Trump's First 100 Days, Tariffs Impact Trade, AI Agents, Amazon Backs Down

I got to wrap guys. I got to catch a flight to Miami. Let me do a closing here. If you want to keep going, you're welcome to three. The plane just waves just text the pilot and just tell them you're All right, listen, I'm not burning all the all-in credits. so to speak and all of our tokens. I'm kidding. I'm kidding. I'm kidding. You're worried about missing a flight? It's everything and they're putting it on the all-in budget and the rest of us are flying Southwest.

Chairman dictator. They didn't miss a flight? It's a strange concept. Yeah, David. What does that mean? David, when's the last time you flew a commercial? Clinton. I haven't missed a flight in about 15 years. All right, everybody, welcome back to the number one podcast in the world. We're back. We're back. And what an amazing panel we have today with us. Ryan Peterson, friend of the pod, is back on the show.

He's the CEO of Flexport. How are you doing, Ryan? Did you get any skiing in this year? I know you like to ski in the deep powder like me. I tried, man, but it was a busy year for work and I got two little kids. I did a few days. Okay, so you're out. Yes, we all forgot. You gave control of your company to somebody. It got a little shaky, got a little contentious, and then you took the reins back. How's it been being back in the pilot seat?

Oh, that was a year and a half ago. So it's a distant memory for in Flexport time. That's like a decade. We've, yeah, really had an amazing run. Although these tariffs, I mean, I guess that's why you guys invited me on. These tariffs have kind of made a lot of, created a lot of new uncertainty in the Flexport's world.

Okay, so we'll definitely get into that. And of course, fan favorite back for his fourth appearance on the pod. So first of all, I saw the comment. I saw the comments last time I was on. I'm officially not a fan favorite, but glad to be back on. And I will be representing free markets in this version. What do the comments say about you? It was like, uh, you know, like, uh, loves Biden, uh, you know, totally beta, you know, all the, uh, Soy boy. Was that when you were filling in for me though?

I think so, yes. I was trying to represent libertarian values at the time, but that didn't work. I love this, that the leftists are embracing Milton Friedman. I think it's all worth it if that's what comes out of all this narrative debate. AOC is going to be a complete free market. person soon. Free market months are coming soon. Embracing free market values and the stock market, right?

Yes, exactly. Because any decline in the stock market is Trump's fault. So now they're embracing the stock market. Well, unfortunately, the one day that he said it's Biden's market, it was a green day. So that didn't help the case. I mean... Gosh. Well, listen, it's like another massive green day already. All that matters to me is that Uber is the anti-tariff stock.

It just does great. It's not impacted by tariffs. So here we go. Chamath, it's started already. We have TDS on both sides. We've got Trump derangement syndrome from Aaron. Wait, no, no, no, no. I want to be. Defender syndrome from Saks. We've got both. Defender and derangement. Here we go. It's not a syndrome. How about Trump bias syndrome on your part? Who, me? Me? I call balls and strikes. What are you talking about? Let's get started.

It's starting already, folks. It's going to be a great episode. Lots of excitement with us again. Jason has the rain. Self-sabotage. Find every way to not get rich syndrome. I do? What are you talking about? You guys said you'd buy me out of this thing and I could get the hell out of here. You know how much my shares are in all inner worth? For the love of God, write a check, Shermas. Get me the hell out of here. I just may. Oh, God. I mean, I'm going to be a tariff. Uber breaks 88.

That's my number. 88 is the number. You're all f***ed when that happens and we're getting close. All right, let's get started here. We have so many topics to get through. With us again, David Sachs. Hey, David, you're doing more episodes now. The audience wants to know. I don't know if we're allowed to make any initial announcements, but people are asking me on the streets, in the airports, in the comment threads. Is Sachs back?

Well, the ratings are back ever since I came back to the show, that's for sure. The ratings are back, show? But is Saks back? Is Saks back? Well, I'm back as much as I can. And you are a partial employee of the government. You can do 130 days a year or something. Is that still the status? Yeah, it's roughly half of work days.

Got it. And so what do you do? You have a punch clock there when you get to the White House? You punch in, you punch out like Fred Flintstone or what? Are you keeping track of these days? How do you do it? I know why you don't know this, because you have yet to be invited to the White House. No, you're interesting. I got invited. That's actually not how it works. Normal. People just badge in and badge out like normal. They badge in and badge out. It's a normal place, Jason.

I mean, literally, it's interesting. There's a new private club. It's incredible that you have thoroughly prepared for this week, just like always. I am always prepared. Interestingly, I don't know if you gentlemen know this, Ryan and Aaron, there's a new private club in DC. that uh don jr is doing and sax is a member tramata member and i just checked my gmail i checked all three of my gmail accounts everything No infight. You must have gotten lost again.

Did you send a paper one? Was it like you sent a gold card or something? Sachs, how do I get invited to this private club? What is this private club? Everybody wants to know. Well, we'll be happy to have you as a guest. Okay. Do I have to wear MAGA hats and have the courtesy MAGA hats at the door? If you want to be a member, obviously there are dues and a membership fee. And I just didn't want to waste your time with...

An offer that I knew you wouldn't be willing to accept. It's only $500,000 is what I read. Is that true? That's true for founding members who have additional benefits, but there's also a lower level that's the more reasonable membership level. So I think people are getting a little bit carried away with that number. Got it. That's what I wanted to clarify. Yeah, there's like 10 founding members who have.

that level and then there's a lower level for a more average member. Chamatha, you one of those 10? Yes. Do you pay more if you have TDS or how does that work? TDS premium. Are we talking about JCal specifically or what are we talking about? The TDS surcharge? Asking for a friend.

It's a TDS surcharge. You put the tariff surcharge and the TDS surcharge. No, look, it's very simple. We just, we want a place to hang out in DC. All of us have been to clubs like the Battery or, I don't know if you go to LA, like the, I'd say the best places. There's Malibu Beach House, there's Bird Street Clubs. There are places in Palm Beach that are really cool. In any event, We wanted a place to hang out, and the clubs that exist in Washington today...

have been around for decades. They're kind of old and stuffy. To the extent there are Republican clubs, they tend to be like more Bush era Republicans as opposed to Trump era Republicans. so we wanted to create something new hipper and trump aligned Since I'm in the government, I can't be an owner, but I told him I'd be happy to be member number one.

And so I said, great, let's do it. And so we're creating a place for us to hang out. That's basically it. We want a place to go where you don't have to worry that the next person over at the bar is a fake news reporter or... Even a lobbyist or something like that who we don't know and we don't trust. Got it. So it's like any private club. You want to go somewhere that's highly curated.

There's private club movements happening all over the country, not just Washington, but we're creating something that didn't exist before in DC, which again is. Younger, hip, or Trump-aligned Republican. I actually started a Kamala club in the Bay Area. So we're... I don't think anyone would pay to join that, though. It's the problem, right?

I mean, it's an open bar, that's for sure. Where do you guys meet up in like Redwood City? We actually meet up at the trade ports. All right, we're 100 days into Trump 2.0. It's just a random. 100 day thing, but everybody's talking about everybody's hand wringing. What has it been like for this first 100 days? How does it compare to Biden? How does it compare to Trump? 1.0 143 executive orders the most ever in the first 100 days.

And they're moving, obviously, at a different pace to be generous. Major indices are down 7% to 10%. Obviously, this trade war and tariffs, the yield on the 10-year, that's down about 40 basis points. There's a lot going on. Let's go around the horn. Ryan, Aaron, you're our guest. What's your take on the first 100 days? Is it what you expected? Good, bad, and otherwise? Wins and fails, everything. I'll go first. I think it's a...

Whirlwind. I mean, if you look at the John Boyd, the fighter pilot has this concept of the OODA loop, which is observe, orient, decide, and act. And the concept is that if you're in dogfighting, if you're able to... maneuver through those UDAL loops at a faster pace than your competition. They get disoriented and don't know what to do. And I think that...

That's got to be how Democrats in Washington and maybe mainstream Republicans in Washington, certainly journalists are all feeling this. Like there's the Trump administration takes action. And before anybody can respond to that, they have already done like four more things and you're like, wait, I forgot to actually follow up on the other thing that they did that I didn't like.

And so it's it's pretty disorienting if you're if you're trying to they can't find a line to fall back to and go, hey, we're going to push back against this policy because they're already moving on to the next one, the next one. So that's like my high level interpretation. Obviously, I come at it from a trade angle. I think everybody knew that Trump was going to be, he told us during the campaign that the most beautiful word in the English language is tariff.

Don't tell them it's an Arabic word, but the most beautiful word in the English language. And so we knew that was coming. I think that the suddenness of it all. caught people by surprise. I mean, they told us April 1st, April 2nd would be Liberation Day. they didn't tell us that it would go live the next week you know and affect ship you've already ordered these goods so that's one aspect that people are kind of disoriented about

And then we're going to unpack. Yeah, we're going to unpack that. Aaron, your thoughts on the first 100 days? Obviously, you are... a democrat and uh you were pretty vocally not in support of trump so what's your take on the first hundred days any any bright spots for you things you you know support actually uh sax's world i'd say has has been a bright spot So especially, I mean, I think we have a very clear message on AI.

And that's been, I think, a huge net positive is, you know, if you look at the past few months. Out of all the AI push from the administration, it's unmistakably, you know, pro open source, you know, pro, you know, bring as much AI innovation, you know, to the US. Obviously, the tariffs, you know, add a little bit of a headwind to that. I have some very strong asks, you know, around high school immigration, because I think that, you know, AI talent is going to be.

super critical to actually win the AI war. So I'd say that directionally has had some positive momentum. You know, from my perspective, this is kind of playing out almost exactly how I thought it would six months ago. And then three months ago, I think there was some signs that maybe, you know, it wouldn't play out this way just based on some of the...

Some of the, you know, kind of early groups that were coming to the White House, the sort of deep business, you know, kind of centricity of the White House. You know, I think it was day one or two that Stargate was announced. You know, at the White House, we're going to go build massive infrastructure. The case I'd like to make, you know, once we talk about tariffs is I think there's an alternative universe where you just lean into acceleration as opposed to adding headwinds.

But so that would be the case of what maybe could have been very different is we just keep doubling down on what's working while fixing the parts that aren't working. But that would be my judgment so far. Chamath, you've been talking about it here every week. You and I have been talking about it pretty consistently, so I don't think there'll be many surprises here, but take a second and maybe assess what you think.

If you had to pick a singular thing that's gone really well, and a singular thing you think could be improved, what do you got? Let me give you my overall grade. And then I'll tell you how I get to that. I think the first 100 days have been a B+. And here's how I get to that score. There have been two things where I think Trump has... frankly hit a home run. The first is all of the direct investment and specifically the foreign direct investment into the United States.

I think it's approaching, if not, it has already exceeded a trillion dollars from corporations and organizations and individuals from around the world. who have committed to bringing money into the United States. And I think strategically, that's a legacy that will live past him. So I think that's been an A plus. The second is we had a very unsafe border situation.

And he ran on shutting it down. I'm not talking about the execution of the deportations. I'm just saying getting the illegal crossings to zero.

And he's done that. So that's been an A plus. I think what's going to be more controversial are these next three things. So in my interpretation, I think the tariffs have been an A. And I think that the market reaction, the stock market is only down 4% and the interest rate markets are 4.25%. I think those have been an A. Now, the reason I think tariffs- have been an A is because it is uncovered, in my opinion, how beholden we are

to a brittle supply chain and specifically to China who is a friend but who's also an enemy. And I think that that's going to really severely complicate our flexibility and optionality in the future as they do what is in their best interest. Okay, so where have they then not done so well? I think the documents have been, frankly, a D. We were supposed to get the Epstein files. We haven't yet. We were supposed to get the Martin Luther King files. We haven't. We did get the redacted JFK files.

I don't think that there's been very good communication about why it's taking so long. So I think it's a very small, narrow thing, but I think it had a lot of attention on the way in. I think the communications of the tariffs... And the back and forth had been a C. I think the markets were not led in enough of a way where they could absorb the volatility.

But if you take it all in its totality, I would give it a B+. I think it's been a very productive 100 days. And when you look back, I think in three years, four years, five years. Okay. We've made some important progress. SACS, obviously you're part of the administration, so...

I'm not sure exactly how to ask you this, but you heard some nice compliments about AI from Aaron. I happen to agree with those. I actually agree with a good portion of the crypto stuff, too. I think actually getting those tightened up, which are your two.

area that you're focused on. I think you've done a great job there. So just bestie to bestie. Great job there. Thank you. What's your take overall? You know, it's kind of hard, I guess, to ask somebody in the administration to criticize the administration, but hearing everybody else's take, what's your response maybe?

Well, I would highlight three main areas that I think are big accomplishments for the Trump administration in the first hundred days. So number one has to be the border. Like Jamal said, I think you have to give the administration an A-plus on this. They've completely stopped the border crisis. I think we all knew that Trump would take action on this because it's one of the main issues he campaigned on. But I think if you had asked any of us.

you know, four months ago, would this problem be completely solved? Meaning border apprehensions completely stopped, border completely sealed within the first hundred days. I don't think we would have believed necessarily that it would get done so quickly, but it has. Recall that for four years during the Biden years, we were told for the first three years that the problem didn't even exist. Whenever the videos were published of.

caravans coming or throngs of people running across the border. We were told that these were cherry-picked videos on Fox News. It wasn't real. Finally, in the last year of the Biden administration, They said, OK, we're finally going to do something about it. They took some limited actions. They said that doing more than that would require new legislation.

Well, all of that was just gaslighting, it turns out. Trump came in, he restored, remained in Mexico, and other policies completely stopped it. He had this line at the State of the Union, which I think is exactly right, which is, we didn't need a new law, we just needed a new president. So I think that's area number one. Area number two, I would say would be the vibe shift in the culture around wokeism and DEI. You know, how quickly we forget about this, but wokeism.

has completely collapsed. I don't know that anyone is. endorsing in a full-throated way. Moreover, beyond just sort of the cultural aspect of it, I think we've had significant policy changes.

on DEI. Trump has basically ended DEI at the government level. He also signed an executive order ending the use of disparate impact for affirmative action. This is the policy that said that even if you have a policy that's applied in a completely neutral and objective way, if it results in a disparate impact where different groups are represented in a different way in the outcomes, then somehow that must be.

And that led to essentially engineering the results of various populations to basically fit. And I think all of that now has fallen by the wayside. And I think that meritocracy and colorblindness are back. The only holdout really has been these universities. where Trump is now taking action against Harvard. And I think that ultimately we will win that battle. You see that even in...

relatively liberal companies, the DI departments have been canceled and they're moving back towards more of a meritocracy. So I would say that that's like big shift number two. And I think if any of us had tried to predict that. 100 days ago, we would have thought, yes, Trump will do something about it, but I don't think we would have predicted the total collapse. of wokeism and DEI so quickly. And then I'd say the third area.

which is still in flight, is the reprivatization of the economy. That's a term that Scott Besson used, I think, that the Trump administration needs to reprivatize the economy. And I like that framing of it. And there's a bunch of different pieces under that. I'd say number one is Doge. Again, ending this hog wall government spending. I do think that Trump has come into office inheriting a very weak Biden economy.

that was being propped up by massive amounts of government spending that was not only stimulating the public sector, but it was also goosing the employment numbers as well. And we knew that that spending was unsustainable. We have to do something about it. So I think for the first time in decades, we've actually started to make.

real cuts in government, real cuts in the federal workforce. And look, we'd like to do more, but that is a huge shift in the conversation. There's other pieces of it as well. I mean, President Trump has signed. On deregulation, there's also been unleashing energy. He ended Biden's EV mandate and a lot of these like green new scam projects. offshore wind, and he's been encouraging oil and gas exploration. So I think there's that. And then I appreciate what Aaron said about tech innovation.

We did repeal Biden's exec order on AI, which was 100 pages of unnecessary regulation on AI. We've ended the war on crypto. And I think we're trying to stop the regulatory capture that benefits large incumbents. You have all these things. And there's been other things that have been done on the economy as well. But I do think that this sets us up for a Trump boom in the future. It's just that a lot of these.

Changes take time to play out. Okay, great. Well done. Well, I think we knew Sax would be very pro. Chamath seems really pro other than he wants like the alien conspiracy files released, which we'll get soon. What is the view from J. Callow, Wendy, where you're the left-leaning guy in the room? I'm kind of independent, but yeah, social liberal. You know, I look at what all Americans...

believe and try to build some consensus here. One of the things I've been trying to do on the pod is look for where we agree. Americans universally want the border secured. They don't want illegal immigration and they don't want fentanyl. So this is the biggest win, I think, for Trump, which I think everybody on the panel pointed out. And Sachs, you were dead right. Like when we were seeing those videos, some of them were five years old. Some of them were recent.

Biden really covered up what was going on in the border and it took years to figure out what was exactly going on there. So that's the biggest win possible. I give overall, just to be brief, a B for. This first hundred days and I give, you know, Biden like a C minus. The second thing that everybody agrees on is they want to downsize the government. They don't want waste and fraud. So I think Doge is the other huge win. The things I think that could be improved, really just three simple things.

The economic uncertainty is really terrible for running a business. I'm seeing a lot of folks in my circle, on my podcasts, This Week in Startups and here. telling me oh i don't know how to plan for the future and we're going to get into that with this tariff stuff and the trade war

And so I think economic uncertainty, we have to sort of slow down and maybe make it easier for people to understand what the administration is trying to do. I think rule of law really matters to people. People didn't like Biden's pardons. They didn't like.

covering up his mental acuity and i don't think people like the deportations without due process we talked about that on a previous episode overwhelmingly people want trump and the administration to obey what the supreme court says they really want rule of law the third term talk like eight out of ten americans don't like that kind of talk And then conflicts of interest. Obviously, people hated the Hunter Biden stuff. They hate the meme coin stuff.

And so that's where it could improve CRISPR communications, more thoughtful execution. Maybe less trolling. I don't like the White House Twitter account trolling. And then focus on what got Trump here. You all said the same thing. What got Trump in here was the economy. And one thing that wasn't mentioned by everybody is the peace dividend. And Trump is making massive progress in Ukraine, apparently. I don't know if it's on the docket today or not, but stopping the war is

And making the economy move. Those are the two most important things that he could do. Can I build on that? Please. I totally missed that. You're absolutely right. That's another one where I would give Trump an A+. Nat and I had dinner with POTUS two weeks ago.

And you had dinner with Trump. It's breaking news. Well, OK, whatever. Yes. Well, I think it's I think it's remarkable how much of a Putin apologist Jake has become. I mean, you want to end the war in Ukraine now? Well, you're going to give it to Putin.

You're not going to stop Putin? I'm totally in favor of what Trump's doing in negotiating a deal to get our money back. Oh, you want to talk to Putin now? I've always wanted to talk to Putin. I just don't trust him. But you can trust him. Let me tell you what. Trump said so. There we go. There was a handful of us at dinner. And then he got up to say a few words at the end. And he reminded me why I was so.

inclined to vote for him, which is he talked about his uncle, and he talked about how his uncle taught him about the severity of nuclear war. and how people don't understand how intense and how destructive it is and the power of these weapons. And he left that speech at the end saying, and this is why I'm so fundamentally against this thing. And it reminded me, to your point, Jason. it is so easy to forget that there's only one existential risk.

save like aliens coming from the heavens, right? There's only one existential risk where all these issues become fringe issues. You mentioned rule of law, border security, foreign direct investment, tariffs. It all goes out the window in a nuclear war. And I was like, I am so glad this guy's in charge because this one issue, he never waved.

And I think there's all kinds of complicated moments that could make this an issue. And this was where my biggest issue with Biden was, was I did not know who was in control. And I think that Trump in the first hundred days, to your point, I think has. completely reinforced that there are no conditions under which he'll go to war. He has time and time again showed

Find the off ramp. And I think that that's really healthy for Americans to see. Yeah. Let me build on that point with respect to Ukraine is we were on a glide path before the Trump presidency. That Biden had put us on a certain path. Kamala Harris gave every indication she would have continued it.

What was that path? It was a path of continued escalation and doubling down in Ukraine. Recall that it was Biden himself at the beginning of the war who said that if we give Ukraine Abrams tanks and F-16s or... attackums or high Mars, or if we allow them to hit targets inside of Russia, it would lead to World War III. He actually used the word Armageddon. So at the beginning of that administration, they were very concerned.

about how an escalatory path could lead us into direct conflict with Russia and World War III. And yet, despite that, at every fork in the road where they had a choice. They ended up doubling down. They gave the Abrams tanks. They gave the F-16s. They gave the High Mars. They gave the Atacums. And finally, when Biden was a lame duck in his last couple months in office, they did the most reckless and irresponsible thing. which is allow American weapons to be used to strike targets.

on Russian soil, not just fighting in Ukraine, but on Russian soil. Moreover, we now know from a New York Times article that just came out in the last few weeks that it was American generals and American intelligence who are planning this war.

So when you're talking about striking Russian targets on Russian soil, it's not just the Ukrainians using our weapons. They're using our targeting. They're using our guidance. They're using our satellites. I mean, we are deeply integrated in the kill chain.

This is the United States being a co-belliger in the war, hitting Russian soil. That is incredibly reckless and dangerous. I have no doubt that if... the democrats were still in office we would be in an escalatory spiral right now with the destination being world war three and i do think that

Trump has pulled us back from the brink there. There's obviously still more work to do, but I really appreciate the efforts that Steve Wyckoff has undertaken where for the first time in three years, we've at least had direct diplomacy with the Russians. We weren't even talking before.

We weren't even talking before. Talking is a great thing. And apparently we're going to keep supplying with them with weapons as long as they pay for them. So it's going to be very interesting to see how this all hashes out over. the next hundred days or so. Let's keep moving. I don't think we know that yet. Let's wait and see on that. Okay. Yeah. I mean, I think that's, yeah, what was reported, but you're right. We should wait and see.

Okay, downstream tariff impacts. We've got to talk about this, and this is why we have you here. Ryan, since you're in the thick of it, you tweeted a thread last week about the lag time. of shipments from China. And when you were on, I guess, during COVID, you really educated us to how the supply chain works. And according to the thread that you shared somewhere around early June, we're going to expect.

warehouses, trucking, the entire supply chain, maybe to start to seize up or layoffs. I don't know how you would frame it, Ryan, but are we past The point of no return with regard to the supply chain, is there an off-ramp for this tariff conflict war negotiation with China in your mind? What are you seeing? on the streets and in the purchase orders and the invoices at

Definitely not past the point of no return. I think we're still right in the middle of the... don't judge the cook while he's cooking is one you know like let's see what the let's see what it tastes like at the end is i think a starting point here and we're still there's still an active negotiation so i don't think today's it's not static now the world does want a lot more certainty

And that's a big cause of what's happened here. And what has happened is a 60% decline in bookings of ocean freight from China to the US. I mean, so that's really, really pretty dramatic, like probably exceeding what was expected. I don't think when they issued, when they rolled out the initial reciprocal tariff plans on April 2nd. It was meant to be a 54% tariff on China. Then there's multiple cycles of escalation. We ended up at what's now 154% tariff. So this is...

There's a lot higher than anybody planned for. And so therefore, I don't think anyone's planning for a 60% decline in ocean freight. Ryan, let me ask you a question about that. Are people actually paying that 154%? There's been this discussion online, and it's sort of unclear from the administration and from retailers.

Stuff that's landing that people ordered before April 2nd, are they actually paying the 154% on top of what's landing? It's live now. It was based on departure dates, so goods that departed China after. Midnight Eastern time on April 9th. are subject to the tariffs upon arrival. And so now enough time has passed that pretty much all the ships that are arriving now left China after April 9th when that started.

So what happens? People are paying it or are people saying I won't take delivery because it's too much? Jason, you have to pay it. Ryan, correct me if I'm wrong, but you have to pay it. at the dock in order to get the goods released. Is that right? More or less, that's true. You have a bond in place so you can pull the goods out before you pay, but the money's owed at that time. And then you get a two-week time frame to actually make the payment.

But there are strategies here a lot of people are doing that you can use what's called a bonded warehouse and move cargo into this warehouse and then you only owe the duties when the cargo leaves.

um that's what i was asking like is there a hack here to it's not that unless you defer things and it's very very common right now people are searching everywhere for bonded warehouse capacity because in a bonded warehouse not only you defer payment to when the cargo leaves the warehouse but you only owe the duty amount based on at that date.

So if the duties come back down, which a lot of people are betting they will on the China-specific duties, you'll actually lower your tariff burden. And then there's another hack for this, which is use a Mexican or Canadian-bonded warehouse.

So you move the goods into Mexico and then you actually only technically import them into the US at a future date when tariffs are lower. So I understand a lot of a lot of companies are doing that right now, too. We're helping some people with that type of strategy.

Sorry, Ryan, do you think that the government, will they view that okay? That kind of hack? If you look at the GDP numbers, one of the craziest things was the inventory pull forward that people did, to your point, like trying to get as much... stuff into the United States before April 9th, as an example. Yeah, I mean, it's not a hack. Bonded warehouses have been around for decades and they're very commonly used. I don't know that it'll be that material in the scheme of things.

that it would, you know, cause a change in the law around bonded warehouse. So you don't think, for example, will have an issue with the strategy of sending inventory into Mexico that essentially you're essentially like, isn't it? It's a workaround. Like instead of paying the China tariff, now you pay a Mexico tariff, which should be less. Is that the idea?

Well, you can move it into a bonded warehouse in Mexico even and not pay Mexican tariffs either. And you just wait until it imports. But I mean, what's the Department of Commerce or the... customs to do it's sort of you just delayed importing the goods you imported them in the future and you know it doesn't i i wouldn't even call it a hack it's just sort of like people people are going to get creative here you know what i mean like that's the job actually the government should

set the rules and the rest of us got to figure out, all right, how are we going to compete and make money in this environment that they've created? Ryan, in that tweet you redid, which was a pretty dramatic tweet painting, very like... I don't know, like a pretty dire situation. Where are we at in terms of how...

dire this will get or resolvable. Paint us the best case scenario and what you expect could happen in that case. Or if this gets extended, are we going to see as you know, people are hand wringing? Empty store shelves. Christmas gets ruined.

all these layoffs start happening in the supply chain. Take us through the two scenarios that people are debating. Yeah, I mean, the bleak scenario, which is I don't really think it's going to happen. I think that the administration doesn't want this to be their legacy, that they created a policy that just kind of tanked. small business and supply chain. So I don't actually think this is going to happen. But the bleak scenario is... Tariffs stay at this level for 145% on China.

The 10% goes way back up to what it was originally announced in reciprocal tariffs. So there's no safe haven for tariffs. And trade just falls off a cliff. And a lot of companies go bankrupt. Especially small companies are the ones that are importing from China. Reality is tariffs have been high on China for a long time. Labor costs in China are not there for cheap labor. You're there for quality manufacturing at this point. There's much cheaper labor in Southeast Asia.

other parts of the world than there is in China. So you're in China because of the manufacturing capabilities, the ecosystem, not just for cheap labor. And if you could have moved, you would have already with the 25% tariffs from the Trump's first terms were high enough incentive. And so that's the bleak scenario is that small business. starts getting wiped out the ones that are buying from china and it's a lot of brands like it's not just amazon seller selling

stuff that you don't need. It's like all the brands that you know are like, you know, fashion brands, apparel brands. I had Cutts clothing on this week in startups last week and he said there's going to be like... If this doesn't get resolved in like, let's say two to four weeks in his group chats, people are going to start layoffs and they can't physically. restart the supply chain in Vietnam or wherever to make t-shirts. So Aaron, what's your thought on this as well? Just bringing you in.

Sure. Well, first of all, I mean, Ryan has supplied me with a high degree of doom scrolling. And it's just like a horror show reading his tweets. First of all, I would feel better if the messages out of the administration were either more kind of consistent. Or that there was a logical connection between do we either want to raise the tariff revenue stream or do we want free trade? Those things are working against each other.

Like depending on who you talk to, they say this is a mechanism to bring down income tax, which obviously then by definition means that they expect the tariffs to sort of persist. which is totally different from let's go negotiate deals that just allow for the free trade to actually increase. And so are we worried about the reciprocity or are we worried about kind of revenue stream? So that's a whole issue.

You also have this issue, which is the messaging from the government. And this is the meta point I'll make in a second is about how we could have actually accelerated into the transformation of the economy. Folks like Lutnik, etc., going on TV talking about the end state of our economy, which are actually probably fine messages, but we haven't seen what that vision looks like.

So everybody is kind of confused. Like, does this mean that we literally go into manufacturing plants and we're like the ones literally doing the screws? on an iPhone? Or is it a bunch of jobs, which are next generation, you know, jobs, which is like we're managing robots and, and like shipping and logistics grows as a result of this and all of the surrounding kind of supply chains, you know, start to grow.

Like, you know, like there's a, there's underlying, I mean, you know, most people on this call have managed teams. Like you do change management. You lead people to the end state. that you want them to sort of see the potential in. And I think something that kind of gets missed is, and the part that kind of confused me is like, I don't know if...

If, you know, exactly to Ryan's point, like people are in China because of the ecosystem of manufacturing, yet the messages you get out of the administration are like, oh, you know, we're gonna have fewer toys at Christmas time. It's like, no, that's not the big picture. Like, you know, this is supplying the parts that go into building a manufacturing plant and building a car.

That allows us to actually, you know, be even remotely competitive in car manufacturing. So where should in your mind this all lead? Because you have some thoughts on American exceptionalism and maybe skating to where the puck is going. So if you were to become an advisor. Yeah. on this as a technology expert and somebody who spent their whole career in it, what would you advise them to do? I'd get rid of Navarro immediately. And you would basically say,

you know, mea culpa, like, oops. And like, obviously, you need to like land that with some really cool trade deals that make everybody kind of feel happy. And you basically say, you know what, like, let's go back to the first two days of Trump, which is let's announce massive deals. We're bringing manufacturing here with Stargate. We're doing TSMC. We're building NVIDIA chip.

We're going to do a deal, which is you get like 5% tax rate if you build in America. And so you just stimulate a manufacturing boom. in the country. We incentivize automation across the manufacturing. We use that as a competitive weapon. to go and compete with the sort of lower cost labor that happens internationally. We find every incentive and tool we can. We deregulate. You allow people to build these plants and so you don't have to go through the three-year EPA process.

Like you just accelerate from this position. And you see it all as upside. And so then business leaders... If you go talk to the Fortune 500 company that actually has to build anything right now, you give them a path to say, listen, we're going to help you transition away from your current supply chain and we're going to make it even more competitive and more compelling in America.

to do that. There's a reason that Elon builds in America. He's actually made it be more effective to be able to bring automation to manufacturing, to be able to build locally. But he wasn't forced to do that. And so I would just, I would argue like you use as many carrots as possible.

In some surgical areas, and Chamath, I've heard your points about the, like, you know, chips, pharma, you know, AI, like in those surgical areas, we get tough where necessary. And if we have to do, you know, a couple sort of very surgical tariffs, you know, to kind of make... make people move the direction that we want, that's totally fine. But I mean, it's like even arguing the premise is hard because we act like it's like countries that are screwing us.

But actually, businesses are independently making decisions about where they want their supply chain to exist. In a free market, they've made that decision. They don't need the government to tell them where are they supposed to or where are they allowed to. to have their supply chain operate. That ends up with just lots of economic distortions that everybody on the right would have called the left socialists.

for trying to kind of implement central planning around supply chains. So that's my piece. Well, what do you think, Chamath, here of this sort of reframing slash off-ramp and sort of maybe the positive spin on it? Hey, if you want to make t-shirts, you know, you want to make commodity items, have at it.

free trade, you know, reciprocal tariffs, great checkbox there. But here's a series of incentives and a path forward to do the advanced stuff to do robotics, etc. Let me answer this in a different way. Okay. A lot of those things he's actually doing. I think this is... Where we are is we're beyond TDS.

There's something that comes after it. And I think that the mainstream media has just lost their mind to a degree that they hadn't even lost their mind in Trump one. I'll give you a couple of examples. Well, one example, by the way, just a shout out to our friend, completely brazen, ridiculous, shitty reporting by the Wall Street Journal last night when they were told that this whole Tesla thing was a total farce. They continued to publish it. Okay, fine. They're referring to Elon, the board.

Yeah, starting a search to replace Elon. And then the board said, well, wait, we told you we weren't doing that. And they didn't even mention they communicated that directly to the Wall Street Journal. The Wall Street Journal said, I don't care. I have an axe to grind. Correct. I think that Trump has a strength, which is he shapes these potholes for the mainstream media to fall into.

The downside of that, though, is that the mainstream media then doesn't do the other part of the job, which is to tell the things that are important. So, for example, we spent a lot of time breathlessly talking about the MS-13 knuckles. of the guy, right? Or then... We spent a bunch of time talking about how MSNBC blurred out the names of the placards on the lawn. Okay, but here's the other part where then they get so tilted, here's what they don't report.

They didn't report that, for example, when Trump took a shot at Harvard, he also reinforced and strengthened historically black colleges and universities. Totally did not get written. I'll give you another example. Besant said that the tax bill will allow you to fully deduct all the PPE and all of the incidental costs of building a factory. I heard that. I immediately went to my wife. She runs a pharma business. This is exactly what she's trying to figure out.

And we now are like, how do you build a business case if this actually gets effectuated? The point is, that thing... would create an absolute economic bonanza if it were to get passed. Other than people hearing it on this pod or randomly maybe finding it on a direct clip that Besant puts out on X, There has been zero coverage by the mainstream media. Yeah, but like the.

First of all, MSM and whatever we want to call it aside, that is still on the administration for driving a change management process. that causes people to build on momentum and not causes boards. to basically say, oh, are we going to pivot our entire supply chain this week because Trump didn't get a callback from Xi?

Like that, that is like, this is really not a, a, a TDS MSM issue. This, if you talk to fortune 500 CEOs, did you know about the PPE thing? No, but that's not, but like, I'm, I don't need to like the thing that I know, but there are many other CEOs that do. They're controlling trillions of dollars of capital allocation. It's an important thing. If we had Mary Barra on this call and we said...

Mary, has Trump increased your ability to execute and operate and accelerate the transition to the US? Or has he had headwinds that make it tougher to navigate right now? Which way do you think she'd go? I think that she would give you a calculated answer that neither is pro or con. I think that answer changes by the day.

I think that if you talked to her last week, she would say this has been a major headwinds. And then yesterday, to Chamath's point, they did this thing where you can depreciate or fully expense in year one capital improvements or building out factories. But also earlier this week. They made it so that auto parts. are not subject to the tariffs. They created a huge exemption.

that wasn't there at the start. It's great. By the way, if this was a bit better planned, it should have been there in the beginning because these auto companies were saying, hey, this is going to bankrupt us if we have to pay taxes on the way in. We keep circling back to communication and making a crisper and cleaner. Yeah, you're right. Aaron, where you are right is...

My expectation is it's my job to stay informed, okay? As a CEO of my company, I try to stay informed. And you're right. It is hard because sometimes I find myself hunting and pecking to find the things that matter. But I do put a bunch of that responsibility into the lap of the people that are supposed to actually report the facts. They can choose. They didn't have to run that article about Elon, which turned out to be total bullshit and horseshit.

On the front page of the Wall Street Journal, they could have talked about what Ryan just mentioned as the first article and said, here completely changes. your ROIC and ROE calculations for 90% of the S&P 500. That was not the article they chose to write and to publish. But I also think it comes back to my original point around the UDOT loops, that Trump, the administration is running these very tight, hey, let's take an action.

Let's see what happens. Let's see the reaction and then take another action. And Washington's used to doing all these committees that plan everything for five years or something or whatever, 18 months. And then roll it out slowly. And they're going, hey, let's roll it out. Oh, crap. We're about to cause this huge problem in the auto manufacturers. And they're all telling us they're going to go bankrupt. Okay.

Three days later, they push an update to that. It feels chaotic. Yeah, to summarize, Ryan and Aaron, your position so we can keep going through the docket. Hey, a little less shock and awe, maybe a little more predictability, a little crisper communication. Chamath, I think your position is, hey, maybe the mainstream media can play a better role here.

focusing us on what matters uh that wouldn't be my takeaway so yeah okay um what's your takeaway i mean like like zero shock and awe like okay like not a little less like like i like my strategy would be a hundred percent different actually

Scott Bestin has an incredible podcast from like September of last year. And he basically said, you know, Bidenomics got it all wrong. And I was like listening to it. I was like, oh, okay, actually, this is kind of cool. Like, he basically says, deregulate the US. make it easier to build manufacturing in the US, increase the GDP, and then you'll be able to take in less tax revenue, spend less in the government. And it was like, oh. This is actually like a glide path we could take.

We could take the fact that we did a soft landing relative to the rest of the globe. We're winning in AI. We're winning in a number of categories. We obviously need more energy. We need to bring manufacturing into the US. And so you have this great momentum, which is we are the tech leader in the world. Let's just pour fuel on that.

And so to pour fuel on that, you just do a series of carrots and the winds that build a flywheel of positive energy. Like the reason why I take a little bit of exception to Chema's MSN point is that... I think to some extent, Fortune 500 CEOs are not the ones like, oh my gosh, like Rachel Maddow said this, like I'm going to go and worry about this topic now.

Like the information coming at them is- I'm not talking about the information that's presented. I'm talking about the information that's excluded. How do you get the information that's not published and shared broadly? No, no, but come on. Goldman Sachs and JP Morgan are not writing reports on the fact that we might enter a recession because of MSNBC's reporting on this topic.

But again, that's not what I'm talking about. I'm saying like glad handing some high level prognostication, which nobody ever gets right, is in my opinion, worthless. What I'm talking about is the details. So when you talk about something as narrow and specific as excluding PPE... or allowing you to double or triple depreciate something in a given calendar year that is narrow, it's precise, it's specific, it's actionable. And what I'm saying is, if I surveyed...

The 500 CEO of the S&P 500, dollars to donuts, the overwhelming majority would not have known. And had they brushed up against that somehow in their normal media consumption to then ask their teams, the odds of that would have been zero as well. So I guess it's then, who do we blame for this, Chamath? Is it the administration's job or mainstream media's? But I bet you everybody knows about the blurring out of the stupid pictures on the lawn and the MS-13 knuckle tattoos.

Yeah. Okay. So let's wrap up on this just really lightning round here. Amazon flip-flopped on a new tariff notification on their website. Trump said he had a great discussion with Bezos. He solved the problem very quickly. He did the right thing. Good guy, etc. If you haven't seen this.

It's something that Timu is doing. Here's what Timu does currently today. Nick, you have that image, if you could pull it up, of just when there is a tariff, they explain the tariff coming into the country. They put it as like a line item. I thought this was actually kind of cool. I don't know why people take offense to it. Ryan, this is pretty standard stuff. So Amazon's competitor, Timu, is putting in the import charges. They don't say tariff.

They don't say taxes, import charges. This is like a standard thing. This happens in other countries too. What is this? What is Timu? Is this like a dollar store? It's basically like a dog. It's the last place you would ever buy anything, but it's a place where you can buy $12 jeans. Basically, your left sock from Laura Piana costs less than Timu's entire inventory of jeans.

The point being, I thought this was actually a plus for. I think that Amazon totally misplayed this. They did it. They rolled it out. Then they got criticized. I think they were called a treasonous company from the White House press, you know, by the press secretary. They totally misplayed this because they should have gone and leaned into it and said,

Yeah, we're showing you all these tariffs when you buy from China. If you buy from America, you don't have to pay any tariff. And look at all these other products. Come on, come on. That would have lasted three and a half seconds. This is exactly consistent with the other issue, which is they're playing whack-a-mole. Okay, we're going to do something with the automakers. We're going to try and solve some problem with Amazon.

Like, this is a sign that it's not a good strategy if you have to do this much whack-a-mole. Like they can't cover up what Amazon is going to end up dealing with because there's going to be 500 other retailers that don't get the call with Trump. To me, that's evidence of clearly they didn't think through the entire downstream set of conditions that are going to change as a result of this. Sure. Yeah, I thought this was a big win, Chamath, because...

They could then have Amazon. Here's a mock-up somebody made. I'll pull it up here. It was interesting. They could, to Aaron's point, just show, hey, here's a bunch of American companies. Buy American when you do a search. That's Ryan's point. I'm sorry, Ryan's point. Hey, here's what it might look like. Pull out the Oral-B toothbrush one up, Nick, if you got it right there. So somebody mocked this up. I think this could be the hugest win. You could have the retailers do buy American.

Buy it once, buy a high quality product from America. If you look here, we don't have the products. It wouldn't work. We don't have the products. Well, I mean, we do have for some products, you know, American made products. You know, I buy my boots from Danner and those are all American. Yeah. So we should just go back to communism and we're all going to make our shoes like it's like that's like we're in a global market.

Like we buy from everywhere. Chamap, any thoughts on this? I mean, obviously there's the whack-a-mole angle. There's buy American and be proud of it. Here's communication. Here's the narrow question. I got a bunch of emails from people. And a bunch of them were Amazon sellers. And I don't know, Nick, if you can find it, but I posted their comments and I re-shared them just to kind of highlight.

the issues that they were going through. And at the core of it was a feeling by them that Amazon had abandoned them as American purveyors and sellers of goods. and that Amazon on the margins had a tendency to help. competitors from abroad. stand themselves up and compete.

and essentially cannibalize on price and margin. This is my view completely. And that this is the biggest opportunity that I think the Trump administration is flying at 40,000 feet doing macro level negotiations and failing to see some of these micro optimizations that are really, really real.

In the United States, you can import goods as a foreign company. You do not have to create an LLC or any sort of registered entity in the United States to import goods. Sometimes they say, oh, Americans pay the tariff. That is not true. In many, many cases, the foreign company just imports this stuff and they sell on Amazon. And when they get caught cheating...

They can lie about the valuation and pay a lower tariff. They can change the classification and pay a lower tariff. They can import stuff that is harmful to children, has lead paint, whatever else. There's no enforcement at all. You can't go after these people. So you're saying Amazon third party is like a bit of a backdoor to abuse the system, right?

I mean, Amazon is sort of just playing the game that's on the field, but there is legal in the United States is these companies import stuff. And I think it's 60% of all, of all the sellers on Amazon are these Chinese registered. They're not registered in the United States at all. Just Chinese companies. Which sounds profoundly unfair.

a level playing field. Can we just take a step back and also acknowledge that we are talking about a level of detailed issues that we would never have talked about six months ago? That there was no... interest in even bringing this up like if if ryan wanted to bring up the sort of hollowing out of american salesmanship, let's say, if you will, because of like this arbitrage that Amazon does for GMV, that would have been a snooze fest.

Except today, it can actually get a lot of awareness. And Aaron mentioned this, and I've mentioned this before, but like... I think that there are four things that really matter. Batteries, AI, pharma APIs, and rare earths. That now is on the agenda. I think the positive way to look at this is the American economy is too complicated. If you had waited, Aaron, for a study. for all of the implications, we would have been waiting forever and nothing would have happened.

And I think that we've made macro level moves, you're right, and now we are finding what the implications are in course correcting in real time. And I hope what happens, though, is when we find these big thorny issues, I think the Amazon thing is a pretty interesting issue, actually, about like American competitiveness. Now the question is, do we follow through and get to the root cause of it and fix it?

And those feedback loops are there. I mean, the Trump administration is going to act on this. And there's an act that's coming out of Congress as well to shut down the foreign importer records. So those feedback loops are there in ways that I don't know if they were there in the past. Go ahead, Aaron. We can totally chaos monkey the economy and just see what breaks. You sort of phrased that we could do the research paper and we could do Aspen Institute as a bad thing, but also...

It can be a bad thing if you're the small business owner right now who has 30 employees and you just literally don't know what you're going to do next month. And so that's sort of then the argument to not... It's like a counterbalance. That's like why you do have some bureaucracy and you don't chaos monkey the economy and why... Rand Paul is literally saying we shouldn't actually have unilateral control over tariffs. So interesting dynamic there.

All right. Saks, you want to wrap us up here or you want to pass? Am I still on the pod? Yeah, well, you turned your camera off. Look, I spent 80 minutes debating this topic with Larry Summers three weeks ago. The point I made then is that we had in this city for 25 years a globalist consensus on trade.

that distorted a lot of outcomes. I don't need to rehash that debate, but I'll just recall that Larry Summers' main argument... for why this would not work out is that the market was down do you remember that that was his evidence yeah this wasn't going to work okay and it was all about the market not pricing in lower expectations well guess what the market is actually up

since Liberation Day on April 2nd. So what happened three weeks ago was basically a panic in the market over this policy, and the media has been trying to fuel that panic. What I said as well is we do have to stick the landing on this. I mean, President Trump shifted the conversation away from this. globalist consensus, and he's now redefined the debate. But it is now up to Scott Besson, the Treasury Secretary, Howard Ludnig, the Commerce Secretary.

jameson greer the u.s trade rep and so on the trump trade team to now negotiate these deals stick the landing and i agree with you to the extent that the sooner that is done the better because it is good to provide business certainty But the idea that so far this hasn't worked, I think, again, the main argument against that was the market reaction that now.

The market's now positive. So I think my point is just we need to give this time to work. I think it's too soon to be judging this policy as if it hasn't worked yet. It needs to be executed properly. And quite frankly, Ryan, I mean, I remember the last time you were on this pod. You were coming on about...

Wasn't there like some union deal that was supposed to shut down all the ports and all the shelves would be empty? That never happened either. It did happen. It did. They shut down for three days. Okay, I don't remember the shelves being empty. which is now the new panic the media is trying to create.

Look, there's a lot of pants sweating that's occurring here that's being fueled by the media. Well, I do want to, I just want to bookmark one thing. I actually, I was more frustrated listening to the Larry Summers and you conversation because I was like, Larry, make this point. Like, come on, like, don't go down the WTO rat hole. Like, that's not relevant. So... Here's the only thing. Of course it's relevant. It's how we got here. No, no. As in like...

that's 25 years ago. Like, let's worry about literally today. And like, what, what do we do? And the only thing I just want to say, because I, because I do think that, that, you know, I appreciate your point about, Hey, there's like, you know, everybody's freaking out, whatever.

But to be totally fair, that some of that freak out, whether we can decide how emotional it needs to be, is the reason that then Trump walks back the things that then caused the market to correct. So we can't just say the market's back. And and like, see, we didn't need to freak out because it was literally we have to make the deals. We have to stick the landing. But look.

China, over the last 25 years, has been able to strategically annihilate our rare earth processing capability and our ability to cast rare earth magnets. We just sat back. As the market basically went to the lowest bidder, which was being subsidized by the Chinese government, which the WTO allowed them to do. And now we have a critical dependency in our supply chain.

on China for basically every electric motor in every product, including cars. That was crazy. We should not have allowed that to happen. How are you going to change that? So we needed to shift the political conversation to recognize the ways in which free trade led to unfair trade and created...

unacceptable dependencies for the American economy. Wait, wait, wait. I just want to make one point. It's more than that. Okay, final point, and then I'll... But this is the national security of the United States that's at stake. Let's go take your favorite pet issue. China invades Taiwan. Okay. And we have to take a side, Jason. My pet issue? Hold on. Let me just finish. And the Chinese say... Here are the implications of supporting Taiwan on this.

a b c and d you don't get any pharma apis you don't get any rare earths you don't get any batteries Okay, it'll send life back 50 years. Or let's say China and India get into a fight and we're forced to pick a side. Same situation. The point is there's all these scenarios that we never even considered. us being able to have strategic optionality to make the decision that's morally and ethically right for the United States. And I think that we have learned.

through this lens that these are huge issues. The thing that the Chinese did that was so brilliant, which we still don't have an answer for. is they have these national champions. And being a national champion allows you, and we'll talk about this in AI. It allows you to blur the lines between the public and private partnership. It allows you to blur the law. It allows you to blur capital. And I'm not saying we have to do that.

But what I am saying is we need to have our own answer to it. And that was never on the table until April 9th. All right. So, yeah, but like a hundred percent, like do that strategy and then, and then, and then don't have a mad rush. It is the strategy. No, no, no. Because, because that's, if you have a, you know, Ryan, what is the number? I don't know. Trillion of imports or whatever. Like you don't need everybody then.

than jamming the system to build their supply chain in the US to solve that problem immediately. If we're sitting here in nine months and you're saying this and there are no deals, I would say that you're right. What Howard Lutnick said last week, and again, we may have all gotten caught up in the knuckle tattoos and we missed this, but he was very clear. We have a country. A deal is already done. We're convening parliament. It's going to be the first of many.

So for all we know, there's like 30 deals that are waiting in the wings, and the first one will set the tone. And I think that Sachs is right here, which is it's way too early to declare defeat and that it was quote unquote chaos. I think if we're sitting here in nine months and foreign direct investment has shriveled up. And domestic investment is shriveled up because there is just no continuity.

You have a claim, but that's not where we are now. I don't think that'll happen. I don't think that'll happen. I think we will end up in, like, I'm with Ryan, like, we will end up in a good spot because we'll iterate through this. My only point is... There's an alternative path that could have occurred. It could have been done in a more thoughtful, well-communicated pattern instead of, hey, let's do barrel rolls with the airplane. I don't disagree with you, Aaron, and I can tell you.

We've already started to see layoffs. Nobody wanted to even initiate the barrel roll, guys. Yeah, listen, we get it. It's like, hey, I don't want anything to change. I think we'll agree to disagree on this. Aaron, where were you with this? Hold on, hold on. This is one last point. We're going to move on to the next topic. Excuse me, excuse me. You didn't call me for 40 minutes. I just want to make one final point.

Here he goes. Aaron, where were you with this perfect plan? Yeah. Where were you with this perfect plan before Liberation Day? I was telling Kamala about it. You're telling Kamala. Okay, great. He was. They were having... Nobody, nobody, all the people. They were having Mai Tais and they were talking about this specific issue. All the people who suddenly know what the perfect plan is and how to perfectly execute it, no barrel rolls, had nothing to say about this topic for 25 years.

They've come forward with their perfect plans. I would say that's victory for Trump. The best thing of all of this is you've got the liberals embracing Milton Friedman and their backgrounds on there. I love it, yes. All right, listen, we're going to agree to disagree. We're going to agree to disagree on this one. The liberals love the stock market. Listen, Sachs, Kamala is coming on next week. We're going to make some cocktails. It's going to be wonderful.

We'll ask her some direct questions about it, but I want to talk about AI agents. 2025, shaping up to be the year. of AI agents, tons to talk about here. OpenAI is planning to charge between two and 20k a month for different levels of AI agencies would be basically cron jobs they would run in the background and do things for your company that humans are doing right now

You may have heard of this agentic tool. Again, agentic is just a fancy word for agent, which is a fancy word for like a cron job that just runs perpetually. Yep. And Manus is the company in China that started this.

weirdly benchmark invested in it that's created a whole fluff on the side and manis's website has a really good visualization of what these agents would look like so first of all i think you're giving a little too much credit to manis they didn't come up with the agents but i do think that they have a very good demo. And it's hard to know exactly how real it is because everyone's used it.

And it's from China. It's from China. I'll get to that in a second. If you go to their website, you can see a bunch of their demos. And I do think that what they deserve credit for is advancing the ball on the UI paradigm. And it's not that other people weren't doing this. I mean, I think notably Anthropic was doing this with its operator product. But the basic idea is that you've got this two-pane view.

And in one window, you've got the standard chatbot interface. And then in the other view, you can see what the agent is doing. And that agent has the ability to toggle between currently four apps. There's cert. browser, code terminal, and document editor. And so when you give Manus a task, the first thing it does is create a to-do list in the document editor. You can kind of see it there. And then it works sequentially to achieve each of those tasks and then puts an X on them there.

And you can kind of see it working. And I think what's cool about the demo is just the way that it seamlessly toggles between those four apps. And you can see. what the AI agent is doing, you know, and it's browsing the internet, it's searching for things, it's writing documents, it's crossing things off its to-do list. I think it's pretty easy to imagine where this goes, which is you'll be able to connect an agent to all of your SaaS apps.

So it won't just be four applications. It'll now be connected to dozens of applications, including ones that already have your data. And it's going to know what actions it's possible to take in those apps. So when it creates a to-do list, there's a much wider range of.

things that it can accomplish. And in fact, there's a new standard called MCP, which is taking off like wildfire, which is built specifically to enable agents to connect with applications and understand the data and understand the actions that are possible in those SaaS applications.

So look, Manus is just the tip of the iceberg here. I think this will become a very standard UI paradigm. That's the reason why I mention it, not because I am pre-declaring them to be the winner in the space, but just because I think there's a lot of talk about agents and I think it's hard to... conceptualize what that means without just seeing it visually. Great summary there, Saxon.

Aaron, I want to get your thoughts on it because obviously you're running Box and you have your finger on the pulse of this. We actually started building one of these in our venture firm. We have 20,000 applications a year. And we have updates coming in from investments. We are now taking those sacks, Aaron.

And we are having an agent sort them and then look for competitors and compare them to the last update. And we're looking into our notion, our coda and saying, what else have, what other communications have we had? What questions should we ask about the startup? and about their strategy and then we're presenting that in slack to our team so this is coming fast and furious

And we spend, I don't know, probably 15 minutes on each of those incoming applications to start doing the math on that. Talk about 5,000 hours of work. Aaron, what are you seeing on the street? What are you doing at Box in terms of agents? landing right now in Q2 of 2025. Yeah, I mean, I think SACS represented it well, which is, you know, you have to now think about AI as effectively being able to do anything on a computer or another piece of software as a human can do.

The little distraction that I think happened two years ago after the Chachapiti moment was we sort of thought about that as, oh, we're just going to do like typing information retrieval. And that's a new paradigm for user interfaces, let's say. So you just like talk to your software and you like search Zillow via chat.

That was sort of a little bit of a distraction. That's super helpful when you want basic information, look up or whatnot. The big breakthrough is starting to think through these things as full, effectively agentic systems that... that operate on any amount of data, any amount of tools for as long as you want to complete any task that you want.

And this is sort of a big year where agents are starting to enter the vocabulary of enterprises, of IT people, of larger and certainly small organizations. And it kind of requires you to have a little bit of a reset moment on how you think about AI, which is it's not just now a kind of a co-pilot that you talk back and forth with. It's actually something running behind the scenes.

that's now actually starting to deliver, you know, real automated, you know, kind of work for you. And so lots of implications, like, you know, massive implications to what the software business model is in the future. You know, I would argue, you know, strongly that's a massive TAM increase. because now software starts to go after labor spend. It completely changes the dynamics of then, how do you build a moat in a world of AI agents?

Unpack that piece there, Aaron. You said something very interesting. How software then is going to go over human spend. Yes. Explain that concept for a second, David. And we go way back in SaaS land, but you used to basically just... You built a piece of software and you sell it for the number of people in the organization. So a company has 500 employees and you sell that thing for, let's say, $10 a user a month.

you know, 120 bucks a year and you make 60,000 bucks. And so that's kind of the business model. Now, when your software actually brings... the underlying workflow to the customer or the underlying outcome to the customer. So that company might have 10 lawyers. And so previously, if you were selling software for lawyers, you had a maximum amount of 10 seats that you could sell.

Now, all of a sudden, if your AI agents are doing the equivalent of, let's say, paralegal work, or some form of professional services. all of a sudden you might be able to sell a multiple of the initial kind of 10 seats that you would have sold previously. So you see it as a huge opportunity because now you're not enabling a human to be 5% more productive, you're replacing a human or you're replacing one out of 10.

Yeah. And actually, I'm going to take a massive, I'm going to do an underscore on this point, though. I don't like the word replace, because I think actually most of the upside is actually going to be for companies that now deploy labor at things. that they wouldn't have deployed labor at before. And maybe I'm biased from the view we have, but most of our conversations with customers are when they have AI agents, they can actually now go and actually deliver work.

in areas that would have been unaffordable previously. So they weren't doing the work. Is that true in logistics? So like we were making thousands of phone calls a day using AI calling truck drivers. And if we have a load, we've got 400,000 truck drivers using the mobile app, Flexport mobile app. I don't have enough loads to keep them all checking it every day to see if there's a load that matches them. And if they don't check it, they're useless to me.

Now, and it was too expensive to call the truck driver and have a human call and talk to them, even if it's a human in a call center in the Philippines. Whereas with AI, it's almost free. I'm calling thousands of them a day going, hey, this load looks like it's a good match for you. Are you interested? And then we activate them on the platform. That's new work that wasn't going to happen before, not just a replacement.

Yeah, I think that I think probably I think like we, you know, in the Valley, unfortunately, we've been co-opted a little bit somewhat with with a little bit of a doomer mindset in some areas. And we think of then AI is OK, like like it's all fixed pie. It's going to replace things. And on the ground with large enterprises, the vast majority of the use cases are...

It's the ability to finally review the contracts that we never got around to reviewing. It's the ability to finally automate an invoice process that we never did. It's the ability to go in and just create marketing campaigns in every language. that we never got around to. And so I think that'll probably be actually like 90% of the usage of AI in the future will be things that if we look back and we snap the line right now, we said, this is what knowledge work is today.

90% of AI usage will be things that we don't do today. 10% will replace what we're doing in some areas. I think that's the right take because Chamath, I... I can tell you in our firm, we would never have associates or researchers or analysts, Sachs, you also were in this line of work as well, venture capital, you'd never have them review legal documents. That's something lawyers would do in legal department.

But now, because of AI, we have them say, here's the safe, here's the term sheet, here's the edited version, dump it all in, find out what the changes are, what are the deltas here, and then let's have a discussion about what the founder changed in a Sander document.

And we don't have to bother with an attorney. And maybe you wouldn't have even checked those documents if you were, you know, a seed fund or an angel fund, you would just go along for the ride because you're the 10th person signing the documents. So what do you think, Chamath, here in terms of the premise that? Maybe it's 10% replacing work that's happening, but this is blue ocean and we're going to do 90% of like new stuff that we just never got to.

Yeah, I tend to believe that's true. I think the customers that we sell into at 8090 are largely large enterprises as well, so not dissimilar to Aaron's customer base. What I would say is that what they are encountering is the trough of disillusionment. And I don't know if Aaron, you're seeing this as well, but every single CIO ran around. signing up some sort of AI product, in large part because their CEO would say to them,

hey, what's your AI strategy? And the reason the CEO asked him that is that at some point, somebody on the board said, what are we doing about AI? So that's the bullshit cascade that we went through in the last two years. And I think- What has happened now is people have spent billions and billions of dollars. I think you can see it in the revenue traction of the AI companies.

But I think where we are today is that there are some real technical complexities that have not been solved. I'll give you an example. We have a lot of customers in regulated industries, If you make a mistake, you will get fined or you will get shut down. Life sciences, healthcare, financial services are three examples. People still don't seem to appreciate that when you replace software that is deterministic with software that is probabilistic, meaning software that somebody wrote for you.

Do A, then do B, then do C. With an LLM that can hallucinate, you'll have errors. So what used to be a throwaway thing, which is quality assurance and QA, right, unit testing, integration testing, is now the only thing that matters. Why? Because if you're a financial services institution and you're supposed to do KYC,

and it borks and now all of a sudden you send a wire somewhere in Syria, guess what? You're in trouble. If you're a healthcare company and you're supposed to do some clinical diagnosis to send out a drug on time. And you don't do that because the model hallucinates. That's a real problem. And I am guaranteeing you. We have not seen the class action lawsuits that will come when those errors will eventually be made. They're guaranteed to be made. We just don't know the scope and the scale of them.

So that's why I'm sort of of this posture where I think we've sold in a ton of promise. I think the reality is much more tactical. It's a little bit more banal. I think we're sorting through the exact use cases where you can put guardrails around these error rates where it's okay and tolerable, like Brian will probably tell you, there's some number of phone calls that just sound totally fucked.

But he's okay with that because the broader thing is okay. So I don't know. I want to talk to my customers though. I have a calling truck drivers to offer them, you know, offer them loads, but I'm not having to talk to my customer. Sorry, I meant your truck drivers. But my point just is that I think agents are real. But I think that we are far away from that because we're still at the phase of how do you build reliable software in production for an enterprise versus...

The toy apps that you see on the internet, which is like, let me vibe code something. I think. These things are worlds apart still. Okay, so let me get Saxon on here. And just to inform the audience, you heard trial of disillusionment. This comes from the hype cycle. This is something Gartner has been talked about for a long time. So in case you're taking it for granted, if you're watching.

you have some sort of technology trigger like agents, you have this like peak of inflated expectations now we're in the trial of disillusionment hey this stuff doesn't work it's hallucinating but we're kind of going up it works it just doesn't work i don't see the disillusionment i don't know where this is coming from i don't even think we're at the peak yet Oh, OK. So you think we're still going up? Because a lot of people, to Shumat's point, were buying stuff and saying, hey, it doesn't work.

You know, and now we're in the messy middle. Let me say it differently, Sachs. I think we have not yet figured out how to move the budgets from experimentation to mainline production. Meaning... where large chunks of the US economy are comfortable enough with the ways in which hallucinations are managed, such that they will replace legacy deterministic code with this new probabilistic model generated code, meaning model enabled code. Let's just put it that way.

Where are we on the slope here? Look, I would separate... change management issues which are always going to be important and there's always going to be big ones whenever there's a big disruption especially in enterprise and especially around compliance and legal all that kind of stuff i would separate that from the impact of the underlying technology trend And I don't think the impact has come anywhere close to peaking yet.

And in fact, I would say the rate of progress is exponential right now on at least three key dimensions. So number one is the algorithms themselves. The models are improving at a rate of, I don't know, three to four times a year. They're not just getting. faster and better, but qualitatively, they're different. Remember, we started with pure LLM chatbots, then we went to reasoning models. And the difference there is with a chatbot, it's like kind of a smart.

PhD or college student giving you an answer off the top of their heads. The reasoning model. It's more like the PhD saying, okay, let me go off and think about that. Let me do a project on that. And it could work for 30 seconds or a couple of minutes. I mean, as much compute as you want to throw at it.

And it will break down your complicated question into a bunch of sub questions. And then it'll try different approaches. And it can validate some of those approaches and come back to you with a much more impressive answer. And if you've been using like the Grok 3 deep research or the new.

to do these types of new reasoning models, it's pretty mind-blowing what they're capable of. Have we even come close to figuring out how to tap the potential there, especially in an enterprise context? No. But my point is that the rate of progress on the algorithms is... Again, three or four times. Let me just pull up here.

Okay, go finish your math, Sachs, and then I'll take it and pass it. Go ahead. Well, I was trying to lay out the dimensions of which progress is proceeding exponentially. Okay, so one is the algorithms, okay, which is not just quantitative, it's also qualitative. We didn't even get to the agents part of it yet, but that's the next big leap after reasoning models. We're just starting to scratch the surface there.

Then you've got the chips. I mean, the chips are getting better at, I don't know, three to four X a year. We've gone from, you know, the H100 to the H200. Now we're on the GB200. We'll be at GB300 soon.

on to three times better per year or they get better three times per year no no no they're getting the chips themselves depending on how you measure it each generation of chips is probably three or four times better than the last okay And NVIDIA is back to rolling out new chip, new generation of products roughly annually. and i'm just using them as one example obviously there are other companies as well

So basically the leap from Hopper to Blackwell to Rubin, I guess, will be in next year. And then I think Feynman's coming after that. I mean, really an astounding rate of progress. It's not just the individual chips are getting better. They're figuring out how to network them together. Like with NVL 72, it's like a rack system to create much better performance at the data center level. And that would be like the third area where you're seeing basically exponential progress.

Just look at the number of GPUs that are being deployed in data centers. So when Elon first started training Grok, I think they had maybe 100,000 GPUs. Colossus was 100,000, correct. Right. Now they're up to 300,000. They're on the way to a million. Same thing with...

And within a couple of years, they'll be at, I don't know, 5 million GPUs, 10 million GPUs. And you see that on the power side, right? You're going from 100 megawatt data centers to 300 megawatts. We're just starting to now see the first gigawatt. power data centers. I don't even think they're live yet, but this is where they're trying to get to.

And I don't think it's beyond the real possibility that we could be at five or 10 gigawatt data centers in the next, I don't know, several years. So my point is just look, the algorithms, the chips. And the data centers are all improving or scaling at a rate of, I don't know, three to four X a year. That's 10 X every two years.

Where people don't understand exponential progress is that if you're getting better at 10x every two years, that doesn't mean you'll be at 20x in four years. It means you'll be at 100x. 100x. So the models, the chips, and the data centers will all be 100 times more powerful in four years, let's say at the end of this presidential term. So you multiply those things together, the algorithms, the chip.

and then the raw compute that's available you're talking about a million x increase some of which will be captured in price reductions some of it will be in the performance ceiling and then some of it will just be in the overall amount of of AI compute that's available to the economy.

But the impact of this thing is going to be absolutely massive. And I think people still don't even appreciate that fact because they don't understand exponential progress. Yeah. And I think maybe just to square the circle, because. Because everything that you just said is what I think is propelling the industry. And then the reality on Shema's side, just to connect the dots.

So we have an eval test that we do, where we run enterprise data through every model to kind of figure out its accuracy rate and how much... It's not even hallucination, but just literally how much data does it miss when we ask for facts. The best model in the world, actually, interestingly, was Grok 3 on this particular test. We send it 500 documents, and we ask for 40 data fields back from the documents. And so it has to get every single data field correct.

And we only do a single pass. So we send the document to the model. We get a single pass back. Right now, the best score is about 90%. And so you can imagine a number of industries where you can't have 90% accuracy. you know, if you give something, you know, a question on 40 data fields. Now, there's ways to solve it is you rerun it multiple times, or you chunk up the document into smaller parts. And so it doesn't get confused by the large context window. But

A lot of the people that were deploying AI a year ago or a year and a half ago weren't doing that. And so they did have a kind of a pilot run of something and it kind of worked okay. And what they have to realize, back to your point, Sachs, is like...

this space is literally exponentially changing. And so if you don't use the latest methods of, okay, you have to actually run the data through the model multiple times, and you have to chunk up the data into smaller parts, and you have to use a reasoning model. And you have to make sure that your prompt is like hyper tuned for the particular use case. If you haven't done those four things, then you probably will actually end up with a project that fails.

And even so, even when you do all those things for even harder problems, you're still going to run into issues. So I think the challenge is that everybody's running a million miles an hour right now, and they're trying a lot of things. Some work, some don't work.

at the same time that the space is actually, you know, changing at a pretty, you know, kind of crazy rate. And let's take a look at our partner Polymarket and which company they think will have the best AI model by the end of 2025 and get feedback from our panel on. If you think this is accurate and who you would pick here, looks like Google. is in the lead here, 41% of people believe.

that they will have the best AI model by the end of 2025. I think the question is, what is the dimension? Like, you know, we use Gemini. So for many tasks at 8090, we use Gemini. It's incredible. But for most of our cogen, we use Anthropic. And Claude kicks out. It's exceptional. This is based on the best scores in the chat bot. which just became a for-profit company. So that is slightly different because people have gamed.

those tests. So that is a rub there. People are now building their A model for the eval unit, right? All the models are way overfitted for these evals. But if you had to pick, who's your, I mean, so I guess, Chamath, you're saying...

You have to take it task by task. It depends on task. I agree with that. What Sack said is right. So it's kind of like, what problem are you trying to solve? And then you have to ride this technology wave that is compounding very quickly. All I was just trying to get across is that the error rates...

have been diminishing, but not nearly as fast as you need for some sectors of the economy. So you can use a model to generate deterministic code. That's great. And as long as you unit test it and integration test it, it'll be fine. But I'm saying if you're going to use a model in production. In an environment where if stuff goes wrong, there are consequences, we're not there yet. Right. You don't want to use this for health care yet, but you could use it for writing or writing jokes or.

No, no, no. That's too binary. It's already used right now in healthcare, but it's just the doctor's meeting notes that would normally take 30 minutes to go and transcribe. You can't be too black and white on that one.

What's happening right now, the reason why the progress is so rapid in coding assistance, and I think, you know, you're right, that Anthropic with... was it claude 3.7 yeah i think they're the leader and in fact i think the manis demo that we showed it's not entirely a wrapper on claude because they actually they do a number of different things but i think they are significantly using anthropic for the

code assistant part of it. In any event, the reason why the progress is so rapid with coding is because code compiles and you can determine objectively whether it works or not. You can validate it. And so that makes it a perfect area. for AI to get better at through reinforcement learning and test time compute is

AI tries a bunch of things. It sees what works. It sees what compiles, sees what the user then accepts, and then to be able to learn and iterate based on that. That's why coding right now is really the big breakthrough application and use case. But it's not going to be the only one. I mean, math is another good area where I think AI is improving rapidly, again, because math, you have proofs, and you can look at the results and see if it validates.

Now, I think one of the big questions in terms of AI progress is how extensible is the progress to other areas that don't easily validate that way? So, for example, legal work. is I think a really good area for AI, but how do you validate that is correct? You would have to go to a court, right? The court is the compiler, like a lawsuit is the compiler or maybe the laws.

Or you could hire like a thousand lawyers or experts in an area to basically do, you know, reinforcement learning through human feedback. But it's not like a compiler, to your point. It's not like a math proof. The progress isn't going to be as rapid because it's harder to validate. But my guess is that once they figure out how to nail coding, math, and the things that are easily validated, they can move to the things.

that are harder to validate. But I think this is one of the big questions is whether, I think people just kind of assume that AI progress will be... you know, equally fast in all areas. And I think it's possible that AI gets really good in some areas better than human.

But it's sort of childlike in other areas. And that's a possible outcome. Narrow tasks is like make your point, right? Like with a finite answer or an answer we know is the definitive answer. But this is the important thing about the agent. kind of, you know, let's just say, framework or architecture, you know, momentum was, was instead of just saying, okay, we're going to do a single pass through the model, and then whatever it comes back with is, is we're going to be satisfied.

The legal work might be reviewed by another agent whose job is to review legal work. And so we can just throw more and more compute at the problem. And we're just early in figuring out how to architect those. Or multiple models, right? You could have quad check, anthropics. You could have anthropic check, GPT check, Gemini. When you have some anomaly, it spits back out to the user. So human in the loop still matters in this type of process.

In the early days of OCR, you would have a computer say, here's the characters in this legal document, then you'd have two humans type it in, and then you would get a certain level of certainty. You'll quickly find that when you layer these models on top of each other, the test time compute costs are... astronomical yep and aaron's probably dealt with this like it's like i get a bill from aws and it's like oh wait hold on a second i just

you know, per 100,000 this month? What's going on? So you have to get to the bottom. That, by the way, is another major trend line, which is that the new applications that we talked about are all much more token intensive. So we went from basic LLMs, which don't require that many tokens to give you an answer, to the reasoning model, where you can spend a thousand times more tokens just getting one answer to a question. And now the agents are going to be even more token intensive than that.

So the amount of compute required to serve all these new applications is going to be massive, which is why I think the CapEx build-out actually makes sense. When you do a deep research, to your point, David, You're firing off maybe 200 queries and it's asking them, the AI is saying, hey, what query should I ask on behalf of the user? And then you go down that rabbit hole. It's basically like doing 200 of them at once. Ryan, your thoughts here on AI-first companies and Agentex.

computing. Well, the one that I really wanted to tie back to was actually our earlier conversation on tariffs. And there's a real use case of LLMs is how do you classify a product? And you'd like to get to what we see today when we did our first machine learning based natural language classification of a product you take a product url listing page a shopify page or amazon page and say hey what what classification code is this what duty is owed

Six years ago in a hackathon, we got to like 70% accuracy. We're now in high 90s accuracy versus what a human trained expert will get to. But you actually get to it, which is not good enough.

you know you're wrong three percent of the time you know you might have committed a violation of the law for sure but actually what is truth in that regard it's there's a lot of gray area in this and truth ultimately is what does custom say what does the cbp determine is correct And those guys are using software.

Right. That's pretty, that's a very simple algorithm and it's a decision tree that's going, okay, is it a shoe? Yes. Is the top made of leather? Yes. You know, is the bottom made of rubber? And they just go through a very simple and that outputs it.

On some level, if you convince the government to use your LLM, it becomes true, whether it's true or not. I think there's going to be some interesting cases like that that we haven't really thought through of like, when does the government adopt these to be the source of truth? Okay, all of this speaks to this thing that's going to sound totally esoteric, but like we all used to shit on QA. Right? Like the least talented engineers were allocated to QA.

I think in the world of AI, it'll end up being the most talented. You know, we internally at 8090, we call it improvement engineering, and it's a total... specialty. It's similar to when I kind of coined the growth team at Facebook. I feel it's the same kind of moment where improvement engineering is really the skill that translates toy apps and vibe coding into something that's very practical and real. And we...

Like, and my team and the leader of this team, he's like steeped in things like Japanese kata management from like Toyota and quality systems. And these are all the things that matter when you're trying to just shrink the error rate. down to zero so that you can use it in a reliable way. and also to document it so that if people want to question what happened or have

recompense or some way to come back and say, hey, that really harmed me. How do you even do that? These are all very complicated issues that will get sorted out. Super, I think, interesting. Okay, four. I got to wrap, guys. I got to catch a flight to Miami. Let me do a closing here if you want to keep going. You're welcome. Two, three, two. Bro, the plane just waits. Just text the pilot and just tell them you're... All right, listen, I'm not burning all the all-in credits.

so to speak, and all of our tokens. I'm kidding. I'm kidding. I'm kidding. I'm not like Frankberg who's flying private to everything and then putting it on the all-in budget and the rest of us are flying Southwest. I'm chairman, dictator. They're going to miss a flight? It's a strange concept. Yeah, David, what does that mean? David, when's the last time you flew a commercial? Clinton. I haven't missed a flight in about 15 years. For Ryan Peterson from Flexport.

Aaron Levy from The Amazing Box. Chamath Paihapitiya. David Sachs, your Chairman Dictator Czar. I am the world's greatest moderator. Love you, boys. Wet your feet. Wet your feet. We need to get merch. These are back.