Limitless: An AI Podcast

Josh:
This week will be known as the week that Sam Altman said, stop.

Josh:
He said, stop, stop, stop, no more. We must put a pause on this.

Josh:
It is time to be responsible. We need to slow things down a little bit.

Josh:
What I'm talking about is a recent article that was just published through OpenAI

Josh:
that was talking about the most recent breakthroughs as it relates to their OpenAI models.

Josh:
And they were a little scarier than I think a lot of people would have hoped.

Josh:
We talked about the Hugging Face incident, which happened a couple of weeks

Josh:
ago, a couple of months ago. It was only a couple of weeks ago they actually

Josh:
discovered it, even though it happened far before that.

Josh:
And it set the precedent for this kind of unshaky ground that they are building

Josh:
the next frontier models on top of.

Josh:
And it seemed like it got to a point where enough was enough.

Josh:
They decided to shut things down.

Josh:
So what happened? OpenAI said, we temporarily paused reinforcement learning

Josh:
training on our latest models intended for deployment for two weeks while we

Josh:
hardened and red teamed our research environments and expanded monitoring coverage.

Josh:
Our largest planned frontier reinforcement learning run remains on hold,

Josh:
while smaller-scale trailing and evaluations validate these safeguards and establish

Josh:
more evidence of alignment.

Josh:
They've stopped everything. And granted, I will say, this isn't for the new

Josh:
models that are coming out. This is for the models after that.

Josh:
And it's weird to hear Frontier Lab say this, because I believe this is pretty

Josh:
much the first time in history they've deliberately paused progress successfully.

Josh:
Of developing these new frontier models.

Ejaaz:
Put yourself in the shoes of Sam Olman right now. You're the CEO of one of the

Ejaaz:
hottest private companies in the world, and you're going head to head against Anthropic.

Ejaaz:
The only thing you should be focused on doing is building the next best AI model.

Ejaaz:
It's going to dictate not just how well your company does, but how everything

Ejaaz:
else progresses in every single other sector, right? So the single most important

Ejaaz:
thing is to build the next best AI model.

Ejaaz:
The fact that he's paused this, and it's been for two weeks and counting right

Ejaaz:
now is a massive deal. And we haven't seen this across any other kind of AI lab before.

Ejaaz:
But the reasonings are twofold. There's two events in particular.

Ejaaz:
You mentioned one already.

Ejaaz:
One was the hugging face incident. This is the case where an internal unreleased

Ejaaz:
model, this is like their mythos grade level model, escaped out of containment,

Ejaaz:
hacked into a company's database and stole information to help serve its own goals.

Ejaaz:
Sam Altman and the rest of the OpenAI team realized this months after the hack

Ejaaz:
actually was in progress and realized that the model that they were building

Ejaaz:
was incredibly misaligned. So they put a pause there. That was in bet number one.

Ejaaz:
Event number two is there is a new GPT model that is internally being made. It's codenamed Astra.

Ejaaz:
Some people are calling it GPT-6.

Ejaaz:
And according to internal tests from the OpenAI research team,

Ejaaz:
it is their most misaligned model yet.

Ejaaz:
But it's really sneaky. It tries to evade every single human researcher's attempt

Ejaaz:
to try and see its internal thoughts. So it tries to hide its thoughts and it's very good at doing it.

Ejaaz:
So it breached OpenAI's internal framework for misalignment.

Ejaaz:
And so they've put a pause on it because they cannot release this model to the

Ejaaz:
public out of the fear that it would wreak havoc.

Ejaaz:
Now, there's a few ways that they're looking to kind of like resolve this right now.

Ejaaz:
And one of the main ways is just monitoring the model. So think about this, right?

Ejaaz:
Do its thing internally, and they're trying to see where it ends up becoming sneaky.

Ejaaz:
Josh, guess how much of their compute budget they are spending just to monitor

Ejaaz:
an internal model that is not making them any money at all.

Josh:
So unfortunately, I did read this essay, and I know the answer is 20%.

Josh:
One in five dollars spent is fairly high.

Ejaaz:
You could be using this compute to serve it to more customers because the demand

Ejaaz:
is insatiable right now. They could be making a heck ton more money.

Ejaaz:
This is probably on the order of like billions of dollars. they could be making more money, right?

Ejaaz:
Or they could be using it to train a smarter model to keep up and beat Anthropik.

Ejaaz:
Instead, they're spending this very expensive compute to monitor a model that

Ejaaz:
they can't even release to the public out of the guise of safety.

Ejaaz:
Now, for all intents and purposes, Sam Allman has received a lot of backlash

Ejaaz:
in the past about not being in favor of humanity and like kind of being this

Ejaaz:
like evil conspirator type of guy.

Ejaaz:
This is a clear case where he's done the opposite out of fear that the model

Ejaaz:
that he's building is actually quite dangerous.

Josh:
I respect it. Yeah, you got to be careful about what happens with these things.

Josh:
And I know a lot of people on the

Josh:
show, they're like, you guys always talk positively about these models.

Josh:
You're always so optimistic. Let me give you a little dose of what could happen.

Josh:
Let's just do a little hypothetical situation here around particularly viruses,

Josh:
because I think viruses is like an interesting thought experiment that not a

Josh:
lot of people have gone through.

Josh:
So I'll kind of advocate for Sam on his behalf here. And we could just go through

Josh:
a hypothetical situation.

Josh:
There's really three times, three types of exploits that you can experience

Josh:
with AI models, the first of which we've seen a lot, and that's kind of what

Josh:
they're defending against, which is AI writes this ordinary malware for a human attacker.

Josh:
It becomes a lot faster. It becomes a lot cheaper. We've seen what a program

Josh:
like Mythos could do. We've seen what GPT 5.6, like the cyber version of that

Josh:
is capable of doing. They're able to.

Josh:
Surface multi-day or multi-zero-day exploits and chain them together in order

Josh:
to exploit a system. Okay, that's like pretty bad.

Josh:
But what happens past that? Well, the second kind of exploit that we could see

Josh:
with these AI models is a self-replicating prompt.

Josh:
So this is kind of like a true AI virus. And this is a plausible outcome that

Josh:
could happen if these models get too powerful too quickly, where a normal prompt

Josh:
is the instructions to make a model produce an answer.

Josh:
So there's a self-replicating prompt that makes the model produce another prompt itself.

Josh:
And we've seen this happen in emails for example like there was a researcher

Josh:
i think last year who created this malicious email that had a specific prompt

Josh:
in it that any ai assistant who read it.

Josh:
Obeyed it and then copied it and did everything on its behalf so in the case

Josh:
that you receive any sort of text to your machine that has this specific prompt

Josh:
in it it will do that thing now why is this scary these models have safeguards

Josh:
right they're they're going to block you from injection prompting

Josh:
but there are these things called jailbreaks and a jailbreak prompt allows you

Josh:
to insert very specific words and characters in order to trick a model into

Josh:
doing something that it doesn't want to do.

Josh:
Traditional computers that haven't been hardened to this aren't very smart,

Josh:
aren't very capable of defending against this. That's version two.

Josh:
And then version three is the scariest one, which is a reasoning worm,

Josh:
basically. And the way it works is it arrives on a machine and then it looks

Josh:
around the machine and it develops an attack on the spot.

Josh:
And now this currently isn't capable because in order to run these models, you have to do it on

Josh:
humongous servers but what happens when the quality of

Josh:
a mythos grade model gets reduced to the amount that's needed to run a local

Josh:
apple model well then you could get these on-site exploits where if you leak

Josh:
some of this model or some of this malware into a machine it's able to look around.

Josh:
Take those zero day exploits, string them together and attack the machine in

Josh:
any way that it believes it's possible according to whatever its mission is.

Josh:
So there's a lot of these scary things that can happen. And I think it's,

Josh:
it's tough to think about it this way, because we, when we think of models,

Josh:
we very much think of chatbots and we think of just these productive workers who are able to help us.

Josh:
But when they are truly agentic and they're able to go on these long run tasks

Josh:
and they have very high intelligence, there's a lot of edges that we can't see.

Josh:
And Sam is like very much aware of that. And I think that's what they're hedging

Josh:
against. So there's a doomer case for you. Okay, what if we get viruses similar

Josh:
to the early internet days? Like that could go pretty bad pretty quickly.

Ejaaz:
As you were describing those different sort of attack scenarios,

Ejaaz:
I couldn't help but think that there were elements of each of those things in

Ejaaz:
the recent Hugging Face incident, right? Like it was in its own contained environment.

Ejaaz:
It figured out that it needed to solve its goal by breaking out of containment.

Ejaaz:
It got access to other open AI servers and computers.

Ejaaz:
It did so but conspicuously, by the way.

Ejaaz:
And it was able to find access to the internet through that realm.

Ejaaz:
But I think an important detail that a lot of people miss is

Ejaaz:
It didn't just do it as a single model. It left messages behind on a message board.

Ejaaz:
We covered this on a previous episode where these agents or these AI models

Ejaaz:
are no longer acting solo.

Ejaaz:
They are acting with the expectation that another agent or model will come after

Ejaaz:
it and resume its mission.

Ejaaz:
So it's like this swarm attack type issue, which actually ends up becoming the

Ejaaz:
craziest type of attack interface for me.

Ejaaz:
And I think that we're gonna see a lot more of those types of attacks surface

Ejaaz:
with these newer open source models that some of the Chinese labs are releasing,

Ejaaz:
like with GLM 5.3, Kimi-K 2.7, or I can't remember which version it is.

Ejaaz:
These models are highly capable of performing similar attacks, similar chain attacks.

Ejaaz:
One thing that's interesting in the report that OpenAI released about,

Ejaaz:
you know, slowing down this training run is one of their proactive actions to

Ejaaz:
try and prevent misalignment is getting another AI model

Ejaaz:
To look at the AI model and make sure that it's behaving super well.

Ejaaz:
So the only thing that separates us from a catastrophic attack is another AI

Ejaaz:
model that is also capable of doing the same kind of attack,

Ejaaz:
being prompt engineered to not do that, to basically be good.

Ejaaz:
We're basically prompting ethics into these models right now.

Ejaaz:
I don't really know how to think about that. It makes me feel slightly uncomfortable

Ejaaz:
that we are only maybe a sentence or two away from, you know,

Ejaaz:
some catastrophic event happening.

Ejaaz:
But it kind of makes sense. If you are scaling AI as quickly as we are,

Ejaaz:
Anthropic hasn't announced anything about slowing down research on their side

Ejaaz:
versus Anthropic who has.

Ejaaz:
These are two different strategic approaches and they're pros and cons to both of these things.

Ejaaz:
I fear that the only way to combat any kind of dangerous scenario is to fight

Ejaaz:
it with AI models that are good. It's kind of like the good versus bad.

Ejaaz:
And I still don't know where the moral and ethics conversation ends with all of this.

Josh:
Well, we're seeing what happens when an AI comes up against a human-made piece

Josh:
of code. And it's very clear the AI model destroys the human-made piece of code

Josh:
every single time. That's why we have all these,

Josh:
conversation is so important and it's so important to kind of just like

Josh:
bring everyone into the fold because everyone is affected by this to some extent

Josh:
it's like we see what happens when these cyber models get released onto the

Josh:
world they just are able to enter and access whatever they please because we

Josh:
are just humans we have we make mistakes we have these like

Josh:
limits we have these constraints we have patience we have all these things that

Josh:
make us human the ai does not exhibit that allows it to be so far superior

Josh:
in so many things specifically with ones with verifiable outcomes things like cyber.

Josh:
And that's why I think we're going to see a lot of cyber stuff coming along the pipe.

Josh:
The other thing that it's really good at, the other verifiable industry that

Josh:
we see a lot of is bio, actually, because bio has very clear math underlying

Josh:
it. It's a lot of just like chemistry, a lot of cells, a lot of charts.

Josh:
And the next piece of news on the weekly docket relates to bio and a huge breakthrough

Josh:
that we had just yesterday.

Josh:
At the time of recording this, perhaps it was yesterday you'll be hearing it

Josh:
two days later moderna and merck today they released a phase three test result

Josh:
trial that basically offered a.

Josh:
Partial cure to a specific type of cancer using hyper specific treatment it's

Josh:
really interesting so basically what they did like loose tldr is

Josh:
chemo kills these like healthy cancer cells together so basically when you get

Josh:
chemotherapy if you're a cancer patient it kills healthy cells and it kills

Josh:
the cancer cells this is problematic because you don't really want to lose your healthy cells.

Josh:
So this process, it trains your immune system to hunt for mutations that exist only on the tumor.

Josh:
They use this, you have to assume AI machine learning, but basically what it

Josh:
is, is they take a tumor sample from your body that is cancerous.

Josh:
They sequence it and then an algorithm detects which mutations are most likely

Josh:
to trigger an immune response.

Josh:
And then it creates this hyper-specific treatment just for you.

Josh:
So it only targets the cancerous cells because it has broken down and fully

Josh:
understands exactly the type of cell that it's seeking out. It's like...

Josh:
Like a dog, like a police dog, when it's going to like chase someone,

Josh:
you give it like the little scent of the person, then it goes and runs after them.

Josh:
That's what this is for these cells. It's like you give them the scent.

Josh:
Here's the blueprint of what you're looking for. Now go out and kill it.

Josh:
And it worked. And the stock was up like 300% a day. It's been unbelievable.

Ejaaz:
For anyone who was positioned in Moderna stock, which by the way,

Ejaaz:
has been underperforming ever since their COVID rush, like what is it?

Ejaaz:
Four or five years ago, you are now up, I think, 250%, including after hours

Ejaaz:
trading, which is just insane in general. But just to go back to the story and

Ejaaz:
kind of like weed in the AI angle here.

Ejaaz:
And I don't want to underplay this. The biggest breakthrough in cancer research

Ejaaz:
probably ever. Like this is a huge thing. Phase three, there's four phases in total.

Ejaaz:
Phase three is like the penultimate stage before you release it very widely to the public.

Ejaaz:
And phase three is arguably the hardest. You test it against anywhere between

Ejaaz:
1,000 to 100,000 patients. So you have a really wide data set as to whether

Ejaaz:
this cancer vaccine will actually work for the wider public.

Ejaaz:
And the answers supposedly, according to this announcement, is it's really good.

Ejaaz:
Just to give you an idea about where AI was used to kind of make this happen.

Ejaaz:
This cancer that they tested it against is melanoma specifically.

Ejaaz:
And the way that they tested against this is they extract the tumor for patients that have melanoma.

Ejaaz:
They sequence the genetics of that tumor cell and they compare it to a healthy

Ejaaz:
cell of the exact same patient.

Ejaaz:
They compare them both with each other and they used AI models and AI algorithms

Ejaaz:
to basically say what's different between these genes, right?

Ejaaz:
And they find these mutations. I think it was up to like 34 of these mutations.

Ejaaz:
This is all the AR models doing this, by the way.

Ejaaz:
And the 34 mutations that they picked was basically the proteins that would

Ejaaz:
enact the largest immune response in a patient if they were to inject that back into a patient.

Ejaaz:
And you might be asking, why on earth do they want the largest immune response?

Ejaaz:
Well, the issue with cancer is the cells look exactly like all your other healthy

Ejaaz:
cells. So your immune system doesn't actually respond to the bad cells.

Ejaaz:
In this way, if they created a personalized mRNA. And by the way,

Ejaaz:
mRNA is basically like a template to basically tell your immune system,

Ejaaz:
hey, these are the bad guys, go and attack them. Like you mentioned earlier,

Ejaaz:
it's kind of like a crime scene, basically.

Ejaaz:
They create personalized medicine. So you might be asking, well,

Ejaaz:
why can't they just create a universal vaccine?

Ejaaz:
Well, the issue is with one patient A that has melanoma and patient B,

Ejaaz:
they both react very differently. You can't have the same cure for each one.

Ejaaz:
It needs to be personalized.

Ejaaz:
And so a few trends have come into effect here. One, AI has accelerated the

Ejaaz:
intellectual ability to be able to identify what the most effective vaccine will be, and two,

Ejaaz:
But biosciences in general have scaled to a point where sequencing DNA and generating

Ejaaz:
DNA is so cheap. I can't remember what the exact stat was, but I think about

Ejaaz:
a decade ago, to sequence your own DNA, it cost hundreds of thousands of dollars.

Ejaaz:
Now it just cost a couple hundred bucks, if that.

Ejaaz:
And so we see these scaling laws, not just in AI, but in everything else.

Ejaaz:
And I think this is like one of the most fascinating stories ever.

Ejaaz:
As a former biologist, I'm like super pumped by this. I did some work on like

Ejaaz:
cancer cells, nowhere near as cool as this, but I never thought we'd see the

Ejaaz:
day in my lifetime, at least that we would get to this point, but it's so cool.

Josh:
So we're getting the same type of technology improvements to biology as we are

Josh:
to the rest of the world. And we're starting to see what that actually looks

Josh:
like. In 1990, this was the first human genome project ever to happen.

Josh:
It took 13 years to sequence genome and that cost nearly $3 billion adjusted

Josh:
for inflation. So a tremendous amount of money.

Josh:
Today, we're able to finish that process in a few hours for perhaps less than a thousand dollars now

Josh:
and soon that cost is going to decrease to hundreds soon to tens soon it will

Josh:
be minutes and a couple bucks and you'll have an app on your phone that could

Josh:
sequence your dna in no time and that decrease in costs and the decrease in time required to

Josh:
do these things allows the economies of scale to rise to get specific treatments

Josh:
like the one that we're describing here where every single person get their

Josh:
own hyper-specific treatment because at the end of the day, that is the only path forward.

Josh:
Like when you think about traditional cancer treatments, they are all broad

Josh:
sweeping. It's one of a kind and like the most popular one, chemotherapy,

Josh:
it just wipes everything out for everyone. It doesn't care what type of disease you have.

Josh:
It just goes and it takes it out. This is a really big deal.

Josh:
Approvals, they're saying could come as soon as 2027.

Ejaaz:
They're also working on all the cancer types as well, right? Yes. That's like sick.

Josh:
Melanoma, like the first one. Melanoma, most popular form of skin cancer.

Josh:
I believe the number is...

Josh:
There's about 100,000 plus people that get diagnosed a year.

Josh:
Of those people, 8,500 die.

Ejaaz:
In America or like in the world?

Josh:
I think this is the world. Wow, okay. People suffer from this.

Josh:
And this is the first type. And you have to imagine that they could solve skin

Josh:
cancer. They could do it for many other things. So it's really,

Josh:
really exciting. Elon has a comment here that we have on screen and says,

Josh:
despite its obvious misuse during COVID, mRNA has tremendous promise for curing disease.

Josh:
Artificial RNA essentially makes curing diseases a software problem.

Josh:
And we know how we well this is me saying it we know how we take care of software

Josh:
problems and now that we have these ai models that are capable of doing these,

Josh:
one processing tremendously on context windows so it can fit a dna sequence

Josh:
inside of a singular context window but two having the inference ability and

Josh:
the understanding to actually make use of that info and do something with it

Josh:
it's a really unbelievable time for biology and if you are a computer scientist

Josh:
suddenly the world of bio is looking very interesting and very compelling and

Josh:
if you are an ai company well,

Josh:
What's the best way to explain to people how AI can actually be beneficial for

Josh:
the world? It's to actually go out and do something beneficial for the world.

Josh:
So we're right on the cusp of, I think, a lot of these things happening in a

Josh:
really exciting way. This is awesome.

Ejaaz:
Okay, moving on. Our friends, or rather we are the fans, of this company Etch,

Ejaaz:
which is basically an AI chip startup

Ejaaz:
founded by two or three MIT dropouts,

Ejaaz:
which is going head-to-head with NVIDIA, is back. And guess what?

Ejaaz:
They have raised another couple hundred million dollars, in this case,

Ejaaz:
700 million dollars, and have reached an astounding valuation of 21 billion dollars.

Ejaaz:
But that's not the headline from this announcement. The headline is this last

Ejaaz:
sentence over here that I'm showing you on screen, which is,

Ejaaz:
We're also excited to share that we've shipped our first rack,

Ejaaz:
custom GPU rack, to Jane Street.

Ejaaz:
Jane Street is basically a quant fund on Wall Street. They are very good at what they do.

Ejaaz:
And the fact that they are now leveraging this custom AI silicon chip to have

Ejaaz:
better AI trading algos is a pretty big milestone.

Ejaaz:
Now, just to kind of recap what Etch does, if you think about NVIDIA,

Ejaaz:
NVIDIA is like the king of GPUs. GPUs are required to train and inference AI models.

Ejaaz:
Now, their GPUs are very good, but their general purpose, which is good because

Ejaaz:
you can run it on any kind of model, but there are certain trade-offs that are

Ejaaz:
made in terms of like cost, power and efficiency.

Ejaaz:
The folks at Etched looked at this problem and said, we can build a better custom

Ejaaz:
chip that is hard-coded to the specific model that you are building.

Ejaaz:
So specific for your OpenAI model, specific for your Anthropic Claude model,

Ejaaz:
and it will be half or maybe even more cheaper than what you were spending already.

Ejaaz:
And it'll be lightning quick. There are certain optimizations that we can make.

Ejaaz:
This is a very hard problem, a huge undertaking. We listened to some of the

Ejaaz:
founders' stories, and they received no's from some of the smartest GPU makers

Ejaaz:
in the world. But despite that, they put their heads down and they built this custom chip.

Ejaaz:
And it turns out that they're also the fastest to deliver. Typically,

Ejaaz:
AI chips take around three to five years to go from concept to delivery.

Ejaaz:
These guys have done it in, I think, just under two years, which is absolutely astounding.

Ejaaz:
And we're about to see it in production. So just a very impressive announcement from the Edge team.

Josh:
It's unbelievable. I've spent so much time looking. I mean, we both do spend

Josh:
so much time looking at all of these companies that are spawning in the world

Josh:
of AI. And there is thousands, if not tens of thousands of people working on

Josh:
interesting problems to solve interesting, to reach interesting solutions. And,

Josh:
Etched is very different. So different that we actually recorded an entire episode

Josh:
about this weird random startup last month.

Josh:
And since recording that episode, EJ's, I don't know if you know this,

Josh:
the valuation has doubled in the last month. When we talked about them,

Josh:
just not even like four or five weeks ago, it was at a $10 billion valuation.

Josh:
Now they're trading at 21 billion.

Josh:
And it's very obvious once you listen to these people who are on the team talk

Josh:
about the product, how they've arrived there, their conclusions,

Josh:
the research that was required to actually reached this point where it's very

Josh:
much the real deal this is a company that anyone who works in ai or semiconductors

Josh:
or hardware would want to make

Josh:
they were just unable to because of the complexity and the difficulty that this

Josh:
team has been able to solve and as a result they have this unbelievable product

Josh:
that is specifically tuned to run

Josh:
large language model transformer infrastructure right on their chips and they

Josh:
are going to worth many many multiples more than they are today

Josh:
and i mean just a congratulations to them but also for anybody who's

Josh:
listening if you want to see what a badass team of high agency,

Josh:
high intelligence founders actually looks like.

Josh:
Read up about the co-founders, read up about the story. It is an unbelievable

Josh:
company that is destined for an incredibly bright future. I would love to be an investor in them.

Ejaaz:
I was about to say, self-serving for Josh and I, if anyone listening has access

Ejaaz:
to this deal, please reach out. We would love to be investors.

Josh:
I am obsessed with these guys in a way that not many people have captivated

Josh:
the attention. It's pretty amazing. And you know what you could do with all those chips, EJS?

Josh:
You can run a tremendous amount of agents. And if you are running agents on

Josh:
all of these chips and you're building for AI agents, chances are you may want

Josh:
to hear about our sponsor, Ledger.

Josh:
Because if you're building with AI agents, chances are you're worried about

Josh:
security. We spoke about this earlier in the,

Josh:
ledger has built this thing called the agent stack that fixes this it gives

Josh:
you a series of open source tools that allow you to do a three-step process

Josh:
with your agents to ensure everything goes well

Josh:
the agent proposes a change the humans approve and then the ledger signers enforce

Josh:
this technology is available and works with cloud code it works with codex it

Josh:
works with cursor or any place where you work with ai it's all open source and

Josh:
available today linked in the description below

Josh:
thank you so much to ledger for sponsoring this part of the episode and as we

Josh:
move on from etched we have to talk about another breakout success which is unitary

Josh:
uh unitary for those that don't know if you haven't heard the name you've seen

Josh:
the videos of these little robots that are like crazy they're doing back loops

Josh:
they're running circles and like um at these track meets

Josh:
They're very cool. I think their IPO was oversubscribed at what, like 5,000%?

Ejaaz:
5,500, actually. Please get it right, Josh.

Josh:
5,500, man. It's unbelievable. And then as a result, the Unitree robotic shares

Josh:
rose 542% in early trading on Wednesday.

Josh:
Is it overhyped? Is this overhyped? Does this make sense? These numbers are insane.

Ejaaz:
It has to be a little overhyped. Listen, I'm not an expert in the Chinese stock

Ejaaz:
market, but they've had a few IPOs recently that have been absolutely insane,

Ejaaz:
including their memory manufacturer, CXMT, which, to be fair,

Ejaaz:
they are, I think, the fourth largest memory manufacturer.

Ejaaz:
So they're up there with like SK Hynix, Samsung, and Micron.

Ejaaz:
So they have a legitimate case.

Ejaaz:
These Unitree robots, I don't know, man.

Ejaaz:
I was looking at, I was speaking to some friends that are living out in China, actually.

Ejaaz:
And I was like, this is amazing. Like, you guys must be super excited about,

Ejaaz:
you know, these companies coming out and IPO-ing at such crazy valuations.

Ejaaz:
And apparently the sentiment in China around Unitree robotics specifically is,

Ejaaz:
it's just a toy maker. They don't actually make robots that are actually valuable.

Ejaaz:
And so I dug into this a little bit more.

Ejaaz:
And apparently, of the humanoid robots that they have, 40% to 60%

Ejaaz:
have only been sold for research purposes specifically, which means that the

Ejaaz:
majority aren't actually being used for practical purposes, like some of the

Ejaaz:
use cases which they advertise, such as

Ejaaz:
manufacturing at factories or automating warehouse facilitations and stuff like that.

Ejaaz:
They're actually just being tested, which isn't really confident or recurring

Ejaaz:
revenue that they can put on their books.

Ejaaz:
So if you map that onto, what is this, a 600% price increase on day one with

Ejaaz:
a 5,500x oversubscription on the IPO, maybe the market dynamics are a little

Ejaaz:
inflated and maybe they're still crushed back down.

Ejaaz:
Let's revisit it in a month. But it is crazy to see that Chinese stocks,

Ejaaz:
specifically robotics, are really starting to gain some momentum now.

Josh:
Yeah, it's a very cool news story. I personally am not touching this with a Zenfopole.

Josh:
That seems really scary. I love watching the videos. I'll continue to watch

Josh:
the videos. I'm very excited to see these robots.

Ejaaz:
Keep the dock flex coming.

Josh:
Yeah, it's very early in humanoid land. And while I am very bullish on China

Josh:
and their ability to make humanoids at scale, it feels a little early,

Josh:
but I'm glad people are excited. I'm glad there's enthusiasm.

Josh:
Next on the docket, we have a company that we just spoke about yesterday.

Josh:
So if you listened to yesterday's episode, we have a small little follow-up,

Josh:
which it relates to stripe and the acquisition that was made for to acquire

Josh:
open router it is officially official we were a little early but right and now

Josh:
it's official all the contracts have been signed,

Josh:
alex's holla who is the founder and ceo says um we officially have a deal and

Josh:
he kind of outlines the thesis and i know stripe as a result of this they shared a

Josh:
publication a blog post ejes that you were really excited so i'll let you describe

Josh:
what they spoke about here But some TLDR on Stripe is like, again,

Josh:
we're talking about unbelievable founders today.

Josh:
The Collison brothers, who are the founders of Stripe, are among the best of the best.

Josh:
They have built an unbelievable business, all starting with seven lines of code

Josh:
that allowed a person to pay with a credit card online quickly and easily.

Josh:
And they've developed that technology from basic credit card payments to basically...

Josh:
The entire payment infrastructure of the world. They started with credit cards,

Josh:
then they moved over to crypto and stable coins. Now they're working with agents

Josh:
to figure out how best to serve these new agentic transaction systems.

Josh:
And that's kind of where we find ourselves here. I'm reading the headline.

Josh:
It's that Stripe is officially telling investors that the singular area has

Josh:
begun. But explain the nuance behind what they actually mean when they say that.

Ejaaz:
Yeah. So in the official letter, which Stripe sent to their board of investors,

Ejaaz:
they basically described why they acquired OpenRata for $7 billion.

Ejaaz:
Why is a fintech company buying an AI lab for such an expensive amount that

Ejaaz:
doesn't even own or make their own AI models?

Ejaaz:
And the thesis is pretty simple. Number one, in a world where the internet was

Ejaaz:
booming, Stripe's core focus was to be the backbone of that entire internet economy.

Ejaaz:
How do you become the backbone of the internet economy?

Ejaaz:
Money. So they created the rails for money.

Ejaaz:
Then they peeked over the fence and they saw this massive tidal wave of AI coming

Ejaaz:
over with agents, with models, and they realized it's not money that runs that

Ejaaz:
AI economy, it's tokens, AI tokens specifically.

Ejaaz:
And so they wanted to own the infrastructure rails to own that AI economy.

Ejaaz:
It's very similar to what they do with money, which is why they're pairing both

Ejaaz:
of these together. So that's thesis number one.

Ejaaz:
But thesis number two, which caught my eye is, And I quote, Stripe basically

Ejaaz:
claimed that the beginning of the singularity has been here.

Ejaaz:
And the date specifically that they specified in this paper was January 1st.

Ejaaz:
And this is a large part of the thesis behind acquiring OpenRata.

Ejaaz:
They basically go on to say that we have reached a pivotal point

Ejaaz:
In our global economy where the future is very much dependent on AI and it's

Ejaaz:
going to accelerate pretty much anything and everything we know and touch.

Ejaaz:
The world is going to look very different five years from now.

Ejaaz:
And so the bet that they're making in this world of a singularity is AI models

Ejaaz:
will be embedded into everything, which means that thesis of AI tokens

Ejaaz:
flooding across the entire global economy is going to be a thing and Stripe

Ejaaz:
wants to be the backbone for that. So it's a big bet that they're making.

Ejaaz:
Open Router, I think on their last earnings that was disclosed by Atala,

Ejaaz:
because again, they are a private company, is making $50 million a year.

Ejaaz:
So $7 billion is a humongous markup.

Ejaaz:
But Stripe is making a bet that inference compute specifically is going to be

Ejaaz:
the biggest earner for AI going forward.

Ejaaz:
And all the numbers from Anthropic and OpenAI recently that have been leaked

Ejaaz:
proves that. So I think this is going to be in the future, if I had to guess,

Ejaaz:
one of the best acquisitions going forward

Josh:
Yeah and perhaps like an explainer on the singularity for people not familiar

Josh:
because this is it's a concept that's been around for a very long time like this is a

Josh:
a sci-fi concept for as long as i can remember in books probably 50 perhaps

Josh:
even 100 years ago where people speculated on this point in time in which

Josh:
the intelligence of artificial systems eclipses that of human beings and it's

Josh:
a moment in time in which ai becomes smarter than us where

Josh:
these smart machines are then enabled to build even smarter machines and it

Josh:
builds this kind of fast loop of recurring self-improvement and the idea is

Josh:
that the second order effects of that is that life changes so fast that humans can't really predict

Josh:
and are going to try their best to control the future and this has been this

Josh:
hypothetical for a really long period of time people always speculate whenever

Josh:
we come up with this super ai intelligence brain and the reality is is that

Josh:
straight believes that it's here and,

Josh:
I don't think anyone would disagree with them too strongly. Perhaps people will

Josh:
say we're not there yet, which is a fair criticism.

Josh:
But to say there isn't a clear path to getting there soon feels a little misguided.

Josh:
It's very obvious now. And it's interesting, the timing, too,

Josh:
that January 1st, because if you remember over Christmas break of last year,

Josh:
going into this year, that's when the real kind of like.

Josh:
Flow of like, yeah, that's when Cloud Code like really came out, started becoming good.

Josh:
And that was the moment in time in which developers stopped writing code by

Josh:
hand and started writing code using ai agents and now fast forward we're sitting

Josh:
here in august and it is unfathomable to imagine

Josh:
writing code by hand like people just do not do that there's absolutely no reason

Josh:
to do that it's weird to think that people ever did do that and that change over this.

Josh:
Eight month period is so extreme when you consider the second order of implications

Josh:
of of what that means for the world.

Josh:
Like now we're seeing these models that are so powerful, we can't actually release them.

Josh:
There's now infrastructure frameworks happening through the government to kind

Josh:
of protect and slow down this. OpenAI has paused progress because it's getting so fast.

Josh:
And if you heard about this even 12 months ago today, you would think,

Josh:
oh my God, this is faster than we expected. This is what the singularity looks like.

Josh:
And here we're sitting in it today. So pretty unique insight by Stripe,

Josh:
really awesome letter. I would highly recommend going through and reading it.

Josh:
It's a leaked letter. This was for private investors. So you get a little inside

Josh:
peek behind the curtain of what's actually going on at the company. Very cool.

Ejaaz:
And so moving on, chapter two of Jensen turning NVIDIA into a bank.

Ejaaz:
If you guys were watching the show last week, we released an episode where Jensen

Ejaaz:
basically managed to raise $500 billion from some of the top financial firms

Ejaaz:
in the world, including BlackRock, Blackstone,

Ejaaz:
to fund the future of data center CapEx for some of these biggest AI labs.

Ejaaz:
And we concluded that it isn't really a circular economy in the way that they're

Ejaaz:
raising it. It is based on a bunch of different milestones and is backed by very healthy debt.

Ejaaz:
Now, in chapter two, Jensen announced that he is spending another $100 billion

Ejaaz:
For OpenAI specifically.

Ejaaz:
He's investing it in this site in Ohio, which is arguably going to be one of

Ejaaz:
the biggest data centers in the world. It's going to scale up to eight gigawatts worth of compute.

Ejaaz:
It is going to bring in a nice and healthy $200 to $300 billion of revenue for

Ejaaz:
NVIDIA specifically from one data site, from one single customer.

Ejaaz:
And it's going to conclude over the next couple of years. Now,

Ejaaz:
the craziest part about this is he's baked into the contract that this includes

Ejaaz:
renewals of newer generation GPUs, which means that he's going to make $200 to $300 billion

Ejaaz:
three times over the longevity of this data center over the next five years.

Ejaaz:
So there's been a lot of contemplation around why Jensen is getting involved in this.

Ejaaz:
The thing that stands out about this particular investment is

Ejaaz:
He's investing these $100 billion specifically in the power and networking infrastructure

Ejaaz:
side of this data center. So he's not really doing it to help OpenAI buy the GPUs.

Ejaaz:
He's helping them set up the power transmitter lines to power these GPUs.

Ejaaz:
And why I wanted to speak about it on this show is we have said a few times

Ejaaz:
now, Josh and I have called it, that the next kind of investment theme within

Ejaaz:
AI is going to be on the photonics, optics, and power stack of the AI trade.

Ejaaz:
And this is yet another very in-your-face evidence point that Jensen is heading

Ejaaz:
that way. And if you look at like NVIDIA's investments over the last six to,

Ejaaz:
I don't know, like nine months, they've invested heavily in Optonics.

Ejaaz:
I think they put like two to three billion into Lumentum and Coherent each,

Ejaaz:
and now they're making a big play on the power side of things.

Ejaaz:
So just an interesting, noteworthy update. I think NVIDIA is going to backstop

Ejaaz:
this entire economy that Stripe is talking about,

Josh:
To be honest. I was reading this great transcript from Ben Thompson of Stratetri.

Josh:
He's just like this you know well-known writer on the internet for people that

Josh:
don't know and he was talking about kind of like where these restraints and

Josh:
thresholds might be in the process of scaling ai systems and he made this really

Josh:
interesting point where oftentimes people are focused on the energy the things that

Josh:
you know kind of like jensen is focused on the land power and shell but one

Josh:
of the other important considerations is like where is the money for all of

Josh:
this coming from and and what we have seen and we've been talking about this

Josh:
on the show over the past couple weeks but it's like okay we went from spending

Josh:
all of the free cash flow to starting to

Josh:
raise money from outside funding and now companies like google are issuing debt

Josh:
they're issuing equity in order to raise more money

Josh:
now you see nvidia and jensen huang working with every large bank in the world

Josh:
to tap into new sources of money these are places like pension funds and retirement

Josh:
funds that's what these banks hold so

Josh:
where do you go to next to raise the next tranche of money to build out the next large data center?

Josh:
It could be. And I really thought this was like a thoughtful insight. It could be the...

Josh:
The actual dollars are going to be running short and it's going to be very difficult

Josh:
to continue to raise the required amount of money to scale this thing so just

Josh:
an interesting thought as we wrap up the roundup today of like

Josh:
where's the bottleneck well everyone's saying it's here but like where are they

Josh:
going to get the money to fund it is an interesting thing to follow and we've

Josh:
been talking about this on the show we'll continue to cover it but if you've

Josh:
made it this far thank you

Josh:
you've made it to the end you are fully caught up if you've watched the other

Josh:
three episodes that we published this week because it was a pretty strong week i would say we had elon.

Josh:
And grokbot releasing grok 4.6 and it's incredible we had leopold making.

Josh:
Basically publishing his final portfolio um because you know he got liquidated

Josh:
but we talked about all of the filings what the smartest money on wall street is investing in

Josh:
yesterday we spoke about um stripe and their acquisition then we talked about

Josh:
what models to use based on what type of use cases you have and here we are

Josh:
today getting fully caught up on all things

Josh:
ai frontier tech so yeah, thanks for watching.

Josh:
We made it back again. EJ, any final parting thoughts before we get out of here?

Ejaaz:
No, I just wanted to say thank you folks so much for listening and keeping close

Ejaaz:
with us. We have added, I think maybe six to seven hundred new subscribers over

Ejaaz:
the last couple of weeks. Hello.

Ejaaz:
It's lovely to meet you. Welcome.

Josh:
A hundred, dude. A thousand. A thousand?

Ejaaz:
Oh my god. The momentum is really gaining with this channel.

Ejaaz:
It's awesome to see the kind of support and vibes coming from different people

Ejaaz:
we read every single comment um

Ejaaz:
i try to respond to as many of them as i can um you guys are growing in fandomship

Ejaaz:
which is awesome to see you guys are watching every single video we see a bunch

Ejaaz:
of like repeat users and listeners as well which is awesome to see wherever

Ejaaz:
you're listening to us on youtube spotify

Ejaaz:
or apple music please give us a rating um

Ejaaz:
give us a thumbs up subscribe turn on notifications leave us a comment it helps us out so much um

Ejaaz:
and yeah i think that's it uh enjoy your weekend this is everything you should

Ejaaz:
officially be caught up unless we're missing something pretty drastic that's

Ejaaz:
happening right now after we record and yeah we'll see you on the next one thank you guys