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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
You're watching TBPN. It is Tuesday, 04/15/2025. We are live from the Temple Of Technology, the Fortress Finance,
Speaker 2:the capital of capital.
Speaker 1:This show starts now. We got a great show for you, folks. We're doing a little bit of a mini, deep dive on China. And it's brother behavior. Brother behavior.
Speaker 1:Lots of brother behavior going out throughout this story. The size gong, an homage to Chinese culture, all that they built. Yes. But now, unfortunately, relationships with between The US and China are degrading
Speaker 3:Have soured.
Speaker 1:With a trade war, and so we wanna take you through it. And it starts with a very stupid question, but on this show, there's no dumb questions because we are in golden retriever mode. And that dumb question is, how did we get here? Because, you know, you learn about World War two in in high school or middle school. And in World War two, I remember going to war against the Japanese, not the Chinese.
Speaker 1:And China was actually The US's ally. And then, of course, it flipped at some point. And if you're you know, if you've studied history, you know exactly what's gonna happen in the story, but there's a bunch of interesting anecdotes and turns and debates and a lot of different historical milestones that actually led to the relationship degrading and then building back up and then degrading again. And so I want to take you through the full ebb and flow of The US China relationship to kind of understand how did we actually get here because we used to be partners with China. Like, we fought the Japanese with
Speaker 3:We had a good thing going.
Speaker 1:We had a good thing going. But, obviously, the trade war has broken out. Thank God it's not a hot war, Connecticut war, but it's interesting to know all the history here. And so that's what I wanted to dig through today. But first, switch your business to Ramp.com.
Speaker 1:Time is money. Say both. Easy to use corporate cards, bill payments, accounting, a whole lot more.
Speaker 3:In one place.
Speaker 1:Fantastic. Anyway, let's move on. So I've I've always been I've always been interested in this. How did the relationship initially sour? Of course, the history here is that, during the World War two, the US was allied with China's Nationalists against Japan.
Speaker 1:But after 1949, the communist revolution created a new reality. And by the late nineteen forties, Americans viewed the loss of China to communism as a geopolitical blow amid the the emerging Cold War. This set the initial tone of hostility. So in October of nineteen forty nine, Mao Zedong's Communist Party won the Chinese Civil War, founding the People's Republic Of China PRC in Beijing while Chiang Kai Kaisi Nationalists fled to Taiwan. So our guys in China Yep.
Speaker 1:Left Mainland China and went to Taiwan. That's why we're on Taiwan's side, basically. Yep. But it's crazy that this has been going on for ninety or eighty years now, and we're still in the yep. We still are guys.
Speaker 1:We still like China, but we just think of China as Taiwan. Yep. And that's really the the the the initial split there.
Speaker 3:And China views Taiwan as China?
Speaker 1:Yes. Little bit different, but, basically, The US refused to recognize the People's Republic Of China, PRC, and continued to recognize the ROC in Taiwan as the legitimate government of China, which it seems like almost edgy today to be like, oh, like, Taiwan is the real China. Like, that's something that NBA players don't say. Right?
Speaker 3:Yep.
Speaker 1:But it makes sense in the context of, oh, well, we were fighting the same war with this government, the the nationalists, Shanghai Saxon nationalists. We were fighting with them. Then they just kinda lost their civil war, and they're in exile. But they're on an island that's, like, kind of over there. It's all the same, so we're on the
Speaker 3:same unique about this dynamic is that the People's Liberation Army Yeah. The armed forces of China serve the Communist Party. Yes. They do not serve the country Yes. China as just purely a nation.
Speaker 3:They serve the party.
Speaker 1:And in America, that would be crazy. It's like the Proud Boys serving at the pleasure of MAGA, basically.
Speaker 3:Yeah. That's that's dramatic. Or or simply the marines being on the side of the democrats.
Speaker 1:Yeah. Exactly. Exactly. Like Or the republican. If either of those happen, that would be like we'd be like, woah.
Speaker 1:Okay. Yeah. But it's a one party system, and that's the nature of
Speaker 3:the And if you have an issue with it, the army comes after you and, you know, takes care of
Speaker 1:you. And so, obviously, like, the threat of communism is the defining theme of the Cold War, and The US adopts a containment policy. And so this was an attempt to diplomatically isolate and economically strangle the new communist government, still very heavily driven by trade and tariffs and who who who does deals with who. Washington encouraged allies to shun Beijing. Americans were prohibited from travel or trade with China.
Speaker 1:There was no trade whatsoever with China, and China was kept out of the United Nations with Taiwan holding China's UN seat. And so then alliance frustrating. For China. Yes. Gotta give them that.
Speaker 1:And so, to contain communist China, the US bolstered alliances around Asia. They did security pacts with Japan, South Korea, The Philippines, Australia, New Zealand, and support for Taiwan. So from the Chinese perspective on the Mainland, they're kind of surrounded. They have this alliance with Russia going, but it's very tenuous. In the nineteen fifties, the US began providing military and economic aid to French Indochina, Vietnam, and later directly intervened in Vietnam, the Vietnam War, of course, partly aimed at curbing Chinese communist influence in Southeast Asia.
Speaker 1:Now we go to the Korean War, nineteen fifty to 1953. The Korean War was the first bloody clash between The US and The PRC. In June 1950, North Korea, backed by Stalin and later by Mao, invaded South Korea. When US led UN forces pushed north towards the Chinese border, Mao sent hundreds of thousands of Chinese people's volunteers to fight US slash UN troops in Korea. The war was brutal, resulting in 36,000 American deaths and a hundred hundreds of thousands of Chinese casualties and ended in a stalemate.
Speaker 1:That's why why, you know, Korea is still split to this day.
Speaker 3:And it's so wild to think of we we think of the American involvement in foreign conflicts as, you know, World War two, Korean War, Vietnam, then you get into the Middle East. Yeah. But thinking about the Korean War happening immediately following Yeah. World War there was almost little to no break.
Speaker 1:And also, I mean, people still think about the Vietnam War about Vietnam and really it's a battle between China and America.
Speaker 3:Yeah.
Speaker 1:And same with Korea in many ways. And so and if you if you there's a fantastic documentary on Frontline. I think it's NBC PBS about the Chosin River Valley battle, the battle of the Chosin in Korea, and it was it was, like, 20 degrees below freezing. Everyone was freezing. It's just, one of the most brutal wars ever fought or battles in war ever fought.
Speaker 1:You should go watch it. So Mao touted that China had fought the American superpower to a standstill, reinforcing his regime's legitimacy. The US came to view The PRC as direct military adversary. So this is kind of the nadir of US China relations. Like, they're openly fighting and seeing each other as
Speaker 3:And Mao rivals. Was spreading fake news.
Speaker 1:Fake news.
Speaker 3:Famously said The US was a quote unquote paper tiger that could be defeated by determined revolutionary forces, a propaganda line to bolster Chinese morale despite the worst cost.
Speaker 1:Yeah. Paper tiger looks dangerous, not actually dangerous in reality. That's the whole thing with the paper tiger. But
Speaker 3:We're more like a bioengineered.
Speaker 1:Yeah. So things continue to heat up after Korea. There's The US Taiwan defense pact in 1954. Soon after the Korean armistice, the US signed a mutual defense treaty with, with the The Republic Of China in Taiwan, pledging to defend Taiwan against PRC aggression. And this is kind of the foundation of, like, this idea that, like, we have Taiwan's back still to this day.
Speaker 1:It all started back then. American naval patrols in the Taiwan Strait began effectively drawing a line that Mao's forces dared not cross, and there's still this debate about, oh, should China be doing military exercises in the straight? And
Speaker 3:can they go beyond this? I believe they had little to no navy at all, them being China. Right? They've they've developed the navy over time, but it's certainly not it sort of pales in comparison to US Navy, which has continued to plague them Yeah. In various ways.
Speaker 1:And so throughout the fifties, the Taiwan Strait continued to be a flashpoint. The PRC bombarded the ROC held islands near the mainland, provoking crises in 1954, '19 '50 '5, and 1958. The US responded with forceful warnings, even hinting at a nuclear retaliation to deter PRC invasion of Taiwan. And so this whole this whole America trying to get China not to invade Taiwan has been going on for seventy years now. The crisis subsided with neither side fully escalating to war, total stalemate, but they reinforced Beijing's view of The US as determined to block China's unification with Taiwan.
Speaker 1:And so the the Mainland China says, hey. Those guys, they they they lost the they lost the war. They lost the civil war. Historically, this was all one place. You know, it would be like in their view, it's like Robert E.
Speaker 1:Lee hanging out in Hawaii. And it's like, no. That's that's our thing. Like, get him back on our seat.
Speaker 3:Funny call.
Speaker 1:Right? It's like I mean, I don't I don't think that's legitimate, but I think that's kind of how they see it. And so there's more ideological warfare. During this revolution phase, fierce rhetoric prevailed. US Leaders spoke of the PRC as part of the red menace, and Chinese state media vilified American imperialists for encircling and and threatening China.
Speaker 1:And America was kind of encircling China in
Speaker 3:the sense
Speaker 1:that, you know, you got Japan, you got Australia, you got The Philippines. There's a lot going on in that in that in in that area. Yep. There was no official contact between Washington and Beijing Beijing. Instead, each sought to determine to undermine each other, The US via embargoes and support of adversaries in China, and China via sponsoring revolutionary movements
Speaker 4:in Beijing.
Speaker 3:That's been we we should actually ask Jordan about this later on the show, but this sort of common thread between The U in The US China relationship is that there has never seemingly been great coms between the two leaders.
Speaker 1:Yes.
Speaker 3:Or really much of either. So it's like we're doing, you know, now we're doing trade on a massive scale. You would think over the last, you know, thirty years, which was relatively stable
Speaker 4:Yep.
Speaker 3:In the history of US China relations, you would think that there would be sort of more open comms. The president could call up Xi Yeah. Have a conversation Yep. Work stuff out. They're, you
Speaker 1:know always super controversial. Like, I remember the this idea that, like, Donald Trump would go and meet with Kim Jong Un in North Korea was, like, deeply controversial. But I'm I'm genuinely pretty pro Comms. Comms. Yeah.
Speaker 1:I I think communication is is is like the only thing that stops kinetic warfare often. And so it's it's very important to have these these these rivals communicating and ideally, like, humanizing each other and realizing that if they if if they if the relationship sours enough, like, both countries will suffer. But but it is it is incredibly diplomatically controversial with all these different scenarios of, like, we would like to invite you to invite us to have a call with you. Like, that's something that
Speaker 3:actually That happened over the weekend.
Speaker 1:That happened over the weekend.
Speaker 3:Think it was Saturday.
Speaker 1:And it's like
Speaker 3:It was, like, you know, the White House and
Speaker 1:the and call each other. Come on. Let's just call each other. Send us a text message. Get on signal.
Speaker 1:You're fine. So in the nineteen sixties, there's this strategic opening, the Sino Soviet split. And so, even as China remained hostile to The US, a rift grew between the PRC and its erstwhile ally, the Soviet Union. By the late nineteen fifties, Mao resented Soviet policies and leadership. In 1960, the USSR withdrew advisers from China amid disputes over ideology and the direction of communist development.
Speaker 1:Tensions escalated into armed border clashes between China and The USSR in 1969. And so Well, yeah. USS
Speaker 3:backstory here. So in the early nineteen sixties, it was actually 1959 to 1961. I will say that communism was not working
Speaker 1:Yep.
Speaker 3:Well in China. Yep. And so a lot of these issues, you know, probably stemmed from the USSR basically saying like, whatever you're doing isn't working because thirty million people have died of starvation in like a two year period. Figure it out.
Speaker 1:And they basically told them skill issue.
Speaker 3:Like you
Speaker 1:gotta keep going. You gotta do more communism.
Speaker 5:But Didn't
Speaker 3:learn didn't learn the lesson there.
Speaker 1:We're gonna try some other stuff maybe Yeah. At this point. But this split meant that by the late nineteen sixties, Beijing saw Moscow as a greater threat than Washington, especially because of the border. Like, they they Russia and China have a border right there. And so if conflict brews, it's really, really dangerous.
Speaker 1:So The US notice notices this growing feud and views it as strategic opportunity. President Nixon and his adviser, Henry Kissinger, later exploited this rift to wedge apart the communist bloc, aiming to befriend one to isolate the other. Nixon wrote of playing the China card against the USSR. Thus, as the revolution era closed, the stage was set for an unlikely thought. China isolated and threatened by a superpower neighbor, the Russians, and The US bogged down in Vietnam and seeking an exit, both had incentives by 1970 to reconsider their their relationship.
Speaker 1:And so the rapprochement starts 1971 to 1979, and there's this funny term, ping pong diplomacy, because the whole thaw of this relationship began on the ping pong table. You'll have to
Speaker 4:see it.
Speaker 3:Many
Speaker 1:relationships There's many deals get done.
Speaker 3:Yes. I think there's a lot of relationships of mine that I could improve by playing ping pong.
Speaker 1:I I I completely agree. Yeah. So in nineteen seventy one, April, China invited the US table tennis team to Beijing during the world championships. American athletes became the first official US visitors to communist China, and their goodwill visit captured global attention. Finally, like, the global populace is saying, oh, well, like, they're getting along and they're playing ping pong.
Speaker 1:Like, maybe things aren't so bad after all. Pretty cool.
Speaker 3:It's a really wild setting to be a ping pong player. Not even a pro ping pong player because I don't think it was even then much of a maybe like a full time thing. You you were maybe doing some other stuff on the side. And you you get tasked with going to communist China Yeah. And being the first Americans to be welcomed Yeah.
Speaker 3:Into
Speaker 1:But this is I mean, the the Olympics throughout history have been, like, hugely geopolitically important
Speaker 5:Yeah.
Speaker 1:Moments with with the what was that ice hockey story where the Russians come, play The United States or, you know, all the stuff that happens in Germany. Like, there there's all these times when when these kind of, like, silly sporting events act as, like, olive branches.
Speaker 3:To bring people together.
Speaker 1:Bring people together and realize
Speaker 3:that, hey. Hey. Maybe we're not blood enemies. Exactly. If we can play ping
Speaker 1:pong with each other, we can we can maybe do a little bit of trade. And so behind the scenes, this is what's interesting. Behind the scenes, speaking of comms, Nixon had long harbored a plan to engage China. In July of nineteen sixty one, Nixon's national security adviser, Henry Kissinger, made a secret trip to Beijing to confer with premier Zhou Enlai. This covert diplomacy paved the way for a breakthrough announcement.
Speaker 1:And the way they pulled this off was really crazy. I think he had to go to, like, India and then through Tibet and then into China. He couldn't go directly. No one knew he was there, and it was, like, this very controversial, very highly risky move both from, like, a security perspective but also just from a public perception perspective because, of course, America's been beating this drum of, like, we're enemies with China. And if you wanna change that, you can't just come out all of a sudden and say, hey.
Speaker 1:Actually, we're gonna be friends. You have to work up to that. And if you don't have any cards to play, there's not really gonna be that much support for it. So, in October of nineteen seventy one, a few months after, Kissinger and Jo Ann Lai start talking in China, the United Nations voted votes to seat the PRC as the legitimate representative of China, expelling Taiwan's r ROC from the UN. The US opposed this, at the time but did not prevent the outcome, which was kind of like, you know, horse trading a little bit.
Speaker 1:And so then in February of nineteen seventy two, the next year, Nixon actually goes and visits China. And there's this incredible opera called Nixon in China by John Adams that you should definitely go see if you haven't, all about this trip and how, like, what an incredible culture clash it was and how how kind of ambitious it was.
Speaker 3:It's fascinating. I was in China in 2016.
Speaker 1:Yeah.
Speaker 3:And let me tell you, there was a culture crash. And that was that was in Shanghai. Right? The most westernized part of China. Yeah.
Speaker 3:After decades of aggressive development and plenty of foreign companies setting up their operating, etcetera. So in the seventies, visiting communist China had to have been truly, truly wild.
Speaker 1:I mean, it's like less than ten years after the two countries were losing tens of thousands of soldiers in direct conflict essentially. It's like Yeah.
Speaker 3:Not to mention even in 2016, if wherever you went as a foreigner Mhmm. You would have people taking pictures of you because it was just so foreign.
Speaker 1:Just so foreign.
Speaker 3:Yeah. That it was like seeing a giraffe walk down, you know Yeah. Melrose.
Speaker 1:Yeah. You know? Yeah. So Nixon goes to Beijing in '72. This he becomes the first US president to ever set foot in Mainland China.
Speaker 1:He spent eight days in China meeting chairman Mao Zedong and holding talks with Jo Ann Lai. This is called the week that changed the world, reflecting its its strategic significance. The two Cold War adversaries begin bridging a 23 gulf. The image of the staunch anti communist Nixon shaking hands with Mao was iconic. You can see it there.
Speaker 1:A dramatic realignment of geopolitical relationships in the Cold War.
Speaker 3:And imagine just the dynamic here around translation. Oh, yeah. Like trying to negotiate and repair a very damaged geopolitical Yeah. Geopolitically, you know, one of the most significant relationships and you're having to do it all through a translator. Yeah.
Speaker 3:Even that dynamic is is Yeah. It's crazy. Shocking.
Speaker 1:So there's a few things that come out of these talks. The US acknowledges the one China principle, the that China the Chinese on both sides of the Taiwan Strait maintain China is one, and Taiwan is part of China while not explicitly endorsing Beijing's sovereignty over Taiwan. And both nations expressed opposition to the hegemonic to hegemonic ambitions in Asia, implying a common interest in containing Soviet power. So Nixon's really kind of, like, saying, like, okay, guys. You both have a claim here.
Speaker 1:We're gonna recognize both of your claims, but, really, let's focus on the Russians. Yeah. And so
Speaker 3:Nice spin. Let's call it a spin.
Speaker 1:It's a good spin. So this laid the diplomatic framework for improving ties without resolving all the differences at once. And this served both nations' interests for China facing a hostile Soviet Union. Better relations with The US offered security and access to technology since The US and The Soviet Union were in the space race, developing a lot of advanced technology, China was falling behind. As a as a partner, The United States could kinda backfill that where the Soviet Union wasn't.
Speaker 1:And for the US, aligning with China would pressure the USSR, who was the Cold War's primary foe, and help The US extricate itself from Vietnam. And so Jo Ann Lai said he he gave a toast, and he says, the Pacific Ocean is big enough to accommodate both China and The United States. This quote encapsulated hopes that the two great nations could coexist peacefully despite ideological differences. So the next few years
Speaker 3:This ocean is big enough for the two of us.
Speaker 1:It is.
Speaker 3:It's basically what
Speaker 1:it's Yeah. So following Nixon's Sino American relationships warmed gradually, albeit short of formal diplomatic ties. There were high level exchanges and people to people contact. Scientific, cultural, journalistic exchanges began ending decades of mutual isolation. The US began relaxing trade restrictions on China.
Speaker 1:And so in 1973, the two governments opened liaison offices in each other's capitals, de facto m their embassies, but they didn't call them embassies because that's, like, a little bit too much. They don't wanna rush into anything.
Speaker 3:Yeah.
Speaker 1:It's all very slow.
Speaker 3:It's like they were engaged
Speaker 1:Yeah. But not They're what what what do they call it? It's not like cold launch, hot launch. Isn't that
Speaker 3:Soft launch.
Speaker 1:Soft launch. They're soft launching the relationship. So after Mao's had after Mao's health had declined, there's some political turmoil. The Cultural Revolution ends, and then Mao Mao dies in 1976. This gave wave this gave way to the rise of Deng Xiaoping, a reformist leader keen on modernizing China with foreign help.
Speaker 1:And so a very big pivot in the politics of China at the time. This leadership change in the Chinese side made made full rapprochement more feasible by the late seventies. Yeah. And so in the early nineteen seventies, there was a shift in dynamics. Nixon leveraged this leveraged the China opening to pressure North Vietnam, which relied on Chinese and Soviet support into peace accords, so that kinda ends the Vietnam War.
Speaker 1:Meanwhile, the Soviet Union, alarmed by US Sino closeness, China China and America working together, pursued, calming down, like, control arm arm arms control agreements with The United States, and the and this is kind of the beginning of the end of the Cold War. And so China benefited as well, the threat on of a two front con confrontation with The US and the USSR East. Like, that would be the nightmare for China if they wound up fighting America and Russia at the same time. And so the culmination came at the decade's end. In September of nineteen seventy eight, president Jimmy Carter and China's Leaders agreed to establish full diplomatic relations effective 01/01/1979.
Speaker 1:The US formally recognized the PRC and severed official ties with Taiwan. This meant The US acknowledging Beijing as the sole legal government in China. After something like thirty, forty years, they say, hey. You guys won the civil war thirty years ago. We're gonna recognize that you kinda run the place.
Speaker 1:And they kinda do, so it's not that unreasonable. But, you know They have a little
Speaker 3:bit of size on Taiwan.
Speaker 1:They do. They do.
Speaker 3:And they won.
Speaker 1:Yeah. What what what is what is underrated is, like, is, the geographic and population is is so disparate. But at this time, like, in terms of technology, military, economics, Taiwan is still very dominant and and and doing very well and and holding its own. So as part of the normalization, Washington affirmed the one one China policy recognizing the Chinese position that there is, but one China and Taiwan is part of China. In return, Beijing accepted that peaceful resolution to the Taiwan question would be pursued.
Speaker 1:This was left ambiguous. So they say, hey. Nary. Wanna put
Speaker 3:It would not be pursued fully.
Speaker 1:Yes. I mean, you could still hope for that. That's kind of what happened with Hong Kong. It was, like, not super violent, but it wasn't great. There were a lot of protests, but that's kind of the idea.
Speaker 3:It's hard to see the protests.
Speaker 1:But it doesn't seem like Taiwan wants to go that direction. But, you know, what would be a peaceful resolution? I mean, I guess Taiwan could say, hey. Wanna be part of China. We're cool.
Speaker 1:We're voting for it democratically. Like, that's the nature of democracy. You can vote to join an authoritarian country, I guess. Would be weird, though. And I'm not sure.
Speaker 3:I I have no hard info here, but I'm sure that China has made a bunch of efforts to organically turn Taiwan Yep. To the point where they just vote to join.
Speaker 1:That's the Hong Kong playbook. Right? It's it's it's it's, you know, political support for pro China, pro Mainland leadership in the government, and then eventually more and more ties, diplomatic ties until there's they they kind of merge. And so there was the Taiwan Relations Act in 1979, to reassure Taipei and congress. The US passed the Taiwan Relations Act in April of nineteen seventy nine, allowing continued commercial and cultural ties and obligated The US to help defend Taiwan.
Speaker 1:This act, while not a formal treaty with Taiwan, effectively guaranteed US support, a point that Beijing grudgingly tolerated but viewed warily. And talk about a currency is a
Speaker 3:is a bit of a strange dynamic to be like. We've got we've got comms.
Speaker 5:We
Speaker 3:We have a relationship. But by the way
Speaker 1:Taiwan is part of China, but we will also defend Taiwan against
Speaker 3:lives if you Yeah. Try to touch it.
Speaker 1:It's kind of a weird dynamic that they're playing both sides here, but that's the only way that
Speaker 3:Geopolitical finesse. Move forward.
Speaker 1:Yeah. So in 1979, Deng Xiaoping visits The United States, which is a groundbreaking trip for a u for a Chinese leader. Deng charmed Americans famously donning a 10 gallon cowboy hat at a Texas rodeo symbolizing the new, the new friendship. He sought US investment and technology to jump start China's modernization. Deng declared, China needs to catch up with the modern world at the Texas at the Texas radio.
Speaker 1:No. I don't know if he said that at the radio. But, he said he toasted to the future of the friendship with president Carter, and he declared that there should be peace in The Pacific. These optimistic notes underscore the sense of a new chapter. Look at that photo of of him wearing the 10 gallon cowboy hat.
Speaker 3:We need 10 gallon hats.
Speaker 1:And and interestingly, Xi Jinping did something similar where he visited some farms in in Iowa, I believe, or and when he when he was much younger. And there are these great cultural moments. As as as as high stakes as these relationships are, you get the feeling that, like, at at some point, like, these are just bros hanging out, like, drinking
Speaker 3:Have you seen the picture have you seen the picture, by the way, of Xi in 1985 No. In
Speaker 1:Okay. I'll try to pull up.
Speaker 4:Send it
Speaker 5:to Ben.
Speaker 1:We'll we'll we'll we'll throw it up. So by the late nineteen seventies, the US and China were in fact tacitly allies against Soviet expansion. They shared intelligence on Soviet military moves, and China benefited from limited US technology transfers. The Soviet invasion of Afghanistan in 1979 further united Washington and Beijing in opposition. And so this was really the transformation of the relationship.
Speaker 1:Two decades of isolation has officially ended. And so in the eighties and nineties, we're talking about reform, more economic opening, and deepening engagement. And so under Deng Xiaoping's leadership, China embarked on sweeping economic reforms in the late seventies and eighties. Moving away from Maoist autarky, Beijing welcomed foreign trade, investment, and technology. Special economic zones were set up to attract overseas capital, and millions of Chinese students were sent abroad, many to US universities to study science and management.
Speaker 1:And this was the beginning of Let's
Speaker 3:bring Check out this picture, by the way.
Speaker 1:This is Xi Jinping in San San
Speaker 3:Francisco with the Golden Gate Bridge. Wow. Fantastic bridge. Just smiling. Having the time of his He forged lifelong friends on that trip to Iowa.
Speaker 3:It was an agricultural
Speaker 1:In another world, he stays here, gets into YC, builds a SaaS company. We'd be looking at a completely different world.
Speaker 3:Completely different world.
Speaker 1:The road not traveled sometimes. Anyway, so The US The US enthusiastically supports China's reform and opening policies. American businesses and technology poured into China seeing vast market potential. It was a great deal for American businesses because they just have a massive new market, And this isn't even to talk about the the supply chain, which we'll get into later. The US government facilitated scientific and cultural exchanges.
Speaker 1:Bilateral trade exploded from a negligible amount in 1980 to tens of billions by the end of the eighties. By 1984, Deng could famously declare, to get rich is glorious, reflecting China's new pragmatic embrace of wealth and markets, a quote often attributed to him. So very different from the from the cultural revolution, the the the the communist mindset that I think people will put on China in the seventies. And so during the during the eighties, the US and China found common cause in opposing Soviet aggression. They cooperated indirectly indirectly in conflicts like the Soviet Afghan war.
Speaker 1:The CIA and the PLA coordinated to funnel weapons to Afghan guerrillas fighting Soviet troops. That turned out to be a bad decision, but but they were working against the Russians at the time. Of course, this, you know, the the all the weapons became the the, like, the training ground for the Taliban. It was very bad. Anyway, it was a little bit
Speaker 5:a risk.
Speaker 3:Reagan even went as far as to export them some military equipment.
Speaker 1:Yep.
Speaker 3:That is one of the most sacred bonds that two countries can have. Yes, It's dark, but it's true. Yeah. Despite his anti communist rhetoric, Reagan was committed to further normalizing ties with Beijing.
Speaker 1:Mean, we'll talk about Bill Clinton's perspective on China and what the Internet would do to bring democracy to China, but this has been a thing since Nixon and continued through Reagan is, I can fix her. I'm built different. Once they see how America works, they're gonna once they get a little taste of our rockets, gonna wanna go full full capitalist.
Speaker 3:And this is interesting. In 1982, the US and the PRC signed an agreement where The US agreed to gradually reduce arm sales to Taiwan, which was aimed at placating China that The US kept selling defensive arms per the Taiwan Relations Act. Yeah. So clearly, again, they just can't pretty much impossible to pick a side and everybody's just sort of kicking the can down the road Yeah. On on the big question.
Speaker 1:Yeah. And so by the mid nineteen eighties, thousands of American companies were doing business in China, and China's economy was growing at double digit GDP increases. You love to see double digit GDP increases, folks. And hundreds of thousands of Chinese students and scholars were studying in American institutions. So there were a lot of people to people bonds, of course.
Speaker 1:Both sides largely viewed the relation the relationship as mutually beneficial. The US saw a vast new market and a potential partner while China gained access to capital and advanced knowledge. But there were some frictions. There were some ideological differences. American leaders occasionally pressed Beijing on human rights and political freedoms, a theme that continues to to till today.
Speaker 1:And there were trade imbalances. You China's exports to The US were growing faster than imports because China was still not a consumption based economy, highly savings driven. And so this US trade deficit with China, while modest then, was beginning to draw attention. And, of course, now it's, like, front and center. It's, like, the most important point discussion point in The US China relationship.
Speaker 1:And then, of course, there was the Taiwan issue. Let's
Speaker 3:move
Speaker 1:on to Tiananmen Square and the butchers of Beijing. This is nineteen eighty nine. The booming nineteen eighties relationship came to a sudden crisis in mid nineteen eighty nine. Over a million Chinese led by students gathered in Tiananmen Square calling for democratic reforms and an end to corruption. On June 1989, China's communist leadership ordered a military crackdown.
Speaker 1:PLA troops opened fire on the protesters, killing hundreds to possibly thousands of unarmed civilians. And the world watched in horror because photos like this were disseminated in American media. And so president George h w Bush publicly condemned the violence and suspended military sales and high level contacts with Beijing. Congress imposed sanctions. Chinese officials were hit with travel bans, and bilateral aid programs were frozen.
Speaker 1:Washington and its allies essentially put The US China relationship on hold. During in 1992, during the US presidential campaign, Bill Clinton criticized Bush for being too lenient on Beijing after the massacre. And this is what's so fascinating about The US China relationship is that it's not strictly a left right issue. We talk about this with, Trump put tariffs on China during his first, administration. Biden kept those in place.
Speaker 1:And so it's not like, oh, the the the Republicans are the China hawks or the Democrats are the China hawks. It's always going back and forth ping ponging based on what's actually happening because that's kind of the nature of geopolitics. And so, Bill Clinton accused, president Bush for being too lenient on Beijing after the massacre massacre, accusing him of coddling the butchers of Beijing. This strong remark reflected widespread American revulsion at the Chinese regime's behavior in a sense that The US should not conduct business as usual with a government that crushed peaceful protests, very anti free speech. How can we do business with them if they're not embracing the most basic of our what we see as human rights?
Speaker 1:Privately, Bush sought to preserve the strategic relationship. Just weeks after Tiananmen, he secretly sent Brent Snowcroft to Beijing to meet Deng, delivering a personal message that The US wanted to maintain ties despite public outrage. The secret diplomacy kept from congress at first showed Bush's desire to sustain the engagement framework, albeit under criticism. So the the Tiananmen events chilled but did not permanently rupture US China relations. The sanctions and global opprobium, isolated Beijing for a short period, but China's importance and the underlying strategic economic interest led to gradual resumption and of engagement in the early nineteen nineties.
Speaker 1:And so at a certain point, Bush is saying, like, yes. They're violating human rights over there, but it's really far away, and we're making a lot of money. So we gotta stay the course. That's basically what happened. So Bill Clinton comes in, and he moves from post Tiananmen isolation back to a policy of constructive engagement with China, which, again, like, complete flipping from from the from the campaign promise of, like, the butchers of Beijing, I'll never do business with them.
Speaker 1:And then all of a sudden, he's like, well, I mean, we could probably do a little bit of business. We could probably get a little bit of a
Speaker 5:little bit of business.
Speaker 1:A little bit of money. So Clinton initially tied China's trade status
Speaker 3:to human rights and prudence. Dynamic. I think there was a continuous belief that if you could get China to adopt free market capitalism Yep. That over time, you know, the free market would guide China to a system that was I don't know. Who knows if it would ever been long term aligned with US interests?
Speaker 3:But the I do believe that, you know, everyday citizens of every country in the world don't have this sort of general I don't wanna generalize this too much. Right? But, like, people in China don't have as much of a, you know, the sort of geopolitical power players, you know, want want people to believe like this is like, you know, citizen on citizen conflict, but it's really not. Yeah. Right?
Speaker 3:It's like every every individual wants to, you know, further their own Yeah. Life and, you know, live in a sovereign country. I
Speaker 1:mean, you think of, like, America's bill of rights and, like, free speech, that is very much aligned with just capitalism. And so you would it does stand to reason that if you get a country to go full capitalism, full democracy, free speech and human rights will kind of follow. But that's not always the case, and that's where we get to this, like, state hybrid common hybrid capitalism that's that's eventually developed. And so Clinton, he's he's channeling the art of the deal here. He's saying, hey, China.
Speaker 1:We're gonna trade status to human rights improvements. Your trade status is gonna be linked to human rights improvements. In 1993, he threatened to revoke China's most favored nation trade privileges. This came up on the all in show, last week if if human rights didn't improve, however, by 1994, he delinked human rights from trade concluding that engagement was better was a was a better strategy to influence China. So he is saying, you know what?
Speaker 1:I'm not going to break off trade if you don't if you don't clean up the human rights stuff. Instead, I'm just gonna focus on increasing trade and that I think that will lead to human rights improvements, which is it is somewhat reasonable. It didn't really play out, but to some degree, it made sense. Yeah. This pivot acknowledged China's rising economic weight.
Speaker 1:And so there's just a certain amount of pressure, and this is the pressure that's been building and building and building where it's, like, decoupling every single year.
Speaker 3:US business putting pressure on the admin to say, hey, we wanna be doing business there. We need to have Yep. A, you know, actual
Speaker 1:Yep.
Speaker 3:You know, relationship Yep. Government to government Totally. For us to confidently go and do business with.
Speaker 1:Every step that the relationship that that the trade that the trade relationship grows makes it more painful to break off, and so there's gonna be more pressure. And so high level visits between US and China continue. 1997, Chinese president Jiang Jimin, made a state visit to The US. And in 1998, Clinton traveled to China for a summit symbolizing the full normalization after Tiananmen. Clinton
Speaker 3:spoke to
Speaker 1:the university. They're back. But there are some security crisis. The Taiwan Strait crisis happens in 1995 when Taiwan's President Li, was allowed to visit The US. Beijing was furious, seeing it as a US breach of the one China policy.
Speaker 1:China conducted missile tests near Taiwan to intimidate the island ahead of its first democratic presidential election. Clinton responded by deploying two US aircraft carrier groups to the vicinity in a show of resolve. The crisis subsided. Taiwan's election proceeded, but it was a very hot and tense moment. And then there was the Belgrade embassy bombing in 1995.
Speaker 1:During NATO's air war in Yugoslavia, US bombs mistakenly hit The US, the Chinese embassy in Belgrade, killing three Chinese journalists and diplomats. Washington apologized profusely calling it a tragic air due to an outdated map. Many Chinese believed it was intentional. Anti US protests erupted across China. US Consulates were besieged by angry protesters and angry demonstrators.
Speaker 1:The incident badly strained relations. And then there was also a lot of surveillance and spying accusations during the late nineties. There was a fear of Chinese espionage, allegations of Chinese theft of US nuclear sick secrets at Los Alamos surfaced in 1999. This injected some distrust, but it didn't halt the engagement. Everyone's making too much money.
Speaker 1:And so trade overdrive begins during, when China enters the World Trade Organization. This is a centerpiece of late nineties engagement. China really gets integrated into the global economy at this point. Put Clinton pushed for a landmark trade deal to allow China into the WTO. In in February, he signed The US China Relations Act of February, granting China permanent normal trade relations.
Speaker 1:This is the PNTR that came up on the all in show again. This paved the way for China's WTO entry in 02/2001. And so The US believed that WTO membership would bind China to global trade rules, open China's markets to foreign goods and investment, which kind of happened, but not for social networking and tech companies, which we'll get into. And Clinton argued that by embracing China and the WTO, quote, The United States is exporting freedom by sending China a message that economic freedom can ignite demands for greater political freedom. So you get richer, and then you start saying, hey.
Speaker 1:I want some free speech. I want a yap. I want to start a podcast. I got money. I can I can afford a Shure s m seven b now?
Speaker 1:So you're not gonna censor me, China.
Speaker 3:Let me
Speaker 1:So The US becomes China's key market, and China becomes The US's key manufacturing hub by the late nineties. China's export led growth was heavily fueled by The US market. China ran large US, large trade surpluses while Americans got low cost goods. This is the Happy Meal of the of the late nineties. US manufacturing sectors like textiles, toys, and electronics began to feel the impact of Chinese competition, but US policy remained firmly committed to economic engagement.
Speaker 1:And so the late nineties were often described as a honeymoon period for The US China relations, aside from some hiccups. Jiang Zemin spoke of a constructive strategic partnership with The US, and Clinton toasted to China's peaceful rise, a term China itself later adopted. However, unresolved issues persisted. The US consent continued pressing China on human rights. There was the treatment of Tibet.
Speaker 1:You might have remembered the free Tibet movement that a lot of Hollywood Actors were involved in and, you know, just a general lack of democracy. China's military modernization began, albeit from a low base, which the Pentagon watched closely. In 1996, US defense secretary William Perry raised concerns about China's missile buildup. And by February, a congressional Cox report warned of Chinese nuclear espionage. But despite such concerns, the two countries keep engaging with each other.
Speaker 1:So post World Trade Organization entrance, China's economy absolutely takes off.
Speaker 3:Yep.
Speaker 1:It's the same 10%
Speaker 3:annual here Yeah. For me personally is being born in the nineties
Speaker 4:Yep.
Speaker 3:Growing up at this time where US China relationships, you know, is, you know, this honeymoon period. Trade is accelerating. Yep. It feels like China is opening up and modern modernizing. I had this dream as a young child of being an international businessman.
Speaker 3:Yep. Like, I just had this idea of, like, the the thing to be was a guy wearing a suit with a briefcase doing international business. Of course. And so as I got into school, once I got to college, I still had this sort of idea that China was going to be an important market for US tech, which I was interested So I started studying Mandarin. Yep.
Speaker 3:I studied abroad in China. Yeah. Got in at effectively like a YC equivalent in China. And realized very quickly that China, the Chinese market, despite what was being marketed broadly, had no interest in Yeah. Foreign, really foreign businesses being involved on the ground in China at all.
Speaker 3:And it really just it it it completely I basically slammed into a wall and within two weeks realized that like this is not a place that US technology companies are ever gonna do business. Yeah. But it was I I felt like I was sold a very very different dream. Yeah. Was still this idea on the ground, even people that were optimistic that, hey, like Google's banned, but like there's still gonna be there's still tons of opportunities here.
Speaker 1:Was the lack of reciprocity. So by the late two thousands and especially in the twenty tens, US officials and business leaders accused China of failing to reciprocate the openness that it enjoyed from the West. So there were market barriers. China maintained high barriers for foreign countries in many sectors like finance, telecommunications, media, even as Chinese firms freely accessed US markets. Now that's that's stopping, but for for all of '2 the February, any Chinese company could come here and sell DJI drones and TikTok Yeah.
Speaker 1:And all sorts of stuff.
Speaker 3:Now we and that was not the case. A cell phone because it was how long did we have to go where, like you said, US Mhmm. US firms were being effectively Yep. Stonewalled in China.
Speaker 1:But no one kinda realized it. Yeah. It was rough. So foreign companies in China faced joint venture requirements, equity caps, and favoritism towards, state owned enterprises. Need to set up this something called a variable interest
Speaker 3:Yes. So when so when I was there Yeah. There was a foreign I was I was helping you know, I was like an intern for this foreign startup. Yeah. And there had to be like a a, you know, Chinese person that was an equity holder in the company Yep.
Speaker 3:That did no work. Yep. They were not involved with the company at all. Didn't even have a board level role. Was just basically.
Speaker 4:Yep.
Speaker 3:Effectively a wealth transfer to someone local. Yep. And that person was like, and and the the reason for that is is not just the economic reason but it's an influencing. It's like if you come in here and you do anything bad, this person is basically
Speaker 1:They can take all the assets of the Chinese entity at any moment. Yeah. It's
Speaker 3:extremely But also it puts the Chinese representative in a weird spot if the foreign firm is not acting in the interests of the party It's very odd. In China broadly.
Speaker 1:And then there's also intellectual property theft. The US became alarmed by widespread IP theft and industrial espionage attributed to China. American firms reported being forced to transfer technology as the price of market entry. So, hey, you wanna sell that car here? We gotta see the blueprints, basically.
Speaker 1:And then there were state backed hackers implicated in theft of trade secrets in 02/2014.
Speaker 3:That's such a crazy dynamic. I wanna enter this market. Give us the exact playbook to
Speaker 1:Give us the codes to Zion. Really? In 2014, the US indicted five Chinese military hackers for cyber espionage against US corporations. And, of course, there was accusations that Beijing was manipulating its currency to keep exports cheap, a stance that led the treasury almost to label China a currency manipulator on multiple occasions, and eventually it did so briefly in 2019. There was also the lack of political reform.
Speaker 1:Like, everyone was hoping that the economic growth would help liberalize China politically, but that just did not materialize. In fact, if anything, China became more authoritarian, and Xi Jinping became essentially a dictator for life. And so the CCP had no intention of loosening its monopoly. There was no two party system. There's no one else.
Speaker 1:And this was like a core assumption of The US engagement strategy was that, hey, we're going to take this leap of faith. We're going to bring you into the global economy, and we're going to expect that you evolve into a democracy over time
Speaker 3:because Yep.
Speaker 1:China was on that track for a little And and
Speaker 3:to to give China a little bit of credit, we were doing the same thing with with Taiwan and basically saying like, yeah, you're the one China.
Speaker 1:Yeah. You
Speaker 3:know, We're we're on your team. Let's do this together. Simultaneously selling, you know, weapons to, Taiwan. Yeah. Everybody was everybody was two timing.
Speaker 1:Yeah. And so during the Obama era, this is the beginning of a tougher stance. So pivot or rebalance to Asia in 2011. The Obama administration announced a strategic pivot to Asia, devoting more diplomatic and military attention to the region. This was partially to reassure reassure Asian allies in the face of China's growing assertiveness.
Speaker 1:Secretary of state Hillary Clinton in 2011 outlined a policy in an essay titled America's Pacific Century calling for an increased US engagement across Asia as a counterbalance to China's influence. This included stationing marines in Australia, strengthening ties with other Asian countries, and moves and these moves were controversial. Beijing definitely viewed them with suspicion. There were also the Transpacific Partnership, which was a standard free trade agreement with Asia Pacific nations, but not China. So there's a new trade deal Everybody else.
Speaker 1:That advantages everyone but China. The TPP aimed to set rules on labor, environment, and state owned enterprises, implicitly pressuring China to reform if it ever wanted to join. And so they basically structured this trade deal, say, hey. You gotta follow all these different things that you're not doing right now. Oh, it turns out Fairly.
Speaker 1:Everyone just happens to do this except for you. Why don't you come on and reform, and then you can join? Because it'd be great. You'd, you know, you'd have more Yeah. Free trade.
Speaker 3:So as China became more assertive territorially, especially in the South China Sea, The US pushed back diplomatically. In 2010, Secretary Clinton stated The US has a national interest in freedom of navigation in the South China Sea, which irked Beijing. In 2015, US defense secretary Ash Carter publicly warned China to halt its island building and militarization of reefs in the South China Sea, saying The US opposed turning these features into military outposts. China was basically like, we'd like some strategic islands so we're gonna make them. Yeah.
Speaker 3:The Pentagon began regular freedom of navigation operations near Chinese claimed areas which I'm sure people are familiar which is basically just, you know, navigating boats through those areas. Show Yeah. Show force. So Power projection. Yeah.
Speaker 3:The US often with EU with the EU and Japan brought cases to the World Trade Organization against Chinese practices, I. E. China's export restrictions on rare earth minerals, which they're doing again now, critical materials for high-tech products, led to a joint World Trade Organization complaint in 2012. While The US won some rulings, China sometimes complied minimally or found workarounds. Annual strategic and economic dialogues were established to air grievances and press China on issues ranging from currency reform to market access.
Speaker 3:There was very little sort of progress during this time.
Speaker 1:Yeah. They also host the Dalai Lama, which is very controversial to China. They don't love what he's pitching about universal rights. But Obama kind of frames this as this is, you know, general strategic, like, a general strategic and economic issue. By Obama's second term, US rhetoric had sharpened.
Speaker 1:Officials openly talked of China as a strategic rival in certain domains even as cooperation continued on climate chains and and Iran's nuclear deal. And then in 2012, '20 '13, this is when Xi Jinping, really takes over. He becomes the general secretary see. In 2012 and president in 2013, And he centralized a lot of power and championed the Chinese dream of national rejuvenation. They did domestic tightening.
Speaker 3:They're trying to basically make America great again Yeah. Campaign.
Speaker 1:Yeah. Yeah. Yeah. Yeah. Basically.
Speaker 1:So they did a military buildup. The PLA got a massive overhaul in budget increases. Dick Cheney was not super happy about this. And then Xi Jinping launched industrial policies like Made in China Twenty Twenty Five. Now 2025 and it seems like mission accomplished, guys.
Speaker 3:Yeah. To some degree. Look. Yeah. He was focused on semiconductors, AI, five gs.
Speaker 1:And they're still not
Speaker 3:on the I would argue that they're not on the leading edge of semiconductors. Yeah. Although they're making great efforts. Are not you know, Tyler Cowen yesterday was was very
Speaker 4:They're behind on AI a lot.
Speaker 3:Which is that they're behind on AI, the most exciting AI projects they have Yep. That are public Yep. Are trained on American models.
Speaker 1:They're doing well in smartphone manufacturing, five g for sure, and then electric cars to an increasing extent, drones, certainly. So important high-tech sectors, but not the key foundational technologies necessarily, but they're certainly working on it and investing very,
Speaker 3:very heavily. And in 2013, China began the vast Belt Road infrastructure project across Eurasia extending its economic and political influence, another point of US concern. Seen as Beijing creating a sinocentric order. Yep. Again, people have been very sort of concerned, afraid, annoyed, frustrated with sort of Belt and Road Initiative.
Speaker 3:Yep. But at the same time, I do wanna give them a little bit of credit that The US has just, you know, aggressively done many similar things over a long period of time. Sometimes with different structures, right? You know, the IMF and some of these sort of like more global organizations are oftentimes carrying out a lot of those efforts, but still.
Speaker 1:And so Xi Jinping starts talking about the century of humiliation. That's from 1839 to 1949 when China was subjugated by foreign powers, vowing the great rejuvenation of the Chinese nation. And so he is arguing that China should no longer be pushed around or play second fiddle. It would reclaim its rightful place as a great power, the kingdom under heaven, the Middle Kingdom. This fueled a more assertive foreign policy.
Speaker 1:China became less willing to hide and bide, which was Deng Xiaoping's old mantra to remain low profile. And so several incidents of deteriorating relations started to emerge in the mid twenty tens. There's cyber espionage clashes in 2015. There's a massive hack of the US office of personnel management. I actually know someone who was in the database at that time, and all of their stuff got leaked because of this.
Speaker 1:It's kinda crazy.
Speaker 3:And they and they was it made public? Or
Speaker 1:I'm not I I I think it might have been made public. I'm not actually sure. But, basically, if you worked for the federal government, all of your personal data was was leaked to China, and this was wide this is widely attributed to Chinese actors. The US accused China of hacking companies. Obama and Xi Jinping reached a 2015 accord not to conduct economic espionage in cyberspace, which helped briefly, but distrust remained high.
Speaker 1:And so there was also a a standoff in the South China Sea. By twenty fifteen, twenty sixteen, China had built and militarized artificial islands with runways and missiles in disputed waters. The US responded with more with more Free
Speaker 3:military navigation
Speaker 1:Operations. That's right.
Speaker 3:Procedures, I believe. Yeah.
Speaker 1:Phone ops. Yeah. And rallied allies to condemn these actions. And I remember there's some very viral YouTube videos about, like, China's artificial islands because it's just like, I how are they doing that? We don't do that.
Speaker 1:That's a crazy idea to just go and, like, build an island. But it makes a ton of sense. If you need to project power, you build an island, you kinda control it, and then you can put a tank or a Yep. A turret or a missile or a plane on And so the economic dialogue starts stalling. Annual talks are yielding only incremental Chinese concessions, which frustrates US Negotiators.
Speaker 1:Market forces market access for US firms remain restricted. By 2016, calls grew louder in in Washington that engagement had failed to change China's behavior
Speaker 3:Yeah. At this point, Obama was frequently saying, which was Please. He would ask China to play by the rules Yep. Of the international system warning that if it didn't, The US and others would enforce those rules. Yep.
Speaker 3:Chinese leaders meanwhile accused The US of trying to contain China's rise
Speaker 5:Yep.
Speaker 3:And not respecting China's core interests like territorial integrity, the whole big Taiwan thing. But but needless to say, saying, you know Yeah.
Speaker 1:And so then, of course, 2016, Trump gets into office. There's the hundred year marathon book that's very informing of China's strategy, and Trump is way, way more aggressive in the rhetoric. He says, they're stealing American jobs. He's gonna he says he promises to get tough on China and demand reciprocity, and this, did resonate with a lot of American voters in industrial states, and that's a big part of why he won.
Speaker 3:The job loss, you know, the various Yep. You know, firms, manufacturing, you know, companies that had basically been shut down due to not being able to be competitive with China for various reasons. Yep. That was still fresh on a lot of people's minds. Yeah.
Speaker 3:Right? If if even, you know, if somebody had a family business that had shut down ten years ago
Speaker 1:Yep.
Speaker 3:And Trump gets into offenses and starts talking like this Yep. That family is not forgetting that that Totally. And
Speaker 1:so we're talking about a Chinese trade war today. It's actually trade war two because the first Chinese trade war happens in March of twenty eighteen. Trump announces tariffs on 50,000,000,000 worth of Chinese imports, and then Trump eventually widens that to 25% tariffs on about $250,000,000,000 in Chinese good, which are industrial components, electronics, etcetera. And additional tariffs on the rest, roughly 300,000,000,000 consumer goods at seven and a half percent. Virtually all Chinese exports to The US were hit, and the administration justified these nest as necessary to counter economic aggression and massive trade imbalances.
Speaker 1:So Trump has been beating this drum of of economic warfare with China is happening. I'm going to lead the charge again and again and again. He's back in. He's doing it again. It's not this should not be unexpected.
Speaker 1:And so China retaliates, placing tariffs on tens of billions of dollars of US exports, targeting politically sensitive products like soybeans, agriculture goods, and autos. For example, when The US levied $34,000,000,000 in tariffs, China responded with 34,000,000,000 on US goods. Trump escalated, raising tariffs from 10% to 25% on 200,000,000,000 of goods. Beijing answered with its own increases. And so there's this tit for tat spiral Yeah.
Speaker 1:That rock global markets and stoked recession fears. By 2019, bilateral trade volumes fell, supply chains began adjusting, and companies in both countries felt pain. American farmers, in particular, were hit or hurt by lost exports and Chinese manufacturers faced higher costs and and uncertainty. And so now we get into
Speaker 3:And then COVID.
Speaker 1:Revenge. Yeah.
Speaker 3:It's great. COVID came immediately after this. Yep. There's you know, we won't get into COVID on this podcast.
Speaker 1:I think it's more relevant to stick with the the crackdown on Chinese tax, specifically Huawei and ZTE. So The US banned government use of Huawei and ZTE products citing espionage risks, and this was the big five g debate. The US also pressed allies with mixed success to exclude Huawei from their five g networks portraying it as a Trojan horse for Chinese spying. Of course, like, if a five g tower is intercepting all Internet traffic, it's gonna be pretty easy to spy, especially if it's unencrypted stuff. So, Huawei responded with lawsuits, but this tech decoupling aimed to protect US national security and technological leadership in the face of China's rapid advances.
Speaker 1:And so, in the in in 2018, the US justice department charged Chinese intelligence officers and hackers in several cases of economic espionage, and The US passed more laws to tighten scrutiny of Chinese investments, especially in tech startups. Sanctions were also imposed related to human rights. The US sanctioned officials involved in Xinjiang's mass detention of Uighurs and for undermining Hong Kong's autonomy. China angrily countersanctions some US Lawmakers and and NGOs.
Speaker 3:And this is from the US Department of State website. Says, also required of every company in China, a branch of the CCP is nested within Huawei's corporate structure. And they say Huawei has deep ties to the Chinese communist party and military. And it's a privately held company, which is interesting too. So I think the American, you know, companies and politicians at this time that Yeah.
Speaker 3:That sounded the alarms were absolutely correct that
Speaker 1:Yeah.
Speaker 3:Just strategically cannot, you know, The US cannot rely on telecommunication infrastructure from a privately held company with ties to foreign military Yeah. Which is a political adversary.
Speaker 1:And so Trump is getting much more aggressive against about China in America. Simultaneously, Chinese officials are starting to use sharp rhetoric against the West, and they call this the wolf warrior diplomacy. And so, the foreign minister Wang Yi blamed Washington for the worsening relationship relationship, accusing it of McCarthyism. And there's some crazy wolf warrior, like, tweets and quotes out there that are really, really aggressive. And it sounds just like Trump, but from the other perspective.
Speaker 1:It's very much like, this is a failing country. They're the worst. It's very funny. And so, of course, there's a lot of propaganda and conspiracies around COVID nineteen. Obviously, that's that that sours the relationship, but most people are super familiar with this.
Speaker 1:And so in 2020, in July, the US secretary of state Mike Pompeo delivered a speech at the Nixon Library titled communist China and the free world's future. He bluntly stated, the old paradigm of blind engagement with China has failed. We must not continue it. We must induce China to change. Pompeo proclaimed the era of engagement is over, citing China's unfair trade, human rights abuses, aggression.
Speaker 1:He called the he called on the world to join The US in resisting the CCP's ambitions. This was essentially an obituary for nearly forty years of US China policy and set the ideological groundwork for
Speaker 3:a new But also not the first time No. That communication had entirely broken down.
Speaker 4:Yeah. Right?
Speaker 3:Yep. This happened after Tiananmen Square. And, anyways, this story is still unfolding.
Speaker 1:Yeah. Yeah. And it kinda brings us up to today. I mean, obviously, Biden kept a lot of pressure on China, and now Trump has escalated things to, what feels like eleven. But we have three great guests today, breaking down various aspects of The US China relationship, what's going on in Taiwan, but we're starting with a more optimistic take on how to support Taiwan with a satellite that will provide Internet.
Speaker 1:And so we are joined by the founder and CEO of Astronis, and welcome to the show, John. How are you doing?
Speaker 4:Hey, guys. How's it going?
Speaker 1:It's great.
Speaker 4:Well, great.
Speaker 3:Having me. Great to have you.
Speaker 1:Congratulations on the announcement. Would you mind just giving us the the high level announcement and and even just, like, a little breakdown of Astronis and what how you describe the company on day to day basis?
Speaker 4:Yeah. Of course. So today, we had this very cool announcement. You can go check it out on on Bloomberg and some other some other places. We announced a new satellite for Taiwan, and this is a special kind of of dedicated satellite in a high orbit that is called geostationary orbit.
Speaker 4:So Mhmm. It's a very special orbit. It's been around for, you know, been around since the beginning of the space age, but essentially allows you to park a satellite over a country or a region of the world Mhmm. And provide continuous service with just that one satellite or oh, wait. What the hell?
Speaker 1:Oops. You look and sound good to us.
Speaker 4:Sorry. My my something glitched on my Zoom, but it's all good? You guys can hear me?
Speaker 1:All good. Yeah.
Speaker 4:Okay. Excellent. So you can provide this service with just one satellite or in some cases, a couple of satellites parked up there and essentially create this this backbone in the sky. Yeah. And this is really important in a case like Taiwan, which I'm I'm sure we'll get into.
Speaker 4:Yeah.
Speaker 1:Sure. Can you give us a little history of the company? And because I know you launched satellites before, and you I we've heard about Alaska and a and a few other countries. What has the rollout been now that you're kind of in the commercialization stage of the company?
Speaker 4:Yeah. So we started the company coming up on nine years ago.
Speaker 1:An overnight success. Overnight success. We love an overnight success on this show. Congratulations. We love to see it.
Speaker 1:Just a quick quick nine year journey. Good job. Honestly, timeline. Yeah. It's incredible.
Speaker 4:I appreciate that. Yes. Yes. We did yeah. We just sprang into being with this, you know Yep.
Speaker 4:Beautiful manufacturing.
Speaker 3:Just snapped your fingers, It
Speaker 1:just yeah. Fully formed.
Speaker 3:It just It just manifested it.
Speaker 4:Magically appeared. So we started the company actually to do this one thing, which I, you know, I always like to joke. It says, there are no pivots. We started with this exact thesis in mind, and then we just have been, you know, grinding away, executing on that all all the way through. But it is, you know, do a next generation satellite design Mhmm.
Speaker 4:Using all the latest small satellite technology, but in high orbits, which have a number of benefits and a number of use cases that are they're very different from, I'm sure, what you, you know, you and your viewers have heard about it, low Earth orbit. So Yeah. Like Starlink and OneWeb and some others that are in low Earth orbit have a lot of advantages, and high orbits have their advantages as well. And that's for both commercial and military and defense applications, which we are are also now charging head on. So we started the company, you know, on on some early commercial customers that we found.
Speaker 4:And now, you know, fast forward today, we've signed contracts for, you know, more than more than 10 of these satellites commercially. We also have a number of US government defense programs. There's there's some in work as we speak. So there's a there's a lot going on. But this one this was an important important one for us.
Speaker 4:Yeah.
Speaker 3:Can you talk about your neighbors in geostationary orbit? I I saw on your site there's $15,000,000,000 worth of these satellites being sent up every single year. So there's other peep you talk about kind of like
Speaker 1:Yeah. What else is up there? Is it like the Hubble Telescope? Like like like how high are we talking? Higher than the ISS?
Speaker 1:Like really, explain it like we're five. Explain it like we're
Speaker 4:billion capitalists Yeah. No. No. For sure. So it is about a hundred times farther away than than lower Earth orbit.
Speaker 4:It's about 10 to the way to the moon. Mhmm. And as as you as you said, there's about $15,000,000,000 worth of these satellite large satellites launched to GEO and other high orbits every year. But historically, those have always been giant behemoth satellites that cost hundreds of millions on really, for the the commercial side is in this, like, hundred million range.
Speaker 5:Mhmm.
Speaker 4:And then on the military side, the satellites cost over a billion dollars per satellite. Wow. Sometimes multiple billions per satellite. Mhmm. So we're talking and we're talking huge satellites the size of, like, a double decker London, you know, Big Red London bus.
Speaker 4:Mhmm. That kind of that kind of size. And then they're really designed to do everything from, you know, broadband communications. This is where all broadcast satellite television has always been from, and then there's some important national security missions up there as as well. And so the 15,000,000,000 is total between commercial and military, but, you know, I mean, it it is a huge number.
Speaker 4:Was just like, it's one of these very big industries that isn't talked about a lot. And so we said, hey. There's nobody really taking a new approach here. Feels like we could go do something really interesting and and perhaps quite valuable.
Speaker 3:And talk about today's announcement and the significance of it. I imagine this is not the kind of partnership that you started working on in q one. It's probably something that's been in the works for a really long time. Like, what what what what, you know, what is even, like, the timeline to make something like this happen?
Speaker 1:You have do have one click checkout? Can Taiwan just go, please just buy now?
Speaker 4:Yes. Exactly.
Speaker 1:Buy now, pay later.
Speaker 4:No. No. No. For sure. It it it it is a longer longer sales cycle for, you know, a hundred million dollar plus deal, but obviously worth the worth the effort.
Speaker 4:This so this is a commercial contract with telco called Chungwa Telecom. It's the largest telco in Taiwan. They have about a $30,000,000,000 market cap, 7 or 8,000,000,000 a year in in annual revenue. So it's very I mean, this is a big country. Big big company.
Speaker 4:Right? It's it's, like, in that Fortune 500 class of company. And they, among other things, in addition to managing you know, operating the cell tower networks for Taiwan, they also manage the undersea cables for Taiwan. They also manage satellite connectivity for the government of Taiwan. So they have a, you know, they have a big footprint there as you would expect.
Speaker 4:And so working with them, you know, going back, I don't know, at least a year, maybe closer to eighteen months ago on where this could be, you know, this valuable asset for them. And then, you know, sort of going through the I I would call it all the normal enterprise sales activities from there. Right? You have to get together with our technical teams. So their technical teams hash out exactly what the the technical specifics are of the satellite and then the the network around it, And then, you know, of course, hammering out the the business terms.
Speaker 4:So it's a it it is a big deal for us and I think a big deal for Taiwan. You know, this is something they very badly need as I'm sure you guys, you know, as I'm sure has not escaped your attention.
Speaker 3:What what does it actually take to get the satellite up to geostationary orbit? Assuming you guys are partnered with, you know, SpaceX on the transport side, but what are what are all the different kind
Speaker 1:of Is this uniquely unlocked by SpaceX in dropping launch costs? I'd love to know kind of the general trend in mass to orbit and how that's enabling the business.
Speaker 4:Oh, a %. Yes. I mean, there's no question. Space when SpaceX came along and really dropped the launch costs in a big way with the Falcon nine, you know, that enabled a whole array of of, you know, of just, like, new new space opportunity. Most you know, we see like I said, we've seen most of that in low Earth orbit, but absolutely still the case for us in in high Earth orbit.
Speaker 4:I think the difference is it's a lot higher Earth orbit the the higher orbits, it's a lot harder to get to. So you have to have your own onboard propulsion. The rocket doesn't actually get you all the way there
Speaker 3:That's what I was getting at. Yeah.
Speaker 4:Yeah. So in lower orbit, the rocket just drops you off where you want to be, and you deploy satellites, and there's satellites in in lower orbit that have no propulsion, extra propulsion on board at all. They don't need it. The we are quite the opposite. So you get dropped off in this transfer orbit, but it's really on us and any other satellite that goes to GEO to do the rest of the propulsion ourselves and and get ourselves the rest of the way up to GEO.
Speaker 4:So that is where we had to really design the whole satellite system around this electric propulsion system. We use an ion thruster, very high performance that allows us to, you know, essentially have all the fuel onboard that we need in the size of of a couple tanks that that are basically look like, you know, a couple of scuba tanks. Right? So it's like that that size of tank, that much xenon gas, which is the propellant, and we can actually get all the rest of the way there up to geo. So, you know, between between that and if there's sort of more recent technologies, I think what we're doing today just wouldn't have even been possible technically until, you know, coming when we around the time we started the company, eight, nine years ago because you you really had a few of these pieces coming together including the the electric propulsion.
Speaker 4:So, yeah, it is it is a it it is a more challenging orbit to get to for sure.
Speaker 1:Interesting. How did you get into this? I actually don't know your background before you started the company.
Speaker 4:I'm an I'm an aerospace engineer. I'm a space guy. I've been a space guy since I was a kid. Did my degrees in aerospace engineering. Worked at some big satellite programs.
Speaker 4:Worked at, you know, a couple of the big defense contractors, which I will remain, you know Yeah. Remain nameless for this. But suffice to say, learned that was, you know, not what I wanted to do with the rest of my life. It's working at the big defense primes and, you know, seeing how they operate. I think there's also you know, there's something there that that we just we gotta fix.
Speaker 4:You know? We gotta fix for the country or we're gonna be in serious trouble. So Yeah. No better way to do that than than starting your own company.
Speaker 1:Yeah. We talked to Ian Cinnamon over at Apex Space, and he was talking about building a satellite bus or a platform for low Earth orbit satellites, kind of almost acting as, a supply chain partner to speed up, you know, delivery to low Earth orbit, like smaller companies that wanna get going. You started the company so long ago. I imagine that that thruster is is in house. You built all this.
Speaker 1:Are there any other partners other than SpaceX that have been helpful to you as you've built out? Or or what does the modern space economy and and landscape of partners look like as someone's building a company like Astronis?
Speaker 4:Oh, that's a great question. So true. A lot of these a lot of these pieces were not in place when we started the company. But as these pieces come along, we'd absolutely take advantage of them. So that includes, you know, more rockets coming online.
Speaker 4:Sure. You know, some of them have have or have have more, what we call, delta v Yep. To to get to the to the higher orbits. That also includes some of these transfer vehicles. So we call it, you know, orbital transfer vehicles.
Speaker 4:So, like, impulse space
Speaker 1:Impulse. Yeah.
Speaker 4:For example. You know, no questions. Those things come online. We can we can take advantage of those and use that to really, to to I mean, not to benefit us, but to benefit our customers.
Speaker 3:Right?
Speaker 4:Totally. We can get a satellite there faster. They get the, you know, faster time to market. They get the set the spacecraft and their service that much faster. If they, you know, if if if they come online and and do the the kinds of things that we're talking about, the orbital transfer vehicles, and we have more fuel on board, which means a longer life for the satellites.
Speaker 5:Mhmm.
Speaker 4:So a lot of these there's there's a lot of great opportunity to, you know, come in and and add pieces to the to the ecosystem for sure.
Speaker 1:Are you expecting Starship to change the business? I know Starship's gonna be able to dump out, like, way more mass in LEO, but, does it also make to get does it also make getting to GEO easier because it's just a bigger rocket?
Speaker 4:Well, it'll it will, I believe it is is heavily legal optimized.
Speaker 5:Mhmm.
Speaker 4:So using it, we will most likely it's it's not strictly necessary. We we we don't have to do this, but Mhmm. We will most likely want to use one of these orbital transfer vehicles.
Speaker 1:Sure.
Speaker 4:And I think that's that's actually, like, part of the genesis of of, you know, why Tom started Impulse Space was he saw this, like, you know, this this real need there. But it will result in lower launch costs. Right? I mean, which just really benefits everyone. I I I think it's a huge it's gonna be a huge boon to the to the industry.
Speaker 4:And, you know, I I'm very much looking forward to to, to it flying. Yeah.
Speaker 1:Can you talk a little bit about, how a modern telecom company delivers Internet? Because I imagine, Chung Hua Telecom has cell phone towers and maybe some five g stuff. And then also maybe now they have geo satellites and those plug into the rest of the system, or or are they or are they trying to specifically create, like, we're gonna sell you a separate product that's a satellite dish that will interface with this geo Internet product, and it's, like, a completely different line. Just like, you know, I have a Verizon plan on my on my iPhone. I also have a Starlink terminal for when I travel.
Speaker 1:They're two completely separate products and networks and bills. But what but how how are the telecoms thinking about providing kind of a a three sixty experience to the customer?
Speaker 4:Yeah. So for for telco, we are providing what what we call trunking and backhaul. Right? So trunking exactly what you'd imagine, a giant pipe that allows them to bring, you know, huge amounts of data pipe huge amounts of data from point a to point
Speaker 5:b. Mhmm.
Speaker 4:And then backhaul is, in in their case, imagine you have cell towers out in remote areas and you need those cell towers are acting like any normal cell tower, and to the end user, they don't know the difference. Right? They're just their cell phone's connecting whatever cell tower they're closest to. But if the cell tower is in a remote area, it doesn't make sense to run a Fiber Line to that cell tower. Mhmm.
Speaker 4:And so you need to do that backhaul link that is connect that cell tower to the network through some other way, and satellites are a, you know, a a a very advantageous way to do that, especially in in certain cases. I think what we've seen with a lot the telcos that we work with, like Chungwala Telecom, is they really yeah. They they do see it as a as a very separate kind of of need and and product offering than what people might get at their homes with, whether that be their their terrestrial provider or a or a or a LEO provider like Starlink. Mhmm. What they are really looking for is dedicated capacity that is set aside for their exclusive use, and it's on these, what we call SLAs, service level agreements, you know, guaranteed uptimes where they they and they know it's there whether they are using it or not.
Speaker 4:It's just always guaranteed to be there for them. And then on top of that, you imagine what I mean, you can just think about what kind you know, what some of these customers, Fortune 500 customers might want in an enterprise grade offering. It's security. It's, you know, a lot a lot of the customization. So understanding exactly what the the different endpoints of the network are, exactly what equipment is used, and, you know, getting to work with us to pick that equipment if they have a preferred vendor for that networking equipment, and then really just having this insight and transparency into exactly what's happening on their network at any given moment.
Speaker 4:So among other things, they know where their data is going and where it's not going. They know, for example, that their citizen's Internet traffic is not going up to a satellite and then landing in some other country outside of their control where maybe they don't, you know, they don't trust that country. They they just don't know what's what's happening to that data. So that's where we've seen this this need out in the market for a a a true enterprise grade offering that has this kind of all these all these aspects to it. Yeah.
Speaker 4:How do how do
Speaker 3:you think about scope creep when you're sending a, you know, multi hundred million dollar, hundred million dollar satellite up into the air? Everybody in, you know, traditional software is familiar. You start building something or you start scuffing something out. You're like, oh, what if we added this button or this feature or things like that? I imagine there's a huge incentive to try to scale capabilities and and offer a bunch of capabilities, but at the same time, like you kinda needed to do Yeah.
Speaker 2:Every ounce matters.
Speaker 3:Every ounce matters. And there's like one or two things that are critically important
Speaker 1:Totally.
Speaker 3:For the sort of value of the product.
Speaker 4:Totally. I I you know, when when the when the customer asks for something and they know that there's a, you know, there's like a hundred million dollar contract there waiting, the sales guys always wanna say yes. So so you gotta figure out ways to help them say yes to things without, as you said, you know, giving giving into to this, like, you know, giving giving into this temptation to just, like, customize everything. Yeah. So we have a standard satellite design.
Speaker 4:We have a few pieces to it that are that are essentially modular. So you can sort of plug and play a few different things like like Lego blocks for slightly different customer configurations. But that's it. Right? We draw the line there, and then there's only so much that we're willing to customize the design.
Speaker 4:You have to you know, it's something you have to say no. Like, hey. If if if we were to totally customize this thing for you, would be the cost would, you know, balloon way beyond what what you are you know, what what you're willing to pay here. So I I think that's I think this worked well for us. You know, we've sold, like I mentioned, a lot of a lot of satellites of of this using that approach, and I think, you know, yeah.
Speaker 4:There's there's there's always ways to to make it work.
Speaker 3:Yeah. I love the the the meme of, you know, the The
Speaker 1:sales guy.
Speaker 3:The sales guy just promised like
Speaker 1:The satellite just ate dinner
Speaker 5:and the
Speaker 1:CTO is Yeah.
Speaker 3:Of course, we can do that.
Speaker 1:You want it to be just be able to go up and back whenever you want? For sure. Yeah.
Speaker 3:We'll make it happen.
Speaker 1:Yeah. Yeah. You want it to land on the moon and then come right back? Yeah. Obviously.
Speaker 4:Yeah. Little bit different. I don't I mean, well, I guess I don't really know in enterprise software land, but I can imagine that it happens all the time and, you know,
Speaker 3:it's like,
Speaker 4:sometimes they just have to put up with But
Speaker 3:Yeah. Yeah.
Speaker 4:It's a little harder to like build a totally different satellite design, but physical satellite hardware No. No. I totally get it. Software features.
Speaker 3:Yeah. No. I totally get it. Software, it's like, okay, you know, this engineering team is gonna have to spend, you know, two days over the weekend, like, you know, shipping this, but it just doesn't quite work the same when you're sending 9 figure payloads to Can you talk about security kind of like risks in in geostationary orbit versus low earth orbit? Are you far enough away that that that it's like a, you know, maybe a more secure environment or or less risk or are the risks still kind of very real?
Speaker 4:Mhmm. Yeah. So, I mean, I'm I'm gonna be a little limited in what I can go into here since I do have a a security clearance. Mhmm. The the there are different threats to higher orbits and geostation orbit than there are to lower orbit and different different counter different counters to those threats.
Speaker 4:I think what I would say is that, you know, our plan is and and what we're executing on is we're building many of these satellites. We're spooling up our production here at here in this building to build, you know, many dozens build and launch many dozens of these satellites, including we'll have on orbit spares. We'll have satellites that we could bring in and and and add to the you know, add to the network or or replace if if a satellite was lost for whatever reason. And you actually imagine I mean, that actually is an easier problem to solve than an undersea cable Yeah. Fiber optic cable being cut.
Speaker 4:That fiber optic cable is being cut. You you you just think about the difficulty to replace that. You have to actually get, you know, a ship to roll that out over. Oh, hold on.
Speaker 1:Thousands of miles. Right? I I somewhat related to that, but probably something you can talk about. In terms of space junk, we hear these stories about, like, oh, the ISS had to dodge some satellite debris. Is is that a problem for you?
Speaker 1:Do you have systems and thrusters that can turn on if you're detecting something, or is it clear enough that it's not really an issue at this point?
Speaker 4:No. It's true. I mean, it it it it occasionally it's it's much more it's much more rare in GEO than in in LEO these days. But Yeah. The orbital, you know, the the the orbital, you know, space, like airspace, but space space, is being actively monitored at all times by the US military.
Speaker 3:They actually
Speaker 4:do this. You know, your taxpayer dollars at work, they do this and broadcast to the entire world if they believe there could be a collision between two space objects. Mhmm. And they they call it a conjunction event and you get a conjunction warning. And you on, you know, onboard like, we do have thrusters onboard, rocket thrusters that we could use to do these evasive maneuvers and get the satellite out of the way if we really believe there was a real risk of of some kind of collision there.
Speaker 4:Like I said, quite rare in geo. Not I mean, certainly not unheard of, but rare for you to to get one of those warnings. More common in LEO, but Mhmm. That is just becoming a reality in, you know, in the space environment now. I mean, that's just a reality we're gonna have to all deal with.
Speaker 1:Makes sense. Speaking of undersea cables, it's been ten years working on this. Can you take me through what the next ten years might look like? I know that a geostationary satellite is mostly, in the case of an island nation, mostly going to act as backhaul between cell phone towers on that country. But is there a future where, instead of going through an undersea cable from an island in the Pacific to Mainland America, you could actually do the backhaul backhaul in space between two geostationary or satellites.
Speaker 1:Is that something that's possible even? Or or I know it might not be as fast, but
Speaker 4:So well, that is the that is the use of this Taiwan satellite today, actually. Oh, cool. That we announced today. That's great. It will actually have a couple of different you know, it it will be able to provide service on the island.
Speaker 4:Mhmm. But it'll also be able to be a relay to locations off the island in the case that all their all their fiber lines are cut. Wow. And they would otherwise just be totally out isolated from the outside world. Right?
Speaker 1:It seems really really important.
Speaker 4:That is it. That is very important. That is a real concern. You can imagine if you were just getting your communications, you know, piped in
Speaker 1:Yep.
Speaker 4:With these undersea cables, and then one day someone accidentally drags an anchor across, you know, all of them Yep. That you would you could end up very isolated and and in fact completely unable to talk to the outside world. It's very scary
Speaker 1:That is very scary.
Speaker 4:A very scary scenario for for a country like that. Right? Yeah. And there's a and there's a lot there's a there are many such countries that that have these concerns now. The world is a more complicated and and I would say dangerous place than it than it was in the past.
Speaker 4:And so, you know, we have this is where we have seen significant demand for this this kind of service now.
Speaker 1:You have
Speaker 3:any do you
Speaker 1:have any insight into how Taiwan and the Taiwanese government views civil military fusion? We've we've heard from Palmer Luckey that, you know, every boat that's built in China needs to be able to be built to military specs. Obviously, you're doing a commercial deal here, but how does Taiwan think about that? I feel like in America, if if AT and T does a deal, the government's like or the DOD is like, okay. Cool.
Speaker 1:Like, you know, that's kind of its own thing. Taiwan might have a different positioning, but what is your take on how the Taiwan government views civil military fusion?
Speaker 4:Yeah. That's a good question. I mean, this this is this is a commercial this is a commercial deal.
Speaker 1:Yeah.
Speaker 4:Sure. And it is one of our commercial satellites coming off our our commercial production line. I think what I would I think what I would say is that, you know, where we've seen interest from the DOD Mhmm. It is actually also for these same satellites off of that same production line. They are very interested in this dual use type of scenario where they actually get to benefit from all the private capital that we've raised.
Speaker 4:We've invested that into this production capability so that, therefore, you know, we're using it commercially. We're using produce. And then if we use that same production capability, produce satellites for them, then they get a much lower price point than they would otherwise. If it just, like all this investment had to come in to stand up a whole new production line just for a military, you know, a new line of military satellites. So that is where right?
Speaker 4:That that's the benefit of of dual of a dual use technology. Like, they are
Speaker 1:Yeah.
Speaker 4:Getting that benefit where they just wouldn't otherwise. And I think places like Taiwan, they they saw the they saw the benefits from that also. They saw our US military contracts. They know that we have, designed something that the military is interested, not in some upgraded, you know, super, you know, turbocharged version of what we have today, but but what we actually have today. And they are they're basically getting that same thing.
Speaker 4:Right? So that is I I maybe that's slightly different way to look at it, but No. That's fine. There's definitely you know, we're we are definitely seeing a closer, you know, amount of overlap of of our commercial industry and the and what the DOD is looking for than never before, I think, in the in The US as I'm sure you guys are seeing with a lot of companies you're talking to.
Speaker 5:For
Speaker 1:sure. I'm a big fan of the moon. I wanna go to the moon. I wanna be able to listen to podcasts on the moon. Are you gonna be able to help with moon coms in the future?
Speaker 4:%. Yes. %. We actually yes. We we have an early NASA study contract.
Speaker 4:We're studying that for NASA. NASA's gonna need every everything that we have in the like, every space service we have for Earth, we're gonna need another copy of that around the moon. We're gonna moon's gonna need its own GPS. Yeah. Moon's gonna need its own comms networks, both, you know, moon to the moon, moon you know, lunar surface to lunar surface comms as well as relays back to Earth.
Speaker 4:They're and then they're gonna need all these transportation systems. I think with the moon, the the most interesting story that nobody is talking about is we have a real space race with China happening as we speak, and it's very concrete. There is a series of craters on the moon that we know have water ice trapped in them, and they're these are permanently shadowed craters on the lunar South Pole. And it is extremely valuable real estate. Like, those that real estate and those mineral rights, if you wanna call that, enormously valuable because you can use that water to create rocket fuel, which you can use to then use the have the moon be this this stepping stone to other places in the solar system.
Speaker 1:Mhmm.
Speaker 4:And whoever gets there first and really decides, we're gonna actually we're not just gonna plant a flag. We're gonna apply we're put down a fence.
Speaker 1:A base. Yeah.
Speaker 4:And we're gonna say, this is our lunar property. Like, whoever does that first, they there's, you know, there's no reason they to to not believe they they will just maintain that forever for all time. Right? I mean, it's currently totally greenfield. Now if if all the nations on Earth agreed to not do that, which I they essentially did through international treaty, I'm sure The US would abide by that.
Speaker 4:But if China decides to just flood that treaty and ignore it and just go land and start grabbing territory there, we would be it would be incredibly dumb for us to let them charge ahead with that and and miss out and let them get there first. So and this is this is like I mean, China just landed a new lunar sample return mission that allows them to demonstrate all the technologies needed to essentially do human missions, do other types of missions for to for all the things I'm talking about. And, honestly, we just we haven't been talking about it enough Mhmm. Because we're we're we're we're sort of letting China just go out and do all these things in space without even calling attention to it. I mean, I I honestly I mean, I think I think our new NASA administrator, Jared Eisenman, who's going to be absolutely fantastic, I think.
Speaker 4:I I suspect he will talk about it once he gets in the seats. We've been waiting for him to get senate confirmed. I think you'll see other folks in the space industry start to talk about it because it it's a it's a big deal. Like, we need to start getting,
Speaker 1:you know Serious about the moon. We gotta
Speaker 4:get Yeah.
Speaker 3:Do do think in some way last question then we'll let you go. Do you think in some way, you know, calling this, you know, the space force the space force kind of like allowed people to not take it at like it doesn't, in many ways, I think the name sounds cool but I think a lot of people didn't feel like it was a super, you know, serious initiative when it actually it absolutely is something that, you know, should be mass you know, continued to be invested in massively and taken more seriously?
Speaker 4:Oh, I I mean, I I, you know, I I think
Speaker 3:And I mean I mean more like the broader social media reaction to like, oh, like, you know, great. We have a space force versus no, this is absolutely a new frontier of defense and warfare, and and it should be taken more seriously than ever.
Speaker 4:Yeah. I mean, it's important to, you know, keep in mind the space for in government terms, space force is still very new. Right? It was these things take a while to get established and and also, you know, essentially to to really put forward their mandate. I also would argue that under the past the previous administration, things were a little muddled in exactly what their their mandate would be.
Speaker 4:I think under the Trump administration has been it's very clear. Their mandate is to counter the all of the activity and, I would say, aggression that we're seeing from China in space, and we're gonna see them. You know, I think we're gonna see a lot more from space from Space Force in the near term here. So
Speaker 3:Great.
Speaker 4:You know, yeah, I I think I think, you know, sort of I think stay tuned on that, and then, you know, we will also and I think we'll also see an increasing amount of coordination between our civil space community, NASA, and the Space Force than we had in the past. Again, that's gonna go back I take it back to, you know, what China's doing on the moon. There's they they have no you know, not only do they have coordination, I mean, there's there's just no divisions at all between their military space, civil space, and even their commercial space. It's all just one big industry blob of of activity that's know, we can't even draw lines there. So I think to counter that, we are gonna see more cooperation there and it and I think people will start taking it very seriously very soon.
Speaker 3:Great. Well, thank you for starting the company ten years ago and for yeah. Congratulations. Congratulations on the milestone.
Speaker 1:It's of a right place, right time story really when I think about it. Ten years in the making. Years in the making. Anyway, this is fantastic. Thanks so much.
Speaker 1:We'll have to be Congratulations.
Speaker 3:Appreciate you. Alright. Cheers.
Speaker 4:Have a good one.
Speaker 3:Alright. We have Jordan coming on. I'll be right back.
Speaker 1:Perfect. Jordan, when you're there, welcome to the show. We're excited to catch up. Talk China. There's so much to talk about.
Speaker 1:You're in the right business. You're here at the perfect time. How you doing, Jordan? Can you hear me? Let's bring him Are
Speaker 2:we on?
Speaker 1:We're on. How are you doing?
Speaker 2:I'm pissed off, John.
Speaker 1:What's happening?
Speaker 2:I'm not happy.
Speaker 1:This is this is the you should be celebrating. This is the best time to listen to Chinatalk. If you're not listening to every single episode that you put out, you're falling behind. And so it's gotta be just a bull market in every single stat you're tracking. No?
Speaker 2:Except for except for America. Except for the America stat that I'm tracking, which is the only one that I care about, John. I wanna win. I wanna industrialize. I want a golden age for America.
Speaker 2:But what we are seeing now is twenty fifteen warriors era execution of how to lose a trade war.
Speaker 1:But what about, reframing it using to use a metaphor, like, imagine playing, like, a beautiful, beautiful violin concerto on the Titanic as it sinks. Like, that would be, laudable. Right?
Speaker 2:Yeah. It it's really fun to play a violin until your conductor gets thrown in a van and sent to El Salvador.
Speaker 1:Oh,
Speaker 2:yeah. The world we're living in, John.
Speaker 1:Oh, no. Well, I mean
Speaker 3:Jordan, it's great to see you.
Speaker 1:Yeah. Good. Yeah. Good good to have you back. You came on with a bang.
Speaker 1:Maybe we could set the table, like like, how have you been processing the the the tariffs? Have you been on a roller coaster? Is it had been has it just been black pilled the whole time?
Speaker 2:It's all the way down.
Speaker 1:It's all the way down.
Speaker 2:Look. I wanna believe. I really wanna believe. I was gonna give him a chance. I was sitting there, you know, January 10.
Speaker 2:Like, look. This guy, he's got some moves. He's got some moves. Okay. He wants to change the way r and d gets funded.
Speaker 2:He wants to bring manufacturing back. He wants to fight a trade war with China. I mean, like, sure. Okay. You can you can I'll put in some table stakes for that.
Speaker 2:Yeah. What what were can we start can we start with the can we start with the research, please? John? Geordie? Yes.
Speaker 2:Let's start with that.
Speaker 3:Okay. With the facts.
Speaker 2:Xi Jinping would cut off his left hand for the basic research university industrial complex which America has, which no other country in the world can hold a candle to until '20 until late twenty twenty five where every single good STEM PhD and STEM, and STEM professor who who can get a job anywhere decides they're fucking sick of this and doesn't wanna live their life terrified that they're gonna be taken away from their family and their research and, you know, their all their professional opportunities because they got a fucking traffic ticket.
Speaker 3:And this
Speaker 2:is the world we're living in now. John, you went to Northwestern. Right?
Speaker 1:Northeastern.
Speaker 2:Yeah. Forty forty visas already. Yeah. 40 people's lives fucking ruined because, Marco Rubio thinks that cool to, to pick fights with biotech and CSPhDs.
Speaker 1:Yep.
Speaker 2:What are we doing here?
Speaker 1:Okay. What about let's go back to the initial trade war with China led by Trump. Twenty nineteen, tariffs kind of go in this tit for tat spiral, 34,000,000,000 on on US goods, 34,000,000,000 on Chinese goods. We were discussing it at the top of the show. Starts with 50
Speaker 3:rookie numbers.
Speaker 1:Then $250,000,000,000. What is your postmortem on the twenty nineteen US China trade war?
Speaker 2:The twenty nineteen US trade, it was kind of a wash, and and you can sort of write it off because The US economy was growing, and we weren't picking a trade war with every other fucking country on the planet.
Speaker 1:But is it is it possible that we land in the same place? And in the next four years, you're like, well, yeah, we can write off the first two trade wars, but the third one's the real bad one. Right?
Speaker 2:Is that possible?
Speaker 1:Here's the thing.
Speaker 2:Here's the thing. John, Jordy, tell me about what the risk free rate is and why it matters for a capital investment.
Speaker 1:Yes. Yes. It's very hard.
Speaker 2:We have we done that yet? We talked
Speaker 1:about the basis trade. It's not looking good.
Speaker 3:Well, yeah. Joe Joe Joe Wisely. Joe was was talking earlier with with Tracy specifically about in the the the UST bill being potentially the greatest export that we could ever have. Mhmm. And I think that's an interesting positioning.
Speaker 3:Can we talk about your your audience are is, you know
Speaker 1:Deep state people?
Speaker 3:No. I I was gonna go I was gonna go towards
Speaker 1:He is by his own definition. He says he's our cash for the deep state.
Speaker 3:Okay. Yeah. Yeah.
Speaker 1:Yeah. This is not me making it up. This is what his his words.
Speaker 3:It's great.
Speaker 2:Love of freedom and democracy. That's that's
Speaker 1:what we're encompassing.
Speaker 4:Okay. Yeah.
Speaker 1:Yeah. Yeah.
Speaker 3:What's reaction from your business audience right now? Are they still at a standstill? Is it, you know, we can't make any decision because we don't have full clarity on what the world looks like in ninety days. You know, what
Speaker 1:Look.
Speaker 2:It's not it's not gonna be ninety days. It's gonna be four years because this man likes to be in the headlines more than he likes literally anything else. So he is going to keep doing things that put him in the headlines. He can't take wins. He was handed
Speaker 1:completely different. Right? He was yeah. Like, yes. Yes.
Speaker 1:He was
Speaker 2:gonna be in
Speaker 1:the headlines next month, but it could be because he's fighting with Rosie O'Donnell. Right? And that has a plain different Oh my What
Speaker 2:I would do to have him pick fights with Rosie O'Donnell? That is the timeline that we should all be rooting for. We need Donald Trump, if you wanna take it all out on me, I'm here. I'll I'll I'll I'll I'll be the sacrificial lamb for America's basic research ecosystem if you wanna pick if you wanna pick a fight with a shitty podcaster. Yeah.
Speaker 2:I mean, like, you know, it's it's we've got we've got a brain drain of America. We got a capital drain of America. We got a geopolitical drain of America because he wants to be buds with Putin and take over Greenland. And, oh, by the way, we are selling the best ships we have to China because Jensen spent a million dollars to have a burnt steak at Mar A Lago. I mean, it's like, truly, we're just checking off
Speaker 3:Yeah. That
Speaker 2:kind of dumb thing to lose this tech war.
Speaker 3:Yeah. We we can you can you talk about the decision that that kind of flew under the radar? Was this Friday or I don't even know if it was yesterday at this point, but NVIDIA is allowed to export the what what is it? The h h 20.
Speaker 5:So it's
Speaker 2:h 20. It's an inference trip which skirts right under the export control regulations And Biden didn't do it because he's an idiot. And now Trump isn't doing it because he likes getting, you know, people to pay a million dollars to have dinner with him. There is no reason. NVIDIA does not need the money.
Speaker 2:It's like $2,000,000,000 of revenue. Like, they will be just fine without it. But we're living in this timeline where if you, you know Yeah.
Speaker 1:So if it's 2,000,000,000 in revenue, then, well, it's only 2,000,000,000 AI data center capacity, and that's not enough to build a GPT five level model, and so it's irrelevant. Like, those two things can't be the same. Right?
Speaker 2:Yes and no. I mean, it's like, okay. Sure. So, like, what are what are what are, like Okay. Like, like, like, Like,
Speaker 1:I'm I'm running superintelligence.
Speaker 2:I'm running too high. I mean I mean, the the the
Speaker 1:the steel man here is that you like like, yes. You don't want them building superintelligence GPT seven level models. Like, you know, the the the the project Stargate, the $500,000,000,000 data center cannot be built in China. But, yeah, take $2,000,000,000, fine tune GPT outputs. It's still gonna talk about Tiananmen, and you have DeepSeek, which is basically an American model, then or Manus, which is clawed, like, vended into China.
Speaker 1:And that's actually we were talking to Tyler Cowen yesterday about this. He was saying that this is a win for American hegemony because the Chinese leading models have American preferences baked into their weights at a very deep level.
Speaker 2:Yeah. I mean, if we're if we're, if we're thinking that our models are gonna democratize China, I mean, that's a that might be one or two steps too far away from me. It would be like trying to nail
Speaker 1:the jelly to the wall.
Speaker 2:Playbook, John, is the way we kind of already are, which is sell all the chips into Malaysia. And if Chinese companies wanna sort of run their cloud out of Malaysia and Singapore, then okay. And we can shut it off if and when we decide we wanna shut it off. But selling chips directly into China, there's no upside to it. Well, well, what just opening yourself up to this, like, whole other universe of risks of maybe these $2,000,000,000 of chips actually do end up being enough to fast follow and, you know, compete with, like, a a totally fucked up meta and an open AI who doesn't really like a
Speaker 1:hyperscaler here. You say that 2,000,000,000 could ever compete with Can we 65,000,000,000 in CapEx. That's ridiculous.
Speaker 3:Can you break
Speaker 1:down spend 65,000,000,000 this year. All of them are
Speaker 2:spending Okay. They're all spending 65,000,000,000 every single hyperscaler. Next quarter just what that $65,000,000,000 number is gonna be looking like. Mean Probably higher.
Speaker 1:Probably higher.
Speaker 2:I wish. I I would up to. Love to.
Speaker 3:Jordan's not he's not AGI pill.
Speaker 1:He's so black filled.
Speaker 3:He's his timeline is so extended. Yeah. We're we're talking twenty twenty eighty at this point.
Speaker 1:2080.
Speaker 3:'20 '80. I wanna so so we covered earlier on the show the sort of venture capitalist version of the history of US China relations. So like sort of high level, you know, trying to trying to get into the dynamic. There was a few days ago, April 11, the US told China to request a Xi Trump call. This was reported which is sort of a funny, you know, it's just a funny way to go about trying to
Speaker 1:get a phone Yeah.
Speaker 2:This is crazy. Here's my number. I mean,
Speaker 1:just call. Right? Just call. Just call. Just Just pick up
Speaker 3:the phone call. This is this is No. But but talk about talk about the history.
Speaker 2:This is how this is how you do negotiations.
Speaker 1:Isn't unique to Trump. Like, this was the same negotiation that we saw with Reagan, Nixon, Clinton. Like like, the the the whole politics of diplomacy have always been extremely convoluted, and there's never been an era where it's been like, oh, yeah. This it was the Democrats that always just picked up the phone and called. There it was always the old school Republicans.
Speaker 1:It's like Trump's just repeating the playbook of the last sixty years of US China diplomacy, in my opinion.
Speaker 2:John, have you done a video about Qian Shui Sen?
Speaker 1:No.
Speaker 2:If if not, you should.
Speaker 1:Okay.
Speaker 2:Okay. He
Speaker 4:is a
Speaker 2:sorry, let me get the Yeah. Okay, so born in China, came to The US to study at MIT in 1935. He was, got a clearance during World War II, was a part of a lot of classified work, was best buds with Vannevar Bush, you know, part of America's missile program in the early days. 1950, McCarthy shows up and blows up this guy's life. He says, you know what?
Speaker 2:Fuck it. I'm gonna move back to China. And proceeds to turn into the father of China's nuclear and intercontinental ballistic missile program. And this is the playbook that we're currently running now, is we're taking all of these smart people and telling them they're not welcome here. And this is I I I am so sure of it, and it's just like it's just ripping me up inside that ten, fifteen, twenty years from now, we are going to see companies founded, we're going to see weapons developed by people who at a sort of hinge moment in their life, you know, 30 years old, they're thinking about where they want to build their life, they're thinking about where they want to start a family, and they see that, you know, this country is not open to them.
Speaker 2:And and it's just like, we have this founder cult in in in Silicon Valley. Right? You know, the 10 x engineer, like, are gonna be a handful of people who are gonna end up kind of determining the future of technology and the future of the world. And we're taking on risk, which we really don't have to Yeah. By telling
Speaker 1:all these people I I agree with all of that. That's not about communication and picking up the phone, but also
Speaker 2:Okay.
Speaker 1:Also, China, they they do have TikTok. They do have DJI. They do have Unitree. Like, they have the companies already. Like, it's not like they're they're like, oh, we haven't thought to build a competitor to Facebook or Instagram.
Speaker 1:Like, they've done it successfully. Like like like, we're we're in a competition now.
Speaker 2:Exactly. We're in a competition, so we can't be fucking around anymore.
Speaker 1:Again Yeah.
Speaker 2:We're gonna have four more years of fucking around. And it's it's just dumb. And like I still I still think we're gonna pull it out. Like I still I still have faith. You gotta believe.
Speaker 2:Right? Yeah. But it's
Speaker 1:just We're gonna be sitting here in in six years being like, yeah. We can totally sweep that one under the rug, but this one's the real deal.
Speaker 2:Really hope not. We can help. I really I really hope you're right, Josh.
Speaker 1:Yeah. Yeah. Should. Should. You should hope that we're right
Speaker 3:about this. No. But but talk talk to me going back to my original question. Maybe it's not maybe it's not as exciting for you, I think it's just interesting.
Speaker 5:Okay.
Speaker 3:What's up with, you know, The US and China never being able to consistently have clear direct communication between the White House and Beijing? Yeah.
Speaker 2:I think there's a really interesting arc of the way that the Chinese government has sort of viewed US China interaction over the past fifteen years in a way that's different for really the second half of the Cold War. So from like, you know, post World War II Stalin up until really the Cuban Missile Crisis, the US and China, The US and Soviet Union weren't really talking. And then you had the Cuban Missile Crisis, people got really freaked out And both countries realized that, yeah, it actually probably behooves us to be able to interact with each other in a more straightforward way as opposed to, you know, finding like business people and like, you know ambassadors handing people notes because we don't have like good sort of leader to leader interactions. And then even though there were scares for the rest of the Cold War, at least there was enough of a kind of muscle memory in terms of these two countries interacting with each other that people started to get a better understanding of, you know, what strategic intentions were. So the Chinese government, I think, like, first off, does not price in the risk of an accident turning into something really horrific nearly as much as the Soviet Union did over the course of the Cold War, and they see that, you know, the the the Biden administration and the Trump administration and and the Obama administration as well, like understand that this is can be a scary thing, and they see it as a shit to negotiate with.
Speaker 2:So if you're if you're not worried about like, you know, planes hitting into each other and you think you can get something out of, you know, setting up like regular dialogues or calls or what have you, then, you know, you're gonna you're gonna put it on one of your five asks. But the the sort of the other thing that I think, you know, Xi's looking at when he saw what happened to Zelensky in the in the White House, right, is like, you know, you I think the willingness to assume like interpersonal risk is a lot lower for that system and they want to have stuff a little more baked out before you kind of like do one of these like leader to leader conversations. So whatever. They'll talk at some point. Like, I don't know if they're going to like end the trade war.
Speaker 2:I'm not really sure what like the aims are because it seems like they changed a lot over the past two weeks and they'll probably keep changing. But, it's just hasn't really been a priority for the Chinese government because it's a thing that they think they can squeeze us on is is the just us wanting to have these conversations to, you know.
Speaker 3:One one of the thing that that's repeatedly come up in our conversations is just the nature of, you know, US tech companies broadly being banned from doing business in China, everything from, you know, Google to Meta, others. And a lot of the people that come on our show are not even allowed to travel to China because they're in anything defense, aerospace related.
Speaker 1:Sure.
Speaker 3:On the ground in China, do they do does the government or the the military, I don't even know how much of this information would ever appear online and available, do they laugh at us for allowing TikTok and DJI and UniTree? Do like do do you think it's silly? It's like you're tariffing our, you know, cheap toys, but then you let us sell you still let us sell DJI You still still let us distribute brain rot to a hundred. Like, is it a funny thing to to them? Because to me it's a terrible irony and that like we just can't get a TikTok ban across the line or we can't we haven't been able to get them to sell it yet.
Speaker 3:And and again, like these sort of industries and products that have, you know, extreme national security risk, you would think those would be the easiest things that The United States could make a sort of collective decision on that would. So I'm curious what their sort of like reaction to the the silliness of it all is.
Speaker 2:Oh, yeah. Laughing laugh laughing their way to the bank. I mean, like, there there there is there is definitely like some trade war shit that needs to be happening. Step one, TikTok and DJI. You said it yourself, Jordy.
Speaker 2:I mean, it's like, I would love for there to be a, like, really wonderful globally competitive supply chain that America can create the sort of autonomous drones that Ukraine has been able to to leverage. And even they still have to buy stuff from China because there's not enough there there ex China. But instead, we're kind of going in a very different direction. So, yeah, I mean, it's you're you're you're totally right, Jordy. It's just there's there's not a strategic vision that we're seeing out of this political moment.
Speaker 2:And I think they're you know, not to put China Two Hundred feet tall, like, there's definitely things that they're not they're going to do wrong and their economy isn't perfect and they're sort of like techno industrial complex is not perfect. But they figured out a lot of this manufacturing
Speaker 3:stuff and Yeah. So the one thing that's clear, very, very good at manufacturing. I don't think anybody disagrees on that. How do you judge, like what do you look for to understand, you know, if China was really suffering right now from these new tariffs, we wouldn't know about it, right? It would be, it's sort of like, it's not like they're gonna come out and start saying, you know, talking to the people publicly and
Speaker 1:saying stock market. Right?
Speaker 3:Yeah. Sure. But but like there's a lot of information control in the same in in a way that that's not necessarily the case. Like if a US business is being affected by the tariffs, that person's gonna go on
Speaker 1:LinkedIn Video goes on. TikTok Complaints.
Speaker 3:Come on TPPN and they'll say like, yeah, my costs are up, you know, whatever 300% and
Speaker 1:Unless they're coping really hard.
Speaker 4:Yeah. But
Speaker 3:how how do you try to judge the the actual impact of the tariffs in the domestic? You know,
Speaker 2:Yeah. See what you're saying, Jordan. I don't think it's as opaque a system as like, you know, the the the the CIA and different corners of the US government were having these, like, big drawn out debates in the nineteen sixties, '19 seventies, and nineteen eighties about how large the the Soviet economy was because they were saying like, okay, let's say they spend 10% of GDP on, you know, on defense. So like, you know, what's the base that they're doing this often? It was really hard to figure out how big the how big the Soviet economy is.
Speaker 2:I don't think it's that hard to figure it out today. As as John said, we have trade data. We have the stock market. Have, you know, quarterly earnings from from all these companies. And I think there's, like, enough out there of, like, chatter of people saying, like, oh, shit.
Speaker 2:I got laid off because of the trade war. That, like, you know, you'll you'll you'll be able to pick up the the the atmospherics just in the same way you you can by having, you know, reading Joe Eisenthal's Twitter feed. Right?
Speaker 1:About what what about kind of the the new ally ships that are building? I mean, you obviously you were very upset about, like, you know, America kind of potentially frustrating trade partners like Canada, UK, Australia, France. Like, we shouldn't be pushing them away. Some of that subsided. It still feels like, in general, if we're going towards a more bipolar world, and you're and you are creating some sort of broad Western alliance, like, you're gonna put the five eyes together.
Speaker 1:You're gonna put NATO and America together. But who is who's on China's side? I've been worried about, like, a China, Russia, Iran coalition forming. Are there other countries that are starting to flip into Chinese allyship more seriously post trade post trade war?
Speaker 2:Yeah. I mean, this is a really interesting thing is like the reason that China wasn't really able to capitalize during trade war number one is because they were feeling their oats, and they thought they could still do wolf warrior diplomacy and and bully other countries around even though Trump was sort of like shitting on on them in their own way. And it'll be fascinating over the next few years to see whether or not they take they sort of learn from that experience and take a more conciliatory approach and and, you know, don't try to, like, you know, nickel and dime these countries in order to really potentially win them over. But, you know, Southeast Asia, like, okay. I guess, like, we we did 70 per six 76% tariffs on Vietnam, and then we cut it back.
Speaker 2:But, like, who knows where we're gonna go with that? But Sure. The the the it's it's it's two things. It's like, are we going to go to China, or are we just gonna cut trade deals with every other country x The US so that we're going to you know, the the sort of, like, the free world x US is going to have this, you know, thriving inter, you know, thriving trade ecosystem, which we're just not going to benefit from because those supply chains won't run through The U. S.
Speaker 2:Or our consumers won't get to benefit from or our exporters won't get to benefit from. So, you know, there is like there are a lot of, like, intellectual risks here. There's the intellectual risk of, like, thinking China is a hundred feet tall, and, you know, we're we're we're shot, and there's no way we can compete with these companies. But there's also the the intellectual risk of thinking America is 200 feet tall. And we are, like, you know, we're still only 25% of global GDP.
Speaker 2:And that's that's a whole lot of GDP out there, which is gonna be thinking about what to, you know, what to do and who to trade with and where to invest. And so I have a question.
Speaker 4:What is
Speaker 3:the so China blocked orders of Boeing aircraft to their national airlines. Are we gonna see bunch stream. Yeah. Yeah. That would be cool.
Speaker 3:They prefer the No.
Speaker 1:Two six fifty e r.
Speaker 3:Do you have do you have any sense of of I'm assure I'm I'm assuming that China's been aggressively trying to clone various, you know, US commercial aircrafts for years. Is that as advanced as the automotive industry in China or is it a is it a ways behind?
Speaker 2:Yeah. It's interesting. That one's kind of been like the final frontier. It has been a clear national priority for a very long time, and jet engines are really hard, apparently, even if you layer on industrial espionage and, like, an enormous amount of state support. My guess is that, like, the reason it has taken so long for COMAK to to get its shit together and and build competitors to Boeing and Airbus is is probably the fact that it is state owned and there are just, like, poor incentives going on versus the sort of free market free for all that you saw on the electric vehicle industry just attracted better talent, more capital.
Speaker 1:Moved over into Yeah. Cars, and they're not doing that in planes. Right?
Speaker 2:Yeah. So I think there's, you know and there's, like, relatively limited upside. It's like a national prestige product as much as it is a capital, you know, a capitalist endeavor, to make these jets. So we'll have to see. I mean, I'm like, look.
Speaker 2:If they can't do it, the the orders will just go to Airbus. And, like, that sucks, but it is what it is. And I think, you know, these that industry in particular, there there's so much, like, geopolitics baked into it that Yeah. I'm not shocked that that was that was on the, you know, first list of, like, things to, things to start cutting from a US import perspective.
Speaker 1:Last question. You seem pretty black pilled. How's Dylan Patel doing? Have you done a wellness check? You seem pretty black pilled when you talked to him a few days ago.
Speaker 1:What's his mindset like right now?
Speaker 2:I wish him the best. I don't know. I think he's it's just, like like, I thought AI would be our out, but if we're gonna sell them all the chips and we're gonna screw up the, like, American capital base that we're banking on to fund all this AI expansion, and we're gonna throw away the AI diffusion role such that, like, the chips are actually just gonna end up going to Saudi Arabia and Qatar and Brunei, then, you know, it's it's just we're just taking on risk left and right. And like, we might be able to pull it out. But it's some it's it's it's hard to watch.
Speaker 2:Thank you for letting me have turned this into the Jordan Schneider Therapy We're gonna leave you with a
Speaker 1:white pill one way or another. Okay. I just had
Speaker 3:a question of like where does The Middle East really sit in all of this. Right? It feels like in many ways, you know, we cover business and technology. In many ways, the relationship between The US tech industry and Saudi Arabia, you know, Qatar, UAE is, you know, thriving just due to the the capital flows. But, you know, how do they think about even pickings you know, I haven't seen themselves inserting themselves into the story over the last couple weeks, and I'm sure that's for good reason.
Speaker 3:But I'm curious how you see them as a player in all this.
Speaker 2:Yeah. It's interesting. I feel like I feel like their diplomatic system, like, knows how to play the kleptocracy game much better than Canada or Europe. You know, they got their reps and sets when it comes to dealing with, you know, family dynasties and whatnot. So they're smart to keep quiet.
Speaker 2:I think, you know, the the diffusion rule, that the Biden administration put out at the very end was really a play to force them to pick sides. And basically, the the deal was like, look, if you want access to the future, if you want access to compute, then you really gotta play ball with us and you gotta play ball with our AI cloud providers and our sort of like broader defense ecosystem. And if you're gonna, you know, have too much China AI in your, you know, in your national bloodstream, then we're gonna reconsider whether or not we're gonna let you, you know, buy chips and access our models and whatnot. So we'll see. This is a regulation which I think is gonna be a really interesting bellwether because it was a very clever hinge to sort of force the Middle East governments and the governments and the money that came with that to invest in the Western as opposed to the Chinese technology stack.
Speaker 2:And look, if they're if they don't love what they're seeing, maybe they'll be more excited to if they a, don't love what they're seeing and b, we we take away the jack that we had around them, then Yeah. You know, you could see them starting to to wiggle in other directions and and take and take side bets on a pot that they may have had to have gone all in with us if it wasn't for all the craziness we've seen over the past few months.
Speaker 3:Got it. Very last thirty second question. Sure. How real do you feel the yield coming out of TSMC Arizona is or is it marketing the admin that, hey, we're doing what you want and NVIDIA coming out and saying they're gonna make Blackwell chips in The US. You know, it's hard to judge whether it's hard to understand how real it is when when, you know, we know that people get excited about, oh, we're gonna produce $500,000,000,000 of of black wall chips in The US in the next five years, think is what they were saying, which sounds amazing.
Speaker 3:But in this current dynamic when there's so so many different conflicts and so much on the line, it's hard to know what's marketing and what's like actual, you know, know Yeah.
Speaker 2:It's a it's a good question. My my rule of thumb is like, you can't lie to the SEC. So just like wait for the filings. But look, there are everyone's everyone's trying to figure out how to get on this guy's good side and maybe this is something that might work. So, you know, I've like, it's a it's a it's an interesting sort of, like, policy trade off.
Speaker 2:Like, would we rather have cheaper AI hardware that, like, Microsoft and Amazon can buy? Would we rather have it be in The US? I mean, like, if it if if the sort of pressure is forcing more stuff to be built in America, like, are pluses and negatives from that, especially Yeah. If we're doing, like, accelerated timelines and, the prices are going up. And I think this applies to TSMC as much as much as it does lots of other industries.
Speaker 2:So look, like they're like they're more pot committed than almost any other any other company in the world, and they don't really have an out for for this. So they're gonna do everything they can to, you know, make make Arizona work and make the relationship with this administration in this country more broadly work. But I'm almost more concerned about the other the other companies who don't have as much money to burn and, you know, have other options when it comes to setting up manufacturing plants and finding kind of like end users to sell to that are just going to look at what they're seeing now and like, We can we can we can open that up that playbook again and see see what else is what other countries and locale are on the agenda.
Speaker 3:Alright. Well It's fantastic. Thank you.
Speaker 1:You
Speaker 5:On
Speaker 1:a spirited debate. We'll figure this out. In America. We're built different. America's gonna be fine.
Speaker 1:Don't worry about it. We're good. We're Another thousand year reign. It's all good. Just relax.
Speaker 1:Just just put out great podcasts. Cash in while you can since China's in the news. Tell people where they can find Chinatalk. Give the pitch.
Speaker 3:Chinatalk. Chinatalk Media. Chinatalk media.
Speaker 2:Chinatalk 1 word, your favorite podcast app. Yes. I promise you I'm not that negative most of the time. It's like eighty twenty good vibes.
Speaker 1:There's some great stuff on there, and we appreciate you coming by. Golden retriever mode. Yeah. Activate golden retriever mode. Be a little bit more positive and
Speaker 3:and then Alright. We got another guest.
Speaker 1:White males next.
Speaker 3:We have another guest.
Speaker 1:No. No. That is not family friendly. Get out of here. We'll talk to you soon.
Speaker 1:Thanks for stopping by, Jordan.
Speaker 3:Bye, Jordan.
Speaker 1:This is great.
Speaker 3:I missed I I missed that completely.
Speaker 1:Yeah. He did a he did a little little squirt gun to the head motion. Not good. Never. Not not family friendly on this show.
Speaker 1:Anyway
Speaker 3:I'm gonna get the sound
Speaker 1:effect on Aaron Ginn coming in the studio. He's written some absolutely banger takes about China GPUs. He's been called the GPU whisperer. And, there's a fascinating article I want him to break down for us. He wrote this in January twenty second of this year.
Speaker 1:It's time to build America's cyber nuke. We desperately need a deterrent to stop wars before they start. I wanna hear him explain it. Aaron, welcome to the show. How are doing?
Speaker 5:Hey. Doing well. Hey. Y'all hearing me alright?
Speaker 1:Yeah. Yeah. We can hear you fine. Would you just, give us a little walk through of your background, what you do, how you got to the place you are in today?
Speaker 5:No. That's a good question. As, you know, I say, like, the Lord works in mysterious ways. So so we actually started this project. It's my fourth company.
Speaker 5:We started this project actually as a, help you leave the cloud. Don't be canceled. Mhmm. And so we're what we found out is the data centers didn't have, like, a software stack to help them monetize customers. Mhmm.
Speaker 5:So they didn't they, you know, they basically they were mentioned, like, you're a merchant selling T shirts, and Shopify didn't exist. Mhmm. And so then we started building this. And then when the GPU craze started, the data centers were like, we need something to run this stuff, and then we were there. And so we started that four years ago.
Speaker 5:And so, like, I can I can we we never had the right customer in mind, but in terms of, like, a lot of the other stuff that happened with this space, I it it just had this really nice merriment of, like, I've been working in public policy for over a decade as well? I have a foundation in DC, Public Policy Think Tank, and I also been, like, doing, like, political stuff on the side. And then it just so happens that, like, AI is the fastest, you know, regulation in Silicon Valley history, and people view it as if, you know, it's regulated under missile technology law. That's how it's regulated right now. Mhmm.
Speaker 5:So so be people in DC literally view the Jensen as selling weapons of mass destruction to other countries. Mhmm. Yeah. So that's why they use the word diffusion, proliferation. Right?
Speaker 5:Those are nuclear weapons words. So those are that's this is not a this is not like in in terms of politicians. They don't view this as if, you know, you're selling this, fun little gaming gear to to to different countries. So, so, yeah, so that's how we got into it. And, you know, now we're, in, I think, over a dozen countries.
Speaker 5:We are at 50 data center or something like that, doing hundreds of millions dollars a year of transactions. So, so, yeah, so we think GPUs are gonna be everywhere and kinda have reached out of gate velocity. There's not really much the US government can do about it at this point.
Speaker 3:Yeah. How did you rack react to the new NVIDIA deal that got announced in the last week? They don't know. Another two another $2,000,000,000 chips of chips to China. You think it's
Speaker 5:just Oh, you mean the the the issue on or they're talking about the the reshoring thing with TSMC and Foxconn? Which one
Speaker 3:are The first part.
Speaker 5:Oh, yeah. The well, I mean, I well, I think it's positive, be because I I think that the approach that Americans doesn't understand is that the way that China, and so, like, I'm a Chinese exile. My family's, communist China. We fought for, the KMT, and then during the Cultural Revolution, half of my whole family got murdered in China, and so I fled to Taiwan and then here. So, you know, I'm I'm a I'm a hawk of all hawks.
Speaker 5:And then my foundation also broke the story. Do you remember the Chinese Chinese government buying land near the Bel Air Basin? So, like, my my my policy foundation, like, broke that story. Wow. So, and, like, I I was telling John that, all, like, a bunch of, like, Chinese ambassadors blocked me on Twitter and because I was, like, harping on.
Speaker 5:It came from a lab. It came from a lab. Like, sort of sort of thing. And and but but, anyways, like, the I think that the Americans, like, like to think the world works as if Western kind of frameworks and philosophy. And and a lot of if you like the history of Chinese and the way that they have accelerated their, innovation curve, which is, by the way, like, not we we sort of treat that in post Nixon era kind of frameworks as, how they we got schooled.
Speaker 5:The pattern the pattern of China has always been to steal technology from other people. And, and so if you look at even how they got the first nuclear weapon, so the way that they got that and this is just just a a quick side story because I think it's helpful for for, the West to understand just how, like, how they work. So, if you remember, Eisenhower was asked, would we ever use a nuclear weapon against China to defend Taiwan? And that actually whole story was planted by the Chinese because China was trying Mao at the time. Mao was so crazy that even Stalin was guy Stalin was like, that dude is freaking nuts, and he kills his own people too much.
Speaker 5:Right? He's like, he was way too far. And, you know, I just do a couple million. He's doing tens of millions. Right?
Speaker 5:So so Stalin was like, absolutely not. We're never getting you nuclear weapons ever. Right? Because you're crazy. And and so the Chinese basically invented this narrative, its story, planted in DC, created this line within the state department that, like, well, they couldn't invade Taiwan.
Speaker 5:And so then got to the media, and the ice tower was asked. And then, then it was posted, he said, yes. We would use a nuclear weapon to to defend Taiwan. So then what Mao does, he goes back to Salin, and he goes, hey. Do you want to have America on your borders?
Speaker 5:And Salin was, no. I don't want that, but I don't wanna give you nukes. So what I'll do is I'll send Russian scientists to China to just codevelop a nuclear reactor with you, but just don't take my secrets. Right? Then five years later, they have nuclear weapon.
Speaker 5:Right? So so they've done that with nuclear submarines. They did that with fighter jets. They did that with, SAMS. They did that with aircraft air aircraft air technology.
Speaker 5:So this is just, like, a long line of history of, like, how they kinda work as, like, a a country. So but but when you're in an environment when they have 10 times the number of engineers as we do, they have a relatively centrally organized government that can execute big initiatives, but it's it's still a highly federalized government. So it's in Shanghai province and Chongqing province. The governor's kind of, like, all work separately, like like in America. Like, they are all they're hyperfederalized.
Speaker 5:But but, generally, they come up with these, like, kind of big initiatives and big plans. And so when it comes to, like, GPUs, we have to realize that they are very much closer than we think. Like like, the reason why iPhones are built there is because it's so technically complex to build an iPhone that we can't do that anywhere else. It's not because it's cheap. The cheapest place to build things is Mexico.
Speaker 5:Like, we just buy buy labor hours, but Mexico doesn't have the typical capability of doing that. And so when we have the the situation with GPUs, you have to understand that that it's not just, like, we can actually protect this technology for that long. The actual modes around the information asymmetry that we have as a nation towards China on the investment of chips is much smaller than than we think. Mhmm. And I think it's, like, under twelve months.
Speaker 5:So if you think they're, like, five years away, I can be sympathetic to the airports controls, but if they're under a year, the goal is to win. The goal is to reach escape like, I I I I I remember. Right? They brought everyone Los Alamos not to, be secretive. It's because we had to win.
Speaker 5:We had to be first. Because whoever's first defined the entire era of what nuclear weapons, became. And so that and and then we actually, by the way, cut off all of our allies too. We we took the mathematicians from Britain. We said, hey.
Speaker 5:Yeah. We'll share everything, and then we made the nuke, and then we cut them off. And then they went to go build their own nuke. So and so it's it's kind of the same situation where building GPUs is actually much easier than the US government thinks, which is why it which is why Amazon's doing it, Microsoft's doing it, Facebook's doing it, Broadcom's now a trillion dollar company. And the second is that their actual ability on the Foundry side is much is more like a year or two behind.
Speaker 5:Mhmm. So in that scenario, it becomes where we need to distribute our technology, like a Boeing asset, to as many places in the world that wants to take it. Because then that becomes our footprint that we control, that we can continually express and influence to that other country. Otherwise, Huawei is gonna show up and it's gonna be like, hey. My thing is, like, you know, 80% is good, but it's cheap, and I'm not gonna cut you off from the most important technology wave in in, you know, in in the next ten, ten, fifteen years.
Speaker 5:And that's a pretty compelling argument if you think you're in another country. And and so that that's why think this reorientation has to happen around where we actually are as a country in terms of how far we are ahead. But, also, we can take advantage of that because the stuff is, like, quite easy to deploy compared to, like, CPU infrastructure and as well as the world wants it. And the and the the most recent controls are a little bit dishonest because if you if you go look at the January 15 ruling ruling, it it it adds Greenland and Portugal and Poland and Finland and adds Greece and it adds basically everywhere in the world, like 19 countries. So do we really think that Greenland is gonna diffuse GPUs to China?
Speaker 5:No. It's because they have cheap power. Right? So it's turned into this, like, protectionism thing where we're like, we have to protect our companies. And I'm like, wait a minute.
Speaker 5:Like, I thought this was about China. Like so now we're, like, doing this to, like, protect and, like, isolate. And so one reason why we we have lost the LLM race on the open source side because because we've done stuff like that. And and I and I think that's putting us again another disadvantage about another advantage for Huawei because Huawei can be like, hey. I have the leading open source models.
Speaker 5:TriNet does. It's it's it's unquestionable. And now I have a chip that's designed for it. So so, like, we're putting ourselves in kind of a a really difficult position and also a difficult position for NVIDIA, because the reality is, like, this is the goal where we have to achieve escape velocity first, like, with a nuclear weapon, not like we can hold off this wall and, like, play these games with countries and just slow them down. In reality, it's like, we just need to win.
Speaker 5:We need to stop, like, messing around and trying to do these kind of stupid games.
Speaker 3:Can you give a hyper abridged version of your your version of AI 2027? Like, what is hitting escape velocity look like? Kind of like potentially like a white look like? Like, what does winning look like?
Speaker 5:I think America should have the largest GPU cluster in the world as a deterrent. That's what I mean by the new button. And and that's a game of deregulating energy. They look kinda like the other things that I think are more widely accepted. Like, to me, it's all energy should be acceptable.
Speaker 5:We can build on federal land. All that stuff's great. And we actually need we need to reshor semis, but I think the way you reshor semis is not randomly tariffing stuff and then providing exemptions when you have a lobbyist that is convincing enough to go to the White House. I thought I thought we're supposed to be opposed to that as a shit, but I guess not now. So I so we we should focus on deregulation and then subset subsidizing actual development here, because then giving tax breaks for people to use the Intel Foundry or TSMC's Foundry Mhmm.
Speaker 5:To, like like, restore. But so I think it's building large DBplus in the world. I think it's being the production house for all advanced, semiconductor work, but then also having, so the way I'd view that is, like, a new Monroe Doctrine that America is not going to either rebuild, the supply chain for fans and servers or fiber optic cables or anything like that. Like, all that stuff, even that is not in China because China is too expensive to build there. So that's why they put it in Thailand and Malaysia and these other countries.
Speaker 5:But we can put that in, like, in Mexico. We can put that maybe, you know, we're outsourcing prisoners to El Salvador. Maybe we see if they can build fiber optic cables too. So, like, we can we can have a new Monroe doctrine of, like, reshoring everything within this hemisphere. Mhmm.
Speaker 5:And I think that's more of, like, a reasonable and also quite more achievable task than just saying everything has to come back into America. And then and and then the the next part relates to open source where, we have to just get better at at this. And and we haven't gotten better, I believe, because of protectionist measures that were mostly secondary effects. I don't think they were primary offered for that. Think it's kind of more of a secondary outcome.
Speaker 5:But that that's gonna be how the space wins. It's it's gonna be a myriad of models, models being used for wide different purposes, models that are highly specialized, and then kind of a separation between, like, platform and service companies to help you run comp models and then the infrastructure. And so the infrastructure part, we can actually win at because we're we're generally, like, good at we're good at, putting in the face. We're good at energy, but we're not good at power, if that makes sense. We're really good at, like, finding stuff and exploiting it out of out of the ground or or building different types of energy frameworks.
Speaker 5:We're not really good at power, and and I think that that's where the rest of the world
Speaker 3:probably the is, like, converting that energy source into a you know, basically transferring that energy into chips. Right? And, like, into the actual, you know, cluster effectively.
Speaker 5:Yeah. Yeah. But, yeah, the because you think that, like, power in our in our country is deregulated. Mostly deregulated, say, it's highly federalized. Mhmm.
Speaker 5:So just because the federal government says you should build power plants doesn't mean Virginia is gonna do it. Right? And and and that's designed to protect our rights as as a nation. It's designed to create the rights of the state. But the state ultimately is in charge of these things and has, the there's the reason why anything that's not enumerated in the constitution is given to the states.
Speaker 5:Mhmm. It's because the enumerate powers are designed to protect the states from big actions down as a dual of these things. And that's what's created actually a very stable political environment. And I do think I'm opposed to terrorists in general, but I think people are kind of overreacting. They think that this is the end of the world, and everything's gonna be done.
Speaker 5:I was like, if America's that fragile, like, lot of bad stuff is is is gonna happen either way. Because it's just not gonna be one person that's gonna take down our system because, you know and I voted for Trump, but the and I don't believe that just from a ideological perspective, but also just the nature of our country. If you look at the history of our country, it's been through worse and it has survived because of the system and the our ethos that we've built. So so when it comes to, like, this situation, I think it's I'll I'll quote a I'll I'll butcher a quote because he's he's way better at at than me, but there there was a there was a prime minister in England who used to say that I and that America is not good primary actor, but an excellent secondary actor. It wins secondary, never wins primary.
Speaker 5:And and it's because we don't generally rise to the task that's in front of us. We kind of, like, go play around Netflix and kinda, like, mess around for a while and, like, spend money on energy that doesn't work and, you know, kind of basically BS ing. And all of sudden, something happens. And they were like, we gotta go to the gym. We have to win, and we're gonna win.
Speaker 5:We're gonna be fucking ruthless. Right? And and then we, like, show up. Right? Yeah.
Speaker 5:And and the rest of the world's like, hey. Pay attention. Pay attention. And we're like, why? Like, there's there's a new episode of, you know, love on the spectrum.
Speaker 5:So that's what I show you. I like it. Yeah. And and I and so so I think that and that's what's Well,
Speaker 3:I think the interesting the interesting thing right now is is and I'd be curious to get your take here. We we had Jordan from China talk on just earlier, and I was asking him. I was like, do the Chinese laugh at us that we don't ban TikTok and DJI and Unitree and all these companies that are just obvious national security threats that, like, you could just end? And it would be controversial, but, you know, it's hard to argue. It's it's genuinely hard to argue in in favor of allowing these companies to operate here when they wouldn't allow the same companies to operate.
Speaker 3:Mhmm. I I wanna kinda unpack something at one thing. My sense is that you have a much greater fear of a US adverse adversary like China with super intelligence with the biggest cluster in the world than Mhmm. Super intelligence by itself. Right?
Speaker 3:So like you're is it is it true that you're sort of like, P doom involves, you know, China winning the AI race and then, you know, using that to exert, you know, power and influence over us Mhmm. And the rest of the world?
Speaker 5:It it's more of a, it's more of, losing soft power and relevancy. I think of it as a, let let let's think maybe, like, a metaphor to help. Like so let's think about airplanes. So Boeing is a national security asset. Right?
Speaker 5:The it exists at the pleasure of the US government. Right? And so it's not you know, obviously, don't own it. Right? But it's clearly something happened.
Speaker 5:We would do something. So same with, like, SWIFT. Right? Same with the US dollar. That's why the bond stuff is the most concerning out of the tariff dramas, the behavior on long term bonds.
Speaker 5:Basically, The US liquidity is declining, which is, like, a very scary kind of thing because we are the default reserve currency and being pegged to the dollar. And so the social influence is what creates wealth for America. That, being the policeman of the world doesn't mean just like where y'all live and where I live. The police aren't here in my house right now. But it's it's the fact of, like, they run it.
Speaker 5:And if when we run the free world, everyone gets wealthier, we get more powerful and more meaningful, and we can continue to bring people out of poverty, introduce human rights, all these, like, great things that I think God has chosen America to be a representation of to the world. And so I view more like like, China is not a kinetic country, and it it has kinetic abilities. Totally true. But the most meaningful war that China's ever fought is the Indosina War. It was a couple thousand people.
Speaker 5:That's it. In the history of their country. They and and they've got proxies. That that that's that that's true. Not at scale of Iran, but you obviously know Korea is the biggest proxy, and they played a little bit in Southeast Asia.
Speaker 5:But they're pretty racist as a country, so they don't really consider all the Asians equal. So it's just more of who's on the border. Like, China is mostly CCP. It's mostly interested preservation and insulation, but that's what they're interested in. And and and so because we express a mimetic desire to be expansionist because, fundamentally, the Western philosophy is expansionist.
Speaker 5:This is based on Judeo Christian frameworks about being evangelical and being free free orientation. I think it's also what humans are designed, to be freely, in commerce with each other. That presents an adversarial view to China. But, fundamentally, China, like like, I would give you another very, very specific example too. Like, a number of amphibian, shipping vessels to actually take people from Mainland to Taiwan, they have around twenty twenty or 30.
Speaker 5:They're actually capable of crossing that. So if they're planning on invading, you don't do 20 or 30. Right? And then the number of military you need is it's actually Hasn't hasn't
Speaker 3:hasn't Palmer talked about, you know Yes.
Speaker 1:Even commercial ships are outfitted to serve the purpose of an invasion?
Speaker 5:But but, again, that let's see if that's asymmetric. So, like, China thinks asymmetrically. They they don't think they think in in a manner of, how do I get something to happen towards my favor without ever having to fight a bullet? That has been their entire foreign policy since existing. Like the Stalin example, how they got submarines, how they got, fifth gen fighters, like, how they actually infiltrate Silicon Valley.
Speaker 5:Like like, they're they're everywhere in Silicon Valley. Like, that's totally true. They've taken RP. Was that asymmetric, or was that symmetric? Asymmetric.
Speaker 5:Like like so it it that's the way they think about the world. And so, for example, like, Xi had took took out right publicly. Why? It's because the way that CCP works is, like, when it's confronted with a significant adversarial problem, like like, the outside of of the country, what typically happens is they replace the president or the premier. And so Hu Jintao was the most logical person to actually come and replace Xi, so he's silent.
Speaker 5:If you look at also there are some all of a sudden, there's a bunch of people in circum central committee and the standing committee that have disappeared now. They have, like, have gone somewhere. It's because if the history of the CCP is that when it's confronted with a challenge, like T And M Square, when all of a sudden that person just disappears. It get they get sidelined in the standing committee. And and and that is the pattern of how the the the act because it's interesting in preservation of its party.
Speaker 5:Does a war increase the likelihood of preservation or decrease, like like, it decreases. Like like, every war does that. So because you know who's gonna win. So so they'd rather play asymmetrically because it's more of an assurance that they are gonna win because we, as a country, are not very good at that. Asymmetric takes advantage of our Western ideas.
Speaker 5:So do I I I
Speaker 1:So how do you think
Speaker 3:about that? How do you think about American soft power in the context of, you know, the the two highest profile consumer AI products that Yeah. I think are are top of mind right now are are Manus. And I'm saying that in a very American way.
Speaker 4:Manus. Manus. Manus. Manus.
Speaker 2:Manus. And Deep Sea.
Speaker 3:And Deep Sea.
Speaker 5:And Deep Sea. And
Speaker 3:and, you know, we had Tyler Cowen on the show yesterday and he was basically saying, you know, you know, these companies are basically trained on Western models. And by nature of that, they have the sort of Western thought is baked into them, and that's some form of soft, you know, soft power for the West.
Speaker 5:But but I I I just don't want to go back to Boeing example, I don't want France to have Huawei gear. I want it to be NVIDIA gear because that's an expression of America. So that that's what I want. Yeah. And and and that that's that's the mitigation thing of, like, if if we allow them to continue to asymmetrically take over the world through the by a new Belt and Road Initiative, the first one failed.
Speaker 5:It it because they because they couldn't actually fund it as a as a society, and they deliver the products is actually pretty bad. Go to You mean, like, mean, like roads
Speaker 3:that roads that are, you know, basically cracked in half and, like, dams that don't work
Speaker 5:and Yeah.
Speaker 1:Bolts that fall apart
Speaker 5:when you try to Yeah.
Speaker 1:Pull up your pants.
Speaker 5:And and and and it's everywhere in Africa. If you talk to we go, like, I've been to Africa and see some stuff behind me from Africa. Like, you talk to them, there's there there's there's cars there with Chinese letters and stuff, and they everyone in Africa says it's garbage stuff that they had to fix locally. So it just it just was a failed experiment, but they're they're generally very good at this kind of focused manufacturing to then act to export to create to create asymmetric influence. Mhmm.
Speaker 5:Like, that that's their goal. And and I'm more I'm more interested in how that, sort of with it relates to AI, how a footprint of Huawei, similar as it responded with with, ZTE, that how that would negatively impact our ability to influence foreign policy in Europe or in South America or Africa. Like, that that's more of my concern, not that they're gonna invade Taiwan. I just think that that's, like, a very American Western way of looking at the situation when the Pentagon says that it would take the entire People's People's Republic Army
Speaker 1:Mhmm.
Speaker 5:To to take up like, the entire. Not not not 80%, a 20%, including reserve, to run Taiwan if they actually did it. Or would it be easier just to have a Manchurian candidate? Mhmm. Manchurian candidate.
Speaker 5:Like like like like, flood the airways with, like, fake AI, you know, into Taiwan and try to flip a party. There is an entire party dedicated to closer relationships in Taiwan and the Taiwan parliament. So why would they invade? Like, it it's just an American way of responding because that's how we respond. Yeah.
Speaker 5:When, like, someone's like, hey. They punch us. We're like, hey. We're on the freaking launch you know, watch missiles from a frigate and, like, destroy your country. Right?
Speaker 5:That's, like, we the way we think about the world. It it and it doesn't mean that like, I'm again, I'm a hawk on China. It's like, is the enemy? And and I think we are appealing to the enemy, but these export controls and Mhmm. Regulating AI, trying to do these proliferation diffusion rules, treating AI as if it's a weapon and regulating as such, that enables the manners and the deep sea to to, like, to, like, to be prolific.
Speaker 5:Right?
Speaker 3:Yeah.
Speaker 5:So that's why we're not doing open sources because all these, regulation stuff is happening on on in the West. And China's like, whatever. We'll just diffuse the model and, like Yeah. You know, everyone go to town. Right?
Speaker 5:That we won the Internet because we are free and open. China's winning AI because it's free and open, not because they care about that.
Speaker 1:It's more a like a word. He's he's trying with Lama four. It's been a mixed reaction, but he is trying.
Speaker 2:Mixed. What
Speaker 5:No. Yeah. Yeah. Yeah. Yeah.
Speaker 3:You talk about you know, something I find fascinating is the companies that feel extremely significant right now to US National Security, Huawei, you know, the the TikToks, Unitree, DJI, they're all private. Right? And I'm assuming that that's like, you know, there there's various reasons you'd wanna be private. One is Mhmm. They can access plenty of capital.
Speaker 3:But another obvious reason is that if you don't, all your metrics can be made up. You can be doing all these things. You can be taking all the state funding, right? Like you can just basically serve the state in a way that it just becomes much harder. Mhmm.
Speaker 3:Do you expect companies, you know, not not financial advice or anything like that, but do you expect companies like, you know, Huawei and and DJI and UniTree, all these critical companies to just stay private forever?
Speaker 5:But, sure. I mean, I I I think of it as again, going back to, like, China is such a massive country. It's very federalized. So think of it as the Chinese people are very different than CCP clearly. And and so when China has something that's very successful, like a deep sea phenomena, what happens is that the CCP co ops it.
Speaker 5:But everything got to that point is China, like, the Chinese people. Like, the the because we we you know, speaking for my dad, who's Chinese, like, it like, it they're very industrious. They're very driven, people. It's just part of the mindset, but, also, also, you're very skeptical. It's a very, actually, low trust society
Speaker 1:Mhmm.
Speaker 5:Similar to, like, India and some other, Asian countries. And so, like, know, my dad's in CDs. He doesn't like stock market. Like, you know, he doesn't trust banks and stuff like that. So it's kinda like his natural, like, kind of, like, framework of the world.
Speaker 5:Wire. And and yeah. Yeah. And so so but but the desire to be industrious is, like, it's it's innate to the the kind of orientation around, what it means to have a Chinese philosophy. And and so when the c when CTV adopts stuff like that, it's like to get to the next level as a company, you have to get joined the communist state apparatus.
Speaker 5:And so everyone who's, like, a big company is co opted in. But to say that and this is where it's different than, like, Leninist style communism. It's like it's like they they they're they're Mao adopted I mean, % opposed communism, but you gotta be fair about what actually happened. Like, Mao took that as an authoritarian concept and just pressed it down on the people. Like, it it it it's not a they're not heuristic in any sense.
Speaker 5:So they're they're they're almost, like, a bit, like, rationalists. Like, they because they they, like, they wanna be powerful and they wanna stay in power. And so if the ideology has to change, it'll change.
Speaker 1:Yeah.
Speaker 5:And and so that's where they let many of these successful companies in China that are, you know, okay. As New York Times says flooding the European markets with cheap goods now, it's like, well, they're flooding our markets with cheap goods. Many of those are done by just Chinese entrepreneurs. Like like, it's just the the no state interaction. But anything that's extenuating beyond the state in a meaningful national security, like, an industry that is really sound security, like, the CCB is utterly in control of that.
Speaker 5:Mhmm. But you you gotta you gotta understand the the etiology, the, like, where it came from, then understand the theological framework of, like, where they wanna go with it rather than treating it as if like, like, I personally don't believe, for example, that China's interested in spreading communism. Mhmm. And and they don't have a common turn, like, Soviet Union did, to spread communism. Like, they're interested in preservation.
Speaker 5:And and so that is not a type of a country where you're like, you know, that that they're gonna go to war with any chance they get. They're fact they're they're very hesitate they're very hesitant to war. And if you read a book you read a book about, like, a a history about China, there's a common pattern in the history of China, which is self implosion. They've done it, like, four times. So, like, they also know that too.
Speaker 5:Like, it just ends up being where, like, so, you know, it all kinda falls apart. And, and I I love a book, by it's by Rodney Stark. He said that, China invented gunpowder at the same time as as Europe did, and, China put it in, in fireworks to scare off, ghosts, and the Europeans put it in a barrel to shoot a bullet. Yeah. Right?
Speaker 5:And so so that that it tells you, like, very industrious, very, you know, driven in terms of ethos, but it doesn't always land a plane. And that and that's what I'm leaning into is like, yeah. Huawei will make something cheap. We'll make something alternative to NVIDIA, but, like, let's, like, not give them the rope where they're like, you know, America's opposed to proliferation, as opposed to exports, as opposed to open source. It's like like you're giving them all the the fuel to be like, come to China.
Speaker 5:We'll give you AI even though it's not as good.
Speaker 1:Yeah. That that idea of, like, memetics memetic rivalry and geopolitics is fascinating to me because, I don't know if you've read Wang Huning's America's America Against America, but it was this book that basically, they sent an emissary to The United States. He looks around, and he determines that America will implode. And it's and it's clearly, like, their own anxiety is about implosion, you know, writ onto the American story. But America is undefeated, and we're not gonna implode.
Speaker 1:It's the last thing
Speaker 5:that's happen. Yeah. It's a it's a I think it's closest thing to heaven. Like, it's, you know, it's it's great. It's an awesome my family loves being here, and it has been an immense blessing.
Speaker 5:My my grandpa came here with nothing.
Speaker 1:And this interview has also been the closest thing to heaven. It's been been been fantastic. I have a couple of other questions.
Speaker 3:Do you have a hard stop?
Speaker 1:Do have a hard stop? Wanna No.
Speaker 5:No. Yeah.
Speaker 3:Okay. Let's keep trying. I got a couple more questions. Let's do it. One, what does having the largest cluster, right?
Speaker 3:This like supercomputer, you know, super weapon in some ways, what does that actually look like in practice? Is it run by you know, who who sort of operates it? Is it a network of clusters? What does that actually look like in your view?
Speaker 5:Yeah. I I would say it'd be run by a firm of energy, combination of Mist. It'd be deployed in a place that's undisclosed, and it's used as mostly as training in our own side, as in our own military on, like, advancing their own capabilities of understanding what LMs can do, understanding, like, how compute can work at scale. Because, like, LMs are, again, super cool. We all use them every day, but it's really the paralyzed computing that it changes the way which warfare works.
Speaker 5:And that when you have the ability to scale that that amount of computing power at a single moment, it it it makes all type of ace which mostly is targeted asymmetric sort of attacks on us. We have to be able to understand, like, what that actually means at that scale. And so it's not it's not Stargate that's clearly for OpenAI. Mhmm. It's not like the DOD sec should, like, email Sam's like, hey.
Speaker 5:Can I can I borrow this for you know? Like, it has to be something that we own, we control, that is, like, is part of the people's power. And and the point of that also is a deterrent thing that if you people will do something bad with AI that that is inescapable. It's a it's part of the fallen nature of humanity that we take great things and we apply maladaptive adjustments to it. And and so we have to just be prepared for that.
Speaker 5:And and what that attack means, I don't think we fully understand yet. We have theories around it, But I I I believe that it's gonna be some form of attack on our infrastructure that's not designed to handle this form of of sort of computing power targeted us. So it's mostly used with the deterrent, and and also kinda show our footprint as in, like, we are gonna be the best at this. And, you know, taking a small slice of the how how how it's tried to the budget's gonna be 5,000,000,000,000 just to, like, say that we're investing this as
Speaker 3:35 f 35 cost about a a trillion.
Speaker 1:It's 1,000,000,000,000 investment Yeah. The United States. A lot less to copy it, actually. Turns out we use to write off all the r and d costs. It's actually a pretty great plane.
Speaker 5:Yeah. And I I was like, let's say it's like it's like you lean into going back to the the badmesis thing, and I and I know you like Gerard. Yeah. They're like, it's like it's like we just lean into so much of, what China's really China's really good at. Like, why are we shocked that DPC captain?
Speaker 5:Like, literally. Like like, how look at Timu Shin. Look at, like, he said, fighter jets,
Speaker 1:like one to many. That's what China does best.
Speaker 5:Yeah. Yeah. So so, like, we
Speaker 3:Yeah. It's actually 2,000,000,000,000.
Speaker 5:Right?
Speaker 3:2,000,000,000,000. You
Speaker 5:2,000,000,000,000. Wow. Jeez.
Speaker 3:I guess on this one question I have is, again, because this conversation is top of mind. But Tyler Cowen yesterday was was very excited about AGI coming in the next couple days. We don't know exactly what he meant. Fastest timeline possible. Fastest timeline.
Speaker 3:Extremely extremely AGI.
Speaker 1:Well, social network. OpenAI is launching a social network.
Speaker 3:Yeah. Might But I I wanna I I like, this conversation's been tremendously fascinating. I'd love to get sort of your personal definition, how you look at, you know, AGI and then what your Yeah. What your timelines look like, around it.
Speaker 5:So I can answer this differently, but I think it's more, honest, is that if you don't know what you're looking for from a, prima facie perspective, you don't know how to measure it. Mhmm. So how do you measure if someone's intelligent? Is is it I mean, is it is it do they make money? Is it that they're wise?
Speaker 5:To people? Yeah. They're funny. Right? And and I think that that's where the AGI problem hits a wall, which is like, what am I even measuring against?
Speaker 5:Like, like, when when it happens, when every single one of those tests, which are, by way, just randomly picked out of a hat. Mhmm. And the, like, a like, an a % across, and it still doesn't fully work. Mhmm. What do we do?
Speaker 5:Right? And and I'm that that's the fundamental anthropomorphic question is which is a metaphysical question of, this is why it's so fun. I I have a background in philosophy and and theology. It it's like, what does it mean to be a person? What does it mean to actually represent intelligence?
Speaker 5:And many people who put push a ASI AGI, they have a very piss poor understanding. Like, they didn't read Locke. They don't they don't know who Descartes is. They don't Rousseau is a stranger. Like, they've read some Nietzsche because it's cool in high school.
Speaker 5:But but there there's very little understanding about the the the longevity and the history of what we've valued as a just a social creature and the evolution of our of our of our culture to say, like, what is meaning and purpose and intelligence? And even the epistemology of there's a difference between information, data, numbers, and knowledge. Like, all those from epistemological perspective are completely different things. Right? Like, knowledge is a discrimination of information.
Speaker 5:Data is a series of numbers. And and if you look at people pushing AGI and ASI, they typically, one, have a very low view of humanity. Like, their anthropology is like, we're robots. We're a reductionist thing. Like, we're all biology and and which is, like, kind of been rejected since the new ideas have fallen aside.
Speaker 5:And they kinda have, like, have all those preceptions built into it versus a person like me who's like, I'm a I'm a Christian. Like, I don't have that view of humans. I think that there is an immaterial part of our nature. Numbers are immaterial. Data is numbers.
Speaker 5:Like, it's pretty logical to believe that, like, we are ourselves an immaterial there's something about it. Therefore, I can't actually put it in bits and bytes. So AGI and ASI, I think, is a trope to kind of make an interesting working angle. But, yeah,
Speaker 3:the other thing is, yeah, it's it's marketing and there's there's conflicts and it's hard to find somebody that works in AI, you know, that that obviously is intelligent on, you know, however you wanna look at it, that doesn't have at least a $10,000,000, you know, position riding on Bags. This AGI marketing, you know, like this this sort of like, it's almost here, like, it's coming type of thing. And so that It's that's why I
Speaker 5:was It's not. But, like, I I just don't believe I I it doesn't mean it's not gonna be valuable. That that's the confusion. Yeah. Is that the if you create this trope, this red herring that's not gonna be there, you then false flag, build a bubble, and, know, it's bad for everybody.
Speaker 5:Yeah. I I think I think LMS is a as founders fund would say, is that I have a Star Wars view of the world, not a Star Trek view of the world. Mhmm. And that the technology is a is a positive adaption of the human capability to extend its arm further, and it only helps humans become more human things. Mhmm.
Speaker 5:And and so a lot of the AGI ASI talk is it's really built on a presuppositions of a negative view, a negative anthropology that is not only been disproven over and over again philosophically and the and theologically, but it just doesn't bear itself in the science. Like, it it it the the mind itself is as an example, you can go back in the eighties and seventies and fifties. They were like, mind is this. We have fully discovered what the mind is. And then ten years later, it's like, we don't know what the mind is.
Speaker 5:Like, it continues to expand. And and I think that relates to unless you can actually pinpoint and understand what intelligence is on the anthropology side, you're not gonna be able to ever measure AGI or have an insight.
Speaker 1:Mhmm. Interesting. Anything else, Jordy?
Speaker 3:Oh, I'd love to keep going, for another hour, but we'll have you back on again soon. This is great.
Speaker 1:This is fantastic. Yeah.
Speaker 5:Yeah. I'm we can go way deeper. Yeah.
Speaker 3:This is really fun. Thanks for coming on.
Speaker 1:Yeah. We'll talk to you soon.
Speaker 5:Yeah. Thanks. Cheers. Yeah. That was, guys.
Speaker 5:Bye.
Speaker 1:That's great. Well, let's rips through some timeline.
Speaker 3:This might be a world
Speaker 1:world record for a number of size gongs this this show. Let's hear that. Activate gold golden retriever mode. Not quite size gong, but close. There's some good sound effects.
Speaker 1:The sound board's back in business, folks.
Speaker 3:Brought to you by brought to you by our very own Ben. Ben Yes. Personally recorded these sound effects.
Speaker 1:It is his voice.
Speaker 3:It's his voice. Founder mode.
Speaker 1:Well, speaking of founder mode, Sam Altman was in founder's mode yesterday when founder founder mode yesterday when it it broke that OpenAI is exploring a social network arena with features. Can't imagine. It's probably gonna be absolutely flooded with Studio Ghibli fixtures. But what is your take on the OpenAI social network? Will you be, They're they're trying to rival Elon Musk's ex, The Verge reports.
Speaker 1:And on one hand, makes a ton of sense to get more distribution, more time in the app means more use
Speaker 3:in the LLM. I understand Sam and the OpenAI team wanting network effects. Mhmm. I feel it feels potentially like a huge distraction to try to go compete in consumer social Mhmm. Which we've just seen time and time again.
Speaker 3:Yes. They have massive distribution. Mhmm. They're on the home screen of hundreds of millions of people. They have, know, in the same the wild thing is I don't I don't know how many how many x weekly active users are
Speaker 1:like I think it's I think it's actually around the same size like 500,000,000 or
Speaker 3:something like that. So x has the same advantage in terms of launching a foundation model, you know, consumer app as as in many ways as OpenAI does having building a social network. I just think it's LLMs seem to be more intuitive to build because you have this sort of black box model. And then you have this like easy interface on top versus a social network, which is like, how are you going to seed it? Right?
Speaker 3:Seating it with 500,000,000 weekly actives from
Speaker 1:Look at the lesson of Google circles.
Speaker 3:Like Yeah.
Speaker 1:Google had a billion people using Google every single day to search for things. People did not necessarily wanna share their search results into Google Circles. It was this Facebook copycat. It never took off. And Google had every advantage in that race against Facebook when they launched that product, I think, in 2010.
Speaker 1:The flip side is, I know a lot of people that run great deep research reports. I would I would probably follow follow Tyler Cowen on the OpenAI social network. And when he finds a really great deep research report, he's spent ten minutes waiting for that to come back, and he's put out a deep research report. If he were able to with one click, hey. Make this one public.
Speaker 1:This is an interesting finding. Or some of the OpenAI friends we talked to who said that they do deep research reports on just what towels I should buy. Alright? That was one of the examples. Or what what refrigerator should I buy?
Speaker 1:Instead of needing to wait the ten minutes, it's already in my feed, and it's also this curation and discovery of I'm scrolling and I see Aiden post
Speaker 3:I like
Speaker 1:Hey. There's this deep
Speaker 3:research report
Speaker 1:on washing machines. I might just click into that.
Speaker 3:I like the idea of building a social feed Mhmm. Into the existing product because I would love to, if you have the opportunity to prompt something Yep. Find something interesting, share it to a feed. Yep. That's very interesting.
Speaker 3:Yep. Don't like the idea of trying to then build this sort of competing social network
Speaker 5:Yes.
Speaker 3:With its own I agree. Like new, you know, are we sharing what are we sharing there? Yep. Is it if it if it's funny, if it's it's a social feed built on top of the app Yep. That, again
Speaker 1:That feels odd. But at the same time, like, right now, the flow is you go into OpenAI, ChatGPT. You figure out that Studio Ghibli style is a great prompt for any image you upload. And then you screenshot that and post it on X and say, here's the prompt. Midjourney kind of hacked that by creating the Discord so you can see what other people in the Midjourney Discord are prompting.
Speaker 1:You can copy paste it, change one word. All of a sudden, it's a cyberpunk dog instead of a cyberpunk cat, and that gets you started on flow of of prompting mid journey. I could see that being kind of interesting. Yep. But, yeah, it'll be very interesting on how this actually gets integrated.
Speaker 1:But there's already a share button on every Chattypete chat Yeah. Interaction, and I do share them with people sometimes. Hey. I I for for the show, I I I turn this into, you know, some bullet points, share it with you. You can go right in.
Speaker 1:You could keep continue prompting. I think that there's something there. Yep. But it could also
Speaker 3:and purely just trying to beat Elon Musk because you're annoyed that he's suing
Speaker 1:you Yes.
Speaker 3:It seems like
Speaker 1:It could just be like a shot across the bow.
Speaker 3:Yeah. Hopefully, there's something deeper there because I actually think it's much easier for X to build Yep. An LLM. Yes. And chat chatbot
Speaker 1:Yes. Than it
Speaker 3:is for OpenAI to build a thriving independent social network.
Speaker 1:And even though they have the app installed everywhere, it does like, there is a set amount of time on an app. There's only a set amount of screen real estate for a button. You know, Elon in the X app puts the Grok button down at the bottom by default, but there's only really six slots for there. So if you're putting that Grok button there that you're taking away from a different feed or messages or notifications, other stuff, there's trade offs here. It could also just turn into an Instagram club where people are just sharing endless Studio Ghiblis, ultimately just flexing on each other.
Speaker 1:And the best way to flex is with a Patek Philippe Nautilus that's from Bezel. Go to getbezel.com. Look at this.
Speaker 3:Boom.
Speaker 1:With the Tiffany dial on the Nautilus. You take a picture of that. Yeah. You buy you you you buy a Patek. You throw it through Studio Ghibli filter.
Speaker 1:It's no longer cringe. You're no longer flexing. You throw it on the OpenAI social network. That's that's brother behavior. It's brother behavior.
Speaker 1:Go to getbezel.com. Anyway Just do it. Notion Mail, similar AI company launching a social network. Now Notion's launching an email service.
Speaker 3:Management launching email.
Speaker 1:We've been talking about this. I was saying I want someone to build a new email client from the ground up with AI at the forefront of that because I've been very dissatisfied with the Gemini experience in Gmail. Even just my Gmail experience, I have, like, four different inboxes now. It's not really filtering stuff.
Speaker 3:Yeah. No. She wants super quick to launch integrate LLMs within the product.
Speaker 1:Which makes a ton of sense on the core product, but then I think that they might be in enough of a founder mode, enough capital Yep. And engineering to actually roll this out and make this great. So I will definitely be trying this when it becomes generally available. It might be generally available now.
Speaker 3:Yeah. And it's an interesting concept. So in the marketing launch email, it says the inbox that thinks like you. One fascinating thing about Notion is if you're actively using it for project management, life management, business, it has so much context on Yep. In your life.
Speaker 3:Right? It has
Speaker 1:And that's the scariest
Speaker 3:thing to me
Speaker 1:because, like, if Google catches up, I have way more data stuffed in Google in Sheets and Docs and Drive. I don't wanna port everything over to Notion because I'm not Notion
Speaker 3:potentially is a is a better data source.
Speaker 1:If you're a Notion user.
Speaker 3:If you're a core Notion user. Totally. Totally. Extending A %.
Speaker 1:If you're a builder or yeah. I know people that build their whole life on Notion. They have, different workflows for every single project. They're all in on Notion. This is gonna be a fantastic experience for them.
Speaker 1:For me, I'm kinda stuck cause I'm like locked into Google's ecosystem. I want them to catch up. They're not really doing it.
Speaker 3:Well, Notion's tool is integrated into
Speaker 1:Gmail right now.
Speaker 3:With Gmail.
Speaker 1:Yeah. So it sits on top of that at least. But I would love to just be able to have my email be processed for me while I'm sleeping on my Eight Sleep. So go to 8Sleep.com/cbpn. 5 year warranty, thirty day thirty night risk free trial for
Speaker 3:free returns,
Speaker 1:free shipping. I I I hope I did well because I think I dialed it in. I got to bed every
Speaker 3:brutal night.
Speaker 1:Ninety nine. Let's go. We Ninety nine. I figured out the routine. I dialed it in.
Speaker 1:I was like, I'm falling asleep. Within thirty minutes of the average of the last three days, the rolling average, that's their algorithm. Seven and
Speaker 3:a of sleep.
Speaker 1:Autopilot cooked. I felt great. I feel great today. Nothing like going into a three hour show with a 99 on the eight sleep score. So go get
Speaker 3:me some numbers.
Speaker 1:Go do it. Anyway, I hope you enjoyed our deep dive on China. If you're looking to follow more of the breaking news with China, please go to Polymarket. They have a bunch of great great, markets about what's going on with the Chinese economy, what's going on geopolitically, what's going on with tariffs. You can check it all out at polymarket.com.
Speaker 1:Anyway, you have to do two pilgrimages in your twenties going to Japan, going to Switzerland. Neither of those I did in my twenties, but what do you think? Is are those worthwhile pilgrimages? Have you been to Japan?
Speaker 3:I've not been to but I'm still in my twenties.
Speaker 1:But you in Switzerland like four months ago.
Speaker 3:I have been to Switzerland a bunch. It's my favorite country that's not The US by a long shot. It's just, it's a perfect country.
Speaker 1:Yeah.
Speaker 3:Well, maybe we'll have to go to gym. The entire country feels like being on a World tour. Golf cart. Yeah. Or a golf course.
Speaker 4:Yeah.
Speaker 1:Well, Sam Ross sharing some big news from numeral tax. Q one was a big year. It was a big one here.
Speaker 3:Boom. In terms of gong ready.
Speaker 1:Customers, filings, our team, and, of course, pieces of mail delivered received by our virtual inboxes. Here are just a few of the highlights. They three x their number of customers in q one versus q one last year. The sales team is crushing quota. They hired 22 new numerals, which is what they call themselves.
Speaker 1:They opened a new HQ in SF. They announced the series a by benchmark, and they rolled the dice at ShopTalk. And they sponsored the world's number one show, TBPN. Thank you for sponsoring us, Thank you, gentlemen.
Speaker 3:And if you are You guys, Numeral?
Speaker 1:If you have sales tax, put it on autopilot, head over to Numeral HQ. Spend less than five minutes per month on sales tax compliance.
Speaker 3:Just do it.
Speaker 1:Just do it. This was a funny post by Sam Altman. He says, b u, work in HFT, shaving nanoseconds off latency or extracting bips from models, have existential dread. See this tweet. Wonder if your skills could be better used making AGI.
Speaker 1:Apply to attend this party. Meet the OpenEye team. Build AGI. And so he's trying to recruit high frequency traders. Maybe, he saw what happened with DeepSeek because they were a bunch of high frequency guys.
Speaker 1:Right?
Speaker 3:A bunch
Speaker 1:of quants. Said, hey. Time to optimize the models. Let's get our inference costs down. And now he's gonna try and pull some people from Jane Street.
Speaker 1:Jane Street has a monopoly on Duarkesh Patel ads apparently, but not for long. Sam's got to buy some. He's got to pay out. Get Duarkesh to start running some job ads because it's one of the few shows I've ever seen Jane Street ad on advertise on, but it's pretty pretty it's working pretty well, guess. But, yeah, this is interesting that the next challenge in AI will be, you know, these inference optimizations.
Speaker 1:The GPUs are We've heard this. The products are growing. They have the product developers. They're in San Francisco. I'm sure they're pulling in plenty of those people.
Speaker 1:The ban the
Speaker 3:if you love OpenAI, just take a take a breather on Ghibli photos. We know you're still doing them. Take a two day break. A two day break. Breathing room.
Speaker 3:Go rent a wander. Till they can get some
Speaker 1:Find your happy place.
Speaker 3:Find your happy place. Place. Find your place.
Speaker 1:Let's book a wander with inspiring views. Hotel Overnight success. Dreamy beds, top tier cleaning, and twenty four seven concierge service. It's a vacation home, but better.
Speaker 3:Wander really is an overnight success.
Speaker 1:It is. When you go there Every
Speaker 3:when you stay there.
Speaker 1:You spend the overnight and you become a success.
Speaker 3:Yes. Yes. And every night is a success at Wander. This stuff on this stuff on Meta with the FTC is just wild. So Yeah.
Speaker 1:Bring this down.
Speaker 3:Meta is in a battle with the FTC. And they basically are claiming we're indistinguishable from any other app, which, Shield says is correct. And they pulls a document that they're using TikTok, Instagram reels, YouTube shorts.
Speaker 1:We can't have a monopoly. It's commodity. Yeah. We can't have a monopoly on all.
Speaker 3:Everybody's got a short form video feed.
Speaker 1:Yep.
Speaker 3:And it's true.
Speaker 1:Converts across apps.
Speaker 3:Yeah. Just got there. Kind of mocking Snapchat, but not
Speaker 1:Didn't have including them. Yeah. But, yeah, I mean, it really
Speaker 3:has Snap and some others.
Speaker 1:There's a I mean, there's a best practice for building a social app now. I'm sure OpenAI has taken notes if they wanna go this direction. Vertical videos, algorithmic feeds, likes, comments, shares, inboxes, and messages, and then you add long form, short form, monetization, comments, and show notes, and all these different stuff. And, all these different competitors, TikTok, Instagram, Reels, Shorts, they've all kind of done the best practice across everything. And the platforms have become pretty commoditized, which is one of the big reasons why, people shouldn't be complaining about TikTok potentially going out of the App Store because the TikTokers will be able to pop over to Instagram Reels, YouTube Shorts, go viral with the same content, and have a similarly sized business very quickly.
Speaker 1:So I think when you hear the stories of, like, businesses are built on TikTok, they will be destroyed. It's like, realistically, most businesses are on all three stages of success.
Speaker 3:Long to ban
Speaker 1:And they'll make and they'll over.
Speaker 3:You had time to reduce platform dependency.
Speaker 1:Yep. But if you think they're gonna win this case, if you think they're gonna lose the case, why don't you go get some exposure on public.com to Meta stock investing for those who take it seriously?
Speaker 3:Not financial advice.
Speaker 1:Not financial advice. I'm saying
Speaker 4:John is just demonstrating that.
Speaker 3:Public is a platform with multi asset investing Yes. Industry leading yields. And there's millions of happy users.
Speaker 1:Yes. So But speaking of investing, Kyle Harrison, quote tweet someone says, is backing competitive companies allowed now in venture? And shows what's going on at the foundation model level. Sequoia is in four foundation models.
Speaker 3:Thinking
Speaker 1:machines. OpenAI, thinking machines, xAI,
Speaker 5:and
Speaker 1:SSI. Lightspeed's in four. Index is in two. Tiger's in two. Cotu's in two.
Speaker 1:Andreessen's in five. Five. OpenAI Thinking Machines, XAI, Mistral, and SSI. Wow.
Speaker 3:It's a party.
Speaker 1:It's just the one.
Speaker 3:It's a party. We got It is a party. Six way party rounds before GTA six.
Speaker 1:It is it is odd. Like, if the model layer's commoditizing, maybe you just wanna buy all the commodities up. Buy buy buy all the big oil companies, I guess. But maybe they wind up going different directions and OpenAI becomes a social network and Thinking Machines becomes a, I don't know, b to b SaaS company or something. Who knows?
Speaker 1:We'll see.
Speaker 3:This next post is amazing from MKBHD.
Speaker 1:Yep.
Speaker 3:He is talking about nominative determinism which we are big fans of on the show.
Speaker 1:Love to see it spreading.
Speaker 3:CEO of Nintendo America, Doug Bowser. Great great name. Strong name. Fastest sprinter of all time, Usain Bolt. COO of Starbucks is Rosalind Brewer.
Speaker 3:Yep. World record chili pepper breeder is Ed Curry. Mhmm. CEO of Capital One Bank is Richard Fairbank. Fairbank.
Speaker 3:BBC weather meteorologist, Sarah Blizzard.
Speaker 1:Yep. Underrated is the nominative determinism that people kind of impose upon themselves. Like, when I grew up, there was a weatherman named Dallas Raines, and he named his kids after cities. So it was like Austin Raines was his son. I forget there
Speaker 3:was another Dad's son is now the mayor of Austin.
Speaker 1:Yeah. Or Weatherman. I'm kidding.
Speaker 3:It's or Weatherman. Fake news.
Speaker 1:So you can you you can keep your your kids in the family business by giving them a name that will determine their future potentially. But nominated deserves them. So much fun. Anyway, let's move on to Gavin Baker. He's a savage that former Meta AI researchers are explicitly noting on their resumes they had nothing to do with LAMA four.
Speaker 1:There's a member of technical staff over at OpenAI joined February 2025 on reinforcement learning frontier research and post training. And, previously, this scientist was at Meta doing AI research and says that they were working on generative AI. LAMA two, LAMA three have not been involved in LAMA four at all. Interesting. I mean, there's been a lot of debate over, like, is LAMA four oversold?
Speaker 1:Is it really that as bad as people say? But this is another data point of, oh, maybe it's a little bit rough over there. But Zucks in founder mode, I think he will figure
Speaker 3:something out. Him.
Speaker 1:Don't bet against him. Let's go to Amy Wu. She says founder secondaries at the series a are becoming the norm again. We are back to 2021 fundraising heats. Founder mode.
Speaker 1:The lady is like, I thought you were gonna go size gong on that. Went with founder mode.
Speaker 3:We actually don't have size gong on yet. We don't.
Speaker 1:Well, size gong for all the series a secondaries that are happening.
Speaker 3:No. I just think this is one of those things that's controversial but never default bad. Yep. I think it just comes down to sizing
Speaker 1:Things in the company.
Speaker 3:And traction. Yep. I don't think there's anything wrong with founders
Speaker 1:Yeah.
Speaker 3:Selling a few hundred grand of secondary.
Speaker 1:I mean, are a plenty of
Speaker 3:not gonna change how they approach the business. It's not like they're retiring. Think some, you know, when we did in 2021, the secondaries that were happening were on another level where it was, you know, a founder selling 50 to $200,000,000 secondary. And it's like, okay, that's like an extremely material exit. Yep.
Speaker 3:And they're gonna by default be in a very different mindset after that I
Speaker 1:mean, the the CoreWeave guys sold, I think like a hundred million or more. I think, like, 8 or 9 figures of secondary before the IPO. Corey's still trading at $40 a share. Like, $18,000,000,000 company. Like, seems pretty stable.
Speaker 1:It hasn't sold off like crazy.
Speaker 3:But it's no. John.
Speaker 4:Am I
Speaker 3:right? Dear John, it's down.
Speaker 1:Thought it was up and then down. It went lifetime. Core Weave.
Speaker 3:Oh, okay. Sorry.
Speaker 4:Sorry. Sorry.
Speaker 3:I was looking. Yeah. Yeah.
Speaker 1:No. No. It's not 7% today. Not it's not having a good day, but but if you look at the year, it priced at 40. I was It cost of 60, and then it's down at 40.
Speaker 1:Like, it's, like, kind of in the trading range. It doesn't
Speaker 2:feel like
Speaker 1:it's back. It's like, oh, it's down 80 meant
Speaker 3:to be priced at around 60.
Speaker 1:And people were saying it was gonna be a $30,000,000,000 company. It's a $19,000,000,000 company, but that doesn't sound but that doesn't reek like, oh, the secondary, like, poison this. Like, they're not taking it seriously. Like, I don't know. At least not yet.
Speaker 1:We'll see what happens. But, I mean, the other thing is that, like, there are founders who are clearly doing their life's work. They're, you know, years into building the business. It's very serious business, makes revenues, even maybe some profit, and they come out to do a series a later. And then, yeah, there is some secondary.
Speaker 1:But for life for lifestyle reasons, maybe they have kids. Maybe they need to buy a house. Like, there's a bunch of different reasons why if you don't have a high salary, great credit as a founder, like, you might need some secondary to pay for that. So, mixed bag all depends on the circumstance, but congratulations if you sold a bunch of secondary. Signal says every visual medium from concept art to fashion design to advertising to architecture is now downstream of text prompts.
Speaker 1:Remarkable. Yeah.
Speaker 3:It's true.
Speaker 1:This is just a good point.
Speaker 3:Been using Weissman using ChatGPT to like imagine interior design stuff around the It's like, it's not perfect but it's doing maybe 70% of what you would hire an interior designer to do in the early stages. Right? Everything other than sourcing.
Speaker 1:Yeah. Ryan Peterson sent me a, like, a meta poster, which was he generated a Flexport poster ad for every single city that they operate in. So he had, like, 50 posters that would be extremely complex to make. Then he put them all on one poster. So it's this big, like, poster that you can print out and show all of Flexport's, like, footprint.
Speaker 1:And then he just liked the props, so he made me one. He just sent me one for for Lucy, which is really cool. And he was like, oh, yeah. You can just print this out. Like, don't go bigger than 18 by 24, but it'll look great.
Speaker 1:And I was like, thanks, man. That's great. Very fun. Anyway, do should we do the SBIR stuff that you were you you were getting texts about? Big changes in the pipe for the SBIR STTR program.
Speaker 1:All air force topics in the current batch just got removed. So there's an email, from d I DOD SBIR topic removals, and you had some extra context about this. Of course, SBIRs are the small business deals that happen pre program of record for defense tech companies. You get a little bit of money from the Yeah. DOD, but it's not it's not a sustainable source of revenue, but it's a great way to fund the business in the short term, prove that there's at least some
Speaker 3:demand to get through Followed up with Adam. Yeah. I'm gonna butcher this. Walnikowski. Walnikowski.
Speaker 3:Walnikowski. Sorry, Adam. I was formerly at Anderol, NVIDIA, and Yale. He's now over at Fid Labs. Mhmm.
Speaker 3:And he says, yeah, there there are four major releases of cyber topics per year and the second one for 2025 was due to begin accepting proposals next week. The two big agencies in that solicitation were Navy and Army I'm sorry, Navy and Air Force.
Speaker 1:Mhmm.
Speaker 3:Then the CBR update email announced around 1PM yesterday that all currently posted Air Force topics are being removed and no longer eligible for proposals. And that ends up being significant because in total that would have amounted to around $135,000,000 of awards which would have gone in some part to early stage defense tech founders.
Speaker 1:And there's also follow
Speaker 5:on
Speaker 3:awards, that that that could be another 200,000,000
Speaker 2:Mhmm.
Speaker 3:In CBR awards that were cancelled. So, anyways, there's reform happening around CBR and general changes to the acquisition process. And so thank you to Adam for flagging this.
Speaker 1:Yeah. That's very interesting. Nice. Well, we have Delian coming on the show Thursday. We have Shamsankar from Palantir coming on the show Thursday, and I'm sure we'll stack a whole bunch of other interesting folks.
Speaker 1:So we should dig into that topic more on Thursday.
Speaker 4:Let's do it.
Speaker 1:But other than that, I think we're good to wrap up. Thank you everyone who tuned in and listened to this show. We really appreciate you having a lot of fun with this. And just trying to up the quality by just five, ten, a hundred percent every single day, compounding
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Speaker 4:Yes.
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Speaker 1:You tomorrow.
Speaker 3:Looking forward to it. Cheers.
Speaker 1:Bye.