Software Stocks Implode, Claude's Hit List, State of the Union Reactions, Trump's Tariff Pivot

**Jason Calacanis** (0:00)
All right, everybody, welcome back to your favorite podcast, the All-In Podcast. Today, we have a Conspiracy Corner episode for you. We're going to go over the 9-11 inside job. We're going over Flat Earth, JFK assassination. It's going to be all conspiracy all the time after our amazing blockbuster episode during ski week. We're going all conspiracy here. Our guest today, Alex Jones.

**Chamath Palihapitiya** (0:25)
How many views did it get? Nine views?

**Jason Calacanis** (0:28)
I mean, it's tough when you have one out of four besties. It doesn't. Michael Tracy is on standby.

**Chamath Palihapitiya** (0:34)
Not true. I can carry an episode for at least 400,000 views.

**Jason Calacanis** (0:37)
I mean, you might. I like your... Hey, for people who don't know, Chamath has his own YouTube channel. He's got his escape hatch. But when this train wreck burns to the ground, he started his own YouTube channel and is hedging his bets. Friedberg's working on his solo project. Everybody's doing solo project. The band's got a lot of solo projects.

**Chamath Palihapitiya** (0:54)
The Beatles are experimenting.

**Jason Calacanis** (0:55)
They're experimenting. We had a little Yoko Ono situation going on here. You know what the number one topic for this show was by the All-In AI Bot, Sacks? What's up? The number one was Dario vs.
The Department of War vs. Anthropic was the number one topic selected by our AI Bot. As a program, you know, for folks, that decision will be made end of the day Friday when this podcast comes out. So we will talk about it next week. But let's get to work. We've got a full docket. The Claude kill list has expanded. And an AI fan fiction substack tanked your 401k on Monday. Let's get into it. Anthropics generational run continues. They're now three for three in tanking different market sectors in February. Congratulations. This is like they took the mantle from Brad Gerstner tanking the market.

**Chamath Palihapitiya** (1:44)
The anthropic list.

**Jason Calacanis** (1:45)
It is February 3rd, Anthropic announces, hey, we got a legal plug-in for Claude, Cowork, Thompson Reuters, LexisNexis, LegalZoom, all down at least 10% since February 3rd. Then on February 20th, Claude Code security is announced in a limited research preview. Stocks tank again, CrowdTri, Cloud for Okta, all down. Then February 23rd, Anthropic announces, Claude can modernize COBOL databases. If you don't know COBOL, that's the like oldest coding language in the world. That's where Sacks learned code when he was in college in the 70s. It's used for banking, payroll, government, Health care. Health care runs 95% of ATMs in the US and it powers social security payments. 85% of all COBOL code runs on IBM machines. So IBM decided they would tank 13% on Monday, their worst day since 2000, $31 billion in market cap losses. So let's stop here before I get into the fan fiction piece. What's your take here of what's happening in the market, Chamath? Is this simply people are looking for an excuse to trim their positions because things have been top ticking, all time highs and people are just looking for an excuse?
Or is this reality? Is this the go-forward reality that AI is going to compress these kind of stocks because it solves a lot of problems?

**Chamath Palihapitiya** (3:08)
I'm going to give you two explanations. I don't know what percentage I would allocate across the two, but I think one is tactical and one is much more strategic, but I think both are happening. The tactical one is that we are at a moment in time where a lot of the smart money hedge funds are starting to massively de-gross. And what that means is they are trimming a lot of positions and they are just taking on a lot less risk. Why? I don't exactly know. It could be motivated by the second thing that I'm going to talk about, but the point is in a de-grossing cycle, you tend to be trimming risk and making your position sizes much smaller. So the longs become less long, the shorts become less short, and you just shrink. And so there's just general downward pressure. That is a clear behavior right now. But I think the structural change is the more important one. And this is sort of what I talked about this morning. In a normal functioning market, what we are always debating is when a set of cash flows go from becoming highly confident to less highly confident. It's a when conversation. So when will Coca-Cola's cash flows be impacted? When will Eli Lilly's cash flows be impacted? When will Metta's cash flows be impacted? And the answer to the when gets translated by the public markets into three things. Your price to earnings multiple, where if you invert that number, what that is equivalent to is the yield on the money that you get, okay? So if you're 20 times PE, that's a 5% yield. The second is a revenue multiple. And the third is what's called your weighted average cost of capital, which is to say, if you look at the next 20 to 30 years of earnings and you want to figure out what that is worth today, you have to discount all of these back and you have to assume a percentage of interest effectively that it takes to get there. And the basic math of this is that when you have a high whack, it's called, you're massively discounting these cash flows. When you have a low whack, you're assuming that these things are very durable. Okay, so what is happening? We used to debate when. This is no longer a when moment. The market is very much in an if mode.