BG2Pod with Brad Gerstner and Bill Gurley

“ChatGPT originally was entirely free, and the reason for that was that it was intended to be a demo. And we're gonna wind it down after a month. We then realized that the demo went viral and people loved the demo, and it was actually a product. And but we realized it'd be a product. You can't take the product down every time you're at capacity. So we, you know, shipped subscriptions simply because it could shape the demand. It was a way of gracefully turning users away, and we had to turn away someone.”

“I care a lot about long term retention, and I would put all my points there because, I'm I'm really proud of the retention stats we have. Huge. But, ultimately, the sign of durable value is whether or not people are coming back in three months because that means you're really solving their problems. And I think things like revenue, they follow from that.”

“We've got about 10% of the world coming to us now, 90% left to go. Right? There's so much more opportunity to to to to reach more people and introduce them to the way that AI can can can benefit fit them. But we're also really excited to go deeper. And that means taking the same billion users that find value in ChatGPT today, and actually providing more meaningful value in their world.”

“The thing that's already come first is the, domain specific agents. If you look at what's happening in in code, we're we're we're fully there. You know, it it's mind bending, but we've got so many engineers, who who don't open their IDE, like, ever. I won't be surprised if you see this happen for other forms of sort of quantitative knowledge work just because it happens to have the properties that code has. It's testable. You know if it worked or not. It's, you know, very RL friendly.”

“Pricings there's no world in which pricing doesn't significantly evolve when the technology is changing this quickly. Yeah. it's possible that, you know, in in the current era, having unlimited plan is like having unlimited electricity plan. You know? It just doesn't make sense because, like, you know, people may need a lot a lot of electricity, and they're getting a lot of value out of that. There's a reason you can't buy that.”

“But GPUs are zero sum. And if you don't have more GPUs, you really have to figure out how do you make very, very hard trades and hate making hard trades for our users. Hence the desire to, have more GPUs, but, it's it's useful to start with the most zero sum trade off when you do your planning. So I think starting working backwards from GPUs, is usually a pretty pretty good idea.”

“So first off, Code Reds are a tool we use, to create focus. End of last year, we had one of those moments where we felt like we we need to show up for our users. We need to focus the things, focus on the basics, like reliability, performance, the way that talking to the model feels, making personalization really great. We just exited the code red, which we knew we would, with the launch of 5.3, which, you know, is a is a great model for the everyday user.”

“I think the most important perma skill in this era is, curiosity, I think, because if the machine can answer all your questions, you better have good questions. And the only way to have good questions, I think, is to pursue the things you were actually excited about from an early age and throughout your entire life. And I reflect on this because the only reason I'm here and working on this stuff is because I thought it was neat when I got, you know, nerds sniped in, in the interview process.”

“I think Mark and I were, giving a demo of reasoning, in front of the, whole company. We're having to do a puzzle in front of everyone. And, I think one of the moments that made me totally feel the EGI is, like, we were in the middle of the demo, and everyone started laughing. I was like, wait. What what is funny? And then I stared at the screen because we're showing this chain of thought as it was streaming out of the model. And the model swore and said, like, oh, damn it. May I have to adjust because I realized I had made a mistake in the puzzle.”

“I think the LLM is a commodity. People are not saying that, but it is a commodity. Like, you can get gas from this gas station or you can get gas from that gas station. It doesn't matter. So it's not about that. It's really comes down to your company. What data does your company have that's special that your competitors don't have? Can you leverage that, and can you build AI that really understands that data?”

“you you hear these 95% of projects fail, but, like, you know, like, that's that's that's actually what you want. Like, you you like, when you are actually experimenting with new technology, if if if all of the all of your projects are failing, that means you didn't just not trying enough, you know, at the moment. So so I think when when I read the study, like, it was not a surprise for me.”

“Royal Bank of Canada, built agents with us that basically take as soon as an earnings report comes out, so equity research analyst, their job is to put together these, you know, reports that say, like, you know, this is a buy. The agent goes, gets the earnings report, gets all the previous earnings reports, gets all the competitors, earnings reports, gets everything that's going on in the market, does the full analysis, the news, everything, puts it all together, and it can get the equity, report out in fifteen minutes from the earnings call. Industry standard is two hours.”

“I think we have AGI. I think we have artificial general intelligence. We really have it. We absolutely have it. It's like anyone who says we need to get to AGI, that's like it's it's, it's false premise to start with. We already have AGI. I came to United States in 2009 at UC Berkeley, and back then, the definition of AGI we had, we already have satisfied that. So for thirty, forty years, we had a definition of AGI. We've already hit that. Now we're changing it and moving the goalpost.”

“I think there's, like, three paradigms or three kind of camps. The first camp is this quest for superintelligence camp. There's a second camp, which are the people that created the original technology. The scientists who created the technology got them the computer science Nobel Prize for it. They have for many years been saying that, that first camp is not gonna that's, like, not even the right approach. Third camp, which is I think what we are in, is I don't think we need superintelligence. So that's why I think we have the AGI we need. Let us just focus on solving the actual problems inside the organizations.”

“Finance is all on Databricks, and it's all all the forecasting, all the sort of it's all moved to machine learning based. But it took them a long time because they had their Excel models, and they're very proud of them. We actually had external data science team build the AI models, and then eventually, they became good enough. And now, finance has taken those over and, like, you know, finance have kind of moved from Excel to Python, largely at Databricks. But it was a journey because, you know, most of the speakers speak Excel.”

“I think the big thing is data entry. How does the data appear in that database? And that's today, not completely automated. So, you know, just just to, like, I I think a company that would be well positioned to do that would actually kinda be Zoom. And a lot of people don't think about it that way. But Zoom is really should be the the the perfect data entry, application. Because that's where you're having all the conversations, and that's all the information's coming out. If you had that, that would be the full disruption of the SaaS.”

“I do think coding is a little bit overhyped. I don't know if I would short it. It's I mean, I think it's still the future. So I think that's that's one of them. I think automating, customer service and support is a little bit overhyped. So, you know, I basically, I think the things that the industry thinks are, like, amazing and we've made great progress, we probably haven't done as much progress.”

“I'm very long on speech as an interaction. Like, I think keyboards are kinda basically gonna disappear completely. We haven't actually nailed speech. I know I know it feels like we have, but we haven't because you're still using your keyboard. So as long as using a keyboard, we haven't nailed speech. But I think we're this close to completely eliminating, keyboard.”

“I would I would say there is a bubble. I I would say those three camps. There is a superintelligence quest camp. I would be very worried there. We're not in a bubble in a sense that we're not spending huge amounts of capital on what we are doing. We're just trying to get actual economic value inside of this organization. So I I don't think it's binary, but there is a bubble. I mean, there are startups with zero revenue worth, you know, $10.20, 30,000,000,000. That's a bubble.”

“It's not what we thought. And as I said to somebody, it's not like when we first invested our billion dollars that, oh, this is going to be the 100 bagger that I'm gonna be talking about to VCs about, but here we are. But we are very thrilled to be, an investor and an early backer, and and it's a great and it's really a testament to what Sam and team have done, quite frankly.”

“We're doing well more revenue than that. Second of all, Brad, if you wanna sell your shares, I'll find you a buyer if you don't feel I I just enough. Like, you know, people are I think there's a lot of people who would love to buy OpenAI shares. People who talk, with a lot of, like, breathless concern about our compute stuff or whatever, that would be thrilled to buy shares. So I think we we could sell, you know, your shares or anybody else's to some of the people who are making the most noise on Twitter, whatever, about this very quickly.”

“Well, I mean, I think the the cycles of demand and supply in this particular case, you can't really predict. The secular trend is what Sam said, which is at the end of the day because quite frankly, the biggest issue we are now having is not a compute glut, but it's a power, and it's sort of the ability to get the bills done fast enough close to power. So if you can't do that, you may actually have a bunch of chips sitting in inventory that I can't plug in. In fact, that is my problem today. It's not a supply issue of chips. It's actually, the fact that I don't have warm shells to plug into.”

“There there will come a glut for sure. And whether that's, like, in two to three years or five to six, Satya and I can't tell you, but, like, it's gonna happen at some point, probably several points along the way. So, you know, if a very cheap form of energy comes online soon at mass scale and a lot of people are gonna be extremely burned with existing contracts they've signed, it if if we can continue this unbelievable reduction in cost per unit of intelligence, let's say it's been averaging, like, 40 x for a given level per year. You know, that's like a very scary exponent from an infrastructure build out standpoint.”

“I don't know how we're supposed to comply with that California sorry, Colorado law. I would love them to tell us, and, you know, we'd like to be able to do it, but that's just from what I've read of that, that's like a I literally don't know what we're supposed to do. I'm very worried about a 50 state patchwork. I think it's a big mistake.”

“I I hope for very small scientific discoveries in 2026, but if we can get those very small ones, we'll get bigger ones in future years. That's a really crazy thing to say is that, like, AI is gonna make a novel scientific discovery in 2026, even a very small one. This is, like, this is a wildly important thing to be talking about. So I'm excited for that. But, yeah, my personal bias is if we can really get AI to do science here, that is I mean, that is super intelligence in some sense.”

“The other side of the value capture for us is going to be incorporating all this IP. Not only we have the exclusivity of the model in, Azure, but we have access to the IP. I mean, having a royalty free, let's even forgetting all the the know how and the knowledge side of it, but having royalty free access all the way till seven more years gives us a lot of flexibility business model wise. It's kinda like having a frontier model for free, in some sense. If you're an MSFT shareholder, that's kinda where you should start from is to think about it.”

“And that's where I thought we did the right thing to give them flexibility to go procure that from others while maintaining, again, a significant book of business from OpenAI, but more importantly, giving ourselves the flexibility with other customers, our own one p. Right? Because sometimes, you know, Sam may say, hey. Give me build me a dedicated, you know, big, you know, whatever, multi gigawatt data center in one location for training. Makes sense from an OpenAI perspective. Doesn't make sense from a long term infrastructure build out for Azure.”

“I mean, it's sort of one of those interesting things, which is everything is a commodity. Right? Compute, storage. I remember everybody saying, wow. How can they give a margin? Except at scale, nothing is a commodity. And so, therefore, yes. So we have to have a cost structure, our supply chain efficiency, our software efficiencies, all have to kinda continue to compound in order to make sure that there's margins, but scale.”

“So it's not like, for example, the per seat versus consumption. The reality is agents are the new seats. And so you can think of it as, the enterprise monetization is much clearer. The consumer monetization, I think, is a little more murky.”

“There is this person who leads our network operations. And the amount of fiber there, the AI ran, and what have you. It's just crazy. There are, I think, 400 different fiber operators we are dealing with worldwide. But the person who leads it, she basically said to me, you know what? I there's no way I'll ever get the headcount to go do all this. Not forget, even if I even approve the budget, I can't hire all these folks. So she she did the next best thing. She just built herself a whole bunch of agents to automate the DevOps pipeline of how to deal with the maintenance.”

“I think anybody that's been a student of financial history has, you know, studied different types of activities that that historically, let's just say historically, have created red flags. And the reason that, you know, any AI you talk to would know what you mean if you said circular revenues is because someone has used it in the past in a way that that wasn't good. And I just described those things to Chai GBT and ask it for its analysis both as an accountant and as a financial investor. And the AI itself, you know, would would find its way toward company names like Enron and WorldCom and those kind of things merely by describing the type of transaction.”

“One of the more peculiar of all the deals is, and this was disclosed in a core we've filing, was NVIDIA has promised to buy any of CoreWeave's service availability that they can't sell to anyone else. That is very unusual. That's not the same as making an investment. That could easily help CoreWeave with their debtors and and getting more debt financing. But it also means as a investor, we we don't know what's going on with real demand for CoreWeave because we probably won't be told if they start moving into the world where they're offloading to NVIDIA or not.”

“This is Mag five CapEx as a percentage of their operating free cash flow bill. And if you look at it in 2025, so that's this year, they'll spend about 66% of their operating cash flow on CapEx. In 2023, their total CapEx was a 156,000,000,000. And this year, it's 379,000,000,000. Right? So radical step up.”

“It appears to me that OpenAI, through all these partnerships and announcements, is trying to create escape velocity. You know? And that could be against the model providers. It could be against a hosting provider depending on how you think the market plays out. But it'll it it creates an interesting stress test for anyone else in the ecosystem to say, are you gonna lay chase? It just feels like they're they're daring people to to follow them, and and I suspect a bunch don't.”

“If we implement 50 different state rules that these companies have to jump through and companies that are that are competitors that are competing in the broader world don't have any of them, there is zero chance that's not gonna create mud and slow down The US players. There's just zero chance. And I'm certain the people that are writing these laws don't understand that there might be some global, you know, consequence of what they're doing.”

“Coinbase and Circle have done this deal where Coinbase will allow you to earn 4% on your stablecoin balance, which, you know, to to get that kind of return at another bank, even a neobank, you have to have your direct deposit go there. Here, whether it's $10 or or a million bucks, you know, you put it in stablecoin with Coinbase, and you start earning 4% daily. And on top of that, you can transact immediately out of that account. So you don't have to, like, move it from your savings to your checking to get it to do ACA. But you can send stablecoin immediately in microseconds, and it'll cost you a few pennies.”

“I'm gonna read this out loud. As part of its aggressive economic and political campaign against Brazil is investigating PIX, accusing the payment system of unfairly utter undercutting US financial and technology companies like Visa and Apple. I mean, that's the most absurd thing I've ever heard. Undercutting Visa? Like, do do they realize they have Visa and Mastercard have, like, the top two operating incomes in the history of American business? Like like, there's there's no one that needs less protection than these guys.”

“The Invest America accounts, now known as the Trump accounts, right, are more capitalism. They make every child a capitalist from birth. A private owner gives them a thousand bucks in a four zero one k like account that they own and control, their family has on their phone. At the start today, there are 65,000,000 kids in the country qualified for an Invest America account. Every kid under the age of 18, and every kid under the age of two will automatically get a thousand bucks in their account. Remember, the accounts have to be funded and established by our 200 birthday, 07/04/2026.”

“There's a great video that that Pink references that we can put in the show notes where Bezos has asked about the decision to leave D. E. Shaw and start Amazon, and he said he used a regret minimization framework. He said, oh, it's only a nerd could do that. But he said, that he imagined himself being 80, and would he care that he left D. E. Shaw maybe for win a bonus? Or would he care more that he didn't take this chance, this kinda instinctive chance that he felt like he had to take? And he immediately, after thinking about it in that way, wanted to go do it.”

“We did this survey and asked people if you could start your career over again, would you do things differently? And in that survey, 70% of people said yes. And we did it again with Wharton just to make sure we had, you know, a a true academic survey going on, and they did a lot more people. And that number was still six and ten. There's a great book called The Power of Regret by Daniel Pink. He said, one of the most robust findings in the academic research and on my own is that over time, we are much more likely to regret the chances we didn't take than the chances we did.”

“I think that OpenAI is likely going to be the next multitrillion dollar hyperscale company. K. I think you and I... If that's the case, the opportunity to invest before they get there, this is some of the smartest investments we can possibly imagine, and you gotta invest in things you know.”

“I underestimated. Let me just go on record. I underestimated. We we now have three scaling laws. We have pretraining scaling law. We have post training scaling law. Post training is basically like, AI practicing. Practicing a skill until it gets it right. And then the third is inference. The old way of doing inference was one shot. But the new way of doing inference, which we appreciate, is thinking.”

“That general general purpose computing is over, and the future is accelerated computing and AI computing. And so the way to think about that is there's how much how many trillions of dollars of computing infrastructures in the world that has to be refreshed. And when it gets refreshed, it's going to be accelerated computing.”

“Of the 25 sell side analysts on Wall Street who cover your stock, if I look at the consensus estimate, it basically has your growth flatlining starting in 2027. 8% growth 2027 through 2030. That is the 25 people in their only job. They get paid to forecast the growth rate for NVIDIA.”

“The annual release cycle. The token generation rate is going up exponentially. And the customer use is going up exponentially. So the first thing is because the token generation rate is going up so incredibly, two exponentials on top of each other, we have to unless we increase the performance at incredible rates, the cost of token generation will keep growing because Moore's Law is dead.”

“Everybody's power limited. And let's say, you were able to secure two more gigawatts of power. Well, that two gigawatts of power, you would like to have translate to revenues. So your performance or tokens per watt was twice as high as somebody else's token per watt because you did deep and extreme co design. Blackwell's 30 times. So you've gotta give up 30 x revenues in that one gigawatt. It's too much to give up. So even if they gave it to you for free, you only have two gigawatts to work with.”

“Some of the things I heard, they could never build AI chips. That just sounded insane. Two, that China can't manufacture. China can't manufacture? If there's one thing they could do is manufacture. And three, they're years behind us. Is it two years, three years? Come on. They're nanoseconds behind us. Nanoseconds.”

“So I'm gonna start with it's a great start. And the reason for that is this. That implies I don't I hope it's not the end, but I think it's a great start. America has one a singular brand reputation that no country in the world has, and no country in the world is in the position or in the horizon to be able to say, come to America and realize the American dream. What country has the word dream behind it?”

“I heard from a Chinese researcher leading one of our leading labs in The US that three years ago, 90% of the top AI researchers graduating from universities in China wanted to come to The United States and did come to The United States to work in our leading labs. And he guessed that today, that's closer to 10 or 15%. So seen a precipitous drop.”

“You're talking to somebody who represents the American dream. My parents didn't have any money, sent us over here. We started from nothing. You guys know I, you know, bust tables, wash dishes, clean toilets, and here I am. This is the American dream. President Trump knows that. We want legal immigrants.”

“If you have a train that's about to get faster and faster and go exponential, the only thing that you really need to do is get on it. And once you get on it, you'll figure everything else out along the way. And so to predict where that train's gonna be and try to shoot a bullet at it or predict where that train's gonna be and it's going exponentially faster every second and go figure out what intersection to wait for it, that's impossible. Just get on it while it's going kinda slowly and go exponential along the way.”