Aaron Ginn, John Gedmark, Jordan Schneider, History of U.S. China Relations, OpenAI Explores Social Network Arena

You're watching TVPN. It is Tuesday, April 15, 2025. We are live from the temple of technology, the forge of finance, the capital of capital. This show starts now. We got a great show for you today, folks. We're doing a little bit of a mini deep dive on China. Brother behavior. Lots of brother behavior going out throughout this story. The size gong, an homage to Chinese culture, all that they built. But now, unfortunately, relationships with between the US and China are degrading, have soured with a trade war. And so we want to take you through it. And, and it starts with a very stupid question. But on this show, there's no dumb questions because we are in golden retriever mode. And that dumb question is, how did we get here? Because, you know, you learn about World War II in, in high school or middle school. And in World War II, I remember going to war against the Japanese, not the Chinese, and China was actually the US's ally. And then of course, it flipped at some point. And if you're, you know, if you've studied history, you know exactly what's going to happen in the story. But there's a bunch of interesting anecdotes and turns and debates and a lot of different historical milestones that actually led to the relationship degrading and then building back up and then degrading again. And so I want to take you through the full ebb and flow of the US China relationship to kind of understand how did we actually get here? Because we used to be partners with China. Like, we fought the Japanese.

We had a good thing going.

We had a good thing going. But obviously the trade war has broken out. Thank God. It's not a hot war, kinetic war, but it's interesting to know all the history here. And so that's what I wanted to dig through today. But first, switch your business to ramp.com. time is money save both easy to use, corporate cards, bill payments, accounting, and.

A whole lot more all in one place.

Fantastic. Anyway, let's move on. So I've always been interested in this. How did the relationship initially sour? Of course, the history here is that during the World War II, the US was allied with China's Nationalists against Japan. But after 1949, the communist revolution created a new reality. And by the late 1940s, Americans viewed the loss of China to Communism as a geopolitical blow amid the emerging Cold War. This set the initial tone of hostility. So In October of 1949, Mao Zedong's communist Party won the Chinese civil war, founding the People's Republic of China PRC in Beijing while Chang Kaisek Nationalists fled to Taiwan. So our guys in China left mainland China and went to Taiwan. That's why we're on Taiwan's side, basically. But it's crazy that this has been going on for 90 or 80 years now and we're still in the. Yep, we still are, guys. We still like China, but we just think of China as Taiwan. Yeah, and that's really the, the initial split there.

China views Taiwan as China.

Yes. Little bit different, but. But basically the US refused to recognize the People's Republic of China PRC and continued to recognize the ROC in Taiwan as the legitimate government of China. Which it seems like almost edgy today to be like, oh, like Taiwan is the real China. Like that's something that NBA players don't say, right? Yeah, but it makes sense in the context of, oh well, we were fighting the same war with this government, the Nationalists, Shanghai Sachs Nationalists. We were fighting with them. Then they just kind of lost their civil war and they're in exile, but they're on an island that's like kind of over there. It's all the same. So we're on the same.

One thing that's unique about this dude dynamic is that the People's Liberation army, the armed forces of China, serve the Communist Party.

Yes.

They do not serve the country. China as just purely a nation. They serve the party.

And in America, that would be crazy. It's like the proud boys serving at the pleasure of maga, basically.

Yeah, that's dramatic. Or simply the Marines being on the side of the Democrats.

Yeah, exactly, exactly. Or the Republican. If either of those happened, that would be like, we'd be like, whoa, okay. But it's a one party system and that's the nature.

And if you have an issue with it, the army comes after you and, you know, takes care of you.

And so obviously, like, the threat of communism is the defining theme of the Cold War. And the US adopts a containment policy. And so this was an attempt to diplomatically isolate and economically strangle the new communist government, still very heavily driven by trade and tariffs. And who, who, who does deals with who. Washington encouraged allies to shun Beijing. Americans were prohibited from travel or trade with China. There was whatsoever with China, and China was kept out of the United nations with Taiwan holding China's UN seat. And so then alliances.

Frustrating, yes. Got to give them that.

And so to contain communist China, the US bolstered alliances around Asia. They did security pacts with Japan, South Korea, the Philippines, Australia, New Zealand, and support for Taiwan So from the Chinese perspective on the mainland, they're kind of surrounded. They have this alliance with Russia going, but it's very tenuous U.S. in the 1950s, the U.S. began providing military and economic aid to French Indochina, Vietnam, and later directly intervened in Vietnam. The Vietnam War, of course, partly aimed at curbing Chinese communist influence in Southeast Asia. Now we go to the Korean War, 1950-1953. The Korean War was the first bloody clash between the US and the PRC. In June 1950, North Korea, backed by Stalin and later by Mao, invaded South Korea. When US led UN forces pushed north towards the Chinese border, Mao sent hundreds of thousands of Chinese peoples volunteers to fight US UN troops in Korea. The war was brutal, resulting in 36,000American deaths and hundreds of thousands of Chinese casualties, and ended in a stalemate. That's why, you know, Korea is still split to this day.

And it's so wild to think of, we think of the American involvement in foreign conflicts as, you know, World War II, Korean War, Vietnam. Then you get into the Middle East. But thinking about the Korean War happening immediately following. Yeah, World War II, like, there was almost little to no break.

And also, I mean, people still think about the Vietnam War, about Vietnam, and really it's a battle between China and America.

Yeah.

And same with, with Korea in many ways. And so. And if you, if you. There's a fantastic documentary on Frontline. I think it's NBC, pbs about the Chosin River Valley battle, the Battle of the Chosin in Korea. And it was, it was like 20 degrees below freezing. Everyone was freezing. It's just like one of the most brutal wars ever fought or battles in war ever fought. You should go watch it. So Mao touted that China had fought the American superpower to a standstill, reinforcing his regime's legitimacy. The US came to view the PRC as direct military adversary. So this is kind of the nadir of US China relations. Like they're openly fighting and seeing each other.

And Mao rivals was spreading fake news. Famously said the US was a quote, unquote, paper tiger that could be defeated by determined revolutionary forces. A propaganda line to bolster Chinese morale despite the war's costs.

Yeah, paper tiger looks dangerous, not actually dangerous in reality. That's the whole thing with the paper tiger.

But we're more like a bioengineered.

Yeah. So things continue to heat up after Korea. There's the U.S. taiwan Defense Pact. In 1954, soon after the Korean Armistice, the U.S. signed a mutual defense treaty with, with the Republic of China in Taiwan, pledging to defend Taiwan against PRC aggression. And this is kind of the foundation of, like, this idea that, like, we have Taiwan's back still to this day. It all started back then. American naval patrols in the Taiwan Strait began effectively drawing a line that Mao's forces dared not cross. And there's still this debate about, oh, should China be doing military exercises in the strait?

And I believe they had little to no navy at all, them being China. Right. They've. They've developed the navy over time, but it's certainly not. It sort of pales in comparison to US Navy, which has continued to plague them. Yeah, in various ways.

And so throughout the 50s, the Taiwan Strait continued to be a flashpoint. The PRC bombarded the ROC held islands near the mainland, provoking crises in 1954, 1955 and 1958. The US responded with forceful warnings, even hinting at a nuclear retaliation to deter PRC invasion of Taiwan. And so this whole America trying to get China not to invade Taiwan has been going on for 70 years now. The crisis subsided with neither side fully escalating to war. Total stalemate. But they reinforced Beijing's view of the US as determined to block China's unification with Taiwan and the mainland. China says, hey, those guys, they lost the war, they lost the civil war. Historically, this was all one place. It would be like, in their view, it's like Robert E. Lee hanging out in Hawaii. And it's like, no, that's our thing. Get them back on our team. Right. It's like, I mean, I don't think that that's legitimate, but I think that's kind of how they see it. And so there's more ideological warfare. During this revolution phase, fierce rhetoric prevailed. US Leaders spoke of the PRC as part of. Part of the red menace. And Chinese state media vilified American imperialists for encircling and threatening China. And America was kind of encircling China in the sense that, you know, you got Japan, you got Australia, you got the Philippines. There's a lot going on in that, in that, in that area. There was no official contact between Washington and Beijing. Beijing instead, each sought to determine, to undermine each other. The US Via embargoes and support of adversaries in China and China via sponsoring revolutionary movements.

And that's been. We should actually ask Jordan about this later on the show, but this sort of common thread between, in the US China relationship is that there has never seemingly been great comms between the two leaders.

Yes.

Or really much of either. So it's like we're doing, you know, now we're doing trade on a massive scale. You would think over the last 30 years, which was relatively stable in the history of US China relations. You would think that there would be sort of more open comms, the President could call up Xi. Yeah. Have a conversation, work stuff out there.

You know, it's always super controversial. Like I remember this idea that like Donald Trump would go and meet with Kim Jong Un in North Korea was like deeply controversial. But I'm genuinely pretty pro comps. I think communication is like the only thing that stops kinetic warfare often. And so it's very important to have these, these, these rivals communicating and ideally like humanizing each other and realizing that if they, if, if they, if the relationship sours enough, like both countries will suffer. But, but it is, it is incredibly diplomatically controversial with all these different scenarios of like, we would like to invite you, to invite us to have a call with you.

Like that's something that actually that happened over the weekend.

That happened over the weekend.

It was Saturday and it's like, like, you know, the White House just pick.

Up the phone and call each other. Come on, let's just call each other. Send us text message, get on signal, you're fine. So in the 1960s there's this strategic opening, the Sino Soviet split. And so even as China remained hostile to the US a rift grew between the PRC and its erstwhile ally, the Soviet Union. By the late 1950s, Mao resented Soviet policies and leadership. In 1960, the USSR withdrew advisors from China amid disputes over ideology and the direction of communist development. Tensions escalated into armed border clashes between China and the USSR in 1969. And so this gives you levers and backstory here.

So in the early 1960s, it was actually 1959 to 1961, I will say that communism was not working well in China. And so a lot of these issues probably stemmed from the USSR basically saying whatever you're doing isn't working because 30 million people have died of starvation in like a two year period. Figure it out.

And they basically told them, skill issue, yeah, you got to keep going, you got to do more communism.

But didn't, didn't learn the lesson, we're.

Going to try some other stuff maybe at this point. But this split meant that by the late 1960s, Beijing saw Moscow as a greater threat than Washington, especially because of the border. Like they, Russia and China have a border right there. And so if conflict brews, it's really, really dangerous. So the US noticed, notices this growing feud and views it as strategic opportunity. President Nixon and His advisor Henry Kissinger later exploited this rift to wedge apart the communist bloc, aiming to befriend one, to isolate the other. Nixon wrote of playing the China card against the ussr. Thus, as the revolution era closed, the stage was set for an unlikely thaw. China isolated and threatened by a superpower neighbor. The Russians and the US bogged down in Vietnam and seeking an exit, both had incentives by 1970 to reconsider their, their relationship. And so the ray parchment starts 1971 to 1979. And there's this funny term, ping pong diplomacy, because the whole thaw of this relationship began on the ping pong table. You see it, many relationships, many deals get done.

Yeah, I think there's a lot of relationships of mine that I could improve by playing ping pong.

I completely agree. So in 1971, April, China invited the US to table tennis team to Beijing. During the world Championships, American athletes became the first official US visitors to communist China. And their goodwill visit captured global attention. Finally, like the global populace is saying like, oh well, like they're getting along and they're playing ping pong, like maybe things aren't so bad after all. Pretty cool.

It's a really wild setting to be a ping pong player. Not even a pro ping pong player because I don't think it was even then much of a maybe like a full time thing. You were maybe doing some other stuff on the side and you get tasked with going to communist China being the first Americans to be welcomed. Yeah, into.

But this is, I mean the, the Olympics throughout history have been like hugely geopolitically important moments with what was that ice hockey story where the Russians come play the United States or you know, all the stuff that happens in Germany. Like there's all these times when, when these kind of like silly sporting events act as like olive branches to bring.

People together, bring people together and realize that hey, hey, maybe we're not blood enemy.

Exactly. If we can play ping pong with each other, we can, we can maybe do a little bit of trade. And so behind the scenes, this is what's interesting, behind the scenes. Speaking of comms, Nixon had long harbored a plan to engage China. In July of 1961, Nixon's National Security adviser, Henry Kissinger made a secret trip to Beijing to confer with Premier Joe Enlai. This covert diplomacy paved the way for a breakthrough announcement. And the way they pulled this off was really crazy. I think he had to go to like India and then through Tibet and then into China. He couldn't go directly. No One knew he was there and it was like this very controversial, very highly risky move, both from like a security perspective, but also just from a public perception perspective. Because of course America has been beating this drum of like, we're enemies with China. And if you want to change that, you can't just come out all of a sudden and say, hey, actually we're going to be friends. You have to work up to that. And if you don't have any cards to play, there's not really going to be that much support for it. So In October of 1971, a few months after Kissinger and Joe Enlai start talking in China, the United nations voted votes to seat the PRC as the legitimate representative of China, expelling Taiwan's ROC from, from the un. The US opposed this at the time, but did not prevent the outcome, which was kind of like, you know, horse trading a little bit. And so then In February of 1972, the next year, Nixon actually goes and visits China and there's this incredible opera called Nixon in China by John Adams that you should definitely go see. If you haven't all about this trip and how like what an incredible culture clash it was and how, how kind of ambitious it was.

I was in China in 2016.

Yeah.

And let me tell you, there was a culture crash and that was, that was in Shanghai, right. The most westernized part of China.

Yeah.

After decades of aggressive development and, you know, plenty of, you know, foreign companies setting up there, operating, et cetera. So in the 70s, visiting communist China had to have been truly, truly wild.

I mean, it's like less than 10 years after the two countries were losing tens of thousands of soldiers in direct conflict, essentially. It's like, yeah.

Not to mention even in 2016, if wherever you went as a foreigner, you would have people taking pictures of you because it was just so foreign that it was like seeing a giraffe walk down, you know.

Yeah.

Melrose.

Yeah. So Nixon goes to Beijing in 72. This, he becomes the first US president to ever set foot in mainland China. He spent eight days in China meeting Chairman Mao Zedong and holding talks with Joanne Lai. This is called the Week that Changed the World. Reflecting its strategic significance, the two Cold War adversaries begin bridging a 23 year gulf. The image of the staunch anti communist Nixon, Nixon shaking hands with Mao was iconic. You can see it there, a dramatic realignment of geopolitical relationships in the Cold War.

And imagine just the dynamic here around translation. Oh yeah, like trying to negotiate and repair a very damaged, you know, Geopolitical. Yeah, geopolitically, you know, one of the most significant relationships and you're having to do it all through a translator. Yeah, even that dynamic is shocking.

So there's a few things that come out of these talks. The US acknowledges the one China principle, the that China, the Chinese on both sides of the Taiwan Strait maintain China is one and Taiwan is part of China, while not explicitly endorsing Beijing's sovereignty over Taiwan. And both nations expressed opposition to hegemonic, to hegemonic ambitions in Asia, implying a common interest in containing Soviet power. So Nixon's really kind of like saying like, okay guys, you both have a claim here, we're going to recognize both of your claims, but really let's focus on the Russians.

So yeah, and so nice spin. It's called a spin.

It's good spin. So this laid the diplomatic framework for improving ties without resolving all the differences at once. And this served both nations interests. For China, facing a hostile Soviet Union, better relations with the US offered security and access to technology. Since the US and the Soviet Union were in the space race, developing a lot of advanced technology, China was falling behind as a, as a partner. The United States could kind of backfill that where the Soviet Union wasn't. And for the US aligning with China would pressure the ussr, which who was the Cold War's primary foe and helped the US extricate itself from Vietnam. And so Joe Enlai said, he gave a toast and he says the Pacific Ocean is big enough to accommodate both China and the United States. This quote encapsulated hopes that the two great nations could coexist peacefully despite ideological differences. So the next few years, this ocean.

Is big enough for the two of us. It is basically what it is.

Basically, yeah. So following Nixon's trip, Sino American relationships warmed gradually, albeit short of formal diplomatic ties. There were high level exchanges and people to people contacts, scientific, cultural, journalistic exchanges began ending decades of mutual isolation. The US began relaxing trade restrictions on China. And so in 1973, the two governments opened Liaison offices in each other's capitals de facto and their embassies, but they didn't call them embassies because that's like a little bit too much. They don't want to rush into anything. Yeah, it's all very slow.

It's like they were engaged.

Yeah, but not, they're just dating.

They're.

What do they call it? It's not like cold launch, hot launch. Isn't that soft launch? Soft launch. They're soft launching the relationship. So after Mao's had, after Mao's health had declined, there was some political turmoil. The Cultural Revolution ends and then Mao Mao dies in 1976. This gave wave, this gave way to the rise of Deng Xiaoping, a reformist leader keen on modernizing China with foreign help. And so a very big pivot pivot in the politics of China at the time. This leadership change on the Chinese side made, made full rapprochement more feasible by the late 70s. And so in the early 1970s there was a shift in dynamics. Nixon leveraged this leveraged the China opening to pressure North Vietnam, which relied on Chinese and Soviet support, into peace accords. So that kind of ends the Vietnam War. Meanwhile, the Soviet Union alarmed by US Sino closeness. China, China, America working together pursued calming down like control arm, arm arms control agreements with the United States and the. And this is kind of the beginning of the end of the Cold War. And so China benefited as well. The threat on of a two front confrontation with the US and the USSR is like that would be the nightmare for China if they wound up fighting America and Russia at the same time. And so the culmination came at the decade's end. In September of 1978, President Jimmy Carter and China's leaders agreed to establish full diplomatic relations. Effective January 1, 1979, the US formally recognized the PRC and severed official ties with Taiwan. This meant the US acknowledging Beijing as the sole legal government in China. After something like 30, 40 years, they say, hey, you guys won the Civil War 30 years ago. We're going to recognize that you kind of run the place and they kind of do. So it's not that unreasonable. But you know, they have a little.

Bit of size on Taiwan.

They do, they do.

And they won.

Yeah. What is, what is underrated is like, is like the geographic and population is, is so disparate. But at this time, like in terms of technology, military economics, Taiwan is still very dominant and doing very well and holding its own. So as part of the normalization, Washington affirmed the one one China policy, recognizing the Chinese position that there is but one China and Taiwan in China is part of China. In return, Beijing accepted that peaceful resolution to the Taiwan question would be pursued. This was left ambiguous. So they say, hey, narrative.

It would not be pursued fully.

Yes, I mean you could still hope for that. That's kind of what happened with Hong Kong. It was like not super violent, but it wasn't great. There were a lot of protests, but that's kind of the idea.

It's hard to see the protests, but.

It doesn't seem like Taiwan wants to go that direction. But you know what would be a piece for resolution? I mean, I guess Taiwan could say, hey, we want to be part of China.

We're cool.

We're voting for democratically. Like that's the nature of democracy. You can vote to join an authoritarian country, I guess would be weird though.

And I'm sure I have no hard info here, but I'm sure that China has made a bunch of efforts to organically turn Taiwan.

Yep.

To the point where they just vote to join.

That's the Hong Kong playbook. Yeah, it's, it's, it's, you know, political support for pro China, pro mainland leadership in the government, and then eventually more and more ties, diplomatic ties, until there's, they kind of merge. And so there was the Taiwan Relationships act in 1979. To reassure Taipei and Congress, the US passed the Taiwan Relations act in April of 1970, allowing continued commercial and cultural ties and obligated the US to help defend Taiwan. This act, while not a formal treaty with Taiwan, effectively guaranteed US Support, a point that Beijing grudgingly tolerated but viewed warily. And talk about a.

Is a bit of a strange dynamic. We've got, we've got comms, we have a relationship, but by the way, Taiwan.

Is part of China, but we will also defend Taiwan against our lives.

If you try to touch it.

It's kind of a weird dynamic that they're playing both sides here, but that's.

The only way that geopolitical finesse.

Yeah. So in 1979, Deng Xiaoping visits the United States, which is a groundbreaking trip for, for a Chinese leader. Deng charmed Americans, famously donning a 10 gallon cowboy hat at a Texas rodeo, symbolizing the new, the new friendship. He sought US Investment and technology to jumpstart China's modernization. Deng declared China needs to catch up with the modern world at the Texas, at the Texas radio. No, I don't know if he said that at the rodeo, but he said he toasted to the future of the friendship with President Carter and he declared that there should be peace in the Pacific. These optimistic notes underscored the sense of a new chapter. Look at that photo of, of him wearing the 10 gallon cowboy hat.

We need 10 gallon hats.

And, and interestingly, Xi Jinping did something similar where he visited some farms in, in Iowa, I believe, or, and when he, when he was much younger. And there are these great cultural moments as, as, as, as high stakes as these relationships are, you get the feeling that like at some point, like these are just bros hanging out like drinking.

Have you seen the picture? Have you seen the picture by the way of Xi in 1985?

Now in.

Okay, I'll try to pull that up. Send it to Ben. We'll, we'll, we'll throw it up. So by the late 1970s, the US and China were in fact tacitly allies against Soviet expansion. They shared intelligence on Soviet military moves, and China benefited from limited US technology transfers. The Soviet invasion of Afghanistan in 1979 further united Washington and Beijing in opposition. And so this was really the transformation of the relationship. Two decades of isolation has officially ended. And so in the 80s and 90s, we're talking about reform, more economic opening and deepening engagement. And so under Deng Xiaoping's leadership, China embarked on sweeping economic reforms in the late 70s and 80s. Moving away from Maoist autarky, Beijing welcomed foreign trade, investment, and technology. Special economic zones were set up to attract overseas capital. And millions of Chinese students were sent abroad, many to US universities to study science and management. And this was the beginning of.

Check out this picture, by the way. This is Xi.

This is Xi Jinping in San Francisco.

With a Golden Gate bridge. Wow, fantastic bridge. Just smiling, having the time of his life. He forged lifelong friends on that trip to Iowa. It was an agricultural.

In another world. He stays here, gets into yc, builds a SAS company. We'd be looking at a completely different world.

Completely different world.

The road not traveled sometimes anyway. So the us The US Enthusiastically supports China's reform and opening policies. American businesses and technology poured into China, seeing vast market potential. It was a great deal for American businesses because they just have a massive new market. And this isn't even to talk about the supply chain, which we'll get into later. The US government facilitated scientific and cultural exchanges. Bilateral trade exploded from a negligible amount in 1980 to tens of billions by the end of the 80s. By 1984, Deng could famously declare, to get rich is glorious, reflecting China's new pragmatic embrace of wealth and markets, a quote often attributed to him. So very different from the, from the Cultural Revolution, the, the, the, the communist mindset that I think people put on China in the 70s. And so during the, during the 80s, the US and China found common cause in opposing Soviet aggression. They cooperated indirectly in conflicts like the Soviet Afghan war. The CIA and the PLA coordinated to funnel weapons to Afghan guerrillas fighting Soviet troops. That turned out to be a bad decision, but, but they were working against the Russians at the time. Of course, this, you know, all the weapons became the, like the Training ground for the Taliban. It was very bad. Anyway. It was.

Reagan even went as far as to export them some military equipment.

Yep.

That is one of the most sacred bonds that two countries have. Anyways. It's dark, but it's true.

Yeah.

Despite his anti communist rhetoric, Reagan was committed to further normalizing ties with Beijing.

I mean, we'll talk about Bill Clinton's perspective on China and what the Internet would do to bring democracy to China. But this has been a thing since Nixon and continued through Reagan is. I can fix her. I'm built different. Once they see how America works, they're going to, once they get a little taste of our rockets, they're going to want to go full capital.

This is interesting. In 1982, the US and the PRC signed an agreement where the US agreed to gradually reduce arms sales to Taiwan, which was aimed at placating China that the US kept selling defensive arms per the Taiwan Relations Act. So clearly, again, they just can't. Pretty much impossible to pick a side and everybody's just sort of kicking the can down the road on the big question.

Yeah. And so by the mid-1980s, thousands of American companies were doing business in China and China's economy was growing. Double digit GDP increases. You love to see double digit GDP increases, folks. And hundreds of thousands of Chinese students and scholars were studying in American institutions. So there were a lot of people to people bonds. Of course, both sides largely viewed the relationship as mutually beneficial. The US saw a vast new market and a potential partner while China gained access to capital and advanced knowledge. But there were some frictions. There were some ideological differences. American leaders occasionally pressed Beijing on human rights and political freedoms, a theme that continues to today. Till today. And there were trade imbalances. China's exports to the US were growing faster than imports because China was still not a consumption based economy, highly savings driven. And so this US trade deficit with China, while modest then, was beginning to draw attention. And of course now it's like front and center. It's like the most important point, discussion point in the US China relationship. And then of course there was a Taiwan issue. Let's move on to Tiananmen Square and the butchers of Beijing. The this is 1989. The booming 1980s relationship came to a sudden crisis in mid 1989. Over a million Chinese, led by students, gathered in Tiananmen Square calling for democratic reforms and an end to corruption. On June 3rd and 4th, 1989, China's communist leadership ordered a military crackdown. PLA troops opened fire on the protesters, killing hundreds to possibly thousands of unarmed civilians. And the world watched in horror because photos like this were disseminated in American media. And so President George H.W. bush publicly condemned the violence and suspended military sales and high level contacts with Beijing. Congress imposed sanctions, Chinese officials were hit with travel bans and bilateral aid programs were frozen. Washington and its allies essentially put the US China relationship on hold during, in 1992, during the US presidential campaign, Bill Clinton criticized Bush for being too lenient on Beijing after the massacre. And this is what's so fascinating, fascinating about the US China relationship is that it's not strictly a left right issue. We talk about this with Trump put tariffs on China during his first administration. Biden kept those in place. And so it's not like, oh, the, the, the Republicans are the China hawks or the Democrats or the China hawks. It's always going back and forth, ping ponging based on what's actually happening because that's kind of the nature of geopolitics. And so Bill Clinton accused President Bush for being too lenient on Beijing after the massacre massacre, accusing him of coddling the butchers of Beijing. This strong remark reflected widespread American revulsion at the Chinese regime's behavior and a sense that the US should not conduct business as usual with a government that crushed peaceful protests. Very anti free speech. How can we do business with them if they're not embracing the most basic of our, what we see as human rights? Privately, Bush sought to preserve the strategic relationship. Just weeks after Tiananmen, he secretly sent Brent Snowcroft to Beijing to meet Deng, delivering a personal message that the US wanted to maintain ties. Despite public outrage, the secret diplomacy kept from Congress at first showed Bush's desire to sustain the engagement framework, albeit under criticism. So the, the Tiananmen events chilled, but did not permanently rupture US China relations. The sanctions and global opprobrium isolated Beijing for a short period, but China's importance and the underlying strategic economic interests led to gradual resumption and of engagement in the early 1990s. And so at a certain point Bush is saying like, yes, they're violating human rights over there, but it's really far away and we're making a lot of money, so we got to stay the course. That's basically what happened. So Bill Clinton comes in and he moves from post Tiananmen isolation back to a policy of constructive engagement with China, which again, like complete flipping from, from the, from the campaign promise of like the butchers of Beijing, I'll never do business with them. And then all of a sudden he's like, well, I mean, we could probably do a little bit of business. We probably get a little, just a.

Little bit of business, just a little bit of money.

So Clinton initially tied China's trade status to human rights?

No, it's a.

Interesting dynamic. I think there was a continuous belief that if you could get China to adopt free market capitalism, that over time, you know, the free market would guide China to a system that was, I don't know, who knows if it would ever been long term aligned with U.S. interests. But the, I do believe that, you know, everyday citizens of every country in the world don't have this sort of general. I don't want to generalize this too much. Right. But like people in China don't have as much of a, you know, the sort of geopolitical power players, you know, want, want people to believe like this is like, you know, citizen on citizen conflict, but it's really not. Yeah, right. It's like every, every individual wants to, you know, further their own life and you know, live in a sovereign country.

I mean, when you think of like America's Bill of Rights and like free speech, that is very much aligned with just capitalism. And so you would. It does stand to reason that if you get a country to go full capitalism, full democracy, free speech and human rights will kind of follow. But that's not always the case. And that's where we get to this like state hybrid, common hybrid capitalism that's, that's eventually developed. And so Clinton, he's, he's channeling the art of the deal here. He's saying, hey China, we're going to trade status to human rights improvements. Your trade status is going to be linked to human rights improvements. In 1983, he threatened to revoke China's most favored nation trade privileges. This came up on the all in show last week. If, if human rights didn't improve, however, by 1994, he delinked human rights from trade, concluding that engagement was better, was a, was a better strategy to influence China. So he is saying, you know what, I'm not going to break off trade if you don't, if you don't clean up the human rights stuff. Instead I'm just going to focus on increasing trade and I think that will lead to human rights improvements, which is, it is somewhat reasonable. It didn't really play out, but to some degree it made sense. This pivot acknowledged China's rising economic weight. And so there's just a certain amount of pressure. And this is the pressure that's been building and building and Building where it's like decoupling every single year.

US businesses putting pressure on the admin to say hey, we want to be doing business there. We need to have a, you know, actual, you know, relationship between government to government totally for us to confidently go and do business.

Every, every step that the relationship, that the trade, that the trade relationship grows makes it more painful to break off. And so there's going to be more pressure. And so high level visits between US and China continue. 1997, Chinese President Jiang Zemin made a state visit to the US and in 1998 Clinton traveled to China for a summit symbolizing the full normalization after Tiananmen.

Clinton they were back.

They're back. But there are some security crisis. The Taiwan Strait Crisis happens in 1995 when Taiwan's President Lee was allowed to visit the U.S. beijing was furious. Seeing it as a U.S. breach of the One China policy. China conducted missile tests near Taiwan to intimidate the island ahead of its first Democratic presidential election. Clinton responded by deploying two U.S. aircraft carrier groups to the vicinity in a show of resolve. The crisis subsided. Taiwan's election proceeded, but it was a very hot and tense moment. And then there was the Belgrade Embassy bombing. In 1995 during NATO's air war in Yugoslavia, U.S. bombs mistakenly hit the U.S. the Chinese embassy in Belgrade killing three Chinese journalists and diplomats. Washington apologized profusely calling it a tragic error due to an outdated map. Many Chinese believed it was intentional. Anti US protests erupted across China. US consulates were besieged by angry protesters and angry demonstrators. The incident badly strained relations. And then there was also a lot of surveillance and spying accusations. During the late 90s there was fear of Chinese espionage. Allegations of Chinese theft of US nuclear secrets at Los Alamos surfaced in 1999. This injected some distrust, but it didn't halt the engagement. Everyone's making too much money. And so trade overdrive begins during when China enters the World Trade Organization. This is a centerpiece of late 90s engagement. China really gets integrated into the global economy. At this point. Clinton pushed for a landmark trade deal to allow China into the WTO. In 2000 he signed the US China Relations act of 2000 granting China permanent normal trade relations. This is the PNTR that came up on the all in show again. This paved the way for China's WTO entry in 2001. And so the US believed that WTO membership would bind China to global trade rules, open China's markets to foreign goods and investment, which kind of happened, but not for social networking and tech companies. Which we'll get into. And Clinton argued that by embracing China and the WTO quote, the United States is exporting freedom by sending China a message that economic freedom can ignite demands for greater political freedom. So you get richer and then you start saying, hey, I want some free speech, I want a yap, I want to start a podcast, I got money, I can, I can afford a sure SM7B now. So you're not going to censor me.

China, let me. Yeah.

So the US becomes China's key market and China becomes the US's key manufacturing hub. By the late 90s, China's export led growth was heavily fueled by the US market. China ran large US large trade surpluses while Americans got low cost goods. This is the Happy Meal of the, of the late 90s. US manufacturing sectors like textiles, toys and electronics began to feel the impact of Chinese competition. But US policy remained firmly committed to economic engagement. And so the late 90s were often described as a honeymoon period for the US. China relations. Aside from some hiccups, Jiang Zemin spoke of a constructive strategic partnership with the us and Clinton toasted to China's peaceful rise, a term China itself later adopted. However, unresolved issues persisted. The US continued pressing China on human rights. There was the treatment of Tibet. You might have remembered the Free Tibet movement that a lot of Hollywood actors were involved in, and just a general lack of democracy. China's military modernization began, albeit from a low base which the Pentagon watched closely. In 1996, U.S. defense Secretary William Perry raised concerns about China's missile buildup. And by 2000 a congressional Cox report warned of Chinese nuclear espionage. But despite such concerns, the two countries keep engaging with each other. So post World Trade Organization entrance, China, the economy absolutely takes off. Yeah, it's the same 10%.

And the context here for me personally is being born in the 90s. Growing up at this time where US China relationships, you know, is, you know, this honeymoon period, trade is accelerating. It feels like China is opening up and modern, modernizing. I had this dream as a young child of being an international businessman. Like I just had this idea of like the thing to be was a guy wearing a suit with a briefcase doing international business. And so as I got into school, once I got to college, I still had this sort of idea that China was going to be an important market for US tech, which I was interested in. So I started studying Mandarin. Yep, I studied abroad in China, got in at effectively like a YC equivalent in China and realized very quickly that China, the Chinese market, despite what was Being marketed broadly, had no interest in foreign, really foreign businesses being involved on the ground in China at all. And it really just completely. I basically slammed into a wall and within two weeks realized that like this is not a place that US technology companies are ever going to do business. But it was, I felt like I was sold a very, very different dream. Yeah, there was still this idea on the ground. Even people that were optimistic that hey, like Google's banned but like there's still going to be, there's still tons of opportunities here.

Yeah, this was the lack of reciprocity. So by the late 2000s and especially in the 2010s, US officials and business leaders accused China of failing to reciprocate the openness that it enjoyed from the West. So there were market barriers. China maintained high barriers for foreign countries in many sectors like finance, telecommunications, media, even as Chinese firms freely accessed US markets. Now that's stopping. But for, for all of the 2000s and 2010s, any Chinese company could come here and sell DJI, drones and TikTok and all sorts of stuff.

This was really a cell phone because it was. How long did we have to go where like you said us US firms were being effectively stonewalled in China.

No one kind of realized it. Yeah, it was rough. So foreign companies in China face joint venture requirements, equity caps and favoritism towards state owned enterprises. You need to set up this. Something called a variable interest.

Yeah. So this is. So when, so when I was there, there was a foreign. I was, I was helping, you know, I was like in intern for this foreign startup.

Yeah.

And there had to be like a, a Nate, you know, Chinese person that was an equity holder in the company that did no work.

Yep.

They were not involved with the company at all. They didn't even have a board level role. It was just basically, yeah. Effectively a wealth transfer to someone local. And then that person was like. And the, the reason for that is, is not just the economic reason, but it's an influencing. It's like if you come in here and you do anything bad, this person is basically.

They can take all the assets of the, of the, of the Chinese entity at any moment.

Yeah, but, but also it puts the representative, the Chinese representative in a weird spot if the foreign firm is not acting in the interests of the party in China broadly.

And then there was also intellectual property theft. The US became alarmed by widespread IP theft and industrial espionage attributed to China. American firms reported being forced to transfer technology as the price of market entry. So hey, you want to sell that car here we got to see the blueprints basically. And then there were state backed hackers implicated in theft of trade secrets in 2014.

That's such a crazy dynamic. You want to enter this market, give us the exact playbook to give us.

The codes to ZION, Really. In 2014, the US indicted five Chinese military hackers for cyber espionage against US corporations. And of course there was accusations that Beijing was manipulating its currency to keep exports cheap. A stance that led the treasury almost to label China a currency manipulator on multiple occasions. And eventually it did so briefly in 2019. There was also the lack of political reform. Like everyone was hoping that the economic growth would help liberalize China politically, but that just did not materialize. In fact, if anything, China became more authoritarian and Xi Jinping became essentially a dictator for life. And so the CCP had no intention of loosening its monopoly. There was no two party system, there's no one else. And this was like a core assumption of the US engagement strategy was that, hey, we're going to take this leap of faith, we're going to bring you into the global economy and we're going to expect that you evolve into a democracy over time. Because China was on that track.

And it didn't happen to give China a little bit of credit. We were doing this the same thing with, with Taiwan and basically saying like, yeah, you're the one China. Yeah, you know, we're, we're on your team, let's do this together. Simultaneously selling, you know, weapons to Taiwan. Yeah, everybody was, everybody was two timing.

Yeah. And so during the Obama era, this is the beginning of a tougher stance. So pivot or rebalance to Asia. In 2011, the Obama administration announced a strategic pivot to Asia, devoting more diplomatic and military attention to the region. This was partially to reassure Asian allies in the face of China's growing assertiveness. Secretary of State Hillary Clinton in 2011 outlined a policy in an essay titled America's Pacific Century, calling for an increased US engagement across Asia as a counterbalance to China's influence. This included stationing Marines in Australia, strengthening ties with other Asian countries and moves. And these moves were controversial. Beijing definitely viewed them with suspicion. There were also the Trans Pacific Partnership, which was a standard free trade agreement with Asia Pacific nations, but not China. So there's a new trade deal that advantages everyone but China. The TPP aimed to set rules on labor, environment and state owned enterprises, implicitly pressuring China to reform if it ever wanted to join. And so they basically structured this trade deal to Say, hey, you got to follow all these different things that you're not doing right now. Oh, it turns out fairly everyone just happens to do this except for you. Why don't you come on reform and then you can join? Because it'd be great, you know, you'd have more free trade.

So as China became more assertive territorially, especially in the South China Sea, the US pushed back diplomatically. In 2010, Secretary Clinton stated the US has a national interest in freedom of navigation in the South China Sea, which irked Beijing. In 2015, US Defense Secretary Ash Carter publicly warned China to halt its island building and militarization of reefs in the South China Sea, saying the US Opposed turning these features into military outposts. China was basically like, we'd like some strategic islands, so we're going to make them. The Pentagon began regular freedom of navigation operations near Chinese claimed areas, which I'm sure people are familiar, which is basically just, you know, navigating boats through those areas.

We could be here.

Show.

Yeah, show of. So power projection.

Yeah. The US Often with the EU and Japan, brought cases to the World Trade Organization against Chinese practices. That is China's export restrictions on rare earth minerals, which they're doing again now. Critical materials for high tech products, led to a joint World Trade organization complaint in 2012. While the U.S. won some rulings, China sometimes complied minimally or found workarounds. Annual strategic and economic dialogues were established to air grievances and press China on issues ranging from currency reform to market access. There was very little sort of progress during this time.

Yeah, they also host the Dalai Lama, which is very controversial to China. They don't love what he's pitching about universal rights. But Obama kind of frames this as. This is, you know, general strategic. Like a general strategic and economic issue. By Obama's second term, US rhetoric had sharpened. Officials openly talked of China as a strategic rival in certain domains, even as cooperation continued on climate change and Iran's nuclear deal. And then in 2012, 2013, this is when Xi Jinping really takes over. He becomes the General Secretary in 2012 and President in 2013. And he centralized a lot of power and championed the Chinese dream of national rejuvenation. They did domestic tightening.

This was basically America great again. Yeah, campaign.

Yeah, yeah, yeah, basically. And so they did a military build up. The PLA got a massive overhaul in budget increases. Dick Cheney was not super happy about this. And then, see, Xi Jinping launched industrial policies like made in China 2025. It's now 2025. And it seems like mission Accomplished guys.

Yeah, to some degree. Look, yeah, he was focused on semiconductors, AI, 5G.

And they're still not on the.

I would argue that they're not on the leading edge of semiconductors, although they're making great efforts. They are not. You know, Tyler Cowen yesterday was. Was very behind on AI. Clear. Which is that they're behind on AI. The most exciting AI projects they have that are public are trained on American models.

They're doing well in smartphone manufacturing. 5G for sure. And then electric cars to an increasing extent. Drones, certainly. So important high tech sectors, but not the key foundational technologies necessarily. But they're certainly working on it, investing very, very heavily.

And in 2013, China began the vast Belt and Road infrastructure project across Eurasia, extending its economic and political influence. Another point of US concern seen as Beijing creating a Sinocentric order. Yeah, again, people have been very sort of concerned, afraid, annoyed, frustrated with sort of Belt and Road initiative.

Yep.

But at the same time, I do want to give them a little bit of credit that the U.S. has just, you know, aggressively done many similar things over a long period of time, sometimes with different structures. Right. You know, the, you know, the IMF and some of these sort of like more global organizations are oftentimes carrying out a lot of those efforts.

But yeah, still.

And so Xi Jinping starts talking about the century of humiliation. That's from 1839 to 1949, when China was subjugated by foreign powers vowing the great rejuvenation of the Chinese nation. And so he is arguing that China should no longer be pushed around or play second fiddle. It would reclaim its rightful place as a great power, the kingdom under heaven, the Middle Kingdom. This fueled a more assertive foreign policy. China became less willing to hide and bide, which was Deng Xiaoping's old mantra, to remain low profile. And so several incidents of deterring relations started to emerge. In the mid 2010s, there's cyber espionage clashes. In 2015, there's a massive hack of the US Office of Personnel Management. I actually know someone who was in the database at that time. And all of their stuff got leaked because of this. It's kind of crazy.

And they. Was it made public or.

I'm not. I think it might have been made public. I'm not actually sure. But basically, if you worked for the federal government, all of your personal data was. Was leaked to China. And this was wild. This is widely attributed to Chinese actors. The US accused China of hacking companies. Obama and Xi Jinping reached a 2015 accord not to conduct economic espionage, the. In cyberspace, which helped briefly, but distrust remained high. And so there was also a standoff in the South China Sea. By 2015, 2016, China had built and militarized artificial islands with runways and missiles. And in disputed waters, the US Responded with more. With more military navigation operations. That's right.

Procedures, I believe.

Phone ops. Yeah. And rallied allies to condemn these actions. And I remember there's some very viral YouTube videos about, like, China's artificial islands, because it's just like, how are they doing that? We don't do that. That's a crazy idea to just go and, like, build an island. But it makes a ton of sense. If you need to project power, you build an island, you kind of control it, and then you can put a tank or a turret or missile or a plane on it. And so the economic dialogue starts stalling. Annual talks are yielding only incremental Chinese concessions, which frustrates US negotiators. Market forces. Market access for US firms remain restricted. By 2016, calls grew louder. And in Washington, that engagement had failed to change China's behavior.

Yeah. At this point, Obama was frequently saying please, which was he would ask China to play by the rules of the international system, warning that if it didn't, the US and others would enforce those rules.

Yeah.

Chinese leaders, meanwhile, accused the US of trying to contain China's rise and not respecting China's core interests, like territorial integrity, the whole big Taiwan thing. But. But needless to say, saying, you know.

Yeah. And so then, of course, 2016, Trump gets into office. There's the 100 year marathon book that's very informing of China's strategy. And Trump is way, way more aggressive in the rhetoric. He says they're stealing American jobs. He's going to. He says he promises to get tough on China and demand reciprocity. And this did resonate with a lot of American voters in industrial states. And that's a big part of why.

He won the job loss. You know, the various, you know, firms manufacturing, you know, companies that had basically been shut down due to not being able to be competitive with China for various reasons. That was still fresh on a lot of people's minds. Yeah, right. If even, you know, if somebody had a family business that had shut down 10 years ago.

Yep.

And Trump gets into office and starts talking like this. That family is not forgetting that happened.

Totally. And so we're talking about a Chinese trade war today. It's actually trade war, too, because the first Chinese trade war happens in March of 2018. Trump announces tariffs on 50 billion worth of Chinese imports. And then Trump eventually widens that to 25% tariffs on about $250 billion in Chinese goods, which are industrial components, electronics, etc. And additional tariffs on the rest, roughly 300 billion consumer goods at 7 1/2 percent. Virtually all Chinese exports to the US were hit, and the administration justified these as necessary to counter economic aggression and massive trade imbalances. So Trump has been beating this drum of. Of economic warfare with China is happening. I'm going to lead the charge again and again and again. He's back in. He's doing it again. It's not. This should not be unexpected. And so China retaliates, placing tariffs on tens of billions of dollars of US Exports, targeting politically sensitive products like soybeans, agriculture goods, and autos. For example, when the US levied $34 billion in tariffs, China responded with 34 billion on US goods. Trump escalated, raising tariffs from 10% to 25% on 200 billion of goods. Beijing answered with its own increases. And so there's this tit for tat spiral that rocked global markets and stoked recession fears. By 2019, bilateral trade volumes fell, supply chains began adjusting, and companies in both countries felt pain. American farmers in particular were hit or hurt by lost exports, and Chinese manufacturers faced higher costs and uncertainty. And so now we get into revenge.

Covid came immediately after this. Yep, there's, you know, we won't get into Covid on this podcast.

I think it's more relevant to stick with the. The crackdown on Chinese tech, specifically Huawei and zte. So the US Banned government use of Huawei and ZTE products, citing espionage risks. And this was the big 5G debate. The US also pressed allies, with mixed success, to exclude Huawei from their 5G networks, portraying it as a Trojan horse for Chinese spying. Of course, like, if a 5G tower is intercepting all Internet traffic, it's going to be pretty easy to spy, especially if it's unencrypted stuff. So Huawei responded with lawsuits. But this tech decoupling aimed to protect the US national security and technological leadership in the face of China's rapid advances. And so, in the end, in 2018, the US Justice Department charged Chinese intelligence officers and hackers in several cases of economic espionage. And the US Passed more laws to tighten scrutiny of Chinese investments, especially in tech startups. Sanctions were also imposed related to human rights. The U.S. sanctioned officials involved in Xinjiang's mass detention of Uyghurs and for undermining Hong Kong's autonomy. China angrily counter sanctioned some US lawmakers and NGOs, and this is from the.

US Department of State website says also required of every company in China. A branch of the CCP is nested within Huawei's corporate structure. And they say Huawei has deep ties to the Chinese Communist Party and military. And it's a privately held company, which is interesting too. So I think the American companies and politicians at this time that sounded the alarms were absolutely correct, that just strategically cannot, you know, the US Cannot rely on telecommunication infrastructure from a privately held company with ties to foreign military, which is a political adversary.

And so Trump is getting much more aggressive against. About China in America. Simultaneously, Chinese officials are starting to use sharp rhetoric against the west, and they call this the wolf warrior diplomacy. And so the Foreign minister, Wang Yi, blamed Washington for the worsening relationship. Relationship, accusing it of McCarthyism. And there's some crazy wolf warrior like tweets and quotes out there that are really, really aggressive. And it sounds just like Trump. But from the other perspective, it's very much like this is a failing country. The worst. It's very funny. And so, of course, there's a lot of propaganda and conspiracies around COVID 19. Obviously, that. That, that sours the relationship, but most people are super familiar with this. And so in 2020, in July, the US Secretary of State, Mike Pompeo delivered a speech at the Nixon Library titled Communist China and the Free World's Future. He bluntly stated, the old paradigm of blind engagement with China has failed. We must not continue it. We must induce China to change. Pompeo proclaimed the era of engagement is over, citing China's unfair trade, human rights abuses, and aggression. He called. He called on the world to join the US in resisting the CCP's ambitions. This was essentially an obituary for nearly 40 years of US China policy and set the ideological groundwork for.

But also not the first time.

No.

That communication had entirely broken down. Yeah, right.

Yes.

Happened after Tiananmen Square. And anyways, this story is still unfolding.

Yeah, yeah. And it kind of brings us up to today. I mean, obviously Biden kept a lot of pressure on China, and now Trump has escalated things to what feels like 11. But we have three great guests today breaking down various aspects of the US China relationship. What's going on in Taiwan. But we're starting with a more optimistic take on how to support Taiwan with a satellite that will provide Internet. And so we are joined by the founder and CEO of Astranis. And welcome to the show. John, how you doing?

Hey, guys. How's it going.

It's great.

Thanks for having me.

Great to have you.

Congratulations on the announcement. Would you mind just giving us the high level announcement and even just like a little breakdown of Astranas and how you describe the company on day to day basis.

Yeah, of course. So today we had this very cool announcement. You go check it out on Bloomberg and some other some other places. We announced a new satellite for Taiwan. And this is a special kind of dedicated satellite in a high orbit that is called geostationary orbit. So this is a very special orbit. It's been around for, you know, been around since the beginning of the space age, but essentially allows you to park a satellite over a country or region of the world and provide continuous service with just that one satellite or. Oh wait. What the hell?

Oops. You look and sound good to us.

Sorry, something glitched on my zoom. But it's all good. You guys can hear me?

All good? Yeah.

Okay, excellent. So you can provide this service with just one satellite or in some cases a couple of satellites parked up there and essentially create this backbone in the sky. And this is really important in a case like Taiwan, which I'm sure we'll get into.

Sure.

Can you give us a little history of the company and because I know you launched satellites before and I've heard about Alaska and a few other countries. What has the rollout been now that you're kind of in the commercialization stage of the company?

Yeah, so we started the company coming up on nine years ago.

Overnight success. Overnight success. We love an overnight success on the the show. Congratulations. We love to see it. Just a quick, quick nine year journey. Good job.

Honestly. Incredible timeline.

Yeah, it's incredible.

I appreciate that. Yes, yes, we did. Yeah, we just sprang into being with this, you know, beautiful manufacturing.

Just snapped your fingers.

It just fully formed, just manifested. It magically appeared. So we started the company actually do this one thing which I, you know, I always like to join. There are no pivots. We started with this exact thesis in mind and then we just have been grinding away executing on that all the way through. But it is do a next generation satellite design using all the latest small satellite technology, but in high orbits, which have a number of benefits and a number of use cases that are very different from. I'm sure what you and your viewers have heard about in low Earth orbit like Starlink and OneWeb and some others that are in low Earth orbit have a lot of advantages. And high orbits have their advantages as well. And that's for both commercial and military and defense applications, which we are also now charging ahead on. So we started the company on some early commercial customers that we found. And now fast forward today we've signed contracts for, you know, more than, more than 10 of these satellites commercially. We also have A number of U.S. government defense programs that are in work as we speak. So there's a, there's a lot going on. But this one, this was an important, important one for us.

Yeah, can you talk about your neighbors in geostationary orbit? I, I saw on your site there's $15 billion worth of these satellites being sent up every single year. So there's other people talk about kind.

Of like what else is up there? Is it like the Hubble telescope? Like how high are we talking? Higher than the iss? Like really explain it like we're five. Explain it like.

Oh yes, yes, yes actually, yeah, no, no, for sure. So it is about 100 times farther away than, than low Earth orbit. It's about a tenth of the way to the moon. And as you, as you said, there's about $15 billion worth of these satellite large satellites launched to geo and other higher orbits every year. But historically those have always been giant behemoth satellites that cost hundreds of millions on really for the commercial side is in this like few hundred million range. And then on the military side, the satellites cost over a billion dollars per satellite, sometimes multiple billions per satellite. So we're talking, and we're talking huge satellites the size of like a double decker London, you know, big red London bus, that kind of, that kind of size. And then they're really designed to do everything from, you know, broadband communications. This is where all broadcast satellite television has always been from. And then there's some important national security missions up there as well. And so the 15 billion is total between commercial and military. But you know, I mean it is a huge number. It's just like it's one of these very big industries that isn't talked about a lot. And so we said, hey, there's nobody really taking a new approach here. Feels like we could go do something really interesting and perhaps quite valuable and.

Talk about today's announcement and the significance of it. I imagine this is not the kind of partnership that you started working on in Q1. It's probably something that's been in the works for a really long time. What's even the timeline to make something like this happen?

Do you have one? Click checkout. Can Taiwan just go please just buy now. Yes, exactly. Buy now, pay later.

No, no, for sure it is a longer Longer sales cycle for, you know, $100 million plus deal. But obviously worth the, worth the effort. This is. So this is a commercial contract with telco called Chunghua Telecom. It's the largest telco in Taiwan. They have about a 30 billion dollar market cap, 7 or 8 billion a year in annual revenue. So it's very, I mean this is a big country, big, big company, right? It's, it's like in that Fortune 500 class of company. And they, among other things, in addition to managing, you know, operating the cell tower networks for Taiwan, they also manage the undersea cables for Taiwan, they also manage satellite connectivity for the government of Taiwan. So they have a, you know, they have a big footprint there, as you would expect. And so working with them going back, I don't know, at least a year, maybe closer to 18 months ago on where this could be this valuable asset for them. And then sort of going through the, I would call it all the normal enterprise sales activities from there, right. You have to get together with our technical teams, with their technical teams, hash out exactly what the technical specifics are of the satellite and then the network around it and then, you know, hammering out the business terms. So it's a, it is a big deal for us and I think a big deal for Taiwan. You know, this is something they very badly need. As I'm sure you guys, you know, as I'm sure has not escaped your.

Attention, what does it actually take to get the satellite up to geostationary orbit? Assuming you guys are partnered with, you know, SpaceX on the transport side. But what are, what are all the different.

Is this uniquely unlocked by SpaceX and dropping launch costs? I'd love to know kind of the general trend in mass to orbit and how that's enabling the business.

Oh, 100%, yes. I mean there's no question space. When SpaceX came along and really dropped the launch costs in a big way with the Falcon 9, you know, that enabled a whole array of, you know, of just like new, new space opportunity mostly. Like I said, we've seen most of that in low Earth orbit. But absolutely still the case for us in, in higher Earth orbit. I think the difference is it's a lot higher. The, the higher orbits, it's a lot harder to get to. So you have to have your own onboard propulsion. The rocket doesn't actually get you all the way there.

That's what I was getting at.

Yeah, yeah. So in low Earth orbit, the rocket just drops you off where you want to be and you deploy satellites and there's satellites in low Earth orbit that have no propulsion, extra propulsion on board at all, they don't need it. We are quite the opposite. So you get dropped off in this transfer orbit, but it's really on us and any other satellite that goes to GEO to do the rest of the propulsion ourselves and get ourselves the rest of the way up to geo. So that is where we had to really design the whole satellite system around this electric propulsion system. We use an ion thruster, very high performance, that allows us to, you know, essentially have all the fuel on board that we need in the size of, of a couple tanks that, that are basically look like, you know, a couple of scuba tanks.

Right.

So it's like that, that size of tank, that much xenon gas, which is the propellant, and we can actually get all the rest of the way there up to geo. So, you know, between, between that and if there's more recent technologies, I think what we're doing today just wouldn't have even been possible technically until, you know, coming when, around the time we started the company, eight, nine years ago. Because you, you really had a few of these pieces coming together, including the, the electric propulsion. So yeah, it is, it is a, it is a more challenging orbit to get to for sure.

Interesting. How did you get into this? I actually don't know your background before you started the company.

I'm an aerospace engineer. I'm a space guy. I've been a space guy since I was a kid. Did my degrees in aerospace engineering, worked on some big satellite programs, worked at a couple of the big defense contractors, which I will remain nameless for this. But suffice to say, learned that was not what I wanted to do with the rest of my life working at the big defense primes and seeing how they operate. I think there's also, there's something there that we just, we gotta fix, you know, we gotta fix for the country or we're in serious trouble. So no better way to do that than starting your own company.

Yeah. We talked to Ian Cinnamon over at Apex Space, and he was talking about building a satellite bus or platform for low Earth orbit satellites, kind of almost acting as, like a supply chain partner to speed up, you know, delivery to low Earth orbit. Like smaller companies that want to get going. You started the company so long ago. I imagine that that thruster is, is in house. You built all this. Are there any other partners other than Space X that have been helpful to you as you've built out or, or what does the modern space economy and, and landscape of partnership look like as someone's building a company like Astranis?

Oh, that's a great question. So true. A lot of these pieces were not in place when we started the company, but as these pieces come along, we absolutely take advantage of them. So that includes, you know, more rockets coming online. Sure. You know, some of them have.

More.

What we call Delta V to get to the higher orbits. That also includes some of these transfer vehicles. So we call them orbital transfer vehicles. So like Impulse Space. Impulse, for example, you know, no questions. Those things come online. We can take advantage of those and use that to really, I mean, not to benefit us, but to benefit our customers, Right?

Totally.

We can get a satellite there faster. They get the, you know, faster time to market. They get the spacecraft and their service that much faster if they, you know, if they come online and do the kinds of things that we're talking about, the orbital transfer vehicles, and we have more fuel on board, which means a longer life for the satellites. So a lot of these, there's a lot of great opportunity to come in and add pieces to the ecosystem, for sure.

Are you expecting Starship to change the business? I know Starship's going to be able to dump out way more mass in leo, but does it also make to get. Does it also make getting to Geo easier because it's just a bigger rocket?

Well, it will. I believe it is heavily optimized, so using it, we will most likely. It's not strictly necessary. We don't have to do this, but we will most likely want to use one of these orbital transfer vehicles.

Sure.

And I think that's actually like part of the genesis of why Tom started Impulse Space was he saw this real need there. But it will result in lower launch costs, which just really benefits everyone. I think it's going to be a huge boon to the industry and.

Very.

Much looking forward to it flying. Yeah.

Can you talk a little bit about how a modern telecom company delivers Internet? Because I imagine Changhua Telecom has cell phone towers and maybe some 5G stuff. And then also maybe now they have Geo satellites and those plug into the rest of the system. Or are they. Or are they trying to specifically create, like, we're going to sell you a separate product that's a satellite dish that will interface with this Geo Internet product. And it's like a completely different line. Just like, you know, I have a Verizon plan on my. On my iPhone. I also have a Starlink terminal for when I travel. They're two completely separate products and networks and bills. But but how are the telecoms thinking about providing kind of a 360 experience to the customer?

Yeah, so for, for telco, we are providing what, what we call trunking and backhaul. Right. So trunking exactly what you'd imagine, a giant pipe that allows them to bring, you know, huge amounts of data pipe huge amounts of data from point A to point B and then backhaul is in, in their case. Imagine you have cell towers out in remote areas and you need those cell towers are acting like any normal cell tower and to the end user they don't know the difference. Right. They're just their cell phones connecting whatever cell tower they're the closest to. But if the cell tower is in a remote area, it doesn't make sense to run a fiber line to that cell tower. And so you need to do that backhaul length, that is connect that cell tower to the network through some other way. And satellites are a very advantageous way to do that, especially in certain cases. I think what we've seen with a lot the telcos that we work with like Chunghua Telecom is they really, yeah, they do see it as a very separate kind of need and product offering than what people might get at their homes with. Whether that be the terrestrial provider or a LEO provider like Starlink. What they are really looking for is dedicated capacity that is set aside for their exclusive use. And it's on these, what we call SLAs, Service Level Agreements. You know, guaranteed up times where they, they, and they know it's there whether they are using it or not. It's just always guaranteed to be there for them. And then on top of that, you imagine what I mean, you can just think about what kind, you know, what some of these customers, Fortune 500 customers might want in an enterprise grade offering. It's security, it's, you know, a lot, a lot of the customization, so understanding exactly what the different endpoints of the network are, exactly what equipment is used and you know, getting to work with us to pick that equipment if they have a preferred vendor for that networking equipment and then really just having this insight and transparency into exactly what's happening on their network at any given moment. So among other things, they know where their data is going and where it's not going. They know, for example, that their citizens, Internet traffic is not going up to a satellite and then landing in some other country outside of their control where maybe they don't, you know, they don't trust that country. They just don't know what's, what's happening to that data. So that's where we've seen this, this need out in the market for a true enterprise grade offering that has this kind of, all these, all these aspects to it.

Yeah.

How do you think about scope creep when you're sending multi hundred million, dollar one hundred million satellite up into the air? Everybody in traditional software is familiar. You start building something or you start scoping something out and you're like, oh, what if we added this button or this feature, things like that. I imagine there's a huge incentive to try to scale capabilities and offer a bunch of capabilities, but at the same time, you kind of needed to do every ounce matters. Yeah, every ounce matters. And there's like one or two things that are critically important for the sort of value of the product. Totally.

I, you know, when, when the, when the customer asks for something and they know that there's, you know, there's like $100 million contract, they're waiting, the sales guys always want to say yes. So you got to figure out ways to help them say yes to things without, as you said, you know, giving, giving into this, like, giving into this temptation to just customize everything. Yeah. So we have a standard satellite design. We have a few pieces to it that are essentially modular. So you can sort of plug and play a few different things like LEGO blocks for slightly different customer configurations. But that's it. Right. We draw the line there and then there's only so much that we're willing to customize the design and you have to, you know, at some point you have to say no. Like, hey, if we were to totally customize this thing for you, it'd be. The costs would balloon way beyond what you're willing to pay here. So I think that's worked well for us. We've sold, like I mentioned a lot of satellites of this using that approach. And I think, yeah, there's always ways to make it work.

Yeah, I love the meme of the sales guy. The sales guy just promised like sat.

At a steak dinner.

Yeah, of course we can do that.

You want it to just be able to go up and back whenever you want. For sure.

Yeah, we'll make it happen.

Yeah. You want it to land on the moon and then come right back. Yeah, obviously, yeah.

A little bit different. I don't, I mean, well, I guess I don't really know in enterprise software land, but I can imagine that happens all the time. And you know, it's like sometimes they just have to put up with it.

But it's a little Harder to like.

Build a totally different satellite design, physical satellite hardware? No, no, I totally get software features.

Yeah, no, I totally get with the, with software it's like, okay, you know, this engineering team is going to have to spend, you know, two days over the weekend like, you know, shipping this. But it just doesn't quite work the same when you're sending nine payloads to space. Can you talk about security kind of like risks in and geostationary orbit versus low Earth orbit? Are you far enough away that that, that it's like a, you know, maybe more secure environment or less risk or are the risks still kind of very real?

Yeah, so I mean, I'm going to be a little limited in what I can go into here since I do have a security clearance. There are different threats to higher orbits and geostation orbit than there are to low Earth orbit. And different, different counter, different counters to those threats. I think what I would say is that, you know, our plan is, and what we're executing on is we're building many of these satellites, we're spooling up our production here in this building to build, you know, many dozens, build and launch many dozens of these satellites, including we'll have on orbit spares. We'll have satellites that we could bring in and add to that, you know, add to the network or replace if a satellite was lost for whatever reason. And you actually imagine, I mean, that actually is an easier problem to solve than an undersea cable, fiber optic cable being cut. That fiber optic cable is being cut. You just think about the difficulty to replace that. You have to actually get a ship to roll that out over.

Oh, hold.

On, thousands of miles. Right. Somewhat related to that, but probably something you can talk about in terms of space junk. We hear these stories about like, oh, the ISS had to dodge some satellite debris. Is that a problem for you? Do you have systems and thrusters that can turn on if you're detecting something? Or is it clear enough that it's not really an issue at this point?

No, it's true. I mean, occasionally it's much more rare in geo than in LEO these days. But the orbital, you know, the orbital space like airspace, but space space is being actively monitored at all times by the US Military. They actually do this, you know, your taxpayer dollars at work, they do this and broadcast to the entire world if they believe there could be a collision between two space objects and they call it a conjunction event and you get a conjunction warning and you on, you know, on board, like we do have thrusters on board rocket Thrusters that we could use to do these evasive maneuvers and get the satellite out of the way. If we really believe there was a real risk of some kind of collision. There's, like I said, quite rare in geo. I mean, certainly not unheard of, but rare for you to get one of those warnings. More common in leo, but that is just becoming a reality in the space environment now. I mean, that's just a reality we're going to have to all deal with.

Makes sense. Speaking of undersea cables, it's been 10 years working on this. Can you take me through what the next 10 years might look like? I know that a geostationary satellite is mostly, in the case of an island nation, mostly going to act as backhaul between cell phone towers on that country. But is there a future where instead of going through an undersea cable from an island in the Pacific to mainland America, you could actually do the backhaul in space between two geostationary or satellites? Is that something that's possible even, or. I know it might not be as fast, but.

Well, that is the. That is the use of this Taiwan satellite today, actually.

Oh, cool.

That we announced today.

That's right.

It will actually have a couple of different, you know, it will be able to provide service on the island, but it will also be able to be a relay to locations off the island in the case that all their, all their fiber lines are cut and they would otherwise just be totally isolated from the outside world.

Right.

It seems really, really important.

That is very important. That is a real concern. You can imagine if you are just getting your communications, you know, piped in with these undersea cables, and then one day someone accidentally drags an anchor across, you know, all of them.

Yep.

That you would. You could end up very isolated and in fact, completely unable to talk to the outside world. It's very scary.

That is very scary.

Very scary scenario for a country like that. Right. And there's a. And there's a lot. There's. There are many such countries that, that have these concerns now. The world is a more complicated and I would say dangerous place than it. Than it was in the past. And so, you know, we have. This is where we have seen a significant demand for this kind of service.

Now, do you have, do you have any insight into how Taiwan and the Taiwanese government views civil military fusion? We've, we've heard from Palmer Luckey that, you know, every boat that's built in China needs to be able to be built to military specs. Obviously, you're doing A commercial deal here. But how does Taiwan think about that? I feel like in America, if, if AT&T does a deal, the government's like. Or the DOD is like, okay, cool. Like, you know, that's kind of its own thing. Taiwan might have a different positioning. But what is your take on how the Taiwan government views civil military fusion?

Yeah, that's a good question. I mean, this, this is, this is a commercial. There's a commercial deal.

Yeah, sure.

And is one of our commercial satellites coming off our, our commercial production line? I think what I would, I think what I would say is that, you know, where we've seen interest from the DoD, it is actually also for these same satellites off of that same production line. They are very interested in this dual use type of scenario where they actually get to benefit from all the private capital that we've raised. We've invested that into this production capability. So then therefore, you know, we're using it commercially, we're using produce. And then if we use that same production capability, produce satellites for them, then they get a much lower price point than they would otherwise. If they just like all this investment had come in to stand up a whole new production line just for a military, you know, a new line of military satellites. So that is where, right, that, that's the benefit of, of dual, of a dual use technology. Like they are getting that benefit where they just wouldn't otherwise. And I think places like Taiwan, they saw the, they saw the benefits from that also. They saw our U.S. military contracts. They know that we have designed something that the military is interested not in some upgraded, you know, super, you know, turbocharged version of what we have today, but what we actually have today. And they are, they're basically getting that same thing, right? So that is maybe that's slightly a different way to look at it, but there's definitely, you know, we are definitely seeing a closer amount of overlap of our commercial industry and what the DOD is looking for than never before. I think in the US as I'm sure you guys are seeing with a lot of companies you're talking to.

For sure. I'm a big fan of the moon. I want to go to the moon. I want to be able to listen to podcasts on the moon. Are you going to be able to help with moon comms in the future?

100%, yes, we actually, yes, we have an early NASA study contract. We're studying that for NASA. NASA is going to need everything that we have, like every space service we have for Earth. We're going to need Another copy of that around the Moon. We're going to. Moon's going to need its own gps. Moon's going to need its own comms networks, both, you know, moon to moon, you know, lunar surface to lunar surface comms, as well as relays back to Earth. And then they're going to need all these transportation systems. I think with the Moon, the most interesting story that nobody is talking about is we have a real space race with China happening as we speak. And it's very concrete. There is a series of craters on the Moon that we know have water ice trapped in them. And these are permanently shadowed craters on the lunar south pole. And it is extremely valuable real estate like those, that. Real estate and those mineral rights, if you want to call that enormously valuable, because you can use that water to create rocket fuel, which you can use to then use the. Have the Moon be this, this stepping stone to other places in the solar system. And whoever gets there first and really decides we're going to actually, we're not just going to plant a flag, we're going to, we're going to put down a fence base.

Yeah.

And we're going to say this is our lunar property. Like, whoever does that first, they, there's, you know, there's no reason to not believe they, they will just maintain that forever, for all time. Right. I mean, it's currently totally green field. Now, if, if all the nations on Earth agreed to not do that, which they essentially did through international treaty, I'm sure the US Would abide by that. But if China decides to just cloud that treaty and ignore it and just go land and start grabbing territory there, we would be, it would be incredibly dumb for us to let them charge ahead with that and miss out and let them get there first. So, and this is like, I mean, China just landed a new lunar sample return mission that allows them to demonstrate all the technologies needed to essentially do human missions, do other types of missions for all the things I'm talking about. And honestly, we just, we haven't been talking about it enough because we're, we're sort of letting China just go out and do all these things in space without even calling attention to it. I mean, I honestly, I mean, I think, I think our new NASA administrator, Jared Eisenman, who is going to be absolutely fantastic, I think, I suspect he will talk about it once he gets in the seat. So we've been waiting for him to get Senate confirmed. I think you'll see other folks in the space industry start to talk about it because It's a, It's a big deal. Like, we need to start getting, you.

Know, we got to.

Do you think, in some way. Last question. Then we'll let you go. Do you think, in some way, you know, calling this, you know, the Space Force? The Space Force kind of like, allowed people to not take it. Like, it doesn't. In many ways. I think the name sounds cool, but I think a lot of people didn't feel like it was a super, you know, serious initiative when it actually, it absolutely is something that, you know, should be mass, you know, continued to be invested in massively and taken more seriously.

Oh, I mean, I, you know, I think.

And I mean, I mean more like the broader social media reaction to like, oh, like, you know, great, we have a Space Force versus. No, this is absolutely a new frontier of defense and warfare and, and it should be taken more seriously than ever.

Yeah. I mean, it's important to keep in mind the space for, in government terms, Space Force is still very new. Right. It was. These things take a while to get established and also essentially to really put forward their mandate. I also would argue that under the past, the previous administration, things were a little muddled in exactly what their mandate would be. I think under the Trump administration has been. It's very clear their mandate is to counter the. All of the activity and I would say aggression that we're seeing from China in space. And we're going to see them, you know, I think we're going to see a lot more from space, from Space Force in the near term here. So, you know, yeah, I, I think, I think, you know, I think stay tuned on that. And then, you know, we will also, and I think we'll also see an increasing amount of coordination between our civil space community, NASA and the Space Force than we have in the past. And again, that's going to go back, I take it back to, you know, what China's doing on the moon. There's. They, they have no, you know, not only do they have coordination, I mean, there's. There's just no divisions at all between their military space, civil space, and even their commercial space. It's all just one big industry blob of activity that's, you know, we can't even draw lines there. So I think to counter that, we are going to see more operation there. And I think people start taking it very seriously very soon.

Great. Well, thank you for starting the company 10 years ago and for. Yeah, congratulations. Congratulations on the milestone.

Kind of a right place, right time story, really.

When I think about 10 years in the making.

10 years in the making. This is fantastic. Thanks so much.

All right, John, congratulations. I appreciate the whole team. Cheers.

Have a good one.

All right, we have Jordan coming on. I'll be right back.

Perfect. Jordan, when you're there. Welcome to the show. We're excited to catch up. Talk China. There's so much to talk about. You're in the right business. You're here at the perfect time. How you doing, Jordan? Can you hear me?

Are we on?

We're on. How you doing?

I'm pissed off. John.

What's happening? Not happy. This is. This is the. You should be celebrating. This is the best time to listen to Chinatalk. If you're not listening to every single episode that you put out, you're falling behind. And so it's got to be just a bull market in every single stat you're tracking.

No, except for. Except for America. Except for the America stat that I'm tracking, which is the only one that I care about. John. I want to win. I want to industrialize. I want a golden age for America. But what we are seeing now is 2015 warriors era execution of how to lose a trade war.

But what about reframing it? Using, to use a metaphor, like, imagine playing like a beautiful, beautiful violin concerto on the Titanic as it sinks. Like, that would be laudable, right?

Yeah, it's really, what a violin. Until your conductor gets thrown in a van and sent to El Salvador. This is the world we're living in, John.

Oh, no. Well.

Jordan, it's great to see you.

Yeah, good. Yeah. Good to have you back. You came on with a bang. Maybe we could set the table. Like, how have you been processing the tariffs? Have you been on a roller coaster? Is it. Has it just been black pill the whole time?

It's all the way down. It's all the way down. Look, I want to believe. I really want to believe. I was going to give him a chance. I was sitting there, you know, January 10th, like, look, this guy, he's got some moves. He's got some moves, okay? He wants to change the way R D gets funded. He wants to bring manufacturing back. He wants to fight a trade war with China. I mean, like, sure, okay, you can, you can. I'll put in some table stakes for that.

But what we're.

Can we start. Can we start with the. Can we start with the research, John?

Jordy.

Yes, let's start with that.

Okay, the facts.

Xi Jinping would cut off his left hand for the Basic Research University industrial complex, which America has which no other country in the world can hold a candle to until 20, until late 2025, where every single good STEM PhD and STEM and stem professor who you can get a job anywhere decides they're fudgeing, sick of this and doesn't want to live their life terrified that they're going to be taken away from their family and their research and, you know, their, all their professional opportunities because they got a fucking traffic ticket. And this is the world we're living in now. John, you went to Northwestern, right?

Northeastern.

40 visas already, 40 people's lives fucking ruined because Marco Rubio thinks that it's cool to, to pick fights with biotech and csp.

Yep.

What are we doing here?

Okay, what about, let's go back to the initial trade war with China led by Trump. 2019 tariffs kind of go in this tit for Tat spiral. 34 billion on, on US good. 34 billion on Chinese goods. We were discussing it at the top of the show. Starts with 50 rookie numbers, then 250 billion. What is your postmortem on the 2019 US China trade war?

The 2019 US it was kind of a wash. And, and you can sort of write it off because the US Economy was growing and we weren't picking a trade war with every other fucking country on the planet.

But is it, is it possible that we land in the same place and in the next four years you're like, well, yeah, we can write off the first two trade wars, but the third one's the real bad one. Right?

I mean, here's the thing, here's the thing, John. Jordy, tell me about what the risk free rate is and why it matters for Capital Invest.

Yes, yes, yes. It's a very.

Have we done that yet?

We talked about the basis trade. It's not looking good.

Well, yeah, Joe, Joe, Joe, Joe was, was talking earlier with, with Tracy specifically about the US T Bill being potentially the greatest export that we could ever have. And I think that's an interesting positioning. Can we talk about your, your audience are, is, you know, deep state people? No, I was going to go, I was going to go towards, you know, people.

By his own definition, he says he's darkest for the deep state. Okay.

Yeah, yeah.

It's not me making it up. This is what his, his words.

It's great love of freedom and democracy. That's what we're. Okay.

Yeah, yeah, yeah. What, what's the, what's the reaction from your business audience right now? Are they still at a standstill? Is it, you know, we can't make any decision because we don't have full clarity on what the world looks like in 90 days.

You know, look, it's not, it's not going to be 90 days. It's going to be four years. Because this man likes to be in the headlines more than he likes literally anything else. So he is going to keep doing things that put him in the headlines. He can't take wins. He was handed, he was like, yes.

Yes, he was going to be in the headlines next month. But it could be because he's fighting with Rosie o'. Donnell. Right. And that has a different.

Oh, my God. What I wouldn't do to have him pick fights with Rosie o'. Donnell. That is the timeline that we should all be rooting for. We need Donald Trump. If you want to take it all out on me, I'm here. I'll, I'll, I'll be the sacrificial lamb for America's basic research ecosystem. If you want to pick, if you want to pick a fight with a shitty podcaster, I mean, like, you know, it's, it's, we've got, we've got a brain drain of America. We got a capital drain of America, we got a geopolitical drain of America because he wants to be buds with Putin and take over Greenland. And by the way, we are selling the best chips we have to China because Jensen spent $1 million to have a burnt steak at Mar a Lago. I mean, it's like, truly, we're just checking off. Yeah, that kind of dumb thing to lose this tech war.

Yeah, we can, can you talk about the decision that that kind of flew under the radar was this Friday, or I don't even know if it was yesterday at this point, but Nvidia is allowed to export the, what is it, the H, the H20.

So it's just one infrared trip which skirts right under the export control regulations. And Biden didn't do it because he's an idiot. And now Trump isn't doing it because he likes getting, you know, people to pay $1 million to have dinner with him. There is no reason Nvidia does not need the money. It's like $2 billion of revenue. Like, they will be just fine without it. But we're living in this timeline where if you, you know.

Yeah, so if it's 2 billion in revenue, then, well, it's only 2 billion of AI data center capacity. And that's not enough to build a GPT5 level model. And so it's irrelevant. Like those two things can't be the same, right?

Yes and no. I mean it's like okay, sure. So like what are, what are, what are like okay, I'm running super intelligent.

Yeah. I mean, I mean the steel man here is that you like, like yes. You don't want them building super intelligence GPT seven level models like you know the project Stargate, the $500 billion data center cannot be built in China. But yeah, take $2 billion fine tune GPT outputs, it's still going to talk about Tiananmen and you have deep sea which is basically an American model vent or Manus which is Claude like vended into China. And that's actually we were talking to Tyler Cowan yesterday about this. He was saying that this is a win for American hegemony because the Chinese leading models have American preferences baked into the weights at a very deep level.

Yeah, I mean if we're, if we're, if we're thinking that our models are going to democratize China, I mean that's a, that might be one or two steps too far away from me. It would be like trying to wait book John is the way we kind of already are which is sell all the chips into Malaysia and if Chinese companies want to sort of run their cloud out of Malaysia and Singapore then okay, and we can shut it off if and when we decide we want to shut it off. But selling chips directly into China, there's no upside to it. Well, because you're just opening yourself up to this like whole other universe of risks of maybe these $2 billion of chips actually do end up being enough to fast follow and you know, compete with like a totally up meta and an open AI who doesn't let a.

Hypothesis hear you say that 2 billion could ever compete with 65 billion in capex. That's ridiculous. Can you break down spend 65 billion this year?

Okay, they're all spending 65 billion, every single hyperscale. Let's see next quarter just what that $65 billion number is going to be looking like. I mean higher, probably higher. I wish I would have to.

I'd love. 65 is low.

Jordan's not, he's not a GI pill.

He's so black pill.

His timeline is so extended. Yeah, we're talking 20, 2080 at this point. 2080, 2080. I want to. So, so we covered earlier on the show the sort of venture capitalist version of the history of US China relations. So like sort of high level, you know, trying to, trying to get into the dynamic. There was a few days ago, April 11 the US told China to request a Xi Trump call. This was reported, which is sort of a funny, you know, it's just a funny way to go about trying to get you.

Yeah, this is crazy.

Here's my number.

I mean, just call, right? I think we're just pick up the phone and call.

No, but talk about, talk about the history.

This is how you do negotiations.

But this isn't unique to Trump. Like, this was the same negotiation that we saw with Reagan, Nixon, Clinton. Like, like the whole politics of diplomacy have always been extremely convoluted and there's never been an era where it's been like, yeah, this, it was the Democrats that always just picked up the phone and called, or it was always the old school Republicans. It's like Trump's just repeating the playbook of the last 60 years of US China diplomacy, in my opinion.

John, have you done a video about Qian Qe Sen?

No.

If not, you should. Okay, so he is a. Sorry, let me get the. Okay, so born, born in China, came to the U.S. to study at MIT in 1935. He was, got a clearance during World War II, was a part of a lot of classified work. Was best buds with Vannevar Bush, you know, part of America's missile program in the early days, 1950. McCarthy shows up and blows up this guy's life. He says, you know what? Fuck it, I'm going to move back to China. And proceeds to turn into the father of China's nuclear and intercontinental ballistic missile program. And this is the playbook that we're currently running now is we're taking all of these smart people and telling them they're not welcome here. And this is, I am so sure of it. And it's just like, it's just ripping me up inside that 10, 15, 20 years from now, we are going to see companies founded, we're going to see weapons developed by people who, at a sort of hinge moment in their life, you know, 30 some odd years old, they're thinking about where they want to build their life, they're thinking about where they want to start a family. And they see that, you know, this country is not open to them. And, and it's just like we have this founder cult in, in, in Silicon Valley, right? You know, the 10x engineer. Like there are going to be a handful of people who are going to end up kind of determining the future of technology and the future of the world. And we're taking on risk, which we really don't have to by telling all.

These people I Agree with all that. That's not about communication and picking up the phone, but also, also China, they do have TikTok, they do have DJI, they do have unitary. Like, they have the companies already. Like, it's not like they're, they're like, oh, we haven't thought to build a competitor to Facebook or Instagram. Like, they've done it successfully. Like, like we're, we're in a competition now. Exactly.

We're in a competition. So we can't be fudgeing around anymore. And we're going to have four more years of fucking around and it's, it's just dumb. And like, I still, I still think we're going to pull it out. Like, I still, I still have faith. You got to believe, right? But it's, we're gonna be sitting here.

In six years being like, oh, yeah, we can totally sweep that one under the rug, but this one's the real deal.

I really hope not.

We can.

I really, I really hope you're right, John. I want to live in that future.

You should, you should, you should hope that we're right about this.

No, but, but talk, talk to me. Going back to my original question. Sorry, it's not, maybe it's not as exciting for you, but I think it's just interesting. Okay, what's up with, you know, the US And China never being able to consistently have, you know, clear commute, direct communication between, you know, the White House and Beijing?

Yeah.

You know, I think there's a, there's a really interesting arc of the way that the Chinese government has sort of viewed US China interaction over the past 15 years in a way that's different for really the second half of the Cold War. So from like, you know, post World War II Stalin up until really the Cuban Missile Crisis, the US and China, the US and Soviet Union weren't really talking. And then you had the Cuban Missile Crisis, people got really freaked out and both countries realized that it actually probably behooves us to be able to interact with each other in a more straightforward way as opposed to, you know, finding like business people and like, you know, ambassadors handing people notes because we don't have like sort of leader to leader interactions. And then even though there were scares for the rest of the Cold War, at least there was enough of a kind of muscle memory in terms of these two countries interacting with each other that people started to get a better understanding of what strategic intentions were. So the Chinese government, I think, like, first off, does not price in the risk of an accident turning into something really horrific nearly as much as the Soviet Union did over the course of the Cold War. And they see that, you know, the, the, the Biden administration and the Trump administration and, and the Obama administration as well like understand that this is, can be a scary thing and they see it as a chip to negotiate with. So if you're, if you're not worried about like, you know, planes hitting into each other and you think you can get something out of, you know, setting up like regular dialogues or calls or what have you, then you know, you're going to, you're going to put it on one of your five asks. But the, the sort of, the other thing that I think, you know, she's looking at when he saw what happened.

To.

Zelensky and the. In the White House. Right. Is like, you know, you, I think the willingness to assume like interpersonal risk is a lot lower for that system and they want to have stuff a little more baked out before you kind of like do one of these like leader to leader conversations. So whatever. They'll talk at some point. Like I don't know if they're going to like end the trade war. I'm not really sure what like the aims are because it seems, seems like they changed a lot over the past two weeks and they'll probably keep changing. But yeah, it just hasn't really been a priority for the Chinese government because it's the thing that they think they can squeeze us on is us wanting to have these conversations.

One of the things that's repeatedly come up in our conversations is just the nature of US tech companies broadly being banned from doing business in China. Everything from, you know, Google to Metta others. And a lot of the people that come on our show are not even allowed to travel to China because they're in anything defense, aerospace related.

Sure.

On the ground in China. Do they do. Does the government or the military. I don't even know how much of this information would ever appear online and available. Do they laugh at us for allowing TikTok and DJI and unitry? Like do they think it's silly? It's like you're tariffing our, you know, cheap toys, but then you let us sell. You still let us sell DJI drones. You still still let us distribute brain rot to 100. Like is it a funny thing to, to them? Because to me it's a terrible irony and that like we just can't get a TikTok ban across the line or we can't. We haven't been able to get them to sell it yet. And again, like these sort of industries and products that have, you know, extreme national security risk, you would think those would be the easiest things that the United States could make a sort of collective decision on that would. So I'm curious what their sort of like, reaction to the silliness of it all is.

Oh, yeah. Laughing their way to the bank. I mean, like, look there. There. There is. There is definitely like some trade war shit that needs to be happening. Step one, TikTok and DJI. You said it yourself, Jordan. I mean, it's like I would love for there to be a, like, really wonderful globally competitive supply chain that America can create. The sort of autonomous drones that Ukraine has been able to leverage. And even they still have to buy stuff from China because there's not enough. There's not enough there. There ex China. But instead we're kind of going in a very different direction. So, yeah, I mean, it's. You're, you're totally right, Jordi. It's just there's, there's not a strategic vision that we're seeing out of this political moment. And I think they're, you know, not to put China 200ft tall. Like, there's definitely things that they're not. They're going to do wrong and their economy isn't perfect and they're sort of like techno industrial complex is not perfect. But they figured out a lot of this manufacturing.

How do you. And yeah, so, so the one thing that's clear, very, very good at manufacturing. I don't think anybody disagrees on that. How do you judge, like, what do you look for to understand, you know, if China was really suffering right now from these new tariffs, we wouldn't know about it. Right. It would be. It's sort of like, it's not like they're going to come out and start saying, you know, talking to the people publicly.

Stock market.

Right, yeah, sure, but, but like there's a lot of information control in the same. In a way that that's not necessarily the case. Like, if a US Business is being affected by the tariffs, that person's going to go on LinkedIn and TikTok. Or they'll come on TVPN and they'll say, like, yeah, Mike, costs are up, you know, whatever, 300%.

And unless they're coping really hard.

Yeah, but, but how do you try to judge the, the actual impact of the tariffs in the, in the domestic, you know, you know, the.

Yeah, I see what you're saying. I don't think it's as, as it's as opaque a system as like, you know, the CIA and different corners of the US Government were having these like, big drawn out debates in the 1960s, 1970s and 1980s about how large that the Soviet economy was because they were saying like, okay, let's say they, they spend 10% of GDP on, you know, on defense. So like, you know, what's the base that they're doing this often? It was really hard to figure out how big the, how big the Soviet economy is. I don't think it's that hard to figure it out today. As, as John said, we have trade data, we have the stock market, we have, you know, quarterly earnings from, from all these companies. And I think there's like enough out there of like, chatter of people saying like, oh shit, I got laid off because of the trade war that like, you know, you'll, you'll, you'll be able to pick up the atmospherics just in the same way you can by having, you know, reading Joe Eisenthal's Twitter feed. Right.

What about kind of the, the new ally ships that are building? I mean you obviously, you were very upset about like, you know, America kind of potentially frustrating trade partners like Canada, uk, Australia, France, like we shouldn't be pushing them away. Some of that subsided. It still feels like in general, if we're going towards a more bipolar world and you're, and you are creating some sort of broad Western alliance, like you're going to put the five eyes together, you're going to put NATO and America together. But who is, who's on China's side? I've been worried about like a China, Russia, Iran coalition forming. Are there other countries that are starting to flip into Chinese allyship more seriously post post trade war?

Yeah, I mean this is a really interesting thing is like the reason that China wasn't really able to capitalize during trade war, number one, is because they were feeling their oats and they thought they could still do wolf warrior diplomacy and, and bully other countries around, even though Trump was sort of like shitting on, on them in their own way. And it'll be fascinating over the next few years to see whether or not they take, they sort of learn from that experience and take a more conciliatory approach and, and you know, don't try to like, you know, nickel and dime these countries in order to really potentially win them over. But you know, Southe, like, okay, I guess like we, we did 76, 76% tariffs on Vietnam and then we cut it back. Like who knows we're going to go with that. But the, it's, it's, it's two things. It's like, are we going to go to China or are we just going to cut trade deals with every other country, the US So that we're going to, you know, the, the sort of like the free world ex US is going to have this, you know, thriving inter, you know, thriving trade ecosystem which we're just not going to benefit from because those supply chains won't run through the US or our consumers won't get to benefit from or our exporters won't get to benefit from. So, you know, there is like, there are a lot of like, intellectual risks here. There's the intellectual risk of like thinking China is 100ft tall and you know, where we're shot and there's no way we can compete with these companies. But there's also the intellectual risk of thinking America is 200ft tall and we are like, you know, we're still only 25% of global GDP and that's, that's a whole lot of GDP out there which is going to be thinking about what to, you know, what to do and who to trade with and where to invest. And so I have a question.

What is the. So China blocked orders of Boeing aircraft to their national airlines. Are we going to see.

They're going to go Gulf Stream?

Yeah, that would be cool. No, you have, do you have any sense of. I'm assure, I'm, I'm assuming that China has been aggressively trying to clone various, you know, US commercial aircrafts for years. Is that as advanced as the automotive industry in China or is it, is it a ways behind?

Yeah, it's interesting. That one's kind of been like the final frontier. It has been a clear national priority for a very long time. And jet engines are really hard, apparently, even if you layer on industrial espionage and like an enormous amount of state support. My guess is that like, the reason it has taken so long for COMAC to to get its shit together and build competitors to Boeing and Airbus is probably the fact that is state owned and there are just like poor incentives going on versus the sort of free market, free for all that you saw on the electric vehicle industry just attracted better talent, more capital, phone companies moved.

Over into cars and they're not doing that in planes. Right?

Yeah. So I think there's, you know, and there's like relatively limited upside. It's like a national prestige product as much as it is a capital, you know, a capitalist endeavor to make these jets, so we'll have to see. I mean, I'm like, look, if they can't do it, the orders will just go to Airbus. And like that sucks. But it is what it is. And I think, you know, these, that industry in particular, there's so much like geopolitics baked into it that I'm not shocked that that was, that was on the, you know, first list of like, things to, things to start cutting from US import perspective.

Last question. You seem pretty blackpilled. How's Dylan Patel doing? Have you done a wellness check? You seem pretty black pilled when you talked to him a few days ago. What's his mindset like right now?

I wish him the best. I don't know, I think he's, it's just like, like I thought I would be our out. But if we're going to sell them all the chips and we're going to screw up the like American capital base that we're banking on to fund all this AI expansion and we're going to throw away the AI diffusion role such that like the chips are actually just going to end up going to Saudi Arabia and Qatar and Brunei. Then, you know, it's, it's just, we're just taking on risk left and right and like we might be able to pull it out, but it's, it's hard to watch. Thank you for letting me turn this into the Jordan Schneider therapy session.

We're going to leave you with a white pill one way or another.

I just had a question of where does the Middle east really sit in all of this? It feels like in many ways we cover business and technology. In many ways the relationship between the US tech industry and Saudi Arabia, Qatar, UAE is thriving just due to the capital flows. But how do they think about even picking. I haven't seen themselves inserting themselves into the story over the last couple weeks and I'm sure that's for good reason. But I'm curious how you see them as a player in all this.

Yeah, it's interesting.

I feel like, I feel like their diplomatic system, like knows how to play the kleptocracy game much better than Canada or Europe. You know, they got their reps and sets when it comes to dealing with, you know, family dynasties and whatnot. So they're smart to keep quiet. I think, you know, the diffusion rule that the Biden administration put out at the very end was really a play to force them to pick sides. And basically the, the deal was like, look, if you want access to the future, if you want access to compute, then you really got to play ball with us and you got to play ball with our AI cloud providers and our sort of like broader defense ecosystem. And if you're going to, you know, have too much China AI in your, you know, in your national bloodstream, then we're going to reconsider whether or not we're going to let you, you know, buy chips and access our models and whatnot. So we'll see. This is a regulation which I think is going to be a really interesting bellwether because it was a very clever hinge to sort of force the Middle east governments and the money that came with that to invest in the Western as opposed to the Chinese technology stack. And look, if they don't love what they're seeing, maybe they'll be more excited to. If they A, don't love what they're saying and B, we, we take away the jack that we had around them, then, you know, you could see them starting to wiggle in other directions and take and take side bets on a pot that they may have had to have gone all in with us if it wasn't for all the craziness we've seen over the past few months.

Got it.

Very last 30 second question. How real do you feel the yield coming out of TSMC Arizona is, or is it marketing to the admin that, hey, we're doing what you want and Nvidia coming out and saying they're going to make Blackwell chips in the U.S. you know, it's hard to judge whether, it's hard to understand how real it is when we know that people get excited about, oh, we're going to produce $500 billion of, of Blackwell chips in the U.S. in the next five years? I think is what they were saying. Which sounds amazing, but in this current dynamic, when there's so many, so many different conflicts and so much on the line, it's hard to know what's marketing and what's like actual, you know. You know, it's a good question.

My, my rule of thumb is like, you can't lie to the sec, so just like wait for the filings. But look there, everyone's, everyone's trying to figure out how to get on this guy's good side. And maybe this is something that might work. So, you know, I like, it's a, it's an interesting sort of like policy trade off. Like, would we rather have cheaper AI hardware that like Microsoft and Amazon can buy? Would you rather have it be in the U.S. i mean, like, if it if, if the sort of pressure is forcing more stuff to be built in America, like there are pluses and negatives from that, especially if we're doing like accelerated timelines and like the prices are going up. And I think this applies to TSMC as it much as much as it does lots of other industries so look like they're like they're more committed than almost any other, any other company in the world. And they don't really have an out for, for this. So they're going to do everything they can to, you know, make, make Arizona work and make the relationship with this administration in this country more broadly work. But I'm almost more concerned about the other, the other companies who don't have as much money to burn and you know, have other options when it comes to setting up manufacturing plants and finding kind of like end, you know, and end users to sell to that are just going to look at what they're seeing now and like, nah, we can, we can, we can open that up that playbook again and see, see what else is what other countries and locate locales are on the agenda.

All right, well, fantastic having you.

Spirited debate. We'll figure this out.

We're built different.

America's gonna be fine.

Don't worry.

Okay. Another thousand year reign. It's all good. Just relax. Just, just put out great podcasts. Cash in while you can. Since China's in the news, tell people where they can find China Talk. Give the pitch.

China Talk.

ChinaTalk Media.

ChinaTalk Media.

Your favorite podcast app.

Yes.

I promise you I'm not that negative. It's like 80, 20 good vibes.

There's some great stuff on there and we appreciate you coming by. Yeah. Activate Golden Retriever mode. Be a little bit more positive and.

All right, we have another guest. We have another guy.

No, no, no.

That is not family friendly. Get out of here. We'll talk to you soon. Thanks for stopping by, Jordan.

Bye. Jordan.

This is great.

I missed, I missed that completely.

Yeah, he did a, he did a little, little squirt gun to the head.

Oh, not good. Never.

Not, not family friendly on this show. Anyway, I'm going to get the sound we got, we got Aaron Ginn coming in the studio. He's written some absolutely banger takes about China GPUs. He's been called the GPU Whisperer. And there's a fascinating article I want him to break down for us. He wrote this in January 22nd of this year. It's time to build America's cyber nuke. We desperately need a Deterrent to stop wars before they start. I want to hear him explain it. Aaron, welcome to the show. How you doing?

Hey, doing well. Can y' all hear me all right?

Yeah, yeah, we can hear you fine. Would you just give us a little walkthrough of your background? What you do, how you got to the place you are in today?

That's a good question. Say the Lord works in mysterious ways. So we actually started this project, it's my fourth company. We started this project actually as a help you leave the cloud, don't be canceled. And so what we found out is the data centers didn't have a software stack to help them monetize customers. So they didn't. Basically they mentioned you're a merchant selling T shirts and Shopify didn't exist. And so then we started building this. And then when the GPU craze started, the data centers were like, we need something to run this stuff. And then we were there. And so we started that four years ago. And so like, I can, I can. We never had the right customer in mind. But in terms of like a lot of the other stuff that happened with the space, it just had this really nice merriment of like. I've been working in public policy for over a decade as well. I have a foundation in D.C. public policy think tank. And it also been like doing like political stuff on the side. And then just so happens that like AI is the fastest regulation in Silicon Valley history and people view it as if, you know, it's regulated under missile technology law. That's how it's regulated right now. So. So people in D.C. literally view the Jensen as selling weapons of mass destruction to other countries. And so that's why they use the word diffusion, proliferation. Right. Those are nuclear weapons words. So those are. This is not a. This is not like in terms of politicians, they don't view this as if you're selling just fun little gaming gear to different countries. That's how we got into it. And now we're in, I think over a dozen countries. We are in 50 data center or something like that doing hundreds of millions of dollars a year in transactions. We think GPUs are going to be everywhere and kind of has reached that escape velocity. There's not really much the US government can do about it at this point.

Yeah.

How did you react to the new Nvidia deal that got announced in the last week? Another 2 billion dollar chips of chips to China. You think it's.

Oh, you mean the H200 they're talking about the reshoring thing with TSMC and Foxconn. Which one first?

The first part.

Oh, yeah. Well, I think it's positive because I think that the approach that America doesn't understand is that the way that China. And so like, I'm a Chinese exile. My family's like Communist China. We fought for the kmt and during the Cultural Revolution, half of my whole family got murdered in China and so fled to Taiwan and then here. So, you know, I'm. I'm a. I'm a hawk of all hawks. And then my foundation also broke the story, if you remember, the Chinese government buying land near the military bases. So, like, my. My policy foundation, like, broke that story.

So.

And like, I was telling John that all like a bunch of like, Chinese ambassadors blocked me on Twitter and because I was like, harping on it came from a lab. They came from a lab, like, sort of. Sort of thing. And. But. But anyways, like the. I think that the Americans like, like to think the world works as if Western kind of frameworks and philosophy and. And a lot of, if you like the history of Chinese and the way that they have accelerated their innovation curve, which is, by the way, like, not. We sort of treat that in post Nixon era kind of frameworks as like how they. We got schools. The pattern. The pattern of China has always been to steal technology from other people. And so if you look at even how they got the first nuclear weapon, so the way that they got that. And this is just. Just a quick side story because I think it's helpful for. For the west to understand just how they work. So if you remember, Eisenhower was asked, asked, would we ever use a nuclear weapon against China to defend Taiwan? And that actually whole story was planted by the Chinese because China was trying a. Mao at the time. Mao was so crazy that even Stalin was guy Stalin was like, that dude is freaking nuts. And he kills his own people at too much, right? It looks like he was way too far. You know, I just do a couple million. He's doing tens of millions, right? So. So Stalin was like, absolutely not. We're never giving you nuclear weapons ever. Right? Because you're crazy. And. And so the Chinese basically invented this narrative and story planted in D.C. created this line within the State Department that like, well, they could invade Taiwan. And so then got to the media and then Eisenhower was asked, and then the news posted and he said, yes, we would use a nuclear weapon to. To defend Taiwan. So then what Mao does, he goes back to Stalin and goes, hey, do you want have America on your borders? And solid was, no, I don't want that, but I don't want to give you nukes. So what I'll do is I'll send Russian scientists to China to just co develop a nuclear reactor with you. But just don't take my secrets, right? Then five years later they have a nuclear weapon, right? So, so they've done that with nuclear submarines, they did that with fighter jets, they did that with SAMs, they did that with aircraft, aircraft technology. So this is just like a long line of history of like how they kind of work as like a country.

So.

But when you're in an environment, when they have 10 times the number of engineers that we do, they have a relatively centrally organized government that can execute big initiatives. But it's still a highly federalized government. So it's in the Shanghai province and Shenzhen province. The governors kind of like all work separately. Like, like in America, like they are all, they're hyper federalized but, but generally they come up with these like kind of big initiatives and big plans. And so when it comes to like GPUs, we have to realize that they are very much closer than we think. Like, like the reason why iPhones are built there is because it's so technically complex to build an iPhone that we can't do that anywhere else. It's not because it's cheap. The cheapest place to build things is Mexico, like just by labor hours. But Mexico doesn't have the technical capability of doing that. And so when we have the situation of GPUs, you have to understand that it's not just like we can actually protect this technology for that long. The actual modes around the information asymmetry that we have as a nation towards China on the advancement chips is much smaller than we think. And I think it's like under 12 months. So if you think they're like five years away, I can be sympathetic to the airports controls, but if they're under a year, the goal is to win. The goal is to reach escape policy, like up on Harmon, right? They brought everyone, Los Alamos, not to be secretive. It's because we had to win. We had to be first. Because whoever was first defined the entire era of what nuclear weapons became. And so that. And then we actually, by the way, cut off all of our allies too. We took the mathematicians from Britain, we said, hey, yeah, we'll share everything. And then we made the nuke and then we cut them off and then they went to go build their own nuke. So it's kind of the same situation where building GPUs is actually much easier than the US government thinks, which is why it measured by Amazon's doing and Microsoft's doing, Facebook's doing it, Broadcom is now a trillion dollar company. And the second is that their actual ability on the foundry side is much is more like a year or two behind. So in that scenario, it becomes where we need to distribute our technology, like a Boeing asset to as many places in the world that wants to take it. Because then that becomes our footprint that we control, that we can continually express and influence that other country. Otherwise Huawei is going to show up and it's going to be like, hey, my thing is like, you know, 80% as good, but it's cheap and I'm not going to cut you off from the most important technology wave in the next 10, 15 years. And that's a pretty compelling argument if you think you're another country. And so that's why I think this reorientation has to happen around where we actually are as a country in terms of how far we are ahead. But also we can take advantage of that because the stuff is like quite easy to deploy compared to CPU infrastructure. And as well as the world wants it. And the most recent controls are a little bit dishonest because if you go look at the January 15 ruling, it adds Greenland and Portugal and Poland and Finland and adds Greece and it adds basically everywhere in the world by 19 countries. So do we really think that Greenland is going to diffuse GPUs to China? No. It's because they have cheap power. Right? So it's turned into this protectionism thing where we're like, we have to protect our companies and like, wait a minute, like I thought this was about China. Like, so now we're like doing this to like protect and like isolate. And so one reason why we, we have lost the LLM rates on the open source side is because, because we've done stuff like that and, and I think that's putting us again, another disadvantage about another advantage for Huawei, because Huawei can be like, hey, I had the leading open source models China does, it's unquestionable. And now I have a chip that's designed for it. So we're putting ourselves in kind of a really difficult position and also a difficult position for Nvidia, because the reality is this is the goal where we have to achieve escape velocity first, like with the nuclear weapon. Not like we can hold off this wall and play these games with countries and just slow them down. In reality, it's like we just need to win. We need to stop messing around and trying to do these kind of stupid games.

Can you give a hyper abridged version of your version of AI 2027? What is hitting escape velocity look like kind of like a potentially like what does whitening look like? What does winning look like?

I think America should have the largest GPU cluster in the world as a deterrent. That's what I mean by the nuke button. And that's a game of deregulating energy. Kind of like the other things that I think are more widely accepted. Like to me it's all energy should be acceptable. We can build on federal land. All that stuff's great and we actually we need to reshore semis But I think the way you resource me is not randomly tariffing stuff and then providing exemptions when you have a lobbyist that is convincing enough to go to the White House. I thought, I thought we were supposed to be opposed to that as a guess not now so. So we should focus on deregulation and then subsidizing actual development here those in giving tax breaks for people to use the intel foundry or TSMC's foundry to like like restore. So I think it's building large DB plus in the world I think is being the production house for all advanced semiconductor work but then also having like. So the way I'd use that as like a new Monroe Doctrine that America is not going to rebuild the supply chain for fans and servers or fiber optic cables or anything like that. Like all that stuff even that is not in China because China is too expensive to build there. So that's why they put it in Thailand and Malaysia and these other countries. But we can put that in like in Mexico we can put that maybe you know, we're outsourcing prisoners to El Salvador. Maybe we see if they can build fiber optic cables too. So like we can, we can have a new Monroe Doctrine of like reshoring everything within this hemisphere. And I think that's more of like a reasonable and also quite more achievable task than just saying everything has to come back into America. And then the next part relates to open source where we have to just get better at this. And we haven't gotten better I believe because of protectionist measures that were mostly secondary effects. I don't think they were primary operating for that and just kind of more of a secondary outcome. But that's going to be how the space wins. It's going to be a myriad of models models being used for wide different purposes, models that are highly specialized and then kind of a separation between platform as a service companies to help you run models. And then the infrastructure. And so the infrastructure part we can actually win at because we're generally like good at. We're good at taking the phrase we're good at energy, but we're not good at power, if that makes sense. But really good at finding stuff and exploiting it out of the ground or building different types of energy frameworks. We're not really good at power. And I think that that's where the.

Rest of the world power you're defining as like converting that energy source into basically transferring that energy into chips. Right. And into the actual cluster effectively.

Yeah. Because you think that power in our countries is deregulated, mostly deregulated state, it's highly federalized. So just because the federal government says you should build power plants doesn't mean Virginia is going to do it. Right. And that's designed to protect our rights as a nation. It's designed to protect the rights of a state, that the state ultimately is in charge of these things and has. There's the reason why anything that's not enumerated in the Constitution is given to the states is because the enumerate powers is designed to protect the states from big actions down as a do all these things. And that's what's created actually a very stable political environment. And I do think I'm opposed to terrorists in general, but I think people are kind of overreacting. They think that it's the end of the world and everything's going to be done. I was like, if America is that fragile, like a lot of bad stuff is. Is going to happen either way because it's just not going to be one person that's going to take down our system. Because, you know, and I voted for Trump. And I don't believe that just from an ideological perspective, but also just the nature of our country. If you look at the history of our country, it's been through worse and it has survived because of the system and our ethos that we've built. So. So when it comes to like this situation, I think it's. I'll quote a butcher a quote because he's way better than me. But there was a. There was a prime minister in England who used to say that America is not good primary actor, but an excellent secondary actor. It wins secondary, never wins primary. And it's because we don't generally rise to the task that's in front of us. We kind of like go play around Netflix and kind of like mess around for a while and spend money on energy that doesn't work and you know, kind of basically BSing. And all of a sudden something happens and they were like, we gotta go to the gym. We have to win and we're gonna win. We'll be freaking ruthless. Right? And, and then we like show up, right? And, and the rest of the world's like, hey, pay attention, pay attention. And we're like, why? Like there's a new episode of, you know, love on the spectrum. So that's what it shows, you know, like.

Yeah.

And, and I. And so, so I think that's.

Well, I think the interesting, the interesting thing right now is, is. And I'd be curious to get your take here. We had Jordan from China talk on just earlier and I was asking him, I was like, do the Chinese laugh at us that we don't ban TikTok and DJI and unitree and all these companies that are just obvious national security threats that like you could just end and it would be controversial. But you know, it's hard to argue, it's genuinely hard to argue in favor of allowing these companies to operate here when they wouldn't allow the same companies to operate. I want to kind of unpack something. One thing, my sense is that you have a much greater fear of a US adversary like China with super intelligence, with the biggest cluster in the world than super intelligence by itself. Right? So like you're. Is it, is it true that you're sort of like p. Doom involves, you know, China winning the AI race and then, you know, using that to exert, you know, power and influence over us and the rest of the world.

It's more of a, it's more of like losing soft power. Relevancy is, I think of it as a, let's think maybe like a metaphor to help like. So let's think about airplanes. So Boeing is a national security asset. Right. It exists at the pleasure of the U.S. government. Right. And so it's not, you know, obviously we don't own it. Right. But it's clearly something happened, we would do something. So same with like Swift, right? Same with the US dollar. That's why the bond stuff is the most concerning out of the terror dramas, the behavior on long term bonds. Basically the US liquidity is declining, which is like a very scary kind of thing because we are the default reserve currency and being pegged to the dollar. And so the social influence is what creates wealth for America. That being the policeman of the world. Doesn't mean just like where y' all live and where I live, the police aren't here in my house right now. But it's, it's the fact of like they run it. And if, when we run the free world, everyone gets wealthier, we get more powerful and more meaningful and we can continue to bring people out of poverty, introduce human rights, all these like great things that I think God has chosen America to be a representation of to the world. And so I view more like, like China is not a genetic country and it has kinetic abilities. Totally true. But the most meaningful war that China's ever fought is the Indo Sina war was a couple thousand people. That's it. In the history of their country. And they've done proxies that that's true. Not at the scale of Iran, but you know, obviously North Korea is the biggest proxy and they played a little bit in Southeast Asia, but they're pretty racist as a country. So they don't really consider all the Asians equal. So it's just more who's on the border. Like China is mostly. CCP is mostly interested in preservation and insulation, but that's what they're interested in. And, and so because we express a memetic desire to be expansionist, because fundamentally the Western philosophy is expansionist. This is based on Judeo Christian frameworks about being evangelical and being free to free orientation. I think it's also what humans are designed to be freely in commerce with each other that presents an adversarial view to China. But fundamentally China, like, like I would give you another very, very specific example too. Like the number of amphibian shipping vessels to actually take people from mainland to Taiwan. They have around 20, 20 or 30. They're actually capable of crossing that. So if they're planning on invading, you don't do 20 or 30. Right. And then the number of military you need is actually.

Hasn't Palmer talked about, you know.

Yeah, even commercial ships fitted to serve the purpose of an invasion.

But again, let's see if that's asymmetric. So like China thinks asymmetrically. They don't think, they think in the manner of how do I get something to happen towards my favor without ever having to fight a bullet. That has been their entire foreign policy since existing. Like the Stalin example, how they got submarines, how they got 5th gen fighters, like how they actually infiltrate Silicon Valley. Like, like they're everywhere in Silicon Valley. That's totally true. They're taking our peak. Was that asymmetric or is that symmetric asymmetric so that's the way they think about the world. And so for example, like she had took out huge and Tao. Right. Publicly. Why is. Because the way that CCP works is like when it's confronted with a significant adversarial problem like, like outside of the country, what typically happens is they replace the president or the premier. And so Hu Jintao was the most logical person to actually come and replace Xi, so he signed them. If you look at also there are some. All of a sudden there's a bunch of people in the Central Committee and Standing Committee that have disappeared now. They have like, have gone somewhere. It's because if the history of the CCP is that when it's confronted with a challenge like Tiananmen Square, someone all of a sudden that person just disappears. They get sidelined in the Standing Committee. And, and, and that is the pattern of how the, the, the actual. Because it's interesting, the preservation of its party. Does a war increase the likelihood of preservation or decrease? Like, like it decreases like every war does that. So. Because you know who's going to win. So, so they'd rather play asymmetrically because it's more of an assurance that they are going to win because we as a country are not very good at that. Asymmetric takes advantage of our Western ideas. So how do you think about that?

How do you think about American soft power in the context of, you know, the two highest profile consumer AI products that yeah, I think are top of mind right now are Manus. And I'm saying that in a very American Manus, Manus, Manus, Deep Sea and Deep Sea. And you know, we had Tyler Cowan on the show yesterday and he was basically saying, you know, you know, these companies are basically trained on Western models and by nature of that they have the sort of Western thought is baked into them and that's some form of soft, you know, soft power for the West.

But I just don't want to go back to Boeing example. I don't want France to have Huawei gear. I want it to be Nvidia gear because that's an expression of America. So that's what I want. And that's the mitigation thing of like, if we allow them to continue to asymmetrically take over the world through a new belt and road initiative. The first one failed because they couldn't actually fund it as a society. And the delivery of the products was actually pretty bad.

You mean like roads that are basically cracked in half and like dams that don't work and Belt ports fall apart.

When you try to pull up your pants.

And it's everywhere in Africa. You talk to like, I've been to Africa. You can see some stuff behind me from Africa. Like you talk to them. There's cars there with Chinese letters and stuff. And everyone in Africa says it's garbage stuff that they had to fix locally. So it just was a failed experiment. But they're generally very good at this kind of focus manufacturing to then to export, to create asymmetric influence. That's their goal. And I'm more more interested in how that sort of relates to AI. How a footprint of Huawei similar as it responded with zte that how that would negatively impact our ability to influence foreign policy in Europe or in South America or Africa. Like that. That's more of my concern. Not that they're going to invade Taiwan. I just think that that's like a very American Western way of looking at the situation. When the Pentagon says that it would take the entire People's People's Republic army to, to take like the entire not, not, not 80, 120 including reserve to run Taiwan if they actually made it. Or would it be easier just to have a Manchurian Candidate. Manchurian Candidate like, like it, like, like flood the airwaves with like fake AI, you know, stuff into Taiwan and try to flip a party. There is an entire party dedicated to closer relationships in Taiwan in the Taiwan parliament. So why would they invade? It's just an American way of responding. That's how we respond when like someone's like, hey, they punch us. We're like, hey, I'm freaking. Launch missiles from a frigate and like destroy your country. Right? That's like we the way we think about the world. And it doesn't mean that like again, I'm a hawk on China. It is like, what is the enemy? And I think we are appealing to the enemy. But these export controls and regulating AI trying to do these proliferation diffusion rules, treating AI as if it's a weapon and regulating as such, that enables the Manus and the deep sea to be prolific. Right? So that's why we're not doing open sources. Because all these regulation stuff is happening in the west and China's like, whatever, we'll just diffuse the model and everyone go to town, right? We won the Internet because we are free and open. China's winning AI because it's free and open, not because they care about that.

Like a word he's. He's trying with Llama four. It's been a mixed reaction, but he is trying.

Can you talk about something I find fascinating is the companies that feel extremely significant right now to US national security. Huawei, the TikToks, Unitree, DJI, they're all private, right. And I'm assuming that that's like there's various reasons you'd want to be private. One is they can access plenty of capital. But another obvious reason is that if you don't, all your metrics can be made up. You can be doing all these things, you can be taking all the state funding. Right. Like you can just basically directly serve the state in a way that it just becomes much harder. Do you expect companies, you know, not, not financial advice or anything like that, but do you expect companies like, you know, Huawei and, and DJI and Unitree, all these critical companies to just stay private forever?

Sure. I mean I think of it as again going back to like China is such a massive country, it's very federalized. So think of it as the Chinese people are very different, the ccp clearly. And, and so when China has something that's very successful like a deep sea phenomena, what happens is that the CCP co ops it. But everything up to that point is China like the Chinese people? Because we, we, you know, speaking for my dad, Chinese like it like they're very industrious, they're very driven people. It's just part of the mindset. But also you're very skeptical. It's a very actually low trust society similar to like India and some other Asian countries. And so like you know, my dad's in CDs, he doesn't like stock market. Like, you know, he doesn't trust banks and stuff like that. It's just kind of like his natural like kind of like framework of the world. And, and yeah, yeah. And so, so, but, but the desire to be industrious is like it's, it's innate to the, the kind of orientation around what it means to have a Chinese philosophy. And, and so when the c, when CTV adopts stuff like that, it's like to get to the next level as a company you have to get joined the communist state apparatus. And so everyone who's like a big company is co opted in. But to say that and this is where it's different than like Linus style communism is like, it's like they're they Mao adopted. I mean I 100% opposed communism but you got to be fair about what actually happened. Like Mao took that as an authoritarian concept and just pressed it down on the people. Like it's Not a, they're not purists in any sense. They're almost like a bit like rationalists. Like they, because they, like, they want to be powerful and they want to stay in power. So if the ideology has to change, it'll change. And so that's where they let many of these successful companies in China that are, you know, okay, as New York Times says, flooding the European markets are cheap goods. Now it's like what. They're flooding our markets are cheap goods. Many of those are done by just Chinese entrepreneurs. Like, like it's just no state interaction. But anything that's extenuating beyond the state and a meaningful national security, like an industry that is really not scary. Like the CCP is utterly in control of that. But yeah, you have to understand the, the etiology, the, like, where it came from, then understand the telogical framework of like, where they want to go with it rather than treating it as if, like, I personally don't believe, for example, that China is interested in spreading communism. And, and they don't have a common turn like Soviet Union did to spread communism. Like, they're interested in preservation. And, and so that is not a type of a country where you're like, you know, that they're going to go to war at any chance. They get their fact. They're very hesitant. They're very hesitant to war. And if you read a book, you had a book about like a history about China, there's a common pattern in history of China which is self implosion. They've done it like four times. So like they also know that too. Like it just ends up being where like, so, you know, this all kind of falls apart. Right. And, and I love a book by, it's by Rodney Stark. He said that China invented gunpowder at the same time as, as, as Europe did. And trying to put it in, in fireworks to scare off ghosts and Europeans put it in a barrel to shoot a bullet. Yeah, right. And so, so that, that it tells you like very industrious, very, you know, driven in terms of ethos, but it doesn't always land a plane. And that, and that's what I'm leaning into is like, yeah, Huawei will make something cheap, we'll make something alternative to Nvidia. But like, let's like not give them the rope where they're like, you know, America's opposed to proliferation as opposed to exports, as opposed to open source is like, like you're giving them all the fuel to be like, come to China, we'll give you AI. Even though it's not as good.

Yeah, that idea of like mimetics, memetic rivalry and geopolitics is fascinating to me because I don't know if you've read Wang Huning's America's America Against America, but it was this book that basically they sent an emissary to the United States. He looks around and he determines that America will implode. And it's clearly like their own anxiety is about implosion, you know, writ onto the American story. But America is undefeated and we're not going to implode. The last thing.

Yeah, it's a. I think it's closest thing to heaven. Like, you know, it's great. It's an awesome. My family loves being here and it's been an immense blessing. My grandpa came here with nothing.

Well, this interview has also been the closest thing to heaven. It's been.

I have a couple. Do you have a hard stop?

You have a hard stop?

No, no, I don't.

Yeah, I got it. I got a couple more questions. One, what does having the largest cluster, right? This like supercomputer, you know, super weapon. And in some ways, what does that actually look like in practice? Is it run by, you know, who sort of operates it? Is it a network of clusters? What does that actually look like in your view?

Yeah, I would say be run by form of energy, a combination of nist, be deployed in a place that's undisclosed. And it's used as. Mostly as training in our own side, within our own military, on advancing their own capabilities of understanding what LLMs can do, understanding how compute can work at scale. Because LLMs are again, super cool. We all use them every day. But it's really the paralyzed computing that it changes the way which warfare works. And that when you have the ability to scale that amount of computing power at a single moment, it makes all types of. Which mostly is targeted asymmetric sort of attacks on us. We have to be able to understand what that actually means at that scale. And so it's not Stargate. That's clearly for OpenAI. It's not like the DOD SEC should email Sam. Hey, can I borrow this for. It has to be something that we own, we control, that is like, is part of the people's power. And the point of that also is a deterrent. Saying that if you people will do something bad with AI, that is inescapable. It's part of the fallen nature of humanity, that we take great things and we apply maladaptive adjustments to it. And so we have to Just be prepared for that. And what that attack means, I don't think we fully understand yet. We have theories around it it. But I believe that it's going to be some form of attack on our infrastructure that's not designed to handle this form of sort of computing power targeted to us. So it's mostly used as a deterrent and also kind of show our footprint as we are going to be the best at this and taking a small slice of the budget, going to be 5 trillion. Just to say that word.

35F35 cost about a trillion.

1 trillion investment United States a lot less to copy, it actually turns out. Exactly. Write off all the R and D costs, it's actually a pretty great plane.

Yeah. That's saying if you lean into going back to the Bad Mises thing, and I know you like Gerard. It's like we just lean into so much of what China's really good at. Why are we shocked that deep sea captain, like, literally, like, like how. Look at Timu Sheen.

Look at like one to many. That's what China does best.

Yeah.

So like we have to do.

It's actually two trillion. Two trillion you Two trillion.

Wow.

I guess on this one question I have is again, because this conversation is top of mind, but Tyler Cowen yesterday was. Was very excited about AGI coming in the next couple days. We don't know exactly what he meant.

Fastest timeline.

Fastest.

Fastest.

His timeline. Extremely, extremely. AGI Social Network.

OpenAI is launching a social network.

Yeah, that might be it. But I, I want to. I like this conversation's been tremendously fascinating. I'd love to get sort of your personal definition, how you look at, you know, AGI and then what your.

Yeah.

What your timelines look like around it.

So I can answer this differently, but I think it's more honest is that if you don't know what you're looking for from a prima facie perspective, you don't know how to measure it. So how do you measure someone's intelligence? Is it sat. Is it. I mean, is it. Is it. Do they make money? Is it that they're wise jokes people? Yeah, the funny. Right. And. And I think that's where the AGI problem hits a wall, which is like. Like what am I even measuring against when it happens? When every single one of those tests, which are, by the way, I just randomly picked out of a hat, 100% across and it still doesn't fully work. What do we do? Right. That's the fundamental anthropomorphic question is which is a metaphysical Question of this is why it's so fun. I have a background in philosophy and theology. It's like what does it mean to be a person? What does it mean to actually represent intelligence? And many people who push asi, AGI, they have a very piss poor understanding. Like they didn't read Locke, they don't, they don't know who Descartes is, they don't. Rousseau is a stranger. Like they've read some Nietzsche because it's cool in high school. There's very little understanding about the longevity in the history of what we have valued as a just a social creature and the evolution of our culture to say what is meaning and purpose and intelligence and even the epistemology of there's a difference between information, data, numbers and knowledge. All those from epistemological are completely different things, right? Like knowledge is the discrimination of information, data is the series of numbers. And if you look at people pushing AGI and asi, they typically one have a very low view of humanity. Like their anthro, their anthropology is like we're robots, we're a reductionist thing. Like we're all biology and, and which is like kind of been rejected since the new atheists have fallen aside and they kind of have like have all those precepts built into it versus a person like me who's like, I'm an evangelical Christian. Like I don't have that view of humans. I think that there is an immaterial part of our nature. Numbers are immaterial. Data is numbers. Like, like it's pretty logical to believe that like we are ourselves an immaterial. There's something about it, therefore I can't actually put it in bits and bytes. So AGI and ASI I think is a trope to kind of make an interesting.

The other thing is, yeah, it's marketing and there's, there's conflicts and it's hard to find somebody that works in AI, you know, that, that obviously is intelligent on, you know, however you want to look at it that doesn't have at least a $10 million, you know, position riding on AGI marketing, you know, like this, this sort of like it's almost here, like it's coming type of thing. And so that, that's why I was.

It'S not like I just don't believe it. Doesn't mean it's not gonna be valuable. That, that's the confusion.

Yeah.

Is that if you create this trope, this red herring that's not going to be there, you then false flag, build a bubble and it all is bad for everybody, I think. I think LLM is a, as Founders Fund would say, is that I have a Star wars view of the world, not a Star Trek view of the world. And the technology is a positive adaption of the human capability to extend its arm further and it only helps humans become more human things. And so a lot of the AGI ASI talk, it's really built on presuppositions of a negative view, a negative anthropology that is not only been disproven over and over again, philosophically and theologically, but it just doesn't bear itself in the science like it. The mind itself is as an example. You can go back in the 80s and 70s and 50s, they were like the mind is this. We have fully discovered what the mind IS and then 10 years later, we don't know what the mind is like. It continues to expand. And I think that relates to. Unless you can actually pinpoint and understand what intelligence is on the anthropology side, you're not going to be able to ever measure AGI or have any of the interesting.

Anything else, Jordy?

Oh, I'd love to keep going for another hour, but we'll have you back on again soon. This was great.

This is fantastic. Yeah, I'm sure we can go way deeper.

I appreciate it.

Yeah, this is really fun. Thanks for coming on.

Yeah, we'll talk to you soon.

Thank you. God bless you guys. Bye.

That's great. Well, let's rip through some timeline. This might be a world record for a number of size gongs this this show. Let's hear the activate Go Golden Retriever mode. Not quite size gong, but close. There's some good sound effects. The soundboard's back in business, folks.

Brought to you by. Brought to you by our very own Ben. Ben personally recorded these sound effects.

It is his voice.

It's his voice.

Founder mode.

Well, speaking of founder mode, Sam Altman was in founders mode yesterday when Founder Founder mode yesterday when it broke that OpenAI is exploring a social network arena with AI features. Can't imagine it's probably going to be absolutely flooded with Studio Ghibli pictures, but what is your take on the OpenAI social network? Will you be. They're trying to rival Elon Musk's X, the Verge reports, and on one hand, makes a ton of sense to get more distribution. More time in the app means more use.

I understand Sam and the OpenAI team wanting network effects. I feel it feels potentially like a huge distraction to try to go compete in consumer social, which we've just seen time and time again. Yes, they have massive distribution. They're on the home screen of hundreds of millions of people. They have, you know, in the same. The wild thing is I don't know how many X weekly active users.

I think it's actually around the same size, like 500 million or something like that.

So X has the same advantage in terms of launching a foundation model, consumer app as in many ways as OpenAI does having building a social network. I just think it's LLM seem to be more intuitive to build because you have this sort of black box, the model and then you have this like easy interface on top versus a social network which is like, how are you going to seed it? Right. Seeding it with 500 million weekly actives from.

Look at the lesson of Google circles. Like, yeah, Google had a billion people using Google every single day to search for things. People did not necessarily want to share their search results into Google circles. It was this Facebook copycat. It never took off. And Google had every advantage in that race against Facebook when they launched that product, I think in 2010. The flip side is I know a lot of people that run great deep research reports. I would, I would probably follow. Follow Tyler cowen on the OpenAI social network. And when he finds a really great deep research report, he's spent 10 minutes waiting for that to come back and he's put out a deep research report. If he were able to with one click, hey, make this one public. This is an interesting finding. Or some of the OpenAI friends we talked to who said that they do deep research reports on just what towels I should buy. All right, that was one of the examples. Or what. What refrigerator should I buy? Instead of needing to wait the 10 minutes, it's already in my feed. And it's also this curation and discovery of. I'm scrolling and I see Aidan post. Hey, there's this decreased report washing machines. I might just click into that.

I like the idea of building a social feed into the existing product because I would love to, if you have the opportunity to prompt something, find something interesting, share it to a feed. Yep, that's very interesting. I don't like the idea of trying to then build this sort of competing social network with its own.

I agree.

Like new, you know, are we sure. What are we sharing there? Is it. If it. If it's funny, if it's. It's a social feed built on top of the app.

Yep.

That again, that feels odd.

But at the same time, like right now, the flow is you go into OpenAI chat GPT you figure out that Studio Ghibli style is a great prompt for any image you upload. And then you screenshot that and post it on X and say here's the prompt. Mid journey kind of hacked that by creating the discord so you can see what other people in the mid journey discord are prompting. You can copy, paste it, change one word. All of a sudden it's a cyberpunk dog. It's instead of a cyberpunk cat. And that gets you started on the flow of prompting mid journey. I could see that being kind of interesting, but yeah, it'll be very interesting on how this actually gets integrated. But there's already a share button on every chatgpt chat interaction and I do share them with people sometimes. Hey, for the show I turn this into some bullet points, share it with you. You can go right in. You could continue prompting. I think that there's something there.

But it could also going and purely just trying to beat Elon Musk because you're annoyed that he's suing you.

Yes.

Is seems like it could just be.

Like a shot across the bow.

Yeah. Hopefully there's something deeper there because I actually think it's much easier for X to build an LLM.

Yes.

And chat chatbot than it is for OpenAI to build a thriving independent social network.

And even though they have the app installed everywhere, it does like there is a set amount of time on an app, there's only a set amount of screen real estate for a button. You know, Elon in the X app puts the Grok button down at the bottom by default, but there's only really six slots for there. So if you're putting that grok button there that you're taking away from a different feed or messages or notifications, other stuff, there's trade offs here. It could also just turn into an Instagram clone where people are just sharing endless. Studio Ghibli's ultimately just flexing on each other. And the best way to flex is with a Patek Philippe Nautilus. That's from bezel. Go to getbezel.com look at this boom with the Tiffany dial on the Nautilus. You take a picture of that. Yeah, you buy, you, you buy a Patek, you throw it through Studio Ghibli filter. It's no longer cringe, you're no longer flexing. You throw it on the open AI social network. It's brother behavior. Go to get bezel.com anyway, notion mail. Similar AI company launching a social network now. Notions launching project management.

Launching email.

We've been talking about this. I was saying I want someone to build a new email client from the ground up with AI at the forefront of that. Because I've been very dissatisfied with the Gemini experience in Gmail. Even just my Gmail experience, I have like four different inboxes now. It's not really filtering stuff.

Super quick to launch. Integrate LLMs within the product, which makes.

A ton of sense on the core product. But then I think that they might be in enough of a founder mode, enough capital and engineering to actually roll this out and make this great. So I will definitely be trying this when it becomes generally available. It might be generally available now. Yeah.

And it's an interesting concept. So in the marketing launch email it says the inbox that thinks like you. One fascinating thing about Notion is if you're actively using it for project management, life management, business, it has so much context on everything in your life, right? It has.

That's the scary thing because like if Google catches up, I have way more data stuffed in Google in sheets and docs and drive and I don't want to port everything over to notion because I'm.

Notion potentially is a. A is a better data source if.

You'Re a notion user.

If you're a core notion user.

Totally, totally extending 100%. If you're a builder. I know people that build their whole life on notion. They have different workflows for every single project. They're all in on notion. There's gonna be a fantastic experience for them. For me, I'm kind of stuck because I'm like locked into Google's ecosystem. I want them to catch up. They're not really doing it.

Well, Notions tool is integrated into Gmail right now.

Gmail, yeah. So it sits on top of that at least. But I would love to just be able to have my email be processed for me while I'm sleeping on my eight sleep. So go to eight sleep.com CBPN five year warranty, 30 day, 30 night risk free trial free shipping. I hope I did well because I think I dialed it in.

I got a brutal night.

99. Let's go. 99. I figured out the routine. I dial it in, I was like, I'm Falling asleep within 30 minutes of the average of the last three days, the rolling average. That's their algorithm. Seven and autopilot sleep. Autopilot cooked. I felt great. I feel great today. Nothing like going into a three hour show with a 99, 8 sleep score.

So go get big numbers. Go do it.

Anyway, I hope you enjoyed our deep dive on China. If you're looking to follow more of the breaking news of China, please go to Polymarket. They have a bunch of great, great markets about what's going on with the Chinese economy, what's going on geopolitically, what's going on with tariffs. You can check it all out@Polymarket.com Anyway, you have to do two pilgrimages in your 20s. Going to Japan, going to Switzerland. Neither of those I did in my 20s. But what do you think is, are those worthwhile pilgrimages? Have you been to Japan?

I've not been to Japan, but I'm still in my twenties.

But you were in Switzerland like four months ago.

I have been to Switzerland a bunch. It's my favorite country. That's not the U.S. yeah, by a long shot. It's just. It's a perfect country. Yeah, well, really is. Feels like being the entire country.

Feels like being on a world tour.

Golf cart.

Yeah.

Golf course.

Yeah.

Well, Sam Ross sharing some big news from numeral tax. Q1 was a big year, Was a big one here.

Boom.

Big in terms of customers, filings, our team and of course, pieces of mail delivered received by our virtual inboxes. Here are just a few of the highlights. They 3x their number of customers in Q1 versus Q1. Last year, the sales team is crushing quota. They hired 22 new numerals, which is what they call numerals. They opened a new HQ and sf. They announced the series A by Benchmark, and they rolled the dice at Shop Talk. And they sponsored the world's number one show, tvpn. Thank you for sponsoring us, Numeral.

Thank you, gentlemen.

And if you are you guys numeral, you have sales tax, put it on autopilot, head over to numeral HQ. Spend less than 5 minutes per month on sales tax compliance.

Just do it.

Just do it. This was a funny post by Sam Altman. He says bu work in hft shaving nanoseconds off latency or extracting bips from models have existential dread. See this tweet. Wonder if your skills could be better used making AGI apply to attend this party. Meet the OpenAI team, build AGI. And so he's trying to recruit high frequency traders. Maybe he saw what happened with Deepsea because they were a bunch of high frequency guys, right? A bunch of quants said, hey, time to optimize the models, let's get our inference costs down. And now he's going to try and pull some people from Jane Street. Jane street has a monopoly on Dwarkesh Patel ads, apparently, but not for long. Sam's gotta buy some. He's got to pay up Dwarkesh to start running some job ads because it's one of the few shows I've ever seen Jane street advertise on. But it's pretty, pretty, it's working pretty well, I guess. But yeah, this is interesting that the, that the, the next challenge in AI will be, you know, these inference optimizations. The GPUs are melting. We've heard this. The products are growing. They have the product developers, they're in San Francisco. I'm sure they're pulling in plenty of those people, the band.

And if you love open AI, just take a, take a breather on Ghibli photos. We know you're still doing them. Take a two day break Take a two day break. Breathing room. Go rent a wander till they can get some. Find your happy place Find your happy place Find your happy place Find your happy place.

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Really is an overnight success.

It is because when you go there, when you stay there, you spend the overnight and you become a success.

Yes, yes. And every night is a success at Wander. Stuff on the stuff on Meta with the FTC is just wild. So Meta is in a battle with the FTC and they basically are claiming we're indistinguishable from any other app, which shield says is correct. And they pulls a document that they're using. TikTok, Instagram Reels, YouTube shorts.

We can't have an opportunity. It's a commodity.

Yeah, everybody's got a short form video feed. And it's true convergence across apps. Yeah, just got there kind of mogging Snapchat by including them. Yeah.

But yeah, I mean it really hasn't.

Happened some others there's a, I mean.

There'S a best practice for building a social app. Now I'm sure OpenAI has taken notes if they want to go this direction. Vertical videos, algorithmic feeds, likes comments, shares, inboxes and messages. And then you add long form, short form monetization comments and show notes and all these different stuff and all these different competitors. Tik Tok, Instagram reels, shorts. They've all kind of done the best practice across everything and the platforms have become pretty commoditized, which is one of the big reasons why people shouldn't be complaining about TikTok potentially going out of the app store because the TikTokers will be able to pop over to Instagram Reels, YouTube shorts, go viral with the same content and have a similarly sized business very quickly. So I think when you hear the stories of like businesses are built on TikTok they will be destroyed. It's like realistically most businesses are on all three.

It's taken us so long to ban and they'll make you had time to reduce platform dependency.

Yeah but if you think they're going to win this case, if you think they're going to lose the case, why don't you go get some exposure on public.com to meta stock investing for those who take it seriously.

Not financial advice.

Not financial advice.

John is just demonstrating that public is a platform with multi asset investing.

Yes.

Industry leading yields and there's millions of happy users.

Yes. So but speaking of investing, Kyle Harrison quote tweets someone says is backing competitive companies allowed now in venture and shows what's going on at the foundation model level. Sequoia is in four foundation models thinking OpenAI, thinking machines, XAI and SSI. Lightspeed's in four indexes in two tigers in two CO2's in two Andreessen's in five. Five OpenAI thinking machines XAI, Mistral and SSI. Wow.

It's a party. It's a party. We got six way party rounds before.

GTA 6 it is, it is odd like if the model layers commoditizing maybe you just want to buy all the commodities up by, by by all the big oil companies I guess. But maybe they wind up going different directions and OpenAI becomes a social network and thinking machines becomes a, I don't know like B2B SaaS company or something. Who knows.

This next post is amazing from mkbhd. He is talking about nominative determinism which we are big fans of on the show. CEO of Nintendo America Doug Bowser. Great, great name, strong name. Fastest sprinter of all time. Usain Bolt, COO of Starbucks is Roselyn Brewer. World record chili pepper breeder is Ed Curry. CEO of Capital One bank is Richard Fairbank. Fairbank BBC weather meteorologist Sarah Blizzard.

Yep. Underrated is the nominative determinism that people kind of impose upon themselves. Like when I grew up there was a weatherman named Dallas Rains and he named his kids after cities. So it was like Austin Rains was his son.

And I forget son is now the mayor of Austin.

Yeah.

Or weatherman or weatherman fake news.

So you can, you can keep your, your kids in the family business by giving them a name that will determine their future potentially. But nominated terms. So much fun. Anyway, let's move on to Gavin Baker. He's a savage. That former Meta AI researchers are explicitly noting on their resumes. They had nothing to do with llama 4. There's a member of technical staff over at OpenAI, joined February 2025 on reinforcement learning, frontier research, and post training. And previously this scientist was at Meta doing AI research and says that they were working on generative AI. Llama 2, llama 3 have not been involved in llama 4 at all. Interesting. I mean, there's been a lot of debate over, like, is llama 4 oversold? Is it really as bad as people say? But this is another data point of like, oh, maybe it's a little bit rough over there, but Zucks and founder mode. I think he will figure bet against him, don't bet against him. Let's go to Amy Wu. She says founder secondaries at the Series A are becoming the norm again. We are back to 2021 fundraising heat. Founder mode. The funny thing is I thought you were gonna go size gong on that. Went with founder.

We actually don't have size gong on.

Oh, we don't? We don't. Well, seismic going for all the series A secondaries that are happening.

No, I just think this is one of those things that's controversial but never default bad. I think it just comes down to sizing the company. Traction.

Yep.

I don't think there's anything wrong with founders.

Yeah.

Selling a few hundred grand of secondary.

I mean, there are plenty of.

Sock it away. It's not going to change how they approach the business. It doesn't. It's not like they're retiring. I think some. You know, when we did in 2021, the secondaries that were happening were on another level where it was, you know, a founder selling 50 to $200 million secondary, and it's like, okay, that's like an extremely material exit. And they're going to by default be in a very different mindset after that point.

I mean, the. The core weave guys sold, I think like 100 million or more. I think like eight or nine figures of secondary before the IPO. Corey is still trading at 40 bucks a share. Like $18 billion. Company like, seems pretty stable. It hasn't.

Okay.

Off like crazy, but it's.

No, John, my dear John. It's down.

I thought it was up, and then down I went. Lifetime core weave.

Oh, okay. Sorry, sorry. I was looking. Yeah.

It'S not having a good, good day. But. But if you look at the year it prices 40, I was confused 60 and then it's down at 40. Like it's like kind of in the trading range. It doesn't feel like it's like it.

Was originally meant to be priced at around 60.

If people were saying it was gonna be a 30 billion dollar company, it's a 19 billion dollar company. But that doesn't sound. But that doesn't reek like oh, the secondary. Like poison this. Like they're not taking it seriously. Like I don't know. At least not yet. We'll see what happens. But I mean the other thing is that like there are founders who are clearly doing their life's work. They're you know, years into building the business. It's very serious business, makes revenues, even maybe some profit and they come out to do a series A later. And then yeah, there is some secondary. But for life, for lifestyle reasons, maybe they have kids, maybe they need bought a house. Like there's a bunch of different reasons why if you don't have a high salary, great credit as a founder, like you might need some secondary to pay for that. So mixed bag all depends on the circumstance. But congratulations. If you sold a bunch of secondary Signal says every visual medium from concept art to fashion design to advertising to architecture is now downstream of text prompts. Remarkable. Yeah, true. This is just good point.

Using wife's been using chat GPT to like imagine interior design stuff around the house. It's like it's not perfect, but it's doing maybe 70% of what you would hire an interior designer to do in the early stages. Right. Everything other than sourcing.

Yeah. Ryan Peterson sent me a like a meta poster which was. He generated a Flexport poster ad for every single city that they operate in. So he had like 50 posters that would be extremely complex to make. Then he put them all on one poster. So it's this big like poster that you can print out and show all of Flexport's like footprint. And then he just liked the prompt. So he made me one and he just sent me one for, for Lucy, which was really cool. And he was like, oh yeah, you can just print this out. Like don't go bigger than 18 by 24, but it'll look great. And I was like, thanks man, that's great. Very fun. Anyway, should we do the SBIR stuff that you were. You were getting texts about big changes in the pipe for the SBIR as STTR program. All Air Force topics in the current Batch just got removed. So there's an email from DoD SBIR topic removals. And you had some extra context about this. Of course SBIRs are the small business deals that happen pre program of record for defense tech companies. You get a little bit of money from the DoD but it's not, it's not a sustainable source of revenue. But it's a great way to fund the business in the short term and prove that there's at least some demand to get through.

Followed up with Adam. Yeah, I'm going to butcher Walnutowski Wallenkowski, sorry Adam. He was formerly at Anduroll, Nvidia and Yale. He's now over at FID Labs and he says yeah, there are four major releases of Siber topics per year and the second one for 2025 was due to begin accepting proposals next week. The two big agencies in that solicitation were Navy and Army or sorry Navy and Air Force. Then the CBER update email announced around 1pm yesterday that all currently posted air Force topics are being removed and no longer eligible for proposals. And that ends up being significant because in total that would have amounted to around $135 million of awards which would have gone in some part to early stage defense tech founders. So and there's also follow on awards so that that could be another 200 million in CBER awards that were canceled. So anyways there's reform happening around CBIR and just general changes to the acquisition process and so thank you to Adam for flagging this.

Yeah, that's very interesting. Well, we have Delian coming on the show Thursday. We have Sham Sankar from Palantir coming on the show Thursday and I'm sure we'll stack a whole bunch of other interesting folks so we should dig into that topic more on Thursday.

Let's do it.

But other than that I think we're good to wrap up. Thank you everyone who tuned in and listened to this show. We really appreciate you. We're having a lot of fun with this and just trying to up the quality by just 5, 10, 100% every single day.

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Yes. This is corporate media.

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