AI Bubble, Stablecoin Boom, and Runnin' Down a Dream | BG2 w/ Bill Gurley and Brad Gerstner

I'm applauding the innovation. I'm I'm

I'm jumping on board the crypto train

and I hope I hope the incumbents aren't

able to strangle this thing in

Washington.

Hey man, great to see you.

Good to see you, Brad.

What an incredible weekend of college

sports. You know, I have to bring this

up. I mean, okay, Texas had that big

upset of number six Oklahoma. You had to

be pretty stoked about that.

It was fun. People that haven't been to

a neutral sight game. So, like Florida

does with Georgia, Texas, they meet

every year in the middle of the Texas

Fair. So, the stadium's got several

hundred thousand people outside of it.

Oh my god. And when you get inside right

on the 50 on both 50s, you know, all one

team on the other and all the other fans

on the other. So, it's loud and it goes

back and forth and it's unlike an

experience you get where there's a home

team and the crowd's all just rooting

for one team.

Oh, that's cool. Well, my Hooers, my

Indiana Hooers, Bill upset the number

three Ducks going to six and0. And

I have a lot of Duck fans in my uh in my

friend group. So, I'm gonna uh I'm going

to refrain from celebrating with you.

But

I I have to I'm used to celebrating

who's your basketball, but rarely who's

your football, but Kurt Signetti's done

an unbelievable job turning that program

around. My 90-year-old mother was

watching that game and sending me

playbyplay. So, congrats to congrats to

the Hooers.

Well, as long as we're calling out

college football teams and then we can

move on. UCLA starts the season 0 and4,

then upsets upsets Penn State at home

with almost no fans there and wins big

again this week. And apparently there

was a coaching change after the 0 and4.

So this could be the biggest turnaround

in the history of college football.

Go Bruins.

Pretty incredible. So there's so much

happening in the world today. We're

going to unpack a few of those things.

We're going to follow up on some of the

issues, Bill, that I raised in the

Jensen pod. you know, the latest AI

announcements, all this bubble talk,

circularity of revenues, quality of

revenues, AI regulation, but we're also

going to do something today and cover

something we don't often talk about on

the pod, and that's like life and

career. Bill, you have a huge book

coming out, Running Down a Dream: How to

Thrive in a Career You Actually Love.

I'm so excited for this book. So, we're

also going to talk a little bit about

that today. And and in the context of

that, you know, we're coming up on the

two-year anniversary of this pod. I

can't believe it. Time has flown by. But

our, you know, when you and I talked

about about doing this, we said our

mission really, we want to talk about

markets investing capitalism and

companies, but really through the eye of

the investment analyst. You and I more

than anything else, I think, are

analysts. We try to find the biggest

problems, opportunities, challenges in

the world, study them deeply. You know,

we compare notes non-stop. Occasionally,

as an analyst, it leads you to a big

investment idea. Sometimes it leads you

to a podcast, maybe writing an article,

teaching a class for you writing this

book. And sometimes even a major policy

initiative like the Invest America Act

that actually became law. I think you

would agree with me the response over

the last two years has been amazing more

than either you or I expected but you

know that also creates its own pressure

of its own to show up to deliver those

unique insights and this takes a bunch

of time.

Yeah.

So given that and I don't want to bury

the lead here. You have some huge

upcoming projects you want to work on

and you're going to step back from the

co-hosting the pod. I'll still talk you

in on occasion, maybe to being a guest,

but you're freeing up time to work on

your big passions like this book and

going deeper into these topics that

people have heard you talk about here,

USChina relations, talking about

regulatory capture, the dysfunctional

state of US healthcare. And for those

interested, the pod's mission remains

the same. I'm going to keep the same

name. We're going to keep chopping it up

with analysts I respect, sometimes with

Bill, and covering topics that matter.

You know, like last week's pod with

Jensen Huang or upcoming pods I have

with Sam Alman or Satcha.

This is a moment of, I think, really

unique consequence. We both recognize

that. We're grateful to have the

opportunity to open source these

conversations that are truly shaping the

future. And I know I speak for you, we

do it for the love of the game. Like,

this keeps us sharp. It keeps us on

edge, you know, and it's a privilege

really to get on here and chop it up and

share something back with the tech

ecosystem that gives us, you know, has

given us so much. So, Bill, you know,

you have anything you want to say? It's

good.

Sure. Yeah. First of all, just thanks to

you, Brad. Like, this has been great

going back and forth. I had two primary

initiatives coming into it. One, as you

mentioned, was to stay sharp and the

other one was to share and give back.

and I've been writing my thoughts on on

the tech industry since I was a sellside

analyst. So um coming up on 30 years and

um always enjoyed thinking out loud. I

think it makes us better as analysts and

helps us to understand but but I also

like to share with people and uh there's

no question in my mind that this got

bigger than I ever anticipated that it

would. I've been chased down in

international cities and recently I was

I started talking with someone. They had

no idea what I looked like, but the

minute they heard my voice, they're

like, "Oh, you're the guy from the

podcast." So, um, it h it has been

popular and I I know there are going to

be people that uh are upset with me and

I I can only say, you know, I'm sorry

and and I apologize that I'm not going

to be doing it anymore. I came across

this quote that was really inspiring to

me. It said, "Life begins where your

comfort zone ends." And there were a

number of people that helped push me to

write the book. It's taken up quite a

bit of time in the last eight years.

It's been a very long project. We'll

talk about it more later, but I'm

feeling a calling to go work on or at

least attempt to work on some of these

bigger issues. So, I want to create a

platform for that. I want to create room

for it and and move a bit away from the

space that I do know quite well and love

quite a bit, but uh pushing myself, you

know, outside of my own comfort zone and

hopefully, you know, having an impact on

things that really matter.

You and I talked about this throughout

the entire time I was working on Invest

America. I certainly encourage you and

push you to to do this. I think you have

an enormous amount to contribute. And

listen, when I uh you know, you and I

chop it up together every day. I I know

where you stand on a lot of these

issues. I'll bring those opinions to

bear for our audience and you know I

certainly know that you'll have the

burning need to come on as a guest on

occasion and and uh share some of those

views but but in the spirit of analysis

let's let's just dive in this AI money

bubble bill and this Jensen pod let's

start by talking about that you know

we've had just a flurry of announcements

including another announcement this

morning between openai and Broadcom

where open AAI is going to be building

their own inference accelerator

amounting to well over a trillion

dollars of incremental capex. That's

above and beyond what we already knew

was going to get built out. I know that

you have concerns about the level of

capex, the absolute level. And I know

that you also have meaningful concerns

about how it's being financed. Why don't

you walk us through your major concerns?

I think anybody that's been a student of

financial history has, you know, studied

different types of activities that that

historically, let's just say

historically have created red flags. And

the reason that you know any AI you talk

to would know what you mean if you said

circular revenues is because someone has

used it in the past in a way that that

wasn't good. And you know, I had an

exercise which I tweeted. we can put in

the show notes people can find. But I

just described, you know, there's not

one thing, there's like six different

transactions that have happened now that

I would say are non-normal. And I just

described those things to Chad GBT and

ask it for its analysis both as an

accountant and as a financial investor.

and the AI itself, you know, would would

find its way toward company names like

Enron and Worldcom and those kind of

things merely by describing the type of

transaction. And so I think that

suggests if we believe in intelligent AI

that that's just what historically has

become the best practice and way to

think about these things. And I've I've

told you before I think you you have

highlighted that some of the multiples

are actually not that high. And I think

this is part of the reason because there

are red flags that people are looking

at.

If you peel that back a little bit more,

you know, one of the things that you and

I have talked about, the very nature,

you know, of roundtpping or circular

revenues, you know, I think there's this

continuum. On one end of the trans on

one end of the continuum is a true sham

transaction. There's no underlying

demand for the product. I send you a

billion dollars, you send me the billion

dollars back. Right? That's clearly a

sham transaction because there's no

underlying demand. On the other end, I

have massive demand for my product. You

have plenty of places you can go get

capital and we just happen to have a an

investment relationship in addition to

that and I'm buying your product. And

those things happen all over the place

in our economy. And you know, maybe

something to pay attention to, but it's

certainly not even close to being

illegal. And it frankly doesn't even

cause me a lot of concerns about the

quality of revenue. And then we have

things in the middle, right? These

things in the middle where you can ask a

question like would this much of revenue

or product had been purchased but for

this investment right and I think that

at a minimum calls the revenue the

quality of those revenues into question.

So when you look at that do you

discriminate between the types of

transactions that have been announced? I

mean you raised this question first 18

months ago about the credit transactions

that were occurring with the

hyperscaler. So maybe just unpack a few

of the different types of transactions.

Yeah. And look, I think it started at

the very beginning and and I think

that's one of the things that's causing

this is it's become part of the

competitive landscape and the

competitive dynamic. So I think there

are many boards and many CFOs who have

been put in a position where they say,

well, if we don't do it, everyone else

is doing it. You might fall behind. But

it but it started with the original from

my perspective with the original

Microsoft OpenAI deal where credits go

in as a inind investment and then those

credits are used back against you know

Azure and and Microsoft cloud services

and in that case you know and I said it

back then I'll say it again now that's a

re that's a cashless transaction like

there's no cash but it becomes an income

statement uh revenue venue item for

Microsoft and I don't think that's ideal

from an economic standpoint and that

practice has now I think happened at

Amazon and happened at Google. I think

they've made investments in other AI

startups with the same kind of thing and

at the very least it drives usage of

their product versus someone else. Um,

and in the worst case, you know, it

creates revenue that might not have

existed had had it not been for that

deal or at least not on those terms. U,

but anyway, it started there. It's

become quite competitive now. There's an

interesting podcast on plain simple

which I I don't plain English which is a

a uh in the Bill Simmons family with

Paul Kadrski and he he makes the

argument that part of the reason these

transactions are taking place. I I think

this is a credible argument he makes is

because some of these players have

already put so much capex so much debt

on themselves that they don't want to

take the next step. And so in that case

you know you have reached some level

where the company's saying oops you know

I feel uncomfortable going further than

this. The transaction that comes to my

mind when I think of that is there was

one where Microsoft agre I mean Meta

agreed to pay for the failure of debt on

a facility where they don't own the debt

you know and to me that's classic

offbalance sheet financing if they own

the risk of it just because they don't

own the paper you know it I don't see

the difference really but this is like I

said this is happening in a in a lot of

different places

you know one of the things that you

Again, I' I've talked about a little bit

on all-in and other places. If I look at

the Nvidia deal as an example, Bill,

Nvidia has the opportunity to invest

though not the obligation to invest.

OpenAI has the opportunity to use their

chips though not the obligation to use

their chips as evidenced by the fact

they just announced their own chip this

morning and they just cut up a huge deal

with AMD. And you know, in the case of

Nvidia, you're not talking about a

highly levered business. is a company

that's going to generate $450 billion

dollars of free cash and is taking a

small fraction of that over the next

three years and investing in companies

that it it thinks are good returning

investments. I mean Google and Google

Capital have been doing this for you

know for years etc. So again I think in

those cases you can say for certain that

maybe uh you know more of their product

is being consumed than would have

otherwise been consumed right uh you

know we saw this announcement last week

where they're investing in this XAI with

respect to their new round most of these

companies that they're investing in I

think have the economic wherewithal to

raise the capital in other places. Elon

could certainly raise it in other

places. Open AAI was well over

subscribed so they could have raised it

in other places. But here's what I think

people should be on the lookout for.

Okay. So where would I have more

concern?

Okay. Now imagine there's a a a chip

that there's only one customer for. So

there's not a lot of demand for the

chip. And that that chip manufacturer

gives a customer $10 billion and that

customer turns around and buys that

chip. Right? So there's no other

potential customers and that the the the

buyer would not have had the ability to

buy it but for that capital. That to me

raises big red flags. And I do think in

this overall ecosystem, the reason I'm

happy you're bringing it up. I think one

of the things we need to do to keep the

wall of worry there to keep the excesses

from emerging is to call them out. I'm

not concerned as a shareholder in Nvidia

with what I'm seeing Nvidia do today. I

like how they're deploying their cash on

their balance sheet, but I do think that

as you go further and further out the

risk curve, right, further and further

to these startup NeoClouds or further

and further to startup chips, you know,

etc., where people, to your point, are a

little bit more desperate for capital,

don't have the balance sheets, don't

have the market leadership position. I

would not be surprised at all in this

moment to see more of those yellow flags

emerge.

There's a couple things, you know, that

I would say in response. One, there's a

reason we know about a lot of these

things, and that's because some auditor

somewhere made them disclose them. Like

they felt that it was um abnormal enough

to require a disclosure. Second, I heard

I listened to you and and the all-in

team talk about this issue. I I do think

investment is riskier or more

risk-seeking than customer loans which

it was compared to and Cisco got in

trouble just with the customer loans

because they were giving loans to

startups who really didn't have the

wherewithal to pay them back. But when

that's really the issue for me though

when you switch from a loan to an equity

you no longer have to pay it back. So in

some ways it's uh it's easier on the

purchaser than if you had a loan

themselves. But but here's my here's my

bottom line. the I think what this does

this this overall situation is first of

all I think it's driven by competition

at this point and like the first the

first step into the gray zone was way

back at the beginning and so now I think

we're we're fairly pregnant with it so I

think it's a competitive dynamic I think

it increases the chance that we go over

the top that that we end up

overprovisioning and I I kind of felt

like that was unavoidable anyway but now

I think it's higher and but I think it

maybe pushes out when we find out that

happens because you've you've just

created more virtual leverage on the

whole system and you might be hiding

some of the signs that would tell you

things are slowing down. I'll give you a

great example. One of the more peculiar

of all the deals is and this was

disclosed in a core filing was Nvidia

has promised to buy any of Coreweave's

service availability that they can't

sell to anyone else. That is very

unusual. That's not the same as making

an investment. That could easily help

Coreweave with their debtors and and

getting more debt financing. But it also

means as a investor we we don't know

what's going on with real demand for

core because we probably won't be told

if they start moving into the world

where they're offloading to Nvidia or

not. And if you'd have said to me, what

would you look for to see if we've, you

know, kind of reached a point where

things are slowing a little bit? You'd

say, well, let's look at one of the pure

plays and and so now that's muddy.

I could see how it it could be, but I I

would expect that every analyst on every

core we've call for the next, you know,

eight quarters, maybe thanks to you you

just raising the flag, is going to be

asking the question, right? Do you see

any slowing? Are you having to send any

of your uh of your demand to Nvidia, you

know, as a result of this? I mean, one

of the things I like about this as well,

right, these are public companies, both

Coree and Nvidia. It is a disclosed

transaction. It's not like this stuff's

occurring in the dark of night. People

can ask the questions of this uh you

know this with regard to demand. And I

will tell you there is the the amount of

money that is being spent to track every

single part of this supply chain from

Taiwan to the United States. I mean,

look at Dylan Patel's business at semi

analysis. The thing has exploded. The

amount of money people are spending just

to stay on top of this. And the second

they see something that smacks of any,

you know, leakage and demand, boom,

docks fall and and and and warnings go

up. So I think it's a good point but I

think you let me transition because I I

do want to talk about this question of

demand. So on the one hand there's this

question about quality of revenues. On

the other question is are we

overbuilding? So let's show this chart

again. This is basically the $3 trillion

of buildout expected over the next 5

years. This is the capex chart that

we've shown here before. To put that in

perspective, Bill, that's about 60 gigs,

right? because we we now are normalizing

everything to gigawatts of data center.

So that's about 60 gigs. It's not all

incremental. A lot of that is is is

replacement or upgrade. Keep that in

mind. The second is this chart of Nvidia

revenues. This is the Nvidia sellside

forecast. Okay. Forecast this year is

for about 200 billion in revenues

growing to about 350 billion in revenues

over the next 5 years. So this year that

means that they're selling about four to

five gigs worth of compute and again

most of that's incremental but it's not

all incremental and that would grow to 9

gigs of compute nine in 2029 2030. So

that's 350 or 400 billion. That's the

Nvidia consensus revenue forecast,

right? And I asked Jensen on the pod

about this and I said, "What is the

chance that we get into a glut over the

course of, you know, the next four or

five years?" And we'll play the, you

know, the piece. But he basically said

there's zero chance over the next two to

three years because all the buildout

will go to the biggest hyperscalers with

the biggest balance sheets in the world

and they're building it to to run their

core businesses. We haven't even got

into the full uh amount with respect to

these new generative AI workloads. What

is the percentage probability that you

think we'll have a glut will run into a

glut in the next three or four or 5

years until we

fully

convert all

general purpose computing to accelerated

computing and AI. Until we do that,

yes,

I think the chances are extremely low.

Okay.

So, here's a question I have for you.

Did you hear anything in the last couple

of weeks that caused you to believe that

we're on the verge of some bubble

bursting or we're greatly overbuilding

or or or anything else? Or is it just

the flags are up and now it's a wait and

see?

Yeah. So, it's funny. They had Howard

Marks on CNBC this morning. I'm a huge

Howard Marks fan. and they asked him

this question and he he said, "Look,

multiples are too low to for this to be

on you. You can't be on bubble watch if

the multiples aren't high enough." And

you've been making this point for a long

time. And I would say like you'd have to

be a fool not to notice that these

numbers you're talking about are so

remarkably unprecedented from anything

we've ever seen before. They are

massive. You know, I I've talked about,

you know, to see the Mag Seven go from

being massive cash producers to where

they're many of them are taking the

majority of their free cash flow into

capex. It's it's it's totally new and

clearly everyone believes that this wave

is maybe bigger than the previous waves

we've seen that have led to so much

value creation. So, all that's

happening. I like to believe that it's

okay to recognize that the market's

great and still think that these

transactions shouldn't happen this way.

And I'm I'm able to keep both those

things in my head at the same time.

I I I think I I think it's a super fair

point. By the way, you just mentioned

it, so we'll include this chart. This is

MAG 5 capex as a percentage of their

operating free cash flow bill. And if

you look at it in 2025, so that's this

year, they'll spend about 66%

of their operating cash flow on capex.

Yeah.

Right. And if you look at the the the

consensus forecast for their capex

relative to their operating cash flow,

this is the peak around 66%. It has it

going down to about 45 or 50%. Now

embedded in there is they're going to

keep growing their operating free cash

flow at 15 to 20% a year, right? So

there's still room for them to to grow

with that coming down. But I think that

is another thing to keep your eye on.

How much are they spending? And by the

way, just give you an order of

magnitude. Bill, in 2023, their total

capex was 156 billion and this year it's

379 billion.

Right. So radical step up in and your

point's a good one. And just remember a

couple years ago in 2022 when Meta

stepped up their capex spending on

Reality Labs, the stock got obliterated

because people said, "What the hell are

you doing? This is all about free cash

flows per share per share." Including

myself. I was saying, you know, let's

get fit here. Let's drive more free cash

flow out of the business. you know, so

much so that the CFO sent me a hat that

says free cash flow, right? So, they got

real about free cash flow, but there's a

difference between investing that free

cash flow in data centers and AI than

there was in reality labs. As an

investor, let me just tell you my own

perspective. The reason Meta stocks

doing great, notwithstanding, going back

to high levels of capexpend because now

the investors understand it and believe

in it. We're seeing the benefits, right,

in the earnings of the business. They're

growing the earnings of the business.

They don't have to hire a lot of new

employees. And so it's it's

fundamentally different than the capex

that was going into reality labs where

investors were saying, "Hold on a

second. We're going to spend a hundred

plus billion dollars over the next 5

years. We don't even know what we're

building, right? We don't know what

it'll be worth at the end of the day."

So I think for now at least there's

enough belief in the the byproduct of

generative AI because people are using

chat GBT. They're seeing the utility in

the enterprise that they're going, you

know, that they're willing to tolerate

these companies giving over half of

their free cash flow into these

buildouts. I do think another dynamic is

the race condition created by the

competitive dynamic. And it appears from

where I sit and you don't need to

comment cuz you're an investor and and

maybe have more information than I do,

probably have more information than I

do, but it appears to me that OpenAI um

through all these partnerships and

announcements is trying to create escape

velocity, you know, and that could be

against the model providers, it could be

against a hosting provider depending on

how you think the market plays out. Um,

it could could be on the consumer side,

could be on the API side, but it it it

creates an interesting stress test for

anyone else in the ecosystem to say, are

you going to lay chase because of all

the numbers you laid out there? They're

they're gargantuan. And it it'll be

interesting. That's my opinion. It just

feels like they're they're daring people

to to follow them. And and I suspect a

bunch don't. It may work.

Well, it's you've seen this before. I

know we've talked about many times on

here. This was and um ultimately I think

a couple things to remember. These these

announcements are frameworks. It it

allows people to begin working, but

they're not etched in stone. These are

not contractual obligations. You know,

everybody's got to deliver their parts.

If the demand comes in lower, then these

people are not going, you know, uh

lease.

Doesn't the Oracle one have to be

contractual for it to be RPO? Yeah. You

know, I you may know.

Well, for sure. I shouldn't say that

they're all right frameworks, but I I

know for example, like in the case of

AMD, they're going to have to deliver a

workable chip or you're not going to

build six gigs worth, right? Uh in the

case of this Broadcom announcement,

obviously they have to build a workable

chip. So I think your speculation and

again it makes sense to me if you said

what are the advantages of getting out

there and locking up all of these deals,

right? I I can't imagine it. It it it

doesn't help a lot with recruiting. All

the best researchers in the world want

to work at the place that has the most

compute and so you want to lock up the

compute. I I I have to imagine it helps

with the supply chain because you know

now you're you're locking up that

supply. I think your speculation is a

pretty big one, a pretty good one. But

at the end of the day, if you add up all

these deals, I tried to do this and we

may be we may be off by a bit and I'd

encourage people who have a better

estimate to let me know. But if you add

them all up, it looks like to me Open

AAI would be on the hook for like 150

billion of capex in 2030.

Okay. And so like the question is, Bill,

what how much revenue do they need in

2030 to justify, you know, 150 billion

in capex? Well, I think you would need

at least 150 billion of revenue, right?

And you know, like at a minimum, we just

talked about Meta and these companies

spending 66% on capex, but if they had

150 billion of revenue, then the

question is, is it plausible they could

have $150 billion of revenue in 2030?

And I would argue as an investor that

it's it's more than more than plausible

that they could have 150 billion in

revenue, but I think it makes it very

very difficult for anybody else other

than the hyperscalers. Obviously,

Google's going to be there. Obviously

Meta is going to be there. Obviously

Amazon, you know, can be there. But it

makes it very very difficult for anybody

else in the ecosystem, right, who

believes this is a game of of scale

compute compete. So I think your point's

a good one.

Maybe maybe shift a little bit, you

know, an area of passion for both you

and I, which is this AI regulation.

We've talked on the pod many times about

the concerning patchwork of these

emerging state regulations that under

the guise of doing good and maybe

they're even well-intentioned cause a

hell of a lot more confusion at best and

at worst they set back our leading

frontier labs, you know, and and really

hamper us in the race to to stay in the

in the lead in global AI. Well, it's

gone from more theoretical to now more

more problematic. I tweeted over the

weekend in particular about this

Colorado AI act which is now passed into

law, signed into law. It defines

something called algorithmic

discrimination by outlining these 12

protected classes of course age, color,

religion, but also limited proficiency

in English language, reproductive health

and basically said if the algo provides

info, right? If the chatbot provides

information that's used to discriminate,

then there's liability back at the

frontier model level, right? And just

this morning, Gavin Newsome signed

SB243, which mandates safety protocols

for AI chatbot companions and gives any

consumer a private right of action to

sue these companies for any emotional

harm that comes out of a chatbot. I

mean, I [ __ ] you not. You can't make

this stuff up.

You said recently that China is so

competitive with the United States

because it's run by engineers and

America is run by lawyers and that's the

greatest risk we have. Talk to us about

the need for federal preeemption and you

know again just let's dive back into

your concern about these two laws that

were just passed. As an aside, I just

consumed Jonathan Height's book, Anxious

Generation, where he talks about what he

believes is some social harms caused by

some of the apps on the internet

ecosystem. And I do think a lot of the

passion for writing some of these states

laws comes from that place. like there

are local congressmen that that feel

like they should have been out in front

of social media more and so they want to

get a jump on this and and and I I think

some of that comes from there. you run

this massive risk of of trying to

regulate a brand new technology um at a

statebystate level. And you know, you

could ask yourself, you know, and and

and by the way, I I I've said this a lot

about policy, the intent of the policy

is different from what happens once the

policy is implemented. And so people can

come in with great intentions and this

goes back to my speech at all in on

regulatory capture and you can end up

with the exact opposite outcome of what

you intended because you just don't know

enough about the way you write the leg

regulation. Right now a lot of people

believe we're in this global competition

to to see you know whose tech stack for

AI is used on a global basis. And if we

implement 50 different state rules that

these companies have to jump through and

companies that are that are competitors

that are competing in the broader world

don't have any of them, there is zero

chance that's not going to create mud

and slow down the US players. There's

just zero chance. And I'm certain the

people that are writing these laws don't

understand that there might be some

global, you know, consequence of what

they're doing. But but it's bad. I mean,

I can remember when Obama was excited

about removing some of the statebystate

requirements on like hair stylist and

whatnot because it makes it such that

they can't move between states and it's

kind of ridiculous that they would have

different laws and different licenses.

This is like if that's a problem, this

is really a problem. And so I, you know,

from a global competitiveness

standpoint, I would certainly hope that

uh that they're able to federalize this

and preempt it. I don't know if it's

there's too much, you know, water under

the bridge or not. I don't know enough

about what it takes in Congress to make

that happen. But I think this is bad for

I think it's bad for the US and I think

it's bad for innovation broadly. It's

going to make it harder for startups to

do things just because they're going to

have to worry about all this stuff.

Yeah, it's it's it's way worse for

little tech, right? Because smaller

companies don't have failances of

lawyers. They can, you know, go out and

comply. You know, I think the other

thing is, listen, we already have the

Civil Rights Act. We have the Fair

Housing Act. We have the American with

Disabilities Act. Of course, we don't

want discrimination, but this just seems

like broad overreach. It's no like I

don't even know how you comply or

enforce. And so it just ends up bogging

down the entire system in uncertainty

and litigation. And again, it's

important to say this isn't even about

whether or not AI should be regulated.

It's just a question who should regulate

it. And what we're saying is that, you

know, there is ample opportunity

for this administration and Congress to

get together and write legislation to

the extent it needs to be written,

right? To provide a national these are

inherently interstate technologies.

there's no way to keep it in a single

state and so write a piece of national

legislation that allows us to continue

moving forward very quickly but all of a

sudden

think we need a we need a moratorum on

all state laws postpone all state laws

until the federal government has time to

act and if states are going to pass

these laws bill then I wonder whether or

not open AI or some other company should

consider blocking the citizens of those

states states until it's resolved at the

national level. Somebody needs to get

the attention of these states that they

can't do this on a state-by-state level.

It's bad for the companies. It's bad for

the country. But hopefully we'll get

action out of Congress soon. I think

there's good momentum. We almost had it

passed as part of the I think the big

beautiful bill.

Yeah.

And so I think there's a lot of movement

of foot in order to do it. I wanted to

highlight it because I think it's it's

one of the high priority issues facing

the new Congress. all this AI all the

time stuff, Bill, and you you pinged me

and you said, "Hey, I want to talk about

stablecoin right?"

Yeah.

We have this parallel development in the

world. So, I think if we have three

major trends in the world,

AI is clearly the largest super cycle

going on. The re-industrialization of

America is massive. All these critical

supply chains, and I would say the third

one is kind of the digitization and

tokenization of finance. It's going on

as a result of the administration

basically turning 180 degrees from where

the Biden administration was total

support of crypto and the bipartisan

Genius Act. So, here are a couple facts

and figures, you know, to throw your way

and then I'll let you take it over.

Total stable coin supply is now over

$300 billion, up from basically zero in

2021.

And this is dollar fordoll backed stable

coin, correct? Adhering to the new

policy.

Yeah. and total settled is now over 18

trillion. Monthly stable coin senders is

now close to 30 million and circle and

tether are issuing 15 billion of stable

per month and becoming the largest

buyers of US treasury.

So that's how much they're increasing

the pool of capital they hold to to back

up the stable coins. Yes,

correct. And we'll show this Visa

dashboard. You know, it's really cool

for tracking all of this activity. Of

course, Stripe after the purchase of

Bridge has gone all in on stable. They

just unveiled this new stable coin

issuance tools and expanded into AI

commerce with open AI that could have

some stable implications. So, what are

your Spidey senses telling you about the

consequences of what I think is a

dramatic change and where we're headed?

Well, one thing I I think that that many

people who listen to the podcast might

say, "Oh, look at Girly jumping on the

crypto train." Because I have not been a

bull. And so to to them, you know,

kudos, think, you know, for getting it

right. I had no idea you would have this

dramatic a shift in policy. It's

probably one of the biggest shifts we've

ever seen in uh in financial policy. And

and quite frankly, I've always felt

like, and this I think is still to play

out, that the financial incumbents in

the US are really good at regulatory

capture and preventing themselves from

getting disrupted, which is part of why

I've been surprised. Something that

really raised my eye that made me pay

attention to this, which seems far away,

there was a a a

move by the Trump administration to

criticize Brazil for the success of

PICSS. And I've talked about Pix in the

past. Um, Pix is a digital clears

immediately um, interbanking product

offered by the Brazilian government that

didn't exist 5 years ago and is wildly

successful. It was mirrored after the

same programs that was built in the UK

17 years ago called UK faster payments

that we've talked about and these

programs exist in China and India as

well and because of the regulatory

capture none of this has ever happened

in the US. Your AC takes three days to

settle. Your wire costs $25 for

domestic, $50 for international, and you

have to fill out pages and pages of

crack sometimes get a verbal and it and

and it and it's, you know, we are so

behind. I am going to go out on a limb

and say I hope someone whoever agitated

this to happen in the Trump

administration is someone who is kind of

caught in a regulatory capture position

getting lobbied by somebody. I I think

if the Trump administration studied

this, they shouldn't be critical of

picks. They should be envious of it. We

should have done this a long time ago

with Fed now. But we may be on the verge

of stable coin just being able to do

this anyway. And the rails have tons of

transaction on them as you've talked

about. We have this interesting

situation where Coinbase and Circle have

done this deal where Coinbase will allow

you to earn 4% on your stable coin

balance which you know to to get that

kind of return at another bank, even a

NEO bank, you have to have your direct

deposit go there. here, whether it's 10

bucks or or a million bucks, you know,

you put it in stable coin with Coinbase

and you start earning 4% daily. And on

top of that, and this gets back to the

Pix thing, you can transact immediately

out of that account. So, you don't have

to like move it from your savings to

your checking to get it to do a you can

send stable coin immediately in micro

seconds and it'll cost you a few

pennies. It is the rails are there.

they're ready and it's working. And I

think the UI is a little difficult, but

there's no reason why that won't get

better and faster. And so I look up, you

know, and I I'm just I wonder what the

team at Meta like they might just be

kicking themselves like with all the

money they spent on that coin,

everything they wanted to do on

WhatsApp. Like they should be running

back at it. Like I don't know. So, so

maybe they should, you know, remember

the guy who did the the Libra network,

David Marcus has started the Lightning

Network. Now it's a startup. Maybe maybe

Meta should go buy, you know, should go

buy Lightning and bring David back in

house because, you know, all the things

they talked about,

all the things they talked about are now

what's happening, Bill. And let me tell

you one, I think you're on to something

big here. But one of the challenges we

still have, I think first anybody who

looks at our current system, right,

knows that it's dreadfully behind the

rest of the world, right? And we know

it's the result of regulatory capture by

not only card issuers, but the banks and

everybody else who who likes the who

benefit from the status quo. But if you

look at Visa and Mastercard today, I

think that they're doing something like

50,000 transactions per second. And I

checked with our good buddy Vinnie

Lingham and he said, you know, on on

both Salon and ETH today, they're still

under 4,000 transactions per second. So

they're trying to come up with these

solutions to actually make the rails

have the functional throughput and

efficient settlement required to really

become a consumer product. But I think

you nailed the other one that you know

Patrick Collison had a tweet on this

that I replied to which is you know when

Genius Act was passed there was massive

lobbying by the banks to prevent the

crypto companies from paying interest on

stable coins.

So the settlement was that they could

pay rewards not interest. Okay. And um

but what the way in which it's

manifested itself because Coinbase is

not the issuer. Circle is the issuer and

they did this deal. So Coinbase is

promoting it as though it was interest.

So from a consumer perspective, a reward

and interest if it's 4% is

indistinguishable.

No doubt.

Right. So I put my money

and and obviously Brian's been out on

Brian Armstrong of Coinbase has been out

on X like

arguing his side of the argument. So

he's clearly he's either getting

opposition or expecting opposition on

the regulatory front. And when I see,

you know, whether, you know, whether

it's Visa or NASDAQ or any of these

people kind of run at the tokenization,

I always worry like because if you look

at the history of like the debit card

versus the credit card, it was supposed

to be disruptive. It was supposed to be

an alternative that would change things,

but they just they just run at it and

strangle it and mix it up a little bit

and then it's not as disruptive as it

was. That's their go-to move. But, you

know, when I read this thing on Pix

again, like I'm going to read this out

loud. It as part of its aggressive

economic and political campaign against

Brazil is investigating Pix accusing the

payment system of unfairly utter

undercutting US financial and technology

companies like Visa and Apple. I mean,

that's the most absurd thing I've ever

heard. Undercutting Visa. Like do do

they realize they have Visa Mascard have

like the top two operating incomes in

the history of American business? Like

like there's there's no one that needs

less protection than these guys. If

anything, there should be an investment.

Were

those guys at the dinner at the White

House

in the cabal? I don't know. I I just

like it's uh it's so bizarre to me. I'm

so thrilled to to see this kind of

disruption. I think that it's super

interesting what's possible. I suspect

all of the big guys should be paying

attention to this. Apple, Google,

Amazon, anybody that might have payment

under Rails.

I'll go out on a limb, Bill. You're

going to see the you're going to see the

hyperscalers. You're going to see Amazon

and Meta and these guys back involved in

the stable business. At the end of the

day, we know money is a network effects

business. And the challenge of Circle

and some of these stables from a

consumer perspective is univers uh Visa

and Mastercard are universal. So, you

got to get to all the merchants. Well,

who has all the merchants? Amazon and

Meta, right? And so, I think they're in

a great position to partner with or do

some of these things themselves.

Clearly, they have the instinct to do

it. That's why they did Libra in the

first place. It's also amazing for

innovation and and one of the reasons

why I think those bigger companies

should run at this is if you look at the

history of the picks like alternatives I

mentioned in the UK and China and India,

the startups that do financial

innovation scale up way more

aggressively and successfully on those

rails that are cheaper and faster. And

if if anything the having more rigid

high friction high transaction cost

rails makes it harder for a startup to

think about you know using one of those

technologies and so the success of

WeChat pay and Alip pay which as I

described for my China chip are

universal. They're the only way people

pay in China happened because of that

government instant pay product not not

in spite of it. And and the same thing I

talked to the CEO of New Bank. He said

Pix was huge for his business. So it's

probably bad for a Lagard bank, but for

a bank that embraces it, it just becomes

a better feature. And I think the same

thing about Coinbase and what they're

doing here. So I'm applauding the

innovation. I'm I'm I'm jumping on board

to crypto train. And I hope I hope the

incumbents aren't able to strangle this

thing in Washington.

Here here.

as we move towards the end and and talk

about my book and what I'm going to do

next, I do want to share with you that

that both my book and and the the next

project are outside of what I've I've

spent my career doing. And and as I

mentioned, you know, that that's kind of

moving outside my comfort zone, but it's

also, you know, trying to have an impact

and give back in areas um that that I

don't know as well, but but with a hope

towards having an impact. I've said this

to you before, but I I've been just

inspired, frankly, to go do this based

on your success with Invest America. And

when you first told me about it, you

know, I had doubts that you could get it

done. Real doubts. And um I've watched

other people in your shoes try and do

these types of things over decades and

be unsuccessful. So, you made it look

easy. I know it's just getting started.

Um, but I wanted you to know how much

that inspired what I'm going to go do

and and could you give us an update on

where things are?

Well, that means a lot. Bill, maybe to

talk about it first is just a reminder.

You know, we I think you and I agree we

kind of have this battle for the soul of

America when it comes to capitalism

right now, right? And that that's

fundamentally because too many people

feel left out and left behind. 60% of

people will never own assets that

compound. Mandami is winning the mayoral

race in New York City and you know

they're doing it by being anti-

capitalist but if you look at these two

charts I've shown them many times before

it just shows you that free market

capitalism is the most productive force

in the history of the world right this

first chart just shows that GDP on a

global basis went parabolic at the exact

same time that capitalism was really

introduced and started taking off and

you know reminder like GDP is important

because It's that surplus for humanity

with a fixed amount of labor and capital

that then leads to better schools and

better hospitals and and and drugs that

save lives and all the things that make

our lives better. And you can look at

this chart that shows the results. Fewer

mothers die in childbirth. The average

age, you know, uh of life is extended.

The quality of life is higher. Literacy

rates are higher. Bill Gates extols upon

this in his in his annual letters. So

it's not just an investment account.

This is really a much much bigger battle

over where we want the country to go.

And I was very concerned as you know a

few years ago that we were headed down

this path, right? And the path is that

you can't have so many people left out

and left behind. So I think the answer

to socialism which has not worked for

Europe, right? Europe's in a disaster

relative to where they were 30 years ago

on a on on a global competitiveness

basis. and China as you well noted have

pulled themselves out of poverty by

leveraging capitalism right so the

answer to this drift into socialism is

more capitalism and the invest America

accounts now known as the Trump accounts

right are more capitalism they make

every child a capitalist from birth a

private owner gives them a th000 bucks

in a 401k like account that they own and

control their family has on their phone

and so I think that's a gamecher you

know but you're right we just got pass.

So what where are we now? The Treasury

Secretary Scott Bessant has to implement

this. And by the way, this is one of the

largest consumer launches in the history

of government. So at the start today,

there are 65 million kids in the country

qualified for an Invest America account.

Every kid under the age of 18 and every

kid under the age of two will

automatically get a,000 bucks in their

account. Right? So you'll probably hear

a launch starting in maybe early

December. Well, they'll launch the

website. People can sign up for this.

Remember, the accounts have to be funded

and established by our 250th birthday

July 4th, 2026. That's only 9 months

from now. And I can tell you, I've been

blown away by the secretary, Secretary

Bessant, the assistant secretary Luke

Pettit, and the team at Treasury working

with the White House. They're attacking

this the way I would attack I would

expect a a Silicon Valley startup to

attack the problem. They've gotten a

great great group of technologists. Joe

Gbia helping to design the front end of

this of course from Airbnb. So, you

know, we're we're on the verge now of

some major announcements, the the start

where people can start signing up their

kids, you know, and then the goal is

once we launch this, all these kids will

have these accounts. They'll be able to

roll them over into their favorite, you

know, uh, bank, whether it's Schwab or

Fidelity or JP Morgan or what have you.

And starting on July 4th of next year,

Bill, as close to automatic account

creation as possible. So you have a

child, the child's born, they get a

social security number, and they get an

account seated with a,000 bucks. From a

kid's perspective, it's going to look

like I own a little bit of Microsoft and

I own a little bit of of uh United

Healthcare and Nvidia and whatever.

We're going to be able to teach this. In

fact, you know, your buddy Tim who's

teaching financial literacy, you know,

we now have 30 states require financial

literacy requirements. We're going to

have this embedded in the schools. Every

kid's going to have this on their phone.

So, at any rate, it's going incredibly

well. I give I give them a very high

score, but we got to get it done.

So, let's talk about your book. I've

been a huge fan of of of the of the

speech you made on this, but I love the

title, Running Down a Dream. What's the

thrust of the book? I remember, you

know, kind of that lecture, but what

really compelled you to write it? So I

was years ago and this this is probably

going back 10 years. I was reading a lot

of biographies and I noticed certain

patterns among people with extraordinary

careers and as VCs we see a lot of

patterns in businesses and pattern

recognition and I just saw patterns with

people and in the back of my mind I

always wanted to do this presentation.

And I I I kind of kept notes on it like

I would a unwritten above the crowd blog

post. And I had an opportunity I got

invited had an opportunity to give the

presentation to the NBA class at the

University of Texas. And so I, you know,

I worked on it and uh put it together,

made it nice and gave that presentation.

They ended up putting that on YouTube

and many people have come to me and said

that it's changed their lives,

encouraged them to do different things.

certain people in the in the in the

media industry notice David Sinra who's

got the new podcast where he interviewed

Daniel Ek and Michael he's a big fan of

the presentation talks about it a lot in

on his podcast James Clear who wrote

Atomic Habits maybe one of the best

self-help personal development writers

out there he retweeted it and put a

transcript on his own website and then a

few people who are influential in my

life started proddding me you should

turn that into a book And so eventually

I got convinced. Um we talked to

publishers, they were interested and so

I started working on this. Now it it

took a long time and the the thing I

would say about it is that I hope that

that time equates to quality. Like I was

out there really wanting to make it

great. And so the book has an

interesting kind of novel architecture.

We combined what I call profiles. So

stories of success with principles,

tools of success. So they alternate. So

you get a a story maybe about someone

you didn't know um and how they started

at the very bottom and became successful

and then the types of things they did.

Um and I do I do think that the

principles, these tools that that are in

the book are things people can use. And

I really want it to be great. It's done.

I still need to record the audio

version. All the podcast fans of ours

tell me I have to do it. It has to be my

voice. So I'm gonna do it. I hope people

love it. I I hope it changes their lives

for the better. And what I really want

to encourage is people to take a chance

and and do what they really love.

I think it's such an important topic.

You know, one of the things parents are

asking me so much these days is, you

know, what what should my kids do,

particularly give there's a lot of

anxiety in the world,

right, today about future careers. And

so maybe just talk a little bit about

why this is so important now because I

think the timing is really profound

here. So in in the introduction chapter

we un unpack a lot of this and I don't

think anyone would be surprised when I

read some of this but but Gallup poll

does a career engagement study they've

been doing it for a long time I think in

the 2023 one only 23% of people said

they were thriving or engaged at work

and 59% were unsatisfied and that's just

a big universal survey. Everyone seems

aware that we've kind of moved to this

gauntlet that we've put our kids in as

they approach college and go through

college. In the coddling of the American

mind, height and Luciana call it a

resume arms race. And um we really

taught them to be grinders, but Angela

Duckworth highlights that if you have

persistence but not passion, you

eventually recognize you're in a grind.

And and and and when you come out of

that, you're in a really tough spot. And

so we've got people, we've got these

kids on this runway. We we're telling

them like they have to pick a a major

even in their application. So they're

17. What do you want to do with your

life? What do you want to do? And and

they they really don't know. And one

thing we stumbled upon doing research on

the book. I I was working with a

researcher. We did this survey and asked

people, if you could start your career

over again, would you do things

differently? And in that survey, 70% of

people said yes. And we did it again

with Wharton just to make sure we had,

you know, a true academic survey going

on and they did a lot more people and

that number was still six and 10. Six

and 10 said if they could start a career

over, they'd do it again. And there's a

there's a great book I read a lot of

books in writing my book, but there's a

great book called The Power of Regret by

Daniel Pink. He's he's a well-known

author, but he he has this thing he

calls boldness regret. and he said, "One

of the most robust findings in the

academic research and on my own is that

over time we are much more likely to

regret the chances we didn't take than

the chances we did." He says, "Again,

the surface domain, whether the risk

involved our education, our work or love

lives, doesn't matter much. What haunts

us is the inaction itself." And so, I

think that I think that ties really

nicely with this idea that if people

could start over, they'd do some they'd

do something different. There's a great

video that that Pink references that we

can put in the show notes where Bezos

has asked about the decision to leave de

Shaw and um and start Amazon. And he

said he used a regret minimization

framework. He said as only a nerd could

do that. But he said um that he imagined

himself being 80 and would he care that

he left de Shaw and maybe forewin a

bonus you know or would he or would he

care more that he didn't take this

chance this kind of instinctive chance

that he felt like he had to take and he

immediately after thinking about it know

in that way wanted to go do it and so

hey Bill I have Bezos's regret

minimization framework taped to my

computer monitor

there you Oh, I didn't even know that.

It's literally taped to my monitor.

Yeah. Powerful.

Yeah. So, so that's that's that's what

this is about. That's what this book is

about. That's who it's for. And I want

more people to take a flyer and go do

what they love. You know, we I have a

phrase I use in the book, life is a use

it or lose it proposition.

Totally

one-shot deal, man. Well, how do you

plan to promote it?

It comes out in February, late February.

And so I'm just getting started in that

process. If people have ideas they want

to share with me, uh, please reach out

and let me know.

Book club. I I'll host I'll I'll host a

book launch event, Bill.

Okay. We we've got we've got a lot of

fun stuff planned, but but but uh but um

I need to record the audio book. I I

know that's going to take a lot of time.

I'm excited. There's a handful of people

that have read it, maybe maybe 50 in the

publisher and whatnot, and nearly every

one of them tells me that they

immediately thought of three or four

people they want to give it to. And so I

hope there's kind of a viral component

to it because people have that reaction.

But, you know, if you're feeling stuck

in your career, you should read it. If

you're a teenager, young adult who feels

overwhelmed by people telling you, where

do you want to major in? Where do you

want to go? what are you going to do

with your like I think this book won't

put more pressure on them. I think it'll

actually relax them and give them a

framework that feels like a lot more

personal to themselves and like they're

a lot more in control. If you're a

parent that wants to help a child on

that journey, I think parents sometimes

overly push kids into the lawyer,

doctor, banker framework. I'm not sure

that's healthy, especially in this AI

world where those jobs may be under risk

as well. And then maybe if you're, you

know, an administrator or someone in the

type of role that guide people in career

decisions, hopefully you'll like it as

well. But we'll put the pre-order link

in in in the show notes. I will put it

on my X feed. Please go out and

pre-order the book. Uh I think it'll

help it be reach more people and and be

successful.

Well, I think it's uh it's going to be

hugely impactful and it's the type of

stuff of consequence. I'm I'm I'm just,

you know, I'm thrilled that you're doing

it. And I'm thrilled that you're taking

the time to do it. I know that's not the

only thing that you're you're thinking

about. You have these other, you know,

big topics that you're thinking about as

well, Bill. We've talked about them here

and I'm sure we will continue to.

Regulatory capture, US healthcare,

nuclear, etc. What are you thinking

about uh uh with respect to those

things?

So,

you going to write a book on every one

of them?

No, I that's Well, I could, but it's not

it's not my goal. My my goal is to just

go spend more times on these really big

problems and see if I can be helpful in

any way. I've spent a career kind of

breaking down and analyzing different

situations. I mean, two two of my

favorite podcasts we've done and and I

hear I hear about this from the

community as well. Um the one we did at

Diablo Canyon and then the one about

around my China trip. And those types of

of work are very rewarding for me. But

they also were learning expeditions. You

know, I went out and put in more hours

for those episodes than others.

And the the nuclear one in particular,

you know, one of the things people ask

me, why would I want to go do this? You

know, we were a small part of a movement

to kind of change the mindset on nuclear

energy. And there were there were people

that put a lot more effort into us. I'm

not trying to take credit for it, but

you know, the fact that Steve Pinker was

out there, Elon, you know, our stuff,

like it eventually happened like

overnight, it seemingly overnight, we

went from a very negative mindset

towards nuclear energy to recognizing

that it's very clean energy and

something that that can really help save

the planet. And so that type of meme

flip, if I could go achieve more of

those in these other areas, I would

consider it a win. So that's what's

motivating me. I'm really looking

forward to it. I'm kind of fired up and

nervous at the same time, but but that's

what that's what I'm thinking about.

There'll be more to come on that in

terms of what the actual platform looks

like. I'm still working on it, but for

now, I'm going to I'm going to sprint

into February to make sure the book does

well.

I couldn't be more stoked for you. This

has been a total blast. You and I have

been chopping it up for, you know, for a

couple decades, but doing this last two

years together, pounding out these has

been a lot of fun for me. I'm sure we'll

continue to chop it up every day. And

you know, I'm sure that you'll find some

topic that you can't live without

exploring on

resist talking about.

Exactly. So, we we'll get you back on,

but I'm going to give you the last word,

Bill. It's awesome. Awesome to hear

about all of this, and I'm super excited

for the book.

Well, I would I would just, you know,

end the way I started, Brad. Thanks to

you. It's been fun working together on

this and and uh and doing it every week.

It does force you to stay fresh. you

have to read everything you possibly

can, which I'm sure is super helpful to

you as an investor. And then thanks to

thanks to all our listeners. Like I I I

I'm sure some of them are feel going to

feel like I'm letting them down, and I I

feel the weight of that. Um, but

hopefully they'll recognize that I'm

going to go try and uh put put my uh

work effort to good to good causes.

As a reminder to everybody, just our

opinions, not investment advice.