E166: Mind-blowing AI Video: OpenAI launches Sora + Is Biden too old? Tucker/Putin interview & more

**David Friedberg** (0:00)
Sacks, how's tequila?

**David Sacks** (0:01)
I tasted 10 samples the other day. One was heads and shoulders above the rest, which was a good sign.
So now we're taking that and making it the new baseline, and I'm going to try 10 more samples, and we're going to go from there. I think we're very close to having something excellent. And then I did a side-by-side taste test of the sample I like the best compared to Claas Azul Ultra, and it was already better than Claas Azul Ultra, which retails for like $3,000 a bottle.

**David Friedberg** (0:30)
Really? Holy s***.

**David Sacks** (0:32)
So it's going to be better.

**Jason Calacanis** (0:33)
V1 is better than their final product, is what you're saying.

**David Sacks** (0:36)
Yes.

**Chamath Palihapitiya** (0:36)
And that was not just your taste test, but like you and several people?

**David Sacks** (0:40)
It was me and two other guys who I trust, so we did it together.

**Chamath Palihapitiya** (0:43)
Now, when you say trust, do you mean underlings or do you mean actually like...

**Jason Calacanis** (0:46)
No, he means alcoholics.

**David Friedberg** (0:49)
Where in your pay hierarchy are they?

**SPEAKER_5** (0:51)
He recruited them at Alcoholics Anonymous in West Hollywood.

**David Friedberg** (0:54)
Are they level 2 employees or level 4 employees?

**David Sacks** (0:57)
No, one works for me and one's a consultant.

**Jason Calacanis** (1:19)
OK, are we over or underestimating the impact of the AI boom? Nvidia has been on an all-time heater. If you don't know, its market cap is now 1.8 trillion Friedberg.
This week, it surpassed Google and Amazon as the fourth most valuable company in the world. There it is, folks, right behind Saudi Aramco. Sixteen months ago, stock was trading about $112 a share. Since then, share price has gone up 6.5x on a big number. Shares went higher this week after it was reported that Nvidia plans to build custom AI chips with Amazon, Meta, Google and OpenAI.
In other news, Financial Times reported OpenAI hit a $2 billion run rate for their reoccurring revenue. It's about $165 million a month, and they think they can double that number in 2025 Tons of competition coming out. If you didn't see, Google rebranded their generative AI suite to Gemini, and they're charging $20 a month for it. But and then there was this bizarre Wall Street Journal headline that Sam was going to raise $7 trillion. That makes no sense. Maybe that was the TAM.
We'll get into that. Friedberg, your thoughts on this ascension? Are we underestimating or overhyping AI?

**David Friedberg** (2:35)
I mean, it seems like the compute buildout is underway.
So this is going to continue for some time. I think the real question that keeps getting asked is, you know, when do you really see the tides recede and what's there? The compute buildout is underway, but are we seeing application and productivity gains associated with the capability of that compute?
Some would say yes, some would say no, but you've got to build out the infrastructure if you're going to assume that there's going to be these productivity gains in the application layer.
And everyone's assuming they'll be there. So we need to meet the demand, which is almost like building out an entirely new internet. And so the core of AI is this matrix multiplication problem, and you need these chips that do that really efficiently. They're not traditional CPUs, which are general purpose chips, but they're chips that are very special purpose for a particular set of applications that render the output of whatever model is being run. It's sort of like the internet. You could pretty much create a bogey of any number on how big this can get.
At the same time, you're seeing some of the other players with different architectures and potentially that are going to be beneficiaries of this build out because there are participants in other parts of the data center for alternative solutions like ARM. And I don't know if you saw this, but in just the last couple of weeks or last week or two, ARM's valuation doubled. It's come down a little bit since that big doubling. Today ARM is sitting at 140 billion valuation. Last week, it got as high as 156 And remember, it was only last August. So if you guys remember ARM was bought by SoftBank and the Vision Fund.
And then I think 25% of ARM was held by the Vision Fund and 75% was owned by SoftBank. Last August, SoftBank bought from the Vision Fund the 25% that the Vision Fund owned at a valuation of 64 billion. So now SoftBank owns 90% of ARM, the last 10% trades publicly. So at $140 billion valuation, SoftBank's position in ARM is 125 billion. And I think it really begs the question, did Masa have a masterful move here yet again? Because everyone said for years, with all the bets this guy was making in the Vision Fund and some of the misguided bets he was making with SoftBank and the leverage he was applying on himself and SoftBank to deploy all this capital during the Zerp era. Everyone was saying, you know, this guy had a one hit. It was Alibaba and that was it. And clearly he doesn't know what he's doing. But now all of a sudden, his bet on AI was fairly prescient and it's paying off pretty powerfully. He bought the whole business for 32 billion and now he has a stake that's worth 125 billion seven years later.