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Exploring the frontiers of Technology and AI
Josh:
So everyone knows how messy breakups get when there's money involved.
Josh:
Now imagine that breakup is between two of the most powerful people in tech.
Josh:
There's $134 billion at stake and someone's personal diary just became court evidence.
Josh:
This is Elon versus OpenAI, the saga that just keeps continuing to escalate.
Josh:
And I guess maybe we'll start with the quick version where Elon co-founded OpenAI
Josh:
in 2015 with a $38 million donation, thinking they were building a nonprofit
Josh:
to save humanity from big tech AI monopolies,
Josh:
Google. Flash forward to today, OpenAI is now worth half a trillion dollars,
Josh:
partnered with Microsoft, about to go public, and Elon is saying, hey, I got played.
Josh:
The receipts dropped. We have Greg Brockman, who's OpenAI's president.
Josh:
He had journal entries from 2017.
Josh:
We're going to get into it. It was really fascinating. And Greg posted a rebuttal.
Josh:
The drama is kind of starting to get out of control. And there's a lot of new
Josh:
updates this week that we're going to dive into. So grab your popcorn and let's get into this.
Ejaaz:
Yeah. Okay. So let's start off with the drama between these two.
Ejaaz:
By the way, I have to acknowledge I'm reporting from the Batcave today, Josh.
Josh:
It's a little dark over there. So you're going to have to deal with me being.
Ejaaz:
A bit of a silhouette. Yeah, yeah. Josh is on the West Coast for listeners here,
Ejaaz:
and I'm on the East Coast right now. So it's past sunset.
Ejaaz:
It's past my sunset over here. So let's jump straight into it.
Ejaaz:
Elon has sued many companies and many founders in his time.
Ejaaz:
But his favorite and most judicious lawsuit has been to open air. Who have wronged him?
Ejaaz:
Josh. He initially invested $38 million or rather donated $38 million to what
Ejaaz:
was then a non-profit OpenAI committed to building AI for the open source good
Ejaaz:
so that it wouldn't get into the hands of evil.
Ejaaz:
Fast forward to today and obviously OpenAI's structure has changed into something
Ejaaz:
that could kind of loosely definitely be categorized as a for-profit.
Ejaaz:
And so the lawsuit's been going kind of back and forth for a while,
Ejaaz:
but it kind of culminated over the last two months.
Ejaaz:
To give you the quick headlines, at the end of last year,
Ejaaz:
the judge refused Sam Altman's request to dismiss the case completely,
Ejaaz:
saying that Elon had sufficient evidence and that it was going to go to trial,
Ejaaz:
which is now going to happen in April of this year.
Ejaaz:
But Elon stepped up the gas over the last week and said that he's coming for it all.
Ejaaz:
He's coming for what his original $38 million donation would be in today's OpenAI's
Ejaaz:
valuation. Do you want to guess what that number is, Josh?
Josh:
Some astronomical amount. I mean, this has to be big.
Ejaaz:
It is $137 billion.
Ejaaz:
He's requesting, he's going for the neck, basically. Oh, rather, $134 billion. My bad.
Ejaaz:
So here are the key details. Musk's expert lawyer, he goes by the name of Paul
Ejaaz:
Wazin, values the damages between $79 to $134 billion based on his original $38 million donation.
Ejaaz:
So the question that becomes, well, what's really changed? Why has Moss got
Ejaaz:
like the upper hand now? And it's just something that you alluded to earlier, which is,
Ejaaz:
Greg Brockman, the acting president of OpenAI,
Josh:
We got your diary, bro.
Ejaaz:
Kept a diary of the entire sequence of events or history of OpenAI up until
Ejaaz:
this day, which he had to legally give to the court for review.
Josh:
Oh, that's so vile. And Josh, could you imagine your personal diary?
Ejaaz:
Dude, also, why? It is like a 16-year-old girl's diary.
Ejaaz:
And by that, I mean he has documented everything down to the line of whether
Ejaaz:
he thinks it's morally ethical to do what he was doing back then.
Ejaaz:
So to give you an idea, look at this quote, Josh.
Ejaaz:
Look at this tweet right here. He goes, it'd be wrong to steal the nonprofit from him.
Ejaaz:
Him he's referring to as Elon. To convert to a B Corp without him.
Ejaaz:
That'd be pretty morally bankrupt.
Ejaaz:
And he's not an idiot.
Ejaaz:
And then he goes on to say, I cannot say that we are committed to the nonprofit.
Ejaaz:
Don't want to say that we're committed if three months later we're
Ejaaz:
doing the b call then it was a lie not feeling
Ejaaz:
so great about all of this the true answer is that we want
Ejaaz:
musk out can't see this turning into a for-profit without a very nasty fight
Ejaaz:
so the long story short is elon is suing very aggressively for what his original
Ejaaz:
donation is in an equity stake in the open ai is today to the tune of $134 billion.
Ejaaz:
And he has pretty much a smoking gun, Josh.
Ejaaz:
But there was a rebuttal from Greg Brockman himself saying that Elon Musk had
Ejaaz:
let some important context or left some important context out of his claim.
Ejaaz:
And I'm showing this on the screen right here where, you
Ejaaz:
We've got to figure out how we transition from a non-profit to something which
Ejaaz:
is essentially a philanthropic endeavor.
Ejaaz:
So what you're seeing in blue on the screen here is what Elon has claimed and caught.
Ejaaz:
He's saying, hey, I've always kept my notion that I wanted OpenAI to become
Ejaaz:
a philanthropic endeavor, but he left out what was in red, which is him saying,
Ejaaz:
I know that we need to transform this into a B Corp or a C Corp.
Ejaaz:
So there's a bit of inambiguity and games being played from Elon.
Ejaaz:
Which side do you take on this?
Josh:
I'm trying to look at this and evaluate this as neutral as possible.
Josh:
And one party, we're seeing the journal entries, which one, I have a lot of
Josh:
questions how they got that journal or the diary, and they knew that it even existed.
Josh:
Because that seems like a very personal thing you wouldn't really want to tell
Josh:
people about. So how the lawyers, one, discovered it existed,
Josh:
and then two, got access to it.
Josh:
I'm sure there's some funny stuff going on behind the scenes of this case,
Josh:
just to kind of provide more evidence.
Josh:
But in terms of the evidence that's been provided, so far, you have one party
Josh:
who is like, hey, we don't actually want this person to be at the company.
Josh:
I think we just want to remove him.
Josh:
But I kind of am siding with Elon in this instance for now, because it's very
Josh:
clear that they wanted out.
Josh:
And even though it's clear that Elon observed it was probably necessary to become
Josh:
a B Corp, he still was ousted.
Josh:
And in the case that it became a B Corp, he still does rightfully own those shares of equity.
Josh:
So I guess for now, I'm team Elon. But more than anything, I'm team drama, man.
Josh:
This is great content. And we're going to continue to follow this as we go through
Josh:
this court case, because I'm sure this is just the tip of the iceberg.
Ejaaz:
Dude, I saw a hilarious tweet earlier this week, which said that,
Ejaaz:
My thesis for Anthropik winning the AI race is simply because they have zero drama.
Josh:
No, seriously.
Ejaaz:
All six co-founders are still there. No one's left. They've had the lowest employee
Ejaaz:
attrition of any of the major AI labs.
Ejaaz:
They've just kind of got their crap together. And OpenAIR is the complete opposite.
Ejaaz:
It's an absolute wrecking ball, as we're going to find out on other things later this episode.
Ejaaz:
The final thing I'll make on
Ejaaz:
this point is the OpenAIR and Microsoft partnership. Josh, if Elon ends up
Ejaaz:
able, like, if Elon ends up getting $134 billion, that dissolves the Microsoft
Ejaaz:
OpenAI relationship completely.
Ejaaz:
Because that is the equivalent of Microsoft's stake in OpenAI as well.
Ejaaz:
So Elon's forcing hand basically gets ahead of him. Like Satya doesn't have
Ejaaz:
the power that he originally thought he had.
Josh:
And now poor Microsoft is just caught up into this, even though they had nothing
Josh:
to do with the inception of the company, and they weren't involved until much later.
Josh:
And I think the reason why this matters beyond the drama even is because Because
Josh:
a lot of people believe that if Elon wins, I mean, it could fundamentally challenge
Josh:
how AI companies are valued.
Josh:
And some people are kind of whispering about whether this trial could be a catalyst
Josh:
that could impact the actual AI bubble that we've been building.
Josh:
If you can remove almost like $150 billion out of that and move it into another
Josh:
entity, that's a huge swing.
Josh:
I'm not sure if the market's going to be able to handle that because OpenAI
Josh:
has so many obligations to make money and pay people back. And I guess on that
Josh:
note, maybe we can get into one of the new things that they rolled out in order
Josh:
to generate some revenue this week, which is their new ad model.
Josh:
And Ijaz, if you remember, just last year, I guess two years technically now
Josh:
because we're in 2026, but in 2024, Sam was on stage and he said,
Josh:
ads are kind of the last resort.
Josh:
We don't really like the ad model. We don't believe in it. We don't need it. Flash forward to today.
Josh:
There are ads rolling out in OpenAI. So let's read. We'll start by reading what
Josh:
they announced, which says, in the coming weeks, we plan to start testing ads
Josh:
in ChatGPT free and go tiers.
Josh:
We're sharing our principles early on on how we'll approach ads guided by putting
Josh:
users in trust transparency first as we work to make AI accessible to everyone.
Josh:
So they have like these four principles that they outlined.
Josh:
What matters most? Responses in ChatGPT will not be influenced by ads.
Josh:
Ads are always separated and clearly labeled. your conversations are private
Josh:
from advertisers pro plus business and enterprise tiers will not have ads you
Josh:
just what do you think about this.
Ejaaz:
Okay, I have many thoughts. Okay, so let me give you a kind of lay of the land.
Ejaaz:
OpenAI today has roughly 800 million weekly active users.
Ejaaz:
Josh, guess what percentage of those users pay for their subscription?
Josh:
I know this because we mentioned this in a previous episode.
Josh:
It is close to single-digit percent. It's very low, surprisingly low.
Ejaaz:
It is 5%. Yeah, that's not high. So the lesson that we've learned from this
Ejaaz:
is you could have subscriptions, but it's not enough to keep you afloat.
Ejaaz:
OpenAI is projected to blow $20 billion this year alone.
Ejaaz:
You need something else to pay for it. So you need to somehow monetize the free users.
Ejaaz:
And the classic model that everyone's used for decades now is ads.
Ejaaz:
So they're turning it on for two specific tiers.
Ejaaz:
The free users who are paying nothing to get access to ChatGPT.
Ejaaz:
And this new tier, which launched at the same time that they announced ads,
Ejaaz:
Josh, called ChatGPT Go.
Ejaaz:
Where it's a subscription where you pay $8 a month and you get access to not
Ejaaz:
the best ChatGPT models, but, you know, just below the best.
Ejaaz:
So let's look at some of the napkin math here.
Ejaaz:
There's roughly 600 million non-paying weekly users or monthly users for ChatGPT. Right.
Ejaaz:
Each of them were to pay $2 in ad revenue for the year of 2026.
Ejaaz:
OpenAI stands to make around $1.3 to $1.7 billion, which sounds like it's a lot.
Ejaaz:
But again, their spending budget is $20 billion.
Ejaaz:
So it doesn't really move the needle that much. And they're projecting by 2030
Ejaaz:
to have made $15 per free user, which then pushes them up into the realm of $36 billion.
Ejaaz:
But you can imagine that their spending budget by then, Josh,
Ejaaz:
is going to be multiples of what they're spending this year.
Ejaaz:
So to kind of put into context, it's not looking great. But my argument against
Ejaaz:
that is I think AI is going to be the ultimate form of selling ads in the future.
Ejaaz:
Everyone is going to surface their intents, be it like, I want to buy something,
Ejaaz:
I want to explore something through some kind of AI chatbot.
Ejaaz:
And if OpenAI or ChatGPT rather becomes the face or the doormat of the internet,
Ejaaz:
then they can charge whatever they want per user.
Ejaaz:
And to kind of give listeners a context of like how much money you can actually
Ejaaz:
make, let's look at Meta, right?
Ejaaz:
In this tweet that I have up here, in 2025, Meta made $58 per user just purely from ads.
Ejaaz:
And if you want to look at like the behemoth that is Google,
Ejaaz:
they made $237 billion last year from ad revenue.
Ejaaz:
That makes up 77% of their entire profit. So there's a lot of money to make
Ejaaz:
from ads, but OpenAI needs to figure out a way to go from that $2 projection
Ejaaz:
to something where Meta's hitting like $60 or even Google at around $80 per user.
Josh:
Yeah, I think it's an interesting testament to, I guess, the human nature of
Josh:
how we think about sponsoring and advertising. I was very optimistic in the early days that,
Josh:
advertising that the traditional ad model, the freemium model,
Josh:
was going to go away in the advent of AI.
Josh:
And that was just some hopeful optimism. Didn't really have any reasoning why,
Josh:
but I think it's become clear that that will not be the case.
Josh:
And this push to monetize free users will continue to be this durable thing
Josh:
that continues into this next iteration of technology, mostly based on the fact
Josh:
that people would much prefer to pay with their attention than their dollars.
Josh:
And particularly when it's good information. Now, the question that I have as
Josh:
it relates to this story in particular is how much data are they going to be
Josh:
collecting and using in order to make these ads actually useful?
Josh:
Because one of the core principles that they shared is that your data is private, your data is being held.
Josh:
It's not influencing the ads that you see. But the reality is that ads can be
Josh:
a good thing if they are hyper-personalized.
Josh:
So where are they going to draw that line? Where are they going to take that
Josh:
line in the sand in order to give people higher value?
Ejaaz:
We actually have some information on that exact question that I'm showing on the screen here.
Ejaaz:
They state in their official post ads do
Ejaaz:
not change chat gpt answers so we know that the answer that you're
Ejaaz:
going to get isn't going to be influenced in any way specifically by an
Ejaaz:
advert and then it goes on to say your chats with chat gpt
Ejaaz:
are not shared with advertisers ads will be clearly labeled
Ejaaz:
and chats that include sensitive topics such as health mental health or politics
Ejaaz:
are not eligible for ads so they're taking a kind of hybrid approach here where
Ejaaz:
they're not explicitly sharing all the data or rather prompts that you're sharing
Ejaaz:
within your conversations but it's taking kind of themes from your conversations
Ejaaz:
and sharing them with advertisers saying,
Ejaaz:
hey, these are the general vibes that our users are speaking about ChatGPT with.
Ejaaz:
Maybe your product could be a well-suited fit for this.
Ejaaz:
Another interesting point to make here is, well, what do the ads actually look
Ejaaz:
like? Is it going to be something subtle where it says,
Josh:
This was shocking to me.
Ejaaz:
Right? Well, I actually like this.
Josh:
I like it though. No, well, shocking in not really the most optimal way.
Josh:
When you look at the amount of screen real estate this takes up for people who are listening.
Josh:
It's huge. About a third of the screen is an ad.
Josh:
That's a large percentage of screen real estate for a single advertising slot to go.
Josh:
It's probably going to be worth a pretty hefty premium and a very strong inconvenience
Josh:
to people who don't want to pay for ChatGPT.
Josh:
So this, in a way, does degrade the experience, but should also make them a good bit of money.
Josh:
Because man, if you're getting 25 to 30% on the screen for an impression,
Josh:
that's like a pretty, you're going to see it.
Josh:
Like there's no way your ad blockers, like your eyes are going to glaze over
Josh:
it and not notice because it is such a profound placement on the actual display.
Ejaaz:
Well, it's also not your average impression, right?
Ejaaz:
Because this is a kind of like boosted impression where the conversion rate
Ejaaz:
is or probability of it converting into someone purchasing your product or service
Ejaaz:
is probably way, way higher.
Ejaaz:
Now, to give OpenAI credit, I like that they're excluding things like health,
Ejaaz:
politics, and also people that are under the age of 18.
Ejaaz:
Because AI is very, very persuasive, both in a good way, but in a really, really bad way.
Ejaaz:
The other kind of lens that I apply to this is the competitors are going to eat this up, Josh.
Ejaaz:
Because, listen, Google is getting plenty of cash flow from all their other
Ejaaz:
businesses. So they do not need to turn on ads.
Ejaaz:
Today, if you are a freemium user of OpenAI and you get tired of this real estate
Ejaaz:
that you just referenced, the sponsored ads, you don't want to see that crap.
Ejaaz:
You can just go and use Gemini and there's no ads at all.
Ejaaz:
And let me tell you, Google will be willing to subsidize no ads for as long
Ejaaz:
as it takes to kill OpenAI.
Ejaaz:
Anthropic, on the other hand, isn't a gigantic monopoly, but they're already
Ejaaz:
making so much money from the people that want their Claude Code product.
Ejaaz:
They've already produced something so valuable, Josh, from their subscription
Ejaaz:
that they're making tons of money. They're projected to make $70 billion by 2028.
Ejaaz:
So they don't need to pull off the stunt for ads.
Ejaaz:
So OpenAI really seems like they've got their back against the wall There's
Ejaaz:
no other way for me to describe it, to be honest.
Josh:
Yeah, they're a small fish in a very, very big pond. I mean,
Josh:
they're competing with companies like Google that have an infinite balance sheet
Josh:
relative to theirs, and they have the ability to subsidize and absorb any additional
Josh:
cost required to win additional market share.
Josh:
And that's what we're seeing as we look at these charts of weekly active users,
Josh:
decline for ChatGPT, and increase for all the others across the board.
Josh:
While Anthropix sits cozy and soundly with their incredible coding model and
Josh:
their business-to-business service.
Josh:
Now, I think it's time to get back into the drama news. This is the gossip part
Josh:
of the show because we have some more.
Ejaaz:
Dude, I wish Sam versus Elon was the only catfight going on.
Ejaaz:
But do you remember that angel from OpenAI that couldn't do no wrong and actually
Ejaaz:
called Sam out for being moralistically unethical?
Ejaaz:
Miro Murati, who left and started her own company, her own AI lab called Thinking Labs.
Josh:
Thinking Machines.
Ejaaz:
Thinking Machines, rather. They just lost...
Ejaaz:
Total 50% of their founders or their founding team this week,
Ejaaz:
they lost their CTO, Barrett Zoff, due to, as this tweet says,
Ejaaz:
unethical conduct, according to two sources familiar with the matter.
Ejaaz:
Those two things that were unethical was an in-work relationship,
Ejaaz:
which he didn't disclose.
Ejaaz:
And also, apparently, he was leaking information to competitors.
Josh:
Yikes.
Ejaaz:
Josh, do you want to guess which competitor, if it was true,
Josh:
Who he might have been leaking that to? take a guess. Considering where they
Josh:
all came from, I'm going to guess they were returning back to OpenAI,
Josh:
which seems very clear to me.
Ejaaz:
Absolutely. Look at this tweet from Fiji Simo, the CEO of OpenAI Applications,
Ejaaz:
who at the same time Mira Murati announced that these guys were leaving,
Ejaaz:
she announced welcome Baratsoff, Luke Metz, and Sam Sheldon.
Ejaaz:
So basically, the three exact people that left Thinking Machines this week joined OpenAI.
Ejaaz:
So I have a feeling that they were already getting tired of their work.
Ejaaz:
They didn't really feel focused under Miro Moracci's leadership and decided
Ejaaz:
that the best place to go back was OpenAI and Fiji welcomed them back with open arms.
Josh:
Hey, I got a question for you, actually. What does the key machines do?
Ejaaz:
Dude, I have no idea.
Josh:
Two billion seed raise. I'm not sure anybody has an answer. Two billion dollar
Josh:
seed raise. I'm not sure anybody has an answer.
Josh:
This company, as far as I'm concerned, they have shipped one small product that
Josh:
I don't think, it was just kind of a research product, wasn't very impressive, and nothing else.
Josh:
But they've raised two billion dollars in their seed. They're looking to raise even more money.
Josh:
And there is clearly a lot of drama going on in-house. There's this funny,
Josh:
funny post, EJs. I actually dropped it in our agenda, if you don't mind opening it.
Josh:
It's titled Jim. and there is a post that
Josh:
someone saw looking into the offices and it has like these weights
Josh:
that are custom branded with thinking machines just as a testament
Josh:
to how kind of outrageous the spending is yeah this
Josh:
this photo it's so funny if you scroll down a little bit you could see the plates
Josh:
on the gym are thinking machines plates and ironically there's no 45s in this
Josh:
picture because i mean maybe ai researchers don't don't really trust me like
Josh:
they need to be who knows but i think it's a it's a funny testament to the fact
Josh:
that um there are bubbly things happening.
Josh:
And one of which seems like it's thinking machines. They've raised a ton of
Josh:
money. They haven't really come up with the product.
Josh:
There's clearly a lot of drama where half of the co-founders now have returned
Josh:
back to where they're left from.
Josh:
So clearly they're not liking it. And it seems like there's this lack of direction.
Josh:
And you can give them the benefit and the doubt in the case that they are a
Josh:
research lab and they're hoping to discover some novel algorithmic improvement.
Josh:
But we've discussed this in previous episodes where an algorithmic improvement
Josh:
is very difficult to capture value from because it very quickly becomes commoditized
Josh:
and democratize throughout the stack.
Josh:
So even in the best case scenario, it seems difficult to see thinking machines.
Josh:
Anywhere else besides either being acquired or just kind of fizzling out.
Josh:
And I mean, at this point, it wouldn't even surprise me to see OpenAI acquire them again.
Josh:
The mirror will come back to OpenAI. They'll get the remaining three co-founders
Josh:
and they'll just continue to move on as they were previously.
Josh:
But that is to be determined.
Josh:
In other AI news, perhaps we'll go off the drama and get back to the hard tech,
Josh:
the people who are actually building stuff, not talking about stuff.
Josh:
And that is XAI, who has just released the first, or has just made it to the
Josh:
first gigawatt scale coherent training cluster in the world.
Josh:
And they have not been around. They've been around the least amount of time
Josh:
out of any other company in the world.
Josh:
So it's pretty ironic the fact that the youngest company is now the first to
Josh:
reach this critical scale of one gigawatt worth of energy.
Ejaaz:
Yeah, this is a big deal. So Colossus 2 and Colossus 1 are XAI's specific data
Ejaaz:
centers that they use to gather all their GPUs and train their AI models and
Ejaaz:
inference their AI models.
Ejaaz:
And the unique part around Colossus specifically is Elon is an infrastructure scaling genius.
Josh:
When he started Colossus 1.
Ejaaz:
He scaled it to 400 megawatts of compute capacity in 122 days.
Ejaaz:
Do you know how long it should have taken him, technically?
Josh:
I mean, this is like a year, years-long project.
Ejaaz:
Dude, four years. A year to just set up the infrastructure, about four years to get at life.
Ejaaz:
He did all of that in 122 days. Jensen Huang called him something like short
Ejaaz:
of an absolute genius that no one can compete with.
Josh:
That's one-tenth the time.
Ejaaz:
Four months, right? Yeah. And so he did that kind of midway last year,
Ejaaz:
and he thought, you know what?
Ejaaz:
I'm going to put my foot on the gas even more. And he started with Colossus 2.
Ejaaz:
And by the start of this year, or rather not by the start of this year,
Ejaaz:
but January 17th specifically, he got one gigawatt of compute total live across
Ejaaz:
Colossus 1 and Colossus 2.
Ejaaz:
He is officially the quickest AI startup to get to one gigawatt's worth of compute,
Ejaaz:
beating OpenAI, who started this stuff years ago. This is a two-year startup.
Josh:
Oh my God, we got to show the chart. Please, go to the chart at the bottom.
Ejaaz:
Yeah, please, please, please, please. let me go to the let me go to this where
Ejaaz:
is the wait where is the chart oh it
Josh:
Was at the bottom of the post.
Ejaaz:
Oh yeah there you go sorry right look at this scale it
Ejaaz:
is just absolutely insane to kind of like put this into context for
Ejaaz:
people um we're talking about 555 000 gpus that's half a million gpus worth
Ejaaz:
18 billion dollars he deployed it that quickly and if you want to understand
Ejaaz:
why he got the edge over every other lab that's been working on this for multiple
Ejaaz:
years and somehow elon's just kind of like swept the rug with them
Ejaaz:
He thought outside of the box. He played in the gray area. And what I mean by
Ejaaz:
that is, of course, he flew in gas turbines, Josh.
Ejaaz:
He flew in gas turbines to power his data centers.
Ejaaz:
If he couldn't get access to electrical grids, he would set it up himself.
Ejaaz:
He would literally thread the wires himself.
Ejaaz:
And if he couldn't get any energy from the national electric grid or the state
Ejaaz:
electric grid, he would fly in Tesla megapacks to power this.
Ejaaz:
He's thinking way outside the box where other AI labs are just kind of waiting
Ejaaz:
for regulatory burdens to be overcome. which is going to take years, to be honest.
Josh:
Yeah, and so much so that these two data centers, Colossus 1 and 2,
Josh:
actually sit in different states, but right on the state line.
Josh:
So they could lobby in two states at once. They have access to double the amount
Josh:
of senators to help get the legislation passed that they need in order to build these things.
Josh:
They have really, like, if you think about how to build a data center from first
Josh:
principles, you want to optimize all of these traits that they have actually been doing.
Josh:
And they have that unique advantage that you mentioned where they have partnerships
Josh:
with companies like Tesla to give them access to these mega packs.
Josh:
And a lot of people don't realize when you do these training runs,
Josh:
there's a couple hundred thousand GPUs that spin up very quickly and then power down.
Josh:
And there's a huge variance in energy that comes through the grid in order to
Josh:
make this work. And when there's a physical combustion motor that's actually
Josh:
spinning, it's very difficult to speed it up and slow it down that fast.
Josh:
So you need something quicker. You need things like Megapack batteries.
Josh:
And the only company that makes batteries this size at this scale with this
Josh:
type of software stack ready to go is Tesla, is the Megapack,
Josh:
and they have this competitive advantage. And in a world in which
Josh:
the winner is the person who can deploy resources the fastest and most efficiently,
Josh:
it very clearly seems that XAI is going to continue to take this lead as they
Josh:
move forward just because of the sheer rate of improvement.
Josh:
And if you look at the chart, I mean, it's a vertical line to get to Colossus 2.
Josh:
And the next person who's coming after this is OpenAI, but that chart looks
Josh:
like it's going to beat them sometime in 2027.
Josh:
So, I mean, granted, there will be variants here, but it seems like XAI finally
Josh:
has taken the lead, And I don't see any world in which they don't continue to dominate this lead.
Ejaaz:
Yeah, I agree with you. Elon's taking a very large gamble here,
Ejaaz:
which is the more compute I have, the better AI model I can build.
Ejaaz:
And that was in contention last year, but Google proved it after they spun up
Ejaaz:
a bunch of TPUs that they produced a leading model.
Ejaaz:
And I have a feeling that Grok 5, whenever that releases in this quarter or
Ejaaz:
first half of the year, is going to be an absolute beast.
Josh:
I can't wait.
Ejaaz:
I can't wait. To put it to context, by the way, because we throw around a lot
Ejaaz:
of these numbers, like one gigawatt, what the hell does that mean?
Ejaaz:
That is the total power that is needed to power San Francisco City,
Ejaaz:
but not just during normal hours.
Ejaaz:
I'm talking about peak hours. If you turn on all the lights,
Ejaaz:
use up all the energy, the most
Ejaaz:
energy, that's how much power is coursing through Colossus 2 right now.
Ejaaz:
And I've got news for you guys. he set up Colossus 3 already and he has raised
Ejaaz:
another $20 billion $5 billion oversubscribed to buy even more GPUs and he is
Ejaaz:
the largest purchaser of NVIDIA's Blackwells and their latest Vero Rubens as
Ejaaz:
well so again it's a big gamble if it pays off
Ejaaz:
Grok's going to be the best, dude.
Josh:
Man, when these Vera Rubin chips come online and they have clusters this size
Josh:
at this scale, there is an impossibility we don't reach AGI at that point.
Josh:
There is so much intelligence, so much energy and compute power solving problems.
Josh:
And this is happening quickly. I mean, this is by next year. We're done.
Josh:
So things are moving quickly. But maybe on that note, particularly the Tesla
Josh:
one, we have updates. It's not that...
Ejaaz:
Well, come on. We're talking about XAI. This is one company,
Ejaaz:
one of six that Elon manages. And you're telling me that he's had a banger week for Tesla as well.
Josh:
Absolutely incredible. So there's a funny thing. I'm in LA right now,
Josh:
and I've been taking Waymos around all week. And this obviously is Tesla's largest
Josh:
competitor. And they're fantastic.
Josh:
They work very well, but they work in this geofenced area where I wanted to go to Santa Monica Pier.
Josh:
And I actually couldn't get there, even though it was only four miles away,
Josh:
because it wasn't in the geofenced area. I wasn't able to get there.
Josh:
FSD is solving this problem. FSD is going to be fully autonomous everywhere.
Josh:
And in fact, just this week, they announced that they are removing the ability
Josh:
to purchase a license February 14th on Valentine's Day.
Josh:
Which is kind of sad because that's a heartbreak thing. And on Valentine's Day
Josh:
of all days, it's not a cool thing, but it signals a few things to me.
Josh:
One is since the beginning of time, it was made very clear that the price of
Josh:
full self-driving would only go in one direction and that's up because the value
Josh:
of having a license to basically grant you unlimited full self-driving miles
Josh:
for the remaining value of the car is a very high premium.
Josh:
And as they get closer and closer, that premium will get higher.
Josh:
Now we've gotten so close to the finish line that they've removed it entirely.
Josh:
And that license no longer exists.
Josh:
So if you want to buy unlimited lifetime full self-driving chauffeur miles,
Josh:
you have about a month to do it.
Josh:
And if you don't do it in that time, that's it, you're done for. Wait, question for you.
Ejaaz:
So let's say you buy a new Tesla after this deadline, Josh.
Ejaaz:
Can you move your lifetime FSD subscription to your new car?
Josh:
There is a month grace period after the window until sometime in mid-March,
Josh:
where if you are a current owner, you can transfer the license to the new vehicle
Josh:
but after that i suspect it's done and it's not coming back but.
Ejaaz:
Didn't people pay like eight thousand dollars
Josh:
To yes i owned the license so it's it's disappointing,
Josh:
But it's been expected for a very long time and the cars last forever.
Josh:
But now the car becomes much more valuable because it does have lifetime free
Josh:
full self-driving miles.
Josh:
And that amount of inference power is really impressive on the back of this
Josh:
post that we're sharing right now, which is the hardware plan as they move forward
Josh:
and as they're actually powering these systems.
Josh:
So AI4 is currently what's on the cars right now.
Josh:
That's what is driving full self-driving. that is what is going to get to full
Josh:
level five autonomy where the cars will drive themselves. But AI5 is coming next.
Josh:
And AI5 is a new chip design that they've been working really hard on basically
Josh:
every week for the last three months.
Josh:
And AI5 is built entirely for full self-driving in a way that AI4 was not.
Josh:
So traditionally with GPUs, the way they're built is for large,
Josh:
I think it's floating point matrix math, some like very elaborate data set.
Josh:
And it's good for general purpose. But basically what Tesla and the AI team
Josh:
are doing is designing, you could think of it like a TPU, but for full self-driving
Josh:
vehicles and for autonomy on machines.
Josh:
So that includes things like Optimus and things like any of the Tesla vehicles.
Josh:
And I'm sure it will find its way into the data centers.
Josh:
In fact, I was listening to an episode with one of the XAI employees who I guess is ex,
Josh:
XAI now because he's no longer with the company after that podcast.
Josh:
But he was mentioning how the plan is actually to take these AI5 chips and all
Josh:
the chips moving forward and actually place them into data centers because they're
Josh:
going to be so effective,
Josh:
so efficient relative to others that Tesla will now soon become not only a large
Josh:
chip manufacturer, but will do the Google thing and will vertically integrate
Josh:
the chips into its own technology stack as it trains these models and starts
Josh:
to build its quest for AGI.
Ejaaz:
He's already working on the future iterations of this chip as well.
Ejaaz:
AI-6, AI-7, and then Dojo 3. He's resuming that project as well.
Ejaaz:
He mentioned that he's going to be doing these iterations in nine-month cycles.
Ejaaz:
So what has typically taken two years, he's accelerating chip design to a new
Ejaaz:
one every nine months, which is just an insane cadence and kind of reminds me
Ejaaz:
of what Jensen is doing at NVIDIA, which brings me to,
Ejaaz:
because Jensen's like doing a new GPU model every year now. That's what he's targeting.
Ejaaz:
Which leads you to my point. We had a conversation, you and I,
Ejaaz:
Josh, months ago last year, where I said that I think Elon might be going down
Ejaaz:
the path where he's not exactly trying to compete with NVIDIA,
Ejaaz:
but he wants to become independent from them eventually.
Ejaaz:
I'm not saying this is a direct hit towards it. I think your comparison to the
Ejaaz:
AI models, the AI-5 chips, rather, being kind of better compared to Google's TPUs is accurate.
Ejaaz:
But if he's not just going to put these in cars, but he's going to put these
Ejaaz:
in humanoid robots and whatever robots Tesla builds in the future,
Ejaaz:
maybe even his spaceships, if they do a cross-collaboration,
Ejaaz:
we already know that there's a lot of synergies between SpaceX and Tesla.
Ejaaz:
This ends up becoming one of the most valuable GPU providers there could be.
Ejaaz:
And I wonder if Tesla starts to get valued similarly to an NVIDIA-esque for
Ejaaz:
maybe custom specialized chips for robots in the future.
Josh:
Yeah, their plan is to develop a TerraFab factory.
Josh:
So their plan is to actually make these chips in-house to become someone like
Josh:
NVIDIA, but do so in a way that's vertically integrated.
Josh:
And you can see in that post, he's kind of sharing what each one of those chips
Josh:
are going to be used for. And we could almost reverse engineer this to create
Josh:
a timeline of when we'll get to AI7, which he says will be the space-based AI compute.
Josh:
If you assume about nine months per iteration, that takes us to 27 months,
Josh:
so two years and change after AI5 releases.
Josh:
So maybe AI5 comes out sometime later this year.
Josh:
After that, we have about two years. So you're looking at like 2028,
Josh:
2029, end of the decade for space-based AI compute to become really a superpower.
Josh:
And you have to assume that by that time, starships will be working very,
Josh:
very well. They'll get the cost of kilogram down.
Josh:
And that's probably when we'll start to see this new AI in space-based narrative
Josh:
actually literally taking off and getting into outer space. So I found that interesting too.
Josh:
So now we kind of have this loose estimate for timelines as well.
Josh:
And one final bonus on the full self-driving part of this show is the real live
Josh:
implementation of this right now, where we're seeing this post,
Josh:
this person drove 13,000 miles fully autonomously from the West Coast to the
Josh:
East Coast and then partially back.
Josh:
This was all done using a production Tesla. There was no early access information
Josh:
and it was actually verified through the software that's on the car,
Josh:
that 100% of these 13,000 miles were driven autonomously.
Josh:
That includes parking, that includes charging, that includes driving,
Josh:
detours, anything that needed to happen, it was done 100% autonomously.
Josh:
And I think that's why you're seeing this premium for these licenses.
Josh:
And the second they go away, you're on a monthly plan, and that monthly plan
Josh:
is going to change price.
Josh:
Right now it's $100 a month, but I suspect it will continue to go up as the cost per mile goes down.
Josh:
And that's basically it for the autopilot section. I mean, it's exciting.
Josh:
It's happening quickly it's out there in production you could go sit in them
Josh:
today and it really does work you have your own chauffeur.
Ejaaz:
To be honest, the most shocking thing from this news update,
Ejaaz:
Josh, is that you spent the week driving around in Waymo's, dude. You know what?
Josh:
Keep your friends close and your enemies closer, man. I got to know what's going on over there.
Ejaaz:
There's 2,500 of them out there right now, right?
Josh:
Oh, and it looks like it. It's unbelievable. Just a sidebar on LA.
Josh:
There are robots everywhere.
Josh:
There's robots rolling down the street delivering food. There's Waymo's that
Josh:
are driving in the streets. It feels like a futuristic place relative to New York City.
Ejaaz:
Did you make it out to the Tesla diner this time?
Josh:
Yes, and enjoyed every moment of it. In fact, I was there the week that it opened
Josh:
up because I'm such a fanboy.
Josh:
It's a cool experience. I would recommend anyone who is in LA go check it out
Josh:
because it's really fun.
Josh:
It is very good. It's all locally sourced. It's high quality ingredients.
Josh:
It tastes great. It's a really fun and novel experience. So it's worth making
Josh:
a pit stop if anyone's around.
Ejaaz:
Okay, well, if you guys are based in the West Coast or better yet in LA,
Ejaaz:
definitely go check out the diner or get a ride in a Waymo. Let us know. Is it safe?
Ejaaz:
Do you get into a car crash? I personally don't know.
Josh:
And share some pics. It's fun. You get an opportunity to actually sit in the
Josh:
future and live that before a lot of people do.
Josh:
So would highly advise. Now, final topic of the week here is a new partnership
Josh:
between OpenAI and Cerebris.
Josh:
I know, Ejaz, you're a Cerebris fan.
Josh:
You're a Cerebris guy. What's going on over here?
Ejaaz:
I'm more kind of concerned that OpenAI is spending money again,
Ejaaz:
despite them burning so much money.
Josh:
How much money are we talking?
Ejaaz:
$10 billion over the next three years. Just $10 billion. By the way,
Ejaaz:
they don't have that $10 billion. Lord knows what it is for.
Josh:
They don't have any dollars. They haven't made a profit yet.
Ejaaz:
They haven't made any profit, but with ads, of course. But yes,
Ejaaz:
this is OpenAI's latest and greatest partnership, or rather investment,
Ejaaz:
which is to the tune of $10 billion in this company called Cerebrus.
Ejaaz:
Now, when I read this headline, Josh, I had a flashback because I'd seen the name Cerebrus before.
Ejaaz:
And I remember I'd seen their name in the context of them moaning about another
Ejaaz:
investment, which was NVIDIA's $20 billion investment in a company called Grok, which makes custom,
Ejaaz:
let's call them custom GPUs, but they're not exactly GPUs.
Josh:
Grok with a Q. Grok with a Q, yeah. $20 billion acquisition that just happened.
Ejaaz:
$20 billion acquisition.
Josh:
$20 billion acquisition.
Ejaaz:
Licensing acquisition, exactly. And NVIDIA made this acquisition so that they
Ejaaz:
would get access to Grok with the queues
Ejaaz:
LSUs, they're language-specific units or whatever the hell it stands for.
Ejaaz:
And basically, it allows them to process inference at a much cheaper rate.
Ejaaz:
And the reason why that's interesting is, okay, trading the model is all well
Ejaaz:
and done and you need GPUs to do that.
Ejaaz:
But afterwards, you have a ton of people like Josh and I just sending prompts every single hour.
Ejaaz:
And it requires a different type of chip that you can make more performant,
Ejaaz:
save you more money, and also make you more money, right?
Ejaaz:
If you can lower the cost of inference, you end up making money on the back
Ejaaz:
end, right? That's what we all want.
Ejaaz:
And so opening, I thought, hmm, I don't have a Grok.
Ejaaz:
What's the next best company to invest in? And that was Cerebrus.
Ejaaz:
Cerebrus, at the time of the NVIDIA acquisition, complained,
Ejaaz:
saying, Grok's not good enough, our chips are better, basically,
Ejaaz:
because they wanted this kind of salty that they didn't get the investment.
Ejaaz:
Now they're getting it from OpenAI, Josh.
Ejaaz:
And so why would OpenAI do it at this time? Well, they received a big bit of
Ejaaz:
criticism for one of their products, Josh, and that is their coding model called Codex.
Ejaaz:
They were told that it was too slow and Cloud Code not only was smarter, but a lot quicker.
Ejaaz:
Well, Josh, a bit of news dropped in the last week, which actually you and I
Ejaaz:
didn't even catch. We caught it at the last minute. um
Ejaaz:
OpenAI dropped Codex Max High.
Ejaaz:
God knows why they called it that, but it's their latest coding model,
Ejaaz:
which is a lot smarter than it was.
Ejaaz:
It's almost at parity with Cloud Code, but not quite as good.
Ejaaz:
But most importantly, it's quicker.
Ejaaz:
And the rumors state that the
Ejaaz:
reason why it's 15 times quicker is because they're using Cerebrus chips.
Ejaaz:
So they have this specific custom chip. It's huge. I've seen a picture of this
Ejaaz:
thing. It's the size of a dinner plate.
Ejaaz:
It looks absolutely ridiculous, but it's more performant and will allow OpenAI
Ejaaz:
to charge more on the backend whilst also delivering enough compute for anyone
Ejaaz:
and everyone that wants to use it for coding.
Josh:
Yeah, it's a 10 times faster than GPU-based inference performance boost.
Josh:
So this is going to be a huge increase in performance.
Josh:
Now they have the performance. Do they have the actual intelligence?
Josh:
That's the next question that remains to be seen. So is it going to be valuable
Josh:
if it's faster, even though the tokens that it's generating are a bit inferior to Anthropic?
Josh:
I don't know. But again, this is kind of a testament to the strategy of open
Josh:
AI, which is being fighting basically every war on all fronts.
Josh:
They're trying to win consumer.
Josh:
They're trying to win institutional and business.
Josh:
They're trying to compete on coding while also doing image generation,
Josh:
while also doing video generation.
Josh:
So they're trying to be the best across the board. And it seems like as a result,
Josh:
they're becoming kind of...
Josh:
Not the best at anything. And I'm not sure where that strategy leads,
Josh:
but it appears as if they're going to continue doing that based on their ad
Josh:
strategy and now this acquisition of Cerebra.
Josh:
So time will tell how this actually pans out. Do you want to hear.
Ejaaz:
My tinfoil hat
Josh:
Conspiracy, Josh?
Ejaaz:
I also read earlier this week, Josh, what is the Neuralink competitor that Sam soldered?
Ejaaz:
Is it Merge Labs or something like that? It's Merge, right?
Josh:
I think that's probably right. Yeah, I know he has a competitor.
Ejaaz:
Guess which AI lab made a massive investment in Merge Labs this week as well? Who? OpenAI.
Josh:
No. So he's just buying his own bags across the board. It's kind of annoying.
Ejaaz:
It's annoying, right? Because he also secretly has equity in this thing.
Josh:
Is he using investor money as exit liquidity? Yes, that's exactly what he's doing.
Ejaaz:
Yeah, it's sus, right?
Josh:
On the back of a $135 billion lawsuit, I think this is probably going to be
Josh:
a big trend for the year, is just evaluating the...
Josh:
Ethics and strategy of OpenAI as they have gone from non-profit to for-profit
Josh:
and now continue to acquire the same companies that are on the CEO's balance sheet.
Josh:
It's interesting. There's a lot of good lore here that we still have to unpack.
Josh:
But I think that's enough unpacking for today. We covered quite a bit.
Josh:
That's going to be the end of the episode. We have another roundup coming later
Josh:
this week. There's so much stuff to talk about.
Josh:
But yeah, that was another.
Ejaaz:
Well, I was going to say, you might have noticed if you're listening to this,
Ejaaz:
that we didn't mention two of the hottest topics this week.
Ejaaz:
Anthropic releasing Claude Cowork and Google taking over the entire AI world
Ejaaz:
with four product releases, including personal intelligence.
Ejaaz:
We actually made dedicated episodes to both of those. And if you don't know
Ejaaz:
what we're talking about, you missed it. And you should definitely go and watch those.
Ejaaz:
In fact, Josh wrote a banger of a newsletter essay in our newsletter.
Ejaaz:
So you should sign up for that as well.
Ejaaz:
Turn on notifications wherever you listen or watch these things.
Ejaaz:
I know some of you can't bear to look at our faces, so you just listen to our voices.
Ejaaz:
That's totally fine. Turn on notifications, subscribe. It helps us out so much.
Ejaaz:
And yeah, we'll see you on the next episode. We're filming a pretty interesting one.
Josh:
Can we link a little bit of alpha here? Yes, please. For anyone who subscribes
Josh:
to the newsletter, the piece that's coming out this week, EJES,
Josh:
I believe, is going to be on XAI and about why XAI is undervalued,
Josh:
how valuable it can get, kind of a continuation of the conversation we had today.
Josh:
So if that seems interesting, that's going to drop on Wednesday of this week.
Josh:
So subscribe in order to get access to that and see a little bit more detail
Josh:
as to why we suspect XAI is going to have the success that we believe it will
Josh:
be, which will be very, very high.
Josh:
But yeah, that concludes the episode. Thank you all so much for watching. We appreciate it.
Josh:
Appreciate you sharing with your friends, doing all the good things.
Josh:
And we will see you guys in the next one.
Ejaaz:
See ya.