Transcript
0:00 Altimeter Capital's Brad Gerstner will be at tonight's state dinner. He is on the North Lawn of the White House for us this this hour. It's nice to have you on. Welcome. >> It's great to be here, Scott, on what is a really historic day here at the White House. >> How are you thinking about what could transpire between these two countries related to AI knowing what the president has already put out on Truth Social? I want to leave it exactly where it is what he has said about what he thinks should come out regarding any sort of AI regulation. Do you think we need a greater platform for AI regulations and for safety?
0:38 >> Well, well, first let's start with this, Scott. We're here to talk about super intelligence. And we have this historic meeting between two of the most important economies in the world. It's the second of what looks like it's going to be four meetings this year. So that in and of itself is an extraordinary level of dialogue including on issues like super intelligence. I'm sure that conversation will come up today. But let's set the table a little bit, Scott, on what we are doing. This idea when the president truths this morning that he wants to continue the course. Remember the course that we are on is both safe and fast.
1:15 The idea that we don't have any regulation is a little bit crazy. The Center for AI standards and innovation, which is in the Commerce Department, it reviews and looks at every single frontier model before it's released. Remember, and I think we're the only government on the planet to pull a model off the shelf when Mythos was suspended earlier this year in order to make it more cyber safe to be released. That was directed by the president and the White House. And so there there there is a cop on the beat. We are taking safety and these precautions seriously, but we're not doing it in a way that's slowing us down. And so I think when he says stay the course, the course is make sure that we're reviewing those models. Number two, the labs are reviewing the models.
1:58 We've been red teaming these models and increasing steps in compute that we're using to make sure that this is safe. And then we heard over the course of last week ideas such as independent monitors or out of Elon, the idea of peer review. So we will continue to evolve those frameworks as the technology evolves. And then finally, Scott, this idea that we're going to shut down AI, have a pause, the moratorium on AI, that is just unilaterally disarming both our economic security and our national security to to others around the world who certainly are not going to slow down. So that's not on the agenda. So that's what Go ahead, Scott.
2:34 >> It doesn't sound like you think that we need or that you're in favor of some globally accepted standard. You mentioned Elon, he's gone a step further in the last 24 hours where he had a conversation with China's state-run a global television network on AI regulation and said the following, I'll quote and get your reaction to that. I think a really important thing that would be good for the safety of the whole world would be for China and the US to agree on a platform for AI regulation that ensures safety of AI for all of humanity. That seems to be going a step further than either what the president is in favor of and if we're hearing you correctly, what you would agree to.
3:18 >> Well, part of the reason that all the AI executives are here today, part of the reason that I'm here is because these important conversations are happening between the United States and China. So I'm not going to front run the the White House in terms of the things that are being discussed, but you wouldn't be having these people convene at the White House if there weren't discussions about the frameworks that will guide us all as we come forward. What the president's made clear, he's not ceding any authority to some super natural national entity like the UN for AI.
3:48 You know, he's going to maintain US sovereignty over AI, but of course we're going to coordinate and cooperate where we can with countries like China that also have a vested interest in super intelligence. I think it's a great step forward. I think that there you know, the path that we're on right now is finding is threading the needle on what is safe, but what is also very fast. And so, you know, we're leading the we're leading the world in AI today. I think that's the most important thing that we continue to keep you know, innovating and that we evolve these frameworks as the technology evolves.
4:22 >> I understand I mean respectfully you're you're not front running anything if the president has put forth his point of view as saying, I want to leave it exactly where it is and then when Elon comes out in the last 24 hours talking about agreeing on what he terms a platform for AI regulation that ensures safety. Are you in favor of that or not? >> Well, well let me ask you this Scott. We have a model release framework in the United States. So, no frontier model can be released in the United States unless it's reviewed by you know, the Department of Commerce like I mentioned Casey, the Center for AI standards and innovation. So, is that a regulatory framework? I think it is and we're already doing it. So, it wouldn't be surprising to me if we have similar frameworks that we can compare notes on and set those best standards with China on a go forward basis. So, I don't know that there's a lot of daylight between Elon and the White House that you're suggesting. but I I I do know this.
5:19 Everybody around the table has goodwill. There's nobody who wants to yolo. There's nobody who thinks we should disregard safety. We know we got to bring this in into the world a way that is maximally beneficial to all citizens of the United States and it is and will be. so, everybody takes those issues seriously, but Washington has a way to do Washington and what that means is they want to lead with regulation. They want to smother this opportunity before it even gets off the ground. We're not going to allow that to occur. The reason we haven't had, you know, incidents to date, and remember we've been at this now for 4 years, is because we have a pragmatic and a sensible solution to regulation, and we need to continue pushing that forward.
6:00 >> I wasn't suggesting. I mean, I was merely reading the statements word for word of what was said by President Trump and Elon Musk in the last 24 hours. Let me ask you this, when you read the comments from both Sam Altman and Dario Amodei yesterday in front of the Security Council at the UN, what was your reaction to Sam Altman saying, "In our history, there have been times where countries who compete and don't always like each other very much still come together for shared interest and the collective good in the face of a powerful new technology, we believe this must be one of those times."
6:33 >> Well, I mean, there's no better evidence of the president's leadership on this and the White House's leadership on it, than the fact that President Xi is at the White House today having conversations on this very topic. And so, you know, it's unprecedented. We've never had the US president and the president of China meet four times in a single year. This is the second of those historic meetings. Just behind me, those meetings are occurring right now. So, I think that he would agree that we need to coordinate, we need to have conversations, but that doesn't mean that we need to have moratoriums or we need to smother this.
7:04 I don't think the Chinese want that. That's certainly not what they're doing. Remember, there's only one country on the planet that is actually suspended a model, that has actually said a model's not safe enough to be released. That's not China. That's not Europe. It's the United States of America earlier this year with Mythos. So, the again, I come back to this that I don't think there's a lot of daylight between the people around the table, but everybody's going to express their opinion, including Elon, and that's how we move the conversation forward. The technology evolves quickly. We need to make sure that we're having sufficient conversations to evolve quickly with it.
7:38 >> We always hear, you know, this race between us and China in this, you know, great competition for the next frontier, if you will. Do you think we have a good handle on where that race currently stands? >> well, it's it's very clear that the United States models are leading the world. You know, I think it's a poorly kept secret that the Chinese models are distilling the US frontier models. and so, in that way, they're derivative to those models.
8:06 We have the best chips, you know, that are training these models and they're running the inference on these models around the world. But, we need to make sure that we continue to export the American AI stack to the world. There are some people in this country that would say we we shouldn't be able to export any of that. And I'll tell you that that's one sure way to make sure that the Huawei stack, the Chinese stack, runs the world of AI. The reason our values are embedded in the internet around the world is because we didn't regulate the internet to death when it started back in, you know, the late '90s and early 2000s. We allowed our companies to go compete. We need to do the same thing now. I think these are the conversations that are occurring inside that we all want to be safe, but we all want to move quickly to make sure that all these benefits are delivered to our economies and to our citizens.
8:55 >> So, you're you're in favor of greater chip exports between the US and and China? >> Well, I I I I'm on record about this from the beginning. I don't think we should be exporting our leading chips to China, but I would love I would have loved if the United States had not, you know, unilaterally ceded that market to Huawei. There's no evidence that we actually slowed them down in that regard. And so, now I think we have limited exports of H200s and H20s that are going to China. I support that.
9:25 I would love to keep all those Chinese developers. Remember, the vast majority of AI developers in the world are Chinese. We would love to keep those developers in the American ecosystem, in the Nvidia ecosystem, in the AMD ecosystem. Unfortunately, by pulling back as aggressively as we did, which really started under the Biden administration and then continued into the Trump administration, by pulling back that aggressively, we really seeded a lot of ground to the Chinese and around the world, not just in China, in terms of the global AI ecosystem.
9:57 >> I'm sure there are are those who suggest back to the the point of global regulatory platform, if if you will, who would say, "Why should we agree to anything of the kind with the Chinese when they have shown a history of not living up to their end of the bargain on other agreements that have been made between these two countries?" Do you share that view? >> Well, I mean, I I I just think from first principles, we start and we do what's in the best interest of the United States, taking all of those things into account. And, you know, we we're leading the world for a reason, because we're letting our thoroughbreds run, and we have maximum competition. We have open-source models from China, from the United States that are competing with our frontier labs. When the president says he wants to preserve the status quo, that's what I think he's talking about. We have tons of competition, the competition is good, it's put us on the frontier. I think we're separating ourselves from China. I don't think the Chinese models are catching up to the US models. I think just the opposite, and given the amount of compute that we're bringing on board at the end of this year and into next year, I think our our lead will extend.
11:06 We're building over 40 gigawatts of AI compute in 2027. Nobody around the world can touch that, and remember, intelligence is the log of compute. The more compute you have, the more intelligence you have, and so I think the US's lead will extend as we look into 2027. >> Is this your first state dinner that you'll attend this evening and and I mean, just what are your general feelings about being in the room tonight with so many important issues on the table and as we said a star-studded guest list from tech, finance, and all other parts of our corporate structure.
11:41 >> You know, Scott, I grew up in a small town in Indiana. you know, I revere the United States and our democratic process. It's messy often at times. We've we we've thrived for 250 years and I think it's an incredible honor to be here at what I think is a consequential moment time with a partner in in China that is the the the second largest economy in the world and certainly one of the most strategic economies in the world at a critical time when we're talking about things like AI and and these technological advances. So, I'm I'm thrilled to be there. You know, and and when I think about what's in that room and the CEOs who are in that room, there are Republicans in that room, there are Democrats in that room, there are centrists in that room, but all of these people care about the country, all of these people take the issues that you're talking about very seriously. It doesn't mean everybody agrees on the level of regulation that that should be in place, but ultimately they're all going to put their best ideas on the table and then the President of the United States is going to make the decision. I think the decisions that we've made over the course of the last 2 years is the reason we're in the lead and extending our lead on the rest of the world.
12:51 >> Just bear with me for 1 minute. we're certainly not naive to the move we're seeing in the market as we're having this conversation and you can clearly see it on your screens. the S&P has now gone green. You see the big spike really overall in the market. Take a look at crude oil which has come off its highs. So much of the story of late, there it is, the move lower by more than 2%. obviously the focus around bond yields as well.
13:16 Let's take a look at the 10-year note yield which has been at its highest levels really since 2007. So many decades until you know, since we've seen something like this. That's dropping. We'll We'll bring you certainly news on something is moving this market and we'll get to that as soon as we have a better idea of exactly what might have transpired. Brad, you know, when you talk about open source and and other models that are out there, I I can't help but think of Meta, which you have a a large position, I believe, in.
13:51 This stock has made an incredible move in the last month. It's up 34% this month alone. It's the best month since July of '13. just how how is the conversation changed in a much more positive way, do you think? What are investors rewarding here? >> Well, remember, you know, Meta had underperformed for almost 2 years, Scott. it was trading well below the market multiple on fully taxed cap earnings. And what we saw was a company led by a founder with some incredible executives at his side, whether you know, that's Nat Friedman or whether it's Alexander Wang, who he brought on board, or Dina, etc., who were really intent on building a frontier world-class model and a consumer application to distribute to their billions of customers. The market was looking at it and saying they're spending $110 billion on CapEx with no return. And we thought there were a lot of ways for them to win. The number one way for them to win, of course, they're they're oftentimes not first. They weren't first with Instagram, but they got there and then they ran the table.
14:54 They weren't first with stories, but they got there and they ran the table. We thought that they could get there with a consumer AI application that I've been talking about for 2 years. They delivered it in Muse. It's incredible. this is the next 10X moment. The world of AI started with chatbots. I would ask it a question, it would give me an answer. The world of AI for consumers is now agents. A Think of it like a smart assistant who can go do everything that you need it to do, whether it's getting you a rebate, whether it's sitting on a a customer service call for 5 hours on your behalf, booking a hotel room, you know, finding you cheaper car insurance. These agents will now work around the clock on your behalf. They're incredibly inexpensive.
15:34 This is part of the democratization and the benefits that we're going to give to hundreds of millions of people in the United States. These are the benefits of AI that I can't wait for everybody to have. So, they launched Muse. It's it's it's it's gone gangbusters, number one in the App Store. you know, we have other great companies that are working on this like Instinct, etc. So, they're not the only game in town and certainly I expect that ChatGPT and and and Claude and others are going to launch their versions of it. But, give it to Meta, man. They are executing in founder mode.
16:05 They have swagger. Consumers love the product. You've read some of the reviews. So, they answered with a double exclamation point that they are going to earn a return on the $100 billion investment that they were making. And I think it's as simple as that. it's re-rated. It's now basically in line with the market, Scott. I think there's still you know, a long way for it to go and and we're thrilled to be shareholders. We've been shareholders, as you know, for a very long period of time.
16:32 >> Yeah, I mean, you know, disgruntled at times, obviously, wrote the now famous letter. but things have turned. It >> Remember what I said in that letter though, Scott? And and and and Mark agreed with. at the time it was the summer '22, it was just before ChatGPT was released, and I said, "Instead of all the money that we're spending on AR and VR, we're entering the age of AI. We just need to reduce our spend on AR AR and VR, and I encouraged Tim to double, triple down on AI." That's what they did. They reorganized around AI in 2023, and you know, we're starting to see the fruits of those efforts today.
17:08 >> I'd like to get your just thoughts on the on the market at large and let our viewers know that a Reuters headline has moved quoting sources which says the US and Iran have discussed a phased deal to reopen the Strait of Hormuz and end the US blockade. It's the obvious reason why you've seen the move lower in crude, the commensurate move lower in bond yields which have been a considerable story and that's the pop in in stocks. I mean, how do you feel about the market right now given everything that I just said and that's been on your screens every day?
17:40 >> Well, I I as I said the last time I was on, we've taken our exposure stock to a medium level. But when I saw the 10-year go above five and now we're at 510, 512 on the 10-year, you know, that's that becomes a really big headwind to the equity markets. You have mortgage rates over 7%. That's a big headwind to a big part of the economy. You know, this would be incredibly welcome news to get the you know, oil price to come down. We think that the 10-year would follow a little bit if we got that you know, got that directional move. The other thing is, you know, remember this AI trade is not going to be a straight line up into the right. So I expect that we'll have some chop along the way here, but as we head toward an IPO or maybe two IPOs later this year and early next year, I think the enthusiasm will be there because the fact of the matter is the use case and the demand is there. We the world wants a lot more AI that it can get its hands on.
18:33 But we got to continue to deliver those revenue numbers out of Anthropic, out of Open AI, out of out of Meta because at the end of the day somebody has to pay the bill on the 1.5 trillion dollars in annual CapEx that people are investing into the ground, which means consumers and enterprises need to pay for these products. >> Before I let you go, I I do want to talk about the latest development in the in your Invest America accounts in which the Brad Gerstner Family Foundation will contribute $250 to a Trump account for every eligible child in Indiana born in '23 and '24, 2023 and 2024. It's going to reach over 140,000 kids in Indiana. you know, you you're never shy to sort of talk about your roots in that state. And I'm wondering if you can just expand on this gift that you're giving.
19:29 >> Well, I mean, you know, it's full circle, Scott. I couldn't be more thrilled. State of Indiana gave a lot to me, a free free college education, free law school education. So, it was our family's honor to pay it forward, you know, and started to drop those $250 on 150,000 kids around the state of Indiana this week. And I can just tell you the letters and the notes and whatnot that I'm getting from teachers and firefighters and others in the state, the return on on that investment is off the charts. But, this has been the mission from the very beginning. We talked on your show at the end of 2020 when I said I had a dream, I have an idea, a thousand bucks for every kid at birth forevermore. Get them aligned with the upside of free market capitalism in America. They should compound when America compounds. This is another brick in that wall. And just with the announcement this week in Indiana, we have states from the state of South Carolina and Connecticut and Montana and Massachusetts across the country, philanthropists who want to do the same thing in those states. So, we're going to do this in all 50 states across the country. We're about ready to announce that we're going to automatically create accounts for all 73 million kids under the age of 18, get those accounts funded and working. And so, it's been an incredible success. The engagement is very high. but, this week for the state of Indiana, for me and my boys and our family to have a an opportunity to pay it forward, you know, was incredibly meaningful to us.
20:53 >> We'll talk to you soon. I appreciate you joining us on the North Lawn ahead of that state dinner this evening in which you will be in attendance. We'll see you soon, Brad. Thank you. >> Thanks for having me, Scott.