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00:00Principally, the Hill and Valley Forum is about the inception of technology as an industry and politics.
00:07And, you know, prior to the war in Iran and doing business with the Pentagon,
00:11probably the mainstay of that Vinod Khosla was to what degree America should export its technology to the world,
00:21but principally China. And you have some views on that.
00:24So to the world, broadly, yes. To China, specifically, very little.
00:31I don't think there's much room for collaboration with China.
00:36There are adversaries, and we are in a techno-economic war with them.
00:41And war is the right term to use.
00:44You consider yourself a China hawk.
00:47Yes.
00:47But there are different extremes and grades of hawkishness.
00:51You know, those that consider themselves a China hawk might also argue if you do not export...
00:58We're talking about semiconductors as one technology to China.
01:02There's a vacuum.
01:03And it empowers, it provides opportunity for Chinese domestic companies and players to occupy the vacuum.
01:11No question about it.
01:13It creates a vacuum for them.
01:15But let's not be fooled.
01:18They are wholeheartedly, with full effort and the power of the government behind them,
01:24going after, filling those holes, whether we supply them with technology or not.
01:30It's not going to slow down that hole or that incentive to push further on chips, on AI,
01:42just because we supplied them technology.
01:44In fact, they will steal it, distill it.
01:47That's right, right.
01:51Please continue.
01:53They will push full force forward, whether we like it or not, whether we supply them technology or not.
02:01So I don't think it's to our advantage to give them anything that they can further distill.
02:06Right.
02:07As you know, Enthropic has accused them of stealing or distilling.
02:11I think that will continue to go...
02:12OpenAI has as well.
02:13Yes.
02:14But has that ship sailed?
02:16You're still here making the conversation, trying to reinforce your views.
02:22But at the same time, Jensen just last week is saying that China demand is back and he's getting orders,
02:27and people seem to be celebrating that.
02:30He is celebrating that.
02:31It's in his short-term economic interest.
02:34I don't believe it's in the interest of the country as a whole to do that.
02:40Of course, he's got whatever deals he can.
02:43He's a great guy.
02:44He's a very visionary guy.
02:47But it's good for his business, and that's his responsibility as CEO.
02:51That doesn't mean everything he does is good for America.
02:55It's good for his global business.
02:57Do you think there's a chance that we change policy, change tap, decide to cut off?
03:02I think we absolutely should.
03:05And I'm in the cape of being as hawkish as possible.
03:09And it's the right policy for America, and I thought this,
03:13this administration was on that bandwagon, but they seem to have changed course.
03:20I don't know what the influences were.
03:22There are probably some that I don't understand.
03:26The middle ground, middle ground is not the right term.
03:30The other consideration are countries in the middle, principally the Gulf.
03:38You export the technology to the Gulf.
03:40If you don't same vacuum, China comes in.
03:44But equally, there are still so-called diffusion considerations around,
03:48well, would China have access to that technology through Gulf nations?
03:53Where do you stand on that, Vinod, that middle ground?
03:55You know, look, there's no clear answers to all these questions.
04:02That's a place where if we don't fill the vacuum, they will.
04:06China will.
04:08And I think it's important to have global use of our technology.
04:13So it's a balancing act.
04:15How much you allow is, excuse me, an open question.
04:22The vacuum is an interesting turn of phrase when we think about,
04:26there's worries that there might be a capital vacuum coming from the Middle East
04:30or lack thereof of money, because suddenly it's going to need to be spent elsewhere.
04:35As someone who's thinking about the next fundraising or next fund that you want to launch,
04:39Coastal Ventures, the idea that maybe Middle East money was helping some of the companies
04:42that you supported go on to do gargantuan rounds,
04:46is that a concern that you're hearing, that you're believing?
04:50Look, what the consequences of the Iran war are and what it does to capital flows
04:56and the need for capital inside the Gulf areas, a little hard to predict,
05:01it's too early to predict, but it could have an impact, for sure.
05:05I'd be worrying about my own spending needs internally.
05:13So it does matter.
05:16Although globally, we're pretty well distributed.
05:21We don't take money from China or Russia or Russian interest.
05:26This is in the context of who your LPs are or are not.
05:28Yeah.
05:29Yeah.
05:29So our LPs are pretty broadly distributed.
05:32The Gulf is an important component, but not a huge material component.
05:39So I suspect somebody like us will be okay, as long as we,
05:44our crux is if he performed well, we get the capital inflows.
05:48Right.
05:49And so that's on us to perform well.
05:51I think if that money dried up, it would not materially affect us.
05:57It may affect some of the much larger projects that need billions of dollars.
06:03Well, for your fund to perform well, maybe we get some extraordinary outcomes in 2026.
06:09If the capital markets open up, if open AI goes public, if we see some other public debuts,
06:15is that going to happen?
06:17Are you worried about it?
06:18Do you have a timing concern in that respect?
06:20You know, I never worry about timing in our business.
06:24When we invest, we don't know what the markets will be like in the usual period of liquidity.
06:31It'd be like trying to predict 2026 in 2018, which is when we committed to open AI.
06:39Like, there's no possible ways.
06:41You really have to take a resilient view of if it takes longer or shorter, what do you do and
06:49how do you manage?
06:50And every company has to have that plan.
06:52We try and do that.
06:54Not always possible, but mostly it can be done pretty well because we have no idea.
06:58Today, when we are making an investment, what the market is like in 2032.
07:04Now, you tell me if you know.
07:06Not in the business of predictions.
07:09I would like to talk a little bit about open AI, but in a slightly different context.
07:14You wrote the first real institutional check into open AI, if you will.
07:19You are not an investor in Anthropik.
07:21That's right.
07:21We are not an investor in Anthropik.
07:23The conversation here at Hill and Valley in part has been, of course, Anthropik's relationship with the Pentagon.
07:31And what I had heard from a number of Anthropik investors is that they actually cheered Dario Amodei taking not
07:39a moral high ground per se, but basically saying having that niche of having red lines is good commercially.
07:46Now, the consequence of that action is that open AI came in and had an opportunity to do business with
07:52the Pentagon.
07:53And I would be grateful, Vinod, drawing on your experience in the Valley and as an investor on how you
07:59feel Anthropik handled that and then what open AI did coming into it.
08:04So I had a tweet on Dario's comments.
08:08It was very simple.
08:09I said I admire him for sticking to principles, his principles, and I admire anybody who sticks to principles.
08:19But I think he had the wrong principles.
08:22He should not be the one deciding what technology the Department of War should use in the battlefield or anywhere
08:32else.
08:34I think he can mandate things like no illegal uses, like mass surveillance and others.
08:41That's a reasonable position to take.
08:44But to understand what the Department of War can or cannot do with the technology should require all the knowledge
08:54that the Department of War has.
08:56And their knowledge of what President Xi would do in Taiwan or what President Putin would do.
09:03I don't think Dario is in a position to do that or judge that.
09:08And I think so the principle of sticking to principles is great.
09:12He just happened to have the wrong principles.
09:14And it's reasonable for him to explain what the technology is capable of and not capable of.
09:21The capabilities which he's qualified to do.
09:24Qualified to then judge how that technology is used.
09:28That's just being arrogant.
09:30Dario, I almost started this year with the adolescence of technology and the idea of we should contemplate some of
09:37the negative sides of artificial intelligence, not just the optimistic.
09:41I think everybody agrees with him.
09:44But it has almost felt like the public opinion, the battlefield for public opinion is being lost right now.
09:51People are nervous about AI, what it does for their jobs, what it does in the state of war, what
09:55it does for ethics, what it does for their children.
09:57You're a man out there saying this is what it could do for your health care.
10:00This is what it could do in terms of a rich, abundant life.
10:02But that message isn't getting across right now, Fideon.
10:05Well, I think it's very important for policymakers in D.C. to make sure for AI to be accepted and
10:16AI is going to be the principal weapon on which nations win or lose the economic war and hence the
10:24social war that we win.
10:28And for people to be supportive of it, we have to give them the benefits first.
10:34So it's pretty easy, easy in the next year or two to make every citizen have free primary care 24
10:43-7.
10:43So if you're a mother somewhere and your child is sick at 1 a.m., you get an AI doctor
10:50who can help you, usually at a higher level of performance than the median physician, human physician you're likely to
10:58get who got his medical degree 25 years ago.
11:01So clearly that benefit has to happen.
11:05Every child in America should have an AI tutor.
11:08Once they see these benefits, they're much more accepting of the use of AI in business and other places.
11:16It's also imperative.
11:18The single biggest fear is everybody's worried about their jobs, including possibly you.
11:25It can do most jobs.
11:27No comment.
11:29So I think we need to take care of that situation.
11:32I talked at the Hill Valley Forum.
11:35AI will hugely disadvantage labor relative to capital.
11:40Yeah.
11:41Right.
11:41That's going to be true and be abundantly clear by 2035.
11:46I suspect it will be a major factor in the 2028 presidential election.
11:52So what can we do?
11:53Why do we advantage capital with a lower capital gains tax rate than ordinary income?
11:59They should be one income tax rate.
12:02And I've suggested we do a revenue neutral increase in the capital gains tax, levelize it with ordinary income and
12:10exclude 125 million Americans from any tax rolls.
12:14If you make less than $100,000, there's no reason for you to be on the tax rolls if capital
12:20gains and ordinary income are levelized with a few details added on.
12:25So what do you think is going to be more than $100,000,000 to some employee bases and maybe
12:29not just a bunch of capitalists right now?
12:31Well, think about it.
12:33Labor is worried about job losses.
12:36The first thing you can do is stop worrying about taxes.
12:39Yeah.
12:39The second thing you can do is say 40% of capital gains tax is paid by people making more
12:47than $10 million a year.
12:50Why they should get an advantage tax rate, I just don't understand.
12:55We want a level playing field between the labor component of the U.S. GDP is about $15 trillion, give
13:01or take a few trillion.
13:04That will be hugely disadvantaged over the next 10 years.
13:09It should be given an advantage in much more support like free health care, free education.
13:18There are many other services that could be free under good AI.
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