#1 Semiconductor Expert Gavin Baker: "China's Not Getting Taiwan's Fabs." | Invested

0:00 I think we will have artificial superintelligence in 10 years. And by that, I mean an AI that is smarter than the smartest human in every discipline. You are, I would argue, one of the world's premier experts on semiconductors and the semiconductor supply chain. Now, you have the US government, who I'm sure in many, many ways is going to politely say, "Hey, we know that you like the chocolate cakes made in Taiwan more than chocolate cakes made in Oregon and Arizona by Intel.

0:28 We'd really like you to buy that American chocolate cake." in the UAE. And one thing that was like profoundly embarrassing for me as an American to realize is that you might be safer being Jewish in Abu Dhabi than you are in most American cities. I think the world's going to run on sunlight. I'm a committed environmentalist. You know, I love to be outdoors, but I genuinely believe global warming is a solved problem. I profoundly believe if it were not for X, nobody would believe that October 7th really happened. I agree with you.

1:02 I'm joined today by Gavin Baker, a long-time friend and incredible investor at Atreides, and the most knowledgeable person on the semiconductor supply chain and the future of AI. You do not want to miss this episode. We also recorded this episode on the day after the assassination of Charlie Kirk. I want to hear Gavin's thoughts on the political implications of that, some what's going on in social media, and the mainstream media as well. Listen in. Welcome back to another episode of Invested. I am thrilled to have my old friend Gavin Baker.

1:33 Welcome, Gavin. Thank you. Thank you. So excited to be here. >> Welcome to Tel Aviv. Oh, yeah. It's awesome. Gavin and I met in a strange situation. We both had our stomachs fall out on a on a plane that went from the Bay Area to Las Vegas that had a little drop in the middle of it, and we were talking about the stock market at the time, and that launched a a real friendship along with our mutual friend Bill Gurley. Absolutely.

1:58 And it's been a wonderful relationship. It's more than 10 years ago. It is more than 10 years ago. Yeah. and Gavin, for those who don't know, is just about the smartest guy in the semiconductor supply chain, and I think both the most astute and sometimes cynical observer of the world of AI we're going through right now. And so, I adopted a line from you early on. We were at a conference together in Abu Dhabi where you got up and said that the foundation models is the fastest appreciating asset in history.

2:31 You still think that's true? Well, so I think that the exact line was Well, first, we should give credit to Bill's partner Eric Fisheria, who I ruthlessly stole that line from. But, I did modify it and say foundation models without access to unique data and internet scale distribution are the fastest appreciating assets in history. I would say my opinion has changed a little bit, and I do think XAI, Anthropic, OpenAI, DeepMind, they've they've opened up a lead.

3:03 and to varying degrees, they all have with probably Google and XAI having the most unique data. I think Anthropic very smartly fo- focused on code early. And then OpenAI got to internet scale distribution just cuz they were there first. But, I do think fundamentally reasoning models have made the business of foundation models dramatically better. And the reason is is that for every trillion-dollar plus internet company, every great internet company >> I love that throwaway. For every trillion-dollar plus internet company, like these happened every day 2 years ago. No. 100%. Yeah, for every dominant internet company, there's the same flywheel that underpins it. And that flywheel is that as the product gets better, you get more users.

3:56 The users create more data. The incremental data makes the product better, which attracts more users. And that flywheel spins at Google every day in the search business, Netflix every day in the recommend- in Amazon every day in the recommendation engines, at Facebook every day both in their ad targeting algorithm and the algorithm they use to select what what content to show you. That loop was not present at all in foundation model companies, LLMs, until very recently.

4:30 And so, the reason that LLMs with unique data had an advantage was one, it would presumably lead to over time an advantage in training if you could train on data that no one else could. And then secondarily, you if you had access to something like X or everything Google knows about the world, you can use that to ground the LLM's answers more firmly in reality. But, reasoning fundamentally changed this with the introduction of kind of reinforcement learning with verifiable rewards during post-training and test time compute. All of a sudden, having a giant user base becomes a big advantage and feeds back into the quality of the product in a way that was simply not present until OpenAI came out with a one in late '24, DeepSeek quickly followed with R1, and then XAI, Google DeepMind, and Anthropic quickly followed with their own reasoning models.

5:26 So, I think that these scaled foundation model companies are much better investments post-reasoning because this flywheel, where the more users you have, the more data you have, the better the product it is, now exists in AI, where simply did not exist before, at least for LLMs. And when you say it's a better investment, I go back to the comment you said before about these trillion-dollar companies, right? And I think it was you know, what do we got? Nvidia, Apple, Meta, Microsoft, Google, am I missing anyone? Broadcom. Broadcom now. Yeah.

6:05 like those have suddenly become a club, the the trillion-dollar club. And you look at these Anthropic, OpenAI, and you go, "Oh, those are obviously going to be trillion-dollar companies." I sat today with somebody, by the way, took told two people who told me they put up over 100 million dollars in the recent Anthropic round. And I said, "Boy, betting on the trillion-dollar outcome." I like stopped myself for a second and said, "Betting on the trillion-dollar outcome. I've been doing this 30 years.

6:31 There haven't been that many of those." Yeah. Well, I will just say I do think it it's been fascinating to see Grok code release and take overwhelmingly dominant share of the coding tokens on OpenRouter. Grok code is a great product. But, yeah, these are big numbers, but it's just funny. You know, Anthropic, what was that? 180 billion? >> Yeah. I mean, they went from 1 billion to 6 billion faster than any company in history in essentially 6 months.

7:03 So, all of a sudden, you're 30 times current month's revenue. I think there are real corporate structure concerns there. Like in 2018, when the governing documents were written and Microsoft made its investment, people thought AGI was a fantasy. And as soon as AGI is declared, the all of kind of the future that technology and future technology from OpenAI goes to the nonprofit. but nonetheless, I mean, OpenAI has, you know, 10-plus billion dollars revenue.

7:33 XAI, it's not public, but they're scaling rapidly. So, these companies now all of a sudden you can value them on revenue multiples now that you have that core product loop driven by reasoning in place, I think it's pretty clear that it's going to be an oligopoly that's going to be tough to break into. But, I think maybe the the heart of your question is to what degree is this a sustaining or disruptive innovation for the existing trillion-dollar plus companies?

8:02 I think the answer has to be, I mean, not to be clever or avoid the question, is it's both. So, I think maybe in in a prior interaction, I said, you know, pre-AI, each one of these mega-cap tech companies was kind of in in its own swim lane. Like Netflix, they competed a little bit with Amazon and Google and Apple, but, you know, Netflix was pretty dominant. Google, dominant in search. Meta, dominant in social. Microsoft, dominant in productivity. And then you have this cloud computing oligopoly of of Google, Microsoft, and Amazon. And, you know, nobody's really competing with Amazon in in e-commerce.

8:42 Post AI, post-LLMs, post-transformers, at some level, they're now all in the same race because I think it's very clear that the transformer is going to be able to do essentially everything that lies at the core of each of those companies. For you're going to be able to make personalized movies, personalized songs. you're going to have an agent that can do all of your shopping. you know, the fulfillment infrastructure will still be valuable. You're They can obviously do search. and then I think it's an open question, what is the value of human-created content in a world where AI can create perfect content that looks like it's from humans. And so, you know, they're kind of all in the same game. But, at the same time, the core ingredients to success are compute and data. And these companies have the most compute and the most data. So, while it's very disruptive and very scary, it's also sustaining in that it plays to some of their advantages if you can attract the right talent.

9:42 Google was able to do that. Amazon, not really in the game, but they bet on Anthropic, which for sure has the right talent. XAI has been able to do that. But, Apple has not even tried, and Meta has until now essentially failed. We'll see if, you know, V3 or V4 of the strategy works. The free agency market works. free agency market. You know, she's very funny. Like I worked for a long time at a large financial institution.

10:06 And I think most big companies eventually learn that it's pretty hard to have a culture of growing your own talent to bring in expensive external talent because it really disenfranchises and upsets the loyal internal employees and you have for sure seen that at Meta. They have a lot of advantages, but it's also kind of the fight of their lives. And that's why I do think they're all They're in a prisoner's dilemma. Where, you know, the amount of capex is going to a to an unimaginable place. Like I think, you know, I think you could see some of these companies, you know, first issue debt, then cancel their dividends, then stop the buybacks because they all feel that winning in this We'll say winning in LLMs is existential.

10:56 And they feel like the the prize on the other side is artificial superintelligence, which they all have a near religious belief is going to create tens of trillions of dollars of economic value. >> Near religious or fully religious belief? Maybe even somewhere in between. I mean, I you know, the current trajectory the current trajectory I think is supportive of getting to artificial superintelligence. but I think one of the most interesting parts of all of this is we don't know what economic returns to superintelligence will be definitionally because we have never seen it.

11:31 And if if humans, we have pushed the limits with, you know, people like Albert Einstein or whoever else pushed the limits of the natural laws of the universe. If we pushed the limits of physics and biology and chemistry and and the math that underpins all of it, then the economic returns to superintelligence, they may not be that high. On the other hand, if we haven't and superintelligence is or curing cancer, inventing warp drives, and we're colonizing multiple solar systems, the returns to superintelligence are going to be really high. But it's very unknowable.

12:04 so I think there's a I'd say there's a quasi-religious belief that we're going to get to superintelligence that I think is well founded in data. But the economic returns to that superintelligence, it's to me definitionally unknowable. And that is where I think there is, you know, for sure religious belief. One of the things I I I keep looking at is as you grow up in the venture business in the year 2000 and then again, you know, in the in the late teens and early 20s of this of this century, you know, came Masa from SoftBank and he weaponized capital. He tried to weaponize. He tried to weaponize capital. When you weaponize capital, you end up with this fight to the death like Grab and Uber and Lyft for a while until until Uber won it, but they really won it in the private markets. So, you know, they had to raise untoward amounts of capital in the private markets to do it. Now we're in this incredible race where you've got multiple public companies chasing the same bacon.

13:01 kosher bacon, of course, but chasing the same bacon. And a couple of private companies doing the same thing. And they're all fighting over what's I guess notionally the same prize. Yes, Anthropic kind of specializes in code and OpenAI is the consumer, but but fundamentally they're after the same the same prize. How does that end? And your point with they all have this religious belief they're going to raise hundreds of billions of dollars, maybe each, right? That's what people believe OpenAI's deck, which I'm not sure I do, to to get to this. And and how's that end the return? I mean, Well, so to date, there has actually been a storied venture capital firm whose name we will not mention on this podcast, a storied American venture capital firm, one of their partners wrote an essay called the $200 billion question and then the $600 billion question.

13:49 And the point of the essay was the first $200 billion question is where is the economic return on this $200 billion in GPUs spent going to be? And then where is the return on the $600 billion? And the funny thing to me about that, you know, sometimes I think you know, VCs, they they're they're they're they're very they're very in their own world of venture. The funny thing to me about that was all of the biggest spenders on GPUs with the exception of xAI are public companies. Yes. And public companies report something called quarterly financials and they file a document called the 10-Q, which has to be accurate. And you can use those documents to calculate something called return on invested capital. it's really easy to do. And to date, the ROI on all of this spending has been strongly positive.

14:38 And some of that, you could argue, was that they got religion about expenses at around the same time. But in the world of AI, fundamentally, the economic return, a lot of it will come from either replacing or augmenting labor with GPUs. Labor replacement. Or augmentation. we will see. But the maximalist I think for sure would say labor replacement. So, I think that's a fair way to calculate it. And then I would just say it's become really clear over the next over the last 6 months in particular, you started to see big accelerations in the top line. And a lot of that has been in using LLMs and AI and GPUs to improve the recommender AI algorithms that power a lot of these companies.

15:22 But nonetheless, I mean, the returns have been good. But just the question is the quantum of spend with Blackwell, which is the next generation Nvidia GPU, is so big. You know, these 50 to $100 billion data centers, just will the ROI continue to be to be good. So, while the answer to the $200 billion question was yes, the ROI was awesome. The answer to the $600 billion question was yes, the ROI has been awesome. Now we're at the trillion-dollar question and the ROI has actually still been good.

15:55 We're rapidly heading for two to three trillion. And will the ROI continue to be good? Unknown. And if it's not, do economics dictate or does the prisoner's dilemma dictate and the companies could keep spending? That is a great question. I want to take, you know, you are I I would argue one of the world's premier experts on semiconductors and the semiconductor supply chain. and understand this incredibly deeply. So, the dominant architecture today is the GPU.

16:27 Does that continue? I think it is very hard It will It's going to be very hard to unseat GPUs in general. and and I would say Nvidia in particular. I think the two most exceptional CEOs I've ever had have the privilege of I guess investing in are Jensen and Elon. I was when I was a very young man at Fidelity 6 months into being a semiconductor analyst. Nvidia was my best idea. It was maybe a $2 billion market cap. So, Fidelity owned 15% of Nvidia and I had the privilege as a very young man of speaking to Jensen essentially an hour or two every week cuz I was a large shareholder. And then a little bit later in 2012, the fund I managed became the largest shareholder of Tesla at a small market cap, but they're exceptional exceptional CEOs.

17:21 And Jensen is super on his game, super dialed in. It's a big advantage to be as close to all of the labs as he is. But I think the issue is that Nvidia's market cap today is I'm going to say is it $4 trillion or I'm going to say it's $4 trillion. I mean, it's $4 trillion, $4.5 trillion. And like let's just say that the GPU market cap $4.3 trillion, amazing. That the GPU market cap, maybe if you look out three or four years, or we'll call it accelerator market cap is is $10 trillion.

17:59 And at that point, I do think you start to see niches develop. and so you're never going to beat Nvidia in a head-on assault. And that's what and particularly when you have AMD, who's an exceptional company, you know, making pretty good chips, maybe lacking some of the systems and software that Nvidia has, but it's going to be very hard to out-Nvidia Nvidia. And that is what I think a lot of the internal ASIC programs at these hyperscalers are trying to do.

18:32 I think that's kind of a fool's errand. that it took the TPU three generations to be successful. I think for sure the best silicon team at any hyperscaler is the AWS team. And I think it will really take, you know, their caught second and half generation of Trainium, maybe the third, for that to be amazing. But for sure, those are going to be successful ASIC programs. I think a bunch of them are here on the Amazon team. Absolutely.

18:59 Came comes from Annapurna. Billy and Nafeesa Bashir. Yeah. So, that's an incredible team. But I think everybody else is going to struggle to out-GPU the GPU. And but then, if you can pick a niche, you know, because at some level all designs are about tradeoffs. Like in in tank warfare, they talk about the iron triangle. You have to make a tradeoff between offense, defense, and mobility. And because everybody is dealing with the same raw materials, the the stronger you make the defense, the less mobile it is cuz the more the tank weighs. And so, you you're you have to make tradeoffs. And it's the same thing in semiconductors.

19:40 And so, as these niches become so big, I think there is an opportunity to make tradeoffs that are different from what the GPU is doing. To do something different. and then you can maybe start with a niche that's 0.5% but that's, you know, billions in revenue and tens of billions in market value and then you can go from there. And so recently you started to see my my firm I should say is is an investor in Cerebras and Cerebras and Groq and I think a couple of others have an SRAM architecture and that can do something fundamentally different from a GPU.

20:21 >> On a big chip. On a big chip. Cerebras in particular. Cerebras did something very radical. Instead of cutting up a 300 mm 300 mm wafer into lots of little die and making that the basis for a chip they use the whole wafer. Very it's a really radical approach and it was really hard for them. It took them their third generation of their chip before they saw success. but now they and and Groq Cerebras Q is another SRAM company maybe less radical approach. But I think they're both seeing real commercial traction cuz they can do something different and that they can generate extremely high throughput on tokens. So tokens per second really matters. Many of you use a reasoning model, you know, when it's thinking it's literally generating tokens and depending on who you use you can kind of see its chain of thought and you know, an answer that might take 30 seconds takes 3 seconds on Cerebras. So that's a niche.

21:15 Next Silicon. >> Mutual investment of ours. >> Mutual investment of ours. They're also doing something fundamentally different. I don't I don't know how much is public about Next Silicon but they're doing something different and I would, you know, and I I saw a lot and I heard pick a niche. You know, pick a niche. and you know, and I think it's it's a truism that in a lot of semiconductors it takes three generations to really really be successful. Two generations to be clear to everyone. Three generations of tape outs. You need the third generation chip and you finally make it. People don't don't remember that Nvidia is a 30-year overnight success. 100% yeah. Nobody realizes.

21:55 It's a 30-year overnight success. Trillion dollars or 4.3 trillion dollars did not come to Jensen overnight. It was 30 years of a life's mission. Absolutely. and just in case that each chip is kind of like a two to three year cycle and it's really hard tape the chip out. you send off this big digital file to Taiwan Semi in Taiwan. You anxiously wait for three or four months while they make the chip. >> Is there a way to speed up that process?

22:20 I mean we're speeding up everything. It's like I'm unbelievable. no, I do think it's very interesting. Tesla has made this giant partnership with Samsung in Texas and one of the conditions of that partnership was that Elon would be able to have influence over the design of the fab and the way it's laid out and in the same way he kind of reconceptualized electric vehicles and then rockets and then data centers from scratch. I think it's very under appreciated that you know, the consensus belief of essentially every AI architect data center architect was with the Hopper generation you cannot get more than 30,000 coherent in training cluster.

23:02 You know, he looked at a data center from first principles, did something very different and got 200,000 coherent. He's going to look at semiconductor manufacturing from first principles. So I actually think that is something interesting may come of that. But no, it's kind of wild to make one little semiconductor, you know, which in the case of a GPU is not that small. GPUs what's called a full radical chip and then now it's two of them. Think of it as being about half the size of an iPhone.

23:27 That takes four months to make it. And then you get the chip back and it's, you know, incredibly anxious moment. You you literally plug it in and you hope it works. It's called power on and sometimes it doesn't and then you have to make some tweaks or if it you if you really screwed up you have to start again. So I don't I don't know how how we got on that though. >> know but I but I want to segue from that cuz you you mentioned TSMC. So like 90% >> Oh, Nvidia overnight success 30 years.

23:59 Yeah. So one of the things that TSMC has going for it is that there's a whole ecosystem built up around it, right? Everything is really in Taiwan built up around this. And semiconductors have become a national security issue. So first question I'm going to ask you is actually is this a national security issue in your view? So I think it is a little overstated. So Taiwan Semi. So they Taiwan Semi is is 18 months ahead of kind of Intel and Samsung who are the other competitors maybe two years. Now two years is a lot. That's Moore's law. So you are getting a chip, you know, whatever you want to call it, you know, 50% more more performance, 30% less power.

24:43 It matters. But if the world had to roll back to two years ago that would be a big shock to the world but the world would not stop spinning. There's a lot of capacity that's essentially two years behind Taiwan Semi. Forget China but there's a lot of capacity in Israel, in South Korea in Japan and in America. >> In larger in larger sizes. Yeah, in the in two years ago. You know, one node up. Two years behind where Taiwan Semi is.

25:14 So the world would just have to roll back. There wouldn't be what what generation of iPhone just came out? 17. Yeah. I think >> Okay, so if that happened there'd be the iPhone 17 production would stop. Mhm. The iPhone 16 you'd have to roll back to the iPhone 16 and you'd have to take I don't know. I mean semiconductor guys get mad at me but you know, it'd be six months of really hard work to port the design of the chips that are in that to the old process. to the design rules for the Samsung or actually now the Taiwan Semi fab in Arizona which is really big. But a generation back.

25:52 Yeah, you just got to roll back. But increasingly we have Taiwan Semi what they're doing in Arizona is pretty close to the bleeding edge. Have you been there? I have not been I have not been to Arizona. it's not something that they let kind of investors tour the the Arizona fabs. If I was Taiwan Semi I'd have you come. Well, it's actually I kind of have a counterintuitive take. The politicians in Taiwan Mhm. believe that they should never let the leading edge process be manufactured outside of Taiwan because that ensures their survival.

26:32 >> that America will protect Taiwan. >> Yeah. I think in a weird way it might be there might be less of a geopolitical imperative if you're China, maybe there's a national pride imperative if that process was also in America. Because for sure, you know, and this was briefly discussed in the Taiwanese media but like if China invades Taiwan China is not getting those fabs. China is not getting those fabs and they're not getting those engineers.

27:04 You know, if you've seen like The Empire Strikes Back like I mean I think I think it's you know, okay, you're a you're key TSMC engineer. There's a plane going to Japan, South Korea, Israel, Arizona, Oregon and Texas. Each one will be escorted by six American fighter jets. Where do you want to go? You know, So China is not getting those fabs and I think it actually might be stabilizing. But other thing that I think is important to realize is Taiwan Semi has only been ahead for six years.

27:36 >> Yep. For 50 years Intel was ahead. And I've been to Science Park. Mo- Morris the legendary chairman and CEO he described catching Intel has a a dream, a beautiful dream and he wasn't sure it would happen in his lifetime. But it was a beautiful dream. and and the reason it's very hard to catch the leader is semiconductor manufacturing is is a little bit it's a little bit like baking where you can give two people the same recipe and it doesn't taste quite the same. And everybody's using the same equipment but if you are ahead and the leading edge customers are using your recipe it gives you a start on the next one and how you kind of combine all the ingredients, you know, the flour, the sugar, the salt and in this case, you know, maybe it's the scanners and the you know, the metrology machines and the and you know, the the etch and depos.

28:39 Yeah. But you're fundamentally using the same machines. You have a recipe and because you developed the last recipe and figured out what worked 18 months before anyone else that helps you figure out the next recipe. The reason Taiwan Semi caught Intel is Intel made two crucial errors. One Intel for a while was run essentially by three CFOs.

29:09 a The the chairman, the CFO and and the CEO. a well-known semiconductor analyst called them the three idiots. And they made a really big mistake. Because this is a a game of trial and error and it's almost as much art and science and you've been baking these recipes for a long time they did not understand that the most important people in the manufacturing dis- division were what were called the gray beards, the people in their 50s and 60s who had been, you know, sticking their finger in cakes for a for a time, licking at being like we need more sugar, okay? They're like, "Oh, this is so smart. We got these really these 30-year-old guys and we can nuke these 55-year-old guys and save some money and these guys are energetic." And that was disaster number one.

30:01 Okay? Taiwan Semi is never going to make that mistake. Nobody's going to make that mistake again. the second mis- mistake they made, I think most bad decisions in business and life come down to arrogance. And they believed that they were so good that they could move to what's called EUV, which is a kind of lithography, one node after everyone else. And this was despite being the largest shareholder of ASML, but they're outraged at the prices that ASML was charging. They thought, "We're so good that Taiwan Semi, they have to buy those, but we can do it without them, double triple patterning with something called DUV."

30:41 That always reminds me of my grandfather's great actually which is, you pay peanuts, you get monkeys. It's hilarious. Absolutely. Yes, that's right. Mar Has, Will Will Danoff, my the great Fidelity portfolio manager and a good friend and mentor of mine who runs I think close to $300 billion with incredible numbers. His his parents were you know, in the garment district of of I guess New York and would say to him, "Price is forgotten, but quality remains."

31:12 >> Ooh, good one. Now, price is important. >> Yeah. You know, price does matter in our business, but nonetheless, sometimes prices are worth paying. So, that was a terrible mistake. And then, the last thing Taiwan Semi had going for them was the entire industry of semiconductor capital equipment. So, ASML, KLA-Tencor, Applied Materials, Lam Research, they had their A teams working at Taiwan Semi cuz they were unhappy that Intel effectively had this monopoly on the leading edge.

31:42 So, now what's happened? Taiwan Semi has made the bet, "We're so good that we can do high NA EUV at a node after Intel." Intel went to that node first. Second, the A teams from these the KLAs and the ASMLs have been at Intel cuz now Taiwan Semi has a monopoly. and I think you have you have a team there led by Lip-Bu, who's a legendary semiconductor investor, great executive, you know, who understands what needs to be done. And I actually think Pat Gelsinger was has been very unfairly treated in the press. You know, he embarked on an audacious strategy, it was kind of their only chance. And now you have the US government, who I'm sure in many many ways is going to politely say, "Hey, we know that, you know, you like the chocolate cakes made in Taiwan more than the chocolate cakes made in Oregon and Arizona by Intel. We'd really like you to buy that American chocolate cake. And, you know, just buy it something." What do you think about the US government taking 10% of Intel? To to quote from Wall Street, mixed emotions, like Larry Wildman going off a cliff in my Maserati.

32:49 But roughly who knows that quote. But Larry Wildman was Michael Douglas's great great business rival. But mixed emotions. I think having the United States government very clearly say you know, that Intel is a national asset for America, we're going to take a stake in it. I think that's important. Whether whether you could have done that with the old CHIPS Act or this, I don't know, but I do think this administration, for better or worse, with the equity stake, they're going to be vocal with American semiconductor companies, Nvidia included, probably in a way that prior administrations would not. To bring business to Intel. To bring business to Intel.

33:42 >> Even if it costs those commercial companies more money and they have to kind of stay a half a generation or generation behind. Yeah, I think the the the cutting edge products will probably be still be made in Taiwan for the foreseeable future. I mean, we'll see how the Intel 18A and 14A nodes pan out. But there's, you know, you know, Nvidia now has yeah, I think seven chips that are very important. And maybe some of them you can make at Intel, but the other fascinating thing is if Intel can just get its act together, Taiwan Semi, I think they're very surprised. You know, they open up the Arizona fab, sold out in milliseconds.

34:15 >> Yeah. Then they raised price 20%. Still sold out. There's unbelievable demand. >> Yeah. I think you could probably charge close to a 100% premium for American wafers. Really? Yeah. I think people will have would have to pay that. >> Yes. Why? No spy technology? No, I just think the the geopolitical fears are are real. Let me ask you Sorry, go ahead. Yeah, I just this administration, I think a lot of their policy is about I think during COVID, what the US military realized was, "Wow, we are too dependent on China to fight a war with them right now." Yep. An extended war.

34:59 And if they know that, if we know that, they knew that. And that means that we are not deterring them from Taiwan. And so, I think you know, they they do believe in peace through strength. And to credibly deter China and to keep Taiwan, which is a democracy, you know, a small democracy that I mean, you know, I I actually think in a lot of you know, a lot of ways it's kind of parallels Israel. you know, maybe four times the population, but you know, it's a small democracy. and, you know, Israel is now essentially geographically surrounded by friends, but that was not always the case.

35:35 And you know, Taiwan you know, depending on who's in power in Taiwan, China is is more of a friend or maybe a little more adversarial. But I think they believe that if we can effectively decouple from China, then that can bring durable peace and to and avoid having a giant war in the South Pacific where essentially China faces off. I think people forget it would not just be America. Yeah. It'd be Japan. It'd be South Korea. It'd be Australia.

36:09 Philippines. >> be the Philippines. Not many people know the geography of that part of the world I've discovered when you Yeah, when you when you when you Yeah. find yourself between New York and Los Angeles, yeah. Yeah, for sure. Yeah. and Japan I mean, Japan would absolutely be involved. >> Yes. Yeah. And so, I mean, just to state the obvious, so my iPhone would cost the American consumer 20% more. Yeah, my iPhone I mean, might cost 50% more. cuz to your point, it's not just the wafers. There's all these other things that are made in America.

36:42 >> But all a lot of those are rapidly being relocated to Mexico. >> Yep. India. Yeah, absolutely. And, you know, Nvidia and Apple and Amazon and the hyperscalers are driving a lot of this. Actually, big Chinese companies are opening up American subsidiaries that can be legally separated and they're bringing their best engineers to stand up manufacturing plants in America or Mexico. Like the Japanese auto manufacturers did 30 years ago or so. 100%. Yeah, fascinating. Yeah. I I feel like I need to ask you this question. We're in Tel Aviv now. So, the United States government just took 10% of Intel. The Israeli government has spent tens of billions of shekels over the last 25 years in both subsidies and tax incentives to have Intel set up their fabs here in Israel. If you were the government of the state of Israel, what would you do in reaction to and response to to level up regarding Intel after the US just took 10% of Intel?

37:38 You're you're the chief advisor on semiconductor supply chain to the Israeli government. I mean, there's there's what's fair and then there's what's possible. So, in a fair world, yeah, Israel should I would go if I were Bibi, I yeah, I would absolutely ask you know, I don't know what's what's a reasonable number for 5% of Intel, 2% of Intel, 10% of Intel. But it also feels to me like maybe Bibi and Israel in general want want other things from America. And so, you have to put that in the calculation. But in a fair world, absolutely Israel should have a a cut of Intel. The great thing is, Israel can do that. It's The American government, it's not like they got to got a good price.

38:27 Like they got they got the market price. >> Right. So, you know, Israel can go do the same thing. They can call up Intel and say and I'm Intel's not going to say no, they need capital. They can make the same deal for however much they want. And maybe they should do that. Interesting. And do you think Is there a way to like to think about this as a secured allied supply chain whereby, you know, Intel and TSMC and Nvidia, which has here thousands of design, yeah, you know, and thousands of employees and many design people, and Apple, which has here you know, unbelievable numbers of chip designers.

39:04 Is there like an allied supply chain? >> 100%. That's what I said about the Taiwan Semi engineers. Yeah. You can go to Japan, ally. You can go to South Korea, ally. You can go to Israel, ally. And, you know, stand up TSMC Israel, or you can go work at Intel Israel, or you can go to Arizona or Texas or Oregon. Interesting. Those That Those are the places on planet Earth where those leading digital chips are made. Nowhere else. So, Israel is 100% a very strategic part of this allied supply chain.

39:33 You mentioned before, which I thought was striking, that TSMC wants to do kind of one generation back or Taiwan thinks that if they give only one generation back of technology, semiconductor manufacturing technology, to the United States that will that will keep them safe. Ironically, that's exactly what the United States government did with Nvidia vis-a-vis China. 100%. Our mutual friend Bill Gurley thinks that's a terrible decision because, you know, the Chinese because of the constraints on them would either develop something that'd be much better or build so-called better software around this, you know, to kind of leapfrog the constraints. Do you think the US policy was correct and think Bill's right?

40:12 >> I respectfully disagree with Bill. So, one, the the advantage that America and its allies, Taiwan included, Israel have in semiconductor manufacturing, because it's a recipe, you can't copy it. You get the plans for the F-35, you can make the F-35. The only part of the F-35 that is kind of like semiconductors is the jet engine. And that was the area where it took China the longest to catch up to the West in terms of aviation technology.

40:42 Cuz the jet engine, there's a lot of art and trial and error. It's even if you have the plan, sometimes and semiconductor manufacturing is the same thing. And I think had we adopted these, you know, that we really adopted these policies in, you know, early in the Biden administration, I think China was six to eight years away of absolutely catching up in manufacturing design. But I think we really did stop them and slow them down. And we have a multi-decade lead.

41:12 Multi-decade lead. Wow. So, today we'll call it it's a more of a four-year lead. But that is because four years ago, six years ago, they had access to essentially everything. Right. Now they don't. So, we will see what happens to that four-year gap. Like I think it probably widens. but I mean, the Chinese are really good engineers, they're very smart, extremely hard working. Yeah, it's actually kind of like I think China and America are actually very similar as as countries in terms of the ethos.

41:47 except except the Chinese have a better educational system and I think are probably harder working on average and certainly are are more focused on science and engineering to their credit and the detriment of America. But I think it's going to be hard. I think that four-year lead is going to grow. Interesting. and then in that context, you are giving them a chip that is, call it, a year ahead of the domestic alternatives, but a year to a year and a half be- behind what firms in Israel, as an American ally, get to use, what America gets to use.

42:27 And I think that I think that's a reasonably smart policy. I think it's like the the position of giving them nothing is a big mistake. And then maybe the position of giving them the exact same chips is a mistake because, I mean, even with a pretty big hardware disadvantage, you know, the only frontier labs that are challenging the American closed-source labs are the Chinese labs with a big disadvantage. I mean, they're very good.

42:59 And you know, there are real geopolitical ramifications of AI. If you look at our industry kind of broadly, investors in technology, you take Bill's an example without singling him out because I also respectfully disagree with with his position on it. Historically, they haven't been that involved in geopolitics, but geopolitics has become a meaningful part of AI, of, by the way, the investing environment, you know, from Anduril to, you know, Hadrian to X Yeah, absolutely.

43:32 >> to X and XAI >> Absolutely. and Tesla because of electric vehicles and energy, I mean, it's >> Absolutely. it's become you find that hasn't been like in the in the purview of Silicon Valley investors, I think, ever until this until this era. I think it's right. How would you approach somebody who's just bringing you a chip company and say, "Hey, there's actually geopolitical ramifications here that'll impact investment returns, that'll impact where you can manufacture this chip over time, that may impact the availability of, you know, parts and Yeah, well, I would I I would say, I mean, But Cerebras, as you mentioned, one of their core customers was the Emiratis. Yes. Their only customer initially was the Emiratis.

44:13 >> while it's reported in the press. >> Yeah. And that may or may not have held up the IPO. I mean, that that's like a big that's a geopolitical issue. The America hasn't decided yet if it fully trusts, you know, Middle Eastern countries Yeah. >> AI. Yeah, it seems like this administration has decided that they do trust for sure the UAE and I think they trust the GCC countries. >> Yeah, thankfully. Yeah. Yes. and I think, you know, you and I have both spent a lot of time you know, in the UAE and one thing that was like profoundly embarrassing for me as an American to realize is that you might be safer being Jewish in Abu Dhabi than you are in most American cities. Yeah. which is like shameful to me as an American.

44:57 But I think America has decided that they are reliable allies. But for sure I mean, it was publicly reported that the Cerebras IPO was caught up in CFIUS. but I would just say, I mean, I would never bet against America, I'd never bet against Israel. Like I would line up like like with the you know, I would line up with the Western democracies. And that would be my perspective and that that would be the way that I invest. Is there such a thing as a sovereign supply chain or something like that? I mean, America's making a good run at it right now, but it feels like even if you make a good run at it, the world is so interconnected and you need to manufacture this in Mexico or India and you know, need rare earths from here or from others to Ukraine or China. Is sovereign supply chain even realistic?

45:46 Well, sovereign, but like emph- emphasis on if you include sovereign to include allies, I think it's possible. So, if you include Japan and South Korea and Israel and Europe, like they do still make a few things. You know, Europe is like on its way to just being a theme park for, you know, wealthy people from around the world. But Europe still makes some useful things outside of like luxury goods. Food ingredients apropos baking in Italy is a big deal. I'm not kidding.

46:18 >> Yeah. Yeah, Europe is not totally lost. So, you know, if you have Europe, America, Mexico, Israel, the GCC, South Korea, Japan, I think that can be a supply chain. Can you make it all in today's world even in America or all in China? I think it's hard. So, those are things chip sovereignty, for example, or anything like that. >> chip allied chip allied chip sovereign supply chains. That's the way I'd frame it. And how would you get someone to focus on that? I mean, I You think the administration has It's happening. Yes.

46:48 Yeah, you feel comfortable that >> Yeah, it is it is 100% happening. I think you said somewhere you tweeted. Can we say tweeted anymore? Posted. >> Posted. Posted. Elon Yeah, he mentioned posted. I said to him, "What do you do about retweet?" He said, "Repost." >> Yes. This AI race is the most important race to win ever. For sure. Yesterday, two days ago, I did a panel at one of these conferences here. Tried eight very smart people up there and asked them to make one prediction about 10 years from now, what will happen in AI. And Shalev Hulio was the founder of Dream Security, which is AI.

47:24 he was on the podcast before, AI to protect nations, said, "In 10 years, there are three things that are going to define super nations. If in the previous century it was nuclear, 10 years from now it's going to be AI, quantum computing, and cyber. Cuz you'll be able to take down a country with cyber attacks break codes, etc." Who do you think's going to win the AI race? Is the first one like who gets the super nation status with AI?

47:51 And do you agree with what Shalev said? I agree with what Shalev said. I may be a little more skeptical on quantum, although it for sure is going to be very important in cyber. You agree with both? But again, I think it's tough to get to bet against America and friends. Like even though like it just, you know, I think it seemed maybe nine months ago that America had alienated a lot of people, I think like these alliances are holding and America and friends is very tough to bet against.

48:29 So, I think America and friends get gets there together. and then I think China is always right behind. Like what what Deep Seek did was impressive. >> Yeah. Do you believe all the numbers? No, so then some of the numbers were were were, you know, clearly made up. You know, there's a line in there, "This cost $6 million, you know, excluding the cost of ablations and experiments." And you know, I posted on X kind of like saying, "Other than that, Mrs. Lincoln, how was the play?"

49:01 And for sure lots of advanced Nvidia GPUs are smuggled into China. Yes, I've said in other forums, like America cannot keep drugs out. And we we have the DEA devoted to keeping them out. And we literally just bombed a drug boat and we cannot keep drugs out. Well, I mean, the only thing like has valuable per like, you know, whatever whatever we're going to call it, kilogram, has some of these drugs or diamonds, our GPUs. And China wants them to come in. So, if America cannot successfully keep out something equally valuable that segments of the American population want.

49:40 It's hard when China, the government, which is very effective, wants to bring these in and has, you know, all sorts of, you know, front companies all over the world to do it. So, China has a lot of advanced GPUs, just not as many as they would have otherwise. You you're you've been a big investor behind Elon. I think that's fair to say. Absolutely. You mentioned that you think global warming and climate is actually a big issue, but you think it's solved. I agree.

50:10 Because of solar? Because of solar and batteries. and you know, God forbid one of these, you know, fusion companies works. And it seems like one of them might probably will. Yeah. I don't know which one. But yeah, I think it's I mean, I don't say this when a I I think believing in global warming is a problem became part of an ideology. And if you just look at the facts and the data around what happening with solar and batteries, I get very like the world is going to run on natural sunlight in my lifetime.

50:44 I mean, in America >> statement. The world is going to run on natural solar fully in your lifetime. Maybe maybe my children's lifetime. I mean, if I want to hedge. But I mean, it's just it's economics. Yep. It's just economics. It's every year it gets cheaper and essentially every other source of power gets more expensive. and and and definitionally all power comes from the sun. Fossil fuels are just stored sunlight. Nuclear is just artificial sunlight.

51:15 actual sunlight plus batteries, it really can and I think will get you there. I mean, in America we are back to I think like 1920 levels of emissions on a per capita basis. I think it's very hard to understand math, look at the charts of what's happening with solar from a cost perspective and a deployment perspective and be really worried about global warming. You know, China was a big part of that, I think it's fair to say, right?

51:44 >> 100% 100% because of economics. >> Because of economics. >> Yeah. They needed So, China does not have domestic fossil fuels. >> Right. So, they bought a lot of oil from the Middle East, yeah, and so Russia. Absolutely. So, yeah, that's why A, they went so hard on solar and batteries and B, went so hard on EVs. Cuz for them it was a national security issue, their dependence on oil shipped from other places. So, yeah, I think the world's going to run on sunlight.

52:11 I'm I'm a committed environmentalist, you know, I love to be outdoors, but I genuinely believe global warming is a solved problem. In your lifetime or your kids' lifetime to hedge? >> the trend is it's just it's like the boulder has started rolling down the hill. It's rolling down the right path and it's going to take you there. Just economics. By the way, something I would something just Elon did more for this planet in decarbonizing it than all of the activists and the Greta Thunbergs combined. Those crazy people who were, you know, splashing paint on paintings, like, you know, they make people you know, want to go buy a big rig. You know, they don't do anything useful.

52:54 Elon did something useful. If you care about the planet and you care about global warming, you just have to be pro Elon. Some some significant number of years ago, Van Jones I think wrote a book called the green collar economy, where he basically lampoons or kind of pans all the environmentalists and just says them it's all economics at the end of the day. Fix the economics and the climate problem will get fixed and we'll have the green collar jobs, too, which I think Elon has proved, you know, with solar installers etc. At the end of the day, the economics and the money moves the world. And but you need to kind of get massive investment into this to get production costs down, which I think would happen with with Tesla.

53:31 >> with China here. But is the battery storage thing really solved like on a national level? I I spoke to the head of energy strategy. She was on my panel, also, for the Israeli government. You know, we got natural gas here. And I said to her, "Well, how are we going to run the big data center that we need to build in the Negev Desert?" And she said to me, "Well, we got enough energy right now, but if it really goes a million GPU cluster, we may have a problem." I said, "Well, what about solar?" I said, "Well, then we need storage." And can you get the storage on a national level? It's tough. We need a lot more battery manufacturing capacity globally and in particular in Ameri in in the America and France. Is anyone focused on that?

54:05 Well, Tesla's very focused on that. >> Elon, yeah. It all goes back to Elon. He's a single point of failure for your vision. I think maybe 10 years ago he was a single point of failure for this, but he's what he's now set in motion. I don't I think this is going to happen. He might be a single point of failure for getting to Mars and and successfully colonizing Mars in my lifetime. You want to go?

54:32 I absolutely. I think it would be really cool to see a blue sunset and a blue sunrise cuz the polarities are reversed. I have been told that there will be a spot for me if I want one. So, I want to something else you you've said is that the worst outcome is one AI model giving one answer, which is very Orwellian, by the way, right? Yeah, in a big way. So, multiple AI systems to give multiple answers need multiple sets of values. And I think one of the under talked about topic around these models is what are the values they're ingesting. You know, right now there's an entire scan about Wikipedia, which is a giant ingestion giant corpus that that's been ingested by AI. Reddit's another one and you're an investor in an astute investor in Reddit as they were ingested by the AI. But that, you know, garbage in, garbage out, that's what's fueling these things. If everyone's ingesting kind of the same corpus is number one, you get the same answer. Number two, whoever's crafted those things with manipulations of Wikipedia and now being investigated by Congress, that's a big deal. We're getting at one set of values. So, how are we going to get to different answers? And how are we going to get to different viewpoints, particularly as people get answers and rather rather than kind of further inquiry? Extremism always kind of burns itself out. And I would say circa you know, sometimes after doing great damage. But you know, in 2023 there was in and I believe early 24, you know, there was, you know, a giant scandal because if you asked OpenAI and Claude and and Jet and Google's Gemini, "Is it worse to misgender one person or kill 10 million people?" It would say, "It's a tough question, but it's for sure worse to misgender one person." And I'm not saying misgendering is not a big deal.

56:20 but killing 10 million people is obviously worse. But these AIs had been so imbued with this, you know, strange American woke monoculture, which really, you know, doesn't, you know, exist in the rest of the world. You know, like in in France, you know, they had a big article, Le wokisme, about how crazy it was. And this is France saying how crazy it is.

56:51 I think that burned itself out. I think you know, and then there are all these instances of, you know, you essentially could not get the AIs to generate a picture of a white man. Yeah. You know, draw me you know, draw me a picture of, you know, the prototypical Viking. You know, it didn't look like a Viking. And so, I think that kind of that was helpful to moving the pendulum. As was, you know, what Elon has done with X and xAI.

57:21 I think cracking the Overton window for bringing back free speech. And something that I think is and then having the Chinese AIs is also going to be helpful. And something that I think is underrated about Elon's success is his companies are always very mission-driven. And so, anyone at Tesla, you ask them, "Why are you here?" To decarbonize the world and make the world green. Very mission-driven. SpaceX, maybe the most mission-driven company. You ask anyone there, "Why are you here?" It's to make humanity a multi-planetary species. You know, there's there's a bartender at SpaceX, there's a tiki bar, and she had been kind of a super fan who would make videos about the launches and then got to know some of the engineers and she was a bartender and then come come be a bartender. And you ask her like, you know, "Why are you here?" To make humanity multi-planetary.

58:13 And she's like, you know, but hey, like I'm just a bartender, but she's like, "My my perspective is if I know exac- every engineer's favorite drink, and I, you know, when they're coming over at 2:00 a.m. or midnight, and I have it made, maybe that makes it a millionth of a basis point more likely to get to Mars, you know? Yes. Yes, the janitors. Yes, everybody." That's the famous John Kennedy line, right? >> Yeah. He asked the janitor at NASA what he was doing up in the men's room.

58:36 Absolutely. That is the ethos at SpaceX. It's amazing. But xAI, they're they're the mission of, you know, X X was free speech and xAI is to understand the nature of the universe and be maximally truth-seeking. And Elon talks a lot about the Galileo test where, you know, Galileo, you know, correctly predicted the way correctly described the way orbital mechanics worked and was put in prison for 30 years because that was not popular. And sometimes science cuts against what we believe or what we would like to believe. And to progress science, you have to be able to be a heretic. Be a heretic, yeah. You know, Richard Feynman said science is a belief is a belief in the ignorance of experts because every scientific revolution completely invalidated the belief system that went before it. And that was a belief system adhered to by experts. The I got to ask you this question. If Elon came to you, didn't matter what If pitched you, would you give him money?

59:32 well, I would always think because I am a fiduciary. Yeah. But I just don't think there's anyone else with a track record across so many different industries of being as successful. Tesla, SpaceX, X and XAI, The Boring Company, which I actually think is going to end up doing incredible things for the world. You know, it's it's amazing the amount of space we've given in cities to cars.

60:02 >> Yeah. Between parking lots and streets. And if you see a picture of a city, there's a famous illustration where the streets and the parking lots are just 2,000 ft deep canyons. And you realize how little space we've left for walking. I should have read Shoup's book, Donald Shoup's book on free parking. There is no such thing as free parking. There's no such thing as free parking. I haven't read the book, but I I understand the concept. and then what Neuralink is doing is amazing.

60:25 >> Yeah. You know, and really bringing back you know, fundamentally changing the lives of these you know, paralyzed patients. and then eventually the hope for Neuralink We have quietly have a Neuralink competitor that's non-invasive. Semi-competitor. So, it'll be interesting. I haven't Yeah. >> betting against Elon, either. Yeah, I think it's tough I think it's tough to bet against Elon, but again, it's going to be a big market. You know, the ultimate hope for Neuralink there's a science fiction series called The Culture written by Iain Banks, I A I N. Highly encourage everybody to read for what like a utopian AI like society could look could look like.

61:03 and the SpaceX drone ships are all named after spaceships from The Culture. But in The Culture, every human has something called neural lace, which is circuitry woven through their brain that effectively lets them merge with an AI whenever they want, you know, kind of always you know, they can be aware of anything happening anywhere at any time. And the hope of Neuralink is it lets us it fixes this long-term hope besides bringing, you know, changing the lives of these patients.

61:32 But you know, there's a real IO problem for humans relative to machines. you know, we we take in so much more information, but can transmit it slowly. And so that having a really high bandwidth connection between a human brain and a machine intelligence through Neuralink you know, you will help humans, you know, better adapt and add value in a world of AIs. That's that's the long-term vision. And I think that's that that's humanistic and also inspiring. You mentioned before that your patriot your values and you talked about Elon's kind of mission-driven nature impact your investing view.

62:08 Yeah, for sure. I do like just you know, the the way I phrase it is just like I I have historically avoided in investing things that I think are bad for the world. and this is not ESG. ESG became totally corrupted. Like the idea that like defense was bad for the world is like ridiculous. There are actually evil people in the world and we need to be defended from them. Like defense, super pro ESG in my mind, the way I would define it. and I think the world is kind of coming around on that. But just if there's something that I think is kind of actively bad for the world like I tend to avoid it. How do you determine that?

62:51 Different in each case. You know, just it's you know, like the famous definition of pornography, I know it when I see it. >> Yeah. Give me your 10-year AI prediction. I mean, I think we will have artificial superintelligence in 10 years. And by that, I mean an AI that is smarter than the smartest human in every discipline. and what the economic ramifications of that are, I don't know. But I do think we will have that.

63:22 I think the two biggest risks to this kind of current moment, to this AI cycle. One is that the economic returns to ASI are just not that high. You know, we're not living forever and colonizing multiple solar systems. I think the other risk is that eventually already today, it's hard for most humans if you're paying two 200 plus dollars a month for the best AI you can buy, it's actually pretty hard for most humans to push the limits of its knowledge. I think the other risk is that in Hang on that one second. Well, in in just a big problem in measuring AI is called benchmark saturation.

64:07 Where it used to be in in like the definition of you know, people are saying, AI will never be able to do that. Then it does that. Oh, well, now it can't do this. And then it does that. And then it's like, oh, it's never going to score at this level on this test called the GPQA. and then it knocks it out of there. Well, we need to have this. And there is a jagged frontier in AI. it's also which is another way of referring to something called the Moravec paradox.

64:31 Which is that things that are very easy for AI are very hard for humans and vice versa. But that frontier is getting less jagged all the time. AIs are getting better at more and more things. But I think the risk is is that if in two or three years, you can run you know, 130 IQ which is a very high IQ AI on your iPhone or Google phone locally and it's your AI and it's friendly and it knows you and you trust it with all of your bank accounts. And then when it doesn't know, it calls out to one of the giant AIs in the cloud.

65:09 I think that is a risk to kind of this current data center boom. And like the history of computers, we kind of oscillate between centralization and decentralization. And I think that that that is a risk. So I do think we will get ASI in 10 years. I think humanoid robots will be everywhere. We will everyone you know, we we'll have humanoid robots in our houses doing useful things. There will be humanoid robots in factories doing useful things.

65:40 >> I'm still going to interview Gavin Baker for the podcast rather than the humanoid I don't know, man. I mean, they're getting pretty funny. Yeah. Yeah. Yeah, maybe humor will be one of the last kind of areas that you know, maybe comedians will comedians and sports stars will be the highest earning people on planet Earth in a world of AI superintelligence because humor will be tough to tough tough tougher for the AIs and you know, maybe it just won't be as exciting watching teams of robots.

66:13 Why are you in Israel now? I'm in Israel so we have probably X SpaceX, I bet 30, 40% of our venture portfolios here. we're very active semiconductor investors. Israel's a great and and venture Israel's a great place for that. You know, so here seeing all the companies, gave some fires gave a fireside chat. Dan Loeb and I talked at the Jefferies conference, which was great.

66:44 And but the one thing is like I was coming here, I was like, okay, I'm going to come every year once a year. And I think for sure I'm going to come minimum of twice a year for a week each. There's just so much happening here and it is you know, I I said on stage and said to you guys, I do think like Tel Aviv it feels like the most exciting city in the world right now. You know, there's you know, and you know, obviously what happened was a tragedy and you know, there's still 20 living hostages.

67:14 you know, so I understand there's kind of a sadness underneath it. But there is just an electricity. It's just it's exciting to see and it it remind the last place that felt like this to me was actually I would say, you know, any major Chinese city maybe 15 years ago. after the GFC, there was just this sense of endless possibility and incredible energy in China. It was really inspiring. I went to China every minimum once a year for a week for 20 years. I have not been in the last six.

67:51 But Israel feels the same way. just incredible energy, electricity optimism and I do think there's good reasons. Like it it feels like we may be on the verge of like a sustainable and durable peace in the Middle East and you know, kind of this golden age for this region and the Abraham Accords expanding and that would be beautiful, but it is it just I find the electricity and the optimism and inspiring to be around.

68:24 and then I do think, you know, Israel it is the you know, I described it as the you know, the 21st century Sparta today. And it is you know, it is defending the free world. and so I want to support that and honor that. so I'm going to come here minimum twice a year. if you're an Israeli entrepreneur and you don't and and you know, you you know, please think of both Mike and me. It's always fun to do it together. I I need to ask you two last questions.

68:55 we're sitting here. This won't be broadcast today, but it's the day after your Charlie Kirk was assassinated in America. Do you think that political violence is back in a big way? And if you had to kind of project forward months and a couple of years, what do you think the impact of this event is? It's going to be very significant along with the murder of Irina. Yeah. I do not know how to say her last name, but a Ukrainian refugee who was brutally murdered on camera in a really callous way.

69:29 and I think having the two back-to-back is actually going to have a significant impact on America. Charlie Kirk, it's tragic because really what he would do is he would go to college campuses and I think more than anyone on the left or the right, he would engage in courteous dialogue and discussion with people he disagreed with. And this is what we need more of in America and everywhere in the world. He had his views. he would explain them. He would listen. He was respectful. And so it's what happened is is is truly tragic as is the fact that it was you know, celebrated on air at MSNBC.

70:10 That guy got fired. I've seen all sorts of snippets from Blue Sky of people celebrating his death. And I think language is powerful. There's there there there's a there's a phrase in Nietzsche. you know, I have a phrase from Nietzsche. I don't get it wrong. It says, you know, you know, take care to not look too long into the abyss for the abyss looks back into you. And eventually you become one. And so I think for a lot of people on the left in America, they believed that Donald Trump was absolute evil.

70:49 And so they used language that suggested like, you know, if if Donald Trump is Hitler, if he's a Nazi, like we all know what should have you know, what should have happened to Hitler earlier in his life. And so that's very dangerous language to use. And I think it kept being used. And then what was just shocking to me and by the way, I've I voted for both parties. Yeah, I consider myself a centrist. But what was you know, so there two assassination attempts against Trump.

71:27 And even then a lot of people on the left in the media, they couldn't stop using language like put a bull's-eye on him. and then what was shocking to me is Luigi Minchione who killed the UNHCR CEO, it was hard. Not many people on the left condemned him. And some prominent voices you basically said, "Hey, we understand why he was angry." Killed this guy. Well, understanding that you're angry about medical bills that you know, doesn't justify murder.

72:00 And then you know, there was this campaign of you know, firebombing Teslas. And again, a lot of people wouldn't condemn it. And then those two Israeli embassy staffers were murdered in cold blood in Washington, D.C. by somebody who you know, I I worked at some sort of liberal advocacy group. and again, like not the condemnations you would hope for. There's an article today in the New York Times that I actually thought was encouraging because it actually for the first time I saw them wrestle with you know, in America, you know, everybody loves to say, "Oh, far right-wing domestic extremism is the biggest threat."

72:47 well, it's been a long time since the Oklahoma City bombings in the early '90s and a lot of things have happened since then. And I don't think domestic far-right extremism is still the number one threat anymore. but it's very feels very safe, I think, to talk about like far-right extremism and you know, evangelical Christians and these are the problem. And it's like it was the first time I saw the New York Times wrestle with wow, you know, this happened and was wrong. And it was almost like they were kind of struggling to find the language, but they were at least grappling with it. How do you think about you know, you mentioned mainstream media, MSNBC, New York Times, etc.

73:31 And you mentioned Blue Sky. and obviously, you know, Twitter is a is a is a free-for-all. Yeah. a kind of free speech maximalism and there was actually celebration on parts of Twitter, too. >> Yeah. My my feed has been filled with parts of it in response to my just saying, you know, God bless his soul and his family. So I I was really shaken by the assassination yesterday. and Do you think that there needs to be any It's kind of funny because it's on mainstream media. It's on the regulated media. It's it's on social media. Like what do we do about this moment where you know, the worst of humanity pours itself out into the media, mainstream or or social? I don't know. I mean, I we tried aggressive censorship in America.

74:16 You know, that's what >> in the UK now. It's not going so well. >> Trying in the UK. and I think the answer may be unsatisfying of you know, of all of the great quotes in the English language, like 90% of them come from Shakespeare and 8% come from Winston Churchill. and one of Churchill's great quotes was, you know, you know, the only thing worse than having allies is not having them.

74:49 And it may be you know, same thing, you know, democracy is the worst system imaginable except for all the others. And it may be that free speech while it's uncomfortable at times, that there's not a good alternative. Cuz I think the mistake when kind of the you know, the woke you know, wing of America was ascendant, you know, and they were aggressively censoring speech. And like never occurred to them that someday they might not be in power and they might be censored. and that has not happened, thankfully, cuz I don't believe in censorship.

75:29 But I do think I mean, there you know, there there things on X that are said that I find offensive. And I'm sure there that there are things that are said that you know, as pro-Israel as I am, you you probably find them even more offensive or they hit in a different way. you know, with you know, the I'm sure the personal nature of your experiences with everything that's happened since October 7th. So those you know, those are upsetting.

76:02 But I just think like that may be the cost of free speech. Cuz at the same time, the flip side of this is I profoundly believe if it were not for X, nobody would believe that October 7th really happened. >> with you. So while there's some terrible things said on X, I think if it were not for X, October 7th would have been wiped from global memory. As you know, I went out and publicly defended Elon on this, you know, post his visit here and I think I completely agree with you.

76:39 What he has uncorked and the ability to get things out that were otherwise censored by mainstream media is profound and he's changed the direction. So I'm I'm in the same camp. I just think it's important to you know, you have to steel man the other argument. >> For sure. And like there's Life is all about trade-offs. And the trade-off of free speech is that you know, sometimes there's speech that is deeply offensive, that is evil. But if it does not Elon follows the law. State of policy is we follow the law. So you know, if you yelling fire in a crowded movie theater, >> Yeah. that that is not that can shut down.

77:18 But anything short of that goes. And that comes with great things. >> Mhm. and I think if there was I mean, you know, all sorts of different ways have been tried to adjudicate it. And other than following the law, which Elon does with X, I don't think any of them have been satisfactory. Do you worry about ongoing violence after what happened in the last week? I do, but I also hope that like I said, I think that article in the New York Times is important. It's the first time. It's like, "Oh, wow.

77:58 We have a problem. Houston, we have a problem. >> we might be part of the problem. And I think that's important. And you know, Charlie Kirk, he was a great man. I mean, it I seems like you maybe knew him. I never met him. >> I never met him. but I thought it was really inspiring to watch the videos of him respectfully debating people who he disagreed with and disagreed with him. Politics the way we'd want to practice.

78:24 >> Yeah. Yeah. And that's the guy you killed? >> Yeah. And then and that's the guy whose death you're celebrating? I want to finish on a happy note or a happier note. When you think about where you want to deploy capital over the coming 12 months, where is it? That's first question. And the second question is who's the investor that you would admire most and go to for advice? As the second one, there's no one investor I admire the most. I admire you, Michael.

78:53 I >> I'll get invited back for another Yeah, exactly. I can't you know, I can't but I mean, you know, I I deeply admire my friend Antonio Gracias who runs Valor Equity Partners. You know, I think you know, he he has done unique things and has unique lens that he sees the world through. There are great portfolio managers at Fidelity. A woman named Jennifer Yurig who she runs a she she actually runs a venture fund now, but she at one point I she ran $70 billion great numbers to to my knowledge has run more money than any woman in history and just you know she had so many great you know pieces of wisdom that have stuck with me.

79:28 You know you either have to panic early or double down late. And there's anything in between you get killed. And you have to know which one you are and be disciplined about it. My friend Steve Wymer who runs a $200 billion fund with absolutely incredible numbers at Fidelity. you know he really taught me the value of not only hard work but doing the work yourself. And also just a phrase that you know Wymer always had was only two things in investing. There are numbers and there are excuses. And if you don't have the first nobody gives a about the second.

79:59 And then the aforementioned Will Danoff you know Will is incredible because Will you know he he he has this he asks sometimes what seem like very basic questions but they're very profound. And being asked them I think maybe sometimes forces the companies to think differently. and he also has this incredible ability to I would call it play in the present and be completely dispassionate. And I'm not a golfer playing the present just means you can't let your last bad shot you know hurt you but investing is the same thing. You got to play in the present. You know whether you you're on a string of string of hits or string string of misses.

80:43 and you know so I feel like I've learned something from you know a lot of people. I've certainly you know learned a lot from some of your former partners at Benchmark. yeah it I think it has it has taken a village to make me the investor that I am. And I'm I'm going to turn 50 soon and I'm excited. How old are you Michael? 54. Okay so I profoundly believe that peak performance years for investors especially public equity investors. And I do I do love public equities. I love venture. I love public equities. are 50 through 70. And so I'm about to enter what I hope are my peak performance years and I'm excited for that. Imagine because they say about me that I'm over the hill at this point because the peak venture years are in your 30s.

81:31 Yeah it feels like that is late 30s I actually thought Bill had a great quote. You know why are you retiring? Because I'm tired of having the same arguments with 25 year olds and knowing I'm right and having to watch the mistakes that I've watched people make for 20 years and I just can't do it anymore. Tell Bill that having eight kids has trained for that. That's actually hilarious and I'm sure very true. Yeah well All right what are you optimistic about what to deploy capital into? This is all our last answer.

81:58 >> Very hard So at the beginning of So I'll I'll give you a few things. I do think SpaceX is probably the highest risk adjusted return available in the markets. it's the highest it's my personal opinion it's the highest sharp ratio asset you can buy. my my friend Antonio who runs Valor and is a large SpaceX investor says it's pro-entropic that as the world gets more disorderly it gets more valuable. It is for sure people talk about Anduril has you know the most important you know United States national defense company.

82:32 No. I agree. SpaceX is by far the most important defense company to the West. even if they're not currently making weapons and never make weapons. So I think SpaceX is a great company. I think Starlink you know people have forgotten what a big market telecom is. And this is by far the best product. It's a unique product. You know telecom is you know over a trillion dollars in revenue. Starlink's >> been investable in the private markets the last 25 years. That's why people forgot. 100%. Yeah and so Starlink is going to be a great outcome for SpaceX and then obviously if SpaceX ends up becoming the British East India Company of the solar system it's going to be very valuable. At one point 70% of global trade 90% of global trade passed through the British and Dutch East India Companies. I think SpaceX can be that for the solar system. And I really think the future's going to be awesome. You know we're going to industry's going to move to outer space.

83:24 We're going to capture asteroids. We're going to bring them into stable orbits. We're going to mine you know mining is going to happen in space by Optimus robots. you know there's an asteroid called Psyche that has more gold, platinum and diamonds on it than exist in all of the earth. Don't be going to short gold because it's been climbing very fast for the >> Yeah I don't yeah I think I think asteroid mining >> trade buy Tesla short gold? Yeah asteroid mining I actually think is actually a real long-term bear case for precious metals.

83:54 so I think SpaceX is exciting. I do think you want to have exposure to the frontier labs and then I think it's just so hard to bet against semiconductors for the simple reason the P&L of your average SaaS or internet company you know the a lot of them would have would have 85% gross margins and of that maybe 5% went to compute. Your average AI company best case best case maybe has a 40% gross margin and 50% of their revenue is going towards compute.

84:29 And that isn't going to change cuz that is just the nature of AI. So AI makes global GDP inexorably more silicon intensive. And I think there's an exciting opportunity in venture semis in particular because often outside of and I think actually Israeli cyber is different. But outside of Israeli cyber and semis you're often investing in 30 year olds. And some of these are exceptional exceptional 30 year olds like Mark Zuckerberg or a young Jensen or a 30 year old Elon. But they're still 25 or 30 and you know they they you know they maybe don't don't have the track record or the years of experience you'd want. In semiconductors often you're investing in a 50 year old who ran a division at a big company and his their team is with them and you're betting on this person just doing what they have done for the last 10 years. So I think it's fundamentally different. I think cyber is maybe a little Israeli cyber in particular is maybe a little bit the same.

85:34 >> Yeah. I I haven't done as much of that as I should but but so I think it's hard to bet against semiconductors public and private. Gavin thank you so much for doing this. Great to have you here. If you enjoyed the episode please rate us five stars on Spotify, Apple Podcasts. Subscribe to the YouTube channel. You're not going to want to miss the Gavin Shorts in addition to the full length interview. Thanks. Thank you Michael. Thank you for having me. It was great.