{ "version": "1.0.0", "segments": [ { "speaker": "Speaker 1", "startTime": "0.0", "endTime": "5.04", "body": "We have a guest cohost today. Introduce yourself for those who don't know." }, { "speaker": "Speaker 2", "startTime": "5.04", "endTime": "6.24", "body": "Jordy's out again. I'm back." }, { "speaker": "Speaker 1", "startTime": "6.24", "endTime": "12.719999", "body": "Yeah. We got Tyler in the Ultra Dome in the hot seat. You're back. You know who else is back? Leopold Ossenbrenner's back." }, { "speaker": "Speaker 1", "startTime": "13.014999", "endTime": "39.8", "body": "He says, you're gonna have to drag me out of salt, out of situational awareness LP because he's down but not out. Little beat up, but he shared a letter that's making the rounds, thanks to some intrepid reporters on the TBPN team that posted this. He sent an LP letter that clarifies a lot of the questions. Yesterday, I mean, even internally, we were going back and forth on like, okay, he'd sold a bunch of the portfolio to Ken Griffin to Citadel. Does this count as a liquidation?" }, { "speaker": "Speaker 1", "startTime": "39.8", "endTime": "46.595", "body": "Yeah. Does this count as blowing up? And these are, like, sort of vague terms. Like, what what does it mean to blow up? There was definitely a drawdown." }, { "speaker": "Speaker 1", "startTime": "46.595", "endTime": "57.239998", "body": "The fund definitely was underperforming that month. But what does it mean? Is the fund gone forever? Is he going to work at McDonald's as some people were trying to make it seem it was happening? Obviously, that's not gonna happen." }, { "speaker": "Speaker 1", "startTime": "57.239998", "endTime": "69.98499", "body": "He's gonna have a long career. Lot of lots of people are rooting for him. I'm certainly rooting for him. There are some facts in this letter that we should read through. So he writes, this is Leopold Aschenbrenner to the LPs of Situational Awareness LP." }, { "speaker": "Speaker 1", "startTime": "69.98499", "endTime": "91.28", "body": "We let you down this month. We came closer to permanent capital impairment than is acceptable to us. While we ultimately found a solution that protected the fund and you as investors, that was the sale of the public equity book to Citadel. There were some other structure going on to get liquidity. He said, we ultimately found a solution that protected the Fund and you as investors." }, { "speaker": "Speaker 1", "startTime": "91.28", "endTime": "108.135", "body": "Our intention in running the Fund is to never find ourselves in such a position in the first place. Volatility is the price of long term investment returns. Over the past two years, we have delivered outstanding results. That's a 100% true. It was up, what, a thousand percent at one point or something like that?" }, { "speaker": "Speaker 2", "startTime": "108.135", "endTime": "111.51", "body": "Yeah. Something like that. I mean, it got up to, what, 45 is the number." }, { "speaker": "Speaker 1", "startTime": "111.51", "endTime": "124.31", "body": "Right? 5,000,000,000 AUM from an original raise less than two years ago, I believe, of $250,000,000 Yeah. Which seemed crazy at the time. People were like, he's a he's a young he's a young first time hedge fund manager. He's got $250,000,000." }, { "speaker": "Speaker 1", "startTime": "124.31", "endTime": "133.535", "body": "That's crazy. Then pretty soon, he was like, oh, he's got a couple billion. That's crazy. Then he was like, he's got tens of billions. Then he's got, 0.5 a centibillion." }, { "speaker": "Speaker 1", "startTime": "134.815", "endTime": "157.745", "body": "So he says, over the past two years, we have delivered outstanding results despite occasional sharp pullbacks. Probably, they're not the first time. There's been other pullbacks in the market, and those have probably been amplified but never gotten to this level of of actually distressing the fund in this way. He said, but our fund must always be structured such that we can take a loss and fight another day. And that's a recurring theme in this." }, { "speaker": "Speaker 1", "startTime": "157.745", "endTime": "166.385", "body": "The writing in this letter is really good. Very clear Yep. Very direct, not being dodgy, very upfront. I love the way it's written." }, { "speaker": "Speaker 2", "startTime": "166.385", "endTime": "171.11", "body": "Almost kind of like there's that PG advice to, like, write very clearly. Yeah. Yeah. I I think it was very" }, { "speaker": "Speaker 1", "startTime": "171.26999", "endTime": "171.67", "body": "For sure." }, { "speaker": "Speaker 2", "startTime": "171.67", "endTime": "172.39", "body": "Kind of in that line." }, { "speaker": "Speaker 1", "startTime": "172.39", "endTime": "188.31502", "body": "There's a lot of that in here. Yeah. So he says, I will make it my mission to ensure that we learn the necessary lessons from this experience. Here's where things stand. One, the portfolio experienced a significant drawdown over the course of July, which was exacerbated by extreme moves in core positions over the past week." }, { "speaker": "Speaker 1", "startTime": "188.395", "endTime": "217.035", "body": "Many AI names drew down by half or more while our positive long short spread reversed violently. While we could say much more about how unusual the month was, we hold ourselves to a higher standard irrespective of market conditions. Two, as these moves proceeded, we started to see increasingly adverse trading in names publicly associated with us. So, this is the rumor that Martin Scrella was talking about yesterday. This idea that there's blood in the water Yeah." }, { "speaker": "Speaker 2", "startTime": "217.035", "endTime": "219.83499", "body": "On spread You can kind of sniff out if someone's hurting and that Exactly. You can" }, { "speaker": "Speaker 1", "startTime": "219.83499", "endTime": "240.59", "body": "kind of short sell those positions, sell those names, go put some pressure on those downward pressure to actually intentionally hurt that fund. It's a knockout drag out fight there on Wall Street, clearly. But that's the game you're playing. That's why you get paid the big bucks if you can pull it off. So these dynamics are essentially similar to a bank run." }, { "speaker": "Speaker 1", "startTime": "241.28499", "endTime": "256.005", "body": "Crazy to put that word in there. A lot of people would be dodging that, but very, very direct. I love it. Vulnerability begetting more vulnerability. We worked to keep the portfolio within our risk parameters, but gradually, this became more difficult as positions rapidly moved against us and market liquidity dried up." }, { "speaker": "Speaker 1", "startTime": "256.31998", "endTime": "282.505", "body": "On Wednesday night, Thursday morning, we took decisive action to protect LP Capital. We traded a portion of our public portfolio in a block transaction to remove all leverage from the fund and prevent further losses. All shorts were closed and reliance on portfolio financing removed. We currently manage a fully paid for public book, long stock and long fully paid for options with no margin liquidity risk. This restored stability and allowed us to preserve our private positions." }, { "speaker": "Speaker 1", "startTime": "282.74", "endTime": "292.18", "body": "So, this feels like down but not out for sure. Yeah. And he says, I take full responsibility for these events. That's just the full paragraph. He just says, I take responsibility." }, { "speaker": "Speaker 1", "startTime": "292.18", "endTime": "311.81", "body": "No equivocating. It's great. To be clear, this should rightly have been a very painful month in terms of the performance of our fund. When AI stocks draw down dramatically while AI technical business fundamentals are improving, you should expect our fund to be down a lot. We embrace volatility, but it should never jeopardize the fund." }, { "speaker": "Speaker 1", "startTime": "311.81", "endTime": "325.025", "body": "The fund was not shut down. It was not liquidated or transformed into a private only fund. This was something that a lot of people were speculating on was, Is this going to be private only? Are they only going to have the private book? Is just going be the anthropic position Yeah." }, { "speaker": "Speaker 1", "startTime": "325.025", "endTime": "341.81", "body": "That's gonna be riding? Or is it just gonna be liquidated and they're just gonna return capital LPs and just say, hey, we're gonna start completely fresh, do something completely different? Even even like an like an aqua hire, the, you know, situational awareness becomes like a a desk at another fund. None of that's happening. He's very clear about this." }, { "speaker": "Speaker 1", "startTime": "341.88998", "endTime": "362.86502", "body": "Situational awareness is not shutting down, it's not liquidating, and it's not transforming into a private only fund. He says, We are continuing to operate as a hybrid publicprivate fund as before. However, we will manage our public book on a fully paid for basis while we draw the lessons from these developments. Most importantly, we took the steps that were necessary to fight another day. I love it." }, { "speaker": "Speaker 1", "startTime": "363.16", "endTime": "397.22", "body": "A rallying cry to both the LPs and the employees, I'm sure. In the coming weeks, I will focus on putting in motion the necessary changes across a portfolio management, risk team and vigilance applied across the board to ensure a higher level of resilience going forward. AI may continue to intensify market volatility for years to come, and that is something that is so clear outside of the situational awareness, bottleneck trade, long tail, low market cap, high volatility stocks. Like, I have never seen the mag seven trading like this where across earnings we're gonna get into this with recapping Meta, Apple, Amazon, Microsoft." }, { "speaker": "Speaker 2", "startTime": "397.22", "endTime": "403.62003", "body": "Yeah. I mean, I I think it was the the stat was Microsoft had the biggest day ever of any public company. Yeah. In the biggest move. Yeah." }, { "speaker": "Speaker 1", "startTime": "403.86002", "endTime": "425.78", "body": "So you're seeing you're seeing trillion dollar companies move by 10%, 9%, 15%. It's insane that anything can happen at that scale. And so clearly, there is going to be a lot of volatility. And I think he's right to point out that it is based on the AI trade. There's so much uncertainty about Yeah." }, { "speaker": "Speaker 1", "startTime": "425.78", "endTime": "457.47", "body": "One little number about how the CapEx is going to trade back. You know, the investors in these large companies, let alone the small ones, are moving the stocks significantly, and that makes his job all the harder. He says, These were very expensive scars, but I am dedicated to ensuring they will be invaluable lessons for our organization and for myself as we move forward. My core promise to you is that we will not waste the opportunity to learn from these events on the portfolio itself. We are very optimistic about the current investment opportunity set." }, { "speaker": "Speaker 1", "startTime": "457.71", "endTime": "476.845", "body": "Of course, I mean, the thesis still holds. The underlying fundamentals are accelerating at the very same time that prices have declined significantly. Thank you for your patience and your partnership. I'm fully invested alongside you. Virtually all of my capital is in the fund, and I intend to work relentlessly to demonstrate that the events of this month have made me a wiser and stronger investor, he says he's available for calls." }, { "speaker": "Speaker 1", "startTime": "477.245", "endTime": "508.99", "body": "But he also says that the as an interim update, the current unaudited estimate of net month to date performance, this is for all of July, basically, negative 67%. Sounds atrocious until you realize that net year to date, they're still up 80%, which is, like, better than any investment fund, ever. So, people are definitely, you know, maybe down but not out. That there's gonna be a second act here, which I think everyone's very excited for. A lot of people were praying for his downfall." }, { "speaker": "Speaker 1", "startTime": "508.99", "endTime": "510.66998", "body": "It's very unfortunate to see." }, { "speaker": "Speaker 2", "startTime": "510.75", "endTime": "517.55", "body": "This I think this was really good letter. I mean, this is, like, instills so much faith. Like, I yeah. He's completely level headed. He's not, like, freaking out." }, { "speaker": "Speaker 2", "startTime": "517.55", "endTime": "517.63", "body": "So," }, { "speaker": "Speaker 1", "startTime": "517.63", "endTime": "521.515", "body": "like, everything. You're calling it another billion dollar PDF. Yeah. This could be" }, { "speaker": "Speaker 2", "startTime": "521.515", "endTime": "522.635", "body": "the second billion dollar PDF." }, { "speaker": "Speaker 1", "startTime": "522.635", "endTime": "526.395", "body": "Might be. Mean, Shalto agrees. Shalto" }, { "speaker": "Speaker 2", "startTime": "526.715", "endTime": "527.59503", "body": "Yeah. Shalto had a great take." }, { "speaker": "Speaker 1", "startTime": "527.755", "endTime": "529.11505", "body": "Great position. What did he say?" }, { "speaker": "Speaker 2", "startTime": "529.275", "endTime": "542.32", "body": "He said, prediction. Situation awareness will be bigger than Citadel by the end of the decade. Leopold has predicted the last two years better than anyone else. Now that he can combine that with very expensive lessons in risk, he will be unstoppable. He has my full confidence." }, { "speaker": "Speaker 1", "startTime": "542.48", "endTime": "546.56", "body": "This is such a wild post. Cain Griffin sitting there being like" }, { "speaker": "Speaker 2", "startTime": "546.72", "endTime": "547.6", "body": "You gotta ride with your boys." }, { "speaker": "Speaker 1", "startTime": "547.6", "endTime": "553.095", "body": "Jolt up. Like, you're gonna take a shot at me like that, bro. Really? Really? You're gonna come for me like that?" }, { "speaker": "Speaker 1", "startTime": "553.415", "endTime": "579.60504", "body": "Because I will die before I am not the biggest hedge fund manager in the world. Pull up a live view from the Citadel Trading Floor because we got some leaked video. This is not the vibe that Martin was articulating Ken Griffin's wanting to be framed as, like, the savior of the Legend of Last Resort, Positive Force. This is" }, { "speaker": "Speaker 2", "startTime": "579.60504", "endTime": "581.685", "body": "the guy you wanna call? I guess. That's the" }, { "speaker": "Speaker 1", "startTime": "581.685", "endTime": "588.44", "body": "guy right here. Ah, Dune. So good. Is this from Dune one or Dune two? I think this one" }, { "speaker": "Speaker 2", "startTime": "588.6", "endTime": "589.95996", "body": "I wanna say Dune one." }, { "speaker": "Speaker 1", "startTime": "591.31995", "endTime": "596.75995", "body": "Yeah. Beautiful. It's very heavy." }, { "speaker": "Speaker 2", "startTime": "596.75995", "endTime": "606.13495", "body": "So so I I think one of the the big stories of the last, you know, few days is we've seen all these new Leopold photos. We've never seen these before. Yes. Brand new rare Leopolds from Wall Street Journal." }, { "speaker": "Speaker 1", "startTime": "606.13495", "endTime": "609.01495", "body": "This might be the biggest story of them all. Yeah. Because, mean, for for" }, { "speaker": "Speaker 2", "startTime": "609.01495", "endTime": "618.43005", "body": "a while, the only image of Leopold was basically, there was like one headshot and then it was just stills from Dwarcache podcast. Yeah. And now we're just seeing all these new ones. Yeah. Like, where did these come from?" }, { "speaker": "Speaker 1", "startTime": "618.43005", "endTime": "636.765", "body": "There was one and then there was a photo that was done, I think, for the Wall Street Journal. But then the New York Times writes up the whole story of the of the situational awareness deal with Citadel and they just drop a banger new photo that they just had in the archive that they could have leaked. Yeah. Let's pull it up. It's here." }, { "speaker": "Speaker 1", "startTime": "637.485", "endTime": "647.69", "body": "It's Leopold looking very pensive behind a glass wall. This one's in the Wall Street Journal today. This one's new too. Yeah. Everyone's been clamoring for this because the one that goes viral is him in that green suit." }, { "speaker": "Speaker 1", "startTime": "647.69", "endTime": "648.01", "body": "This is the" }, { "speaker": "Speaker 2", "startTime": "648.01", "endTime": "649.37", "body": "one I'm pretty sure that's AI." }, { "speaker": "Speaker 1", "startTime": "649.37", "endTime": "649.93", "body": "Right? That's AI." }, { "speaker": "Speaker 2", "startTime": "649.93", "endTime": "650.41003", "body": "Yeah. It looks" }, { "speaker": "Speaker 1", "startTime": "650.49", "endTime": "664.225", "body": "But this one is not. This is from the New York Times. They went and shot this and then never published anything. Like, the first time Leopold was mentioned in the New York Times was yesterday and they used this photo. And so, you have to wonder if they were, like, working on a profile." }, { "speaker": "Speaker 2", "startTime": "664.225", "endTime": "665.345", "body": "Yeah. They've been sitting on it." }, { "speaker": "Speaker 1", "startTime": "665.345", "endTime": "681.79", "body": "But Leopold's been so quiet with his public relations strategy. He's not talking to media, doing photo shoots, doing profiles constantly. Yeah. He certainly could be doing more Bloomberg, at Forbes, and Fortune. Like, could be doing a lot, but he's had a very narrow strategy and I think it's worked very well for him." }, { "speaker": "Speaker 1", "startTime": "682.19", "endTime": "698.34503", "body": "But it's funny that somehow all the mainstream media just has secret Leopold photos they've been dropping the timeline. John Arnold is chiming in. He says, my philosophy when I used to hire traders was that the optimal number of past blowups was one. He's not saying zero. Yeah." }, { "speaker": "Speaker 1", "startTime": "698.34503", "endTime": "699.465", "body": "Says, you gotta learn your lesson." }, { "speaker": "Speaker 2", "startTime": "699.465", "endTime": "702.89996", "body": "Is how does the FTX future fund count? Does that count?" }, { "speaker": "Speaker 1", "startTime": "702.89996", "endTime": "703.86", "body": "I don't think that counts at all." }, { "speaker": "Speaker 2", "startTime": "703.86", "endTime": "705.45996", "body": "That it definitely doesn't count as a full blow up." }, { "speaker": "Speaker 1", "startTime": "705.45996", "endTime": "711.22", "body": "He he wasn't a fund manager of it. Right? It wasn't it, like No. Got donations and then FTX was just the one that was funding?" }, { "speaker": "Speaker 2", "startTime": "711.22", "endTime": "712.1", "body": "Yeah. It was like SlantBree." }, { "speaker": "Speaker 1", "startTime": "712.1", "endTime": "712.25995", "body": "He he" }, { "speaker": "Speaker 2", "startTime": "712.25995", "endTime": "713.22", "body": "was doing SlantBree stuff." }, { "speaker": "Speaker 1", "startTime": "713.22", "endTime": "719.97504", "body": "That seems yeah. That seems completely separate. Yeah. Is is the wedding photo AI or is this real? And is he carrying an American flag?" }, { "speaker": "Speaker 1", "startTime": "719.97504", "endTime": "721.015", "body": "Let's pull up this image." }, { "speaker": "Speaker 2", "startTime": "721.015", "endTime": "723.575", "body": "Yeah. I suppose Yeah. This one I've never seen before until yesterday as well." }, { "speaker": "Speaker 1", "startTime": "723.575", "endTime": "739.33", "body": "I I mean, like, if it's the wedding, like, wedding's happening right now, this wouldn't exist. Photo. But I am wondering if this, like, leaked onto the timeline from someone who was there. Also, this photo hit like Wednesday and I think the wedding would be over the weekend. But it's cool that he's just rocking, caring, and American He's international." }, { "speaker": "Speaker 1", "startTime": "740.37", "endTime": "757.935", "body": "Yeah. The real lesson here is never travel internationally because he takes one day off, one weekend off to go to Europe and everything goes everything blows up now. Of course. This one I was laughing at before the show, Rambo says, comparing Leopold Aschenbrenner to Bill Wang. Wang is the goat." }, { "speaker": "Speaker 1", "startTime": "757.935", "endTime": "779.615", "body": "Bill Wang is from Archer Ghost. Wang is the goat of degenerates and Leopold is a sheep compared to him. Did you know that Wang turned 200,000,000 into 36,000,000,000 and it was all personal capital? The guy literally led prayer circles in the conference room before trading day started. He had a $160,000,000,000 of stock exposure on just 36,000,000,000 of capital." }, { "speaker": "Speaker 1", "startTime": "779.775", "endTime": "796.32", "body": "It's like five or six x levered. That's His blowup happened in two days, and he literally caused the collapse of one of the most prestigious investment banks. Banks lost a total of $10,000,000,000 combined because of his collapse. Leopold is nothing compared to Bell. It's so" }, { "speaker": "Speaker 2", "startTime": "796.64", "endTime": "798.0", "body": "It gets her numbers up." }, { "speaker": "Speaker 1", "startTime": "798.0", "endTime": "810.95496", "body": "Yeah. No. Yeah. I mean, that that that's the interesting thing here is that, like, it is this sort of, like, dramatic unwind. But at the end of the day, it is just, like, an over the counter transaction with Citadel for a block of trades and block of equity positions." }, { "speaker": "Speaker 2", "startTime": "810.95496", "endTime": "815.035", "body": "Yeah. And the fund is still around. I mean, they're still seem to be, like, probably gonna be doing very well." }, { "speaker": "Speaker 1", "startTime": "815.035", "endTime": "817.115", "body": "Yeah. They'll be yeah. They'll be okay. Citadel will be okay." }, { "speaker": "Speaker 2", "startTime": "817.355", "endTime": "818.94", "body": "Bigger than pretty soon." }, { "speaker": "Speaker 1", "startTime": "819.1", "endTime": "830.385", "body": "Any day now. Yeah. And the and and importantly, all of the all of the prime brokers, the big banks, like, they were not affected. There was not there was not like a liquidity crisis that Yeah. Yeah." }, { "speaker": "Speaker 1", "startTime": "830.465", "endTime": "845.42505", "body": "A contagion effect did not take root. Roy Driscoll says there's nothing to learn from the situational awareness situation about the AI trade. Leo was right in 2024. And based on the Amazon results, he's still right today. Hyperscale CapEx continues unabated." }, { "speaker": "Speaker 1", "startTime": "845.42505", "endTime": "855.58", "body": "There is obviously something to learn about risk management. Forex leverage with high beta stocks is a mistake in trading stocks. Half the battle is getting the trend right, but the other half is nailing the portfolio construction well." }, { "speaker": "Speaker 2", "startTime": "855.58", "endTime": "862.995", "body": "Yeah. I mean, this is what Martin was saying yesterday. Right? Yeah. Like, the underlying completely makes sense, but, like, you get into these crazy psychology things where it's just like" }, { "speaker": "Speaker 1", "startTime": "863.15497", "endTime": "863.39496", "body": "Yeah." }, { "speaker": "Speaker 2", "startTime": "863.39496", "endTime": "863.795", "body": "Who's really" }, { "speaker": "Speaker 1", "startTime": "864.035", "endTime": "877.67004", "body": "Everyone's focused on the leverage. It does also seem like they were like, every time the 13 f would drop, it would be like 12 names, which is like not a lot of diversification. So Yeah. I wonder like, right now, the message from the letter is we're not using leverage right now. We're going to be learning the lesson." }, { "speaker": "Speaker 1", "startTime": "877.67004", "endTime": "905.83", "body": "Yep. Maybe the lesson is, hey, 2x leverage or 3x or something like that or four in certain scenarios with smaller trades, not portfolio wide or or something like that. But it will be interesting to see if there's a difference in if the lesson that's learned when the next 13 F drops in a couple quarters, we see, Oh, wow. He has, like, 100 names or there's Yeah. You know, he's using more options or less options or, you know, whatever however it changes, that will be interesting to see for sure." }, { "speaker": "Speaker 1", "startTime": "905.83", "endTime": "918.15", "body": "So Leopold still has Anthropic, Maddox, and Fluid Stack, tier one private companies. He can probably raise 2 to 3,000,000,000 more. It's not over for him by any means, says Zephyr. There's been this vibe of, like, it's too good to be true. Yeah." }, { "speaker": "Speaker 1", "startTime": "918.15", "endTime": "918.71", "body": "Too young." }, { "speaker": "Speaker 2", "startTime": "918.71", "endTime": "923.085", "body": "Tall puppy syndrome. Yep. You know, he's he's the keep getting away with it. Kid. Yeah." }, { "speaker": "Speaker 2", "startTime": "923.085", "endTime": "923.885", "body": "Yeah. You know." }, { "speaker": "Speaker 1", "startTime": "923.885", "endTime": "928.045", "body": "Yeah. People people hate to see a young a young" }, { "speaker": "Speaker 2", "startTime": "928.205", "endTime": "928.925", "body": "A young goat." }, { "speaker": "Speaker 1", "startTime": "928.925", "endTime": "941.01", "body": "A young young hedge fund manager running up crazy. Lexi Guzzi says, keep people keep making fun of Leopold on the timeline, but everyone one, everyone needs to get margin called once in their life. Is this true?" }, { "speaker": "Speaker 2", "startTime": "941.01", "endTime": "952.255", "body": "Yeah. Leon had a similar take. Right? He said, basically, all the goats on Wall Street have had some sort of blow up earlier in their career, part of the game being live player on the field. So But yeah." }, { "speaker": "Speaker 2", "startTime": "952.255", "endTime": "952.975", "body": "Is is that true?" }, { "speaker": "Speaker 1", "startTime": "952.975", "endTime": "976.83", "body": "I don't think that's actually true. I don't think Warren Buffett ever blew up. I don't even think Ken Griffin ever really blew up. I think he had a really bad year in 2008 during the financial during the housing crisis, the financial crisis. But early on, I think he got his start sort of post .com and was doing convertible debt trading and and never really like, the entity has always been Citadel." }, { "speaker": "Speaker 1", "startTime": "976.83", "endTime": "984.41504", "body": "There was no precursor to that. Mhmm. But but it's a fair take that, like, clearly people can blow can can build back up after there's a Yeah." }, { "speaker": "Speaker 2", "startTime": "984.41504", "endTime": "991.21", "body": "I mean, there there's a lot of comparisons to PT. Right? Yeah. Oh, this is also kind of Yeah. Lose take." }, { "speaker": "Speaker 2", "startTime": "991.21", "endTime": "994.09", "body": "Right? Yeah. Going to VC Yeah. Then you can kind of do the long only" }, { "speaker": "Speaker 1", "startTime": "994.09", "endTime": "1004.525", "body": "Yeah. Thing. The real the real hack would be to just raise the smallest hedge fund ever, $10,000, lever it, blow it up, and be like, wow. I'm post fall." }, { "speaker": "Speaker 2", "startTime": "1005.485", "endTime": "1006.685", "body": "Oh, yeah. He's post fall." }, { "speaker": "Speaker 1", "startTime": "1006.685", "endTime": "1014.845", "body": "He's post Yeah. Yeah. And so but but if you do it with like such a small amount of capital, but you can still be like, oh, man. Learned so much. That was really crazy." }, { "speaker": "Speaker 1", "startTime": "1014.845", "endTime": "1023.85", "body": "Those were crazy crazy times. I lost $500. Ready ready for the real fund now? No. Leo still made incredible returns." }, { "speaker": "Speaker 1", "startTime": "1023.85", "endTime": "1035.755", "body": "His fund will do incredibly well in the long term. Lots of people coming out in support. One person that's not in support, Joe Eisenthal, is is going back and forth with Tracy." }, { "speaker": "Speaker 2", "startTime": "1035.755", "endTime": "1036.395", "body": "That's hilarious." }, { "speaker": "Speaker 1", "startTime": "1036.395", "endTime": "1059.0449", "body": "So Joe has been live tweeting this. He's he's been making a bunch of great points and and just illuminating the deeper level of, like, what's going on with prime brokerages and all these different aspects of what's going on. But Joe started by sharing the Wall Street Journal article that said that Citadel buys situational awareness stock portfolio after big losses in AI. And Tracy says, why does he have to get bailed out at all? And this is another question like, is this a liquidation?" }, { "speaker": "Speaker 1", "startTime": "1059.0449", "endTime": "1070.885", "body": "Is this a blow up? Is this a bailout? It would be it would have been a very different conversation if this had been like a government bailout of situational awareness. That's not what happened." }, { "speaker": "Speaker 2", "startTime": "1070.885", "endTime": "1071.525", "body": "This like risk." }, { "speaker": "Speaker 1", "startTime": "1071.525", "endTime": "1082.5399", "body": "Tracy says, why can't we just let the speculators fail? Joe Wiesenthal says, who says he's getting bailed out? He entered into a transaction with a willing counterpart. And Tracy says, isn't that a bailout? Why not just keep managing the fund?" }, { "speaker": "Speaker 1", "startTime": "1082.5399", "endTime": "1093.2449", "body": "Why not be Cathy Woods and have a bad day and live to tell another tale? Except there were probably too many redemptions, so it was spiraling. Joe says he got margin called. And Tracy says, so it is a bailout. Just let it fail." }, { "speaker": "Speaker 1", "startTime": "1093.725", "endTime": "1105.7201", "body": "But maybe it was too big and could see the contagion. Joe says, I don't get what you're saying. Someone got gets margin called and they have to pay the broker. And the way they pay the back the broker is selling off shares to some other counterparty. How is that a bailout?" }, { "speaker": "Speaker 1", "startTime": "1105.7201", "endTime": "1114.12", "body": "Like, he's just selling and people associate every sale with a bailout now, I guess. But that's Yeah. Not what this is. This was not the government stepping in." }, { "speaker": "Speaker 2", "startTime": "1114.12", "endTime": "1116.04", "body": "Yeah. Yeah. He was not too big to fail." }, { "speaker": "Speaker 1", "startTime": "1116.04", "endTime": "1116.68", "body": "No. Not at all." }, { "speaker": "Speaker 2", "startTime": "1116.68", "endTime": "1119.305", "body": "I mean, people were saying that he could have been big to fail going in, but" }, { "speaker": "Speaker 1", "startTime": "1119.465", "endTime": "1135.9801", "body": "Yeah. I it doesn't seem like that's what happened. It seemed like there there were significant losses, and then they ran an auction, and there were three three parties bidding, and they and and the bids came in above above, like, you know, liquidation level. So the fund is not liquidated. Yeah." }, { "speaker": "Speaker 1", "startTime": "1135.9801", "endTime": "1147.375", "body": "And it and it remains. And so, Joe, after fighting back and forth for several post, he says, I think we might have a different definition of the term here. And I think you do. I think you do. Very fun." }, { "speaker": "Speaker 1", "startTime": "1147.375", "endTime": "1165.4401", "body": "This is an interesting scoop from Berber Jin over at The Wall Street Journal related to this. Situational awareness tried to sell a $3,500,000,000 stake in Anthropic to a group of investors led by Green Oaks and Sequoia. Obviously, there's a lot of demand for the stock. The parties reached a deal late Wednesday, but then situational awareness pulled out Thursday morning They turned it down." }, { "speaker": "Speaker 2", "startTime": "1165.6001", "endTime": "1166.88", "body": "They turned it down." }, { "speaker": "Speaker 1", "startTime": "1166.88", "endTime": "1167.84", "body": "They turned it down." }, { "speaker": "Speaker 2", "startTime": "1168.56", "endTime": "1170.9601", "body": "They were off for like 3,500,000,000, something like that." }, { "speaker": "Speaker 1", "startTime": "1170.9601", "endTime": "1182.285", "body": "Something like that. And they turned it down just to grind for the public equity book. They sold that to to Citadel. That obviously cleared a lot of the risk out. And they said, hey, let's keep this position." }, { "speaker": "Speaker 1", "startTime": "1182.285", "endTime": "1189.3499", "body": "We're extremely excited about this. We're bullish. Yeah. And so, I don't know. I think will this be the subject of a book?" }, { "speaker": "Speaker 1", "startTime": "1189.6699", "endTime": "1196.63", "body": "Will this be the subject of an actual movie? Is it is it drama enough? Have we gotten the FTX movie yet? Because that's No." }, { "speaker": "Speaker 2", "startTime": "1196.63", "endTime": "1197.2699", "body": "Way more dramatic" }, { "speaker": "Speaker 1", "startTime": "1197.2699", "endTime": "1198.6299", "body": "and I don't think that ever happened." }, { "speaker": "Speaker 2", "startTime": "1198.63", "endTime": "1200.23", "body": "Yeah. I haven't seen it." }, { "speaker": "Speaker 1", "startTime": "1200.23", "endTime": "1204.545", "body": "And then there was Infinity not Infinity Machine. There was a Going Infinite. Yeah. Is that the one?" }, { "speaker": "Speaker 2", "startTime": "1204.545", "endTime": "1205.3451", "body": "That was the Michael Lewis book." }, { "speaker": "Speaker 1", "startTime": "1205.3451", "endTime": "1221.62", "body": "Michael Lewis book. But that was written like before the blow up and so it was like sort of it it didn't really tell the story like day by day. Mhmm. But like an in the room fly on the wall minute by minute account of this Yeah. Would be interesting, but it's not that dramatic because it doesn't end with an explosion." }, { "speaker": "Speaker 1", "startTime": "1221.62", "endTime": "1224.1", "body": "It ends with like a, okay, we're back in the fight." }, { "speaker": "Speaker 2", "startTime": "1224.1", "endTime": "1224.5", "body": "Yeah. Which" }, { "speaker": "Speaker 1", "startTime": "1224.5", "endTime": "1248.11", "body": "is cool. I mean, it's maybe more positive outcome. Big tech's AI spending is continuing to produce blockbuster financial results even as investors have become increasingly selective about which companies are willing to reward. Over the past two weeks, Microsoft, Apple, Amazon, Meta, Alphabet, all reported quarterly earnings that largely exceeded Wall Street expectations. It's very boring when you pull the did they beat on top line?" }, { "speaker": "Speaker 1", "startTime": "1248.11", "endTime": "1272.355", "body": "Did they beat on bottom line? It's like everyone beats, then the stock goes down 10% or up 10% Yeah. Based on CapEx forecast and also just messaging around AI diffusion and AI uptake. Microsoft led the group with shares surging after reporting fiscal fourth quarter revenue of $90,000,000,000 up 18% year over year and ahead of the $87,400,000,000 that analysts were expecting. That was the consensus estimate." }, { "speaker": "Speaker 1", "startTime": "1272.75", "endTime": "1282.99", "body": "EPS came in at $4.74 versus expectations of four twenty one. So they beat top line, beat bottom line. Azure revenue accelerated 43% over year over year." }, { "speaker": "Speaker 2", "startTime": "1282.99", "endTime": "1287.235", "body": "Yeah. And so they gained $450,000,000,000 in one day. 16%." }, { "speaker": "Speaker 1", "startTime": "1287.235", "endTime": "1289.875", "body": "50,000,000,000 in one day. Yeah. That's for" }, { "speaker": "Speaker 2", "startTime": "1290.035", "endTime": "1292.835", "body": "Biggest one day polled. Market cap gain for any US company." }, { "speaker": "Speaker 1", "startTime": "1292.835", "endTime": "1299.715", "body": "Look at that. The god God. Channel. That's really, really impressive. It's up 25% over the month." }, { "speaker": "Speaker 1", "startTime": "1300.2799", "endTime": "1336.74", "body": "Very impressive. Apple also beat expectations, reporting $109,400,000,000 in quarterly revenue, earnings per share of $2.02 Stock briefly pushed the company market cap above the $5,000,000,000,000 mark, but it has been absolutely tanking today, down, what, 10% today or something like that? Let's see. Down 9.4 Last, seven we'll go through two more. Amazon has also impressed investors with revenue climbing 20% to $200,000,000,000 200,600,000,000 AWS growing 37% to $42,400,000,000 sending shares sharply higher in after hours trading." }, { "speaker": "Speaker 1", "startTime": "1336.74", "endTime": "1365.5599", "body": "Here's Amazon. We can pull that up as well. The market is up 13.76%, and the day is looking pretty good too, up 15% today. The market's reaction wasn't usually universally positive. Meta posted stronger than expected revenue of $60,800,000,000 up 28% year over year, but earnings per share fell $6.18 fell short of the $7.22 analysts had expected." }, { "speaker": "Speaker 1", "startTime": "1365.5599", "endTime": "1403.0049", "body": "Investors focused on the company's $31,100,000,000 in quarterly CapEx, along with $3,600,000,000 in onetime legal and severance costs, sending the stock sharply lower. Let's see what Meta's doing. Down just a bit. Alphabet, meanwhile, reported revenue of $119,800,000,000 while earnings per share of $9.11 comfortably beating expectations, while Google Cloud revenue surged 82% year over year to nearly $24,800,000,000 Even so, investors remained focused on the escalating cost of AI infrastructure as hyperscalers continue pouring hundreds of billions of dollars into new compute capacity. And here's Google." }, { "speaker": "Speaker 1", "startTime": "1403.565", "endTime": "1422.4401", "body": "So we can dig into this more. There's a whole bunch of deeper questions about what is the actual efficacy of Meta's spending on AI, how much are they spending on tokens, how much are they spending on head count? All these things matter. But we will dig into it another time. Take us through what's going on with OpenAI pushing the model frontier access across efficiency." }, { "speaker": "Speaker 1", "startTime": "1422.4401", "endTime": "1424.2001", "body": "What happened? They dropped the cost of Luna?" }, { "speaker": "Speaker 2", "startTime": "1424.605", "endTime": "1429.085", "body": "Yeah. So there's there's Luna, Terra Soul. This is the cheapest model. Yes. Massively reduced cost." }, { "speaker": "Speaker 2", "startTime": "1429.085", "endTime": "1437.005", "body": "You can see on the kind of yeah. Prudhoe curve, this is, like, actually much cheaper than a lot of, like, open source models because you because we've been talking about this recently." }, { "speaker": "Speaker 1", "startTime": "1437.005", "endTime": "1437.4049", "body": "It's like" }, { "speaker": "Speaker 2", "startTime": "1437.71", "endTime": "1443.95", "body": "there's cost per per task, not just like, can it do it and how much do like, it depends a lot how token efficient the model is." }, { "speaker": "Speaker 1", "startTime": "1443.95", "endTime": "1452.955", "body": "Yeah. Because there you you could measure it on on cost per token. But if if a certain model takes 10 times the amount of tokens, it's only half the cost, you wind up spending more." }, { "speaker": "Speaker 2", "startTime": "1452.955", "endTime": "1453.195", "body": "Yeah." }, { "speaker": "Speaker 1", "startTime": "1453.195", "endTime": "1464.5549", "body": "Why is the Pareto frontier in this graph flipped? I feel like the Pareto frontier used to be this direction. Am I am I hallucinating that? It's always been this way? You always wanna be on the left side?" }, { "speaker": "Speaker 1", "startTime": "1464.5549", "endTime": "1467.14", "body": "I thought you wanted to be on the right side or something like that." }, { "speaker": "Speaker 2", "startTime": "1467.14", "endTime": "1468.98", "body": "Well, it depends on where you are in the Prudu." }, { "speaker": "Speaker 1", "startTime": "1469.38", "endTime": "1470.1", "body": "I I suppose." }, { "speaker": "Speaker 2", "startTime": "1470.1", "endTime": "1471.7", "body": "I guess I see I think I see what you're saying." }, { "speaker": "Speaker 1", "startTime": "1471.7", "endTime": "1489.1549", "body": "I suppose. Anyway, we also I don't think we touched on this, but Arc AGI v three, the leading labs have been going back and forth. Yeah. Opus five put up a very, very impressive number. Then OpenAI fired back with 5.6 SOL used to solve open problems in mathematics." }, { "speaker": "Speaker 1", "startTime": "1489.1549", "endTime": "1496.115", "body": "So why was it struggling with Arc AGI v three, which you, at one point, were in the top 10. Right?" }, { "speaker": "Speaker 2", "startTime": "1496.7", "endTime": "1502.7", "body": "Yeah. I I was I was globally ranked Arc AGI v three. Right. I I don't think it's still up, but Yeah." }, { "speaker": "Speaker 1", "startTime": "1502.7", "endTime": "1508.2999", "body": "I was Arc AGI v three player. That's out there. You were like, you were pro am." }, { "speaker": "Speaker 2", "startTime": "1508.2999", "endTime": "1509.26", "body": "Yeah. Yeah. Yeah. I would say." }, { "speaker": "Speaker 1", "startTime": "1509.26", "endTime": "1510.7799", "body": "You you didn't go pro. You turned it down." }, { "speaker": "Speaker 2", "startTime": "1510.985", "endTime": "1511.4651", "body": "I turned it down." }, { "speaker": "Speaker 1", "startTime": "1511.4651", "endTime": "1512.985", "body": "Yeah. Had the opportunity to be an" }, { "speaker": "Speaker 2", "startTime": "1512.985", "endTime": "1515.625", "body": "RK They were gonna give me like 10 more tasks, five more tasks, something" }, { "speaker": "Speaker 1", "startTime": "1515.625", "endTime": "1535.59", "body": "like that. Yeah. Apparently, OpenAI was able to investigate the low score of 5.6 SOL on RKGI v three and the harness was not letting it remember what it had learned, we found that enabling two API settings tripled our scores with six x fewer output tokens. So very interesting to watch" }, { "speaker": "Speaker 2", "startTime": "1535.59", "endTime": "1549.715", "body": "these This is fascinating. I mean, we've seen this a lot over the past, like, I don't know, year and a half almost where the harness, like, really matters a lot. Yeah. And if you have the wrong harness or it's, like, limiting the model in some way, I mean, it can have, like, massive Totally. Like, effects on the the downstream task." }, { "speaker": "Speaker 1", "startTime": "1549.715", "endTime": "1561.21", "body": "Yeah. People were not expecting this. It was definitely, like, the the the model, the god model will be just one model and you'll just ask it to predict the next token and it'll just do it perfectly. Yeah. There's a lot more that goes into the integration here." }, { "speaker": "Speaker 1", "startTime": "1561.29", "endTime": "1582.16", "body": "I still think Arc AGI v three, I mean, benchmark. Love the team. Obviously, Mike's been on the show multiple times. But it's also just a great way to actually illustrate AI progress to someone that maybe just doesn't want to build software or hasn't built software before and doesn't really can't really feel that visceral this this viscerally. I can't say viscerally." }, { "speaker": "Speaker 1", "startTime": "1582.16", "endTime": "1582.8799", "body": "I don't know." }, { "speaker": "Speaker 2", "startTime": "1583.2", "endTime": "1595.12", "body": "Well, especially, you know, the the famous, like, time horizon task doubling every six months. Like, that's basically like, we can't actually measure the the high end now. It's, like, too hard. We we we don't have enough task to, like, measure it efficiently, basically." }, { "speaker": "Speaker 1", "startTime": "1595.12", "endTime": "1600.4249", "body": "Yeah. And a lot of people are just, what? A task that takes me twelve hours? Like, what is that? I don't even know Yeah." }, { "speaker": "Speaker 1", "startTime": "1600.4249", "endTime": "1611.465", "body": "It is a bit hard to think of that off the top of your head. Like, what does that mean? Like, building a whole report or something or like A lot of people work in like various ways. Like, yeah, twelve hours of meetings, is that one task? I don't know." }, { "speaker": "Speaker 1", "startTime": "1611.465", "endTime": "1632.695", "body": "But if you show someone the Arc AGI v one puzzle and it's very easy and v two is very very very easy and then you and then you walk them through the story of how AI has progressed on this and how hidden the answers are, you can pretty easily help someone feel the AGI which is very very very very fun. And we'll see you on Monday. See you. Goodbye." }, { "speaker": "Speaker 2", "startTime": "1632.695", "endTime": "1633.6549", "body": "Boeing Flashback." } ] }