Introducing Oneshot: The AI Arms Race and Crypto Market Consolidation | Michael & Vance

Transcript

The the thing that everybody needs to realize is that there is an allout war going on and it's literally happening about couple hundred yards, couple thousand yards that direction, which is open AI versus anthropic and they have positioned themselves, in fact, they've counterpositioned themselves to be opposites of each other. And everything that Daario says versus everything that Sam says is is specifically chosen to not necessarily be what he believes or what he wants to have happen or expects will happen, but to be counterpositioned against them so that they are made to look in a different light. But all of this is for the intent purpose, the stated purpose of raising capital.

>> Nothing said on one shot is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Michael Vance and our guests may hold positions in the company's funds or projects discussed. >> One shot. Um, hello Michael. Well, it's beautiful day here in San Francisco, but uh we don't have the extra floor yet, which will feature our new podcasting studio. That will probably take a little while as we still are in in the construction phase. But, uh turns out we uh don't have enough

conference rooms to be able to withstand two people simultaneously with with founder meetings going on. Um so, Vance had to run home. uh I got the backdrop, but this is the first of what will become many uh oneshot podcast episodes. You want to share more about one shot, what it means, where it's coming from. One shot to be oneshotted by something uh usually in a positive context in terms of, you know, getting into a rabbit hole. There's also a negative context in terms of getting oneshotted by something like Iawasa and changing your personality forever. So, don't do drugs. But I think the theme of this podcast is we want to go deep versus broad. You know, we had uh two and a half three years of doing the take of

the week and I think a desire from our end to go deeper and cover things within crypto, cover things outside of crypto and and cover the convergence of uh tokenization, fintech and and crypto. Uh and so super excited about that. And um I think you know one of the areas that we've been finding a lot of uh energy from especially as you know the general anything with momentum bare market plays out is um in the public equity space and I think there's some interesting themes happening there uh and you know we'll share more on on you know podcasts to come but it seems like a lot of the tokenization and stablecoin stuff is actually playing out within either the

largest private companies or within public companies that exist today that are kind of trying to adopt this tech stack. And so, um, >> before before we get into that, I think one one point of clarification is we're not going to be I think on bell curve what we were doing was the the weekly roundup and and every once in a blue moon we'd have on a founder like a SID or uh from April or you know other guests you who kind of give perspectives. Um, I think going forward, it's probably going to be more 50/50 founders and kind of subjects, specific subjects that we're diving deep on with, um, not just your like run-of-the-mill uh, you know, fifth, sixth, seventh episode that you would hear on podcasts of like what's happened over the week.

Um, I I think we'll be doing general market updates when there's kind of things that are notable and and there are actually some things that are have been notable since we've been on air. Uh, and even this week. Um, so we'll be talking about like general stuff probably with more of a removed perspective than most of the other podcasts that exist, but um going to be pairing that with uh more interviews and more in-depth subject matter um because frankly we think that that's something that's kind of missing from the conversation um right now. And um we we have a couple of subjects of things we want to touch on this week. I think um stable coins and kind of what's going on in public markets um whether that be crypto markets or public markets is definitely one of them. Um and I

think the other thing that's just frankly changed as an update in the last 24 hours or or maybe 48 hours is what's going on in DC. Um feels like there's some real changes of foot in terms of the crypto regulations. Um but uh I I think it's also you know worthwhile to talk about over the last couple of weeks since we've been on just like the massive change that has occurred within the AI space. Um particularly with the advent of these new new code up uh these new model upgrades um that I think at this point was maybe three or four weeks ago feels like like basically there there's something different in the water now. Um and I don't think we're going back. Um but those are those are kind of the three things. Um, you know, at least

today we wanted to talk through um I don't know if there's anything else, Vance. >> No. Um, why don't we talk through clarity? So, today Brad Garlinghouse came out and said there's a 90% chance that it passes by April. And from what we've heard as well, it seems like we are on a glide path towards getting something done. There's back and forth with issues like yield sharing. There's back and forth issues like ethics. And it seems that we're getting to a point of conclusion which is really positive. So I think with that backdrop, you know, what what's kind of your take on on the goings on, Michael? What what comes from this? Well, um it's not just Brad who says this. Poly market now gives it a

90% chance of passing in 2026, which uh for anybody who follows uh any of the conflict polyarkets um knows that usually it's it's people who have some inside information or who are probably the ones trading in those markets. >> There's also going to jail for uh >> betting the Venezuelan. Well, and uh there there was a uh I saw some Tik Tocker who stood outside of Levi Stadium the the two days leading up to the Super Bowl, timed the rehearsals of like the national anthem. national anthem at the Super Bowl happens to be one of the most popular pop prop bets like and and like how many planes fly over is another one,

but like literally this dude was standing out there with a microphone and headphones timing how long the rehearsal was and got it dead correct and made like a hundred grand. So, you know, like how prediction markets deal with like this is kind of an ongoing conversation which maybe we can rabbit hole on this episode or some other time is just like h how do we think about prediction markets and market structure around prediction markets? Like do is is inside information good or bad? Should it be able to be traded on? Obviously, you cannot trade or profit off of inside information in securities markets and that's kind of the whole point. Um you can when it comes to other markets um like um for instance you know

commodities don't have the same you know restrictions um they they have around market structure and kind of like fair market uh participants or participation but it's not inside information. There is no such thing as inside information when it comes to like wheat or corn or oil. Um, so all all of this is to say like there's definitely some interesting stuff going on with prediction markets. Prediction markets today went from 60% clarity passing in 2026 to 90%. Um, somebody probably knows something. This was also I believe it was this morning the third meeting of the minds between you know crypto people uh crypto policy people. So the you know the blockchain association type people and the industry

people and I know that the subject of today's conversation is the third meeting on stablecoin yield. It seems like that is the last remaining point. Uh what what has happened uh over the last few weeks is it seems like there was a at least a Senate draft that was put forward um by Senate Banking and and that that you know took a lot of you know amendments let's say or like then I can't remember how many but there were a ton of amendments. Um, I think the that was the also the draft that Coinbase stepped out and said, "We do not support this."

In doing so, it basically killed all momentum. It killed the draft. And I think it's usually telling when you have someone who's in a position of power. Um when when they say something and they say they didn't do something, usually what that means is they did exactly what they said they didn't do and they are defending themselves inadvertently by saying, you know, whatever it is. in and in this case, Brian um Armstrong first words out of his mouth in the interview yesterday was we had nothing to do with stopping the momentum of the Clarity Act. Uh we didn't put our hands up and say this isn't going to work and and we we we put the brakes on it, but in reality they did. And I think um there's

a lot of fingerpointing right now going on um as to is it Paul Greywall and he's he's basically saying it'll be the banks that make this stuff fail if it doesn't go through. And of course the banks are saying it's Coinbase who's just blocking this. Um so I I think these are all negotiation tactics but the the core of the issue is is there a construct or is there an agreement between community or regional banks, local banks, national banks like JP Morgan and Coinbase to find something that is basically not competitive but also a business that works business model that works for them and and Coinbase's largest single

business unit largest single revenue line item right now is the yield sharing that they get or the revenue sharing that they get from Circle when they do uh when USDC is held on Coinbase. They get 60% topline I believe is what the number is. That is just like a billion dollars of revenue that they they get and they're you know he's the CEO of publicly traded company and he isn't going to sit there and kind of like let his business fade away. Um so he's going to fight obviously. Um, but everybody's kind of positioning it this as like we need to do what's best for the consumer and like we need to make sure everybody's fair treated fairly. And JP Morgan is is like, well, we love the fact that we can have people deposit and

we only have to pay them a basis point or two, but we get to lend it out at four or 5%. Like, that's a great net interest margin for us. and they don't want the competition or letting kind of a a loophole exist where Coinbase can, you know, over time slowly eat away at that deposit business. Coinbase doesn't want to give up their billion dollar you cash flow machine. Um, but they also want clarity because they know that clarity will create market structure for the industry and and so there's just a lot of two-facing going on. Um it honestly like my my my personal read is like Coinbase is really kind of um they have been uh dual intentioned for a long time and

it's tough when you're trying to push forward the industry versus you have direct incentives and you need to get those incentives covered. um even if the secondary effect is like a positive industry momentum, but you need to take care of the primary first, which may be against the secondary. There's just like a weird kind of incentive layering going on. So, it's been tough. Um but I I think if if we're able to get market structure passed in whatever way, shape, or form ultimately kind of like gets passed, this is what the industry has been waiting for for the last 5 years.

and we get to make sure we get to ensure that a new Gary Gensleresque era isn't possible. Um, it'll leave a lot of room for interpretation. It'll leave a lot of room for for rulemaking and that's what SEC and CFTC are set up to do. Our own Vance Spencer is now on the advisory committee for the CFTC. Um, which I think was pretty awesome to see announced last week. Um, so look, I think there's a lot of people who are lined up ready for this stuff to kind of take off. market structure, clarity, whatever it is, is is potentially that starting gun. Um, and and if Poly Market is right, if Brad Garlinghouse is right, we we got a 90% chance. And and I think a lot of people are expecting this to happen in weeks, not months. Um, so as

as bare market and as down as everybody probably feels right now in crypto, there is a light at the end of the tunnel, uh, potentially. And, um, yeah, my my bets on clarity kind of pulling us through. >> Yep. My my bet it's on on the same. Um I think what we see from the cryptonative perspective uh is that you know this will open up a universe of marginal buyers. There's not a ton of marginal buyers of crypto today just to put it plainly there's a lot of marginal sellers but opening that back up is going to be really positive. Um what we're seeing kind of on the ground in DeFi uh you know interest rates in a which is you know backed by crypto indogenous collateral are like 1.7% today. So like

people are willing to accept far below the risk-free rate just to to keep their capital in crypto. So that is actually a positive sign. Um, but what I think that is a harbinger of things to come is that there's going to be a ton of consolidation in the industry in each major vertical and I would say the major verticals are derivatives, stable coins, swapping, um, and I would say prediction markets too. There's probably space for a decorn plus, but probably not much else other than that. And there's amazing returns to scale to technology, especially when there's liquidity. Um, you know, like all the S-curves that you see about network effects and crypto are basically that squared. Um, but for everybody else, there's not going to be a ton. And so, I think what you're going to see is that a lot of DeFi struggles,

but the ones that really kind of persist and dominate and consolidate are really going to be just these massive, massive success stories. And, um, you know, we were talking about AI uh, today and like, you know, what the future looks like and even texting my dad, he was asking, you know, what what's the role of labor in in the world going forward. It's so hard to say what you know and there will be jobs obviously but like the returns to labor will be diminishing going forward. I think returns to capital going forward will be massive. And you look at some of the capital pools in crypto, you know, $380 billion in stable coins, all the market cap of the major assets. Uh if we can figure out how to connect these two to a coming investment wave of what will hopefully

be mostly fixed income opportunities to lend to AI, that'll be massive. And so the thesis is pretty simple. Owning one of these pools of capital is going to be really really productive going forward. And you know, if you have confidence in what you're doing, the money will follow. And that is kind of how I think about the next epoch for crypto is just um we need clarity. We need some other things to play out, some consolidation, but the winners will be far larger than you can imagine. And the valuations are pretty rock bottom today, especially next to things uh like, you know, OpenAI at 800 billion and you know, all this other stuff. And um yeah, no, the the bubble brewing in venture capital is epic. Uh but the bubble in crypto is basically gone.

>> Um and that's that's a good thing. We we have uh a bunch of different investment committee meetings depending on kind of the subject. And one of them is we we have one dedicated just to you know liquid assets which um requires frankly just like a different underwriting process than kind of the venture process. And one uh one of the assets that we've been looking at and I I won't say which um but it it is literally trading at like almost a 1x revenue and and a and a one and a two to 3x price to earnings with like growth that is doubling every quarter. um like there if there was anyone paying attention to

these markets like we are um and we're still doing the diligence and and haven't pulled the trigger yet, but the there are some deep value buys uh in in the liquid crypto markets and kind of the way that we at least one of the ways that we describe it to LPS is there there's basically three assets in crypto or three different buckets of assets. there's Bitcoin, digital gold, or or kind of like the reserve asset. You know, there's all kinds of stuff that we could talk about with that. And that's so different from basically everything else. Then there's the L1s or the smart contract layers, Ethereum, Salana, you'd even put like SU or or any of the L2s kind of in this camp. Um, and then there's basically like digital assets that have value flows. and and primarily

I I think the age of investing in smart contracts or L1s frankly is over at least until there's a new reason for more or we we become so limited in block space that a new technology actually is an advantaged position. Um doesn't feel like we're anywhere close to being in that position. And so what you're basically evaluating as a crypto venture investor is what is the business and why is a decentralized protocol the best way of generating the most value and how does that value kind of go back to the token and are you okay trading at a price to earnings that probably is going to be an order of magnitude less than you would get if you were in the private markets and that's current right now. It may change eventually. Historically it's

been you know at or above what what public market multiples are. Um, but some of these things are in such deep value. I I feel like, you know, anybody with a capital base is is able to really go um, you know, hunting right now and find some super huge wins. And just this week, the other thing to call out is is uh I think yesterday was the day they announced with Dragonfly closed their their fund. Um I I think just as there's dispersion within the landscape of crypto assets um there will also be dispersion as we've been saying within the landscape of fund managers and a lot of the names that were around in 21 and 22 are frankly just not going to be around in 26 and 27. Um so there's there's been a lot of change and and you

know Dragonfly is raising their fund. Kyle from Multicoin is stepping down. I think I think um yeah a lot of a lot of things are a foot. We we've called this the uh we're in the middle of the regime change and any regime change whether it be uh political regime uh social regime or or financial regime is going to be it's going to be tough and there'll be winners and losers but what we are moving from is this world where crypto is selling or distributing products and services to crypto users. What we're moving to is crypto is a technology that is being used by external users and consumers

to cost or or create, you know, better um better products and services that are then distributed to people outside of crypto. It's like the movement of like we're moving and doing everything in to this technology layer that we're expanding and and extending externally. Um and so yeah, I think it's just uh a lot of these themes that we've been talking about on Belker for the last year or two are now coming to fruition um more violently and more rapidly maybe than uh anybody would have thought. But um hey look, Bitcoin broke 60k and we're still here. So we we can withstand the volatility.

>> We didn't die. Um, yeah, the the other stuff that, you know, we've been looking at is just the the universe, the universe of public names that has to do with tokenization. And sometimes that's coins, most of the time that's coins, sometimes it's public equities. And something that we've just kind of been finding is, you know, everyone gets put through this trial by fire now when you go public. Um, I thought the Sebastian, I don't know what his last name is, but the Clara CEO, that interview was fantastic. Um, and you know, they were worth 42 billion. Now they're worth five billion. They dropped 25% last night after they missed earnings.

>> Well, they were worth 42 in the private markets, >> right? In the private markets. Um, and you know, it's it's just this remarkable thing where he said, you know, when I was the highest valued fintech in Europe, everything I said was gold. >> So exciting. That's so brilliant. Like you'd go off script and people are like, that's amazing. And now, you know, and he's in the middle of this right now turning it. He's like everything I say I just get on. I say I'm I'm say I'm reducing employees and they say that I'm you know a heartless capitalist. They say, you know, I'm I say I'm growing topline and they say that I'm taking too much risk. And you can see CLA, you know, and it's not something that we're buying is in the early stages of this turnaround, but like Figma just went

through this. Coreweek went through this. Um it's really easy to beat your chest when you're a p private company or a private token and say, you know, look at me, look at how valuable I am and I, you know, I'm brilliant. Um, but liquidity is such a virtue and it's so fleeting and the market is such a harsh judge and sometimes in the wrong way like when this AI you know when this karaoke machine company released a AI trucking logistics program and all the logistics companies cracks 30%. It's um it's humbling and you and you do have to stay humble. But I think what is going to happen in the age where AI takes over a lot of business process and tokenization reduces the cost to transact is that you're going to see a lot of dark horses emerge because really

like the technology sets the table. Everything else is window dressing and the people that are grinding away at this technology year after year after year, they eventually release something that sometimes is very powerful and can reset the dynamics of whatever industry that they're operating in. And so, you know, just seeing all of these names both in token markets and public markets have the same sort of dynamic. Um, it gives you this sense that it's a really great time to be a picker of things in public markets. And venture for us has been really slow for, you know, probably past six months, nine months. We've done, you know, a deal or two, a quarter, but it's been slower. It's just, you know, it's just so many more interesting things happening in public markets right now, which is great. And I think the surprising thing for me at

least is like talking to our LPs about this. They're over the moon that we're not doing the uh 52 card pickup game of venture capital where you just kind of see which one lands face up. Um liquidity is a is a premium branding advantage now too. Well, and to be clear, public markets extends to not just equities, but also public tokens and being able to evaluate tokens, which like when we started framework in 2019, there were no private rounds. Like everybody forgets every every single asset or just about every single asset that we bought in that first year were remaining vestigages and like hangovers from 2017 ICO stuff. And it does feel a little bit similar to that. Like the

nuclear bomb has gone off and like radiation is slowly dissipating and like some of the early people are coming back to to like go inspect and see what's left and and kind of pick up some some valuable assets in the process. Um so that's kind of what it what it reminds me of. Um but I do think um you know and and to go back to the venture stuff like the venture deals that we have done in the last six months I think have no intention of launching a token ever and and and that is I think kind of where things are right now. If if you had an expectation that you were going to do this private round, a series A, series B, you were going to, you know, get to some scale, some metric,

whatever, and then you're going to launch a token. And and that was basically the playbook for every single founder over the last few years. um with the expectation of like oh you give 7% to Binance and you get listed and you got this one to2 billion dollar valuation and things take off like go gang busters and you've got this valuation which allows you to recruit people and then you've got markups and blah blah blah and look funds did this too like this is the game that so many funds were playing for so long and this is one of the reasons why I think there's going to be halves and have nots going forward it's it's like if your basis was if your fund basis was we play this Binance game and we get the markups and look at our TVPI and um then everybody goes, "Well, wait, that's real money,

right?" Right. >> I know. >> No, it's not. Um >> I use that's as good as money. >> But the the private markets right now are reserved for companies who frankly maybe have a crypto angle. Um I mean pro usually have a crypto angle, but it's don't have a crypto token as their value pool mechanism. Um so it's really just like traditional venture again on that front. um which I think is healthy and and things will change. We'll go back to a world where you know tokens are back in favor but but I do think that it requires something like clarity passing.

Yeah. And there was a world very recently where tokens had a premium to equity. And so things change um and I think what we're yet to see is what all of these large cap private companies trade like in public markets. And um you know there's maybe a world where you're buying open AI, Anthropic, SpaceX far below what people paid for in private markets. that certainly has played out in crypto markets and um liquidity is a virtue and it's finite and and it's just something to think about and and be wary of as you look at these things. So, um let me ask you this, Michael. Do you do you have a MacBook Mini or you're going to be a member of the permanent underclass or will you save yourself? I have a MacBook

Mini. I don't have an agent running on it right now. I have I have uh installed uh open quad and um let's say let's say I have started the process. I I I really just like the thing that I don't have right now is is frankly like what's the killer use case? Um unless it's for business purposes. >> Talk about your brother. >> Yeah. Yeah. So I was going to say unless it's for business purposes, it's really kind of um I don't know yet. Like I I the the examples of like oh someone booked my flights and book my hotels.

It's like yeah that's nice but like sometimes I like booked my own flights so that I at least internally know like oh I got a flight on Wednesday because I remember booking that versus like you got to go to the airport right now. Uh I mean I've I've I've used it and and I'm I'm a codeex user. Um I would say I'm a I was an early adopter of chat GBT. I've been a late adopter of these coding tools. Um vast majority of my friends who are using this stuff seem really enthralled by it. They feel really productive. I don't think they are very productive. Um for me, you know, I use it for research data analytics projects.

It's certainly helpful for that. It does have a lot of missing context that you then have to stitch back up. Um for the blue sky projects that I try to go on where I just say, you know, pull me the list of 10,000 tokens. Pull me the list of 10,000 public equities. Tell me which tell me which ones we should invest in. Buy a stake in whatever. Um, there's a lot of distance between, you know, here and and where it would be helpful on that sort of project. And I don't think it's necessarily taste. I think it's probably just like a ton more context. So, I do view it as like a potentially solvable problem. Um, but it does feel like especially in this age, like the information processing power of smart people is now unlimited. So, you should be using these things. I I I will kind

of take the under on a lot of the white collar job displacement uh feverizing. Um there will be new members of the permanent underclass. There will be probably new members of the permanent overclass like there there will be some sort of dynamic rebalancing of labor and capital. Uh but I do think right now is just an incredible time to be investing the convergence of crypto AI fintech and it's not like these crypto AI scammy projects. It's like very pragmatic use cases of tokenization to lower your funding costs, AI to lower your uh labor automation costs, then you just have a better up business overall.

>> Yeah. And and look, I I think I'm I'm actually like got busy plans this weekend. My my plan is um actually to try and get like prediction market bot up and running to see and and just like play around with some sports uh bets or or some prop bets um not in the sports realm just to like see how it does see if like there there is a world where okay if you if you've got an asset manager that can identify different you dislocated markets or um uh advantage kind of like there's a percentage chance that this is happening but this market is trading you know well below that like go and trade that like I'm curious player out of that as a as a personal use case. The example with my brother, he's a civil engineer and um is helping to bid on a lot of public um

infrastructure. So like uh water sewer kind of treatment facilities um you know bridges um basically municipal infrastructure and so it's public public works which means that it's low bid wins >> and the bid is an extreme process but if you are so low that you you win the bid that's also the amount that you pay. Uh, so it's not a second price auction. It's it's a it's a um traditional auction. And so you want to get it ideally you want to win the bid by $1. Um, and you leave no money on the table and and um if you win the bid by, you know, 10% like that kind of sucks.

>> Uh, that's how Anyways, >> so that that's the way it works. But you can imagine that it took this this group of people, you know, who who are, you know, traditionally, you know, civil engineers, it took them a long time to adopt things like, you know, spreadsheets and and digital, you know, records of things. And obviously, they're, you know, they could use every advantage they could possibly get. I doubt that there's that many people who are civil engineers or or contractors who are doing you know competitive bid processes that have open claw helping them estimate these these uh these systems. Um and you know the spec on these things is like hundreds of pages long. Like you get a binder multiple binders like this thick. So it it's a ton of information. So anyways I I've

been hacking around with it. My brother's been hacking around building a a bid estimating bot. I don't think he's got anything kind of solved yet. And and I think you know some of the test runs there's definitely some hallucinating going on but but you know like don't going back to it. I think it's not that there's going to be this like one week we wake up and like half of the S&P 500 decides to to get rid of you know 20% of their employee base. Like that's just not true. Um what we are talking about though is there is a world where if you don't have the the skills of these tools that could be looked unfavorably upon you in the workplace and we I mean look we we have

portfolio companies who have told us they're like we're looking at token usage by employee and we're using that in our evaluation of of their reviews and and potentially like who we're keeping and who we're not keeping. Um so so like learn these tools and and that I know that you know whatever article um something big is happening got passed around the last week or two like and it's hyperbolic it was great you know anal the reason why I think it went viral is because everybody went through covid and if you use that as an analogy everybody will relate to it um but if if uh but the message on it is correct everybody who works in any form of knowledge work environment needs to learn this stuff. Um, and you know what

happened in SAS is now happening within the startup world uh with AI which is that it wasn't the big companies that adopted SAS first. It was you know the the Fortune 100, the Fortune 1000, they were afraid that if they put their personal PII information of their employees in in a SAS cloud environment that there was going to be elite. And so it was the startups who had 25 employees that started using the, you know, the startup SAS HCM or CRM provider. And what the VCs saw because they were all on the boards of these companies, it's like, oh all of my portfolio companies are using this. Like it's it's spreading like wildfire on these companies and they're saving tons of money by doing it. It starts small companies, bigger companies, larger

companies, then the largest companies. And that same thing is going to happen with this where all the startups are using these tools to be more efficient. They're they're doubling their productivity. They're they're reducing headcount and increasing productivity at the same time. They're also hiring for people who are just like prototypers. Um like we had one founder who came in and met with us and was like, I just need to hire someone who can prototype five products a year or seven products a year. Just like vibe code them. They don't have to be perfect, but we're just gonna like release them and see what works and what sticks. And previously that would have been like five teams of five people just to like prototype these things. Now it's one person with Claude.

So like that that's going on. Um but you know just like I I remember when uh right as I was right as we were finishing school uh maybe a year or two before there was this whole concept in the marketing industry that basically like it became possible to be a social media market uh manager. And what that meant was everybody every brand every entity had to have a social presence. you know, you had to be on Instagram, you had to be on Twitter, you had to be interfacing with your customers, and well, who who were the best people to hire in those situations.

Well, was all the kids who had been doing that personally and individually? It's like, hey, I can do this for you professionally. And I I don't think it's the same. I think this this um this wave is like orders of magnitude bigger than that. But it does kind of remind me of that where it's like you're just you're going to create a new class of employment which is like vibe toer or prompt engineer. Um and and so I I think that's actually a much bigger wave than the the people that we're going to lose because they're not able to contribute. And and I think that these are tools. These aren't like replacements for humans yet.

I I never minded the social media manager uh type, you know, I thought they were part of the business and and thought they were interesting, you know, to work with. I honestly did have some sort of issue with like engineering teams because like they would gatekeep data. They would, you know, okay, we came up with all these ideas. Oh, >> that's cuz you were on the business side. >> Oh, that's all because you're on the business side. Got it. It's like, oh, you wouldn't understand how complex this is. >> Come join engineering product and design. get all the data you want. >> Yeah. But like, you know, business people make the world go around. There's just like a bunch of munchers on the back end. And now the fact that these people have been replaced, it kind of tells you how much value they were

adding. And it and it and it was something when they really were partial to the whole equation, but now it's just like you've you've taken the rate limiter off the business to some degree. And so I'm not sad to see them go. Um, I I think like the software industry freaking out about its own demise is is kind of ironic in some senses, especially when you think about like, you know, the final form of like a software engineer, which is like one of these AI researchers, and it's like, yeah, these guys are super expensive. You got to pay, you know, a billion dollars per researcher, but you may only have to pay that person for like two or three years if you automate their workload as well. So, um, am I sad to see the engineering jobs go? Maybe, maybe not. I think it is more productive

for society as a whole for anybody to be able to build any form of digital business. Um I I think that's a good thing. >> Well, just to close the loop on the AI stuff, I I think everybody here should go listen to the Dwarash Dario interview and there's there's lots of really good points in it. Um the the first is just that the capex buildout I I think um also the concept of space uh space data centers. is just like silly. So like pair that with the Elon Cheeky Pint uh interview where he's like, "Yeah, yeah, I figure it out. Within 36 months, we're going to have him in space." It's like, "No, no, I'm I'm calling the under on that one." Was but

and just one quick thing on Elon. He feels at risk in many different dimensions. And there's like this never bet against Elon thing, but like XAI didn't work. Tesla is now looking like it won't have any car sales, you know, in the next two years. It's going to ship humanoids instead. SpaceX is worth 1.5 trillion on eight billion of ibbita that doesn't include building the rockets. Is was Elon a phenomenon? >> No. Uh never bet against Elon. I I think to say that XAI hasn't worked I think is patently incorrect. Um they have worked >> they have the most installed blackwells.

um whether or not Grock just being distributed. >> That's like saying Monet has the most TPS, therefore it's a great great chain. >> No, that's like saying someone who has literally the the most revenue producing digital uh product that exists in the world today, which is a Blackwell GB300, and they have the most of them, and they've had the most of them since the fall. Like, I don't know the numbers on XAI. It's making tens of billions of dollars in revenue, I would assume. Um I think uh the other thing and I think Nikita was probably joking about this like XX itself has 30 employees. Well the other thing the uh the other thing that they did announce is that they have a billion in ARR just from subscriptions

not ads. So like X valued at you know whatever the cost structure is but X valued at whatever is is definitely working. Uh I think it'll continue to scale. Um, XAI, uh, is, you know, either single digit or probably low double digit billions of revenue. Um, and look, I think, you know, Tesla, yes, may have a a lull on car sales, who knows? Um, the first Cyber Cab did roll off uh the the factory this week. So, where you think Whimos have been crushing it and they're worth quarter of a trillion dollars, like I think Tesla's probably going to get into that business pretty soon here. um like there's a lot of things that I think he he is um he's

definitely playing chess and and not checkers. Um and and so I'm I'm in the don't don't ever bet against Elon camp except for when he gives you timelines. Then you always take the over because he is just like any contractor remodeling a house. It's going to be twice as long as whatever estimate they give. So >> and I totally I'm with you on that. I'm with you on the never bet against Elon when Elon does not have timeline to get to. I think the issue with the the anthropic CEO, the uh OpenAI CEO and and and Elon now as well is that the timeline they are on is a determined by the pace of progress and AR ramp of each other, but b it's also determined by the

amount of capital that they need to play in that race and the amount of chips that they need to buy and and they're, you know, if they never needed to go public, I would never bet against Elon. But the fact that Tesla is kind of wobbling up here and it's still a 1.4 trillion dollar company and then SpaceX is going to be forced to go out because they need money to pay for XAI and all these other things like we are now on a timeline that is not of their own creation and the public markets are fickle. If if the IPO window is shut for whatever reason and they try to go out it's going to get it's going to get fruity. what you didn't factor into um the number of the eight eight trillion that it doesn't include the build of rockets uh which I I don't know that

exact figure uh or or the lack of the cost of rockets but what isn't factored into that figure is is Starlink which be the largest business within all of those ecosystems and growing probably the fastest so I think the cons like the worry that I actually had with SpaceX for a long time was that SpaceX was going to basically do what PayPal, eBay did, which is like get rid of the the marquee product to get more value in the public markets. SpaceX was going to get rid of Starlink, >> right? >> Create value, but in doing so revealed this like single single like rocket business that >> in 30 year in 2030 will be a really successful thriving rocket business, but in the meantime, like they lose their

cash cow in in Starlink. the fact that he's consolidating everything, I think, is actually like a much stronger position to be in. And whether or not they go public this year, um, Michael Grimes, who's the head of tech banking at Morgan Stanley, who's done every single IPO, uh, merger, whatever, was the deputy secretary, I think, at the Commerce Department or he was in the White House. Um, >> he left a couple weeks ago to head back to Morgan Stanley. I guarantee you that that means that Morgan Stanley will be lead left as the IPO lead bookrunner for SpaceX. Does this happen this summer, this year, this time?

>> When is happening? >> I I actually personally think it's 2027. I think they need more time to scale, need more time to grow. Uh, and post merger installation of uh XAI and and SpaceX is going to take some time. Um, but yeah, don't don't ever bet against Elon and don't uh uh don't believe any of his timelines. Um, I I also though would bet against him in terms of uh data centers in space. I think that that's just funny. >> He's trying to trying to do that. What he is correct on his take is that you have like 5x the power output if you're outside for solar energy if you're outside of the atmosphere. It's like, yeah, great. You solve one of the seven

problems. The other ones are like way harder because you're in space, which is like how do you get them up there and how do you fix them? Like these data centers don't just like set and forget. You you literally have to be going in there and like replacing pieces and devices are failing and like you're you're fixing them constantly. So unless we build the space force of people that want to go live their lives walk doing some uh spacew walks every day at these data centers, um I I just don't see it being feasible. All of this to be said, um I think Dark Cash interviewing Daario and and then the I I think they're in India, wherever they are, where Sam and Daario are are seen to not be holding hands in that like group photo opportunity.

>> Also, Daario's speech at that conference was terrible. Look, >> did he get off his iPhone? The the thing that everybody needs to realize is that there is an allout war going on and it's literally happening about couple hundred yards couple thousand yards that direction which is open AI versus anthropic and they have positioned themselves in fact they've counterpositioned themselves to be opposites of each other and everything that Daario says versus everything that Sam says is is specifically chosen to not necessarily be what he believes or what he wants to have happen or expects will happen but to be counterpositioned against them so that they are made to look in a different light. But all of

this is for the intent purpose, the stated purpose of raising capital. It's like yes, they're the evil empire. We're the Rebel Alliance and we're we're raising $30 million. Well, Sam's coming back and he's raising hundred billion dollars. And um like Dario on the Dwar Cash podcast talking about, well, if you're off by a year, you you might go out of business. like you got and >> he's totally right about that. >> Think he's right because I think that that assumes that you can't go off and raise more capital. >> I think these guys are tapped out in the private markets and we have different perspectives on this but like the way that they're starting to mess the OpenAI 100 billion raise like okay we're taking commitments. It's all coming in like make sure you get some. I like we had a

discussion at IC. Would you rather own Open AI at a trillion or or meta at a trillion? And I think it was 5050. people wanted to back OpenAI. And keep in mind, Meta has 200 billion of revenue. OpenAI has 20. I I think the most likely pass with these companies is that they're amazing generational companies. Just most of the value has been realized in the private markets so far. And I don't know if there's going to be additional takers over a trillion in the private markets. So, you know, it's it's going to be a fascinating case study to see if you can uh you know, buy these in the public markets anywhere near these prices. I think it's either going to be, you know, half off and like all of these things are subject to the same laws of financial gravity where people unlock and they want to sell. Um,

unless you're capturing all the, you know, the value in the light cone and you're shipping the Dyson sphere, whatever like AI, you know, LM psychosis terms you want to use, like trillion dollar is a trillion dollars and that's a lot of money. >> Well, to be fair, the thought experiment was you want to own uh Meta at 1.5 or do you want to own OpenAI just below a trillion? So like there is some some margin of separation there. Uh but also it's a buy and hold. It's not a trade. And and so it's do you want to hold this for the next five years? And I I think it remains to be seen. I I I know Zach is playing catchup. He's spending tens of billions of dollars. We'll see what that looks like. Um but uh you know where Sam is. You you know that he's got

some hardware device that remains to be seen. You know, we'll see if Johnny can pull a rabbit out of a hat twice. um or or multiple times as he did at Apple. Um but you know that they're going to be the biggest and I actually think um you know this whole clawed um Super Bowl ads set where it was making fun of them for for bringing advertising to to an LLM to chat. Um I think I think that that's like a fair shot right now. And once again that goes back to the like it's an allout war. Like they hate each other and it's it's playing out in real time. It's just that, you know, you kind of have to read between the tea leaves to see what's going on. But what what I actually think is is fair, which is both Google and Facebook have been able to

accomplish this and and basically nobody else, Twitter, Snap, everybody else has not been able to build a robust enough, a strong enough advertising based business model. And an advertising based business model requires you to build an ad network that is pro providing users with both relevant and attractive information. So like break that down. there's there's relevance. You know that this is something that you have that is in your search or it's in your interests or it's something that you're like literally attracted to on Instagram based on who you follow, whatever it is. And and that has to be the the elements that provide a successful advertising based business model. If it's just like sticky banner ads that get in the way, like it degrades the product where

slowly over time it's like paper cuts. It just like you you lose users. And so if they're able to build an ad business like Facebook or Google, they OpenAI will be be a multiple larger if not an order of magnitude larger than Anthropic if Anthropic is already thrown in the towel on not having an ads business. Um because that's that's how you get multiple billions of users and that's how you monetize. Right now Facebook monetizes at like $20 per user in the US. They're not charging any fees. So assume that like the average revenue per user in the US is like 20 bucks. Sorry, maybe maybe that's across the globe. I can't remember my stats. Maybe in the US it's higher. But if you've got a billion users who are monetizing at 20 bucks and

that's just like pure and and I I think that that is just a huge business that is ripe for the taking and it's it's all it's not be as high margin as as Facebook has but it's going to be extremely high margin and extremely profitable money uh revenue that's coming in. So I think I think if you have the consumer version of AI, it's going to be orders of magnitude bigger or multiples bigger potentially an order of magnitude bigger than than basically the uh enterprise only version. >> Damn. I I've got I've got I'm I'm unsure on my take, but I I I think a lot of the people using chat GBT for consumer feel really productive. they aren't

productive and maybe there's like a non-enterprise use case that they're using it for. But the open claw Mac mini people remind me of the NFT people and uh and maybe maybe we can leave it there for the week. Uh we will be back every uh every couple weeks. Um we're going to have >> we're going to try and have different subjects, but next week or the week after we'll be back. >> All right. Thanks a lot, guys.