[BidClub_]
All-In · · 102 min

Socialists Sweep NYC, China Catches Up in Coding, AI Memory Crunch, Micron's Blowout Quarter

Gavin BakerTravis Kalanick

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TL;DR

  • New York’s Democratic-socialist sweep showed how disciplined activists can capture safe seats and pull an entire party left. Polymarket put the three-candidate sweep at just 26% before election day, yet Mamdani-backed challengers won in NY-7, NY-10, and NY-13, including two defeats of established incumbents. David Sacks’s key investor-relevant point was organizational leverage: the DSA views Democrats as “a ballot access vehicle,” so even members who survive may alter votes and rhetoric to avoid primaries.

  • The panel attributed socialism’s momentum less to working-class demand than to downward mobility, institutional failure, and exceptional political communication. Gavin Baker described the emerging base as relatively affluent, highly educated white liberals whose outcomes differed sharply from peers in industry, while Chamath Palihapitiya emphasized housing costs, college debt, healthcare dysfunction, and inflation as proof to younger voters that “the system’s rigged.” Baker’s changed view was explicit: he once considered AOC the Democrats’ standout communicator, but now calls Zohran Mamdani “one of the most talented politicians I’ve ever seen.”

  • The proposed cure for youth radicalization exposed a fundamental split between child protection and anonymous speech. Chamath Palihapitiya argued that under-16 social-media bans could reduce early exposure and produce “a far less radicalized youth”; Travis Kalanick agreed that social media is “brain rot for real” but said age verification is really a mechanism to deanonymize adults and construct “a full-scale censorship regime.” Baker supported the child-safety objective but judged Kalanick’s free-speech cost “really high.”

  • Israel has become a primary-election fault line whose intensity is increasingly explained by age rather than party alone. Sacks presented Brad Lander’s defeat of pro-Israel incumbent Dan Goldman as close to a single-issue test, citing 80% Democratic disapproval of Israel and 57% disapproval among Republicans under 50. Chamath insisted critics must separate Jews, Israelis, the state of Israel, and Benjamin Netanyahu: collapsing them into one object of blame is “insane.”

  • GLM 5.2 turns China’s open-model progress from a strategic warning into an immediate commercial constraint. The 744-billion-parameter, one-million-token-context MIT-licensed model scored 51 on Artificial Analysis, beat GPT 5.5 on Frontier SWE, trailed Claude Opus 4.8 by under one point, and was described as 85% cheaper than GPT 5.5 at comparable performance. With Opus 4.8 rolled back and GPT 5.6 navigating approvals, Sacks warned that America is “on a shot clock”: stopping domestic deployment will not stop China.

  • Open weights may compress frontier-model margins while expanding the infrastructure opportunity. Baker expects enterprises to run a “council of LLMs,” routing perhaps 85% of work through customized open models and escalating only difficult tasks to frontier systems; his rough current split was open models processing 80%-plus of tokens while frontier tokens capture about 90% of economic value. His conclusion was not that frontier labs disappear, but that composability shifts value toward chips, memory, hosting, and routing.

  • Micron’s quarter confirmed that DRAM—not exotic components—is the binding AI bottleneck and a source of consumer inflation. Revenue rose from roughly $9 billion to $42 billion, Q4 guidance reached $50 billion versus $43 billion expected, and 2026 HBM supply was already sold out; Baker expects DRAM to absorb 30%-40% of hyperscaler capex next year. Apple’s $699 MacBook Neo moving to $799 and Mac Studio pricing rising 25% illustrated the spillover: “Inflation has come to the desktop.”

  • Scarce terrestrial power strengthens both orbital-compute economics and the value of large energized sites, while public markets remain able to fund the buildout. Baker put a one-gigawatt terrestrial data center at $35 billion of semiconductors plus $25 billion of power and cooling, versus approximately $40 billion in orbit if reusable Starship lowers launch to $5 billion. He separately valued Anthropic at roughly $3 trillion and argued that public markets need absorb only the offered slice, but Cerebras showed why execution matters: once an IPO breaks deal price, mechanical selling and opportunistic shorts can turn disappointment into “a pile-on.”

Digest · the substance, structured for research

1. The DSA sweep converted low-turnout organization into congressional power

  • Mamdani-endorsed candidates went three-for-three: Brad Lander unseated two-term incumbent Dan Goldman in affluent NY-10, the NY-13 challenger defeated a five-term incumbent backed by Hakeem Jeffries, and Claire Valdez won NY-7. Polymarket had priced the full sweep at only 26%.

  • Jason’s demographic observation was deliberately barbed: the candidates performed especially well with younger, college-educated, high-income voters—“people who can afford to be socialists.” Because all three districts are safely Democratic, the primary victories likely determine the eventual officeholders.

  • Sacks read the DSA platform as a constitutional reconstruction project: abolishing the Senate, carceral state, ICE, and Electoral College; granting universal amnesty; subordinating the executive and judiciary to Congress; expanding the House; imposing proportional representation and ranked-choice voting; and pursuing public ownership of major companies.

  • More consequential than any single seat was the organization’s declared strategy. One DSA co-chair described Democrats as “a ballot access vehicle,” useful for winning office and caucusing when convenient, while calling the establishment “an obstacle, not a home.”

2. Primary threats may move more Democrats than DSA seat totals suggest

  • Sacks argued that the DSA thrives in contests like New York’s primary, where turnout was roughly 17%: activists are passionate, highly organized, and practiced at exploiting low-participation electoral systems. He expects similar tests in Los Angeles, where he said the DSA holds something like half the city council seats.

  • His forward mechanism was straightforward: after strong incumbents lost, every Democrat in a deep-blue district must consider the possibility of being primaried. Members therefore may shift rhetoric, votes, and positioning toward DSA priorities even when relatively few formal DSA candidates win.

  • Jason compared the strategy with Trump’s takeover of the Republican Party: build a large enough tent, dominate the communication channel, then force established officials to follow the new base. The DSA’s own formulation was equally direct: Democrats cannot represent both “the billionaire class and the working class.”

  • Mamdani’s communication skill made the threat harder to dismiss. Jason described being briefly captivated by a Knicks speech despite opposing Mamdani’s politics: “It was like getting hypnotized.” Sacks’s response captured the vulnerability—“That’s all it takes. We’re screwed.”

3. Economic frustration supplies the audience, but charisma supplies the leader

  • Baker said the old Democratic coalition sought opportunity for working-class, Black, and Hispanic Americans; in his reading, the DSA is losing those voters while gaining relatively wealthy white liberals who are downwardly mobile. Many moved from elite schools into an NGO-and-nonprofit system rather than industry.

  • His sharper institutional claim invoked the “Curley effect”: politicians can support policies that worsen constituent outcomes yet drive out rivals, then award well-paid nonprofit jobs to allies. Baker cited homelessness spending per capita more than doubling in New York and roughly quadrupling in California while outcomes deteriorated.

  • Chamath supplied the demand-side explanation: younger generations face expensive housing, college debt, healthcare dysfunction, and inflation, and increasingly doubt they can outperform their parents. With little conception of socialism, communism, or the historical examples Sacks cited, “democratic socialism” arrives in an attractive wrapper—“the Coke Zero of socialism.”

  • Baker nevertheless credited the movement’s ascent principally to Mamdani, not its ideas. His updated judgment: “I used to think AOC was by far the most talented Democratic politician,” but Mamdani is a singularly capable speaker, interviewer, and “chameleon” with no obvious establishment rival.

4. AI was pitched as capitalism’s leveler—and Silicon Valley as its worst ambassador

  • Chamath called AI “the greatest economic leveler we’ll ever find in our lifetime.” Search gathered the world’s information, but AI converts that information into expertise and action, giving anyone the functional equivalent of a brilliant co-founder who can “out-engineer people” and “outthink people.”

  • In that framing, access is no longer gatekept; outcomes depend on a person’s ability to direct the available intelligence toward something valuable. Yet Silicon Valley’s public infighting allowed narratives about job losses, water consumption, and doom to dominate, leaving capitalism’s alternative poorly represented.

  • Chamath said congressional races in Utah and New York became practical referenda on AI, with Anthropic-funded anti-AI groups opposing what he described as OpenAI-funded pro-AI groups. The pro-AI side “held the line,” but only narrowly.

  • Kalanick offered a deeper social diagnostic: “Truth and justice is the immune system for society.” When truth loses to distorted media or crimes carry no consequences, the immune system is suppressed and social pathologies flare; the trajectory of those two variables predicts whether society improves or worsens.

5. Social-media age gates split the panel over censorship

  • Chamath argued that if political stability and predictability emerge in Canada, the UK, and Australia after their under-16 bans, that could be evidence for the bans; he pointed to Florida’s existing action and suggested considering broader U.S. adoption. His theory was that a healthier information diet could yield less-radicalized future voters.

  • Kalanick mounted a full counterargument while conceding the harm: social media is bad for children and adults, “brain rot for real,” potentially worse than cigarettes. But he said child protection supplies the justification for forcing adults to identify themselves, enabling authorities to suppress disagreement as “harmful content.”

  • Baker agreed that an under-16 ban would be beneficial in isolation, but said the price Kalanick identified was substantial. Anonymous accounts and free speech on X, in his view, prevented a much worse information environment; he supported age restrictions only if anonymity could survive.

  • Sacks paired free speech with civic formation. Hearing overtly anti-American classroom material during COVID helped move some Democrats toward Trump, he said; schools should teach national failures honestly while still explaining why America is “about as good as it gets” and an unusually successful multicultural society.

6. Israel now divides younger voters across both parties

  • Sacks treated Lander’s victory over Goldman as unusually clean evidence. Both were veteran white Jewish New York politicians with broadly progressive credentials, but Goldman defended Israel while Lander visited a mosque and denounced what he called genocide in Gaza; Lander won handily.

  • The polling Sacks cited was stark: 80% of Democrats disapproved of Israel. Among Republicans under 50, disapproval was 57%, whereas older, more establishment and Fox-oriented Republicans remained much more supportive—making age the clearest divider.

  • Chamath compared the authority granted Israeli leadership after October 7 with America’s response after September 11, including passage of the Patriot Act. He understood the initial mandate to “set the table right,” but argued that criticism of Netanyahu had become wrongly conflated with hostility toward Israelis or Jews.

  • Jason diagnosed a communications vacuum: Israel needed a sub-35-year-old American-Israeli spokesperson fluent in English and social media, with comparable representatives in France, Germany, and other countries. Instead it often deployed admirable older figures who lacked the medium’s native language while “taking body blows every second.”

7. GLM 5.2 brought open weights to the coding frontier

  • China’s Z.AI released GLM 5.2 under the MIT license with 744 billion parameters and a one-million-token context window. It is downloadable, self-hostable, forkable, free of regional restrictions, and usable commercially with only the license attribution.

  • The reported performance placed it beside closed frontier systems: 51 on the Artificial Analysis Intelligence Index, the highest open-weight score cited; better than GPT 5.5 on Frontier SWE; and less than one percentage point behind Claude Opus 4.8. API use was described as 85% cheaper than GPT 5.5.

  • Baker said the quality challenged some of his prior beliefs, though he considered large-scale distillation certain. His analogy was an enormous device farm querying cloud APIs through masked accounts, harvesting full reasoning traces, then feeding those traces into reinforcement learning and possibly pre-training.

  • Distillation is effectively a “cheat sheet,” but GLM 5.2 may now be capable enough to conduct its own reinforcement learning. Baker hedged the conclusion because he had not seen the next OpenAI or SpaceX models; the frontier gap might widen again.

8. Regulation cannot preserve a lead against a competitor outside US jurisdiction

  • Sacks emphasized the timing: Opus 4.8 had been rolled back after a reported jailbreak, while GPT 5.6 was navigating additional approval hoops. That left a Chinese open-weight model competitive with the strongest currently available OpenAI and Anthropic systems.

  • Jason asked whether Dario had deliberately provoked the outcome to create a regulatory moat. Sacks noted that Dario had advocated an “FAA for AI,” so Anthropic had obtained the approval structure it sought, but probably did not welcome losing Opus 4.8—possibly being “hoisted on his own petard.”

  • Sacks opposed rewarding that strategy with a labyrinthine regulator. Once the jailbreak is resolved, Anthropic should return to market, and OpenAI should not face unnecessary delay: “We do not have months to give away in this race.”

  • Cyber risk, in his account, requires acceleration rather than suppression. White hats need frontier tools to find vulnerabilities, distribute patches, and force a broad upgrade cycle before adversaries exploit them; China, historically around nine months behind “plus or minus three,” can close faster after a known breakthrough.

9. Composable models shift the profit pool toward infrastructure

  • Baker’s enterprise architecture is a “council of LLMs”: a router sends routine tasks first to a company’s tuned open-weight model, then invokes a frontier system for harder work, verification, or added reasoning. He argued Grok should be one of the frontier choices because it will tell an owner politically inconvenient truths.

  • He suggested open systems might process 85% of enterprise queries, even though frontier tokens currently capture roughly 90% of economic value while open-source systems already handle more than 80% of tokens. Those ratios could persist; the models perform different economic jobs.

  • Open weights are therefore not bearish for the AI complex as a whole. They transfer margin from frontier laboratories to compute, memory, hosting, and routing providers—making Nvidia, in Sacks’s phrase, “the American open-source champion,” capable of releasing a GLM 5.2-class model when incentives permit.

  • Nvidia’s restraint may reflect channel conflict, but OpenAI’s newly announced Jalapeno chip, reportedly built with Broadcom, could alter that calculation. Jason’s speculation: if frontier labs enter chips, Nvidia may become more willing to compete directly in models.

10. China is preparing an exportable AI stack, not merely a benchmark model

  • Z.AI claimed the GLM-5 family was trained entirely on Huawei Ascend 910B clusters; DeepSeek V4 had attracted a similar claim. Sacks kept the hedge explicit—China might be lying or using smuggled Nvidia hardware—but viewed the broader indigenization push as credible.

  • GLM 5.2 inference is optimized for Huawei chips. Sacks expects China to package Huawei hardware with optimized models as “AI in a box” and sell it globally at a fraction of US cost, following its familiar formula of better, cheaper, faster—or at least almost as good.

  • That prospect reinforced his case for US exports: America could have supplied friends and partners before Chinese substitutes matured, yet “invented reasons not to sell abroad.” He expects China to be globally competitive within one or two years.

  • Hosted Chinese models still refused Jason’s Taiwan and Tiananmen Square prompts, but Sacks did not regard censorship as fatal to open weights. American companies such as Perplexity had already forked Chinese models and restored excluded content, separating the base capability from the hosted political layer.

11. DRAM became AI’s tollbooth and consumer electronics’ inflation channel

  • Micron’s revenue rose roughly fourfold, from $9 billion to $42 billion, beating expectations by 16%; Q4 guidance reached $50 billion against $43 billion expected. Its full 2026 HBM supply was sold. Jason said Micron’s stock was up about 10x, while separately noting that Baker’s earlier HBM-maker call was up 14x.

  • Baker dismissed the “bottleneck bros” searching for obscure components: “The bottleneck that matters is DRAM.” Capacity and bandwidth underpin every model, and only Micron, SK Hynix, and Samsung were described as capable of producing the advanced memory needed for AI servers.

  • Micron’s supply agreements now include price floors and ceilings and cover about half its revenue with only four customers. Baker said the new floor pricing exceeds previous cycle peaks on a gross-margin basis, potentially transforming an industry historically valued as cyclical.

  • HBM’s difficulty comes from stacking dies—eight high in HBM3, moving toward 12 and 16—and packaging them reliably. New capacity takes years, while data centers “hoover up” memory; Baker expects DRAM to consume 30%-40% of total hyperscaler capex next year.

12. Scarce power favors orbital compute, modular deployment, and execution-led valuations

  • Baker’s one-gigawatt terrestrial bill was $35 billion of Nvidia semiconductors plus $25 billion of power and cooling. Reusable Starship could cut launch to $5 billion, producing roughly $40 billion of orbital cost versus $60 billion on Earth today—and perhaps $70 billion terrestrially within three or four years.

  • Jason said about 40% of data centers had been contested since 2021 and expected that share to rise. Chamath separately described energy supply as very meager against effectively infinite demand, arguing that large energized terrestrial sites could become “Hope diamonds,” while modular pods could compress build cycles to approximately 90 days.

  • Training still requires tightly co-located chips—even two kilometers can destroy efficiency—but distributed inference is more plausible. Separating memory-capacity-heavy prefill from bandwidth-heavy decode could extend H100s and A100s for seven, 10, or 12 years; Kalanick cited Targon offering H200s permissionlessly for $3-$4 per hour.

  • Baker put Anthropic at roughly $3 trillion today, said it would end the year well over $100 billion, and argued it could be very profitable at inference scale, with people reporting 85% gross margins. For Cerebras, however, the operative metric was energized megawatts: adding 50 MW monthly in 2027 could imply a roughly $9 billion cloud run rate, but breaking IPO price triggered mechanical selling—another argument for leaving pricing room or, as Jason argued, using an auction.

Jason Calacanis

Episode 278. David Friedberg took a mental-health day today after the socialist sweep in New York City, so we invited 2 guests. They both said yes. Travis Kalanick is here from Adams. How are you doing, brother?

Travis Kalanick

I’m good. Good to see you.

Jason Calacanis

Good to see you. Good to see you. And after a triumphant week at Starbase, the one, the only, everybody’s favorite, Gavin Baker of Atreides Management. How are you doing, Gavin?

Gavin Baker

Great, man. Thanks for having me.

Jason Calacanis

You’re still floating on Cloud 9 after the SpaceX IPO.

Gavin Baker

Yeah, that was a very special moment, and it was a culmination of some decades of hard work. But, man, to quote Bill Belichick: “On to Cincinnati.”

Jason Calacanis

Yeah. Exactly right. 0–0 is how the Knicks talked about the next game in every series. They were like, “It’s 0–0. We come into this as if it’s like the 1st game of the series,” even if they’re up 2 games or 3 games.

The socialists have swept New York in the congressional Democratic primaries. On Tuesday, New York City Mayor Zohran Mamdani went 3 for 3 in the candidates he endorsed, and they all won their primaries.

10th District leader Brad Lander defeated 2-term incumbent Dan Goldman. The 10th is one of New York’s richest districts and includes the West Village, all those townhouses, Wall Street, DUMBO, Cobble Hill, Carroll Gardens, and Park Slope. That’s some weird geography put together there.

In New York’s 13th, Jia Lee beat a 5-term incumbent who was backed by House Speaker Hakeem Jeffries. The 13th is one of the poorest districts: Harlem and the West Bronx, the Boogie Down Bronx. She’s a 32-year-old democratic socialist with a history of spicy remarks.

New York’s 7th District: Claire Valdez won the open seat over the handpicked successor. The 7th is a DSA stronghold: Bushwick, Williamsburg, Long Island City, and Greenpoint, known as the commie corridor. A lot of hipsters and baristas with suspenders in that neighborhood.

According to our partners at Polymarket, the Mamdani sweep chances were just 26% before Election Day. Yeah, that would be like the trifecta there if you were gambling. These candidates, just like Mamdani, did a lot better with younger, college-educated, and high-income folks—folks who can afford to be socialists. And these are all safe Democratic seats. The DSA will very likely win. So, the DSA caucus—

Travis Kalanick

That’s the best way you just said it: people who can afford to be socialist. It’s always the rich poors. They’re rich, but they pretend to be poor. It’s perfect.

Jason Calacanis

This is the history of our country from the ’30s, the ’50s, the Red Scare, the Black Panthers. We’ll get into it, Chamath, but basically, if you’re intelligent and you get into business, you become a capitalist. If you’re super intelligent and you go into academia, eventually you have the luxury of believing that socialism is awesome.

What’s your take here, Chamath? And then I’ll go to you, Sacks, because I can see you’re chomping at something over there. You’re just ready to go.

Chamath Palihapitiya

Honestly, I think that we are losing the script, and part of it is because we’ve been our own worst enemy. I’ll just keep saying this: I think AI is a very good prism into this problem. I think AI is the greatest economic leveler we’ll ever find in our lifetime. I think it’s the thing that can create the greatest amount of equality. I think that it can even the starting line for every single person on Earth.

But we’ve done such a poor job in representing it, in bringing it to market, and in talking about it. We’ve let all of our own personal trials and tribulations and insecurities and fights spill out into the open. As a result, Silicon Valley has lost even more credibility with the people at large. And in that vacuum, other people can paint a picture of how anything other than what capitalism looks like today is a better version of what they see.

This is why you’re seeing a lot of these people get a lot of momentum. I think if you look at some of the key congressional races, they were a referendum on AI. The good news is we were able to hold the line in some of these key places, but just barely. In Utah and in New York, there were a couple of very important races where it was essentially Anthropic-funded anti-AI groups, which is, again, insane, against, in some ways, OpenAI-funded pro-AI groups, and the pro-AI groups won.

Instead, we’ve gotten caught up in doomerism, jobs being lost, and water being consumed, all of which are lies, all of which are complete fabrications and misinformation. These have been created in order to specifically help 1 small set of actors inside the AI race, and it’s been fed and funded by those folks. So, in this vacuum, Jason, we’ve allowed all these other people to paint the other version.

Right now, the other version looks way more compelling than the current version because the current version has very poor brand ambassadors.

Jason Calacanis

You just explained that it’s a great leveler. Can you give a couple of examples and just expand on that briefly? How is it a great leveler? I know, but for the audience’s sake, you’ve said this a couple of weeks now, so I think unpack it a bit.

Chamath Palihapitiya

The best way to explain it is, I think, that the 1st real major unlock of economic productivity was when the internet, and specifically Google, went and harvested and collected all the world’s knowledge and all the world’s information and made it available via search.

What we figured out, though, 25 years later, despite the fact that they built a great business, is that what was missing was being able to take that knowledge and information and transform it into expertise and intelligence. That’s effectively what AI does. It takes that world’s knowledge and allows you to act upon it so that every single man, woman, and child has an equivalent Travis Kalanick as his co-founder—a superfounder, this brilliant person that can think through all your problems, can out-engineer people, can outthink people, and sits beside you.

There is no gatekeeping that can prevent you from having that. Now you’re only as good as your ability to direct that energy into something productive that you value. That is an incredibly powerful thing.

Jason Calacanis

Sacks, what’s your take on this? I guess some people are looking at this as the left’s version of the populist takeover that Trump did over the last 10-plus years. What’s your take on what we’re seeing here with socialism, its amazing appeal, and its winning at the ballot box?

David Sacks

I think there is some truth to that. I think the choices of the future are going to be communism—or, if you want to call it socialism—in the Democratic Party, or nationalism in the Republican Party. That is where we’re headed. Those are the 2 populist directions.

But let’s look at what these DSA candidates stand for. Let’s look at what their platform is. They actually say they want to abolish the Senate. They want to abolish the carceral state. That means basically police forces and prisons. They want to abolish ICE and grant amnesty for all. They do not support any deportations whatsoever.

They want to replace the president and Supreme Court with an executive and judiciary that is chosen by and subordinate to Congress, which basically now, I guess, just means this House. With respect to House elections, they want to abolish the Electoral College. They want to replace the 2-party system with a multiparty democracy. And they want to expand the House of Representatives, implement proportional representation, and implement ranked-choice voting in all elections.

This would be a total makeover of our constitutional system. They want to free Palestine. They want public ownership of major corporations. They want to defund the Department of War. This is a very radical organization.

You would laugh at a lot of these types of proposals, but you can’t really laugh at them anymore because these guys are taking over the Democratic Party. You can see the Democratic establishment is in complete panic right now because they have lost control of the party to Zohran Mamdani and his allies.

So, Jason, like you said, let’s take this 1 race here, New York 13. You’ve got this ally of Hakeem Jeffries, longtime incumbent Congressman Adriano Espaillat, I guess is his name. He is the chair of the Congressional Hispanic Caucus. He was defeated by an unemployed 32-year-old Ph.D. candidate. She’s never had a job. She’s been in college for 10 years, I guess, writing this Ph.D. thesis.

I think even by DSA standards, she might be kind of a lunatic. She has declared that she wants to end Western civilization. She wants to eradicate Western civilization.

Jason Calacanis

Wait a second. What?

David Sacks

We’re soaking in it. She actually said she used the American flag as a napkin to clean her hands.

Jason Calacanis

Oh.

David Sacks

Yeah. She attended a rally 1 day after October 7 celebrating the slaughter of Israeli civilians. She’s very pro-Palestine, but even to the point of celebrating Israeli civilian deaths. She calls white women ugly colonizers.

She’s called for the complete defunding of the police and abolishing all prisons and borders. She doesn’t want a single deportation. She hates the police, openly calls them pigs, and has called U.S. service members war criminals on social media. She says the U.S. is a disgrace of a country. She’s written favorably about communism and seizing the means of production, and on and on and on.

This is basically the new Democratic Party. Even if the Democrats do take the House in November and Hakeem Jeffries becomes speaker, this is going to prove to be a huge headache for him managing all these new DSA members because they do not actually see the traditional establishment wing of the Democratic Party as an ally.

They see it as an obstacle. The DSA co-chair, Josh Block, said, “We’re using the Democratic Party as a ballot-access vehicle.”

David Friedberg

Oh my gosh.

David Sacks

“Not because we share its goals. We build our own organization, get elected under the Democratic label, caucus with Democrats when it’s useful, and push our own agenda from the inside. We see the Democratic establishment as an obstacle, not a home.”

The DSA is coming for the Democratic Party. It controls the base now. It’s where all the energy is. I think this takeover will continue, and I think the DSA will gradually take over more and more of the Democratic Party. All I can say to these establishment Democrats is: play stupid games, win stupid prizes.

You supported this open-border policy that brought in this wave of mass migration. That is a huge part of the base of this new DSA wing. Mamdani would not have won the mayoral election in New York if it had just been native-born New Yorkers voting. It was the mass migrant vote in New York that swung it to Mamdani.

It’s not exclusively the DSA base. It’s the migrants plus these overeducated white progressives, who I say are overeducated because they’re more downwardly mobile. They end up going to work in academia or NGOs, that kind of thing. They’re hard left-wing. They’re kind of the vanguard.

It’s this combination of recent college graduates who are the organizers and this migrant movement that is really taking over the Democratic Party. But again, this all goes back to Democratic Party policies. They may not have intended for the DSA to take over, and they may not have intended to lose control, but it was their open-border policy.

It was also the fact that they have cracked the melting pot and the policy we had for many years in America of assimilating migrants—immigrants. That all got cracked by multiculturalism and wokeism. We don’t really do that anymore.

Now you’ve got these candidates like Shioalier openly declaring they’re not just anti-American, they’re post-American. They don’t have any respect for the American system, our constitutional order, or our free-enterprise system. They want to introduce something much different, and it’s going to look a lot like the countries where these migrants are coming from.

David Friedberg

Yeah. So again, if you import massive numbers of migrants, don’t assimilate them into our system, and then have these Marxist leaders, you’re going to end up with the American system coming to resemble the countries from which they came.

It’s really interesting. You mentioned how she wants to delete all of these units. It’s very similar to Trump’s approach. He wanted to delete a separate set of things, like the IRS, USAID, the Department of Education, and the EPA. They each use that playbook as well: “Hey, we’re going to delete some of this stuff.”

David Sacks

Trump didn’t want to delete the U.S. Constitution.

David Friedberg

No, definitely not.

David Sacks

Slight difference. I agree. He didn’t want to delete Western culture.

David Friedberg

I don’t think he wants to delete Western culture.

David Sacks

No. You might want to delete USAID because it was festering. It was basically a front for all these—

David Friedberg

NGOs.

David Sacks

NGOs, yeah. By the way, you may have noticed that in South America, we’ve had 7 elections where the countries have swung to the right. I think a big part of the reason why might be that you don’t have USAID there conducting all these left-wing regime-change operations.

David Friedberg

Polarization disappeared, and the incentives disappeared with it.

David Sacks

Travis, you famously had The Fountainhead, Ayn Rand’s novel, as your Twitter avatar for a decade or two.

Travis Kalanick

No, they’ve been writing about it for a decade or two. This was like a 6-month thing where I would read a book and then rotate my avatar.

David Friedberg

Yeah. You had Hamilton for a while. I had Ender’s Game for a while. Having known you for a while, I think you believe in the individual and their exceptionalism, and in trying to have a little ruggedness there. This is obviously the exact opposite. What’s your take on what’s happening in these pockets? It’s not national yet, but it’s definitely notable.

Travis Kalanick

All right. I’ve got 2 aphorisms for us. The first is: truth and justice are the immune system for society. When the immune system is suppressed, all the social ills flare up.

If you’re seeing us lose truth in social media, mainstream media, whatever you call it, that’s an early indicator of bad things happening in society. It’s not just social media or mainstream media; it’s everything around us. The same is true on the justice side. If people commit crimes and there are no consequences, that’s a nice early indicator.

You can watch these things and ask: Is truth winning today, or is it losing?

David Friedberg

Is justice winning today, or is it losing? What is the trajectory? That will tell you: Are we going to get worse, or are we going to get better?

Right. COVID and the Fauci case—now we’re seeing a lot more information come out. We have a really hard time getting the truth, and maybe we’ll get justice eventually. It seems like we’re getting a little more truth 5 years later, but it’s a perfect example of what you’re discussing.

Travis Kalanick

There’s a lot packed into that, but you can unpack it. If we had a lot of time, we could unpack it. Those become the sort of atomic things that you look at.

The other thing I’d say—and some people get a little surprised when I say this—is that communism is in all of us. Communism is in our blood as humans. People go, “What the hell are you talking about? You’re crazy. What do you mean?”

I say, “Well, have you ever in your life been lazy?” Everybody says, “Yes, I’ve been lazy in my life before.” I say, “Have you ever in your life wanted something for nothing?” The difference is: Do you make that a way of life?

When you have ecosystems that essentially allow you to do both of those things without consequence, those ecosystems reach a critical mass and start taking hold. I think that’s what we’re seeing.

David Friedberg

Well said. I think it’s well said. Gavin, I know you—I don’t know you to talk too much about politics, but you talk about markets, and these 2 things do relate, I think. Give us the economic perspective on why this is happening, because obviously different generations have had different economic experiences. I don’t want to lead the witness here, but I’ve had conversations with you about this before.

Gavin Baker

Yeah. I do think AI is going to be the defining political issue of the midterms and, for sure, the next presidential election. But I feel like what’s going on with the DSA is really a fusion of 2 things.

The Democratic Party—I was a Democrat for most of my life—was the party of working-class people. It was trying to create opportunities, maybe level out inequality, and help Black Americans and Hispanic Americans. You can agree or disagree with their methods, but I think those are all noble goals.

To a large extent, none of those goals are really present in the DSA. None of them. If you look at who voted for which candidate, the voting base of the DSA is relatively wealthy white liberals who are downwardly mobile. They’re losing votes among working-class people, poor people, Black Americans, and Hispanic Americans.

The people that the Democratic Party, I think, for a long time tried—whether they failed or succeeded—to represent and give a voice to are not of interest to the DSA. I think the DSA is dangerous. It’s tragic that we are electing profoundly anti-American candidates who, in some cases, have called for violence to eradicate America.

There’s a whole class of people who went to an elite school and grew up in really nice circumstances. Instead of going into industry, they went into this kind of giant NGO nonprofit machine, and their outcomes have been very different from people who did productive things for the world.

I’ve said on this show many times that Elon has done more to decarbonize the planet than every activist combined.

David Friedberg

Yeah, times 10, by the way.

Gavin Baker

Times 10. I think these NGOs, and the fact that the government is increasingly outsourcing a lot of funding to them, are a really big part of this problem. They are pursuing policies—I think we may have talked about it last time—like the Curley effect.

A mayor of Boston pursues policies that he knows are going to be disastrous for his constituents, but they drive out his rivals. Then you can give your friends and allies $600,000-a-year jobs running an NGO that does nothing productive. It’s really organized corruption happening at a massive scale.

David Friedberg

You know, the one thing—whatever you want to say about the Trump administration—a lot of people are up in arms about this new plane he’s getting from the Qataris.

Gavin Baker

Well, one, it sounds like we needed a new plane. But two, it’s right there for you to see. I think there are tens of billions, maybe hundreds of billions, of these payments flowing to these NGOs.

If you look in California and New York, the per-capita spending on homelessness has more than doubled, and it’s all gone to NGOs while outcomes have gotten worse. In California, it’s quadrupled, and outcomes have gotten worse.

I think this is dangerous, and I hope that the mainstream Democrats can find a compelling candidate, because I think the reason the DSA is increasingly ascendant is not because of its ideas.

David Sacks

I think their ideas appeal to this very narrow subset of downwardly mobile rich white people who increasingly maybe live in quasi-genteel poverty because they’re not doing productive things. They may be well-intentioned, but they’re not doing productive things. I think the reason they’re ascendant is Zohran Mamdani.

I think he is one of the most talented politicians I’ve ever seen in my lifetime. He can give a great speech, he’s good in an interview, and he can tap into all of this. He’s kind of a chameleon who can shift, but I think he is a singularly talented politician, and he is the reason that the DSA is ascendant—not their ideas or dissatisfaction with A.I., but him. There’s no one else in the Democratic Party.

I used to think AOC was by far the most talented Democratic politician I’d ever seen in my lifetime.

Jason Calacanis

That was the warm-up. Yeah.

David Sacks

She was talented. She’s nothing like Zohran from a political—

Chamath Palihapitiya

Zohran is clearly talented. If you combine his charisma and ability to communicate with generations like this, we now have 2 of these lost generations that feel like they’re going to do worse than their parents.

If you look at housing and college debt and health care, they don’t believe that they can participate in the system. They feel the system is rigged. If somebody comes along who speaks to them, and they have no conception of socialism or what happened in Germany or during the Red Scare, they have no idea what socialism or communism is.

They have this incredible wrapper they’ve put around this: they’re democratic socialists. It’s the Coke Light. It’s the Coke Zero of socialism. It’s actually just communism. They want to literally seize people’s assets. They want to seize half of these companies’ stock. They want to seize their wealth.

They just want to take from the people who have made stuff, as we talked about last week, and we’ve done nothing to change their mind. We haven’t made more houses. We haven’t made college more affordable. Health care is a disaster, inflation is a disaster, and we’re starting pointless wars. Obviously, support of Israel is somewhere in here as part of this.

He, AOC, the lady that just won—

Travis Kalanick

Shiovalier [?].

Gavin Baker

Shalier [?].

Chamath Palihapitiya

Let’s just break it down. They’re all good-looking, they’re all charismatic, they have their pulse on the zeitgeist of the moment, they know how to use social media, and they are essentially curating an army.

Now, if you cut the legs off by saying young people should actually age into social media, I suspect the most important channel of information consumption being taken away from them actually starts to give them the opportunity—and the rest of us, quite honestly, because we have to deal with kids who are just really stupid constantly asking for this stuff—the chance to actually show you how a balanced diet allows you to be much healthier in your later life.

As it relates to information consumption, I think you are going to see, I suspect, a far less radicalized youth aging into the voting rolls in those 3 countries. I suspect if you start to see political stability and predictability in Canada, the U.K., and Australia, you can put your finger right on this ban as the reason why. Florida’s already done it in the United States, and I think we need to deeply consider it across the rest of the United States. Good night.

Jason Calacanis

The social media ban is now starting at 16, and Canada has it. It may come to the U.S. Go ahead, Travis.

Travis Kalanick

I’m a full counter to Chamath on this one. I think we all agree social media is bad for the kids and for the adults. Too much of that stuff is very bad. It’s brain rot, for real. It’s going to be worse than cigarettes. It’s all the things.

But the real point of banning it under 16 is so that you can force adults to identify themselves and deanonymize themselves, so you can set up a full-scale censorship regime, which they’re sort of contemplating in the U.K.

What censorship is really about is not harmful content. It’s about content that the people in power don’t want you to see because it disagrees with them. If it agreed with them, it’s not harmful. It’s the stuff that doesn’t agree with them. What they’re doing is criminalizing disagreeing with them.

Gavin Baker

And so there’s a derivative of this age-based stuff—

Travis Kalanick

Age-gating.

Gavin Baker

That—

Travis Kalanick

Which is really about the adults, not the kids.

Jason Calacanis

That is the downside to it. Gavin, you wanted to add?

Gavin Baker

No, I super agree that I think a social media ban under 16 would be great, but I think it comes at a really high cost outlined by Travis. That’s what’s really going on: they want to restrict anonymous accounts on X that say things that particularly the powers that be in the E.U. do not like.

If there’s a way to do that while preserving anonymity and free speech, I’m all for it. But I think if it were not for free speech and X, I think we’d be living in a very different world today that would be a lot worse.

David Sacks

And just to riff on a few things that all of you have said, on communism: the great tragedy of human experience is that we can’t learn from the experiences of others. It may not matter that communism has failed utterly and ended in death and misery wherever it has been tried, in a variety of different cultures with a variety of different mechanisms. Every generation may need to experiment with it.

I think the saving grace, and the importance of preserving free speech, is that the DSA’s policies—and I would say, in particular, super-progressive Democratic policies—are measurably bad. They lead to bad outcomes.

If you care about Black lives, there’s a study that is uncontested that when you elect a Republican D.A., all-cause mortality for young Black men in that city drops by 7%. That’s all it takes.

If you care about the environment, progressives have so many regulations that you can’t build solar, which is really the only thing that matters. The world is going to run on sunlight.

If you care about education, their approach to education—getting rid of these elite schools that allow low-income people to have a real chance, getting rid of math in California—is profoundly disadvantageous to people. It leads to terrible outcomes.

We all know what happens with crime. It turns out that there’s a certain percentage of people who are responsible for, I think, 60% or 75% of the violence, and they have 10 or more convictions.

Chamath Palihapitiya

Yeah. I think the specific stat is that 0.1% commit 70% of the crimes. If you just dealt with the 0.1%, you’d effectively have no crime.

I just think the scary thing is—and I do worry for the first time, as a student of history—the United States has been a very stable political-economic entity, geopolitically stable for a long time. That’s to its credit, because we could have literally taken over the world after World War II.

But, man, if they get total control of some of these cities and drive out everyone who is productive, I don’t know how you come back. That is a little worrisome to me in terms of the future of the United States.

David Sacks

Well, and by the way, I don’t think it’s just New York. I mean, that race for mayor in L.A.—where was it?—Nithya Raman somehow beat Spencer Pratt, thanks to ballot harvesting after Election Day, or votes that were found and counted after Election Day.

That will be a test of the DSA, because they are highly organized and they have learned how to take advantage of all these rules, these ballot-harvesting rules, and all these types of things. The DSA, I think, has something like half the city council seats now in L.A., and they’re growing.

Especially in these low-turnout elections—and look, this was a Democratic primary in New York, which is a strongly blue state—maybe 17% turned out. It was very low. This is where the DSA really thrives and excels, because they care passionately, they’re highly organized, and they know how to take advantage.

This is why they want all these ranked-choice voting systems and all these types of things. They know how to manipulate and take advantage of those kinds of systems. I think you’re going to see this in lots of other jurisdictions wherever they’re organized.

I think L.A. will be a really interesting test. I don’t think we can just chalk this up to Zohran’s popularity. This is a national movement, and we’re going to see it in a lot of places. But there’s no question that Mamdani is now kind of the spiritual leader.

I mean, a lot of these people don't think AOC is a sellout, or Bernie is a sellout. They are way more radical than even those types.

Jason Calacanis

To add to that, Sacks, they did learn something from Trump, which is: build a big tent. So you're seeing Bernie, Mamdani, and Ro Khanna—they're all kind of like, “Yeah, we're different, but there's enough room in this tent.”

David Sacks

Well, what's happening is that these more established progressive leaders want to tap into this energy, and even the establishment wing of the Democratic Party is bending the knee. So what you're going to see is, regardless of how many DSA candidates actually get elected, the rest of the party is now responding to this, and they're going to bend. They're going to blow in this direction because they don't want to get challenged in a primary.

Think about this. You had 3 major congressional races where the Mamdani-backed candidate won. 2 of them unseated really strong incumbents. These were big upsets. So you've got to think now that, in every congressional race in a pretty blue district, those members are going to have to take into account that they could get primaried. They're going to have to tilt their voting, their views, and their rhetoric in this DSA direction because they don't want to have happen to them what just happened to Dan Goldman in New York's 10th District.

And just to make one last point on that: Jason, you mentioned the Israel issue, and I actually think that is a hugely important and salient issue now in the Democratic Party, in Democratic primaries. Obviously, you saw that as part of the DSA platform. One of the planks is “Free Palestine.”

This defeat of Dan Goldman—a 2-term congressman who led the impeachment effort against Trump—was a huge upset. He had all the right progressive credentials. He checked the box on all the left-wing policies, and he was on the right cable news channels all the time. No one expected him to lose.

He lost to Brad Lander really just over this issue of Israel. Dan Goldman is very pro-Israel. He basically defended Israel's actions over the past few years, whereas Lander, who, like Goldman, is also Jewish, went to a mosque in order to denounce what he called the genocide in Gaza. So this was, again, a white Jewish congressman against a white Jewish longtime New York politician. On paper, they're very similar. It was just on this issue of Israel where they disagreed.

David Sacks

So this was really as close as you can get to a straight-up vote on that one issue in this primary, and Lander won pretty handily. The reason for this is that, if you look at polling, 80% of Democrats now say they disapprove of Israel. Israel used to have high approval ratings pretty much across the board. It was sort of a consensus among both Democrats and Republicans. Now 80% of Democrats say they disapprove.

You really can't underestimate how much of a motivator this is for young Democrats. They believe—

Jason Calacanis

They were all over campuses. We've seen it—I mean, it draws people out, and it has been quite polarizing. Just to call balls and strikes here inside the Republican Party as well, you have Tucker Carlson leaving the party over this. You have Megyn Kelly going mental over this, and you have a lot of civil war inside this administration, according to the report. So this is—

David Sacks

Well, let me—look, I'm not taking a side in this. I'm just trying to describe what's going on.

Jason Calacanis

Absolutely. Same as me.

David Sacks

I think the Republican Party is a little bit more mixed on this issue, and it really comes down to age. If you're part of the older, more establishment Republicans—let's say you're a Fox News viewer—you still have high approval ratings for Israel. But if you're under 50, which means you're probably not watching Fox that much anymore and you're probably onto the podcasts, I think the disapproval rating for Israel is now 57%. Interesting. So it really comes down to age. Young people across the board—

Jason Calacanis

Have serious problems with what Israel is doing.

David Sacks

And then, as you get into older age groups, that's where you see a big difference between Republicans.

I think Chamath did a wonderful job of explaining this on Megyn Kelly. There's Jewish people, there's the state of Israel, there's Israelis who live in the state of Israel who are also Jewish, and then there's Bibi Netanyahu. I think there's a lot of concern that Netanyahu is just absolutely out of control. That is the consensus, I think, among many people across many religions and political parties.

Chamath Palihapitiya

Not to rehash this whole thing, but there are a lot of parallels between what happened on October 7 and what happened on 9/11 in the following ways. When you invade a country and slaughter its people, it creates an enormous injury—an enormous emotional, physical, and psychological injury. What that country typically does is respond by giving the authority to the leader at that time to set the table right.

You have to remember that there were a lot of things that happened post-9/11 that, under any other circumstance, would never have happened. At the top of the list would have been the Patriot Act, which in any other world would never have gotten passed or seen the light of day, but not after 9/11. So there are moments where leaders are put in a position and essentially act on behalf of their country and their people to right a wrong. I understand that. I think everybody understands that.

What's happened now, though, is that people cannot logically disambiguate Jews, Israelis, and Bibi. I think that's very unfortunate, because we're at a point in time where everything gets conflated and this thing has become a third-rail issue. I find it absolutely shocking. It's completely reasonable for people to have a point of view on Bibi and say, “Hey, you know what? It's enough. It's gotten too far,” or whatever it is.

Jason Calacanis

And I think there's a very reasonable claim to make that it's time to find different leadership—new leadership—inside Israel and have an opportunity to reset its standing on the global stage. They deserve that. The Israeli people are incredible. Jews are incredible. But the idea that you fold it all together, look at one person, and then apply it to an entire country and then an entire religion is insane.

May I add one thing? There are—well, 2 things, really, and I'll be quick. One, Israel has a giant PR problem. They need a young, under-35-year-old American-Israeli who's super fluent in English, conversant in social media, and is their kind of spokesperson to America. They need that in France, in Germany, in every country, and they do not have that.

There was a young Israeli—I think his name, I forget his name—but there was a young Israeli who was doing a really good job, an Israeli American representing Israel after October 7. Evidently, Bibi Netanyahu's wife didn't like him, so they canned him. They've never really found a replacement, and I do think this is an urgent issue for Israel because they are taking body blows every second and they're not even responding.

What they tend to do is sometimes roll out someone who's a great man or woman in Israel, who's in their 60s and a hero of a war, but isn't that fluent in social media. Maybe their command of English is technically precise, but there's an accent. Those are great people, but they're not great spokespersons. This is an urgent issue.

David Sacks

As far as the antidote, going back to Chamath's comment, I do think a big reason Trump got elected—many of the Democrats I know who voted for Trump, a big part of it was that during COVID they heard what their children were being taught—and it was radicalizing for them.

Jason Calacanis

Yeah.

David Sacks

I think it's really important that, as part of the American educational system, there not be overtly anti-American things. Listen, we've made mistakes as a country. We're not perfect, but we're about as good as it gets, and we need to tell that story in every grade consistently. We can have a debate—we've done so many things wrong. Let's learn from them.

But slavery was endemic to the world, apart from some countries in East Asia. It's not a uniquely American problem. We need to tell those stories because I think a lot of kids—the reason they're so susceptible to this social media propaganda is that they've been brought up being ashamed to be American, ashamed of various things in their identity, and being told that America is evil. We need to unwind that because America is awesome, and we're the only vaguely successful multicultural society on planet Earth.

Jason Calacanis

Yeah, the melting pot. And if you say that—God forbid—if you say the melting pot is a beautiful thing, you're going to get canceled because, oh my God, you're getting rid of people's culture. It's like, no, no, keep your culture and then join this culture, and we can all have this great smorgasbord.

Chamath Palihapitiya

Yeah. You know what your culture is? You know what my culture is?

Jason Calacanis

I don't know.

Chamath Palihapitiya

It's no longer Loro Piana. I know that. I know you're off the train.

Jason Calacanis

Winning.

Chamath Palihapitiya

Winning. The culture of winning. I love it.

Jason Calacanis

Learning.

Chamath Palihapitiya

Progress. Adventure. Moth. Do you piss excellence, to quote Ricky Bobby?

Jason Calacanis

Oftentimes, I piss excellence.

David Sacks

Just to warn the dopey Democrats who have been unable to get anything done: the socialists are using your party. This guy went viral. They're just a host. They literally want to infect the Democratic Party and then literally get the voting base.

This guy, Gustavo Gordillo—I don't know if you guys saw this—he's a DSA co-chair in New York City.

Jason Calacanis

And he just said it outright. I'm going to read you the quote:

“We're part of the Democratic Party caucus, but we don't agree with the way the Democratic Party runs its apparatus. So, we're trying to build our own independence by focusing on a volunteer-led movement. We think everyone should be able to be trained and become someone who can participate in the political process. And we don't think the Democratic Party is run that way.”

In terms of the agenda, there's a problem in the Democratic Party. They are funded by billionaire donors, and at the same time, they're trying to represent the working class. In our opinion, you have to choose between the billionaire class and the working class. They are just taking over the party.

And again, back to the playbook, this worked really well for Trump. He took the Republican Party over, and he owned them. They tried to get him out, but his message and his communication style were just too on point. He knew exactly what people wanted to hear, and he knew exactly how to deliver it.

He is an all-time comedic performer. Of non-comedians, he's the number-one comedian in the world, and of actual comedians, he's in the top 20. So, he communicates perfectly, and that's exactly what Mamdani's done. He's taken the Trump playbook and applied it here. He is taking over with this communication.

You guys know I'm a diehard Knicks fan. I've been one my whole life. I cried and was at Game 5 when they won the Finals. Then Mamdani gave this speech that somebody wrote for him about the Knicks, and I was absolutely flabbergasted and upset that it was so great. He's got that Obama-Trump charisma, and he is going to destroy your party from the inside out.

Socialism is communism and is the road to suffering and pain. As Gavin said, no good will come out of it.

David Sacks

Isn't it amazing?

Jason Calacanis

Here we go.

David Sacks

Okay. You know, Mamdani is a communist, and what he represents is basically evil, and yet—

Jason Calacanis

Because he just gave a speech about the Knicks, you love him now.

No, I love the speech. I liked the speech.

David Sacks

That's all it takes. We're screwed. That's all it takes.

Jason Calacanis

It's true, though.

David Sacks

I mean, this guy is a total phony. He doesn't stop smiling. He's got this crocodile smile all the time. He's talking about eating you.

Jason Calacanis

Yeah.

David Sacks

And it's totally fake.

Jason Calacanis

Absolutely. Come on. He was making Knicks references, and it was the biggest get-out-of-your-seat, standing-ovation cheer I've ever heard in a speech about the Knicks. I was infuriated. This guy is such a good orator.

David Sacks

You got programmed.

Jason Calacanis

I hate him.

David Sacks

We're going to have to deprogram you now.

Jason Calacanis

No, no, no. It was like getting hypnotized, and I just pulled myself out. I got pulled in for a second.

David Sacks

Next topic.

Jason Calacanis

Next topic, for sure.

Topic 2: Chinese open-source models appear to be catching up with the U.S. frontier models. Let's start with GLM 5.2, released by China's Z.AI. This is a frontier-class, open-source, free-to-download-anywhere model: 744 billion parameters, a 1-million-token context window, and it's under the MIT license. If you don't know what that is, open-source licenses have very—

David Sacks

Super open source.

Jason Calacanis

Yeah, it's super open source.

David Sacks

The most open source.

Jason Calacanis

The most open source of all open source. If you open it up, you can use it however you like. You can fork it. You can build your own company based on it. No regional restrictions, no API, fully self-hostable, no Dario.

David Sacks

It's just yours. It's just yours. You just have to reference the license. That's it.

Jason Calacanis

Yeah, you shout out the license, and you're good.

It scored 51 points on the Artificial Analysis Intelligence Index. That's the highest score of any open-weight model ever. It stacks up nicely next to the frontier models. It beat GPT-5.5 on the Frontier SWE coding benchmark—that's a software engineering benchmark—and trails Claude Opus 4.8 by less than 1 percentage point.

API usage costs are obviously much cheaper—85% cheaper, in fact, than GPT-5.5 for comparable performance. The Z.AI founder told Elon Musk that open-weight frontier capabilities will be here sooner than Q1 2027. Gavin, in other words, all this hand-wringing, all of these legal restrictions and self-imposed restrictions, are now completely, or close to completely, moot if they're going to have a model in Q1. Does 6 months even matter? Does 6 months in the grand arc of AI matter or not? And what does this mean for frontier models?

Gavin Baker

I do think how good GLM 5.2 is has challenged some of my beliefs. There was a great post from a TPU engineer that said, for sure, distillation has happened. There's been an immense amount of distillation. No question.

Jason Calacanis

Please explain to the audience what that means.

Gavin Baker

Distillation is when you have—we've all seen videos of these Chinese iPhone farms. Just picture a farm like that: tens of thousands of phones, iPads, and computers asking the cloud API through masked accounts very specific questions. These so-called reasoning traces are being harvested because if you're on the API, you get to see every token.

Those reasoning traces are then fed back into the model during the reinforcement-learning process and probably during the pretraining process. That is a way that you can get really, really close to the frontier at a fraction of the cost. This is for sure going on and has gone on for a long time.

Jason Calacanis

It's a cheat sheet for other models to catch up.

Gavin Baker

It would be like asking Google every question you could ever imagine, every search imaginable, getting all the results, and then putting your own search engine together to make it very simple.

Jason Calacanis

Exactly.

Gavin Baker

But now that this model is so good, it is good enough to do its own RL, and the cat may be out of the bag. I don't think we really know how good Mistral is. We don't really know how good the next OpenAI model is. We haven't seen the next SpaceX model. So maybe that gap opens up again.

But either way, I profoundly believe the future is composable models. Every enterprise is going to have what Andrej Karpathy called a council of LLMs. You're going to have Grok, Anthropic, OpenAI, and Google. You're going to have at least 2 of those.

I would argue Grok should always be one of the 2 because of its dedication to the truth. It will tell you, as a business owner, a politically inconvenient truth that you need to know for your data. But you're also going to have your own open-weights model that is trained on your data.

You're going to put those 2 together—the frontier models and your own model—and you are going to get real Pareto-dominant outcomes. Half the queries are going to go to the open-source model, maybe 85%. Maybe they all go to open source first, and only the hardest ones are then checked by the frontier models. So, I think this is the future. It's coming.

A misconception that a lot of people have is that open-source models are somehow bad for AI. They're awesome for the AI infrastructure providers. They just shift economic value from the margins of the frontier labs to the infrastructure. And that's not bad for AI.

Jason Calacanis

That's great for them.

Gavin Baker

It's great for them. But I do think there's still a role for these frontier models. It may be true that, to date, frontier tokens are capturing 90% of the economic value, and open-source tokens are probably 80% or more of the tokens processed. Those ratios may be here to stay, but I just think composable models are the future.

Jason Calacanis

What does “composable model” mean? If you're a corporation, is there a new name for your super-secret startup, Travis? What's the new name?

Travis Kalanick

The name is called Adams. It's not super-secret; it's super awesome.

Jason Calacanis

Super awesome. Super awesome. For your super-awesome startup, Atoms, loads of people have been calling me to say they've spoken to you and—

Your dog is hunting with investors, Travis.

Travis Kalanick

All right. Fair enough. Fair enough.

Jason Calacanis

Okay.

Gavin Baker

You're going to have a router, and every query that somebody sends in, every task that needs to be done at your company, that router is going to send it to your RL-SFT'd version of Nemotron.

Yes. Then, at some point in the workflow, a frontier model may or may not come in to check it or add to it. That's what I mean by a composable model: a symphony of models working together, with the frontier models perhaps being the conductors. That's what I mean when I say composable.

Jason Calacanis

Yeah, understood. Thank you.

Sacks, formerly AI czar and now running PCAST, what are your thoughts on China's ascension in open source? We're still looking for our open-source champion, obviously, here in the U.S., but it feels like—

David Sacks

Can I just say one thing? Nvidia is the American open-source champion.

Jason Calacanis

Thank you. Yeah.

David Sacks

They can release GLM 5.2 or better whenever they want.

Jason Calacanis

Okay, but why haven't they done that? They don't want to screw their customers too much? It's too much of a conflict to be pushing it out there too often.

David Sacks

All of the above. Who knows? We'll see.

Jason Calacanis

Okay. Yeah, and you've got to be delicate there. I see. Okay, so I'll say it, not you: Jensen does it.

David Sacks

Yeah. I mean, it's a classic channel conflict, right? You don't want to compete with your customers.

Jason Calacanis

And he is competing with Elon on self-driving now, and Elon’s making his own chips. So I think these frontier-model companies should think very, very carefully about AI and the incentive that creates for Nvidia. From the model perspective, if OpenAI, which launched its Jalapeno chip this week and announced that it’s being built by, I believe, Broadcom, is saying, “Hey, fuck you to Jensen and Nvidia,” and they were already in full contact with him, don’t be surprised if Nvidia says, “You know what? We kind of like the area you’re operating in now that you’re going to make chips, and maybe OpenAI sells those chips to other people.”

Don’t be surprised if Nvidia starts an OpenAI competitor. You heard it here first on All-In. Sacks, did you want to jump in there?

David Sacks

Sure. Look, I think that China’s been good at open source for a while here. There’s nothing new about that, but there are a few things that are significant about GLM 5.2. The first one is, like you said, it is now the best open-weight model for coding, software engineering, and long-context agent work.

And you gave a couple of the SWE-bench scores. It was just a tick below Opus 4.8, and it was right up there with GPT-5.5. So if you compare this to, again, the state-of-the-art frontier models from Anthropic and OpenAI, it is right there with the previous model.

But you have to remember now that the current model, Opus 4.8 for Anthropic and GPT-5.6 for OpenAI, is now in a little bit of purgatory because of all the reasons we covered last week. Now, look, like I said last week, I ultimately blamed Dario and the way he communicated and the way that he primed officials to be on a hair trigger with respect to these models.

When the government got a credible report about a jailbreak from one of Anthropic’s own most trusted partners, you’re going to say, “Roll that back.” But that is the situation we’re in right now: Opus 4.8 has been rolled back, and GPT-5.6 is trying to navigate these new approval hoops.

So we now have a Chinese open-weight model that is as good as the currently available models from OpenAI and Anthropic. Look, this is a point I’ve been making really since I joined the administration: We are in a very competitive situation with China. I’ve been saying this from the beginning. Our whole AI strategy from the get-go was about winning this AI race, defining it as a race, and being globally competitive.

And we cannot afford to do things unnecessarily that slow our companies down.

Jason Calacanis

David, can I ask: Do you think Dario got exactly what he wanted? It seems to me there’s some chance this has been a very calculated strategy to provoke the U.S. government into doing what they just did, and this is what he wants. He has a regulatory moat now. He can keep his future models behind this, give them to Glasswing, and use them to distill it for themselves. Do you think this is what they wanted?

David Sacks

I think that, on a certain level, it is what they wanted, because they’ve been advocating to have a federal regulator—basically, a new agency. In fact, Dario posted a blog just a few weeks ago saying he wants an FAA for AI. They wanted government approval, a government approval process for AI models, and so, in a sense, they’ve gotten exactly what they wanted.

Now, that being said, I don’t think they’re happy about the fact that Opus 4.8 has been rolled back. So, in a sense, you could say that Dario got hoisted on his own petard here, or it could be a FAFO situation.

But look, my view on it is we should not reward Dario by giving him exactly what he’s always craved, which is some sort of labyrinthine government approval process that does reward regulatory capture. I do think that as long as Anthropic has resolved the jailbreak issue, then they should be allowed to come back to market. Similarly, for OpenAI, I don’t think we should be delaying them unnecessarily.

We do not have months to give away in this race. And let me just say one other thing, which, again, is something I’ve been saying for months: With respect to risks like cyber, it is undoubtedly a risk. But what is the response to that? The only thing you can do is go out and find all the vulnerabilities first yourself.

The white hats have to find all the vulnerabilities and do a big upgrade cycle. Roll out the patches before they can be exploited. The reality is that if you just clamp down in a way that doesn’t even allow these models to be used, the Chinese are going to have these capabilities imminently anyway.

You know, they’re already at the Opus 4.8 level. And the founder of Z.ai said that before Q1, they’ll have Opus-level capability. I believe them because, look, the Chinese have been, I’d say, 9 months behind our models, plus or minus 3 months depending on capability. But when they know there’s been a breakthrough around something like cyber, they can deploy more resources against that particular problem and catch up faster.

So, like I said, we’re on a shot clock here. I’ve been saying for months that we’re on a shot clock. We have to do smart things. We can’t just slow everything down, because that will not slow down the Chinese. They’re not under our jurisdiction.

We have to basically get these tools in the hands of our cybersecurity industry. They’re the force multiplier. They’re the enabler. We have to basically go out and do this big upgrade cycle quickly, because we only have a few months left.

Chamath Palihapitiya

They’re 6 months behind on the model and they’re 24 months behind on the silicon, yet they’re only a few months behind in total. So what game are we playing? This is insane. We are going to lose if we keep doing this stuff to ourselves.

David Sacks

So let me make a point about that. On the silicon, there’s been a huge push in China by the government to push their AI labs to develop and train on Huawei chips. And look, you can take these claims with a grain of salt. Maybe they’re not true, but it was claimed that DeepSeek V4 was trained on Huawei chips.

And now Z.ai is saying that the GLM-5 family was trained entirely on clusters of Huawei Ascend 910B chips. So now, look, maybe they’re lying, maybe they smuggled in some Nvidia chips, but the claim is that this was all done on indigenous chips.

What I believe is that China is engaged in a strong indigenization push right now. They want to prop up Huawei as the national champion. They want all their companies using Huawei chips. They still need to scale some of the manufacturing, but they’re going to do that pretty quickly.

And then what they’re going to do is take these Huawei chips and these Huawei-optimized models. Remember that with GLM 5.2, the inference is optimized for the Huawei chips. We know that. They are basically going to package these things up. They call it AI in a box. They’re going to sell it at a fraction of the cost globally.

Chamath Palihapitiya

Which is what they do with every technology, right? Better, cheaper, faster—

David Sacks

—or almost as good. Yeah. And that’s another thing: As I’ve been saying since the beginning of this administration, we have to be pro-export because China is going to be there within 1 or 2 years.

As I said, we’re going to be kicking ourselves because we could have had the whole global market to ourselves. We invented reasons not to sell abroad to our friends and partners, and now China is going to be there imminently.

Jason Calacanis

Yeah. And with a lower price tag, when you play with this new GLM, you get some really interesting responses. I asked it about the country of Taiwan; it was not pleased and didn’t give me an answer. I asked it about Tiananmen Square. No answer as well.

I’m using the hosted version at Z.ai. But when I asked it for places to visit in Paris, it did an exceptional job. Except when I said, “Make these ideas into an infographic and make me a 3-day agenda,” it was like, “Hey, we don’t have enough time to do that.”

And it said, “Use the other model because this model’s too busy,” but you can go play with it at z.ai.

David Sacks

Just to add on a point about the censorship: There’s no question that these Chinese models have, you could say, censorship and political bias in there out of the box. But American companies have taken Chinese models and then essentially worked around it and basically fixed the censorship inside their own forked version.

For example, Perplexity did this very early on with Chinese models. They showed that you could sort of put back the content on Tiananmen Square and things like that. So I think, JCal, you’re absolutely right about the censorship, but it’s not a fatal problem. It’s something that American companies can fix when they—

Jason Calacanis

Yeah.

David Sacks

—take an open-source model and fork it and customize it.

Jason Calacanis

Yeah. In the hosted version, you’re not going to get a great answer on what agenda you should use for tourism in the great country of Taiwan [laughter] or your visit to Tiananmen Square.

All right, let’s keep moving here on the docket. Micron smashed its earnings. If you don’t know Micron, they are 1 of only 3 companies on Earth that make high-bandwidth memory. These are specialized chips. They sit on top of the Nvidia GPU, and their entire 2026 supply is sold out and has been for some time.

SK hynix and Samsung also make HBM. Micron smashed earnings: Revenue up 4x year over year, $9 billion to $42 billion; beat expectations by 16%; big jump in guidance for Q4, $50 billion versus $43 billion. Their stock is up 10x.

Shout-out to Gavin in our 2025 prediction show. He gave a call on HBM makers like Micron as the best-performing asset since that time, up 14x.

Chamath Palihapitiya

I’m not crying in my soup.

Jason Calacanis

You’re not crying in your soup. I got a ton of information here. I think I’ll just end on the Apple price increases. Everybody knows Apple has really been a beneficiary of the run on local-models movement that I’m part of, and people are buying 128 GB and 256 GB MacBook Pros and Mac Studios.

David Friedberg

But the gig is up, apparently, because now Apple, which had not passed on those costs to customers, is having to pass those increases on. So everything from the new MacBook Neo, which is their $699 laptop kind of competing with Chromebooks, is now $799, up 14%, and Mac Studio is up 25%. The costs are just going to be very significant. Inflation has come to the desktop.

Your thoughts, Gavin, on Micron and the impact on the industry? Is this a temporary bottleneck, or does this mean everybody has to get into this business quickly?

Gavin Baker

No. Well, 1: DRAM is the most important bottleneck. There's a whole segment of people on X who are very focused on bottlenecks. I call them the bottleneck bros. They'll do some work with Claude, find some esoteric Japanese company. The bottleneck that matters is DRAM.

DRAM and HBM DRAM—this is the most important bottleneck simply because memory capacity and bandwidth are foundational to the performance of every AI model. So this is the most important bottleneck. Elon is focusing the Terafab on memory because he sees it as the most important bottleneck—not lasers, not capacitors, not power-supply semiconductors, not NAND flash, not HDDs: DRAM.

I think this bottleneck is going to be with us for a while, and it is kind of astonishing. A few thoughts: What was important about the quarter is that they announced these supply agreements. They have a floor and a ceiling for prices with an increasingly large group of large customers, and this covers essentially 50% of their revenue, I think, with just 4 customers.

The floor pricing in these new contracts is ahead of prior-cycle peaks from a gross-margin perspective, and so this really may end up being very transformational for the industry. Most other parts of the semiconductor supply chain have rerated. Lam Research and the wafer-fab equipment suppliers all trade at huge premiums to DRAM relative to prior cycles, and their business models have improved. But so have the industry structure and business models of DRAM, because HBM DRAM is increasingly a customized chip.

As far as other people being able to do this, look, CXMT is going public in China. They may be the cure for Apple's ills. They will flood the market with, to some degree, cheap consumer-grade DRAM. But for the DRAM you need in these AI servers, there are 3 companies that can make it. It's really hard to do. This is as close to magic as science can get.

I think Terafab is going to be an important part of this solution. These stocks still trade cross-sectionally cheap relative to the rest of AI. Something I've been thinking about with memory is that DRAM is probably going to be 30% to 40% of all hyperscaler capex next year. Hundreds of billions of dollars are going straight to DRAM. It's wild.

But this may actually be very valuable for society because it is probably going to inflate the costs of building a gigawatt data center to the point where, even for the hyperscalers, economics matter. We're caught in this prisoner's dilemma, and this may give us as a society time to adapt to what our friend Brad Gerstner calls the social contract.

David Friedberg

So the high iPhone prices—1, CXMT is coming for consumer-grade DRAM, but 2, this may be good for AI. It may be good for us as a society.

Making it is just really pure silicon, right? Making memory is just incredibly refined silicon, and that might be the pre-bottleneck.

Gavin Baker

Yeah. Yeah. Making HBM DRAM, making what NVIDIA calls SOCAM, making LPDDR—these are the types of DRAM that are really hard to make, not consumer-grade DRAM, and they are increasingly what you need in these AI data centers.

David Friedberg

Yeah, semiconductor-grade. Yeah. So, my understanding is that HBM stands for high-bandwidth memory. Again, this is part of the GPUs that go in the data center to run AI. You take the DRAM wafer or die and actually stack them.

I think HBM3 is 8—it’s stacked 8 dies high—but now they're increasing to 12 and even 16. To basically stack them and then package them all together is an advanced technology in and of itself. So you're seeing now, like Gavin's saying, there's only 3 companies that can do it.

This is also creating significant price pressure for all the consumer-electronics businesses. Apple had huge news today where they announced massive price increases. Again, it's because DRAM is less available because it's just being hoovered up by all the data centers.

If you're a data center and you need to buy GPUs, those chips are using immense amounts of DRAM because, again, 1 HBM chip is using multiple stacks of DRAM. It's just getting slurped up, and then it takes a couple of years to ramp up new capacity. These companies are going to do that, but that could take a while.

We saw that in New York. Remember, that was that Micron plant that had just broken ground and then got shut down the same day because of some crazy environmental issue. So it's not easy to ramp this stuff in the US. Although Micron is the 1 provider that's in the US, SK Hynix is in South Korea, and Samsung's in South Korea, too.

But anyway, we're going to see more of this AI inflation, as they're calling it. It's just another reason I hate AI: in this narrow area of consumer electronics where there's competition for DRAM, it is leading to price inflation. Now—

David Sacks

Microsoft raised the price of the Xbox. It's coming for the Switch. It's coming for the PlayStation. There's demand destruction because of prices in consumer electronics, whereas AI demand is relatively price-insensitive.

Gavin Baker

David, I would modify 1 statement. It's hard to build a Micron. It's hard to build a new fab in a deep-blue state. You can build fast.

Jason Calacanis

Why were they trying in New York? It's kind of crazy.

Gavin Baker

New York gave them all these incentives, but none of those incentives matter. It's a little bit like solar power. You can be as pro-environmental as you want, but if you can't build and install solar because of regulations, it doesn't matter.

So maybe that Micron plant ends up getting built in my home state of Texas.

Chamath Palihapitiya

The incentive game has kind of flip-flopped. It used to be that the states were courting the factories and the fabs. Now the fabs are like, “Which state can actually build this? We'll pay you whatever you want. Just tell us where to send the envelope. We'll drop a couple of envelopes off. It's not a problem.”

Gavin, can you say how long it's going to take to stand up the fab at TeraFab?

Gavin Baker

Well, I mean, [laughter] if it was a normal fab, it would be a 2-, 3-, or 3.5-year process. But we've seen what Elon has done to other construction processes, and he's starting with some advantages from the Intel partnership.

I don't think anyone knows, but based on past history, he's probably going to stand up TeraFab faster than other fabs have been stood up. But this is really hard. It's really hard. It's the intersection of magic and science. You can't believe how complicated this is, so it's going to be hard.

But he has a track record of doing what Jensen called impossible, superhuman things. So we'll see. We'll see how long it takes.

Jason Calacanis

One other point here that I guess might be relevant to SpaceX AI—although it doesn't have to be limited to this—is that I think there's an assumption that, over time, it would get cheaper and easier to stand up new data centers, right? But what you're saying is that it might actually be getting harder. It might be getting more expensive, right?

There's competition for these components. The memory is getting more expensive. I'm not sure that the GPUs are getting any cheaper. I guess some of these—

Gavin Baker

Transformers, the switchgear—

Jason Calacanis

The energy might be getting cheaper, and then the entitlements are getting harder and the political situation is getting harder. There are very few places where you can even stand up new data centers. So is it the case that it's actually going to get more and more expensive to—

Gavin Baker

100%. To stand up a 1-gigawatt data center, it's $35 billion in NVIDIA semiconductors, and it's $25 billion of power and cooling equipment. That is clearly inflationary because a lot of that $25 billion is the human labor required to install it.

The calculation that needs to be done for orbital compute is that it's $35 billion of silicon in each case—literally in outer space and in orbit, and on the ground. But if you can get the cost of launch significantly below that $25 billion, then the math starts to really make sense.

When Starship is reusable, it's going to cost $5 billion to put a gigawatt of compute into space. Something that drives me crazy is that people picture these Pentagon-sized data centers. No, it's racks in space linked with lasers. It's kind of a virtual data center in space.

Jason Calacanis

Wait, $5 billion—is that $5 billion of launch cost, or what?

Gavin Baker

$5 billion of launch cost. Now you're at $40 billion to put the gig into space. You're at $60 billion terrestrially. The $25 billion that is power and cooling is clearly inflationary. So it may be that in 3 or 4 years it's $70 billion versus $40 billion.

That $5 billion, as Starship becomes rapidly reusable, is likely deflationary. So this is the economics that underpin orbital compute from first principles. On an ongoing basis, you're maybe paying $1 billion a year for the power to run those chips and cool them.

Jason Calacanis

If I had to make a guess, I think what's going to happen is that, since 2021, about 40% of all data centers have been contested, right? I think that number is going to go up.

Chamath Palihapitiya

Sacks, I suspect that whatever forecasted energy consumption we're looking at in AI is grossly imbalanced. There is very, very meager supply, and there's effectively infinite demand. So that probably pulls forward the economic equation to want to go to space.

But then again, that's going to prefer SpaceX and its compute stack and compute decisions over the hyperscalers and anybody else. And so you're going to have a cost of an output token, I think, terrestrially—particularly from the hyperscalers—be a little economically lopsided versus SpaceX once they get it to scale. That's the key statement.

Whatever is left on the ground, though, will be incredibly, incredibly valuable. It'll be a diamond. These are diamonds. And the thing is, you have to find a reasonable size, right? You can't have a 10-kilowatt diamond. That's like a little pebble; nobody cares. But if you're in the reasonable hundreds of megawatts to gigawatts, man, those are like Hope diamonds.

David Sacks

Those are just—lock them down.

Chamath Palihapitiya

Which I own.

Jason Calacanis

Travis, there was an interesting trademark filed this week—more in the investigative-investor vein of the Tesla–SpaceX marriage that everyone seems to believe is going to happen shortly.

Travis Kalanick

You can say that. You can give me credit for it.

Jason Calacanis

Of course, yes. As Chamath has architected in his high perch. But this trademark came out.

Travis Kalanick

How cool would that be? How cool would it be for those two to come together?

Chamath Palihapitiya

It's going to happen, and it'll be incredible. If you're lucky enough to be an owner of both—

Jason Calacanis

Top and bottom. Everybody can decide to be an owner of—

Travis Kalanick

Jason, I'll be making love to myself when this happens. There'll be no—

Jason Calacanis

So, no different than any other Thursday.

Travis Kalanick

Exactly.

Jason Calacanis

On the top and the bottom.

Travis Kalanick

The top and the bottom, just like any other Saturday night.

Jason Calacanis

Here's the trademark for Megapod that came out. This has a filing date of June 18, 2026, so it's very recent: “Modular data center hardware for artificial intelligence computing comprised of a network of computer servers, computer hardware for artificial intelligence processing, computer network hardware, electric power distribution units, and cooling systems sold as a unit; self-contained modular computing hardware systems for artificial intelligence workloads,” yada yada yada.

David Sacks

By the way, that description makes—I don't know what it is. I still don't know what it is.

Jason Calacanis

Essentially, what people are saying is this is going to be a giant battery pack with GPUs at the Supercharger stations that have already been approved. That's the back channel. Chamath, go ahead.

Chamath Palihapitiya

You have a couple of issues right now to turn on compute terrestrially. Assume you have land; that's relatively straightforward. Assuming you can get it zoned is less straightforward. Assuming you can get power is very difficult.

Then you have a very critical design decision. All of these folks publish something called a basis of design, and your BODs essentially tell you: Here's the Anthropic spec, here's the OpenAI spec, here's the CoreWeave spec, here's the AWS spec, here's GCP. You get these 50- and up to 500-page documents with all of these technical details.

The issue that we have is, I don't know if you guys have used OpenAI or Anthropic recently, where you get the whole thing of “come back later,” right? That “come back later” is completely unacceptable. It just means that they have no compute.

Jason Calacanis

Surge pricing is coming.

David Sacks

Yeah, let's go.

Chamath Palihapitiya

So, in trying to find this solution, what's happening is that the restrictions and specificity in these bespoke designs are being relaxed. One of the key constraints is we've moved to an architectural model from Google and NVIDIA that has said, “Look, we have to liquid-cool these racks.” These are very complicated, big-girth supercomputer racks, essentially.

Now we're also going back and saying, “You know what? Maybe some of this older stuff that's a little less performant and a little less useful, but that we can air-cool, is useful.” Everybody's saying, “Yeah, you know what? We should try to use everything that's available in that second class.”

What some very smart people are doing is saying, “Wow, well, here's a shipping container that you can just drop on a concrete pad somewhere, plug in the power, and let it rip.” So, Jason, what you're seeing is that level of investment that's happening.

There are companies like Dell that make these racks, and companies like Vertiv that make these modules. I think if Tesla can make them available, folks like us—for my data center project—we would be enormous buyers of these things because we would literally prefab them in a warehouse. Get the chips, prefab them, truck them to the place, crane them in, turn them on, and off to the races you go.

You have a 90-day build cycle, which is unheard of. That's where these Megapods are coming from. I hope they're not entirely consumed by Tesla and SpaceX internally.

Jason Calacanis

Well, the rumor is that he's going to put them at the Supercharger network, where he has a lot of land and already has power there. Those are lightly used in some cases.

Chamath Palihapitiya

There are other requirements. The problem with some of these things is that you need to have certain levels of access. There are certain infosec requirements, and there are certain liquid-cooling requirements that make many of the workload applications unfeasible at a place like a Supercharger center, where random people are traipsing around.

Travis Kalanick

So, guys, I've got 500 properties with lots of energy, lots of mechanical cooling systems, and lots of natural-gas access—sorry, not LNG; natural gas is already piped in. On all the stuff I'm doing on robotics, AI, and physical AI, we're literally looking at putting some of our compute—

Jason Calacanis

Wow.

Travis Kalanick

—into our kitchens. Compute kitchens.

David Sacks

You're going to be able to buy small modular—let's put “data center” in quotes—

Travis Kalanick

Yeah, but it doesn't matter. I just go buy the GPUs and set them up in a kitchen.

Jason Calacanis

Right? It's not that—no, hold on. It's not a Bitcoin miner.

Chamath Palihapitiya

No, no, hold on, hold on, hold on. It's not that easy. If you guys want to build a cloud and contribute it to a pool, you're going to have to sign up for liquidated damages, and you're not going to sign up to an SLA.

Travis Kalanick

I'm not a hyperscaler. I'm just using it for myself.

Jason Calacanis

Yeah, rack and stack.

Chamath Palihapitiya

Oh, okay. Sure, you can use it for yourself. I'm saying the more interesting opportunity is when—

Jason Calacanis

Whatever Travis says. Let's talk about the interesting stuff.

Chamath Palihapitiya

No, no, I'm just saying, what I thought you were going with this, Travis, is that you could build a synthetic pool and contribute it to a neocloud. All I'm saying is, to do that is a litany of things you'd have to do that you probably don't want to do because it veers you away from what you're doing.

I think the security thing is the main issue around non-data-center-type real estate, to be honest. It's the big one. Look, you've got to do liquid cooling, you've got to do mechanical systems for air cooling, and you have energy. There are a lot of things you've got to do.

But assuming you even had all that, the architecture of a data center is set up with man traps, right? You go into a room, and the door closes behind you—the door that you got into with your fingerprint. Then you go into the next part of it, again with your fingerprint, only when that door closes.

Jason Calacanis

Well, just out of genuine curiosity, how much does one of those man traps cost? Why can't you put some of those in your—

David Sacks

Yeah, maybe you could.

Jason Calacanis

Are you interested in putting in a man trap?

David Friedberg

I'm just trying to help trap some men.

I'll try to interpret where Chamath's going with this. A Megapod sitting at a charge—at a public-charging situation—has physical-access issues. There's probably some stuff you've got to do if you're going to resell it, but if you're going to use it for yourself, you can use it for yourself.

The real value, I think, in the Travis example—which I find super exciting—is if you can contribute it to a distributed training pool or a distributed inference pool that has a lower SLA. That's more how this community-oriented work functions. Jason, I think you've talked about Bittensor. I think Venice is a project, and Pluralis is another project. Travis, that's where I think it's super exciting.

Travis Kalanick

But the one thing I'll throw out there, guys, is the distributed training stuff. If these things are far away from each other—not right next to each other—they're so much less efficient. The efficiency drops dramatically. You want these things to be right next to each other physically. You get multiple orders of magnitude—at least an order of magnitude—type efficiency, maybe plus-plus. It's a big deal.

David Friedberg

So, you could have two—we have two facilities. Passing the jobs from one GPU to the other is super important, and if it's on a peer-to-peer network—

David Sacks

It's going to have lag. It—

Travis Kalanick

Honestly, even if it's on your own fiber, connected 2 kilometers away, you're screwed. It's not a thing.

David Friedberg

This is 100% true. But everything that cuts against training works for inference—

David Sacks

With respect—

David Friedberg

Well, latency is super important, and I do think distributed inference clouds are coming.

David Sacks

Yes, I get that. That's—

David Friedberg

And to riff on what Chamath said in all of this, there is actually a startup that's trying to put 4-GPU units with a battery on people's houses and give them a discount on their power. Then you can do inference for that neighborhood from those 4 GPUs, and it's locked and sealed so nobody can get in.

There's another dynamic that I think we should talk about with all of this, and it can play into the Megapods. Other people are kind of working on data centers.

You know, Crusoe is working on modularly assembling data centers, kind of like a data center in an 18-wheeler, a shipping container, whatever it is. But that is the disaggregation of inference into prefill and decode.

When a model is answering your question, it's doing 2 things. The prefill part is understanding the question and its context thus far. Think of that as: the more you can remember, the bigger your memory capacity. Literally, the more words you can remember, the better.

Decode is the process of generating the next token, and that is a memory-bandwidth-bound problem. Think of it as: the faster you can speak, the better. These 2 types of inference are increasingly being disaggregated, and Chamath was an investor in Groq, which NVIDIA bought, and they're going to use this. Cerebras is the other solution available today.

You can put Groq- or Cerebras decode-optimized chips in front of old NVIDIA GPUs like H100s. They both say you can do more than decode on them, and that's true. You can lift H100s and A100s out of some old data center, put them in one of these Megapods—a rack in a shipping container—put a Groq or Cerebras in front of it, and you can get a very competitive solution.

I do think the disaggregation of inference means we're going to be using GPUs for 7 years, 10 years, and 12 years, and that's great because it lowers the cost to finance them, which makes this AI revolution more financeable. Chamath, do you want to riff on Groq?

Chamath Palihapitiya

I really agree with everything. You're incredibly well steeped in the space. It's so exciting. I don't have any investments or anything in the distributed compute space, but at the intersection of competing against China, having a vibrant American open-source community, and having a bunch of distributed models for purposes of free speech and otherwise that Travis mentioned earlier, I do think this idea of distributed inference has a real place in the American ecosystem.

I don't exactly know where and how homeowners would get paid, but whoever figures that out as a pan-American idea, I think is really onto something.

David Friedberg

And yes, Travis, obviously slower, but people are contributing compute to this that's kind of surplus computer or compute that's available to—

Travis Kalanick

Unused computing, unused compute. And then there's Targon, where you can rent H200s by the hour for $3 or $4, and it's permissionless. Anybody can contribute, provided—and this is kind of the magic of Bittensor—that there are validators who make sure you're putting in what you say you're putting into the network.

If somebody just had the hardware and Tesla said, “From now on, every Powerwall—we'll give you a discount on it. Every Powerwall has our GPUs in it.” Part of the offering is that you can't buy a Powerwall without putting GPUs in it. When you're not using it, we will pay you for your battery.

You put a Starlink on your roof, and now you've got a distributed system where you get a couple of these Powerwalls with their own silicon in them and a Starlink. Now Elon has created an infinite number of home battery backup systems. People get their battery system for free.

Jason Calacanis

He gets the exclusive for 20 years. You guys see that there's a rumor that Elon is going to buy T-Mobile?

By the way, just because Cerebras has blown up and gone through deal price, we should talk about Cerebras a little. Cerebras had an incredible IPO. Give us an update on where these IPOs are happening.

Obviously, SpaceX had an incredible IPO but has retreated from this otherworldly $200 share price. To the extent you can, talk about these 2, as well as the 2 IPOs to come. $4 trillion in backlog. We've obviously got OpenAI and Claude—I'm sorry, Anthropic, which makes Claude. Both of those will be worth a billy-plus.

You put all this together: $4 trillion of new offerings, plus Cerebras in the mix. How does the market manage this much new inventory being put on the market? Obviously, the float for SpaceX is notably small, but over time, people like yourselves and other insiders—Founders Fund, et cetera—will be unlocked and have the ability to distribute to their LPs.

This is going to be a moving target in terms of share price. Can the market absorb this? Where does the money come from—retail, or does it come from people selling their Bitcoin and moving it over to something more exciting? What's the dynamic here in the market? I know we're in uncharted territory, Gavin.

Gavin Baker

Well, for sure there's no precedent for any of this, but a few things I would say, just in no particular order. I think Anthropic is worth $3 trillion today, and it's very important.

Jason Calacanis

I'm sorry, did you say Anthropic is worth $3 trillion?

Gavin Baker

Yeah, I think that's roughly where it would probably trade as a public company.

Jason Calacanis

Wow.

Gavin Baker

Yeah. I mean, look, they're going to end this year—

Jason Calacanis

Oh, man.

Gavin Baker

They're going to end this year well over $100 billion.

Jason Calacanis

Holy [laughter] What's the 2028 number? Is it $200 billion? Is it $300 billion?

Gavin Baker

It's probably not going to trade at 10 times that number, and it will be very profitable at that scale because it'll be inference-dominated, and people are reporting that they have 85% gross margins on inference.

But in terms of the market absorbing this, the market's already absorbed it. It's just shifting from private to public. In the scale of global capital markets, these seem like really big numbers. You're just moving from the private markets to the public markets, which are even bigger.

As far as SpaceX specifically, I think one of the more important things is everybody who's a SpaceX investor or employee has had a chance to sell every 6 months for the last 10 years. So they may not be the wall of liquidity that some people are thinking about.

I read this New York hedge fund short report that said you could just short SpaceX on the lockup because so many people are going to sell.

Jason Calacanis

Really?

Gavin Baker

Well, everybody who's on the cap table has had an opportunity to sell, and almost half the employees at SpaceX bought on the IPO. Now, I do think Cerebras—

Chamath Palihapitiya

But Gavin, one thing, though, I've got to say: I've had SpaceX since 2018.

Jason Calacanis

What? What?

Chamath Palihapitiya

Their little liquidity thing every year—last year it was $350 billion. So you got an 8x in 1 year. You could have a lot of people selling, right? They were doing little 20% up, 30% up clips for many years, and then an 8x-er could create that liquidity.

Gavin Baker

Maybe, but we'll see. That's possible. But the employees are buying at the new price, and they're probably, at some level, one of the biggest pools of ownership that's going to unlock.

And then I do think a lot of people probably own SpaceX through SPVs, and those probably don't unlock or get distributed anytime soon. So I would be careful with assuming—I don't think Elon's a seller of his—

Jason Calacanis

No, he's definitely not, obviously. Yeah. Yeah.

Gavin Baker

And a lot of us aren't sellers, and that's great. Yeah.

Jason Calacanis

Yeah. I mean, a lot of people who had large SpaceX positions were large buyers on the IPO of Cerebras.

Gavin Baker

Cerebras has had a tough 2 days since they reported their first quarter as a public company. I think there are 2 things that are very worth discussing here.

One is there is a whole generation of portfolio managers. There are a lot of people who are advocating for squeezing the blood out of the stone on IPO prices. The flip side of that is that there are a lot of portfolio managers who, if a stock breaks deal price, sell it no matter what. They consider it a promise that was broken.

This is what has happened with Cerebras to some degree over the last 2 days. This may seem irrational, but there are people who run giant funds who I know personally where, if a stock breaks deal price, they sell no matter what. If a stock breaks deal price, it can sometimes go to places you wouldn't think it would go.

This means that shorts, if a stock gets close to deal price, short it because they want to break deal price, and then they make a quick 10% or 20%. So it becomes a pile-on because you have this price-insensitive selling that can be triggered, and this is what has happened to Cerebras.

People talk about hate selling, but they broke deal price. So if you're going public and you're listening to this, tell your bankers: “Price this in such a way that we're not going to break deal price in our first 9 months as a public company.” That's what I always advise everyone to do, and I think it's important.

But I also think it takes companies a while to learn how to tell their story and communicate to public markets. It's a very different audience than VCs. The way I would have respectfully told the Cerebras story is this: What happened to Cerebras is they reported a quarter, and they're growing fast, but relative to the rest of AI, they're not growing that fast in the March quarter.

So what I would have said is: “We signed this transformational $20–25 billion—I don't know the exact number—contract with OpenAI in December 2025. We immediately ordered more wafers from TSMC. It takes 4 months from when we make that order. TSMC says yes, they start producing, and it takes 4 months to make the chip. Then it takes us 2 months, plus or minus, to turn that chip into a server.”

And then, if we're lucky and we can find the power, it takes us a month to energize that chip and start making tokens with it. So the first time you're going to see the impact of this OpenAI deal, at the earliest, is probably around Labor Day. You'll see a little bit of it in the third quarter, but then it really starts to build.

And just simple math: let's use some rough numbers. Let's take some Nvidia numbers. It takes them $35 billion to bring on a gigawatt, and you can generate $15 billion in cloud revenue out of that gigawatt.

Somebody on the call talked about adding 50 megawatts a month. If they could add 50 megawatts a month in 2027—forget 2026—that means they exit the year at roughly a $9 billion cloud-computing run rate. We're at less than $40 billion of market cap.

Now, that is going to be really hard to do, and they've never done anything like that before. But I would focus, as an investor, on what matters here: not where they sit competitively, not what new demand they can bring on, but just how quickly they can bring on power.

And listen, outside of the hyperscalers, the only companies that have ever brought on more than a gigawatt, I think, are CoreWeave, Crusoe, and SpaceX AI. Bringing on 600 megawatts is really hard. That is what I'm focused on as an investor: how many megawatts can they bring on? Because we know what they're going to monetize at. That is the question, and we'll see.

Jason Calacanis

Yeah, and I think that's well said. The other companies that have had this happen of late—I guess Rivian, and famously, Chamath, Facebook—traded below the IPO price in the first year, I think. This doesn't necessarily mean a bad company; it just means a lot of hype, or maybe going for it in the IPO and pricing it to perfection.

It can go one of two ways: you can either grossly underprice or grossly overprice. It's really hard to get right, and this is why auctions are the way. Auctions are the way, and it's not hard to price if you just do it the way it's supposed to be done. It's hard to price when you want it to be a certain number.

Gavin Baker

I don't think that happened here. I think there was a good-faith effort to price this thoughtfully, but it was such an in-demand IPO. I think it was a hard IPO to price.

Jason Calacanis

You just auction it, Gavin. You just auction it.

Gavin Baker

I think that's different than underwriting it. You're underwriting, but the bankers, I think, just need to get more in the mode of doing the auction.

Jason Calacanis

The final topic was this $3 trillion—or, actually, now it's your $3 trillion call on Anthropic, which would make it like $6 trillion in offerings. What do we think broadly about offerings, because they're going to offer a small slice of that?

Gavin Baker

Sure. And that small slice is very easy to absorb in the context. I believe we have no precedent. We'll see; I might be wrong, but it's not hard for global capital markets to absorb $50 billion of an offering. It's not like somebody has to come up with $3 trillion.

Jason Calacanis

Yeah. A 5% float is $150 billion.

Guys, remember when $15 billion used to be a whole lot of money? How weird is what's going on? By the way, crazy: where is all this money coming from? Oh, yeah—where was it all this time?

Can we just reminisce, man?

Gavin Baker

When I was at Fidelity, my colleagues and I got pilloried in the press for not knowing what we were doing. I think we priced Uber at $14 billion, and we got pilloried in the press for that. Then, 6 months later, I think you guys did a round at, what, like $42 billion or something. But $14 billion was groundbreaking for a private company back then.

Jason Calacanis

Yeah, for sure. It was $17 billion. We had a big negotiation, and we ran an auction—no, we just ran an auction.

Gavin Baker

Yeah, you wanted $20 billion, and maybe we landed at $17 billion.

Jason Calacanis

What we did was, every person who wanted to be involved had to fill out a sheet showing how much money they would put in at $10, $11, $12, $13, $14, or all the way up to $20. Then we just did the Dutch auction. We said, “We want to clear $1.5 billion.” We did the auction and cleared it.

We went back to people and said, “Hey, you're not going to get it. You have another shot.” They updated their Excel sheet, and it just moved the number up a little bit. Then you close it down. But, yeah, that round started at, I think, $9 billion or $10 billion or something like that. It ended up at $17 billion.

Thank you for your service. It used to be that was a lot of money. That was unheard of at the time. That was 10 years ago, when we used to walk to school uphill both ways.

We used to have to eat potatoes with no butter, just hot potatoes. Sometimes we were lucky that they were cooked. Sometimes they were raw. My dad would tell me that story. It's a famous John the Beard story. He'd say his mom would put 4 potatoes in the oven. They'd wrap them in tin foil, 1 in each pocket, because they couldn't afford gloves. You'd put your hands in your pockets with the hot potatoes. You'd get to school, eat 1 for breakfast and 1 for lunch.

He and his sister, Johanna—God rest her soul, my aunt, who died too young—they would just go eat these potatoes. That was their life: walking to school.

And our kids are trying both ways. They're trying to get the new iPhone 16 or 17. I don't know.

What's with this art piece, Gavin, behind you? Is that an art piece, or did you make it?

Gavin Baker

Yeah. No, this is—I’m staying at a rented house in Atherton.

Jason Calacanis

Oh, okay. There you go. It's just Arabian art.

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