Loading summary
Transcript76 lines
- [00:01]
A
Like, I have some AI friends who are prepared to have a Los Alamos style lockdown. They expect the US Government to fully control them within three years. When you think about the most critical national defense projects the US has ever had, with the nuclear project, we literally, we put all of our nuclear scientists in the desert and we spied on them. We wouldn't let them leave. They couldn't make phone calls. Right. When we treated it like a military project, AI is that Mythos is a military project, and US Government may start approaching it that way and say, oh, you're a top engineer on, you know, machine learning at Meta. You're only using a government issued cell phone. You're only traveling with permission. You're not allowed to leave the country. You're not, you know, and if the US doesn't do that, we will be leapfrogged by China. So all of that affects these as investments. Right. In ways I don't fully understand. Yeah. Not saying they're bad investments, just I haven't seen people see. Seriously, talk about discounting these factors.
- [01:15]
B
All right, guys, welcome back to another really fun episode of A Thousand X. I think this is going to be a good one with me today. I have Ari Paul, who actually is my former boss, founder of blocktower, which was one of the greatest crypto hedge funds back in the 2017-2023 era. And I'm just super excited. I've known Ari as probably one of the most thoughtful people that I've ever encountered, has great takes on a variety of different topics, can go deep, can go wide, and is always a really fun conversation. So thank you, RA, for joining me on this call. It's kind of funny to be podcasting with you because we used to work together.
- [01:56]
A
Totally. And same compliments to yourself. I'm excited to be chatting with you. We catch up somewhere regularly and they're always fascinating combos. And it's not a shock to me in that as long as I've known you, Avi from almost immediately had a sense that just that similarly, you were a very thoughtful person and we'd likely have interesting interactions regardless of the local professional context. So it's been interesting following your career path and excited for what you're. What you're working on now.
- [02:25]
B
No, I appreciate it and I kind of want to start because I think our audience will find it interesting, you know, where you started in crypto, how you got into it, and what really drew you to the industry, because I think you were drawn to it in a way that was both Similar and also different than other people. And then we can get into, you know, what's happening now in the world. And whether you think that that vision that you originally came into crypto with still pans out today or if it looks different to you.
- [02:54]
A
Yeah, you know, it's funny, like I did so much of the podcast circuit in like 2017, 2018, and then not much last for a year. So like back then I was always asked like, what got you into crypto? And I would give kind of a pretty similar answer every time, which was partly the angle that was maybe not unique for me, but differentiated from most crypto people at the time, was that I was a little bit more further along the career path on the finance side. There weren't that many kind of 30 plus year old finance people entering crypto prior to kind of March 2017. And so that investment angle really drew me in from the angle of an inefficient market as a trader. And I didn't hear many people talking about it. So like when I was raising for Blocktower originally, my pitch to a lot of VCs, investors was you don't need to believe in crypto. You also don't need to believe that I'm the best trader or hedge fund manager in the world. This is the most inefficient market in the world. And the really big players, the people who are way better investors than me, more experienced, smarter, they're not in it. And they won't be in it for years because of the regulatory hurdles, because it's a small, basically I and we got to be a small fish in a small pond as that pond was growing, or maybe I should say a big fish in a small pond as that pond kind of grew. So the inefficient markets was a big angle. I did believe in the humanitarian angle very much. As the grandson of Holocaust survivors and caring about people fleeing oppressive regimes globally, the angle of crypto is privacy. Tech was meaningful to me and that people like refugees could escape an oppressive regime with, you know, just a passphrase in their head and relocate to another country without having to be in a refugee camp and giving up everything. And then the last was the tech, which I found very interesting. I'm a non technical person, but I really enjoy kind of rabbit holing down the cryptography, the engineering. So that was what got me into it. And the first few years were really exciting. It felt like being in the garage with Steve Jobs and Bill Gates and these brilliant entrepreneurs and founders. And then I think my Experience was not that dissimilar for most of the people watching, which was a sense of disillusionment over time. A product of a bunch of things. Partly so much capital came into the industry and very little of that was productively spent, right? Your projects raising 50 million, 100 million, a billion dollars, and a few percentage points of that being spent on quality engineering or quality cryptography. I wasn't really disappointed by the game theory experiments and those. I kind of expected that to be hard. For example, building social consensus around a defi protocol where you're trying to use more interesting game theory alignment mechanisms, utility token mechanisms. Actually, I just saw a tweet from Eric Voorhees with his project that's two years old with a decentralized LLM and it has utility token. And people were talking about maybe he's found a smart aligned utility token. Because at least back in our day, Avi, when we were investing, they all kind of failed, right? The utility token model. And my take on that then and now is it's just really hard to make it work. It's not that it's a bad idea, it's not that it's impossible. It's that it's going to take a lot of iterating towards success around things like governance, around defi, game theory, all of that. So I think my disillusionment came more from not so much small missteps or hacks, but kind of the aggregate lack of forward progress, which I think is largely a function of incentives, misaligning incentives in people. And what I mean by that is crypto rarely had the true best and brightest. And I mean, it's also myself in that as well. And that that made sense in the very beginning. Something I said constantly was the very best investors are not in crypto. That's why I can win, that's why blocktower can win. And by the time they're in crypto, because crypto is big enough, institutional enough, well, if we're going to compete, we're going to have to be competing with the best. But we've got some years to build up that capability, that skill. Maybe I'm hiring billions of those people, maybe I'm poaching people from Sedel, you know, or whatever. That didn't end up really happening. From my perspective. The quality of people in crypto didn't really level up in aggregate. Of course. There's some great people, some brilliant people, but in aggregate. And I think that was a large part due to kind of structural reasons. So the Ambiguous regulation under the Biden admin and prior admins almost guaranteed that criminals would leave the industry. Because if you don't, basically, if you don't enforce against the worst criminals and you do enforce against the people who are mostly playing by the rules, the register, the regulated, they're filing, what happens? You basically guarantee the industry leaders will be finance over Coinbase, let's say as an. And Coinbase is kind of one exception because they played the institutional game, they lobbied very aggressively. But for the most part, the industry got led by the people willing to act, least ethically, least legally, willing to take the most risk. And that pushed out the best people, the people who don't. Who didn't want to take jail risks or didn't want to steal from people. A lot of them went into AI or when or stuff stayed in traffi or. I think AI has soaked up a lot of the just absolute. Like you look at some of the people around like leading AI efforts like Deep Seek. It's people like, I forget the name of the Deep Seq founder, but he was being compared to Terrence Tao as this super math genius when he was like 10 years old. He was winning math Olympiads. And you look at someone like that, those are the people kind of leading AI. Not everyone leading AI, but we're just these super geniuses. We don't have that many of them in crypto. And those that do exist are usually kind of relegated to engineering positions and a lot of their work ignored or politicized or they're not. They tend not to really be leading projects in a meaningful, productive way. So let me take a pause there. I don't want to. I could expound on this a lot
- [08:31]
B
more, but no, I think, I think it's good. There's one thing that you hit on in the beginning that I want to dive into because I think it's really important is. And you've written about this before, but it's. It's the concept of table selection and why. Why crypto? And maybe talk about, you know, like what you saw, like what was so inefficient about crypto at the time that maybe some examples where you're like, oh wow, this. We can really take advantage of this. We can come in and whether that's. That you thought that people were just massively mispricing some of the future value of Bitcoin, some of the future value of these technologies, or whether there was just. Whether it was just amateur hour and you could clean up, but maybe talk about your process of how you decided that crypto was an easy table to play at.
- [09:17]
A
This is bringing me back. I haven't thought too much about this in the last year.
- [09:20]
B
That's fun.
- [09:21]
A
There were a lot. What first got me into bitcoin was I had a very high conviction mental model that was loosely based on George Soros's reflexivity and model around adoption of assets and bubbles and commodities and currencies. Basically, I felt in 2016 like I had this really almost like crystal ball from a trader's lens around circles of adoption people were learning about. I was watching people in endowments learn about bitcoin, buy for their own account, start exploring, thinking about buying it institutionally. I felt like I just saw a really clear roadmap where if nothing changes over the next two years, a lot of people are going to be buying bitcoin. By nothing changes, I mean just the stuff in progress continues being built, right? People are building better exchanges, they're building better infrastructure, there's better regulation coming down the pipeline. So if nothing new happens, we're going to have 10 times the number of market participants who were potential bitcoin buyers because they now have accessibility, they're socialized to it, they're educated. And if even a small fraction of those people buy, the price has to go up. That was kind of like the most basic thesis I had prior to 2017. That thesis kind of ended maybe by end of 2021, certainly by 2023, by the time, certainly by the time Trump was elected the second term, the bitcoin president who keynoted a bitcoin conference talking about a bitcoin strategic reserve. It's not early. It might be early in terms of global adoption, but it's certainly not early in a brand recognition sense, right? Everyone in the world has heard about bitcoin. Most of the potential buyers have either bought it or tried to buy it, or you. Or you look at countries like El Salvador adopting and then largely abandoning bitcoin. So it went. The thesis was, wow, there's all these people who might want to use this thing and own it. They just can't yet, or they haven't heard of it yet, or they haven't tried yet to. Now, kind of everyone who can use it or might want to buy it has. They've either tried it, they've thought about it, they've made a decision, for better or worse, whatever. So at this point, you need something new to happen for a bullish thesis. It's not just like more, you know, everyone's heard of It, Right. It's pretty accessible. It's. You can buy it anywhere legally. Right. So that thesis, that was kind of one that was like a secular tailwind where that's not to say that it won't continue going higher, but it's no longer like free money. And it hasn't been for a while in my view. And then the other is the kind of market microstructure. So in, you know, prior to 2017, you had 30% arbitrage was between South Korea and the U.S. for example, and that persisted into 20. Late 2017, you had a 30% arbitrage at one point. And that existed because of largely regulation, but also a lack of arbitrage capital and just money allocated to kind of taking advantage of that. I mean, so many examples where the same asset is priced differently on two exchanges. So you have real large arbitrage, you had crazy exchange movements due to liquidations. I remember in 2017, at one point I was click trading on Coinbase. I think this was. Yeah, I guess this would have been before you joined asavi. And there was a point where the Coinbase API went down completely, so the market makers couldn't make markets. And the website was updating like once every three seconds. So it was almost like a stalled out website. And then it would update and you'd see a price and like a massive amount of activity it went through. And during for like an hour, Bitcoin was swinging back and forth by 20% on Coinbase. And I think I traded it five times. I don't remember quite where the price was, but it was something like, sell at 15k, buy at 11k, sell at 15k, buy At 11k, all in an hour. And why did that opportunity exist? Why was I able to flip Bitcoin for 20% a few times? And the answer is because you didn't know if you were getting filled. So no one could trade electronically at all. It was terrifying. Right? I'm placing an order on Coinbase, not knowing where the market really is, not knowing if I'm getting filled, not so. It's a lot of guesswork that not that many people are comfortable doing and most institutional traders would be uncomfortable with that environment. So, I mean, a million examples like that and almost all of that stuff diminished over time. As you'd expect, more professional market makers, more professional traders, less dumb money. Defi is a great case study of this where when Defi summer was first taking off, you had incredible high real yields, real meaning. Yes, there's risk, but you have 100% headline yield, maybe the risk adjusted yield is still 70% a year. The default rate of Uniswap or AAVE wasn't more than 30% annualized. You fast forward a couple of years later and now everyone's piling into Luna at 12% when I would argue at that point its default was already somewhat foreseeable, or at least as a very high risk. Basically you had worsening risk and far lower return. And that happened just because you had more people chasing the same set of deals, the same set of opportunities. It gets crowded, the real yield is diminishing, the demand for it is rising. And so you fast forward to today. Obviously there's people making good money, there's market makers, there's arbitrageurs, but it's increasingly the smartest professional, lowest cost of capital, most scalable money. So guys like Jane street continue to mostly crush it, I think, in crypto. But it's not easy to compete against Jane Street. They're very good at what they do, they're very professional, they have low cost of capital, they have lowest latency, the best algos, extreme diversification where they can take massive swings in any one name, all of that. So basically just starting to look more like a traditional market in terms of tight spreads, tight arbitrages and the exceptions. There's usually, there's at least whenever I look, there's always a good reason, which is to say, okay, there's an arbitrage on two scammy exchanges. Yeah, but that exists because the smart people don't want to give their capital to the scammers. Right? They don't want to short on ftx or they don't want to short on binance because we've seen what happened before and what can happen again. So I think at this point, the market inefficiencies and opportunities, they're just thinner. I think it's a similar approach with this kind of holistic smart risk management necessary to capture those gains. Well, okay, sorry, slice it back. Either you're kind of an arbitrage and a good quant risk manager like Jane street, or you're someone like yourself, Avi, who's applying kind of a holistic common sense approach saying, how risky is this exchange really? How risky is this the by protocol, really approaching it using more qualitative data to form a quantitative conclusion versus a quant. Can't answer that. Like, okay, unis swap's never been hacked, so what is the hat risk? Well, it's not zero, but we don't have any data to go on. We can only kind of put together a smart guesstimate based on kind of qualitative data points. So I think today crypto is still. If I was a. If someone said, hey, I'm looking to get into trading, I have a little bit of mentorship and experience. I'm. I basically, I. It's credible for me to be a professional trader. What should I trade or where should I look? What table should I sit at? I would still say crypto is a great place to look as a small trader with limited capital. It's still definitely a more inefficient market than most. It's just not that ratio of risk reward is just probably never going to be as good again as it was when we were first getting in.
- [16:12]
B
Yeah, I think that's probably a big problem that I've run into a lot is that when you look at crypto, I think, and you go back to 2017 and 2018, it really was the most exciting thing on the block. Right. There weren't that many other industries that were A, that small and had such large potential for growth and B, had a lot of excitement and energy pouring into them. I think it was very easy for crypto to capture people's attention because they actually didn't really know where else to look. And then you fast forward today and there's so much that's happened. Right. I mean, you look at what's happening with the hyperscalers, you look what's happening with AI stocks and memory, you look at the rebirth of the American infrastructure, Everyone's caterpillar is going through the roof because they're selling power generators for these data centers and people are talking about. Trump's talking about funding new uranium startup or new nuclear startups and people are getting really excited about uranium. And so it almost just seems like there's more excitement today. And I guess, is that true or is that just recency bias? When you were getting into crypto in 2017, was it because it was. You're looking around, I mean, you're sitting at UChicago at the time, you're helping manage the endowment as a portfolio manager and you're saying like, well, there's just not. There's nothing else. It's just like crypto is the most exciting thing.
- [17:46]
A
Yeah, absolutely. That was part of it. I mean, at the endowment, at Uchicago, Endowment and other endowments, we were all actively Talking about finance 12 years ago felt and looked pretty boring. We were all talking about where do we look for higher yields. Right. So Especially if you're an institutional investor and you're in these mega funds that are all shockingly similar, especially public equity funds. All it became part of this was choice incentives, pressure, pressure and also and partly to market. So we had a market for like 20 years that was pretty boring in public equities, dispersion was low, everything was going up together almost every day. And so it was a terrible period for active management. Active hedge funds really struggled to outperform after fees because basically like if you could just buy and hold a basket and capture the index, it's pretty hard to outperform that when most things are just going up together. Right. And so outperforming fees and the negative tax effects. And so that pressured people like myself as well as endowments institutions to look for alternative asset classes. So they were looking at frontier markets, emerging markets. Alternative assets, like things like investment in certain types of commodity investments became more and more attractive to pensions, for example. Historically that had been viewed as off limits because commodities aren't cash producing inherently. But over time it's like, well, we got to get more creative and so let's start investing in pipelines and just other commodity plays, for example. So I think that desperation for yield and the push to be more creative and basically no one had almost any good ideas. Frontier markets were kind of terrible and everyone who invested in lost. And that was largely because corruption and local adverse regulation in much of Africa, for example, also just small markets. So every crypto project that has tried to do banking in Latin America or stable coins Latin America or at least almost all of them have done terribly. And partly that just because you have small markets, you have people without much disposable income. It's not that even if you have, you know, 10 million daily clients who are impoverished people in Ecuador or Chile or whatever, that just doesn't support that valuable of a company. Right. It just, it's hard to build a VC backed company on that. Whereas today, yeah, I mean we've seen it feels like there's limitless growth potential in giant assets that can soak up almost infinite capital. So a lot of endowments and pensions were pretty aggressive in being early direct investors into the data center play. Frankly, I was a little surprised by that. I visited my alma mater or my former workplace, UChicago, six months ago. I was surprised at how early and aggressively they had been direct investors and data centers on that same thesis of we got to be a little bit more activist, creative to generate high yields. So crypto is certainly not the only game in town. I think people are also a little bit disillusioned in that like some of those pensions endowments found the offices explored direct investments in crypto 5, six years ago. Most went badly, right? I mean most altcoins are down. Most things that you bought did not do well. And the things that got shot to the big institutions were mostly it was things like Solana at the top. It was things, it was, it was these big protocols at the top that were probably forever tops. I mean that's subjective, who knows. But the tops in most all coins was made what, four years ago and
- [20:58]
B
mostly depends how much the dollar goes down.
- [21:00]
A
But yeah, so basically anyone who did any kind of direct investment program as an institution is probably down very heavily with. And it's hard for them to make an argument that the next time will go differently. Not saying it won't, but it's just hard from that institutional perspective. Yes, I think you raise a great point. There's so many interesting things happening in the world right now and so much is AI to me. And I think most investors feels like it's disrupting kind of everything, which puts everything in play. So every boring industry, every boring asset class suddenly might be high returning with the right thesis or the right angle because it just. We're in a world of almost total disruption.
- [21:39]
B
Can we dive into that? I mean this is something that I think a lot of people are sort of wondering, especially now because you've had such massive gains in the memory sector. You've had such massive gains and you know, from, from Nvidia and Google and Facebook. And you just said something that actually not a lot of people I think are looking at right now is that you said that AI could have impact in boring areas. And so like I kind of want to get into that. It's like, where do you think, maybe where do you think the opportunity is right now then? Or is.
- [22:10]
A
Yeah, my high level take on this is that I kind of miss the first wave. So I basically didn't invest in AI. And it wasn't because I was skeptical. It was so three, four years ago just because I was super focused on crypto and I was just kind of like, I'm sure you guys will make money, you guys will do great. All of my time and mental energy is consumed with the mix of entrepreneurship, investing in this space. And then over the last, frankly, over the last 18 months since block terror, I've just kind of been too burnt out. I've been gradually catching up and learning and networking, but my take has been I want to position. So AI is like world defining, world changing. You can't avoid it if you're an investor at all, tech oriented. So my take is not to ignore it indefinitely. I'm spending an hour, two hours a day learning, but it's to be prepared to make those investments for the next wave. I'm not saying I'm not gonna, I've made some small punts, but what I'm really focused on is kind of like what I was thinking about with crypto in 2015, 2016, which is let me get the crystal ball, let me try to get a high level, strategic, strong viewpoint that will carry me for a decade or two decades and then I'll start pursuing individual threads. So I followed a lot of the rotations. This is an amazing time. I mean we've seen some great active investors do incredible rotations, basically following the AI, you know, optics, memory, just each. You mentioned Caterpillar making a mint, selling the power generation. So it's incredible time to be an active manager. I'm not a full time investor right now. I'm not, I don't want to half ass it, I don't. My attitude for my own money as well as everyone I'm giving advice to is don't try to trade unless you're treating it like a full time job. You know, it's, it's hard, it's, you know, even if you're good at it, it's a full time job, it's demanding. So with that said, I have very few meaningful, insightful, short time trading or investment views. But that said, I do have some high level views that I think are worth sharing. So one is, I've been, I don't know if bearish is the right word, but a little bit skeptical on the IP created of the AI generators. So like Claude, Meta, Google. I was having a debate with a close friend who's pretty senior on the Meta ML team about this and we were debating it. It was like 48 hours before Claude accidentally posted a good chunk of their code base publicly. This was like three months ago. They accidentally revealed a lot of weights and things. There's constant corporate espionage both between the firms, right? Google's trying to poach top Meta people and vice versa. But then nation state espionage, anything being produced by Claude, by Meta, by Google, you have to assume is in the hands of Russia, China, North Korea. And I don't know specifically who has what, but that's a good starting assumption. So with that assumption, how do you value these companies, how you value the ip, where does the value accrue? This is very similar to the early discussions we were having in like 2016, 2017 about crypto, like hat protocol thesis. Right. It's okay, there's going to be all this activity. This thing is going to change the world. But what do you actually want to own? Do you want to own the memory chip makers? The AI generators? Do you want to own the companies that are going to utilize the AI? Here's another angle that I think is important to recognize. If a firm like OpenAI or Claude develops a model that can, for example, beat the stock market tremendously, not only are their users probably never getting access to that model, so we as the public are never getting access to that model. That's not going to be on like a, like a retail customer tier list. Right. The enterprise model users are also not getting access. Ken Griffin's not getting access to that, but neither are the shareholders. Because if Sam Altman realizes what he has, why is OpenAI going to run that auto? Sam Altman's going to run it privately, or the engineer who discovered is going to run it privately? I don't mean to state that as a tautology. You could frame it as a risk, but I would argue it's actually a likelihood. So that pushes me away potentially from investing in the model creators like Claude. Another angle, as we've seen, is the regulatory side. These are pseudo nationalized companies.
- [26:08]
B
Do you think that's necessary in order to make an investment in anthropic or OpenAI? Do you think it's necessary that they capture 100% of the value of their model? Right. So it's like they could be a good investment, but maybe they're engineers on the back end that are running both could be true.
- [26:26]
A
Absolutely be true. My coin is more. It's hard. I was trying to kind of come up with like, okay, well, where. What is OpenAI actually going to create that they can monetize for trillion dollars?
- [26:36]
B
Right.
- [26:36]
A
I mean, we're talking gigantic. I'm not. Right.
- [26:39]
B
I mean, these things are coming out at insane value ratios.
- [26:41]
A
I'm not claiming something not valuable, that they can't produce great cash flow. The question is more like, right, just is the market overpricing or underpricing them? And with something like a SpaceX or an OpenAI, there's a lot of optimism. Right? I mean, SpaceX valued at well over $1 trillion on what was it, like 20 billion in revenue, right?
- [26:56]
B
Yeah.
- [26:56]
A
And that's not that insane because, yes, SpaceX does have an incredible set of prospects and they're going to land a bunch of, you know, there's no question that revenue is going to be growing radically. So it's like, yes, Face X is a valuable company. I don't disagree. But is it 100 billion valuable or 2 trillion valuable? I have no idea. So it's more that my impression, talking to other investors, was that they were not discounting this at all. They were not incorporating these factors as risks either. The nationalization of Anthropic that, you know, anthropic not being allowed to sell or use Mythos, I don't know how far this goes, but it could go pretty far. So, like, I have some AI friends who are prepared to have a Los Alamos style lockdown. They expect the US government to fully control them within three years. This is a hypothesis. I'm not sure I agree. But when you think about the most critical national defense projects the US has ever had, with the nuclear project, we literally, we put all of our nuclear scientists in the desert and we spied on them. We wouldn't let them leave. They couldn't make phone calls. Right. When we treated it like a military project, AI is that Mythos is a military project. And at some point the US government and other governments, I mean, other governments are already doing this. At least Chinese US, US Government may start approaching it that way and say, oh, you're a top engineer on, you know, machine learning at Meta. You're only using a government issued cell phone. You're only traveling with permission. You're not allowed to leave the country. You're not, you know, and if, if the US doesn't do that, we will be leapfrogged by China because they'll, they'll, they, they can basically use corporate espionage to get to where we are and then, and then go forward. So all of that affects these as investments, Right. In ways I don't fully understand. So it's less, I'm making a concrete argument, more just raising these variables that I haven't seen that many people, you know, talk much about. So that does leave plenty. So, yeah, not saying they're bad investments. Just I haven't seen people seriously talk about discounting these factors on things like the memory makers. My concern there. And this, this explains why, like I put some thought into this and yet haven't pulled the trigger on many investments or, and nothing in size for these reasons. So with things like Caterpillar and power generation or the memory chips, the natural trend. So as an investor, Avi something I've often talked about and a framing I often use are kind of the extrapolations investors make throughout history that are incorrect. And every tech bubble follows a similar pattern, which is investors correctly identify a world changing technology, they extrapolate it forward, they extrapolate recent progress and the pace forward. And so they say, oh, this is going to change the world in five years. And they're always right directionally, but wrong in timeline. The five years is almost always 20. And the reason they make that mistake is it's a series of kind of mistaken extrapolations that are pretty simple if you kind of analyze them. So I worry that the buildup in data centers, and this is not other people accept this for sure is analogous to the overbuilding of fiber in the Internet era. In the mid to late 90s. It's not that demand for the Internet didn't continue growing exponentially. It's that other bottlenecks appear that had to be addressed first. And so with AI, what we found is data centers were the bottleneck. We threw massive, unbelievable amounts of money at that and built a crazy, it was basically like a man on the moon project. Like building a trillion dollars of data centers in a couple years is incredible. But now what we're realizing is there's other bottlenecks. Yes, we could get better AI if we threw another 5 trillion at compute. But everyone's realizing that's not the good ROI investment at this point. And so what we're starting to see is week after week new AI papers being published that dramatically cut the hardware needs to achieve the same result. So if you think about kind of progress in almost any multi variable area, you hit a bottleneck. The smartest people throw lots of money and brain power at that. They work at it, work at it. Then there's some exponential breakthrough. We discover the transformer, we discover a much better fab trip, fab progress, whatever. And then often we go too far in that direction because all the money, all the incentives, all the everything says that this is where it's at, build data centers or whatever. But then we realize, oh, if we do a little bit of work here, we get much bigger gains, right? We've overbuilt the this type of the physical capital, we're underweight human capital or we've overbuilt. Now we have all these data centers, but we don't have enough power, or we don't have enough rare earth metals or we don't. Or silver is the bottleneck, or optics or rare turbines are now the limiting factor, right? And so the challenge with investing in that is, I think you either need to be really fast and on the ball as the best active managers are today. And I'm envious of them. I mean this is an amazing time to be a sharp invest investor of that type. But I think that's a full time job that I'm reluctant to like dabble in. And the concern there is, is okay like once you move on to, it's very much a rotational type trade.
- [31:40]
B
Right.
- [31:41]
A
What happens next? Bottleneck. It's kind of like, I mean OBI in crypto. Blocktower we used to love trading those one to three month rotations.
- [31:48]
B
Yeah, I mean they were like the best, I think they were in some ways the best part of crypto because if you pay, if you paid attention to the pulse, you could kind of figure out where that capital would flow and just sit there and park in it and basically say I don't know when this narrative is going to take hold, but I know in the next six to eight weeks it's very likely and even if it goes down 20% in the meantime, it's going to go up 5x at some point in those six to eight weeks and then we can make a trade out of it. But again the issue with crypto is that it was all a trade. Almost everything effectively or everything that we touched when we were at Block Tower, except for Bitcoin was, was a trade. I don't think there's a single other than, I mean you, you, you let, you let an investment in Poly Market which obviously has done it, done, done extremely well. But I think if you look at the, like you, you know, the portfolio that we managed at Block Tower, almost everything we touched is now probably below, far below. Its all time high.
- [32:43]
A
Yeah, to be fair we didn't know that always at the time there were some things.
- [32:46]
B
But, but I think, I think, I think there was a little bit of an implicit understanding between both of us that for example, I actually remember this very clearly. It's like in Q4 of 2021 we put on this huge near and phantom trade and it delivered a lot of return to our portfolio. We were both like, okay, we know what this is. And so I think part of being a good trader is just obviously understanding what made you your money. Were you an incredible investor that could see the future or were you able to navigate these types of cycles? And at least for me, I think one of the reasons that we actually work together very well and you guys will hear on this podcast as we keep going is Ari's very good at figuring out all of the different possible paths that could exist. I think finds angles that other people can't find and then you just have to pick one to voice a trade. And I think that dynamic worked out really well. But I guess the whole point of this is to go to AI where I'm of the opinion that these cycles are not necessarily traits, that it's very possible that in 10 years from now everything that touches AI is just higher. And that's what I'm trying to parse out. Right. And that's the difference that I view with crypto is that.
- [34:10]
A
So I don't think I agree so fully agree there's more of a real secular tailwind with AI and with crypto I agree with your core premise. With that said, with every real birth of a new tech that was purely positive and like the personal computer, the Internet, still 95% of the startups fail. Still 95% of the public companies go bankrupt. Right? You look at the leading Internet stocks in 99, very few survive. Five years. You look at the, the personal computer brands of the early 60s, very few survived. Same with the railroads in the 1850s, same with basically every. So my rough metal model on this is okay. A challenge with AI is it enables disruption, right? Including to itself. And so we saw that the leading AI leaders today are less than 10 years old. OpenAI Claude and new firms being created kind of out of nowhere getting multibillion dollar VC backed valuations. So right now capital's not an obstacle for anything AI, right. If you're, if you're someone who is very credible founding an AI startup, you get money thrown at you, I think advances because AI disrupts tech and allows leveraging of tech. What I worry is that the AI leaders can just as easily as they leapfrogged and became new incumbents. That can happen again. So I'm super bullish on AI. Like I'm not at all an AI skeptic, but what I'm skeptic of is individual AI companies. And just like trying to retain that basic investment realism that it looked very similar to discussions in crypto. Just because a protocol has billions of dollars of activity on it a day doesn't mean the price goes up, doesn't mean the pro, doesn't mean the tokens are valuable, doesn't mean. Right. Just because everyone is using, I mean like OpenAI had their incredibly, what was it? Sora, their video creation product. Incredibly popular. Everyone loved it, Amazing. They shut it down because it was massively money losing and they could not find a way to make it profitable. So it's a great example where like they built a working great product, they got the market, they got the users, and yet it was massively money losing.
- [36:22]
B
Kind of like all the early delivery apps on the Internet before. Yeah, no, no, it's true, it's true.
- [36:29]
A
Can be very smart and can be great, great for the world, but also can be great for the company. It's just, I think we're going to see that again and again and I think it's hard. So, okay, so how do you invest in this? You can very similar to crypto and actually I think I have used some similar metal models everywhere. You can either take, as you said, that kind of trading rotational mentality where you don't care about disruption. Three years, you're really just looking at the current pipeline, who's coming out in the next six months, who has pricing power over the next six months, or you take the VC mindset and you say, okay, I'm going to make a bunch of bets, I'm going to have. I know that a bunch of these startups can like similar. If you're approaching personal computers in the 60s, Internet in 95, how do you win knowing that 95% are going to fail even in this incredibly right fertile ground? Well, the answer is you have to be somewhat discerning and make good bets. And you make a lot of bets. And if one of the bets in your basket is IBM, you win. And if one of the bets in your social media basket is Facebook, eventually you win. So I think you can take that attitude with AI. The challenge there is, and this became the same challenge with crypto later on. When the assets are so expensive and highly valued, it's not easy constructing a passive basket. It's not clear what that means. So this brings me back to like late 2017 when investors would ask me, are you just doing a market cap weighted basket? I'm like, well that would mean I'm putting 20% of your money into iota, which is valued at like 20% of crypto's market cap.
- [37:51]
B
Oh wow. I have not heard that name in a long time.
- [37:53]
A
Yeah, yeah, like no garbage, it's going to go to zero. Why would I put 20% of your money in it? Basically, if too much of the market cap is heavily overpriced, then a somewhat passive or market cap weighted approach will, will produce a bad outcome. Even if you still have a secular tailwind, Even if all crypto, like if you bought that basket in 2017, it didn't touch it. We can easily imagine in another few years, maybe just saying hypothetically, Maybe Bitcoin's at 200,000, maybe Ethereum's at 6,000, and yet IOTA is still probably at zero.
- [38:22]
B
Right?
- [38:23]
A
Or we're very, very close to zero. So that initial basket maybe does okay. But point is, I don't think there's a free answer at this point. I think crypto is like maybe where. I'm sorry, AI is maybe where crypto was in 2021 or 2022, which is to say the easiest money is gone. The tailwind that was so strong that almost anything with an AI name gave you 100x. I think that's over now. This is more like 2122, which is to say we still have a strong tailwind. Prices in general are still going to go up, but I think some people will lose money on AI over the next three to five years.
- [38:56]
B
Right. And I'm curious to take it a step further and not just talk about the AI companies themselves. What is something that's undeniable, that I think you agree with and I agree with, is that AI will disrupt certain industries. AI will change certain things. So one place to start is obviously like, what is AI good at? Like what, what are, what are LLMs currently capable of doing and what industries are potentially the most affected by that? And going downstream and trying to think to yourself like, okay, does this mean I just need to be short Accenture for the next 20 years? Because it's, you know, going to be, going to be, going to be a great short or, you know, is, is that, is that not going to be affected or, you know, if they're publicly traded law firms, are you going short or is AI going to like increase the caseload? That's actually an argument that people are making just as a tangent with law firms specifically is that AI is enabling lower ticket cases to come online, especially in the personal injury world. And so the caseload is actually exploding there, not decreasing. It's kind of interesting. So it's like there are all these different effects and I'm curious whether you've tackled this or thought through it.
- [40:02]
A
I've spent some time thinking about this, but I don't have really strong conclusions. I can riffle with some high level thoughts. So there's a hedge fund manager, I think it's Chris Hahn at FoundersFund, who's one of the top performing managers of all time. And he's had a kind of an interesting thesis that's a bit of A tweak on Warren Buffett's kind of value investing where he invests in companies with locked in distribution. Sometimes those are government monopolies or regulatory capture. Sometimes those are literal distribution pipelines that would be very expensive to replicate. And he kind of doubled down on that thesis in the era of AI and he's been doing very well over the last few years. And his thesis is that an AI company can't easily disrupt a distribution company. And engineers kind of get this wrong or like the intuition isn't like super, like why couldn't OpenAI be Coca Cola? Why couldn't OpenAI be Walmart? And the answer is because it's actually really expensive and hard to replicate all that local distribution because you're dealing with local regulation and ordinances town by town, city by city. Now AI may help with that, I'm sure, like AI lawyers and all of that, but it's still anything that touches human beings is the bottleneck for all things AI, right? I mean, anything that's purely digital moves at infinite speed or near infinite. Anything that involves humans goes to human scale. If you need a human to sign off on it, it doesn't matter how fast the AI is. So anything when you're dealing with unions, if you're dealing with government officials and regulation and bureaucracy, anything where you need to be lobbying, all of that is still a human first endeavor, even if it's helped by AI. So Chris's thesis, which is, at least I'm springing it up for discussion, is he basically doubled down on some very boring old world companies with the thesis that these companies, and I don't know his current portfolio, so I can't. I'm going to give an example, but I don't know if he owns it now. But you take a company like Visa, which at face value should be like the easiest to disrupt company in the world, right? Crypto. You and I have seen a million pitch decks saying crypto is going to disrupt Visa. AI should disrupt Visa. And yet maybe not, because Visa can use stablecoins, Visa can use AI to drive its costs down dramat while providing the same service. And why is Visa going to get replaced? So yeah, OpenAI could offer a Visa with whatever half the credit card payment processing fees, but does that really matter to consumers? Does that really matter to merchants compared to the brand ubiquity of it being accepted everywhere around the world, all that. So his argument is that by reducing costs for companies with locked in brands, consumer bases, very high switching costs, all of that, those companies are Going to see falling costs due to AI and flat or growing revenue which makes them great buys. So that's just one kind of old school. Is there still a place for Warren Buffett in this world with that style of investing? Yeah, and Chris seems to be proving it. And I think that's an interesting thesis. Again, I think that's a full time job really diving in and understanding these companies and how they're going to use AI. And I don't think that works without. I think you need to be doing some channel checking and really getting to know the companies, not just kind of like industry level analysis. Other than that I have more fears than bullish conviction. And what I mean by that is disruption just looks incredibly attractive almost everywhere. It's kind of. I mean LLMs are amazing and AI agents are getting better exponentially and one person, one human being can now be a company. If I was launching a hedge fund tomorrow, I don't think I would hire junior analysts. I think I would just use AI in their place. Basically. If I think blocktower we were very thinly staffed because I kind of did like mapping people. So we were always understaffed. We were at one point we were managing almost $2 billion with a team of like 33 people across like five different strategies and franchises. But if I did it over again, I think I'd probably have a third the headcount because most junior analysts, I think it would be basically me and an LLM and or I would hire a AI power using single analyst and he would do the work of eight analysts in terms of producing great reports for me on any topic I want in an hour. That would have been, you know, work I would have asked you or Blake to do or work that I would have been doing myself either for blocktower for a boss before. That's almost all pure LLM at this point. It requires a smart human to give it some basic instructions and basic kind of formatting, setting up the agent. But then, then you get a million stock specific reports, a million daily reports on cryptocurrencies. You know, partially I've been doing a lot of. So a passion of mine recently has been personal health which may turn into a startup. I've been dive deep holing through a rabbit, holing on neuromodulation. LLMs are incredible for medical research. You know, I can pour through 200 peer review medical studies now and kind of create my own medic meta meta study in like 10 minutes. Whereas that would have been probably 10 hours of hard work before.
- [44:49]
B
Are you Are you using that to drive outcomes in your actual behavior in life? Like, like what? Like, yeah, like what, what, what does that look like to you?
- [44:57]
A
Yeah. So I'm kind of fairly early down this journey. So coming out of Block Tower I was super burnt out, anxious, depressed, like pretty miserable. It just felt like I had the body and mind of a seven year old and I.
- [45:09]
B
Wanting a hedge fund in crypto can do that.
- [45:11]
A
Yes. Yeah.
- [45:12]
B
And I think, I think that's probably actually very close to home for a lot of people.
- [45:17]
A
Yeah, I'm certainly, I'm not unique in this and so I wanted to prioritize physical and mental health. I mean it just, it was rational. Right. I, I have a well, well earned respite from work and I have the resources. Why not? And that, that's been like a slow, laborious process. It's been very hard getting good medical advice, even though I tried to see the best doctors I could find. Like, US doctors are rarely holistic in their approach. So for example, I have some minor back issues. I have slight scoliosis, I have a herniate L5S1 not a single US doctor ever mentioned my feet or hips in relation to my back issues. I hired a medical quarterback who has a network in London. Went to London.
- [45:58]
B
What does that mean?
- [45:59]
A
Oh, so medical quarterback is someone who, it's kind of like a gp except they typically, they often exist outside of a medical system. It's like the high net worth version of a gp.
- [46:10]
B
Okay.
- [46:11]
A
It's someone who will look at all of your test results, recommend more, connect you with someone offering peptides, prescriptions, whatever. It's kind of a level up from, from a gp and, and this guy works with like a lot of billionaires and just very demanding people and he, his whole network was in London. So I went to London and I met with a few spine specialists. Re, like four different people around back, like rehab, osteopath. They all diagnosed me differently with a different methodology and they all came to the exact same conclusion. And they've all, all of them were focused on remediating like hip imbalances. It's like that's the cause of your back issues. So I give it just as an example and that's kind of like specific to me. But so the physical was one side of it and that's included diet supplementation. And my learnings on this, on the physical side are not going to be interesting to anyone listening to this. It's the same that everyone hears on every podcast which is sleep, exercise and nutrition. 80:20 get the basics right. I've been dabbling with some slightly more nuanced things, but I think it's very much 80, 20 on that. Like, whether a supplement helps you is largely dependent on if you yourself has a deficiency in it. Like, is selenium gonna help you? Only if you have a selenium deficiency. Otherwise, no. The advice that I would probably give everyone watching this is there's some things you can do very cheaply that are equivalent to best in the world, like concierge health practice. So for example, you can get a monthly blood test for $75 a month and for another $100, you can have someone come to your apartment to take your blood or just go to any of the normal blood test clinics. And for $100, you get a blood test and, and having that data monthly or having maybe it's 150 for comprehensive blood panel. That's great data. And you may notice, or with working with an LLM or a doctor, you may notice that, okay, you're not in the red for anything, but you're a little low on vitamin D. So for me, I was a little low on vitamin D, vitamin B12, selenium, boron. Not where my GP said you're fine, but this medical quarterback said you're a little low. Why don't we just supplement, it's harmless, it can't hurt you, and we'll do another blood test in a month. And being a little low on those things reduces your energy level, you know, so just kind of like getting a little more precise on medical treatment. It's not. You don't need to be a billionaire to do some of the stuff. There's also all sorts of tests you can do at home pretty inexpensively. Gut, biome, DNA, you know, all of that. And with, and I do think it's reasonable to use LLMs to analyze the results because that's the expensive part. And it's so hard finding good doc. I've seen a lot of good doctors. LLMs beat me. Working with an LLM beats them. For most analysis. The very best doctors absolutely trounce anything the LLMs do or anything I can do with an LLM. But it's so hard to find those, those really good doctors that I think it is reasonable. Now, with that said, anything, any, you know, if you're going to make a major medical decision, of course, consult with a doctor, consult with an expert, LLMs hallucinate, all of that. But realistically, it's not reasonable to tell someone like, go do your Own research thing is kind of just bad advice. And the whole, like, talk to experts for everything all the time. You don't. None of us have the time or money to do that. Like, no, I'm not calling up a doctor with every question every time. You know, especially so I think you can get a lot done very cheaply today. Where I've been more interested and have maybe more nuanced thoughts is on the neuromodulation side. So I fell down. Kind of a cognitive augmentation rabbit hole. I was introduced in London to a psychiatrist for TMS treatment. Trans. Trans magnetic stimulation. Or am I messing up the acronym?
- [49:43]
B
You lost me there.
- [49:44]
A
I'm messing up the acronym. You use a magnetic stimulation to the brain, which triggers electric pulses. This is well studied. It's been around for like 50 years. It's FDA approved for pregnant women and children. It's very safe. It's primarily used to treat anxiety and depression. It's also used for stroke victims and Parkinson's and pretty, like, pretty widely used. There's all sorts of different types of tms. I tried it for anxiety, depression. Felt like I got moderate benefits in over a few days of sessions. The neuroscientist I was working with, psychiatrist, neuroscientist, he became convinced that the TMS can improve learning. And there aren't many public studies on this. And I dove into this. So he. He believed that using TMS with a few other things, he could like, 5x his speed of learning.
- [50:37]
B
And like, like in terms of retention of information, in terms of literally learning
- [50:42]
A
a foreign language, five times faster. Okay, five times faster. Advanced math, sports skills. And it was plausible to me that that might be true and it might be underappreciated in the medical community. And both those things could be plausibly true due to medical bureaucracy. It's very, very hard to, like, if you want to do a medical experiment, it's very rigid and narrow. How you have to do it, right? The medical ethics application, all that. And so like the company that makes the device I used, they didn't bother because of the cost and bureaucracy. They didn't bother getting FDA approval in a clinical setting. So it's only marketed as an aesthetic device. It's. Even though it's zapping your brain and used for brain treatment, they only put it in clinics that do stuff like app sculpting.
- [51:26]
B
Interesting. Okay.
- [51:27]
A
And they do that because they just don't want to deal with getting it registered as a medical device. And so it's exclusively used off label.
- [51:34]
B
Right.
- [51:35]
A
So, Right. So they sell this device for purpose A but almost everyone who uses it is using an off label, which is not illegal, but it brings extra liability with it. There's all sorts. It means you can't market it for that purpose. There's all sorts of. Right. You know, similar to what we dealt with, with financial regulation, there's this obscure and capricious medical regulation. So I've been kind of rabbit holing on that, experimenting. I think this neuroscientist was over optimistic. I don't think you can get five times learning benefits, but I do think there's evidence you can get 30 to 100% improvement.
- [52:06]
B
Have you done it yet? Sorry.
- [52:08]
A
Kind of. Okay. So I've been doing TMS daily. I actually smuggled a TMS device into the. I say smuggled. I did it legally, but it was, it was like tricky in a lot of work.
- [52:18]
B
Yeah. I was going to say maybe. Maybe we have to cut that part out then.
- [52:22]
A
No, no, no.
- [52:23]
B
Okay, we're good, we're good, we're good.
- [52:25]
A
It's a tiny bit gray area, but. No, you're welcome to share this publicly. So I've been doing TMS daily in my apartment. I've been starting to experiment with it for learning. There's one combination that I think produced a meaningful learning enhancement which is combining TMS with an antibiotic called DCS D cyclocerin, which is a scary antibiotic that's mostly used to treat tuberculosis when other antibiotics can't. And it's scary because it's heavily neurotoxic and heavily habituating. It doesn't, it's not addictive, but your brain adapts to it very quickly. But in small doses, it has an incredibly powerful neuroplasticity effect. It gives you the brain of a 7 year old. Neuroplasticity is your brain's ease of rewiring and forming new connections. And as we age, our brain becomes less and less neuroplastic. It gets harder to learn and DCS prove and this is well studied in small doses, like 10x is your neuroplasticity, but only for a few hours, for like two to three hours, like once a week or it's quite harmful.
- [53:29]
B
Okay.
- [53:30]
A
So with the tms, so you got
- [53:32]
B
to basically you got to really make use of those two to three hours.
- [53:35]
A
Yes.
- [53:35]
B
Like you can't, you can't be slacking off.
- [53:37]
A
My tms, I'd say learning enhancements so far has been, I think positive, but within placebo range. Like I think it's enhanced my learning by 30%. But that's small enough that it's hard to be short. Right? That's like, okay, did I, did I learn a week of guitar in four days? Five days? I don't know, right? Whereas. But with the dcs, I did five minutes of juggling and learned a new move that would normally take me an hour or two. I did five minutes of slacklining and got meaningfully better in five minutes.
- [54:10]
B
This just like this entire conversation makes me so bullish on the idea of these biotech companies. I mean, there's so much that's coming out right now in the research and in the literature and also aided by drug discovery using AI I mean, Eli just can't help this cholesterol. I mean, we're kind of at the precipice of radical change for human health. I mean, I know Brian Johnson's been on this cake kick for a while, but there's just so much coming out. But it's almost like the FDA can't actually keep up with it.
- [54:39]
A
All agree.
- [54:41]
B
It's like they, there's, there's overwhelming, there's going to be an overwhelming amount of drugs come out and that's, that's, I think, where the danger probably comes in. I know, I mean, I know personally a ton of people that are on Retro True Tide that got it from who knows, like basically who knows where. And like, hopefully it's okay.
- [54:57]
A
So, yeah, it's. I've also been rattle holding on peptides a bit and I actually did a little reluctantly or just very skeptically. I'm actually on the Wolverine stack now. Those are the only peptides I take and I started taking them a couple of weeks ago. Those are the most popular ones. It's 1, 5, 7 and TB 500. Yeah, it's called the Wolverine stack because they promote healing and reduce inflammation. I so I so first, very few peptides have good evidence behind them. The Wolverine stack only has meaningful animal studies. There's no meaningful human studies. The human evidence is anecdotal and mixed. There's plenty of people who've been on the wolverine sack and felt nothing. Adverse effects are quite rare if you get them from a good source. So I'm sourcing them through a very reputable supply chain and my medical quarterback, the site visits of factories and things. So I've gotten that side taken care of and I'm under like close monitoring for adverse effects, that kind of thing. The point though is I don't. I think the peptide industry is functioning very much like the supplement industry 20 years ago, most of it's garbage. Most people will be hurt by it because like if you walk into a GNC and you buy 30 supplement bottles, most of them do nothing on a healthy person. So it's not that like if you supplement with selenium, if you have the amount of selenium your body needs, the extra selenium does nothing. It just gets urinated out. So and for most people, you're, you're like the common line is you're, you're just producing expensive urine when you take all these supplements, which is accurate. But it's worse than that because as you noted, some percentage are tainted. So if you're taking 30 supplements every day, you're getting some toxic heavy metals, you're getting some contaminants, you know, and so, and, and there's some existential risk, especially with injections that you can, you know, inject, produce an infection or, you know, so, yeah, people shouldn't be rushing to take tons of peptides. They should be cautious about the supply chain. With that said, I'm sure similar supplements among the hundred peptides being mass sold right now, at least a few definitely are good. Like we know the GLP1s and 3s are, are certainly they're effective, right? We, I don't, I don't know if we know all the cost benefit analysis, but certainly many of these peptides are quite effective and powerful. And so I don't know, I'm not pitching the Wolverine stack.
- [57:05]
B
Sure, if I know we're, we're heading into a future of biohumans like the new age. I do want to get your take on one thing, especially before we wrap up here, because we're hitting the hour mark. And one thing that I think you've always been very thoughtful on is the concept of one cultural change and the idea of how different generations react to new technologies and basically where the political winds might be heading over the next 15, 20, 25 years. And right now, what we're seeing with dramatic change, I mean, we're seeing a huge amount of concentration of capital among even smaller group of people as people leverage technology to really set themselves apart from the pack. I mean, I think as you noted, a motivated human today can suck up a lot of the value in a way that they just couldn't 20 years ago. Like, it would quite literally be impossible. They would have to share that value with a substantial amount of people. And now you don't. And I'm curious how you think that, like, how does it play out I mean, you've talked about the book the Fourth Turning. Like, are we now, are we headed into a period of political unrest because of all this? Or do you think that, you know, we're good and actually we're heading into, you know, totally fine, like nothing. Nothing's going to change?
- [58:23]
A
Yeah. You know, we've been talking about these models for like, you know, seven years now, and I think we're at or close to peak chaos. It does feel like things would get a lot worse. I don't know how bad things will get in terms of political chaos compared to 10 years ago. Things feel horrible in the sense that. Right. Political assassinations and wide distrust and all that. But we get used to stuff. The world didn't fall apart. People's lives are pretty good. The average American has a pretty good life. So I could see things getting a lot worse before stabilizing. We might have another five, 10 years of things getting worse. And what I mean by worse is less social cohesion, lower social trust. I find the concept of high trust, I've talked about it forever within a business, within blocktower, within countries, and I'm seeing that framing getting used more and more in the social discussions around immigration, around kind of social, cultural values, around even like the rule of law and how that works when. And the breakdown when you have judges who are saying, like, no, we gotta favor empathy over justice kind of stuff, it looks to me like it gets worse before it gets better. So the rising left in the US are terrifying to me. Not because they're. I mean, I called myself a progressive Liberal until like four years ago. My politics have been unchanged for 20 years now. I'm probably a moderate, but the, like, the Mamdani crew, who many of them openly say they're communist. Two of the recent New York State assembly elected literally wrote their goal is to destroy the United States liberally. No exaggeration, their words. So that's potentially the rising force on the left in America. With the right, I don't know, I'm actually maybe more optimistic about the right and that after Trump. I think Trump probably would try to retain power if he was younger and healthier. I don't think he'll try in the current context. And so maybe it's Rubio, maybe it's Vance. I could see the Republicans actually moving towards the center and kind of moving back toward moving away from identity politics, more focused on governing. I don't know. From the investment perspective, both sides are socialists now, Right. So it's funny. Trump ran railing against socialism. He's been the most socialist president the US has had at least since fdr. And he literally had the US government take direct stakes in multiple companies. He shut down Mythos. He just a very long list of like literal socialist actions. But. But the left is embracing that even more aggressively. So in much of the world, we basically the trend for the last 10, 20 years has been kind of rising populism on both the left and the right, the horseshoe right. Both sides are identity or it's basically like both sides are woke. Now we just have woke identity politics from the left and the right. That's horrible. To me, it's horrible socially, culturally, economically, scientifically horrible in every way. It looks like it's going to get a little worse. Although again, I'm so like, I don't know how much worse. I. It's a scary thought, right? How much? It can get a lot worse. It can get a lot worse. With that said, in a time sense, I think we're closer to the end than the beginning. Like if you look at like big themes, right, like we probably have the blow up of American capitalism ahead of us over sometime in the next five years. We probably have something that feels like a more holistic collapse of Western democracy, but that's then the foundation. And then we get to enjoy 50 years of growth or 50 years of kind of secular progress and trend. If AI doesn't kill us all, who knows? Any. Any long term or cyclical type prediction is kind of falsified. AI and I do view AI as a singularity. It means history will not repeat. It means that any historical analogy we want to make, we need to be cautious about.
- [62:01]
B
I think that's, I think that's honestly, let's, let's end it on optimism. Let's say we're headed for 50 years of peace and prosperity and thanks to, thanks to AI, we're going to get there. This was a great conversation. Thank you, Ari for coming on the podcast. It's always, always a good time talking to you. We'll need to catch up again more in the future.
- [62:19]
A
My pleasure, Avi. Thanks for having me.
- [62:21]
B
Take care. Nothing said on the 1000X podcast is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of one KX Media. Our hosts, guests and the one KX team may hold positions in the company's funds or projects discussed.