Confronting ARK Invest: Bitcoin to $1 Million, Trump, Tesla’s Future

If the Fed has sufficiently bent the

curve on inflation then why take the big

risk of breaking something major things

could have gone catastrophically wrong

for Humanity these Technologies are

going to compound over the course of the

decade at a 40% rate wouldn't take a big

team to make it much much better so then

you have to ask what are they waiting

for honestly we're at the beginning

stages of multiple escorts that are

compounding on top of each other a lot

of good faith people lost money

permission that is granted

by the SEC blessing this product is

going to create all kinds of credible

arguments that like investment Banks can

make other Regulators around the world

will look at this and say oh okay this

is permissible now it does seem like

companies are almost scrambling to

figure out how to apply this they had

counterparty risk that they couldn't

really assess because the government was

like preventing kind of like legitimate

counterparties to from coming to the

table is Elon making a big mistake

getting so political on X should he just

shut

up welcome back to another episode of

the meet Kevin show today we have the

honor and privilege of being here with

Brett Whitten it's been 11 months since

we last chatted thank you for inviting

us back oh my pleasure thanks for coming

did they discover

AGI it's a funny question because no uh

and the definition of AGI I think is

going to always be shifted to keep it

from being discovered for some

foreseeable future I think that um you

know because of the board

resolution not because of the board

resolution no so not specific to open Ai

and that's maybe a separate conversation

instead I think that people humans have

like this idea that like AGI is a thing

that we're going to achieve right and um

but any technology that gets

sufficiently Advanced kind of becomes

seemingly mundane to us and so then we

set a new goal post for something that

needs to be achieved uh and I think

we're going to be in a state of um kind

of like AI systems like exceeding

benchmarks that we never thought were

possible to be exceeded and then we as

humans continuously defining different

benchmarks that uh they haven't yet

achieved and saying well that's

something that is actual AGI or

artificial general intelligence where do

you see the biggest benefits is it uh in

in medicine or mostly I mean I know

we've all got GPT now which is crazy

because when we last met that was just

starting right uh but I feel like at

least my personal usage has sort of bell

curved where it was like up and now it's

kind of tapering off a little bit what's

your experience been and what do you see

for the future for AI I think my own

experience is like it's a great kind of

search then information retrieval Tool

uh and and then also a kind of like

certain written output basically like

def frictioning uh for me so it's like

um I use it for um for instance a GPT

add-on to basically just be able to type

extremely quickly and then it um kind of

maintains my sentence structure but then

like compresses it like not just fixing

misspellings but also adding appropriate

transitions between sentences and so so

it it like really tracks kind of like

the idea flow that I'm doing and just

like uh leaves allows me to remain in

flow in first draft mode rather than

kind of like word picking mode kind of I

like that what is that called uh that's

flow speed typist so it's a GPT a GPT

with an open framework um I think that

generally right now Enterprises are

experimenting with hey how can we get a

return on investing in this technology

and and they're trying all kinds of

things it's obvious that some of kind of

like is going to work and some is not um

and then over the medium time frame I

think the right way to think about this

is that um this is really knowledge

worker productivity enhancement that's

going to occur um so um you know you

could think of it as augmented

intelligence but it's really like how

much can I do as a knowledge worker and

how much quicker will I be able to do

that so like ways in which we've used it

internally is it's like we have a

database of 30,000 different rare

diseases and um to previously like say

um what like how severe is this disease

and what is the human health cost of

this disease uh and what's the

addressable market for this disease we

might have to be like okay we're going

to have an intern like go through all of

these things and try to figure out the

health impact and how severe it is now

you can kind of um throw kind of the

descriptions of those diseases at uh at

GPT uh combined with some actually

hand-coded data that you've done uh to

then actually produce an estimated kind

of severity and um basically life impact

that those diseases have from that you

can um estimate you know what is the

human health impact of all rare diseases

and then what's the market value in

solving it and so it's like an example

of like something where it was possible

to do if I wanted to go to the trouble

of like trying to find like you know

kind of interns to do it but then their

first cut at it might be wrong and it

would take a while and then you have to

like you just get into a faster

iteration cycle of how do I take data

and convert it into information uh and

so like at a aggregate level we think

that um AI software will improve

knowledge worker productivity by roughly

10x a little less by by 2030 and that

like 50% of the knowledge working

population will be using these tools

actively to well they still have jobs

well of course because it's like you

know I think that there is a set of

circumstances in where these systems

just Spin and be able to operate

themselves but for a very long time it's

really going to be like augmented

intelligence type products where it's um

you know there's a lot of um intuition

and human pattern recognition that even

is guiding like what is the right spot

to to guide this software where we might

generate something of interest and so um

you know and you can imagine like how

would that manifest it's kind of like um

from the consumer side it might be like

I get a much better understanding of of

how good a product is for my spe

specific use case before I commit to

buying it so essentially it's kind of

like the the interfaces between people

trying to sell services and people

receiving services are going to get much

less full of friction often like my wife

will get something from Etsy and she'll

receive and be like oh I didn't know it

was this size as opposed to this size

right you know so that's like a simple

example of like where there's really

like a a lack of information in the

marketplace and that'll get cleaned up a

lot and then kind of all the

entertainment products will get that

much more compelling because of it so

we'll just get sucked into digital

experiences more completely but net if

you go back to that expectation of

productivity enhancement to knowledge

workers um usually businesses pay uh

roughly 10% of the um value they get out

of a software for the software itself W

so if you do the calculation there's

roughly $30 trillion in knowledge worker

wages by 2030 outside of China if I

improve their productivity by half of

their productivity by almost 10x you get

to a number that you know is like 130

trillion in um kind of like value that's

generated to the economy and basically

better knowledge work and then

businesses will pay 10% of that so $ 13

trillion in AI software Revenue by 2030

do some more math and you can conclude

well that suggests there's you know 8090

trillion do worth of AI software market

cap wow by 2030 there's I mean that's

half of the entire US GDP more than half

relative to today sure just in

artificial intelligence

uh potential productivity generated

Revenue yes yeah exactly but think think

about it on a global basis if I'm paying

knowledge workers $30 trillion and um

you know in a world without AI you know

their output would be X yeah so I'm

getting essentially almost 5x that

output um surely like i' it' be worth it

to me to you know increase their wages

by 50% but instead of throwing it at

knowledge workers I'm paying for kind of

AI systems to basically enhance and you

know allow them to generate better

forecasts allow us to think about how

much Capital time and energy is wasted

on technologies that simply aren't going

to work right right and so if if you

have like a better way to tune and

understand take drug development like

early in a drug development process that

hey kind of like this biological system

is not going to like respond in the way

I think it's going to if I plug in this

molecule then you can forgo all of the

expense in time of human trials that

would lead you to that conclusion

hundreds of millions of dollars and

savings GDP then uh you get to a product

quicker so GDP can grow faster

essentially with output so yeah that

might represent a large number seemingly

today but your suggestion is output

could explode through this right so at a

at a very high level and actually this

is like an important macroeconomic point

if you look over the course of history

um it's not um it's not a historical for

us to cross a threshold when suddenly

GDP growth changes in a structural way

up

as in um you know in like the the post

kind of like the turn of the 20th

century um we entered a new Global GDP

growth regime because of the

introduction of electrification and the

telephone and the internal combustion

engine and all the innovations that have

happened like prior to that kind of like

GDP growth was maybe half as much and so

like when you change the rate of growth

um you actually end up with much much

bigger numbers on the back end so if if

you look at the long run of History we

actually think over the course of this

decade compounded annual real GDP growth

will average um 7% from here forward wow

so it's it's actually a step change up

and and to be clear that's us or global

global okay okay so like consensus if

you look at like consensus forecasting

agencies the idea is that um by 2030 the

GDP Global will be around $130 trillion

this is 2021 and we think it'll be7

trillion so you go from uh expectations

of $155,000 GDP per capita to $20,000

GDP per capita and so that's on the

basis of like hey if there's a like

given the rate at which these structural

changes of GDP growth have happened

historically you could roughly conclude

that and then it's supported by the fact

that if we look at the underlying

technologies that we focus on you can

justify that forecast just based on our

expectations for Robotics and Robo taxis

even leave out the AI sof software

knowledge work side that's so

interesting just because so many have uh

argued oh artificial intelligence is

just a fat it's just it's going to be

here today gone tomorrow sort of thing

uh and your argument is what we've just

done with AI is almost changed the rate

of growth of our global economy uh

almost to a similar fashion as what

electricity did for our Global economies

do I understand that right yeah I think

that and and actually like the way we

think about the world is that there

there are these major like um signpost

Technologies like major technological

innovations so the steam engine

electrification uh and uh and the

internal combustion engine and that like

at the the most kind of we've had enter

the E economic Marketplace at the same

time is at the turn of the 20th century

when there were three and right now we

think there are five between energy

storage public blockchain AI Robotics

and what we think of as multiomic

sequencing all kind of hitting these

credit stages of inflection at the same

time and so then it's it's like

consistent with history that that would

Trigger or catalyze just a change in

growth I mean if you have a you know

leave aside the knowledge work side

which is a little intangible and I think

a lot of that is going to acud to

people's benefit without getting

recognized into GDP statistics if we

have a humanoid robot that you can buy

that can basically make things to the

same like quality or even lower quality

but just working 24 hours a day as uh

human manufacturing worker um then like

the amount of created stuff can explode

you know uh and like you all drove down

here down the PCH like what a waste of

your wonderful brain to have to be

piloting a vehicle for that long you

know in traffic like you'd rather be

admiring the view or kind of like I

don't know doing one of your crazy real

estate deals something like that well

like the a robo taxi will free you up to

do that while costing basically the same

per mile that you're already paying to

drive yourself and so kind of like that

in GDP statistics that'll appear in the

amount you're paying for that service uh

plus kind of like the other stuff that

you're doing when you would otherwise be

driving so you're taking kind of

non-paid wages which is you driving

right now and turning it into a market

service and plus freeing up your time to

do some other either watch Netflix so

you're paying somebody else or doing

work that generates kind of like income

for your consuming or generating that's

really interesting now you uh have been

tweeting about two seat uh Robo taxis

and looking at how little usage there is

in taxis uh above basically two people

in a taxi uh and you're really into cars

I mean are people going to be into two

seat Robo taxi does it matter how many

seats there are I mean I think from a

the the general idea and this is uh

something that Sam corus our batteries

analyst and I have been discussing a lot

is that probably Optimum strategy for

Tesla uh for uh Robo taxi is a twodo

vehicle might be four seats but it's

really like a two- seat vehicle um

because like if if you're if you can

deliver Robo taxi service to your

vehicles you want to minimize your

manufacturing cost and maximize your

unit volume so you can basically

maximize ride liquidity like maximize

the number of places markets that can

service and maximize your data intake

rate so it's not you know it's not true

that like a four-door vehicle costs

twice as much as a two-door vehicle but

it definitely costs more than a two-door

vehicle all right so um it seems likely

to me that the platform they develop for

robo taxi is a two-door car the the

issue is if um somebody doesn't believe

that Robo taxi is possible and they find

out Tesla's nextg $25,000 car is a

two-door car a traditional analysts will

conclude well there's no market for

two-door cars like there's no Mass Mark

you know it's not like the Honda Civic

it's TW doors that's a four-door vehicle

and they'll conclude that uh you can't

like this will actually kill the sales

demand for the vehicle if you don't

believe in Robo taxi now one I think

that every Market that Tesla's entered

into has been a market that didn't

actually really previously exist as in

when they launched the model X even like

SUVs at that price point were not a

thing right and and actually they move

people up Market into it there are kind

of uh in in in expanded the category

meaningfully like there is like a

neighborhood electric vehicle category

that's lying nent there's like smart

cars that you know are fun except if

you're driving around with a bunch of

SUVs you might get like pancaked by

somebody on the road um and I suspect

that kind of like even ex Robo taxi

Tesla launching a $25,000 vehicle if it

has two doors will actually sell like

quite well um but you know our

expectation is robotaxi Will

commercialize basically this year or

next year and then that that

commercialization event will you know

transform the economics of Tesla and

then it will you know um mean that that

kind of mass Market type vehicle is

probably not even being sold into

individuals in a material way it's being

acquired by operators who are trying to

operate it as part of a robot taxi

Network and then with a two two even a

two- seat vehicle you can make you can

meet more than 90% of the demand for

kind of Robo taxi and ride haill um

what's your concern with uh potentially

Herz complaining and now selling some of

their used Tesla Fleet on the belief

that or the realization that maintenance

for these cars and the taxi Fleet or

Uber Network or whatever rental network

uh has been too expensive relative to

ice Vehicles because they've had

challenges finding Parts not as readily

available there are not as many service

techs available to repair Cosmetics

inside uh these these Ubers or whatever

to where uh Herz is now returning back

to ice vehicle for their Fleet I don't

know if it's accurate to say they're

returning back to ice vehicles for their

Fleet I do think like if you the the

price volatility in electric vehicles

generally relative to internal

combustion has been effectively higher

in part because also there's not the

kind of like um call it buffer of

selling

into uh dealers that then hold the

inventory on lot and sell it at a

discount without nationally discounting

price uh and so Herz in a position where

they were acquiring a bunch of Robo

taxis in 20 or a bunch of Teslas in

20121 uh and then being forced to like

recognize well the value of these is

dropped just because like The Upfront

price has dropped then feeds into their

kind of financials in a way that they

weren't expecting so I I don't you know

I I think that there's a um there's some

kind of like hey you know they their

financial statements have to recognize

the fact that these vehicles have

depreciated much more quickly than they

thought they were going to because if

you look at kind of like the historical

depreciation rate of EVS it's actually

they depreciate less quickly than

internal combustion and so um it's kind

of like a the mapping to their financial

reporting is definitely not what they

expected and so then they have to have

kind of like an explanation for that for

Wall Street a PR move is what you're

saying well it's not PR I mean it's kind

of like listen you know if if you bought

or I bought like an electric vehicle in

2021 uh relative to what I could get it

at today I overpaid oh yeah but the fact

is like I it doesn't change like my cost

per mile of driving that car it's kind

of like when you buy a car you're

pre-commit to basically a number of a

bundle of miles at a specific cost per

mile and you know when you make the

purchase decision that's what you're

committing to you're not you know or I

am not doing it saying oh and then three

years from now I'm going to sell the

vehicle for X right you know and I'm and

it's actually like on a cash basis I'm

not at all sensitive to that um so

whereas someone who's if you were

strictly reporting that through like a

financial statement that you're having

to present to I don't know Wall Street

or kind of like to your family you know

you'd be like ah I made a bad move you

know um but practically like I think

that the

um even Tesla sold at kind of the peak

purchase price those vehicles are

continuing to improve year-over-year

because they're delivering software

updates to those vehicles that make them

more useful and that's very different

from kind of traditional vehicles and

you D have a Tesla right yeah uh is that

your black X yes nice yes um so FSD how

have you seen it evolve over the last

year oh it's amazing like or for me it's

a massive stress reducer and kind of

like keeps me more alert even driving

around La uh so also safety enhancer I

have kids kids are in the back kids need

a snack if you're driving like trying to

like you know yeah give a snack back to

the kids is like definitely net unsafe

if you don't have some kind of like

driving augmentation and it performs

amazingly well in that and it's improved

it's gotten smoother it now crosses kind

of like what I think of as the the wife

test where she's in the passenger seat

we have it on she's not like being like

you have to turn that off this is making

me motion sick um and there's still a

lot of work to do like I think that the

um you know I use I basically use it at

all times while driving and then there

are intersections I come to where I'm

like I don't bother to try to leave it

on through the intersection even though

it could probably make it through the

intersection on its own it's more like

I'm making a left turn and a two-lane

left and it's just like I I trust myself

more than the system you know uh and I

do think that so sometime this month

likely to in customers they're going to

release version 12 which is um uh full

stack nurl Nets from top to bottom uh by

doing that they're eliminating 300,000

lines of of code out of the system and

so it's like well what are they

replacing that with they're replacing it

with 3,000 lines of code and lots of

data compressed by lots of compute uh

and so one way to think about the

Improvement rate of the full

self-driving system is prev viously like

they would run into unique problems and

then they would have to come up with a

unique solution to each unique problem

it's like how do I deal with a

roundabout you know and so you need a

software engineer to think about okay

what's the car going to go through as it

goes through a roundabout what are the

if then statements about like when it

can turn how does it determine when to

turn uh and and uh and so every single

Corner case required a clever software

engineer to figure something out and

kind of each incremental kind of

reduction in the number of interventions

you need unveils probably an order of

magnitude more Corner cases so you're

always running up against this wall of

like either I'm hiring 10x more people

for each kind of like step up I make in

kind of like the log error rate or um I

need another solution so once you go

full stack neuronet my intuition is that

then every unique problem has the same

solution you throw more data and compute

at all of the problems uh and so it

means that not only should there rate

Improvement now just be governed by how

much compute they can throw at the

problem because they're not data

constrained it also means that their

ability to forecast the Improvement rate

should improve so uh Elon Musk has

famously said basically we're a year

away from commercialization for maybe

four or five years right whereas kind of

in our forecast we've been we've slipped

slightly but it was 2023 for a while and

now it's 2024 like as in we really

thought this was around the time frame

where it would happen now I think

they'll have much better line of sight

on this is the Improvement rate this is

how much additional Improvement rate we

get to throwing more computational power

at it this is how much cash we have to

throw at computation uh and so they can

um kind of with much more Precision say

this is the thresh the place in which

we'll cross a threshold in the specific

geography say California where we can

commercialize the product and so um

there will be they'll be ble to both

business plan and message the street a

lot more um precisely on like when Robo

taxi is going to commercialize and what

that will look like uh and then so from

the analyst perspective not us but ones

that um essentially rely on management

to tell them what's going to happen and

then map that to how they think

financials are going to occur um there

will be like um an ability to begin to

underwrite that into the stock uh and

and and that'll you know it it totally

transforms the business model if and

when that occurs there's no um you know

there's not a comparable

transition probably in any corporate

entity's history um to what that could

do to cash flow generation for Tesla do

you expect early Robo taxi to have any

level of Geo

fencing well yeah in that I

mean not at the block by Block Level I

would but yes at the kind of like

Geographic entity by Geographic entity

level as in like you know maybe it's

just City of La or maybe it's state of

California or maybe you know they're

going to have to get regulatory approval

at least at the state level and maybe at

the city level in order to launch and so

it's like Austin Texas probably lets it

happen uh and then there will be areas

where you know it's as performant but

you're not yet allowed to commercialize

it and then there will be areas where

it's just not as performant because they

don't have as much training data uh and

I think it's an open

question um like not just for Tesla but

for all of the players like what is the

yeah rate expansion like to what degree

should they be concentrating on you know

specific streets like wh Mo's um

strategy has been we're going to keep

the thing off the highway you know and

so we're g to and it means that for

longer trips it's not you know you're

having to sacrifice like double the trip

length um in order to ride in a robo

taxi that's priced kind of the same as a

traditional Uber and so then it doesn't

actually make sense as a product that

scales um and so I think that Tesla's

approach is more aggressive but

ultimately more scalable where it's like

at least in the geographies we've

trained on this thing should be able to

drive in any conditions and we're not

going to Blacklist any intersections or

type of um driving in part because I

think a problem with a a more precisely

Geo fenced system is then um an

intersection that you have whitelisted

suddenly becomes an intersection it

can't clear through like it it like you

know the intersections under

construction or like the structure of

the intersection changes and so suddenly

it acts more like an uncontrolled

intersection rather than one with a

traffic light and so then you end up

with like a really bulky and kind of

like subject to lots of kind of hand

tuning and changing uh system and and

it's likely both bad consumer experience

and then you have a huge kind of

operational expense of just like

figuring out like what the map looks

like for you at any given time or any

given day well that was the whole I

think uh crw problem was they had 1.5

workers per car driving on the road

essentially for that operational control

I think this is interesting because what

what you've just described is

essentially uh you can underwrite uh

once once Tesla starts providing that

guidance you you're you'll see the

market more likely underwrite the value

of Robo taxi from what's probably

underwritten now of zero to whatever it

might be uh more maybe so than full

self-driving is that your argument that

people that there'll be more value

really out of the robo taxi than trying

to convince people to t you know pick up

full self driving the take rate seems

like pluming yeah I think that's a or

it's not a sideshow like it's material

to their gross margins but I don't think

it actually um yes as

in like I have full self-driving it's an

incredible luxury product for me as in

it's expensive and it delivers me a lot

of value in terms of my Driving

Experience is much better and I can

understand somebody buying a Tesla and

being like $122,000 for what even though

the comparable like even if you're

buying a BMW or whatever like comparable

like just you know Lane following on

Highway and active cruise control is

like sometimes like A6 $7,000 option so

actually Tesla's living delivering you

know I would argue substantially more

value per dollar and it's something that

people I can understand how people

aren't opting into it because it's like

I don't have $122,000 extra to spend and

for what do you know what I mean well a

lot of people also have that trust

Factor too I notic that especially in uh

older Generations frankly uh 40 plus

there a lot of people I just won't trust

it have the Tesla but I just don't trust

it right right and so it really has to

for people to kind of like buy that

option they also have to have

experienced it in some way they have to

know it's worthwhile but all of that

kind of disappears once you deliver Robo

tax or or or that Nuance doesn't matter

anymore think about it this way this is

very crude math so consider it heavy

approximations but roughly right okay so

um I sell you a model 3 you should be a

model 3 buyer uh I sell it to you for

$50,000 what is Tesla net an operating

revenue for that sale maybe $5,000 call

it a 10% operating margin it's not

exactly precise but roughly okay so it's

a one-time $5,000 operating uh profit

for Tesla what if that model 3 becomes a

robo taxi okay so we think the model 3

could roughly do 100,000 miles per year

as a robo taxi that might be an

overestimate but it's it's like that

there's ways in which you can model it

where you think that's kind of the

utilization it could get to okay and uh

at a dollar per mile we think there's uh

a trillion miles addressable globally

there so let's say we're that the first

trillion miles of Robo taxi driving is

occurring so you can charge a dollar per

mile for 100,000 miles okay so then uh

there's gross revenue somebody is paying

you know $100,000 a year to ride in that

vehicle now Tesla gets to extract a

platform fee off of that just like uber

oryt do they should be able to do

something more than Uber or lift because

they're delivering this whole autonomous

Driving Experience say it's 50% okay so

then that's $50,000 in Revenue to Tesla

if they're getting like software type

margins on that that's $25,000 in

operating profit to Tesla okay so I've

gone from one time $5,000 in operating

profit to annual for every vehicle

that's capable and turned on $25,000 in

operating profit per year into

perpetuity okay so from Tesla my gosh

like I've I've quintupled my operating

profit per vehicle and turned it into an

annual thing as opposed to the one time

I sell it based on this very expensive

Factor I've built to produce these

things so the financials explode cash

flow okay now think about it from your

perspective though and this is actually

a really interesting and nuanced point

is like you paid $50,000 for the car now

it's generating $50,000 in net revenue

to you if Tesla's only charging a 50%

platform

margin and your cost to run that vehicle

is you know you can estimate it in

various ways but it's on the order of 15

cents a mile or 20 cents a mile maybe

okay so that's $30,000 in profit to you

who bought the the Tesla per year so

clearly you underpaid for that asset at

$50,000 buying an asset for $50,000 that

generates $30,000 in income it's worth

much more than that so then like what

practically will happen is Tesla will

actually collect more than 50% platform

fee at that time cuz you shouldn't be

getting like all of that right or the

cost per mile collapses as everybody's

showing right right so so then there's

the demand side like if there's a

gazillion M if there's more than a

trillion miles then being driven then it

collapses down to ultimately we think

around 50 cents is the equilibrium price

going out um but like between here and

there um kind of like you can think of

like buying Robo taxi now is you're

buying the experience of having or

buying FSD now buying the experience of

having the car help you drive for a

while plus buying a modern day taxi

Medallion where it kind of like gives

you kind of the opportunity to kind of

extract value out of this vehicle or

sell this vehicle who's going to

maximize it as a robo taxi in the future

um and so like the I think the they'll

have a lot of kind of like levers they

can pull in terms of like how much did

they charge for FSD versus what is their

take rate in terms of platform fee um

you know but ultimately it's I think

from a financials perspective it's all

going to flow through into an effective

take rate against miles for them yeah

that makes a lot of sense the uh so

another thing that was fascinating that

you mentioned is this idea that you can

create a robot that can work even less

like quality uh or or create a less

quality output than a human but work 24

hours a day so really there's this idea

of even if it's just let's say unboxing

boxes out of a freight truck or whatever

uh neither of these these these robots

that could work 24 hours a day or robot

taxis neither are really underwritten

into Tesla's valuation today so where do

you see Tesla going in the next decade

even if they just started producing and

selling the first robots to let's say

Pepsi or whatever like when does that

that sort of trigger hit is it at the

first sales and what does it do I I

think it's hard are one interesting

thing that's happened to me as somebody

that focuses on technology is I feel

like my line of sight is actually

getting compressed forward as in I think

it's hard even going out a decade from

2024 I think it's much harder than it

was going out a decade from 2020 uh

because of the rate pace of change of

artificial intelligence I will say that

like relative to at the technology level

um kind of our expectations for Robotics

are the ones that have shifted most this

year compared to last year um because um

I or call it we had concern that there

was like mechanical and actuator

constraints that were going to prevent

kind of robots from being super useful

and so even if you had great software

that you could attach to them if if like

kind of like the ability to actually

mechanically actuate these systems was

the constraint then that's like a hard

Hardware problem which usually takes

longer and the evidence that we've seen

there's an open source robot for it's

like 20 or $30,000 that can you know

flip an egg and do all kinds of stuff in

a teleoperated way uh that uh there's

just a paper published on the

demonstration certainly from Tesla's

Optimus bot is much more um kind of

mechanically faasil than I would have

expected given they've been working on

the project for relatively short when

they film that though they're wearing

the sort of uh goggles and like it's the

robots really just mimicking the person

rather than the robot well yeah that

could be or I I don't know for sure but

but that's also fine as in if if my

concern was the governing constraint was

like the being able to move fingers in a

fluid way and being able to pick up an

egg and you know um if if it's

teleoperated then that indicates well

that's not actually the constraint then

the constraint is the software side and

so then on the software side it's like

very clear that kind of AI is going to

just any Benchmark you can set for it

saturate that Benchmark very quickly uh

and so kind of like a way to think about

it is is we think AI costs are declining

3x per year so what in traditional

compute takes two years to occur uh

where every two years you get a hot cost

having in AI happens every six months uh

and so one like Universal rule of

technology is people overestimate how

much is possible in the short term and

underestimate how much is possible in

the long term well if you consider

long-term in traditional Computing like

eight

years in AI That's

two as in so things that we think like

the thing the the time frame over which

people underestimate performance I think

is is getting compressed because of how

quickly AI systems are advancing so your

concern was that is the hardware even

going to be able to catch up to how

quickly the software is moving so you're

very optimistic then from what you're

seeing yes I mean I I think I think yes

from the I it seems like hardware and

and the two are interrelated and that

you can imagine you can have a very very

precise Hardware system which is then

very expensive um and you can trade down

in terms and and but it's very precise

it can go to the millimeter that you

need but that's not how your body works

your body like if I'm going to pick up

that object over there I like my hand

gets near it and then I look and see how

close my hand is it's not like I like

try to like close my eyes and grab the

thing and so having good software allows

you to trade into like less precise

hardware and still achieve the same

event um but generally there was like a

um um yeah can you get actuators small

enough and with Loosely precise enough

that you can attach software to them and

make them work and now I'm more

optimistic on that front think about it

this way so this 20 to $30,000 robot

that I talked about um Hardware is open

source and they demonstrated that you

can tell operate it to like crack an egg

and flip an egg and and do all kinds of

like everyday tasks well maybe there's a

bridge state in which um kind of the AI

soft Ware is good but not perfect and so

you have a teleoperator on the back end

who's helping the thing like you know

think about like the marginal cost of

somebody to cook for you if you're

paying Los Angeles salaries is a lot

higher than if I'm paying somebody in

Mexico to teleoperate that robot oh wow

uh and so you could you could have the

hardware infiltrate with like a kind of

hybrid type model um and and actually

you know provide return to people um

that uh even even if the software is not

all the way there that's fascinating I

mean you could have a an Indian Chef

who's cooking you Indian food but

they're in India yeah possibly I mean

and and and and then like the the

feedback loop in AI is like the software

is going to improve on the basis of how

much compute you throw at the problem

and then how much data do you have on

the problem you're trying to solve well

having kind of like that hybrid type

robot provides the data that then will

improve the software so you don't need

the Indian Chef anymore right and so um

they're training their own replacement

exactly but we're all training our own

Replacements in some way I mean what are

you doing with your kids I'm training my

own Replacements they're like seven and

10 years old that's a good point that's

a very good point during your last

interview with Kevin I was behind the

camera on that one but you were talking

about the the power of AI and how much

it's going to grow and you were

expecting a Sevenfold increase in the

like aggregate capabilities of AI

systems in 2023 how accurate do you

think were you on that prediction and

then what do you expect going

forward I mean it's hard it's hard to

measure but I think I'm roughly accurate

as in like the cost declines have

happened more quickly than we

anticipated in a lot of ways um and so

um okay I can't okay I know when that

interview occurred okay so gp4 for

example um they released GPT 4.5 turbo

or whatever right the that on a cost per

token basis was at roughly a a third the

the price so that in itself was a third

cost Decline and it was over 240 days

not 365 days and then if you adjust for

latency um as in like the tokens get

produced more quickly out of it so same

accuracy at a third the cost and uh and

it was roughly three or four times

faster so performance adjusted it was

probably a 10x Improvement in terms of

that specific AI system so it was

basically under uh on on a very clear

like light like for like basis um but

there is so much evidence that these

systems are just um they are wildly

under optimized right now like we we

really are just figuring out how to use

them the fact that you can you can ask

an AI system a question in a slightly

different way and get like a 10 or 20%

Improvement in its answer rate is just

indicative of how kind of undertuned the

systems are like compar to like I was

was watching a video the other day of an

internal combustion engine being

manufactured like a V8 BMW V8 was like

massively optimized you know like so

automated and precise and like you can

tell that every single process that

creates it the entire design has been to

squeeze all of kind of like the energy

input into horsepower output out of that

system and the like last iteration of

something is always the best version of

that thing because you you've just like

you know tightened every screw and in AI

it's like all the screws are wildly

loose and people are just trying to

tighten one versus another being like Oh

my gosh this works and this works and

you combine it together and it works

this much and so like at the

architecture level at the kind of data

that we feed into it level at the

applied to this class of problems level

at the kind of like how do we yeah query

the systems level there are still

massive Improvement opportunities of

available and so kind of yeah our our

forecast is tuned really to the like how

expensive is it to train the raw

underlying models and and we think

that's declining 3x per year but there

is so much on top of that that is

improving system performance uh and even

like if if you think about the magic of

mors law was in part like if you can

press the number of transistors on a

chip then kind of like the number of

transistors you get for the same amount

of raw material

doubles and because they're closer

together like the cycle time of the chip

can improve so you got like a dual

performance boost similarly with AI as

you are creating models that are um the

same performance on a smaller number of

parameters then it's less cost to

actually infer that model and you

generate material more quickly so you

get this double cost decline

characteristic of like I can charge 3x

less per token and I'm delivering you

know three or four times more speed uh

and so uh it it yields this you know

that's interesting too because you're

really not to cut you off there but I

mean this it does seem like companies

are almost scrambling to figure out how

to apply this and uh it's almost as if

the AI in a weird way is way ahead of us

figuring out where to put it yet uh and

uh then I look at a company like paler

and I feel like they've always always

been in AI that it just used to be

called Big Data and now it's Ai and it

seems to me they feel like one of the

few very profitable AI companies whereas

everybody else is just trying to figure

it out maybe include open AI with paler

what's your take on that or is who else

really stands out in the AI uh space

yeah I mean I I think that there is

broadly a set of companies that have um

both a product that can like benefit a

lot from just deploying AI against it

that um they will deliver productivity

advances to employees that then they're

going to be able to charge for in some

way so like look at Zoom which by the

way right now is like in the Russell

1000 value index like it has selling for

13 times right now it's it the the

embedded expectation for that company is

that you know it's basically X growth

that's like how much cash flow can we

scrape out right five bucks I think is

the curing current EPs and it's expected

to be there for the next like five years

so zoom's marginal competitors are

clearly like the Google suite and the

Microsoft Suite right like um and I

think it's there's plenty of compelling

evidence that even companies that use

those products internally still need

Zoom for all external meetings because

like as a salesperson the worst thing

that can happen is like the meeting gets

delayed by 10 minutes because people are

trying to install software or they can't

get logged in and stuff yeah yeah yeah

exactly uh and and and zoom provides a

frictionless experience and they are

layering on AI capabilities onto their

system right now they're not upcharging

for those in a meaningful way but

Microsoft is if you look at like at

least on a list price basis Microsoft

thinks they can almost double the price

of Office 365 once they layer in AI

systems and if you look at at least what

Google's announced they also think they

can double the price of Google office

suite layering in AI so so there there

is either Zoom is going to become a much

more compelling like you know cost

tradeoff versus those products or Zoom

also is going to be able to increase

prices based on the productivity they

deliver for AI so that might be their

growth opportunity is is just provide

more value raise the price so to speak

and that could be meeting summaries or

or whatever sure uh I suppose isn't

there some risk though that there's

almost this endless competition in these

software software Suites that you get

you've got to get price compression at

some point rather than price increase

you know I mean it's funny like over

time you know uh software franchises

have proven to be incredibly durable at

least on the Enterprise side I like I

think that enterprises tend to um be

very conservative in shifting soft like

you know you get a software get look at

like Oracle or or you know any of these

kind of software packages look at

Salesforce people kind of um develop on

top of the tools not even officially but

also in in kind of implicit ways within

their organization that makes it very

difficult to unseat the tool once it's

developed in and if anything I would

think that kind of AI systems will

increase the stickiness not decrease the

stickiness of a particular software

system um so then Zoom also has like a

potential call option where they're

trying to develop a document um type

system that will be AI facilitated on

top of kind of the zoom Enterprise Suite

and you can imagine like look at like

even think about the Microsoft versus

Google competition in office software

over time like why did Google manage any

penetration against Microsoft it's

because when they designed docs and

sheets and stuff they designed it with a

kind of cloud collaboration first

mentality right and even today it's like

very clear that Google Docs works better

for collaboration than Microsoft where I

don't know how many times I've had my

dock desync and some like massive

headache issue on the back end that

actually cost me productivity it doesn't

deliver productivity and frustration

Factor yeah and and so I think it's

there it's really valid to say that

whatever the kind of like office

productivity Suite looks like if you

were designing from scratch with the AI

capabilities that we have today you

would design it in a different way see

the whole front end would look different

right now Excel has like even like

toolbar and then another menu bar above

that like it's clear that there's lots

of UI Cru that's been layered on to that

software product over time as kind of

compute paradigms have changed and so I

think um you know it's possible that you

have another like a a real competitive

office type Suite develop AI first that

then penetrates the Enterprise and if

and as that occurs it massively expands

kind of like the market opportunity for

the likes of Zoom there's no guarantee

that they get there but it's like a call

option embedded in a company that's

being treated like okay let's see how

much cash flow we can scrape off this

thing yeah like you said like a value

stock right now exactly yeah right uh so

what about um uh um you know there's so

much hope that Elon is going to be able

to turn into like an AWS for example

running a software data centers doing

the AI compute uh you've got uh a lot of

talk about Amazon started as a bookstore

and now 70% of ebit is from data centers

uh people don't even seem to underwrite

Amazon anymore for the fact that it

delivers of stuff overnight can that

happen at a company like Tesla sure I

mean I I think the transition from

selling vehicles to like generating

Revenue off Robo tax SE would look like

that and then like I think that there's

a

valid um perspective that essentially

having all the vehicle data uh feeding

into their data center provides them a

better Foundation model for things

operating in the world Tesla's bias will

be to vertically integrate and kind of

like just develop the robots themselves

and not um essentially sell kind of

those models as a service but it gives

them strategic optionality to do it so I

think one way to think about companies

is like what is the like optionality

they're developing on top of the

intangible assets that are acing on

their balance sheet which don't appear

in the financials uh and then what is

the monetization value of that and they

don't you know you could ask Elon right

now and he'll have a statement about the

direction he thinks he's going but uh

one I think real value of having a a a a

a founder-led franchise that is that is

willing to take hard moves is if his

prior conceived Notions about what the

Strategic direction of the

franchise um were uh changes he'll shift

the franchise towards that so if there's

like a point at which it's like well the

op Optimus Hardware is working we're

deploying AI models against it but

actually the future requires there to be

all different kinds of form factors of

robots being manufactured and there's

all different kinds of people making

these things and we're better off kind

of like selling access to the underlying

model embedded within our data center to

empower you know a whole variety of

applications that might be the way to

maximize value as an owner of the

franchise Ron Baron has this idea of

Tesla inside that uh you know the the

FSD in the cars or maybe the brain of

the robot could be the new Intel Inside

uh is that

roughly align yeah I mean I think that

there's a question of like do they at

least in the vehicle level do they

license the robot taxi technology out to

other manufacturers and um I mean to be

honest

like yes that will be Optimum if like

other manufacturers are stepping up to

the plate in terms of um electric

vehicle production sufficient to to meet

the needs so um you know if Tesla is

ultimately constrained by the number of

units they can get onto the road then

yes they'll license the technology um

but you have to have like and and maybe

in a geography like China it makes a lot

more sense where they're probably not

going to be able to get full share of

the economics of a robotaxi platform

anyway right um just from a kind of like

sensitivity to government perspective

and kind of like how much

um they'll rely upon being allowed to

operate that service uh and so their

kind of optimal strategy might be to

license it collect some like smaller

platform fee and essentially deal in

some of the local Chinese players um

we'll see I I I think that um if

anything the last year has on the

traditional autom manufacturer side

demonstrated the danger of being a

shareholder sensitive management team

where it's like um GM and Ford

particularly GM basically like almost

throwing in the towel but at least

announcing that like this generation of

EVS is not going to work for us and

therefore we're kind of like pulling

back and buying back some stock and kind

of you know it it it's almost like

announcing to the world they're going to

run down their franchises uh and um

because you know we think 70 million EVS

are going to be sold by 2027 uh it's

most of the market uh and um so what is

going to be the value of an internal

combustion engine franchise if you

alongside everybody else who hasn't

invested aggressively have factories

that are like producing kind of like you

know vehicles that people no longer want

like it's unclear like to me that's a

recipe for bankruptcy and consolidation

um and so I I just don't know that

they'll have that many people to license

their software into where we be Optimum

for Tesla to license versus kind of like

just delivering to their own Fleet you

know Brett actually accurately predicted

grock last year when you were talking

you had mentioned that Twitter has a

very and I think it was still Twitter at

the time uh Twitter has a very unique

data set and that you thought it was

obvious that they would be coming up

with their own llm um but my my question

actually is there's a lot of money

that's getting thrown at AI right now

and I don't know how much of it is going

to R&D and how much of it is going

towards marketing but we've seen some

really amazing marketing uh and I expect

a lot of them aren't going to end up you

know fulfilling that so what do you look

for when you're researching these

companies as far as what's truly good Ai

and what's just really flashy

marketing oh I mean it's partly like

using the tools and seeing if they're

delivering value um and I you know a lot

of in talking to management teams like

you end up with a real sense for how

strategic It Is by talking through like

what is your AI strategy and and how do

you think about kind of your or um kind

of superpower that you can use to to

deliver on that AI strategy and I agree

like with any technology cycle it's

suddenly like you have the you know

blockchain IC te company or you know

people begin saying AI because they're

like oh Wall Street wants to hear Ai and

so they like attach AI to anything um

and you know on the private and Venture

side it's like we've talked to a number

of companies where it's clear that they

develop technology you

know prior there was more machine

learning traditional machine learning

now that um kind of the large language

models have come out now they start

talking about their technology as if

well this is AI and it's like okay I

mean I guess that's within a loose

definition of the concept it is um and

it's actually you're you're in a

structurally disadvantaged position

because you've sunk a lot of money into

a system that is basically being

surpassed by another set of systems uh

and so it's actually um you know uh it

it uh it they would be dangerous spots

to take from a allocators but from an

investor perspective because they they

actually are being disrupted by rather

than disrupting um but when you're being

like it's universally true when

companies are being disrupted they Co-op

the terms and say we're already doing

that like you know that's that's like

always what happens uh and um and you

know that doesn't change like the

trajectory of disruptive technology it's

just indictive that uh companies are

getting into scramble mode and realizing

this is where the puck is moving and

that they're not well positioned for it

there's a small disruptive technology I

wanted to ask you about Bitcoin yeah

we've obviously just gotten uh Bitcoin

ETF approvals and uh you have a

comparison uh of comparing the future

value of Bitcoin to what happened after

the exchange traded products for gold uh

were released uh one of the concerns

that I had that I wanted to ask you

about that was it appeared the real

takeoff and value of those gold ETFs

occurred during the recession

is it

possible that might not be the best

comparison then using gold to bitcoin no

I mean I think it creates potential

energy is the way to think about it

you're absolutely so like the gold ETF

listed in the US in 2004 in over eight

years like the price of gold went up 4X

um and um but it was heavily catalyzed

by the financial crisis right as in kind

of like people you know the story of

gold became a story people were paying

attention to uh in part because they're

like oh the whole world is you know

going to go bankrupt and we need to own

the asset that's going to survive

afterwards right and um the the

um gold as a call it a tool in the

financial toolbox of investors um gra

gained credibility because of that

listing right as in like if you look

after that you know all the strategies

and stuff began to put out papers on

portfolio allocation and precious metals

and how to think about the

characteristic price movement of gold

relative to other you know things

equities and bonds and everything else

this is a different asset and you should

think about it as a you know low singled

digit allocation in an efficient

portfolio allocation um and so um the I

think similar so and then there's an

important difference between gold and

Bitcoin which is the price of gold went

for up Forex over over eight years uh

and that caused a lot more people to go

out and find gold in the ground and dig

it out so like over the decade 20 2004

to 2014 like annual gold production went

up 25% so regardless of what the Bitcoin

price does uh you know eight years from

now uh it'll be basically like a quarter

uh annual Supply what it is today

roughly uh and so um you can you know

there's reason to believe like so I

think it's valid to say that that kind

of the listing of the Bitcoin ETFs uh

you know is a a a threshold and Tipping

Point that is really momentous for

Bitcoin as an asset class because now

all of the traditional Financial

ecosystem at least in the US is allowed

to like look at it and say hey this is

something I should consider in portfolio

allocation so maybe that 6040 Bond uh

stock Bond portfolio turns into a 65

35 something of that sense whatever the

allocation is the point is it can be

allocated now the follow up question to

that is theoretically it could have been

allocated already versus with gold you

know you got a before the ETS you had to

buy the gold you had to store it

somewhere whereas with Bitcoin we were

still able to digitally buy it

beforehand yeah you and I can like

retail normal like people who are like

hey I'm interested in Bitcoin I'm going

to open up a coinbase account we could

buy it a financial adviser would in many

cases like no chance one think about it

like if I'm a financial adviser I'm

advising a client I basically have like

access to their brokerage account right

so if they can't buy the asset through

their brokerage account I might think

it's the right thing to do um the person

I work for might say no you're not

allowed to advise that but the reason

they would is they would say to protect

client but it's really because if I tell

my client to hey take some dollars out

of this brokerage account go open a

coinbase account and get some B coin

yeah there goes the AUM exactly that

cost me money and by the way hey people

respond to incentives I'm it's it takes

a lot of belief in Bitcoin to tell my to

basically uh hope that my client will do

well by it and then appreciate me more

even though I'm costing myself money by

doing it whereas now the financial

adviser can be like hey this is a useful

thing in your portfolio allocation you

should you know buy this spot Bitcoin

ETF because it's low fee and it's an

efficient exposure and it fits right in

like if you're borrowing against your

portfolio in any way it fits right in it

if you're you know I still get credit

for allocating you to it you know it

fits right in and so it's it's it's

actually an important Bridge into the

traditional all of the processes that

happen in traditional financial services

that previously Bitcoin was excluded

from like imagine you're a financial

adviser and you tell your client hey you

should buy Bitcoin it's a good thing to

do and you send them to FTX as opposed

to coinbase yeah well then you might be

subject to a loss like you know so then

you as a financial adviser do you really

want to like try to underwrite coinbase

to help your you know client like

custody Bitcoin somewhere no you just

want to be able to like you know I know

that whoever Fidelity or Schwab is is an

institution that's going to exist I know

that there are rules in place even if

Schwab goes bankrupt that those assets

will still be my clients and so

therefore I can trust anything that's on

that platform as something that I can

invest in that's fair and you get cpic

at that point sipc insurance so that's

interesting then so let's say we get a

lot more institutional institutionally

allocated Capital to bitcoin that should

be great for the underlying Bitcoin does

it hurt coinbase though to

see retail which is the most profitable

trading sector for coinbase somewhere

around 73% of their revenue is uh uh

from Trading about a third of that is

from Bitcoin uh and their most

profitable segment being the retail

consumer if they shift from coinbase

Trading to an ETF now because it has

cpic coverage it's easier it's part of

the brokerage account

great is that going to devastate

coinbase's revenues well one coinbase is

custodian on most of the Bitcoin spot

ETF product so they're generating

Revenue on the money that goes into that

albe it it's different you know a

different um kind of like take rate

relative to the retail trading dollars

two the people who are in coinbase are

typically not people who are just

wanting to own Bitcoin they are owning

Bitcoin they're staking ethereum they

are kind of investigating the entire

kind of smart Contracting protocol space

and and so like net it's beneficial for

coinbase if the entire you know set of

assets goes up in value and this if

anything probably opens up and

solidifies the foundation on which smart

Contracting Protocols are going to be

built you know there's going to be I

think you know who knows what will

happen with ethereum in terms of any SEC

listing but certainly there's going to

be any appreciation and Bitcoin will

likely spill over into the other crypto

assets and having like a larger uh more

diverse holder base of individuals who

will frankly raise hell if Congress

tries to do anything to these assets is

net better for kind of like coinbase's

both political stance and the future

prospects of like the call options

embedded within their business model um

in in some ways I think it's like

there's a VIN diagram between the people

who own on coinbase and the people who

are going to own within traditional

Financial ecosystems and there's

actually not as much overlap as you'd

expect one I think interesting call it

byproduct that is this in terms of

financial Innovations it's like

typically like big people get it first

and then little people get it later

right and a lot of the Innovations are

let's take big person pricing and

convert it into little person pricing

like securitization was like big giant

corporations could could you know borrow

money in the bond market but little

individual homeowners couldn't well if

you securitize mortgage um mortgages

then it allows little consumer

homeowners to actually get big corporate

pricing on their bonds here it's like

retail has had access and now only now

is institutional getting kind of dealt

in in at least in a robust way so you

don't think then it doesn't sound like a

a coin Bas is a bearish move for you nor

does it sound like you think uh being

bearish on on let's say Bitcoin where

maybe it could stagnate like the price

of gold over the last decade or so uh is

in your forecast instead bullishness

well I mean think about it there's like

a couple ways to approach the problem

but like one way to think about it is we

think that there's going to be roughly a

quadrillion dollars in financial assets

globally by 2030 okay uh and that's not

making anything any there's no

aggressiveness embedded in that forecast

other than our GDP expectations of 170

trillion as opposed to 130 trillion so

Bitcoin at a million dollars a coin uh

suggests that Bitcoin is around 20

trillion dollars so 2% of

that wait 100 trillion 10 trillion sorry

less than less than 2% of that quad you

know 0 2% of that quadrillion right and

so it's like uh oh no sorry 2% of that

quadrillion sure right uh and so that's

roughly like we have a official Bitcoin

forecast that's out there that's

constructed from like a a low singled

digigit percent allocation from

corporate treasuries and from

institutional allocators and Bitcoin

displacing you know some substantial

share of marginal gold holders we just

think it's a better way to store and

protect value than gold one and a half

million per coin is the bull case right

right and then 600k I think base case

what's your what's your bare case for

Bitcoin uh I think in the published

forecast it's around 300K per coin uh

but I think it's like one you can look

at portfolio allocation you know

documents and show that like a single

digit percent exposure to bitcoin is the

right thing to do from a like

correlation and excess returns uh

perspective uh and to me it's reasonable

that like if you think about like 2% of

financial wealth acre into Bitcoin you

know that actually is going to be like

very unevenly distributed as in like

some people are going to have a lot so

then a lot of people are still going to

be under allocated uh and and be trying

to like essentially catch up uh in some

ways it's a like if Bitcoin returns very

well it'll attract more Capital there's

definitely like momentum embedded in

Capital markets but um I think and and

also just like if you look at um not the

total market cap but the amount

allocated to um gold for example uh over

time after the ETF listing even after

the kind of um the the the financial

crisis which caused it to like move to a

different level in terms of the amount

of wealth that people are allocating to

Gold annually on a net basis

um you don't have to assume that Bitcoin

gets to that level um to get to a

million dollars a coin you actually just

needed to proportionally move up as much

as in kind of like I think people you

know on the margin people have a certain

amount of wealth and they shift a little

of that wealth into the assets that they

are interested in or they think they

need more exposure to and kind of like

you can kind of track a a a reasonable

forecast to that and get to a million

dollars of coin saying million dollars a

coin is your modest

estimate well it's probably I mean we

haven't produced our official estimates

for this year that'll be an a big Ideas

deck that comes out sometime this month

likely um and like on the prior

published estimate $1.5 million is the

upside case and 300,000 is the downside

Case by 2030 uh and I think the the midc

case is 700 to 800,000 I think if

anything the you know we didn't know

that the Bitcoin spot ETFs were going to

get approved if anything this like uh

enhances and probably enables um the

institutionalization to happen uh in a

way that hadn't happened before because

think about it like it's really it's not

just the ETFs the permission that is

granted by the SEC blessing this product

is going to create all kinds of credible

arguments that like investment Banks can

make that that you know other Regulators

around the world will look at this and

say oh okay this is permissible now uh

and so I think it's going to catalyze

like a lot of call it

officialized to you know think about how

to manipulate financially like it does

not it it is so obvious to me that like

investment Banks should be combining

like energy trading with Bitcoin mining

with Bitcoin primary generation into

kind of like like trading function for

Bitcoin and if investment Banks don't

like coinbase probably will right and

now kind of the Goldman's and Morgan

stanes of the world you know prior to

this there was all kinds of signals from

the administration this stuff is off

limits it's radioactive don't you dare

touch this you know this is like we're

going to try to you know put anybody out

of business who deals with this stuff to

now Hot Potato yeah yeah now it's like

well you know you've just invited you

know every person with with any

brokerage account

into owning kind of products tied to

this underlying directly and that sends

a signal and it makes the investment

bankers able to go to the banking

regulator and say listen you have to let

us participate in this market because

there is wealth being created here that

we're being held out of um because

you've held us out of this market and

for what good reason you just approved

all these ETFs you know a different

regulator but a regulator within the US

government and so I think it'll create a

lot of whereas before all of the kind of

official parties in the financial

ecosystem were rightly concerned about

what this meant for them now it's like

this is happening whether you like it or

not and so you better like move in to

get your piece uh and so then that

creates like this whole like once an

investment bank has it well then they

have a Salesforce that's going to go out

and try to sell it and try to sell all

their services and you know so so like

really what this is doing is turning on

the kind of distribution of traditional

Financial Services

into advocating for an asset whereas

before there was as much incentive in

the world as possible for them to

Advocate against it including going to

the regulators and saying you have to

stop this stuff and you know so like the

whole dynamic is inverted um I mean it

goes as far as like uh we spoke with

multiple different Securities attorneys

last year as we're working on projects

and they would say we can file you know

regd documents reg a documents like this

like this if we mention the word crypto

we'll be at the back of the list and

it'll take three times as long

right and that you know depending

regulator unreg like there still might

be some of that friction in the system

and I think it's it's it will be much

harder for that friction to persist now

than it was even even a month ago like

or a few months ago when when you know

the SEC was still digging in its heels

so I I I you know I think it's it's it's

like a quasi Blessing by the

administration that we can't stand in

the way of this technology and I think

that's net better for the world like I

honestly think that the administrative

stance opposed to cryptocurrency and

crypto assets broadly has been backwards

and like I think that there is a group

of call it gray-haired people in

government who um really have been

worried about what this means for their

particular lever of power that they get

to pull uh but the Strategic interest of

the United States and of Freedom

globally I think is is in having an

asset that is uncensorable and it's just

like you know information should flow

freely and monetary systems are just

like information systems and um somehow

having some person with gray hair who's

able to say no that information is not

allowed I think that's actually a

dangerous stance and and it's it's it's

um it's actually comforable to like

imagine that the US government had gone

through a multi-year effort to try to

prevent the development of universal

translation technology because they were

worried about what it would mean for the

Primacy of English right right that's

basically like I think the relationship

of the fed and the SEC and to kind of

thinking about the Dollar's relationship

to to bitcoin I think Bitcoin is

universal translation technology or

cryptocurrency broadly but Bitcoin

specifically Universal translation

technology for money and the likely

result of that is not to diminish the

importance of the dollar but it's

actually going to magnify the importance

of the dollar because you're going to

end up with like one proof of work coin

and then one Fiat coin probably you know

and and kind of like all of the monetary

systems like down stack

become much less

meaningful and in fact maybe um are

under threat uh right but that's almost

isn't that almost a risk factor that at

some point if

this is somewhat of a crazy argument but

that if we can't print money anymore we

can't sustain our fiscal deficits and

that we the dollar collapses and we have

the real Great reset which basically uh

I don't think is near personally but uh

that's a big fear is that we're gonna

have to go back to to paying you like

having a balanced budget imagine that

right yeah I mean but I mean look at the

so the argument is basically by by being

the reserve currency for the world we

get some kind of like Financial benefit

and that we can borrow cheaper than we'd

otherwise be able toig go um but like

look at the borrowing cost of the US

versus like Greece right now I think we

borrow more expensive than Greece so

clearly it's not I I don't think it's as

kind of it's not clear to me how much

benefit we get then the other argument

is well being able to like impose

Financial sanctions is an important kind

of strategic aim of the US government

and I have yet to have anybody Point me

towards like a set of financial

sanctions that have actually produced

the outcome that the government was like

looking it worked against Russia oh wait

yeah well or even go back in history

it's not like it's not like imposing

embargos on Cuba did a lot for our

strategic interest there over a long

long time uh and like if anything kind

of like the it seems like the result is

that you cement dictators into power at

the expense of their population's

well-being so from a like a universal

like humanitarian perspective it seems

like it's a net um net bad and I'm I'm

sure maybe there are examples out there

I'm sure there are I'd love in the

comments somebody tell me what I'm wrong

about here but I think it's more like

you know I've been reading a book it's

the history of the CIA which is

incredibly depressing uh and um people

like to be able to pull levers yeah and

like the thing that kind of like when

people are in power they want to be able

to impact things and so if you're taking

away a lever for them even they will

convince themselves that that's bad for

the world even though kind of

objectively it's probably net good uh

and and I think you know I think a you

know cryptocurrencies and and smart

Contracting protocols like crypto assets

broadly are going to be net good for the

world in a profound kind of like our

ability to motivate Capital into the

most useful products for the benefit of

humanity fashion uh and and and they

will deliver you know a a much more

efficient Capital allocation system

system uh and kind of like that will

redown to the benefit of the the country

that um you know is most geared to

technological innovation and enables the

most technological innovation and the US

is undoubtedly that country at least

right now uh and and so I think you know

it's in our strategic best interest to

enable that new system to thrive and

flourish as quickly as possible and we

can essentially succeed through just GDP

and productivity growth and the optimism

that comes with I have a feeling BR is

slightly bullish on crypto that's the

vibe I'm getting what are your thoughts

of countries like El Salvador or the

Central African Republic that actually

use it as a legal

tender well I don't think that there's

actually um been that that much

utilization of it as a transactional

asset you know we're still in kind of

like the store of value area and I think

you know for the likes of um El Salvador

or you know these countries like they

are um both they're making a strategic

bet and appreciation which I think is a

wise one and they're trying to like

reduce their both dependence and the

power that the US government has over

them which is probably also a wise

strategic move and you can understand

why the US government would not like

that but I think that from a the

perspective of like you know can I do

what I want internally without suddenly

the US government you know taking away

the money that is supposedly mine like

that's probably n wise for them I I

think that um what I think is

interesting or useful about the

technology is once once those countries

basically say hey this is potentially

legal tender it gives people kind of a

framework by which they can kind of uh

diversify their own risk internal to El

Salvador away from the El Salvadoran

currency or the dollar that is

denominated against and so like I I do

think that there will be like emerging

markets that transition either

voluntarily or involuntarily into a more

Bitcoin based economy um simply because

it's like going to there will be kind of

universal tools for onboarding and

holding digital wallets and stuff that

won't be um kind of like developed in

that country like if you think about

like a a banking license is actually an

incredible rent seeking um thing to have

in a lot of Emerging Markets because you

can extract you know extraordinary fees

off of the customers that you service

which and then you cut out and don't

care about the people that don't have

that much money because like why bother

servicing them right and so it's like

the the kind of bureaucracy and the

fixed cost of opening a bank account

basically leaves a lot of people out of

the traditional Financial system and

there's no incentive for the banker to

actually go and service that marginal

poor customer whereas um with Bitcoin or

cryptocurrencies broadly it's like well

there's going to be a universal set of

tools that the marginal cost of

delivering it to somebody is going to be

effectively zero and so they'll get on

board but not through traditional

currency through kind of like the set of

crypto assets um you think heav is going

to succeed in getting rid of the central

bank I don't know if I know enough to

actually com I mean should we End the

Fed in the United

States probably not we shouldn't fire

Jerome

Powell is he keep using firing Jerome

Powell is not equivalent to ending the

FED um you know and I think that we'll

see what happens economically over the

next 12 months do you think we'll stick

a soft

Landing history would suggest no what do

you personally

think I mean I think that

it I think we are kind of like teetering

right now I think that the um there

could be like

uh I think we're in a position where

things are set up where something major

could break oh wow right and and but

it's you don't know for sure you put

something under enough strain and it's

like it might hold and kind of like it

snaps back but in event of breakage it

could get pretty messy uh and so I think

that kind of like a stance of uh you

know lowering rates would be like net

safer to the economy as soon as possible

yeah I mean I think that the you

know imagine like a set of consumers

that's out there that had this like you

know kind of bloat of savings that's

worked into their balance sheet that um

they spending down the reason people

hate the economy right now is is not

necessarily because of their income it's

because they had this lump of savings

that they're spending more quickly than

they thought they needed to and some are

getting into distress and kind of like

there's clear like damage in terms of

capital asset purchasing as in I'm not

like making big purchases um and um you

know borrowing some interest rate relief

like I think more and more people will

get broken over the back of um kind of

like the interest rate burden um so not

necessarily another banking collapse but

a broader consumer collapse that could

lead to joblessness or or where do you

see the St I mean the the two are

co-related as in like I think that the

you know a you know there's like in the

property sector there's clearly a bunch

of players that are in trouble right so

what do they need to like survive they

need to roll their loans at some rate

that's not exorbitant from the banks if

the banks aren't sitting there and being

like hey have a loan uh you know then

they die right and so the way they die

is basically the the keys to the bank so

then the bank like takes property on its

balance sheet that it doesn't want so

you know how does the bank manage that

do they sell it into the mark like

there's a lot of potential Cascade

effects in the real asset in real asset

land that could like Cascade back onto

the bank's balance sheets and I'm not

saying it's you know it's not certain

it's going to happen it's just there's

like a very high potential there and so

I think from the fed's perspective it's

like uh at least from you know we think

that technology delivering a lot of

deflation into the economy right now um

there's plenty of evidence within the

technology space that consumers are

beginning to like trade down and kind of

like you know Force pricing down uh and

um you know if if the FED has

sufficiently bent the curve on inflation

then why take the big risk of breaking

something major rather than you know

cutting aggressively to to kind of like

try to land the plane is there the risk

that they pull a mid1 1970s and by not

staying high for as long or longer they

reinduce inflation by breaking

expectations I don't think there's

strong evidence that there's been a wage

price spiral in the same way that there

was in the 70s it's really like the

consumers had this like set of savings

that they were spending so it's like the

consumer wasn't faced to make internal

adjust wasn't forced to make internal

adjustments because they still had a

bank account it's not because hey I'm

making more money this year than last

year so therefore I can spend SP more

instead it's like well you know I guess

I'll order from door Dash again cuz I

have all this money in the savings

account even though I know it's net

expensive for me you know and then

suddenly somebody spent I don't know

somebody was posting on Twitter they

spent $30,000 on door Dash last year oh

my Lord and it's like well that was a

dumb move like you could have you could

have walked down the block and gotten

that food and and you know reduced kind

of like net spend uh and maybe bought a

car you know and and so I think that um

because it has n like fed through into

wages uh there there's there's not the

same Dynamic with employers where it's

like oh there's an expectation that I'm

going to get a raise this year you know

instead people are marginally uncertain

about their jobs so I don't I don't

think that you know cutting rates and

kind of like saving Property Owners from

like sending their buildings back to the

bank is necessarily going to feed

through until suddenly the consumers

have leverage against kind of like

employers to demand oh interesting so uh

in other words uh uh save save the

wealthy because something bigger might

break well I mean you call somebody

wealthy but if you look at like the

average office building that person

might have zero equity in that building

as in as in you know they're wealthy in

that they have uh a loan out for more

than the value of the business from the

bank that's actually net unwealthy right

and so like the reason they're sending

their keys back is because it's like I

can't roll this loan and make it make

sense so good luck with this asset do

you know what I mean uh and so I don't

know if it's you know yeah I don't know

if that's exactly the framework I'd

think about it through Fair who's going

to win the

election I don't know it's like I I

think it's it I just go with betting

markets it's basically 50-50 Democrat

versus Republican with your mix of

Republicans on the one side and a mix of

Democrats on the other because people

still think that Biden might like drop

out or somebody might step in right do

you think that uh the economy will be

the primary deciding factor that is

let's say we get to November 2024 stocks

up real estate market didn't collapse we

didn't have mass joblessness we get

Biden uh stocks down mixed red pain

joblessness you go for a change of

regime just like you know' 08 the hope

you can believe in um I do think it

plays a factor and I think to be honest

it probably from the fed's perspective

will feed into their decision Matrix as

you think the fand is going to be

manipulated by potentially the prospects

for what how they want the election to

move well I I mean it depends on how

broadly they interpret their mandate but

I could imagine members of the FED

saying that we're interested in kind of

like the stability of the dollar and

believing that um Trump poses a danger

to kind of the stability of the dollar

and so then you know and that won't

appear in the minutes of course

but I I I can't imagine that that's not

a internal bias that they wow so I mean

it's not like Trump's ever threatened a

fire poell oh

wait yeah I think I think you know again

it goes back to the like the levers of

power bit right where it's kind of like

the FED Governors are incredibly

powerful right now you could imagine a a

situation in which the power of that

seat is dramatically diminished if

somebody gets into government and says

you know what I want somebody who

answers to me to be in that seat wow uh

and so with that as a perspective I

think that there's probably I I I think

it biases me towards more rate Cuts this

year than I would otherwise interpret

how interesting uh few final questions

uh Roblox they've got about $100 million

of cash flow quarter uh growing at about

38% however despite this growth their

losses are widening a lot of their

expenses like 70 plus percent of it

going to stock based comp when is Roblox

ever going to be

profitable well like this is the way we

think about the consumer space broadly

which is that there are um going to be

probably a handful of enter

entertainment Platforms in which people

spend a majority of their time right and

these platforms are going to be

incredibly powerful and compelling and

the platforms that enable kind of like

the creation of interactive experiences

and content are going to command a ton

of attention and so like the if you

think about where robot roblock stock

based comp is going it's going to people

that are trying to create these

experiences and create the platform okay

right so if the cost of creating the

experiences and compelling experiences

collapses as then you can have users

generating those kinds of experience and

still compel their users attention um

then actually you get great essentially

leverage against the model where um the

where you want to be is as big a user

footprint as possible with as Dynamic a

platform as possible that then can have

all kinds of things built on top of it

uh and Roblox is a candidate for that

and so you know you there's like them

and then there's like fortnite uh and

epic games like I think those are both

great kind of candidate um game engines

for um like immersive experiences

that'll can command a ton of consumer

attention and then from a like consumers

generally will pay either implicitly

through ads or or explicitly through

like virtual items and or wagering or

whatever uh or buying Commerce items um

for the time they spend on those

platforms uh and so kind of the this is

the early days of that story this is not

like the late kind of like extraction of

value portion so you're you're still

very early on the scurve in your

expectations for Roblox sure are you in

Roblox right now uh my children are okay

right right right oh your children are

going to grow up and have spending power

and it's kind of like the diversity of

experiences that are available there are

going to expand um and it's uh in some

ways it's like um you know the it's it's

similar to The Social Network story just

on a different kind of like interaction

layer is the iPad uh or sorry is the

Apple Pro Vision going to be the next

iPad moment for Apple no it's too too

it's too expensive and nobody I I'm I

haven't used it yet so say that a fire

trck going by um and I'm really curious

to see how the like the vision tracking

feels like I think that's like a unique

user interface Paradigm but $3,500 for a

device is way out of range to attract

enough users to like spin up a developer

ecosystem uh and generally I think with

new user interface paradigms actually

the software that's going to work is

going to be the software that's

developed specifically for that it's not

going to be I'm taking iPad apps and

like pting it into that experience so

it's hard for me to imagine

like like our analysts are going to

shift from like looking at a screen to

like wearing this thing and trying to

multitask against virtual screens

because of like weight discomfort

because of like lack of resolution

because it's kind of like the user

interface will be bulky and so I don't

think it's actually G to certainly at

this price point there I I would put a

very low odds on it working and um even

given an expectation for a price curve

they can ride down um it's hard it

really has to be the primary compute

device to make economic sense and it's

hard for me to see it sitting there like

I have much more faith in kind of like

meta rayb bands as being something that

people would wear and kind of like use

as a way to interact with the world or

like the you know the rabbit device that

just came out at CES that's like a

consumer device that that's

purpose-built for all the interaction

that becomes available to you when you

use AI to interact like I think that's

like a more interesting or likely

pathway that things develop I don't know

if that device specifically is going to

work but the design is great and it only

cost 200 bucks and so they sold I think

it was something like 10,000 of them on

the first day wow right and they sold

10,000 because people are like well 200

bucks for a really well-designed device

that might offer me utility right that

seems like a reasonable bet it's like a

Kickstarter project but we'll actually

deliver you the product you know and and

um in the history of compute like when

you have a massive change in your user

interface that's what leads to platform

transitions so you know going from the

keyboard to the mouse uh that's what

displaced IBM and led us to Windows

going from the mouse to the multitouch

screen LED us from like Windows to uh

Apple well now we're clearly in a

different user interface paragon I can

talk to a computer and it can respond

you know and um you know maybe there

maybe I can gesture and stuff like so

people are figuring out exactly how to

use it but it suggests to me that at the

very least like the way in which

software and compute Hardware is

designed and works is going to change uh

and typically the person who dominated

the last platform in user interface has

so much Legacy user interface design and

training for their users that they have

they struggle to make that transition so

you think Apple might be left behind

it's possible so the counterargument

would be listen they have like their

constellation of devices they're just

going to do like uh voice interface

through their airpods and they're

fine and I mean I don't know that that

company is showing its kind of legac in

age to some degree like Siri you

mentioned earlier yeah how long is Sir

been now like that that is it is

actually comically bad now relative to

what somebody could develop just

wouldn't take a big team to make it much

much better so then you have to ask well

what are they waiting for honestly like

what is who is the product manager of

Siri who's like hold on guys let's not

improve this thing because people really

enjoy like asking it six times to try to

just play a stupid song you know like

what what is the what is the holdup here

and I'm sure they're going to deliver

some AI enabled product hopefully this

developer cycle but honestly it should

have already happened and the the kind

of like the framework of how I approach

what I do on my phone is feels full of

friction now it's like I'm searching for

like a specific app to do a specific

thing I have to remember what that app

is I have like you know 100 apps on my

phone I use like 15 like there is there

is a different way in which our

relationship to computers is going to

work on a go for for basis and it's hard

to bridge from like everything runs

Central through the iPhone to maybe it's

you know more ambient Computing where

it's like I have a user interface that's

independent of the hardware that um kind

of like has to be able to bounce around

to all of my systems in some way uh and

so I don't I'm you know they clearly

feel like they're in extraction phase of

their Monopoly and that's usually not a

stance where you can motivate a

Workforce to actually build the next

system wow last question I have and then

I'm sure you have some questions to

Mikey we'll wrap up here in a few

minutes um is Elon making a big mistake

getting so political on X should he just

shut

up I think he should say whatever he

wants to say like honestly I think that

um you know there's there's like the

Strategic framework perspective where

imagine the election coming up as 50/50

yeah and imagine that uh if one side

wins they'll basically like have a set

of rules that they follow in terms of

how they deal with entities and stuff if

the other side wins there's going to be

much less adherence to the rules and

much more kind of like call it um

responding to um who they perceive as

being loyal versus disloyal uh and so uh

if you're operating within that

framework where it's kind of I know what

the rules are if one side wins and I

don't know what the rules are if the

other side wins then you're better off

kind of aligning yourself in a way where

in the event where the rules are fuzzier

kind of you're GNA be in the good graces

of the person that's making the new

rules so there's like wow that was a

very interesting way of basically saying

if Trump gets in and everything goes

into chaos at least I was on the side of

supporting Trump and maybe we'll be okay

as

Tesla I

mean I I think that you know not quite

as crudely as that but I I can

understand I can understand how that

would be like uh Optimum strategy uh and

I think you know there are clear things

that he believes that I absolutely

adhere to as well which is that there

should not be kind of suppression of

information and speech and that I think

that um X as a platform is actually the

right way for information to propagate

around the world and uh and I think that

it's an incredibly um powerful kind of

like Way by which kind of all the

information that's out there down to the

raw material in the synthesized material

can be like you know collated and and

and and raised and I think that he is

you know both demonstrating that and and

kind of using the platform to its

maximum benefit for him that's a great

answer Mikey what do you at all right I

got a few we'll go fast in you know

respect to your time uh I guess I'll

kind of work backwards so one of the

last things we talked about was that

rabbit that just came out I think it's

called the R1 I've already heard that

referred to as the iPad moment for AI

and I think you can take that to mean a

few different things but one of the

things that stood out to me is with the

iPad it was a device that nobody thought

they needed until it came out and then

everyone was like oh I actually need

that so do you think there's some Merit

to that or do you think they're making a

mistake by making it a standalone device

and it should be something that's in

your iPhone or Android instead well I

think that you should understand it

within the perspective both of corporate

strategy and of kind of like the the

previous thing I was talking about where

like the user interface I think it has

to change if you can if you can interact

with these things in in kind of a voice

first way so from corporate strategy

perspective imagine that they were

instead of releasing a hardware device

to try to launch an app on Apple okay

one they're subject to the Apple tax so

any commercial transaction that they

develop through that they have to pay

30% back to Apple and for what it's for

Apple's distribution but also they're

probably uh restricted in how much data

they can ingest and extract off of the

used use behavior um if they're on you

know the iOS ecosystem and so they both

lose kind of like some of the data they

need to improve their system and they

give up some of the economics and I

think one I ordered one because like

Teenage engineering which did the

hardware design for that is a great kind

of like Hardware design organization

like I I want to order all of their

stuff it's beautiful I know it'll like

be like good in my hands like there's

you know so and the price point is like

$200 not meaningful and is it going to

be useful I'll find out you know and I

that there is a like the iPad yes I mean

Kevin's over here using one I'm looking

at the rabbit right now I'm like this is

very interesting um well you missed the

first set of orders you're going to have

to wait for delivery um the the um the

iPad is useful and I feel like

particularly like as a smart home

control device it's still like bulky and

actually not very useful and and I think

the the question I have about this

specific device is is it really credible

that people are going to carry two

things in their pockets probably not or

a minority of people are going to so it

could be that some people are more like

I'm going to do it myself and I have a

smartwatch that's connected to a cell

phone and then I have this thing that is

like my you know personal Communicator

with the world or device you know and

and like they get off of the phone as

the primary thing in pocket or it could

be that people have this more as like a

hey this is my interface that actually

works with all the systems that I have

in my home which span like you know

Sonos and apple stuff and and you know

that where I'm kind of like using it to

control more of the home envir yeah and

I think that's maybe a way it will be

useful and it's kind of like a we'll see

and and from the think from the

corporate strategy perspective it's like

if you look at these large language

models that have been uh reinforcement

learned where uh you you're like you're

providing human feedback to make them

better and more interactive the N the

amount of data you need for

reinforcement learning is actually like

it's not that much it's costly because

you're paying humans to do it but it's

you know 150,000 or 200,000 or maybe

even 100,000 kind of like um kind of

nudges to the model to to train that

policy Network so if you can get you

know they sold 10,000 of these things uh

if they're getting like 10 interactions

that are useful from a reinforcement

learning perspective per device at all

you know that probably improves their

kind of underlying model that they're

using and so I think it's like both

clever and that kind of well-engineered

device great price point that people are

going to order and then if they can

drive any engagement at all they're

probably getting useful information off

of that which will then improve their

system over time and one real difference

between kind of AI software and

traditional software is actually you

should see more continuous and dramatic

Improvement in the software over time as

in like iOS generation to generation

they only release a new one every year

and it's like what's the marginal

Improvement it's like oh now I can

change my background screen you know

it's it's not like there's not marginal

Improvement and so kind of like the I

think the The Stance towards like how do

we improve our software over time and

what does that mean to the end user is

going to change so it's like similar to

a Tesla like the rabbit the R1 that I

buy today I I expect it a meaningfully

more performant a year from now whereas

the the I phone I buy today you know

like the software improvements they're

going to offer are not going to be that

great and they may even degrade like

battery life in the device so then you

know it's it it actually kind of changes

our relationship to kind of the value of

the technology that we hold when we talk

about the growth of AI uh you were

talking about Moors law earlier do you

see it linear in that same fashion or do

you think it's more of an s-curve and if

it's an s-curve where are we on that

curve well I mean mors law is not you

mean it it's it it compounds at a

consistent rate uh and and so um I

think one as I described it's it's kind

of like the there are so many different

Improvement vectors right now in AI that

it's probably the cost decline is we've

clearly under for we say it's declining

at 3x per year but clearly it's it's

it's improving faster than that on a

cost basis uh and I think right now it's

it's semi chaotic uh and there's so much

optimization happening that depending on

how you measure cost declines you can

you know get really meaningful

performance like kind of performance

discontinuous breakthroughs uh and and

we're in the very early stages of that

and and I think that then you will have

a consolidation into a more both

measurable and kind of forecastable set

of cost declines but we're not there yet

but this is all caveat with like even

the fundamental

architecture is still in Improvement

mode there was just a paper out um that

was demonstrating that the the

Transformer based large language models

are not Turing complete meaning you

can't you can't give it any arbitrary op

operation and have it like compute an

output and so one way to think about

that is the large language models right

now as they're currently designed it's

it's almost like a calculator right like

a calculator is a really useful thing

right it's a really useful thing but I

can't give it an iteration Loop that

then like uh kind of like computes any

arbitrary thing I want there's like a

limited set of operations it can do uh

and the paper was demonstrating actually

if you combine two Transformers in a

model in a clever way you can make a a t

complete AI model uh

and we don't know yet but to me it seems

like an architectural breakthrough where

actually these systems could become you

know wildly more applicable to almost

any task uh and so there's lot that's an

example of one paper there's the we're

so early in figuring out what the

existing systems we have can do what the

next system is going to look like you

know even just improving the existing

systems we have by throwing more data at

them um that it's like to