A (3:35)

Yeah.

B (3:35)

So given that, and I don't want to bury the lead here, you have some huge upcoming projects you want to work on and you're going to step back from the co hosting the pod. I'll still talk you in on occasion, maybe to being a guest. But you're freeing up time to work on your big passions like this book and going deeper into these topics that people have heard you talk about here. U.S. china relations, talking about regulatory capture, the dysfunctional state of US healthcare. And for those interested, the pods mission remains the same. I'm going to keep the same name. We're going to keep chopping it up with analysts I respect sometimes with Bill and covering topics that matter, you know, like last week's pod with Jensen Huang or upcoming pods I have with Sam Altman or Satya. This is a moment of, I think, really unique consequence. We both recognize that we're grateful to have the opportunity to open source these conversations that are truly shaping the future. And I know I speak for you. We do it for the love of the game. Like, this keeps us sharp. It keeps us on edge, you know, and it's a privilege really to get on here and chop it up and share something back with the tech ecosystem that gives us, you know, has given us so much. So, Bill, you know, you have anything you want to say? It's good.

A (4:51)

Sure, yeah. First of all, just thanks to you, Brad. Like, this has been great going back and forth. I had two primary initiatives coming into it. One as you mentioned was to stay sharp and the other one was to share and give back. And I've been writing my thoughts on the tech industry since I was a sell side analyst. So coming up on 30 years and always enjoyed thinking out loud. I think it makes us better as analysts and helps us to understand what. But, but I also like to share with people and there's no question in my mind that this got bigger than I ever anticipated that it would. I've been chased down in international cities recently. I was, I started talking with someone, they had no idea what I looked like, but the minute they heard my voice, they're like, oh, you're the guy from the podcast. So it had, it has been popular and I, I know there are going to be people that are upset with me and that I can only say, you know, I'm sorry and I apologize that I'm not going to be doing it anymore. I came across this quote that was really inspiring to me. It said, life begins where your comfort zone ends. And there were a number of people that helped push me to write the book. It's taken up quite a bit of time in the last eight years. It's been a very long project. We'll talk about it more later. But I'm feeling a calling to go work on, or at least attempt to work on some of these bigger issues. So I want to create a platform for that. I want to create room for it and move a bit away from the space that I do know quite well and love quite a bit. But pushing myself outside of my own comfort zone and hopefully having an impact on things that really matter.

B (6:30)

You and I talked about this throughout the entire time I was working on Invest America. I certainly encourage you and push you to do this. I think you have an enormous amount to contribute. And listen, you and I chop it up together every day. I know where you stand on a lot of these issues. I'll bring those opinions to bear for our audience. And I certainly know that you'll have the burning need to come on as a guest on occasion and share some of those views. But in the spirit of analysis, let's just dive in this AI money bubble Bill, and this Jensen pod. Let's start by talking about that. We've had just a flurry of announcements, including another announcement this morning between OpenAI and Broadcom, where OpenAI is going to be building their own inference accelerator amounting to well over $1 trillion of incremental capex. That's above and beyond what we already knew was going to get Built out. I know that you have concerns about the level of CapEx, the absolute level, and I know that you also have meaningful concerns about how it's being financed. Why don't you walk us through your major concerns?

A (7:36)

I think anybody that's been a student of financial history has, you know, studied different types of activities that, that historically, let's just say historically have created red flags. And the reason that you know, any AI you talk to would know what you mean if you said circular revenues is because someone has used it in the past in a way that, that wasn't good. And you know, I had an exercise which I tweeted, we can put in the show notes, people can find, but, but I just described, you know, and there's not one thing, there's like six different transactions that have happened now that I would say are non normal. And I just described those things to chatgpt and ask it for its analysis, both as an accountant and as a financial investor. And the AI itself, you know, would, would find its way toward company names like Enron and WorldCom and those kind of things merely by describing the type of transaction. And so I think that suggests, if we believe in intelligent AI, that that's just what historically has become the best practice and way to think about these things. And I've, I've told you before, I think you, you have highlighted that some of the multiples are actually not that high. And I think this is part of the reason, because there are red flags that people are looking at.

B (8:57)

If you peel that back a little bit more. You know, one of the things that you and I have talked about, the very nature, you know, of round tripping or circular revenues, you know, I think there's this continuum. On one end of the trans, on one end of the continuum is a true sham transaction. There's no underlying demand for the product. I send you a billion dollars, you send me the billion dollars back, right? That's clearly a sham transaction because there's no underlying demand on the other end. I have massive demand for my product. You have plenty of places you can go get capital and we just happen to have an investment relationship in addition to that. And I'm buying your product and those things happen all over the place in our economy and you know, maybe something to pay attention to, but it's certainly not even close to being illegal and it frankly doesn't even cause me a lot of concerns about the quality of revenue. And then we have things in the middle, right? And these things in the middle where you can ask A question like would this much of revenue or product had been purchased but for this investment? Right. And I think that at a minimum calls the revenue, the quality of those revenues into question. So when you look at that, do you discriminate between the types of transactions that have been announced? I mean you raised this question first 18 months ago about the credit transactions that were occurring with the hyperscaler. So maybe just unpack a few of the different types of transactions.

A (10:18)

Yeah, and look, I think it started at the very beginning and, and I think that's one of the things that's causing this is it's become part of the competitive landscape and the competitive dynamic. So I think there are many boards and many CFOs who have been put in a position where they say, well, if we don't do it, everyone else is doing it. You might fall behind. But it started with the original, from my perspective, with the original Microsoft OpenAI deal where credits go in as a in kind investment and then those credits are used back against, you know, Azure and Microsoft cloud services. And in the, in that case, you know, and I said it back then, I'll say it again now that's a revenue, that's a cashless transaction, like there's no cash, but it becomes an income statement revenue item for Microsoft. And I don't think that's ideal from an economic standpoint. And that practice has now I think happened at Amazon and happened at Google. I think they've made investments in other AI startups with the same kind of thing. And at the very least it drives usage of their product versus someone else. And in the worst case, you know, it creates revenue that might not have existed had had it not been for that deal or at least not on those terms. But anyway, it started there. It's become quite competitive now. There's an interesting podcast on Plain simple which I, I don't Plain English, which is a, a in the Bill Simmons family with Paul Kadraski and he, he makes the argument that part of the reason these transactions are taking place, I think this is a credible argument he makes is because some of these players have already put so much capex, so much debt on themselves that they don't want to take the next step. And so in that case, you know, you have reached some level where the company's saying oops, you know, I feel uncomfortable going further than this. The transaction that comes to my mind when I think of that is there was one where Microsoft, I mean meta agreed to pay for the failure of debt on a facility where they don't own the debt. You know, and to me, that's classic off balance sheet financing. If they own the risk of it just because they don't own the paper, you know, I don't see the difference really. But this is, like I said, this is happening in a, in a lot of different places.

B (12:50)

You know, one of the things that, you know, again, I've talked about a little bit on all in and other places. If I look at the Nvidia deal as an example, Bill, Nvidia has the opportunity to invest, though not the obligation to invest. OpenAI has the opportunity to use their chips, though, not the obligation to use their chips, as evidenced by the fact they just announced their own chip this morning and they just cut up a huge deal with amd. And you know, in the case of Nvidia, you, you're not talking about a highly levered business. This is a company that's gonna generate $450 billion of free cash and is taking a small fraction of that over the next three years and investing in companies that it thinks are good returning investments. I mean, Google and Google Capital have been doing this for, you know, for years, et cetera. So again, I think in those cases you can say for certain that maybe, you know, more of their product is being consumed than would have otherwise been consumed. Right. You know, we saw this announcement last week where they're investing in this XAI with respect to their new round. Most of these companies that they're investing in I think have the economic wherewithal to raise the capital in other places. Elon could certainly raise it in other places. OpenAI was well over subscribed, so they could have raised it in other places. But here's what I think people should be on the lookout for. Okay, so where would I have more concern? Okay, now imagine there's a chip that there's only one customer for, so there's not a lot of demand for the chip. And that chip manufacturer gives a customer $10 billion and that customer turns around and buys that chip. Right. So there's no other potential customers and the buyer would not have had the ability to buy it but for that capital. That to me raises big red flags. And I do think in this overall ecosystem, the reason I'm happy you're bringing it up, I think one of the things we need to do to keep the wall of worry there, to keep the excesses from emerging, is to call them out. I'm not concerned as a shareholder in Nvidia with what I'm seeing. Nvidia do today. I like how they're deploying their cash on their balance sheet but I do think that as you go further and further out the risk curve, right, further and further to these startup neo clouds or further and further to startup chips, you know, et cetera, where people to your point are a little bit more desperate for capital, don't have the balance sheets, don't have the market leadership position. I would not be surprised at all in this moment to see more of those yellow flags emerge.

A (15:22)

There's a couple of things, you know that I would say in response. One, there's a reason we know about a lot of these things and that's because some auditor somewhere made them disclose them like they felt that it was abnormal enough to require disclosure. Second, I heard, I listened to you and the all in team talk about this issue. I do think investment is riskier or more risk seeking than customer loans, which it was compared to. And Cisco got in trouble just with the customer loans because they were giving loans to startups who really didn't have the wherewithal to pay them back. But when, that's really the issue for me though when you switch from a loan to an equity you no longer have to pay it back. So in some ways it's, it's easier on the purchaser than if you had a loan themselves. But, but here's my, here's my bottom line. I think what this does, this, this overall situation is first of all I think it's driven by competition at this point. And like the first, the first step into the gray zone was way back at the beginning. And so now I think we're, we're fairly pregnant with it. So I think it's a competitive dynamic. I think it increases the chance that we go over the top that, that we end up over provisioning. And I, I kind of felt like that was unavoidable anyway. But now I think it's higher and, but I think it maybe pushes out when we find out that happens because you've, you've just created more virtual leverage on the whole system and you might be hiding some of the signs that would tell you things are slowing down. I'll give you a great example. One of the more peculiar of all the deals is, and this was disclosed in a Core Weave filing was Nvidia has promised to buy any of Core Weaves service availability that they can't sell to anyone else. That is very unusual. That's not the same as making an investment that could easily help Core Weave with their debtors and Getting more debt financing. But it also means as a investor, we, we don't know what's going on with real demand for Core Weave because we probably won't be told if they start moving into the world where they're offloading to Nvidia or not. And if you'd have said to me, what would you look for to see if we've, you know, kind of reached a point where things are slowing a little bit, you'd say, well, let's look at one of the pure plays. And, and so now that's money.

B (17:44)

I could see how it could be. But I would expect that every analyst on every core we've called for the next, you know, eight quarters maybe thanks to you, just raising the flag, is going to be asking the question, right? Do you see any slowing? Are you having to send any of your, of your demand to Nvidia, you know, as a result of this? I mean, one of the things I like about this as well, right, These are public companies, both Core Weave and Nvidia. It is a disclosed transaction. It's not like this stuff's occurring in the dark of night. People can ask the questions of this, you know, this with regard to demand. And I will tell you, there is the, the amount of money that is being spent to track every single part of this supply chain from Taiwan to the United States. I mean, look at Dylan Patel's business at semianalysis. The thing has exploded. The amount of money people are spending just to stay on top of this. And the second they see something that smacks of any, you know, leakage and demand, boom, stocks fall and warnings go up. So I think it's a good point, but I think, let me transition because I do want to talk about this question of demand. So on the one hand, there's this question about quality of revenues. On the other question is, are we overbuilding? So let's show this chart again. This is basically the $3 trillion of build out expected over the next five years. This is the CAPEX chart that we've shown here before. To put that in perspective, bill, that's about 60 gigs, right? Because we now are normalizing everything to gigawatts of data center. So that's about 60 gigs. It's not all incremental. A lot of that is replacement or upgrade. Keep that in mind. The second is this chart of Nvidia revenues. This is the Nvidia sell side forecast, okay? Forecast this year is for about 200 billion in revenues, growing to about 350 billion in revenues over the next five years. So this year that means that they're selling about four to five gigs worth of compute. And again, most of that's incremental, but it's not all incremental. And that would grow to nine gigs of compute. Nine in 2029, 2030. So that's 350 or 400 billion. That's the Nvidia consensus revenue forecast. Right. And I asked Jensen on the pod about this and I said, what is the chance that we get into a glut over the course of, you know, the next four or five years and we'll play the, you know, the piece. But he basically said there's zero chance over the next two to three years because all the build out will go to the biggest hyperscalers with the biggest balance sheets in the world. And, and they're building it to run their core businesses. We haven't even got into the full amount with respect to these new generative AI workloads. What is the percentage probability that you think we'll have a glut? We'll run into a glut in the next three or four or five years.

A (20:42)

Until we fully convert all general purpose computing to accelerate computing and AI? Until we do that, yes. I think the chances are extremely low.

B (20:57)

Okay, so here's a question I have for you. Did you hear anything in the last couple of weeks that caused you to believe that we're on the verge of some bubble bursting or we're greatly over building or anything else? Or is it just the flags are up and now it's a wait and see?

A (21:13)

Yeah, so it's funny, they had Howard Marks on CNBC this morning. I'm a huge Howard Marks fan and they asked him this question and he, he said, look, multiples are too low for this to be. You can't be on bubble watch if the multiples aren't high enough. And you've been making this point for a long time and I would say, like, you'd have to be a fool not to notice that these numbers you're talking about are so remarkably unprecedented from anything we've ever seen before. They are massive. You know, I, I've talked about, you know, to see the Mag 7 go from being massive cash producers to where they're, many of them are taking the majority of their free cash flow in the capex. It's, it's, it's totally new and clearly everyone believes that this wave is maybe bigger than the previous waves we've seen that have led to so much value creation. So all that's happening. I like to believe that it's okay to recognize that the market's great and still think that these transactions shouldn't happen this way. And I'm able to keep both those things in my head at the same time.

B (22:25)

I think it's a super fair point. By the way, you just mentioned it. So we'll include this chart. This is Mag5 capex as a percentage of their operating free cash flow Bill. And, and if you look at it, in 2025, so that's this year they'll spend about 66% of their operating cash flow on CapEx. Right. And if you look at the consensus forecast for their capex relative to their operating cash flow, this is the peak around 66% and it has it going down to about 45 or 50%. Now embedded in there is they're going to keep growing their operating free cash flow at 15 to 20% a year. Right. So there's still room for them to grow with that coming down. But I think that is another thing to keep your eye on. How much are they spending? And by the way, just give you an order of magnitude, Bill, in 2023 their total CAPEX was 156 billion and this year it's 379 billion. Right. So radical step up in your point. A good one. And just remember a couple years ago in 2022, when Meta stepped up their capex spending on reality Labs, the stock got obliterated because people said, what the hell are you doing? This is all about free cash flows per share, including myself. I was saying, you know, let's get fit here. Let's drive more free cash flow out of the business. You know, so much so that the CFO sent me a hat that says free cash flow. Right. So they got real about free cash flow. But there's a difference between investing that free cash flow in data centers and AI than there was in Reality Labs. As an investor, let me just tell you my own perspective. The reason Meta stock's doing great, notwithstanding going back to high levels of capex spend, is because now the investors understand it and believe in it. We're seeing the benefits, right, in the earnings of the business. They're growing the earnings of the business. The they don't have to hire a lot of new employees. And so it's fundamentally different than the capex that was going into Reality Labs where investors were saying, hold on a second, we're going to spend 100 plus billion dollars over the next five years. We don't even know what we're building. Right. We don't know what it will be worth at the end of the day. So I think for now at least there's enough belief in the byproduct of generative AI because people are using ChatGPT, they're seeing the utility in the enterprise that they're going, you know, that they're willing to tolerate these companies giving over half of their free cash flow into these build outs.

A (25:00)

I do think another dynamic is the race condition created by the competitive dynamic. And it appears from where I sit, and you don't need to comment because you're an investor and, and maybe have more information than I do, probably have more information than I do. But it appears to me that OpenAI, through all these partnerships and announcements, is trying to create escape velocity, you know, and that could be against the model providers, it could be against a hosting provider, depending on how you think the market plays out. It could could be on the consumer side, it could be on the API side, but creates an interesting stress test for anyone else in the ecosystem to say, are you going to lay chase because of all the numbers you laid out there? They're gargantuan and it'll be interesting. That's my opinion. It just feels like they're daring people to follow them and I suspect a bunch don't. It may work.

B (25:56)

Well, you've seen this before. I know we've talked about many times on here. This was and Lyft. Ultimately, I think a couple things to remember, these announcements are frameworks. It allows people to begin working, but they're not etched in stone. These are not contractual obligations. You know, everybody's got to deliver their parts. If the demand comes in lower than these people are not going. You know, doesn't the Oracle one have.

A (26:21)

To be contractual for it to be rpo? Yeah, you know, you may know.

B (26:25)

Well, for sure, I shouldn't say that they're all right frameworks, but I know, for example, like in the case of amd, they're going to have to deliver a workable chip or you're not going to build six gigs worth. Right. In the case of this Broadcom announcement, obviously they have to build a workable chip. So I think your speculation and again, it makes sense to me if you said what are the advantages of getting out there and locking up all of these deals? Right. I can't imagine it doesn't help a lot with recruiting. All the best researchers in the world want to work at the place that has the most compute and so you want to lock up the compute I have to imagine it helps with the supply chain because, you know, now you're locking up that supply. I think your speculation is a pretty big one, a pretty good one. But at the end of the day, if you add up all these deals, I tried to do this, and we may be, we may be off by a bit, and I'd encourage people who have a better estimate to let me know. But if you add them all up, it looks like to me OpenAI would be on the hook for like 150 billion of CapEx in 2030. Okay. And so like the question is, Bill, how much revenue do they need in 2030 to justify 100, you know, 150 billion in capex? Well, I think you would need at least 150 billion of revenue, right? And you know, like, at a minimum, we just talked about Meta and these companies spending 66% on capex. But if they had 150 billion of revenue, then the question is, is it plausible they could have $150 billion of revenue in 2030? And I would argue as an investor that it's more than, more than plausible that they could have 150 billion in revenue. But I think it makes it very, very difficult for anybody else other than the hyperscalers. Obviously Google's going to be there, obviously matter is going to be there. Obviously Amazon, you know, can be there, but it makes it very, very difficult for anybody else in the ecosystem, right, who believes this is a game of, of scale, compute, compete. So I think your point's a good one. Maybe, maybe shift a little bit, you know, the area of passion for both you and I, which is this AI regulation. We've talked on the pod many times about the concerning patchwork of these emerging state regulations under the guise of doing good, and maybe they're even well intentioned, cause a hell of a lot more confusion at best. And at worst, they set back our leading frontier labs, you know, and really hamper us in the race to stay in the lead in global AI. Well, it's gone from more theoretical to now more problematic. I tweeted over the weekend in particular about this Colorado AI act, which is now passed into law, signed into law, it defines something called algorithmic discrimination. By outlining these 12 protected classes, of course, age, color, religion, but also limited proficiency in English language, reproductive health, and basically said if the algo provides info, right? If the chatbot provides information that's used to discriminate, then there's liability back at the frontier model level, right? And just this morning Gavin Newsom signed SB243 which mandates safety protocols for AI chatbot companions and gives any consumer a private right of action to sue these companies for any emotional harm that comes out of a chat bot. I mean, I shit you not, you can't make this stuff up. You said recently that China is so competitive with the United States because it's run by engineers and America's run by lawyers and that's the greatest risk we have. Talk to us about the need for federal preemption and you know, again, just let's dive back into your concern about these two laws that were just passed.

A (30:13)

As an aside, I just consumed Jonathan Haidt's book Anxious Generation where he talks about what he believes is some social harms caused by some of the apps on the Internet ecosystem. And I do think a lot of the passion for writing some of these states laws comes from that place. Like there are local congressmen that feel like they should have been out in front of social media more and so they want to get a jump on this. And, and, and I, I think some of that comes from there. You run this massive risk of, of trying to regulate a brand new technology at a state by state level. And you know, you could ask yourself, you know, and, and by the way, I, I've said this a lot about policy. The intent of the policy is different from what happens once the policy is implemented. And so people can come in with great intentions. And this goes back to my speech it all in on regulatory capture and you can end up with the exact opposite outcome of what you intended because you just don't know enough about the way you write the regulation right now. A lot of people believe we're in this global competition to, to see, you know, whose tech stack for AI is used on a global basis. And if we implement 50 different state rules that these companies have to jump through and companies that are, that are competitors that are competing in the broader world don't have any of them. There is zero chance that's not going to create mud and slow down the US players. There's just zero chance. And I'm certain the people that are writing these laws don't understand that there might be some global, you know, consequence of what they're doing. But, but it's bad. I mean I can remember when Obama was excited about removing some of the state by state requirements on like hair stylists and whatnot because it makes it such that they can't move between states and it's kind of ridicul that they would have different laws and different Licenses. This is like, if that's a problem, this is really a problem. And so I, you know, from a global competitiveness standpoint, I would certainly hope that, that they're able to federalize this and preempt it. I don't know if it's. There's too much, you know, water under the bridge or not. I don't know enough about what it takes in Congress to make that happen. But I think this is bad for, I think it's bad for the US And I think it's bad for innovation broadly. It's going to make it harder for startups to do things just because they're going to have to worry about all this stuff.

B (32:54)

Yeah, it's way worse for little tech. Right. Because smaller companies don't have phalanxes of lawyers. They can go out and comply. I think the other thing is, listen, we already have the Civil Rights act, we have the Fair Housing act, we have the American with Disabilities Act. Of course we don't want discrimination, but this just seems like broad overreach. It's no, like, I don't even know how you comply or enforce. And so it just ends up bogging down the entire system in uncertainty and litigation. And again, it's important to say this isn't even about whether or not AI should be regulated. It's just a question of who should regulate it. And what we're saying is that, you know, there is ample opportunity for this administration and Congress to get together and write legislation to the extent it needs to be written. Right. To provide a national. These are inherently interstate technologies. There's no way to keep it in a single state and so write a piece of national legislation that allows us to continue moving forward very quickly, but all of a sudden, at the same time addresses any of these concerns. I frankly think we need a, we need a moratorium on all state laws. Postpone all state laws until the federal government has time to act. And if states are going to pass these laws bill, then I wonder whether or not OpenAI or some other company should consider blocking the citizens of those states until it's resolved at the national level. Somebody needs to get the attention of these states that they can't do this on a state by state level. It's bad for the companies, it's bad for the country, but hopefully we'll get action out of Congress soon. I think there's good momentum. We almost had it passed as part of the, I think the big beautiful bill. And so I think there's a lot of movement afoot. In order to do it, I wanted to highlight it because I think it's one of the high priority issues facing the new Congress. All this AI all the time stuff, Bill, and you pinged me and you said, hey, I want to talk about stablecoin. Right. We have this parallel development in the world. So I think if we have three major trends in the world, AI is clearly the largest super cycle going on. The re industrialization of America is massive. All these critical supply chains. And I would say the third one is kind of the digitization and tokenization of finance. It's going on as a result of the administration basically turning 180 degrees from where the Biden administration was total support of crypto and the bipartisan genius act. So here are a couple facts and figures, you know, to throw your way and then I'll let you take it over. Total stablecoin supply is now over $300 billion, up from basically zero in 2021.

A (35:31)

And this is dollar for dollar backed stablecoin.

B (35:34)

Correct.

A (35:34)

Adhering to the new policy. Yeah.

B (35:37)

And total settled is now over 18 trillion monthly. Stablecoin senders is now close to 30 million. And Circle and Tether are issuing 15 billion of stable per month and becoming the largest buyers of U.S. treasuries.

A (35:53)

So that's how much they're increasing the pool of capital they hold to back up the stable stable coin. Yes.

B (36:01)

Right. And we'll show this Visa dashboard. You know, it's really cool for tracking all of this activity. Of course, Stripe after the purchase of Bridge has gone all in on stable. They just unveiled this new stablecoin issuance tools and expanded into AI commerce with OpenAI. That could have some stable implications. So what are your spidey senses telling you about the consequences of what I think is a dramatic change in where we're headed?

A (36:26)

Well, one thing I think that that many people who listen to the podcast might say, oh look at girly jumping on the crypto train because I have not been a bull. And so to to them, you know, kudos think you know for getting it right. I had no idea you would have this dramatic a shift in policy. It's probably one of the biggest shifts we've ever seen in, in financial policy. And and quite frankly I've always felt like, and this I think is still to play out, that the financial incumbents in the US are really good at regulatory capture and preventing themselves from getting disrupted. Which is part of why I've been surprised. Something that really raised my eye that made me pay attention to this, which seems Far away, there was a a move by the Trump administration to criticize Brazil for the success of picks and I've talked about picks in the past. Pics is a digital clears immediately interbanking product offered by the Brazilian government that didn't exist five years ago and is wildly successful. It was mirrored after the same program that was built in the UK 17 years ago called UK faster payments that we've talked about. And these programs exist in China and India as well. And because of the regulatory capture, none of this has ever happened in the US. Your ACH takes three days to settle, your wire costs $25 for domestic, $50 for international and you have to fill out pages and pages sometimes get a verbal and it's, you know, we are so behind. I am going to go out on a limb and say I hope someone, whoever agitated this to happen in the Trump administration is someone who is kind of caught in a regulatory capture position, getting lobbied by somebody. I think if the Trump administration studied this, they shouldn't be critical of picks, they should be envious of it. We should have done this a long time ago with Fed now, but we may be on the verge of Stablecoin just being able to do this anyway. And the Rails have tons of transaction on them. As you've talked about. We have this interesting situation where Coinbase and Circle have done this deal where Coinbase will allow you to earn 4% on your stablecoin balance, which, you know, to get that kind of return at another bank, even a NEO bank, you have to have your direct deposit go there here, whether it's 10 bucks or a million bucks, you know, you put it in stablecoin with Coinbase and you start earning 4% daily. And on top of that, and this gets back to the Picks thing, you can transact immediately out of that account so you don't have to like move it from your savings to your checking to get it to do ach. You can send stablecoin immediately in microseconds and it'll cost you a few pennies. It is. The rails are there, they're ready and it's working. And I think the UI is a little difficult, but there's no reason why that won't get better and faster. And so I look up, you know, and I, I'm just, I wonder what the team at Meta like, they might just be kicking themselves, like with all the money they spent on that coin, everything they wanted to do on WhatsApp, like they should be running back at it, like, I don't know if they.

B (39:48)

Would say so, maybe they should. You know, remember the guy who did the Libra Network, David Marcus has started the Lightning Network. Now it's a startup. Maybe, maybe Meta should go buy, you know, should go buy Lightning and bring David back in house because, you know, all the things they talked about, all the things they talked about are now what's happening, Bill. And let me tell you, I think you're onto something big here. But one of the challenges we still have, I think first, anybody who looks at our current system, right, knows that it's dreadfully behind the rest of the world, right? And we know it's the result of regulatory capture by not only card issuers, but the banks and everybody else who. Who likes the. Who benefit from the status quo. But if you look at Visa, MasterCard today, I think that they're doing something like 50,000 transactions per second. And I checked with our good buddy Vinny Lingham, and he said, you know, on. On Both Solana and ETH today, they're still under 4,000 transactions per second. So they're trying to come up with these solutions to actually make the Rails have the functional, throughput and efficient settlement required to really become a consumer product. But I think you nailed the other one that, you know, Patrick Collison had a tweet on this that I replied to, which is, you know, when Genius act was passed, there was massive lobbying by the banks to prevent the crypto companies from paying interest on stablecoins. So the settlement was that they could pay rewards, not interest. Okay. And. But the way in which it's manifested itself, because Coinbase is, Is not the issuer, Circle is the issuer. And they did this deal. So Coinbase is promoting it as though it was interest. So from a consumer perspective, a reward and interest, if it's 4% is indistinguishable, no doubt. Right. So I put my money.

A (41:37)

And obviously, Brian's been out on. Brian Armstrong of Coinbase has been out on X, like, arguing his side of the argument. So he's clearly, he's either getting opposition or expecting opposition on the regulatory front. And when I see, you know, whether, you know, whether it's Visa or NASDAQ or any of these people kind of run at the tokenization. I always worry, like, because if you look at the history of, like, the debit card versus the credit card, it was supposed to be disruptive, it was supposed to be an alternative that would change things, but they just, they just run at it and strangle it and mix it up a little bit. And then it's not as disruptive as it was. That's their go to move. But you know, when I read this thing on pics again, like I'm going to read this out loud. As part of its aggressive economic and political campaign against Brazil is investigating picks accusing the payment system of unfairly undercutting US Financial and technology companies like Visa and Apple. I mean that's the most absurd thing I've ever heard. Undercutting Visa, like do they realize they have Visa and MasterCard have like the top two operating incomes in the history of American business. Like there's no one that needs less protection than these guys. If anything there should be an investigation.

B (42:55)

Were those guys at the dinner at.

A (42:56)

The White House in the cabal? I don't know. I just like, it's so bizarre to me. I'm so thrilled to see this kind of disruption. I think that it's super interesting what's possible. I suspect all of the big guys should be paying attention to this. Apple, Google, Amazon, anybody that might have payment under rails.

B (43:17)

I'll go out. You're going to see the, you're going to see the hyperscalers, you're going to see Amazon and Meta and these guys back involved in the stable business. At the end of the day we know money is a network effects business. And the challenge of circle and some of these stables from a consumer perspective is Visa and MasterCard are universal. So you got to get to all the merchants. Well, who has all the merchants? Amazon and Meta. Right. And so I think they're in a great position to partner with or do some of these things themselves. Clearly they have the instinct to do it. That's why they did Libra in the first place.

A (43:50)

It's also amazing for innovation. And one of the reasons why I think those bigger companies should run at this is if you look at the history of the pics like alternatives I mentioned in the uk, in China and India, the startups that do financial innovation scale up way more aggressively and successfully on those rails that are cheaper and faster. And if anything the having more rigid, high friction, high transaction cost Rails makes it harder for a startup to think about using one of those technologies. And so the success of WeChat Pay and Alipay, which as I described for my China chip, are universal. They're the only way people pay in China happen because of that government instant pay product, not, not in spite of it. And, and the same thing, I talked to the CEO of New bank. He said pix was huge for his business. So it's probably bad for a laggard bank, but for a bank that embraces it, it just becomes a better feature. And I think the same thing about Coinbase and what they're doing here. So I'm applauding the innovation. I'm jumping on board the crypto train, and I hope, I hope the incumbents aren't able to strangle this thing in Washington. Hear, hear.

B (45:06)

Hear, hear.

A (45:08)

As we move towards the end and talk about my book and what I'm going to do next, I do want to share with you that both my book and. And the next project are outside of what I've. I've spent my career doing. And as I mentioned, you know, that's kind of moving outside my comfort zone, but it's also, you know, trying to have an impact and give back in areas that I don't know as well, but. But with a hope towards having an impact. I've said this to you before, but I've been just inspired, frankly, to go do this based on your success with Invest America. And when you first told me about it, you know, I had doubts that you could get it done, real doubts. And I've watched other people in your shoes try and do these types of things over decades and be unsuccessful. So you made it look easy. I know it's just getting started, but I wanted you to know how much that inspired what I'm going to go do. And could you give us an update on where things are?

B (46:07)

That means a lot, Bill. Maybe to talk about it first is just a reminder. I think you and I agree, we kind of have this battle for the soul of America when it comes to capitalism right now. And that's fundamentally because too many people feel left out and left behind. 60% of people will never own assets. That compound Mandami's winning the mayoral race in New York City. And, you know, they're doing it by being anti capitalist. But if you look at these two charts I've shown them many times before, it just shows you that free market capitalism is the most productive force in the history of the world. Right. This first chart just shows that GDP on a global basis went parabolic at the exact same time that capitalism was really introduced and started taking off. And, you know, reminder like, GDP is important because it's that surplus for humanity with a fixed amount of labor and capital that then leads to better schools and better hospitals and drugs that save lives and all the things that make our lives better. And you can look at this chart that shows the results. Fewer mothers die in childbirth the average age of life is extended. The quality of life is higher. Literacy rates are higher. Bill Gates extols upon this in his annual letters. So it's not just an investment account. This is really a much, much bigger battle over where we want the country to go. And I was very concerned, as you know, a few years ago, that we were headed down this path, right? And the path is that you can't have so many people left out and left behind. So I think the answer to socialism, which has not worked for Europe, right? Europe's in a disaster relative to where they were 30 years ago on a global competitive basis. And China, as you well noted, have pulled themselves out of poverty by leveraging capitalism, Right? So the answer to this drift into socialism is more capitalism. And the Invest America accounts, now known as the Trump accounts, right, are more capitalism. They make every child a capitalist from birth. A private owner gives them 1000 bucks in a 401k like account that they own and control their family has on their phone. And so I think that's a game changer, you know. But you're right. We just got it passed. So where are we now? The Treasury Secretary, Scott Besant, has to implement this. And by the way, this is one of the largest consumer launches in the history of government. So at the start Today, there are 65 million kids in the country qualified for an Invest America account. Every kid under the age of 18 and every kid under the age of two will automatically get 1000 bucks in their account. Right. So you'll probably hear a launch starting in maybe early December. Well, they'll launch the website. People can sign up for this. Remember, the accounts have to be funded and established by our 250th birthday, July 4th, 2026. That's only nine months from now. And I can tell you, I've been blown away by the secretary, Secretary Bessant, the Assistant secretary, Luke Pettit, and the team at treasury working with the White House, they're attacking this the way I would attack. I would expect a Silicon Valley startup to attack the problem. They've gotten a great, great group of technologists, Joe Gebbia, helping to design the front end of this, of course, from Airbnb. So, you know, we're on the verge now of some major announcements. The start where people can start signing up their kids, you know, and then the goal is, once we launch this, all these kids will have these accounts. They'll be able to roll them over into their favorite, you know, bank, whether it's Schwab or Fidelity, or JP Morgan or what have you. And starting on July 4th of next year, Bill as close to automatic account creation as possible. So you have a child, the child's born, they get a Social Security number and they get an account seated with a thousand bucks. From a kid's perspective, it's going to look like I own a little bit of Microsoft and I own a little bit of, of United Healthcare and Nvidia and whatever we're gonna be able to teach us. In fact, you know your buddy Tim, who's teaching financial literacy, you know, we now have 30 states require financial literacy requirements. We're gonna have this embedded in the schools. Every kid's gonna have this on their phone. So at any rate, it's going incredibly well. I give them a very high score, but we gotta get it done. So let's talk about your book. I've been a huge fan of the speech you made on this, but I love the title, Running Down a Dream. What's the thrust of the book? I remember, you know, kind of that lecture, but what really compelled you to write it?

A (50:38)

So I was years ago and this, this is probably going back 10 years. I was reading a lot of biographies and I noticed certain patterns among people with extraordinary careers. And as VCs, we see a lot of patterns in businesses and pattern recognition and I just saw patterns with people and in the back of my mind, I always wanted to do this presentation. I kind of kept notes on it like I would a unwritten above the crowd blog post. And I had an opportunity, I got invited and had an opportunity to give the presentation to the MBA class at the University of Texas. And so I worked on it and put it together, made it nice and gave that presentation. They ended up putting that on YouTube. And many people have come to me and said that it's changed their lives, encourage them to do different things. Certain people in the, in the, in the media industry noticed. David Sinra, who's got the new podcast where he interviewed Daniel Ek and Michael, he's a big fan of the presentation, talks about it a lot in, on his podcast. James Clear, who wrote Atomic Habits, maybe one of the best self help personal development writers out there, he retweeted it and put a transcript on his own website. And then a few people who are influential in my life started prodding me, yeah, you should turn that into a book. And so eventually I got convinced. We talked to publishers, they were interested and so I started working on this. Now it took a long time and the, the thing I would say about it is that I hope that that time equates to quality. Like, I was out there really wanting to make it great. And so the book has an interesting kind of novel architecture. We combine what I call profiles, so stories of success with principles, tools of success. So they alternate. So you get a story maybe about someone you didn't know and how they started at the very bottom and became successful, and then the types of things they did. And I do think that the principles, these tools that are in the book are things people can use. And I really want it to be great. It's done. I still need to record the audio version. All the podcast fans of ours tell me I have to do it. It has to be my voice. So I'm going to do it. I hope people love it. I hope it changes their lives for the better. And what I really want to encourage is people to take a chance and do what they really love.

B (53:02)

I think it's such an important topic. You know, one of the things parents are asking me so much these days is, you know, what should my kids do particularly? There's a lot of anxiety in the world right today about future careers. And so maybe just talk a little bit about why this is so important now, because I think the timing is really profound here.

A (53:21)

So in. In the introduction chapter, we unpack a lot of this. And I don't think anyone would be surprised when I read some of this. But. But Gallup Poll does a career engagement study. They've been doing it for a long time. I think in the 2023 one, only 23% of people said they were thriving or engaged at work, and 59% were unsatisfied. And that's just a big universal survey. Everyone seems aware that we've kind of moved to this gauntlet that we've put our kids in as they approach college and go through college in the coddling of the American mind. Height and Lukianov call it a resume arms race. And we've really taught them to be grinders. But Angela Duckworth highlights that if you have persistence but not passion, you eventually recognize you're in a grind. And when you come out of that, you're in a really tough spot. And so we've got people, we've got these kids on this Runway. We're telling them, like, they have to pick a major, even in their application. So they're 17. What do you want to do with your life? What do you want to do? And they really don't know. And one thing we stumbled upon doing research on the book I was working with a researcher. We did this survey and asked people, if you could start your career over again, would you do things differently? And in that survey, 70% of people said yes. And we did it again with Wharton just to make sure we had, you know, a true academic survey going on. And they did a lot more people, and that number was still six in 10. Six and 10 said if they could start a career over, they'd do it again. And there's a. There's a great book. I read a lot of books in writing my book, but there's a great book called the Power of Regret by Daniel Pink. He's. He's a well known author, but he. He has this thing he calls boldness regrets. And he said one of the most robust findings in the academic research and on my own is that over time, we are much more likely to regret the chances we didn't take than the chances we did. He says, again, the surface domain, whether the risk involved our education or work or love lives, doesn't matter much. What haunts us is the inaction itself. And so I think that ties really nicely with this idea that if people could start over, they'd do something different. There's a great video that Pink references that we can put in the show notes where Bezos is asked about the decision to leave DE Shaw and start Amazon. And he said he used a regret minimization framework. He said it was only a nerd could do that. But he said that he imagined himself being 80. And would he care that he left De Shaw maybe for when a bonus, you know. Or would he. Or would he care more that he didn't take this chance, this kind of instinctive chance that he felt like he had to take, and he immediately after thinking about it in that way, wanted to go do it. And so.

B (56:13)

Hey, hey, Bill. I have Bezos's regret minimization framework taped to my computer monitor.

A (56:21)

There you go. I didn't even know that.

B (56:23)

It's literally taped to my monitor. Yeah. Powerful.

A (56:27)

Yeah. So that's what this is about. That's what this book is about. That's who it's for. And I want more people to take a flyer and go do what they love. You know, we have a phrase I use in the book, Life is a use it or lose it proposition.

B (56:42)

Totally one shot deal, man. Well, how do you plan to promote it?

A (56:48)

It comes out in February, late February. And so I'm just getting started in that process. If people have ideas they want to share with me, please reach out and Let me know.

B (56:56)

Book club. I'll host a book launch event. Bill.

A (57:00)

Okay. We've got a lot of fun stuff planned, but I need to record the audiobook. I know that's going to take a lot of time. I'm excited. There's a handful of people that have read it, maybe maybe 50 in the publisher and whatnot. And nearly every one of them tells me that they immediately thought of three or four people they want to give it to. And so I hope there's kind of a viral component to it because people have that reaction. But, you know, if you're feeling stuck in your career, you should read it. If you're a teenager, young adult who feels overwhelmed by people telling you, where do you want to major in, where do you want to go? What are you going to do with your, like, I think this book, it won't put more pressure on them. I think it'll actually relax them and give them a framework that feels like a lot more personal to themselves and like they're a lot more in control. If you're a parent that wants to help a child on that journey, I think parents sometimes overly push kids into the lawyer, Dr. Banker framework. I'm not sure that's healthy, especially in this AI world where those jobs may be under risk as well. And then maybe if you're, you know, an administrator or someone in the type of role that guide people in career decisions. Hopefully you'll like it as well. But we'll put the preorder link in in, in the show notes. I will put it on my X feed. Please go out and pre order the book. I think it'll help it be. Reach more people and be successful.

B (58:25)

Well, I think it's, it's going to be hugely impactful and it's the type of stuff of consequence. I'm, I'm just, you know, I'm thrilled that you're doing it. I'm thrilled that you're taking the time to do it. I know that's not the only thing that you're. You're thinking about. You have these other, you know, big topics that you're thinking about as well. Bill. We've talked about them here and I'm sure we will continue to regulatory capture US health care, nuclear, etc. What are you thinking about with respect to those things? So you're going to write a book on every one of them?

A (58:56)

No, that's. Well, I could, but it's not, it's not my goal. My goal is to just go spend more times on these really Big problems and see if I can be helpful in any way. I've spent a career kind of breaking down and analyzing different situations. I mean, two. Two of my favorite podcasts we've done, and I hear about this from the community as well. The one we did at Diablo Canyon and then the one about around my China trip. And those types of. Of work are very rewarding for me. But it also were learning expeditions. You know, I went out and put in more hours for those episodes than others. And the. The nuclear one in particular, you know, one of the things people ask me, why would I want to go do this? You know, we were a small part of a movement to kind of change the mindset on nuclear energy. And there were. There were people that put a lot more effort into us. I'm not trying to take credit for it, but, you know, the fact that Steve Pinker was out there, Elon, you know, our stuff, like, it eventually happened, like, overnight, seemingly overnight. We went from a very negative mindset towards nuclear energy to recognizing that it's very clean energy and something that can really help save the planet. And so that type of meme flip, if I could go achieve more of those in these other areas, I would consider it a win. So that's what's motivating me. I'm really looking forward to it. I'm kind of fired up and nervous at the same time, but. But that's what. That's what I'm thinking about. There'll be more to come on that in terms of what the actual platform looks like. I'm still working on it, but for now, I'm gonna. I'm gonna sprint into February to make sure the book does well.

B (60:35)

I couldn't be more stoked for you. This has been a total blast. You and I have been chopping it up for, you know, for a couple decades, but doing this the last two years together, pounding out these, has been a lot of fun for me. I'm sure we'll continue to chop it up every day. And, you know, I'm sure that you'll find some topic that you can't live without exploring, can't resist talking about. Exactly. So we'll get you back on, but I'm going to give you the last word. Bill. It's awesome, awesome to hear about all of this, and I'm super excited for the book.

A (61:03)

Well, I would just, you know, end the way I started. Brad, thanks to you. It's been fun working together on this and. And doing it every week. It does force you to stay fresh. You have to read everything you possibly can, which I'm sure is super helpful to you as an investor. And then thanks to, thanks to all our listeners like I, I, I, I, I, I'm sure some of them are feel, going to feel like I'm letting them down and I, I feel the weight of that. But hopefully they'll recognize that I'm going to go try and put, put my work effort to good to good causes.

B (61:45)

As a reminder to everybody, just our opinions, not investment advice.