Inside the Iran War and the Pentagon's Feud with Anthropic with Under Secretary of War Emil Michael

All right, everybody, emergency podcast time, episode 263 of All In. We have Emil Michael,

the Undersecretary of War, for research and engineering, working directly for Pete Hegsha.

We had to get this out to you on Thursday night because it is an emergency pod. One of my

own besties. Emil and Michael is here. Emil and I were part of team Uber back in the day he was,

Travis's right hand man. Some might say fixer and Emil Michael is now the undersecretary for war.

Here in the United States serving as country like our bestie, David.

Facts. Welcome to the program for the first time. Emil Michael, how you doing, brother?

I'm doing good. I hope it was more than the fixer, but you know,

you got it done. You got it done. He would give you the hardest things. Yeah, just fair enough.

If it was hard and that's what a fixer is. An operational acts. That's what they call it.

All right, sure. And Brooklyn, we call them fixtures with us again.

A rain maker. There's that too. There's that too. Making it happen with us again.

Shamoff, Paulie, how are you, brother? Great. Yeah, look at that smile.

What do you got going on? You got some pokers in the fire.

Look, I'm not going to say I mean, coming weeks, I think some news is going to drop.

That's my prediction. I don't have any. Are you loving Shamoff's tweet mugging that's been going on this week?

So good. So good. So good. He's looks maxing by default, but he's been mugging the gooners.

Yeah, so funny. What was your favorite favorite? The one I sent you this morning that you said,

what are you saying? So what are you collecting? You're

losses. My tax harvest. What did you say?

Shamoff said, oh my god, it was just like, yes, I did. Yes, I did. Yes, I did.

Someone said something to Shamoff. He's like, dropped in.

Why is everyone so mad at Shamoff? All he did was lose billions in retail investors.

Money probably, probably one page spacks. It's not like he then told them to enjoy their capital

losses or anything. Give them a break. Shamoff's response. Yes, I did.

All right, piling on. It's your sultan of science.

Everybody's favorite. How do great?

So yeah, some great science that he brought to the show last week.

Friedberg, how are you doing?

Oh, yeah, I've been traveling this week back at home.

All right. Sacks is out today. He's very busy on Capitol Hill. We'll talk about what he's up to next week.

Let's go. Come on. Let's go. Let's go. Let's go. Go, Jason.

All right. The US and Israel launched a joint attack on Iran on Saturday.

Today is day six of Operation Epic Fury Iran Supreme Leader Ali Hamani

was killed within hours of the operation. 40 senior officials have also been killed.

Debt also far about a thousand people, according to reports,

tragically six US Army reserve soldiers were killed following the drone strike on a base in

Kuwait, a US submarine sank in Iranian ship off the coast of Sri Lanka.

This is the first torpedo kill since World War II.

Why we're at war? It's been a bit of a moving target in a debate.

First explanation from Rubio, he said Israel was going to attack

and the US had no choice but to participate later walk that back.

Trump made it clear that this is not a regime change effort.

But we're doing this to stop terrorism and the development of ICBMs by obviously a pretty

crazy group of individuals and obviously nuclear bombs, which we blew up a couple weeks ago.

Trump also mentioned the people of Iran should seize the moment, quote,

and take their country back. Hegseth, I believe is sure boss Emile, said, quote,

this is not a so-called regime change more, but the regime sure did change and the world is

better off for it. So here's an interesting polymarket. Right now, US forces enter Iran.

This is boots on the ground by the end of March 40% chance, by the end of the year 59% chance.

So the idea that we're not going to have boots on the ground, the sharps on polymarket believe we

will. Will the Iranian regime fall by June 30, 39% chance according polymarket and by the end of

the year 51% chance? So Emile, I guess there are two questions people really want to know.

I'll leave off why we're doing this. I think President Trump has been pretty clear now.

But how long is this going to take is the one question. And are we going to have to have boots

on the ground? And maybe what is success here?

I think the President talked about this is a week's not months kind of operation. And it's aimed at

essentially disarming the regime or the country from in such a way that they can't supply Hezbollah,

Hamas, Muslim Brotherhood, all the kind of terror groups that get sponsored by weapons and money

from Iran not to mention the nuclear bit. And that's how you see from the reporting, they're going

after the depots, the you know, we went after nuclear sites before. They're a prodigious drone maker.

These like huge one-way attack drones that can go hundreds and hundreds of miles.

Lots of ballistic missiles that are aimed at every country in the Middle East as you've seen,

they've attacked them. So I think that's one. In terms of boots on the ground,

there's no scenario where we have some protracted boots on the ground, Afghanistan, or act too like

scenario. Freeberg, your thoughts on this war, obviously a lot of people voted for Trump in order

to have the peace dividend that he was. In his first term, absolutely the peace president.

And now here we are, eight countries have been bombed. And we've had two leaders

deposed, and one of those two have been killed. Your thoughts, Freeberg?

I think the president and the administration have probably the biggest meetings of the term

coming up in China and April. My estimation based on the conversations and the comments made by

the president before he came into office, and since he's been in office, is that finding a

grand bargain or a deal with China is probably one of his top priorities. And if you think about

the importance of that, is the US going to wade into a giant global conflict led by a US

China rift, or is the US going to find some grand bargain? I think he would probably have a preference

for the grand bargain. And that being the case, I think you could look at the in the context of

Maduro and the actions in Iran as creating maximal leverage going into those negotiations.

The reason for that, Freeberg? 90% of the oil that comes out of Iran goes to China.

And there's been a long developing and developed relationship between Maduro's government and China.

And these are big economic drivers, or support the economic driving in China. So creating leverage

by having significant influence or damage or destruction to those supply chains for China

gives the United States footing to be able to negotiate a better deal for America.

I would imagine that the president's intention here isn't to go and decide who should be in charge

and drive regime change and end in a multi-year conflict with Iran. But ultimately, if there's some

transaction with China that gets everyone out of this and puts the US on a strong footing where

American businesses can sell into China, which is very challenging as everyone knows today.

And there's regulatory parity, economic and trade parity between the US and China.

There's a point of view on what happens with Taiwan and availability of key technologies,

like semiconductors. I think it could be a win-win. And I think that a deal with China could be

the crowning achievement of this administration, particularly going into the midterms.

So the timing is right. And I think that's probably a core part of the motivation here.

Tomat, your thoughts on this action and why we're doing it? You've heard, obviously,

the president has his position. We're not doing regime change. It's a secondary effect, obviously.

But we want to stop those ICBMs and nuclear bombs from being developed. And we want to stop terrorism.

Additionally, Friedberg says, hey, we're framing this great, you know, discussion we're going to

have with Xi and China. And oil is part of that. Where do you think you stand on all this?

I'll build on both what Emil said and what Friedberg said. I don't think this is about regime change.

And I don't think it's about a local regional conflict. I think if you take a step back and zoom out,

the most important thing that we did in the last three months was by taking out Maduro and by

taking out the Iranian leadership. We have created enormous leverage as Friedberg said

with China. Now, why is that important? Because I think all of this centers around that geopolitical

discussion. Last night, something important happened, which is that the official Chinese

bureaucracy posted what their GDP targets were. And it was shocking to anybody reading it,

because what we saw was that they guided to a range of four and a half to five percent,

which if you look at the historical context of that growth, is the lowest that it has ever been

in about 30 years. So three decades. So before they entered the WTO. And the question that one should

ask yourself is when a country that's growing at eight, nine and 10 percent, start to grow at half

that rate, yet have doubled the number of people and doubled the GDP. What happens? You already

have incredibly high domestic unemployment, especially youth unemployment. Does it become more

or less chaotic? And I think the historical artifacts of every other country would show that it

will become more chaotic. If you have that as a starting point, what is it in China's best interest

to do? And I think it becomes obvious that the right thing to do would be to invade Taiwan.

Why? Because you start to create a sinkhole that occupies your people, that occupies resources

that can get domestic production up and running, that can start to generate a war machine.

And you see the economic impact of war machines in any country during any conflict.

And if I had to guess just to build on what Emil said, the president saw that. And I think what

they did can be summarized in this chart, which I sent to Nick. So if your goal is to prevent

war with China, which is a massive global conflict, which could be nuclear, which could be

cataclysmic, how would you do it? And this chart paints one way to do it. If you look at the

conditions inside of the Chinese economy, the most interesting takeaway is that they are enormously

dependent on imported oil. So about 20% of their economy, but it's not 20% of their economy,

because it's 100% of these critical things that create GDP, logistics, transportation,

aviation, feedstock inputs. And of that 19%, about a fifth of it comes exclusively from Iran

and Venezuela. And now all of that is off the table. So if you take that and then you see what

Steve Whitkoff and Jared Kushner and Josh Greenbond have been doing, which is trying to get a deal done

in Russia, and you put all of these things together, because by the way, if you add Russia into

that mix, it's about 40% of China's oil. Not only do you redalarize, not only do you stop

the funneling of all of these illicit oil funds to creating chaos all around the world,

but you hem in China going into a massive moment at the end of March, beginning of April,

whereas Freeberg said, really astutely, there is the potential for a grand bargain. And I think

that secures global safety. In that, that is a huge thing for America. Emil Hamish does this have

to do with China? I think, you know, my instinct is, and I'm not speaking for the administration on

this, is that's a second order benefit to some of these things, like the, you know, and then you

said eight conflicts have not been a conflicts. There is like, we inherited Gaza, we inherited

Russia Ukraine, Venezuela was its own operation, and then you could sort of attach to it the drug

boats that were coming out of that as like one big operation. And then the Houthis was just Biden

was ignoring the Houthis. They were just shooting at our ships. So that was like very limited in terms

of like stop shooting our ships. We need freedom of the seas. And that wasn't sort of a, you know,

so that's something any president should be doing generally, I think. The Iran being the one,

you know, material conflict outside of Venezuela. So it's not that many. And how long to

Venezuela last? There was one raid, one night. I guess that's really in four hours. Yeah,

it's an important note, I mean, for you, Emil, to sort of, I've explained to us, there's a new

approach here with regard to these actions, which is no boots on the ground. And we seem to,

and you of course, have better information than anybody else does. I don't think anybody would

have known Venezuela would have gone as well as it did. And so far, listen, we got a long way

to go with Iran. This has gone very well as well. So explain to us what you know and what you,

the president and Hegseth know that we don't, that makes these two operations go so smoothly. What,

what is it? And then there's obviously some new technology here in the case of what happened in

Venezuela. Yeah, besides the discombobulator, what we've got is a very well-trained military,

like the global war and terror was the disaster in so many respects. But the people now who are

fighting that are generals now. And so they've learned a lot of lessons. And you compare that to

Chinese military. They don't have a lot of experience. In fact, the decapitation they did in the

Chinese military, the one guy that took out was the one guy who had experienced and be at

nom. So they don't have conflict experience. And that matters because you understand going in,

what are the things that could go wrong. And then you, you have incredible technology, space,

air, land, sea, cyber, all kinds of effects that you could bring together. And so you imagine

a hundred guys goes into the most fortified compound in Venezuela where the president is,

you know, take him and his wife out safely and are out with no KIAs. I mean, it's incredible,

right? These things, these wargames have been on the shelf for a long time. Every scenario has been

planned for years ahead of time. Midnight Hammer and Iran was planned, years ahead of time in terms

of how would you do it if you were going to do it? And then you're keep refreshing the tactics,

the tactics techniques and procedures and you're updating them. So we have a very sophisticated way

of doing these things and minimize loss of life and max my success. Can I ask a question? I don't

want to, I don't want to do all this conversation. But is the discombobulator real? Like what can you

say about the discombobulation? I completely, I was like obsessed with this when I saw it on X. I

was like, what is this thing? I mean, I needed in my house, I guess I'm putting up all these

my ginsens just for when Helm you chose out. Oh my God. Not meant for your kids,

so I don't know if they're behaving badly. No, it's can't talk about it. I mean,

do you think we would have been able to pull off that mission as successfully as we did five

years ago, 10 years ago? Has the technology improved that quickly? That this is not something that's

been possible historically? And how does that change the pacing and the face of war for the next

couple of years? I'd say no, it wasn't only a technology maturation from five years ago.

It's the rules of engagement. The rules of engagement that we used to have, there was,

I mean, if you read about them, some of them are insane. Like in Afghanistan, if the guy had a small

gun, you had to have a small gun. And you know, there was this parody in weird ways. And when you're

like, well, but is the objective to have like a fair fight or an unfair fight? Well, if you're on

our side, you want to be unfair. So the rules of engagement were relaxed to be who writes those

amoeil who sits in an office and says, you can't shoot back if a combatant is shooting at you if

you aren't matched gun for gun. Yeah, I mean, crazy policies that are written in the military

departments. And that's why when Secretary Hickseth talks about this kind of thing and what was

happening with him when he was in Afghanistan, if you ever read his book in Iraq, he's like, the

rules of engagement were so punishing that we were at risk all the time because you had to have like

a legal understanding of what was happening in every minute in the battlefield. As opposed to,

well, your job is to, you know, take out these guys and protect these guys. Here's your munitions.

Here's like the the red lines. And then like in the middle of that go, use your judgment.

You're commanding officer, use your judgment and how to win. And we kind of gone back to that,

use your judgment, push responsibility field, still have your red lines, but other than that,

the objective is the objective. And so it's more of a clone powel approach. It's like, go all in,

have a clear objective, come out, use overwhelming force. And we were not doing that for the last

four years. And then going back to the the face of war going forward, my understanding is that

there have been more drones deployed by the United States this past week than we've done in the

history of military activity. Is that right? And like, how does that really change things going

forward here? It changed the big. Well, so so the predator drone was the first big drone program,

like 10, 15 years ago as this big honkin drone. And then if you remember Obama would take out some

of these al-Qaeda leaders with drones on their balcony and things like that. I think we present

Trump took out Suimane with the drone near his car. That was the beginning. And then they were

like, sorry, the Russia Ukraine war happened where it's like drone on drone, 70% of the casualties are

for drone, but because of drones. So drone on drone warfare, robot on robot warfare, those things

are the future for sure. Right? And that's why companies like Andral are companies like Andral is

because they're making unmanned systems. And this has been something you've specifically

been very focused on. And you tweeted today a little bit about a competition. We'll play a little

video here on this Lucas logo. This is unmanned combat attack systems. It used to take a lot of time.

It certainly wasn't start up time to get new product into the channel for our military to use.

Explain what program you're running here. It feels like the DARPA self-driving challenge all over

again. And what these drones cost. I know there's a company making them for I think $35,000. Am I correct?

I mean, the small drones, like I'm holding right there and that are way cheaper than that.

The Lucas one-way attack drone, which can go five, six, 700 miles at the speed of an airplane,

carry big warhead. Those are like $50, $80,000. Depending on what kind of equipment you put on,

you put on it, but we have a drone dominance program. And we basically have to build an arsenal

for drones. Now, are we likely to have a territorial conflict like Russia, Ukraine, with Canada and

Mexico? No. But we do want to take out drug drones at the border. But one way attack drones are

important for any kind of major conflict like you're seeing in Iran. But also to protect military

bases for America to 50 world cup Olympics in 28. There's a lot more uses of drones for surveillance,

not just for combat. There, you're showing drones that are sort of human-operated. But how much of

this should basically be AI? So that it's just some computer vision. And again, back to what you

said before, a model understands the rules and the red lines, but otherwise is beyond task and

accomplish your mission. How much of it is one versus the other? I believe that a sophisticated

drone war is going to be drone swarms controlled by AI to some degree or another. To what degree

the control matters? For example, drones have decoys. They could spit out, they could dazzle,

they could put out things. So how do you discriminate what's a drone and how to hit it? You can

use AI for that because it's learned how to do automatic target recognition, for example.

And then also could it identify a person? And does that make it safer? So it's going after

actually someone you want to get and not someone you don't want to get. So there's a lot of uses

for AI at the edge, if you will, in the future here. Do Ukrainians and Russians do something called

like a kill box where they lose comms? Because it's jammed for this drone and then it just starts

going in a box and looking for the person that are trying to get and they're starting to use AI

to do that. And China has this ability already probably times some magnitude, yeah?

They have drone swarms because they can force the companies that make them, not just the GI,

to interoperate. So interoperating drones called heterogeneous autonomy, you take different kinds of

drones and how to communicate with one another and then make sure they're not going after the same

target is like a pretty complex thing that they're definitely working on. And let's talk about

the fidelity of these. Obviously, AI is a new technology. It can make mistakes. Anybody who uses it

on a day-to-day basis might experience a hallucination. How confident are you in the AI? Ukraine and

Russia conflict. They obviously are not going to be as thoughtful maybe as we are in putting this

together. They're in a hot water right now. But we as the United States have to be very thoughtful

about this. So how confident are you that this isn't going to make a mistake? I think that's

the key to a lot of this debate. And when will it be perfect to find as much better, and I guess

this dovetails with the self-driving, it has to be a magnitude better than a human. So when will this

be a magnitude more accurate than when we have make a mistake as a military and we kill a civilian?

No, it's a good question. And I don't know when that moment hits that FSD moment where it kind

of gets better. It's certainly not there. And you wouldn't want to take huge risk with that in

life. There's a gradation of when you would use that and what kind of risk you're trying to take

or not. If you were trying to take out a drone using AI, using a laser or something, you'd be pretty

like, okay, make a mistake because you just missed the drone, you know, like whatever with the laser

laser goes off, it's all over. If you were doing something more sophisticated in the population

area, have a densely populated area, you'd take less risk. So we're developing procedures,

tactics for each scenario. And this is part of the debate I had with Anthropic, which is we need

AI for things like golden dome. Chinese harpsonic mix will come up. You've got 90 seconds before

it separates and all kinds of decoys and you don't know where the actual payload is. And you want

to get it, hit it from space. And a human can't doesn't have the reaction time, doesn't have the,

may not be able to discriminate with their own eyes with their going after. That's a pretty,

you know, low-risk thing because it's in space and you're just trying to hit something and

just trying to hit you. So I think in the next 10 years, you're going to see a lot of these

applications develop AI to one degree or another. So long as we think it's safe and it's not going to do the,

you know, make mistakes. Before we get on to the Anthropic,

discussion and we really appreciate you coming here. And my Lord, this has been so informative.

So thank you, Neil, for coming here and explaining to the American public and to us what you're

working on. It really makes us, I think, speak for everybody, really confident in what you're doing.

It's so great that you've, you know, left the private sector to do this. What I would say,

just very quickly, Neil, is I think that not enough people understand that the American military

has had to fight with one hand tied behind their back, just that little insight that you just

gave about Afghanistan. To me, seems so scary because the men and women that sign up for the

American military, they're doing this to fight on behalf of this country. They deserve a lot more

than being sent there and all of a sudden being given this rulebook and say, do your best. And

it's like, oh, wait, you violated 19 rules trying to protect America. Do your job. That's insane.

Let's just, it's really insane in some cases. And my belief is that's what the frustration

for those soldiers who are out there in those wars had more than anything. There was the broader

frustration. Like, what are we doing here? And then secondary frustration is, well, I'm here.

Why can't I do my job? Yeah. Is there, is there much of a debate internally? I mean, I'm sorry,

Jake, how before we move forward on this, regarding this idea of full autonomy in military action,

I don't want to speak ahead to the anthropic point, but it was something that the media seemed to

say was part of Dario's concern is that when you press the button and hand over complete autonomy,

and there's a kill action that you're now giving to a robot or to some autonomous system,

do we then kind of have a moral issue at hand? And is that something that's kind of debated or

discussed? And is that the right way to think about the framing that what goes on? I mean, we're

not even close to there yet, right? We're like, the systems are not. We wouldn't feel that a system

that would have sort of like real risk for a civilian is ready to launch yet. So we're not even

debating that. We're just trying to get basic autonomy in drones, basic autonomy in underwater

unmanned vehicles, basic autonomy that, you know, you've heard of this collaborative aircraft

that fly along with the jet craft so that it has more firepower, but it's still tethered

to what the jet does. So we're just at the very beginning of this stuff. But for Golden

Dome's a good example of like, yeah, who can oppose that? Like, it's the only way to get out of

a threat like that. So I, who could oppose if you have a military base, you have a bunch of

soldiers sleeping that you have a laser that can take down drones autonomously on that? So there's,

it's, it's pretty scenario by scenario, but I don't, we're not having a lot of debate because the

SkyNet thing is so not a realistic thing at this moment, right? Except if, when they're going to

did tell the anthropic guys, I was like, you know, or, yeah, I'd tell us any of that company,

your models are getting stolen by the Chinese. They're going to unguard rail them and use them

against us. And then you want our models to be less capable against your models. It's sort of

not going to be thoughtful enough. They're going to go for it. And, you know, if we just benched

Mark this against where we were at, you know, but 10, 15 years ago, there was the WikiLeak

of collateral murder. I think they called it where we tragically had an Apache take out some journalists.

And this technology, even applied today, probably would have avoided that in my mind, yeah?

Like we have enough that when you're targeting not drones, but, you know, people on the ground

with an Apache, this would have probably avoided that. Yeah, or, or, you know, the Kuwaiti aircraft

hitting, you know, an American aircraft to make a mistake because it doesn't have the identification.

I mean, it's the same self-driving argument to a degree. Like self-driving could save lives

even though it's scary to look at a car without a human behind the wheel. But there's tons of

scenarios where it's a way better, say, for option more precise than the alternative.

All right. Before we move on to the Dario thing and in Thropic, in that room, there was one piece

that we haven't addressed with this interaction, Friedberg, Chimoff, which is the Israeli government

and their desire to take out this regime and us, according to Tucker Carlson and a large contingent

of the MAGA base, they feel that we are captured by this group. Does Israel have too much influence

over the United States with regard to these actions in the Middle East? This is, you know, a big debate

within the party, within the Republican party, within the MAGA constituent. Hey, week number one,

we don't want these wars. Number two is Israel's driving this thing to the point of Rubio's quotes

that, hey, we're doing this because Israel's going anyway. I think we should address it here.

Not that I have a personal stake in this. I'll give my personal opinion at the end.

I don't think the president has captured by Israel at least. I think he decides

what is in the best interest of the United States. And if

Israel can be a part of that, then they're a part of it. And look, let's be clear,

they're incredibly capable. And so in something like this, to be able to incorporate

the intelligence of Masad, what you're seeing today in this Operation Epic Fury,

or four days in, Iran has been 90% depleted of all of their munitions. It looks like they're just

firing no more missiles out from Iran to anywhere else. There's fleets of drones and planes

just waiting. Everybody knew where the Iranians were. It's great that when we make a decision on

something that we need to do, we can rely on our allies. I think the opposite question should

also be asked, what was the UK doing? Why is Spain pontificating? Why was Europe taking the

weekend off before they could even issue a statement? Why don't you ask that question?

Yeah, no, it's an equally valid question. And Freiburg, do you want to get in on this or now?

No, I'm a Jew. No one's going to care what I have to say. They're either going to be totally

like, we're going to say these guys are **** you. We shouldn't listen to him. So like, let's move on.

Go ahead. Yeah. I mean, I need thoughts on this. I do want to know from a meal, though.

Like, you know, is this iron dome working? This laser in Israel system? Is this operational?

And if so, is there any success metrics you can share around it?

I mean, I think the gold, sorry, the gold. Iron beam was the first generation of the Israeli

air defense thing. And then they're building, building iron beam. And I think it's still early

ash, but yeah, it works. They're, they're a technologically sophisticated country. That's very small

that has like a reason to invest in these things and have a lot of smart people to do them. So I

think, I think it's good. But does it primarily work on rockets? And I guess I just want to understand

the logical evolution of this because in the 80s and 90s, there was a lot of conversation about

space-based lasers that could shoot ICBMs out of the sky to avoid, you know, global nuclear war.

And we could always take out every nuclear warhead delivered on an ICBM. Is that technology feasible?

Is there a place in the near future where we could see basically maximal global deterrence using

these systems, either ground-based or space-based, to take out hypersonic missiles?

I think, I think the, the harder but more valuable problem, the solve would be the space-based

way of doing it because then you could get at any kind of, almost any kind of threat that

hits space. But you still need a ground layer because there's cruise missiles that could

come at you, there's drones, and so on, too. So we called it multi-layers. Like how do you,

how do you get every kind of weapon at every layer? But, you know, directed energy, lasers,

as they get more powerful, you could take on a bigger weapon farther away, right? So those,

so those technologies that as they improve, it gets more and more capable, and I think all

these defense systems are going to get more and more capable to got more and more of a variety of

weapons that farther, farther stand off, which is what you want. You want it to, you don't want

to shoot it when it's right over Tel Aviv, you want to shoot it, you know, when it's still over

there, they're land, ideally. Are the laser interceptors in the field today? There's reports

that they are. I think they're some, I think they've demonstrated some of them.

Got it. And insist our technology or Israel's technology, because President Trump said,

hey, that's actually our technology. Is there any insight there? We have collaborations with Israel

on some of the stuff they have their own, we have our own. So it's not, this is, but they're good

attack, we're good attack. There's certain ways you get part of our system and part of their

system, because it's like a hit. It's a quickly evolving part of science right now. How do you

cohere beams of light to like get distance? How do you use high powered microwave to like just

drop drones in their tracks? There's lots of different ways to get at some of these things.

And yeah, a lot of it's ours, and a lot of, and some of it's there.

Yeah, and to the earlier question, you know, I am pro regime change if it can be done

thoughtfully. And obviously isolating a dictator, that's the best thing you can do. We've done that

successfully with, you know, Putin, Kim Jong Un, etc. Keep diplomacy up. But if there is a moment

in time where you could free the people of Iran after 50 years of being subjugated by these lunatics

and dictators, I'm all for it. And I actually trust President Trump to make that decision. I know

this may sound crazy. People think like I'm a lib tart or something because of the way my best

he's framed me on this program, which is completely inaccurate. I'm an independent. You are.

I actually are completely independent. You're not. Okay. And I am just based on my voting. Okay.

I'm not on either one of these sides. I am pro president Trump. And I trust his judgment. I think

he has more information. That's I think you had more information. I actually trust you guys to do

it thoughtfully. And there obviously was a window here. Israel can have their own, you know,

motivation. There could be the China motivation. But there's also spreading democracy. Can I say

something on that of people's concerns here? But that's on the top of my

list. They would like to see the people of Iran free. Just to build on your point Jason,

the thing that Emil said before, which I think is important as well as we have an enormous

amount of learnings about what happened in Iraq. Yeah. We also have a ton of learnings

between the Iran Iraq war and a ton of learnings in 53 when us in the British

deposed most of the in the part or at least formented that and put the Shah. And then the Shah

was booted out. Yeah. If you take those three chapters in Iranian history or that regional history,

there's a ton to learn. And to your point, there is a way to affect what we need to do

without creating some 20 year forever war. There was an incredible tweet. I don't know if you guys

saw this. Somebody said, so every war doesn't have to be three decades and trillions of dollars

to your friends in Virginia, Maryland and DC. Did you guys see that tweet? It's true. These things

can be one and done in and out. And if President Trump succeeds here, I just want to also give

him some flowers here. The people of Venezuela and the people of Iran being free represent about

5% of the people in the world living under an autocracy, under a dictator. If those both flip

back to democracies, he'll have done more for the spread of democracy than any president

for many decades, perhaps in our lifetime. This would be incredibly noble, incredibly noble,

incredibly just. And would you and the human rights set one him to get the Nobel then? Absolutely.

I'll give him all the Nobel's. Like, literally, if you can free people, all of them, give him every

prize, give him an awesome. For physics, chemistry, chemistry, chemistry, chemistry, chemistry, philosophy,

take housing independent. When's the last time you voted for a Republican presidential candidate?

Just curious.

Yeah, sand, sand, no, no, no, no, no, no, no, no, no, no, no, no, no, I didn't, I would have voted for,

if I was a wage, I would have voted for, I wouldn't have voted for the bushes. I would

voted for the moderates, obviously, Clinton and Obama. Oh, we're paying the water should

again. I would have voted for Reagan in my situation. I would have bought in $4. Well, no,

I didn't vote for Kamala, so I'll leave it at that. But I voted probably for you. Why don't you

say that you voted for President Trump? Just say you voted for President Trump? I don't want to

complicate things, but you did. So just say it. I didn't vote for Kamala. I'll leave it at that.

All right. It's so weird that you say you'll say you're a moderate, but you won't say that you

voted for President Trump. I am supporting President Trump in about 60, 70% of what he does. Let's

leave it at that. Three, two, all right. Let's talk about economic impact of oil and insurance.

Oil has rose to $84 a barrel Wednesday, straight-of-form moves. Here's a video is basically a

standstill at this point. Here's the clip. You can see the traffic slumming down and then,

hey, some of the dots are even going away. That could be ships were teaking out.

Unless the straight opens, 3.3 million barrels of daily production would be lost

early next week. And then there's insurance companies. They've all canceled.

So the war risk coverage of vessels in the Gulf effective March 5th Super Tank Attropic

dropped 94% within the first 48 hours. Trump said the US would provide political risk insurance

for all maritime trade through the Gulf, especially energy. Freeberg your thoughts on the economic

second water effects that we're starting to experience here. And over the next four weeks

could be, you know, intense and acute. The modern insurance market emerged specifically

to solve the risks of maritime trade. So in the 17th century, Lloyds of London,

which was a coffee shop in London, where all the maritime traders were get together and they

talk about, hey, what's the safest route? So pirates don't get our ship and so you don't run into

weather. That's where they would kind of have these conversations. And eventually they started

underwriting the risks of the shipping routes and giving each other guarantees. They said, hey,

if you make this route great, you pay me a certain amount. And if you don't make the route,

I'll pay you the lost value. And that's how Lloyds of London, which is the kind of world's biggest

reinsurance market started. Today, Lloyds of London has 78, what are called syndicate members. And

these are kind of these pools of reinsurance that underwrite big, crazy risks like maritime

insurance for folks that are moving oil tankers through the strait of hormones, which the IRGC

just announced they're shutting down. When the IRGC announced that they were shutting down

the strait of hormones, there's a significant risk of all the mines going in the strait and

the ship's getting attacked and blown up. So loss of value, the insurance premium spiked initially

from a quarter percent, so 0.25% of the value of the ship to 1.25%. So it went up by like 5x. And so

folks had to pay a lot more of the value of their ship in order to continue the routes and get

guarantees that they'll make it through. And then all of the markets started to shut down. So once

the conflict got heavier, everyone said, let's shut this thing down. And that's obviously a massive

risk to energy prices globally, which drives inflation and puts US economic security at risk.

And so this is a brilliant move. I would say the US government stepped in with the US

international development finance corporation, which was actually funny enough started a couple

of years ago, like in 2019 or something like that as a kind of output of one of the agencies that

provided credit from USAID, much talked about USAID. And so they're leveraging a credit capacity

of this old USAID agency to go out and say to all the shipping companies, hey, we'll give you

insurance on your routes. And the reason they need it is the shipping companies are levered. They

take on debt to buy the ships. And the debtors require that they have insurance, or else they're

not allowed to take the routes because the debtors are ultimately going to be out the money. And so

the shipping companies themselves need to have insurance. And so this provides a market that has

now gone away. Very smart. And ultimately, a lot of people are saying this could actually

reshore or onshore maritime insurance back to the United States and create an entirely new

insurance industry here in the US that has historically been served almost exclusively by European

syndicates and European partners. And it actually creates a big economic opportunity as this war

dies down for American insurance companies and American brokers to basically be the underwriters

and the guarantors of this sort of insurance and create a new industry. So that's a super interesting

kind of side story on what's going on here. All right, some breaking news here folks via Bloomberg.

The Pentagon has formally notified Anthropic that it's been deemed a supply chain risk. This

has never happened to an American company. It has happened to Russian companies and Chinese companies

while late. And for background, the Department of War canceled Anthropics $200 million contract

on Friday and said they would do this. The dispute came down to two clauses according to sources

and we have one of the principles here. So we will hear directly from him in a moment Anthropic

had two concerns. Number one, fully autonomous weapons, aka murder bots as we previously discussed.

Dario didn't feel that their technology was reliable yet and wanted some assurances. The second

thing Anthropic said was they were concerned about mass surveillance of Americans because they

believe this technology is uniquely powerful. And it's can do things beyond what a series of

webcams or a network of seven 11 cameras can do. The Pentagon said they want it all lawful

use. Dario, you're welcome to come on the program next week or any time to give your

side of the story. But this week we have a meal, a meal, your thoughts and explain to us what

happened here and how this broke down. It's worth a little history, short history. So

if you remember the Biden executive order on AI, which was this crazy executive order that

limited the amount of compute any model company could do and was essentially grandfathered in a

few small number of AI companies that they were going to designate the winners and everyone

else was out so they could have more control on what they did. Anthropic was one of those winners.

And then they were smart, actually was a good sales strategy to sell into the most sensitive

parts of the U.S. government. Like all over combat and commands, sent comms, sent central

command that's doing the Iran fight now, the Indo-Paycom command, which is sort of responsible for

China, several of the intelligence agencies. And they did forward deployed engineers,

volunteer styles, so they got very sticky to the workflows and all that.

So I came in and I got the AI portfolio for department in August and I said I just want to see

the contracts, the old lawyer in me. And I looked at the contracts, I was like, holy cow,

they say you can't use them to plan a kinetic strike. You can't use their AI model to move

a satellite. You can't, there was a 20 page. You can't do a war game scenario with it.

You could do a scenario, but you can't, like let's suppose you're writing a plan saying,

like if this happens, this is what we would do. And it might involve a connect strike which causes

harm to a human. So like, well, what do you think these folks do? You know, this is the department

of wars. This is what we do. And so I said, okay, well, I've got a number one, have

direct relationships with these companies, not just through Palantir, because I want to use it

more broadly. And then number two, I need to have the terms of service be rational relative

to our mission set. So he started these negotiations and took three months and I had to sort of

give them scenarios about like these Chinese hypersonic missile example. They're like, okay,

we'll give you an exception for that. We'll have this drone swarm. We'll give you an exception

for that. And I was like, the exceptions doesn't work. I can't predict for the next 20 years what

all the things we might use AI for. And so all lawful use seems like a good thing. If Congress wants

to act great, we have our own internal policies, like we'll follow them. We're not knuckle draggers

here. We want to hurt people unnecessarily. So you know, it's our province to decide how we fight

and win wars. So long as they're lawful. And I think at some point it turned into a PR game for

them because they were not going to win this intellectual battle of what we're going to stop you.

We're going to use our judgment because we think Congress is behind and impose it on the US

military. And it became this like, let's find the issues that are most inflammatory, robot weapons

and mass surveillance. I mean, like we're the Department of War, we're not the FBI, we're not

homeland security, we're not nice. You're not allowed to legally spy on Americans. Yeah, you're not,

so it's so you're like, and then what it came down to on that issue just as an anecdote is they

didn't want us to bulk collect public information on people using their eyes or AI system. And they

wrote it in a way that I was like, so you tell me before we got to bulk like if someone types in,

you know, Shaman's linked in, it's I'm using public available information that I would be violating

in terms of service. Like, yeah, well, okay, let's rewrite it. So there's months of this like stuff

which, which was sort of interminable. And then the trigger point was after the Maduro raid.

One of their execs called Palantir who we buy themselves through and asked them was our software

used in that raid, which is by the way, classified information. Anyway, so we're trying to get

classified information. And implying that if there was use in that raid that that might violate

their terms of service. So they wanted to enforce, this is very important here. Yeah,

they wanted to enforce their terms of service. They went behind your back to try to collect information

to then maybe pull your license for their technology. But you know, it wasn't by behind behind

back. I don't want to accuse them of that. Palantir is the prime contractor of this sub. But it

raised enough alarm with Palantir who's got a trusted relationship with the department to tell me

and I'm like, holy s**t, what if this software went down some guardrail kicked up, some refusal

happened for the next fight like this one. And we left our people at risk. And so I went to

Secretary Hague Seth. I said, this would happen. And that was like a woe moment for the whole

leadership of the Pentagon that we're potentially so dependent on a software provider

without another alternative that has the right ability to do to not only shut it off.

Maybe it's a rogue developer who could poison the model to make it not do what you want

at the time or sort of trick you. You have to trick it. I mean, all these things that we know

where we were about models are hallucinate purposefully or do not fall instructions

like some insider threat stuff. So then that culminated in the Tuesday kind of dramatic meeting with

Hexath and Secretary Hague Seth and me and Dario with the Friday deadline that that got blown.

And I never thought they really wanted to make it.

Meal, is the model entirely hosted by Anthropic or just explained to us technically,

does this sit in a cloud that Palantir runs for you guys? Is it really technically a way that

employees at Anthropic could kind of interfere, intervene in the use of the model?

Yeah, so they put their model in AWS GovCloud.

Like GovCloud. And then Palantir serves it from there and they refresh it. They held the control

plane for the model. So so yeah, they can change the model weights if they want. They can do whatever

they want. Yeah, the insight into this thing is unbelievable. Not just governments,

but now if you're running a company, the reality is that what Anthropic showed,

which by the way, is there right at some level, is that they're going to have a political

perspective and a set of terms that reflect their philosophy and that that philosophy can change

on a dime. But what the government did was also completely reasonable, which is we can't rely on

you if you're going to be completely unreliable and disallow things that are reasonable. I'll give

you a different example to make the point. There's a state that wants to run some healthcare program,

but they're a pro-life state. You can't conduct abortions in that state.

Does that mean that the Anthropic engineers can decide, you know what? We're a pro choice,

so we're going to change the access model and the capability of that model inside of that state.

Is that allowed? Should that be allowed? At one level, you'd say this is a private company,

they're allowed to choose, but what that really means is for the government, for all the states,

for any city, for every company, you cannot choose to only use one of these things,

because it is just a matter of time until some person inside of one of these companies goes on

some lunatic moral tirade and then jeopardizes your business against something that is nothing

about law, but is everything about subjectivity. That is the huge thing that this thing

tore open this weekend. So if you're not figuring out how to be multi-model and

agnostic across these models, you're taking on an enormous business risk after Friday,

because you can't tolerate that these folks will do that. It's too critical of a technology.

By the way, this is de-platforming all over again. Remember what happened when you didn't like

what was said, now all of a sudden you were de-platformed? This is that times a thousand,

because this is not about posting on social media. This is about using fundamental technology to

either advantage or disadvantage your business. Emil? Yeah, I mean, I think I describe it the other

way, the other day, the leaders of these companies say they're going to cause 50% white collar

unemployment. This is as powerful as a nuclear bomb. It's like 50,000 geniuses in a data center,

so you could have a small country coerce the world into it, whatever. It's really like holy cow.

All right, so this is a general substrate of intelligence, of technology. That's applicable to

a lot of things. Very generalized. It's not like H.R. software, we could just use the competitor.

This is going to be part of our everyday life in so many different ways, and the controlling the

what, whether it has a moral conscience, I mean, Anthropic has its own constitution. It has its own

soul. It's not the U.S. Constitution. So your subject to that, plus whatever whims and how that

changes, and that's a scary thought for Americans, generally. And I think that did come through

a little bit today, and in the coming years, it's going to be a bigger and bigger deal. So take us

through OpenAI software, Gemini software, and Grox software. Have they pushed back on any use,

or are they like Dell or Apple? They sell you a computer, and you have the computer, and you can

use it as you will. Have any of those given you any pushback? So Grox all in for all awful use cases

across all classified and unclassified networks, as you'd expect, because Elon's truth-seeking,

we want truth in the Department of War. We don't want ideology, because ideology will mess with

operational decisions, but you don't want anyone to anything to be fake or tilted. We're surging

Google. We have Google for all awful use cases on on classified networks, and we're trying to

move them to classified networks, so they have to build out infrastructure, because it's stuff's

complicated. So they're in compliance in terms of what you're looking for as a partner, and then

I guess the last one is OpenAI, and Sam seems to be just characteristically playing both sides

a bit. No, no, just to his credit. I called him, and he said, I need a solution. If this thing goes

sideways, I need multiple solutions. I'd like you to be one of them. And he's like, okay, well,

what can I do for the country? It's like, I need to get you up running as soon as I can.

He was trying to protect anthropic to his credit. He was like, don't call him a supply

chain risk. That's bad for the industry. Let me maybe I can negotiate terms that they'll find

acceptable, but he's in the middle because they compete for the same researchers. So a lot of this

comes down to this thousand researchers, like baseball players that get traded between these

companies. Moneyball, yeah. It's a very money-ballish sort of thing, and it's not that many of them,

and you lose 20% of them, and all of a sudden, you know, they launch cloud code before you launch

codecs, or something like that. And then the numbers change pretty dramatically. So he was

being a real patriot to his credit and trying to help them drop it while they were trashing him

and recruiting from his company. And I am not biased. I want all of them. I want to give them

all the same exact terms, because I need redundancy. I want to see if they diverge or not,

if they converge, maybe only in the two over time. But we don't know. It's too early.

But why keep them in the mix, Emil? So if there's clearly, like, a difference of operations and

philosophy and how they want to run their business, and there's other models, is their model

particularly good at particular applications that make it important to keep it in the mix,

given that there are three or four other kind of alternatives here?

Anthropic, you mean? Yeah. Well, because the number one reason we were having this conversation

at all is because they were deeply embedded. So now I have to unentangle them. And the other

companies have not gone as heavy enterprise, enterprise sales, forward deployed engineers,

government business. So they have to catch up, not necessarily the capability of the model,

but just how do you serve the government to go ahead? Because just way ahead on that.

Right. But the models themselves, you don't think are uniquely advanced, or do you have a view

on that at this point? I don't have a view on that. I don't think they're, you know, I mean,

it was certainly Claude code was innovative and ahead. That's true. But do I believe in 12

months code X is not going to be close? I think it will be. I think you're right. There's an

asymptoting that's happening. If you just look at the like the confidence interval on how

over-performing or under-performance, some of the leading models are, the air bars are shrinking,

right? The confidence intervals, like, these things are all kind of becoming the same.

Eventually, they're all getting access to enough power, enough compute. They're generating

similar results. It turns out, which I think you would expect. So even more important that

you have a complexion of models. The other thing, Emil, I don't know if you saw this, but they posted

about the revenue ramp of nthroping. And well, I have a small software company called 890,

and I asked the team, let's go look at our objects. I posted it because I was so shocked with

these numbers. Our costs have more than tripled since November of 25. Between the inference costs

that we pay, AWS, which is ginormous, between our cost with cursor, between anthropic, we are

just spending millions. Now, more per unit and more aggregate. Both. But the problem is that my

cost are going up three acts every three months. My revenues are not.

So token users are addicted. And by the way, because everybody has gotten infatuated with what we

call these Ralph Wiggum loops, like, just like send the thing off and like, it'll just go figure

something out. A, it never figures anything out. And B, you just get this ginormous bill from cursor.

So one of the things we had to do was just, we had to say, guys, you got to deprecate cursor,

because you're just wrapping plot code and charging us way too much for these tokens.

But I don't know if you're seeing any of this thing where like the tool usage,

it's so great to use these tools. Let's be honest. It's super far from it. It's like, you feel like

a genius. But then the ROI of these tools are really important. I'm not sure that that says much

of an issue for you or not in the department. It will be for sure. As people find more and more

in use cases, the use cases get more sophisticated. So the next marginal thing you have it do is

likely to be harder and therefore be more consumptive, right? Right. Right. Let me just ask,

I mean, the important question that I think triggered a lot of the news this week is why then

designate them as supply chain risk? Why not just abandon them, move on, use the other vendors,

like why take this kind of punitive action? Yeah. So I don't view this punitive and I'll tell you why.

It's if their model has this policy bias, let's call it based on their constitution,

their culture, their people, and so on. I don't want Lockheed Martin using their model to design

weapons for me. I don't want the people who are designing the things that go into the

componentry to come to me because if that poise, if you believe the risk of poisoning inside

it, yes, it can enter into any part of the defense enterprise, but it's just the defense enterprise.

So Boeing wants to use anthropic to build commercial jets, have at it.

Boeing wants to use it to build fighter jets. I can't have that because I don't trust

what the outputs may be because they're so wedded to their own policy preferences.

I guess a dovetail to that is why could in this have been handled quietly? Is this anthropic

who made this a public spat? Or was it the administration that made it a public spat or two to ten?

I mean, they have a very good sophisticated press operation and like really good and painting

us as doing mass surveillance where where where their issue was like some commercial database thing

that someone else could buy they didn't want us to buy to use it, which I'm not even sure we buy

them except to do recruiting for soldiers and you know we run schools, hospitals, we do a lot

of things that do, we don't just fight wars and and the way they were able to characterize these two

things which are generally scary to people, but we're not the real issues. It was really the you worry,

I worried about them shutting off our system at a moment of need or them messing with our system

in motor means. What a thing that came to mind is if they are selling you batteries and you need to

use the batteries or the laptops whoever you need to use them lawfully okay that should be

enough for them unless they are peacenicks and they don't want to be involved in selling weapons

which by the way was Google's position for many years they just didn't want to be involved in it

because to your point they want to recruit talent that is also aligned with that so there's just

seems to be maybe this isn't the right partner for the department of war. If you don't want your

stuff to be used for department war stuff you shouldn't be selling to the department of war I'm

pretty grateful. It's in the name. It's in the name. Well and then also I have to say when you know

you said hey we don't know what how we're going to use this thing like it immediately came to my

was like 9-11 you have to go check with them you know if you find out there's another 9-11 you

need you know black swan event that's going to occur and you have to go clear with them like you

that was literally the comment that was literally the comment when I was yeah so it was in a room

of 20 people so this is not undeniable if everyone Dario wants to die it and I was given these scenarios

these golden dome scenarios and so on and he's like just call me if you need another exception and

you know like but what if the balloon is going up at that moment and it's like a decisive action

we have to take I'm not going to call you to do so it's like not rational and yes so that was

another holy cow moment of like how they think about it that just means that what he wants to be

is the secretary of war that's right he wants to be the the god king there I guess yeah you can't

do that the thing that shocks me and me all I don't know you maybe you can't say anything but

make guys you can comment on this it's clear that anthropic just lost all the Republicans

but I think that if they think that they have the Democrats that's fleeting as well because

I think progressive Democrats fundamentally just hate Silicon Valley and technology and so there's

no way they're going to let some god king over here that they don't control either and so in both

ways I think they accidentally may have pissed off every constituent the longer term fall out

amongst them and progressives will come home to roost because as the progressives want more control

and these guys push back on them they're just going to fall into the same situation

yeah I mean it's an interesting perspective I think if you don't want to be involved in war

that's your right I think you mentioned this like free times to moth it just don't sound bullets

if you don't want to be in but you can't call Smith unless it and say can I the other thing is

what the hell was the senior management and the board talking about over these last few days

because to me it would have sounded insane so then the question is where people just so breath

list to buy this revenue curve what is the board doing what is the senior management really doing

what do you change guys what do you think you would tell them if you were sitting inside of the

board of enthronement if you're an investor you're on the board what do you say to Dario when

he says hey I need to dictate to a meal and hexeth how they use my tool and everybody else is

just saying waffle use as the standard what's your coaching advice well it's also a very unusual

circumstance because I don't think any business in history has grown as fast as they have in

the last 90 days so they've added what was it six billion of ARR in a month or something

I mean that's absurd like I mean absurd it's absurd it's absurd it's a great product open

claw has driven a lot of this it's you're closing your eyes yeah you're shutting the f*** up

yeah you're just shutting the f*** up because something's working you're selling exactly

I think he's off doing his thing and they're gonna let him do it and I don't think that

companies worth 350 billion anymore God knows what it's worth oh that's interesting where do you

if you get put a block of stock right now where do you put a bit in I'll tell you where I'm

oh my god I had I had this conversation at dinner two nights ago it's like you have to pick between

open AI at their current mark andthropy get their current mark or Google and it's either

multiple from here or net market value creation from here because those are actually two very

just different conversations I think the net market valuation because Google's already worth

three trillion so if they double they've added three trillion but I think Google is the bet I think

Google is the market value creator bet but I think anthropic is the multiple bet I think anthropic

is a trillion five market cap at the end of the day unless this blows them up you're still buying

the 5x versus the 3x kind of thing you'd buy the 5x instead of the 2x but if you get put a block

of stock now do you buy it at the last post or do you buy it at a discount or do you just say

ah I just buy it at the last post and anthropic is worth a lot more than 350 that's for sure

I it's undervalued compared to Chachi they just added six billion in the last month and I'll tell

you anecdotally anecdotally I am everyone I talk to is on co-work everyone is like gone deep

on this everyone's amazed and shocked and actively using it and everyone's saying the same thing

which is anthropic may actually both be fulfilling the promise of AI I will also say that it's only

going to take 90 days for Google to flip on a virtual version of co-work and once Google

like has this integrated with G Suite and you have a virtual hosted version of co-work I think

Google sweeps the market with the same and competitor but right now co-work is such an incredible

product and everyone's saying the same thing it's like giving giving truth to AI Elon said something

with respect to Grock which was that he expects it to exceed all of these coding models probably

in the may spend but for sure by June so to your point freeberg like what like I guess my question

guys to you is like what happens okay what do you guys do and you know what do you do when all the

models asymptote let's just say by October of this let's just say I can guarantee you just for

the thought exercise by October all the models are the same do you just take a complexion of the

mall and say great we're going to build some governance layer around it and now we're in

different or I would love to be indifferent because then I can compete on price right and then

then I have and then I have one one main and one we're done in or two mains and I'd need at least two

yeah and anthropics not going to be one of them if they continue sort of with their their

sort of posture so then it would be three and if one gets wobbly from a policy scenario too because

they all you know except for Elon's is based in San Francisco and has that that vibe to hit so

you kind of want to have two or three at any given time and yeah then then you price compete them

I do think Google has a long-term strategic advantage not because not only because of their

consumer thing but because they have their own cloud so between them they don't have the margin

on top of the cloud that anthropical have to pass on so it's an interesting economic proposition

from them and just to build on your point freeberg after you finish your insightful comments

here pull this up Nick almost on cue freeberg there's such an oracle here is the announcement from

Google Google workspace is now integrated for agents and 40 agent skills were included today

and you know you've been great today super honest Dario's position I'm going to give you some fast

balls here Dario says the real reason the pentagon and Trump adamant do not like us is that we

haven't donated to Trump while open AI Greg have donated a lot here's Claude's answer to that

claim here's nine companies and their activities with the administration from the inauguration

to attending the inauguration to the White House CEO dinner to the Melania documentary if you go

through and you look at these nine companies Microsoft Apple Tim Apple Nvidia Amazon they have

all participated there's one company that hasn't participated and that's anthropic are is anthropic

being singled out because they are not genu-flecting and because they're not paying the cover charge

people say this administration is paid for play that's the accusation he's making I'd say maybe

this a cover charge nobody likes to pay it but the other companies have what do you think here I

mean it's one of the dumbest things I've ever heard I truly just because I'm like I'm in the

Department of War I need to win wars if you help me win wars and I don't have to waste time

transitioning you out dumb that makes me thrilled it's sort of it's a criticism on me because

it's not like Trump president Trump dipped in and it's like hey me all by the way those guys

didn't get many money you can't use them anymore obviously it's sort of like like invention in

his own mind it's like I don't know who people sleep at night if there was thoughts get in there

and and I was trying to work with them why would I spend three months trying to negotiate with them

to get to a simple standard if I would have just said okay guys you're out by so I think it's

just some internal psychosis that's the only way I can explain that okay it could be on Dario

that he's antagonistic to the administration both with respect to how he operates commercially

and it's also reflected in the fact that he doesn't want to support the administration I have a

different theory yeah I don't know what they have a massive instance of co-work running internally

that helps them come up with business strategy and I bet you there's like some element of AI

that says yeah you should do it do it it just makes sense zig where they zag and get more press

and so now there's some some f***ing clawed bot telling them to basically tell the department of war

to pound sandball it's going to turn out to be the stupidest decision listen if I was chairman

of the board of that company I pulled Dario aside and I'd say listen you're obviously ingenious

we obviously have the best tool in town this is not a battle you can win and it makes no sense

you're going to come across as not being patriotic and Tim Cook is showing up for the

Melania premiere would he kill you to support the president would he kill you to show up look

what happened I think that's I think that's the one you look what happened when Biden excluded you

on that angled him show up for the president show up for America and be a patriot you don't have

to donate but be a patriot and show up for the dinners that's terrible advice here's my advice

okay here's your advice okay hey Dario call a meal back right now and say you know what sorry

we f***ed up we're going to own this and we're going to put out a press release that says

we support our customers use of our models to do everything in anything that's lawful number one

and number two that our terms of service are written in stone and that you can expect

salinity and reliability from us and this was just the misstep can we all how do you respond I

mean I would say that's what I've always wanted I need a reliable steady partner that gives me

something kind of work with me on autonomous because someday it'll be real and we're starting to

see earlier versions of that and I need someone who's not going to wig out in the middle and we're

just at the early stages and it's rational but then you know you call president Trump and you're

5,000 word essay on Friday I want to be dictator you're going to have to apologize to more people

than just me yeah maybe time to re-underwrite the position here uh let let's just say kumbaya

everybody kumbaya we solve the problem and look who's on the line surprise gas Dario's here I

thought I would surprise everybody Nick pull Dario up no he's not here what's your view on how the

industrial supply chain for hardware components and systems is coming along in the united states

because my understanding is we're trying to reduce dependency on Chinese manufactured components

where are we with respect to where we need to get to in the us manufacturing supply chain

we are early days um critical minerals you see you've seen the action around that um you'll

start to see so I have the office of strategic capital which has 200 billion in lending authority

and what we're trying to do is is it's like treasuries plus a hundred bips loan to companies

show them that the department needs their solid rocket motors their batteries their fiber glass

like all the things that we that were heavily dependent on for our defense industrial base

that are completely outsourced to China and domesticate them here um and we've got a bunch of great

people running it so I but it's early days it's going to take for the rest of the term to get

I think we'll get critical minerals done before the rest of the term where where we have the

access to what we need to from us or allied countries um and but from batteries is like the next

problem I'm trying to solve for example batteries are totally outsourced both technologically and

from lithium to China um and there's like you know kind of call 20 critical things if I could get to

all of them at some level but then it'll take a few years for them to like build plants and do

that stuff but they're they're it's it's very important I hope whatever administration comes next

continues it because I'm all free market but but we outsourced so much that um you know it crippled

sort of the the kind of assembly part of putting all these things together do we have a munitions

risk right now given the conflicts that were involved in we don't have a munitions risk

but um we do need to plus up because the Europeans are taking a long time to contribute like

Ukraine Russia is consumed a lot of munitions from like all over the world and then uh obviously

these conflicts would have been in and um we need to have like the next generation we're still

there's still a large degree we're fighting with 1980 Cold War weapons right and not modern

weapons and so we need to plus up those things that uh to regenerate them I mean our nuclear

missiles are 50 years old some of the planes are 40 years old so all that has to be renewed

do you think um it's just speak to the venture capitalists in the audience are we in the early

stages of this kind of defense tech boom is defense tech well funded at this point or is it kind

of too heighty and bubbly and that's not really the issue it's not about funding the companies it's

about funding some of the further upstream uh issues that we're facing what's what's your view

on where we are there's more defense tech venture capital than ever by you know three x more than

last year so you know the it's growing what I need to do and what the department needs to do is have

some of these companies win big contracts quick like whether you know andralshire um uh uh

seronic sure like bunch of these companies so that more money flows in more entrepreneurs do it

and I could buy more because generally I do think warfare is going from big carrier

carrierships I cost 20 billion dollars and a decade and have to build to mass it's riddle ball

low cost um uh things and that's what these new product these new entrance can do so we need

those to succeed so that the flywheel goes with venture capital money entrepreneurs capabilities

in that sense and what I've heard as kind of the explainer for this is we're moving from

the old primes to the new primes that there's going to be a small set of big winners and then

obviously lots of seconds and and subs and whatnot is that really how this market's going to evolve

so are we going to end up with andral palantir maybe three or four others and that's where most

of the values going to accrue from the market perspective I mean andral palantir want that and I

joke with them all time about it but I I want I definitely want at least a second layer that's

innovative in trying to disrupt the first layer all the time I met a mom and pop like wholly

owned company that that makes these missiles called irams that are we really sell send to

Ukraine and they do it like 30 people and they could do a thousand a year because they've designed

a manufacturer it's awesome so I want companies like that to continue innovating maybe andral then

bought buys them but the one of the reasons the primes are such a small number it's not the only

but it's one is they learn how to contract with the government they learn how to go through the

bureaucracy and that became a competitive advantage I'm trying to take that competitive advantage away

that's a really important point how do you disassemble all that bureaucracy so that

product innovation can actually get to you yeah so we did we did a big work so part of it comes

down to requirements reform what used to happen is people like oh we need a new fighter jet so

army navy air force put into the requirements and we're you know it would we needed to be stealthy

to hold a missile to hold for humans and you know it became this

unbuildable thing but the contractor didn't care because they're getting paid cost plus so like

sure I'll fulfill your requirements two years from now you're like that it was never engineered

properly it'll be enough a few years late and a couple more billion dollars so we're trying to

change that to I tell you my common operational problem I need a bunch of missiles that go 500

miles and more that have this kind of blast come to me with solutions as little requirements as

possible on that side and on the contract piece trying to get to as close to commercial contracts

as possible and this is going to and this is where the startups are so good they'll do fixed cost

pricing they'll do you know pay you don't pay me as much if I deliver late you pay me more if I

deliver early it's very disruptive to the existing systems super disruptive but that's that's

what I'm like waking up every day trying to do so you could put out at something saying hey the

straight of hormones is super important we need to keep it open we need these type of devices to

keep it open but come to us with your ideas yeah and let them be creative entrepreneurs as

opposed to you know just trying to goose the profits yeah it's really brilliant yeah I mean you

also oversee DARPA yeah yeah DARPA is the father of the modern internet and it's created a lot

of really critical technologies can you talk about what's going on in there are there interesting

things that you think our audience should know about that you're trying to push forward I mean there's

it's so it's probably my favorite part of my my office is like because they're that's where you

it's sort of like it's still a very honored profession to be part of DARPA like you know being

at being government service for a long time is sort of reduced in its stature since the Manhattan

project now because now you now if you're great ask you know someone who wants to rockets the

stuff you go to space act DARPA still has the best of the best and so the most creative ideas

happen there one of the things that they're working on that's public is they're trying to use

biology to synthesize critical minerals so so how do you so how do you just pull them out of

ground use biology to do it so you don't need to do all this crazy messy dirty refining that would

like change the game big time on our ability to get the critical minerals we need faster and leap

frog the Chinese in terms of tech so they're doing a lot of that kind of stuff they're deep inside

or cyber attacks are the next huge threat with AI right but what we saw with creating all these

agents to attack systems that are entropic actually happen to them um so they're they're they're

working on that's they've done a ton I can talk about kind of DARPA because it's so it's so

classified but those are a couple of examples for you all right speaking of classified uh just

two quick questions before we wrap here are there aliens and what are you going to tell us

as in number two uh in all seriousness i'm curious what have you learned about China and where

they're at and the threat there in our ability to counter it like give us some idea of where we're at

as a country because we hear a lot of hyperbolic stuff they're building this incredible mobile small navy

they've got hypersonics they're just way ahead of us you know we hear these things but realistically

are we competitive um i thought well i'll answer your first question was i fought for the alien

portfolio i didn't get it all the guys on my team were like do you got to get this for us please

talk to the secretary we want to do this but i but i i was like you know as long as i had a hundred

percent access to everything i would do it because that would be it would be amazing right

lifesavers would be a game check yeah but on the second one uh it is true that chinese have had

the greatest military build up in world history in the last 15 years and we were asleep at the

wheel to some degree because we're focused on global war and terror so they've advanced without

sort of us thinking about that that being said our operational expertise and our space like we

have some sophisticated stuff uh you know it's our subs our space layer um we still have the best

stuff in the world that does you know but but we have to make sure that gap doesn't narrow

right we can't be complacent we should sleep well at night knowing you're there yeah knowing

president trump's allocating money towards this and he's decisive in his actions yeah but we cannot

be complacent we can't invest i feel like this week was a true reminder of how fortunate we are to

have the defense that we have for the united states when you look at what happened in Dubai and in

doha and in telev and you see how people in their residential homes are getting attacked and bombed

you realize just how fortunate we are to have all of the layers of protection that we have

by our government and i've actually come around to this quite a lot i'm a true kind of arguably

libertarian at heart small government but the one thing that i've realized is so critical

for us to have the freedom to do all the things we want to do is defense and so i think it's an

amazing institution very valuable to the united states i mean i'll thank you for what you do

yeah thank you i really appreciate you coming on and being so candid and thoughtful

yeah and insightful this has been an amazing episode we'll see you next time bye bye

happy boys bye bye

oh

we should all just get a room and just have one big huge or two cuz they're like this like

the sexual tension that we just need to release around

You