E129: Sam Altman plays chess with regulators, AI's "nuclear" potential, big pharma bundling & more

• Podcast Feature Debut: The hosts launched a new "Reddit Performance Reviews" segment, where they read candid, often negative feedback about themselves from the r/allin subreddit.
• Specific Criticisms Received:
  • David Friedberg: Accused of hiding behind a "nerdy, apolitical persona" while pushing for higher tax rates (predicted to reach 70%) and restructuring Social Security.
  • David Sacks: Criticized as a "rich guy who would rather work your grandparents to death," described as "stupid and boring" if not for his wealth (attributed to following Peter Thiel), and labeled a "dictator" at Social Capital.
  • Chamath Palihapitiya: Called a "self-serving leech" willing to burn down society for profit, with feedback noting he is the "biggest self-serving leech" in the group.
  • Jay "J Cal" Cutler: Critiqued as the "least skilled knowledge worker" on the show, with predictions that AI will replace his hosting within three shows.
  • Group Consensus: A Reddit vote suggested renaming the podcast from "All In" to "Three Billionaires in JCal" or "Three Kind of Smart Guys and JCal Assholes."
• All In Summit Update: General admission for the 2023 summit sold out due to exceeding demand; VIP tickets remain available. Scholarship applications are paused, and the event will be held at Royce Hall, which is 2.5 times the size of the previous venue.
• Wine Budget Clarification: A $750,000 figure was mentioned regarding the event's wine budget, attributed to a $1,000 VIP per event estimate.

AI Regulation and Sam Altman's Senate Testimony

• Hearing Participants: The Senate Judiciary Committee hearing featured Sam Altman (OpenAI), Gary Marcus (NYU Professor), and Christina Montgomery (IBM).
• Altman's Proposal: Altman advocated for a new federal agency to license AI models and require safety standards, independent audits, and compliance testing before deployment.
• Hosts' Interpretation of Altman's Strategy:
  • Regulatory Capture: Sacks and Friedberg characterize Altman's concession as a strategic move to create a "moat" around his incumbency, effectively using regulation to stifle competition from smaller, open-source rivals.
  • Impracticality of Enforcement: Friedberg argues that as models become smaller, open-source, and run on the "edge" (e.g., iPhones), a centralized regulatory agency cannot effectively audit every instance, making the licensing regime a "fool's errand."
  • Market Reaction: The hosts note a divergence between Silicon Valley builders (advocating caution and guardrails) and Wall Street investors (giddy and aggressive about betting on AI), with Wall Street prioritizing speed over safety.
• Chamath's Counter-Argument:
  • Existential Risk: Chamath compares AI to nuclear weapons, citing the "1% of negative use cases" that could destroy humanity, arguing that the technology is not fully understood (specifically how transformers work) and requires slowing down development via stage gates.
  • KYC Proposal: Chamath suggests a Know Your Customer (KYC) approach requiring high-scale model builders (running clusters of GPUs) to submit tax IDs and undergo scrutiny to prevent the creation of harmful models (e.g., toxic chemical synthesis).
• Commercial Incentives: The hosts discuss how Altman's pro-regulation stance allows him to shape the rules of the new agency, leveraging his relationship with Congress and the $10 billion Microsoft investment to solidify his market position against open-source alternatives.

Open Source AI and Market Dynamics

• Commoditization of Models: Friedberg and Cutler highlight the rise of open-source models (e.g., Mosaic ML's "MPT-7B" trained for $200k on public data) that are outperforming closed-source models like Llama and are small enough to run on consumer devices.
• Hugging Face Leaderboard: The hosts point to Hugging Face as a repository where open-source models are rapidly advancing, noting that internal sources from Google (Bard) have admitted these open models are outpacing their own with fewer resources.
• The "Cat Out of the Bag" Narrative: The consensus among Friedberg and Cutler is that open-source software cannot be effectively regulated via licensing because the distribution mechanism is permissionless, making it impossible for a government agency to control the "weights" once they are released.

Tesla, Twitter, and Leadership

• Linda Yaccarino as Twitter CEO:
  • Role Division: Sacks analyzes Elon Musk's appointment of Yaccarino (former NBCUniversal Ad Sales Head) as a strategic fit where she handles business/advertising (which Musk dislikes) while Musk retains control over product and technology.
  • Virtue Signaling: Friedberg notes the irony of Musk, who faces constant attacks, surrounding himself with highly competent women (Gwynne Shotwell at Tesla, Linda Yaccarino at Twitter, SpaceX President) while the "mids" on the left attack them based on minor social media follows.
  • Success Factors: Sacks warns that the arrangement will only work if Yaccarino does not interfere with Musk's core mission of free speech on the platform.
• Elon Musk's AI Views: The discussion distinguishes between the current utility of Large Language Models (LLMs) and the long-term risk of Artificial General Intelligence (AGI), which Musk fears could lead to human extinction.
• AI App Launch: Cutler notes that OpenAI has launched its official iOS app (ChatGPT), a shift from previous beta testing, which the hosts predict will "10x" user engagement.

Healthcare and Antitrust

• FTC Block on Amgen-Horizon Deal: The FTC sued to block Amgen's $27.8 billion acquisition of Horizon Therapeutics, citing anti-competitive bundling tactics regarding gout and orphan drugs.
• Hosts' Divergence on M&A:
  • Chamath's View: Argues that blocking such deals is "scientifically illiterate" because the biotech ecosystem relies on M&A to recoup risk; large pharma companies acquire early-stage biotechs after Phase 1/2 trials because private capital cannot fund the expensive Phase 3 trials required for blockbuster drugs.
  • Friedberg's View: Acknowledges the FTC's specific argument regarding "bundling" and price inflation but disputes the application to this specific mature company (Horizon has $4B revenue), suggesting the FTC is conflating early-stage risk with established monopolies.
  • Sacks' Stance: Advocates for targeting specific anti-competitive tactics (like bundling) rather than blocking mergers that facilitate investor exits and innovation.
• PBM Investigation: Friedberg notes the FTC's simultaneous investigation into Pharmacy Benefit Managers (PBMs) as a more direct approach to addressing drug price inflation than blocking M&A.
• Stemcentrics Example: Chamath cites the $10 billion failure of Stemcentrics (acquired for $10 million) as evidence that even failed M&A deals are crucial for the overall biotech ecosystem to function.

Commercial Real Estate and Housing Market

• San Francisco Office Crisis:
  • Vacancy Rates: The SF office vacancy rate has reached 35% (approx. 30 million square feet), driven by remote work and lack of capital for tenant improvements.
  • AI Demand Insufficiency: AI companies are expected to absorb only 1 million square feet, insufficient to offset the massive surplus.
  • Banking Risk: Hosts predict a banking crisis as "zombie" office towers default on loans, forcing lenders to write off collateral that is no longer "blue chip."
• New York vs. San Francisco: While SF is described as a "ghost town," New York is reported as packed, though office occupancy remains low (1-2 days/week) due to housing constraints.
• Housing Market Sentiment:
  • Gallup Survey: Only 21% of Americans believe it is a good time to buy a house, a historic low.
  • Market Freeze: High interest rates (7% vs. 3.5% previously) have created a "lock-in" effect where homeowners are unwilling to sell to buy new homes at higher rates, freezing the market and reducing mobility.
  • Economic Indicator: Cutler views the low sentiment as a sign of plunging consumer confidence and economic insecurity, not just interest rate sensitivity.

Public Safety and Justice System

• SF Shoplifter Shooting: Brooke Jenkins (SF DA) declined to prosecute a security guard who shot a shoplifter, deeming it self-defense; the incident highlights the tension between lawlessness and public safety.
• NYC Chokehold Case (Daniel Penny):
  • The Incident: A marine was charged with manslaughter for subduing Jordan Neely, who had a history of mental health issues and violent crimes (including attempted kidnapping).
  • Friedberg's Defense: Argues Penny acted in self-defense and defense of others, criticizing the media for portraying Neely as an innocent "Michael Jackson impersonator" rather than a repeat offender with a psychological break.
  • George Soros's Role: Friedberg attributes the permissive prosecution stance of DA's in SF and NY to George Soros's funding of "Soros DAs" who abuse prosecutorial discretion to change laws without legislative approval.
• Mental Health Proposal: The hosts propose converting post offices into scaled mental health shelters to address the root cause of such crises, suggesting this would be cost-effective compared to the societal cost of lawlessness.
• Soros's Global Influence: Friedberg accuses Soros's Open Society Foundations of funding "color revolutions" and regime change globally, damaging US foreign relations.

Apple AR Headset and Consumer Electronics

• Product Details: Apple is expected to launch an AR headset in late 2023 priced around $3,000, featuring an external battery pack and targeting developers first.
• Strategic Shift: The hosts note this is a deviation from Apple's usual "perfect product" release strategy, suggesting Tim Cook is pushing this to compete with Meta and Oculus.
• Use Cases: The "killer app" is theorized to be a FaceTime-like live chat experience, though the hosts are skeptical of the $3,000 price point for mass adoption.
• Future Potential: Cutler envisions a future where AI + AR glasses provide context-aware assistance (e.g., remembering names, providing translations, or suggesting restaurants), though Sacks notes current pricing is prohibitive.
• Missed Opportunities: Cutler suggests Apple should have acquired Tesla earlier or developed a smartphone car, viewing the current AR push as a missed opportunity for a "Terminator mode" interface.

Closing Remarks and Guest Announcements

• Nikki Haley: Confirmed as a future guest to discuss her potential 2024 presidential run.
• Donald Trump: Hosts challenged guests to secure Donald Trump as a guest for the All In Summit.
• Listener Engagement: The podcast concludes with a "lightning round" and a call for listener interaction regarding the "evil supervillain" concept and the "besties" dynamic.