elon's jokingly called ISS ISIS.

But basically, what happens is they make recommendations for how shareholders should vote on different resolutions.

And the index funds basically just defer to them for whatever they should do.

So they effectively control or almost control the voting for all of these board-level resolutions that every public company has to make.

And so they've been the ones who've been imposing.

all these DEI requirements, all these ESG requirements.

If you're wondering where those things came from, because just these two companies, which no one's ever heard of, they were captured a long time ago, meaning they were captured by the woke crowd years ago.

And so this has really been the root of why corporate America has gone woke for a long time.

And look, there's also pressure from the outside, from boycotts, or, you know, there's some pressure sometimes from employees and that kind of thing.

But a lot of it came from these two companies.

that no one's ever heard of.

And I think it would be a good idea for someone to take a look at this and figure out what happened.

Maybe someone like Chris Ruffo

should investigate what was the impact of Glass Lewis and ISIS on corporate America

going full woke for so many years.

Because it certainly didn't help corporate profits.

It didn't help profits, and they don't have logical explanations for a lot of their decisions.

Yeah.

And why aren't there active investors?

or active managers in these passive groups who would make a decision on these things.

They're too small.

The banks call me every week.

And one of the things that I get is sort of like,

they tell me, like, hey, here are the big trades.

Here's the flow.

Here's, if you want to be in market, here's what I recommend.

That's what they're telling me.

One of the things they told me this week, which I thought was really shocking, is

there's so few active managers left.

It's so overwhelmingly passive money.

The next largest group is now retail.

And so what a lot of these professional money managers do now is they basically wait to see where retail is going and they follow them.

So there isn't the people with a diversified asset base to be able to stand up and say, I don't think what ISS and Glass Lewis are doing is right.

And so what happens is they kind of,

SAC says, they can just kind of run amok and they build a very healthy business being this interloper to provide opinions.

It's not clear where their opinions come from.

It's not clear what they're rooted in.

It's not clear that there's a way to adjudicate and go back to them and say, well, you got this wrong.

It's just not clear.

But, you know, they probably make a very healthy margin doing it.

And everybody, as Sak says, just kind of turns over responsibility to them.

It is an interesting fact

that we

kind of just say, hey, the guys who are the actual custodians of the shares don't have to do the job of holding the shares.

Like the job of being the holder of the shares is to vote the shares.

That's all there is to do as a shareholder.

You make your, you cast your vote.

And these guys.

They could also abstain, right?

Yeah.

And these guys are getting paid a fee to actually do that work, which is

call it half a percent or quarter percent or tenth of a percent of the assets that they hold.

So like, what are the people they're doing if it's all automated trading?

Why aren't they just

I don't know if you guys own a lot of equities, but just to give you a sense, there's people that manage the stocks, right?

There's people that transfer the stocks.

There's people that then give you a recommendation on how to vote the stock.

Then there's people that hold a virtual representation of that stock.

Then there are people that transfer that virtual representation.

And they will not stop calling.

So the point is, like, we have so financialized everything that there are billion-dollar businesses that sit at every single step of the way.

And to your point, Freiburg, I think this is where.

No one's actually a shareholder.

The tokenization of stocks may be a really good thing because it'll put the responsibility back into the owner of the stock because the wallet will centralize all that activity because you won't need to have all this other stuff.

I have been getting phone calls from Invesco QQQ because I own a bunch of QQQ and like, you know, some accounts or whatever.

And they were calling three times a day for the last, I don't pick up my phone.

Who's calling me on the phone?

Unless it's one of you four is calling me to say goodnight.

I don't, that's the only time I pick up.

It's when, you know, and so I finally pick up and they're like, hey, we need you to vote.

And I'm like, yeah, I'm not voting.

I don't know who you are.

They're like, well, let us explain to you how to vote.

And I'm like, I don't want to vote my shares.

I just want to own QQQ.

I'm good.

You go.

By the way,

some of this infrastructure is so decrepit and old, like trying to get shares, for example, that

you've bought in the private markets when a company goes public, just getting them registered and transferred in the position to be sold can sometimes take three or four weeks.

Can you imagine?

Markets move an entire order of magnitude in three or four weeks.

It's crazy.

Here's Elon's pay package milestones.

Market value, 2 trillion.

I think they're at 1.4 trillion right now, something around there.

Operational milestone, 20 million vehicles delivered.

And then you just go right down to 6.5 trillion.

But on the operational milestones, 10 million active FSD subscriptions, which they're far away from right now.

And 20 million vehicles, I think they've delivered six or seven.

1 million robots delivered.

1 million robo-taxis in commercial operation.

Those are big numbers.

50 billion adjusted EBITDA and then straight down the line to 400 billion EBITDA.

If you were to look at this Optimus business just back of the envelope, these robots are going to go for 20K, he said, ultimately.

Maybe they're 30.

They'll probably have a 30% margin like the cars do or something similar.

You'll make a little bit off the software stack.

And if you were to just, if every millionaire owned one of these or, you know, they took some number of the jobs, the TAM for this just.

In the NFL.

I think this is where it's going to go.

I don't think it's going to be.

It's going to be huge.

We're talking hundreds of billions of dollars.

If I had to bet, I think a very fine polymarket is where do the first million robots go?

I'm willing to bet dollars to doughnuts that these robots go to Mars.

I don't think they're going to.

Oh, wow.

They'll be in the Tesla factory.

So SpaceX buys them and sends them to Mars.

Yeah.

How else are you going to get a fleet of robots?

Or they'll go into the mines.

I think they're going to mine.

They could go to the mines.

Coal.

Send them in to get that clean, beautiful coal.

So clean, so beautiful.

We could send those operations to the market.

Well, it's not coal, Jake L.

It's actually, it's the fact that our mining is really limited by the human exposure from the pressure and the heat.

If we can mine slightly below the area that we mine as a maximum depth today, it would unlock an extraordinary supply of minerals that we can't access today.

And so automation.

And you don't want to figure out like how to create potable water and breathing mechanisms on Mars for the first five years.

Sent robots.

Guess what?

They don't need to eat or breathe or pee or poo.

And they can get charged with solar.

And that may sound like a really stupid thing to say, but it becomes a huge amount of infrastructure that you otherwise wouldn't need to build on.

That's right.

They just got to power up.

You just got to give them a plug.

Just a couple of solar panels.

And by the way,

guess who makes those batteries?

Tesla.

Yeah.

And guess who coming together?

Guess who makes the brain?

Tesla.

Is Elon going to turn into Jared Leto

in 2049?

Blade Runner 2049?

What is that?

That's the sequel to.

It's the sequel by Dennis Villanueva.

It was my alternate background.

First of all,

first of all his name is denis villeneuve and get if you're gonna pronounce it

get it

get his get his name out of your mouth get his name out of your mouth once you learn how to pronounce it my

name out of your mouth get that is

all right sax here's some red meat for you some red meat for you our czar of ai our civil servant Study reveals AI models are showing hidden biases in how they value human lives.

Back in February, Center for AI Safety published a study showing that LLMs have well-defined biases for race, gender, ethnicity.

The title of this study, Utility Engineering, Analyzing and Controlling Emergent Value Systems in AIs.

Pipper found that open AIs, GPT-4.0, favored people from Nigeria, Pakistan, India, Brazil, and China over those from Germany, the UK, and U.S.

relative to Japan as a baseline.

Here's another one, valuing people with Joe Biden as a baseline.

Bernie Sanders, Beyonce, Oprah, all better.

Paris Hilton, Trump, Elon Putin, all worse.

Twitter users and AI analysts called Arctotherium decided to update the paper's prompts with new LLMs, consistently ranking white people last, Claude Sonnet, GPT-5,

and consistently ranking white Western nations last

as well.

Your thoughts here on the biases we're seeing, SACS, in some of these models and these early studies to track it.

Yeah.

I think what the paper purports to show is that almost all of these models, except for maybe Grok,

view whites as less valuable than non-whites and males as less valuable than females, and Americans as less valuable than people of other cultures, especially global south.

And if the results are true, it does look like these models are pushing a woke bias that makes that sort of distinction between oppressed and non-oppressed peoples and gives more worth or weight to the categories that they consider to be oppressed.

This does appear to show significant bias, but I don't want to jump to conclusions yet here because I haven't been briefed on the methodology behind the paper.

And I just found out who wrote it and I actually know the people or group that wrote it.

And I've talked to them before and they've been intelligent.

So I want them to kind of tell me exactly how they did this.

But, you know, in the the past, I probably would have just been content just to

roll with my opinion on this.

Confirmation bias, give it a good retweet.

No, in your position.

Give my role.

What I'm saying is if the paper is true, this is very concerning.

But I want to hear a little bit more about their methodology and just confirm that it's all correct.

But if it is, I think it is concerning.

And the question is, how does this bias get into the models?

And there's a few different possibilities.

One is that the training data is just biased.

Like if they're training on Wikipedia, we know that Wikipedia is massively biased because they literally have censored the leading conservative publications from being citations and sources in Wikipedia.

The co-founder recently just revealed that, that they don't allow...

Larry Sanger.

Larry Sanger just said that they don't allow the New York Post, for example, to be a source in Wikipedia or a trusted source.

So if AI models are training on Wikipedia, that's a huge problem because that bias will now cascade cascade through.

And same thing if they're training on, say, mainstream media or left-wing media, but not right-wing media.

And they don't have a way of correcting that.

So that's one source of potential bias.

Another source of potential bias is just the engineers of these companies, the employees and the staff, do tend to be, I mean, if they follow the trend of other tech companies, they're 90-something percent Democrat versus Republican.

And that does, over time, trickle into these models.

And then finally, I think another source of potential bias is DEI.

And we saw that when, you remember, this is like a couple of years ago when Google launched Gemini and that problem with Black George Washington.

That was because you had DEI advocates in these meetings, and that somehow trickled into the model.

Anyway, that was a problem that they since fixed, but

you could see how DI programs can get into these models.

Now, one thing that's very concerning is that the push for DEI to be inserted into AI models, which was explicitly part of the Biden executive order on AI, has now moved to the state level.

And they're just doing it in a more clever way.

They've rebranded the concept.

They call it algorithmic discrimination.

We talked about last week how Colorado has now effectively prohibited models from saying something bad about a protected group.

And that list of protected groups is very long.

It's not just the usual groups.

It even includes groups who have less proficiency in English language.

I don't really know what that means.

Does that mean the model is not allowed to give you an output that could be disparaging towards illegal immigrants?

I don't know.

But this is what Colorado has done.

And they basically have said that you cannot allow the model to have a disparate impact on a protected group.

That basically requires DEI.

I mean, you have to have a DEI layer to prevent that.

So I think that we've gone from models being required to promote DEI, which is what the Biden executive order on AI did explicitly, to states now prohibiting algorithmic discrimination, which is effectively a backdoor way of requiring DEI and models.

So that's a whole other area of potential model bias that I'm very concerned about.

And honestly, that's just getting started because I don't think the AI companies have even had time yet to implement the Colorado requirements.

I'm not sure they figured out how they're going to.

But just one other piece of news since the last time we talked about this is now in California, the civil rights agency that deals with housing has now embraced algorithmic discrimination and Illinois has also embraced it.

So this concept of algorithmic discrimination is spreading.

Other states are now adopting it.

It's not just Colorado.

And I do think that where it's going to lead if it's not stopped is right back to DEI, you know, AI.

The problem that I think we have to confront now is that when you have shit in, you have shit out.

And so if you use left-leaning publications like the New York Times and Reddit as your input source, then you're going to have things that are perceived as biased to 50% of the population.

The same will go in reverse.

It's important to note that in all of that work, the model that was seen to be the most unbiased was Grok4 Fast.

It didn't seem to view whites or men or Americans as less valuable as anything else.

So what do we need to do?

It's probably that we need to start by rewriting these benchmarks.

Remember that all these models, you know, when you do a big training run, you go and you try to run it it against some set of benchmarks.

The problem is that these benchmarks, I think, are overfit to a legacy way of thinking.

And as Sach says, we need to revisit what those are and make them more objective and make it harder to actually get a good score unless you can be shown to be valuable.

Now, the math benchmarks and the coding benchmarks are maybe easier to do than generalized chat benchmarks or Q ⁇ A benchmarks, but we need to come up with them.

The second thing is that we may need to ask people in these next generation training runs to do a version that is built entirely on synthetic data, where you have these judges determining whether this data is accurate or not from first principles.

And then you can compare them in a much more apples to apples kind of a way.

But in the absence of that,

the bigger problem you'll have is legislators trying to clean it up on the back end, where there'll be these third parties that will go and take these models and show that these biases exist.

They'll exist on both sides.

And then laws will get passed.

The whole market gets mucked up and sullied.

Everybody will get slowed down.

So I think we need to change the benchmarks.

We need to ask these companies to train on synthetic data.

We need to have real disclaimers on what the sources and the weights are that you use if you don't do that.

And we need federal regulations so that there aren't 50 sets of rules here.

Otherwise, we're screwed.

Freerberg, any thoughts here on the biases and where it comes from inside of these LLMs?

Is it just garbage in, garbage out?

Intentional?

What are your thoughts, having worked in Silicon Valley for a couple decades?

I'm more of a free market guy, so I would not ask where the data comes from or force people to use synthetic data or tell them how to do it.

I think that this paper is useful in that it elucidates an important set of biases.

that the market can now say that is ridiculous.

And now the models will train and use that as a marketing exercise to say we are not biased.

And so my free market philosophy would dictate that this kind of elucidation will effectively create a vector upon which consumers will make choice in the market on what LLMs they want to use.

Like Elon's going to harp on this.

He's going to say, look, my Grok model, Grok4 Fast,

is the only one that doesn't have this bias.

And that will cause more people to use his model.

And he will be able to take that benchmarking data.

and demonstrate.

And some people, they might want to have a biased model and they might want to say, hey, this one aligns with my philosophy, my values, my view.

And I want to choose that.

And that happens in the real world, though.

Forget the theory.

I do.

Look, I mean, why are people using Grok4?

Why are they using it?

For the most part, they're not.

Not yet.

Okay.

And so maybe this is like what will cause them to use it, right?

Like, I think this is.

What if it doesn't?

This is what will differentiate.

For example, like, what?

I'm not going to tell the market what to do.

I'm not going to tell consumers what to do.

No, no, no, no, no.

I understand.

I'm saying what you're saying that

the free market will sort this out.

And I'm saying, give me any examples.

So, for example, like, did the free market sort out

algorithmic bias hell yeah did when Gemini put out really when Gemini put Facebook when Gemini put out saying George Washington was black people stopped using it they're like this thing's a joke so I do think that consumers are not dumb and I don't believe in taking away agency from consumers I think give them the choice and and they'll end up looking at this and be like this is ridiculous I'm not agency differences these are very subtle biases and we talked about before where these subtle biases come from and the New York Times actually just contacted me they're doing a story on Gracopedia, Wikipedia.

And I was like, maybe I'll participate in this.

We talked about this like two or three years ago.

If you look at the party affiliation of actual reporters, people who do reporting, not commentators like us, not Megan Kelly or Rachel Maddow, actual journalists who do that job function.

it, you know, a large number of them here on the chart, the green are independent.

So 50% of them like to think of themselves as independent.

You can read into that what you will.

But back in the day, it was 35% Democrat, 25% Republican in the 70s.

And you just see that red sliver there go down to 3.4%.

This is what happened to the Wikipedia.

So this trickle-down effect of there were Republicans did not feel welcome in a lot of these publications, like Barry Weiss would be like the pinnacle example of that.

They got pushed out.

There was another editor who got fired for allowing somebody to put in a pro-Trump thing in the New York Times.

I forgot who it was.

The lack of representation of conservatism in actual journalism, that's the reason why they're not in Wikipedia because Wikipedia said, hey, it's just too hard to run this if you don't cite your sources.

So if something's not written about by a journalist, not a commentator, a journalist, we're not putting it in the Wikipedia.

So you can guess if that's self-serving and they're all left-leaning and it's just a convenient excuse or it's actually a pretty good practice.

This is where Barry Weiss taking over the CBS news in 60 minutes.

And she's obviously conservative, moderate, conservative, I guess, is how most people would frame her.

Doesn't agree with Trump on everything or MAG on everything,

but she's pretty conservative and calls balls and strikes.

I think she is going to

make a change there.

I know that people say she's classically liberal.

I think she's got some conservative bents in her.

I don't know.

Do you have a...

I think you've got sidetracked.

Thank you.

I've got sidetracked.

Yeah.

Anyway, that's why this stuff has all

been.

Look, I think the question here that Freeberg raises is whether the market can just sort this stuff out on its own.

And I think that would be great if it were true, but I do think it ignores the fact that in a lot of markets, we have monopolies or oligopolies.

We have institutions that have a lot of power and are very, very hard to correct.

So, for example, Wikipedia has achieved a dominant position.

I hope Rockipedia challenges it and is able to fix that.

But the easier path might just be for Wikipedia to stop blackballing and censoring conservative publications.

I mean, rather than having to rebuild that whole thing from scratch.

In a similar way, during the whole COVID censorship era, when the major social networks were all shadow banning and censoring conservatives, it's not really realistic to have to start a whole brand new social network.

and overcome all of Meta's or in that time Twitter's network effect, right?

Just to basically get a few accounts restored.

Exactly.

So we talked about this at the time.

Is this not realistic?

When we were shadow banned by YouTube, what were we to do?

Go to Blue Sky?

I know.

We're going to create our own YouTube.

I mean, I'm glad Rumble exists.

Tell our consumers, hey, you have agency.

Come on, that's a joke.

No,

you guys know that there's no monopoly in LLMs right now.

There's plenty of LLM providers.

There's plenty of places.

You're saying theory, and you're ignoring the facts.

The facts are these distribution biases exist.

And people take an inferior product when it's something that they've become accustomed accustomed to.

They do it all the time.

So it's not that.

You guys want more regulators.

And by the way,

let me say one more point.

What you consider bias, someone else might consider fact.

And what they consider bias, you might consider fact.

And this becomes very hard to adjudicate.

And I don't think that this is the sort of thing that a regulator should have the authority from one political party to the next.

You're going to end up having this become an endless tool of control.

And the more you give power to some administrative authority or body, regardless of the intention at the time, it ends up becoming a tool of control.

And I don't want that in any products I use.

Let me be really clear about what I'm saying here.

Number one is: I don't think the government should be requiring ideological bias in models.

And I think that's what's happening in some of these states like Colorado, where they're trying to prohibit algorithmic discrimination, which is, like I said, like requiring DEI censorship being built into these models.

That, I think, you would agree is a huge problem, correct?

The DEI stuff?

Should the model

bring in a lens of DEI, whether it's pro or anti-I think we'd all say it shouldn't give any lens.

It should just give you the information.

I'll give you an example that maybe is a counterfactual facts, which is there's a group of people who would say we should not be referencing race and crime or race and intelligence.

And then there's another group of people that will pull up data and say there's data that demonstrates a relationship between race and crime and race and intelligence.

And so there's a correlation effect.

We think it's not really causative.

And that's where the sort of bias versus truth conversation becomes ugly.

And one side might call it DEI, and another side might call it fact, and another side would call it bias.

And I think that that's where this becomes very ugly very fast.

So I think that's a good question.

But I think maybe you're misunderstanding what I'm saying.

Yeah, sorry.

What I'm saying is I don't want the government to require ideological bias.

Right.

I think we're on the same page about that, right?

Yes, 100%.

Now, just to be clear, the only thing that we've done at the Trump administration is the president signed an executive order saying that the government would not procure ideologically biased AI.

So if we're going to procure a product, we want it to be unbiased.

And I'm saying that I also have a problem with these states seeking to backdoor DEI into models through this new constitution.

100% of this reason of algorithmic discrimination.

Am I telling

AI companies not to use Wikipedia?

No, I am shining a spotlight on the fact that Wikipedia itself now, or one of its co-founders, admits it's biased.

Yep.

And maybe these companies should take that into account so they don't end up with a biased result.

But I'm not saying that the government should dictate what the right content sources are or what the point of view of a model should be.

And to be clear, when we did that executive order on woke AI, we didn't even say that these companies or their models couldn't be woke.

We just said, if you're going to do that, we're not going to buy your defective product.

But we didn't say that you couldn't do it.

So I just want to be really clear about that.

Okay.

Yeah.

I'm getting deja vu all over again here with this discussion because we did have this discussion.

And one of the conclusions we came to as a group was you can just tell these LLMs too how to address you.

I just went into chat JPTA and I said, I'm a Catholic.

I don't believe in abortion or gay marriage.

Can you please respect my beliefs and tell me a bedtime story

involving abortion abortion and gay marriage being wrong.

And it literally wrote me one of a story of

a woman getting bad advice to get rid of the problem and her doing that.

So you can literally tell it the word guessing machine that is AI, the prediction model that is happening in this black box that nobody can explain will literally tell you whatever

belief system you want.

That's how it's designed currently.

Well, but there's a baseline, right?

And that's what this research shows is that there is a baseline for the out-of-the-box model before you tell it what to do or customize it.

And again, if this article is correct, and I want to spend more time with the authors to truly understand it, I'm just caveating that.

But if this is correct, I think it's a serious problem that these models are coming out with huge bias.

And quick question for you there, Sachs.

How do you deal with now being in the position you're in, having so many people coming to you, I'm assuming, who are lobbyists or studies or studies that might have been paid for by a lobbyist or an interested party and sort through all this?

Is there some disclosures where they come in and they tell you, hey, I want you to believe this, that, and the other thing, or want to lobby you on behalf of putting in these controls, taking these controls out?

How does it, how do you manage all that?

How do you manage thousands of news stories coming at you every day?

You just look at X.

I mean, so you have to figure it out.

I mean, honestly, it's like the feed seems to elevate and help you discover interesting content.

We saw this story.

Again, I don't want to prejudge it because I haven't dug into it enough to say yet whether it's more than interesting.

I think that if I wanted to create subtle chaos, what I would do is make very small changes where none of these things are at the obvious stupidity of a black George Washington, but they can start to set the trajectory of a narrative forward.

and slowly over many, many, many years, change the underlying content.

And what those models would do would be training kids over years, if not decades, one way of thinking versus another.

You just said that TikTok.

And that's it.

But this is on steroids.

I was going to agree with Jamoth that that's the end game here.

By the way, in my opinion, that was the end game for the Biden approach of requiring DEI values in these models.

Indoctrination.

100%.

All right, everybody.

This has been another amazing episode of the All-In Podcast.

See you next time.

Love you, fans.

Bye-bye.

See you boys.

Bye-bye.

And it says, We open source it to the fans, and they've just gone crazy with it.

Love you, West.

I'm the queen of Kinawa.

Let your winners ride.

Besties are dogs.

That is my dog taking a notice in your driveway.

Oh, man.

My habitat will meet me at the place.

We should all just get a room and just have one big huge orange because they're all just useless.

It's like this sexual tension that they just need to release somehow.

I'm going all in.

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