# AI Monetization, Photonic Computing, and Pharma Realities

**Podcast:** a16z Podcast
**Published:** 2026-04-23

## Transcript

The richest guys in the world don't just drop $400 million on a single deal.
The biggest VCs, maybe.
That's still like a lot.
So like, how'd this guy show up with $400 million to drop?
So there's $10 trillion, whether you include all the other hardware coming out, the rest of the ecosystem, et cetera.
Maybe it's $5 to $10 trillion market cap up for grabs.
And it's not an area where there's a lot of startups, which is like really shocking.
I don't want it to have data centers in space.
I don't want to have nuclear reactors in my backyard.
And I think that, you know.
It'd be a lot easier if we just made a freaking better computer.
No matter how big of a mistake you made, there's always redemption.
It's just you have to show the vulnerability.
You have to say, I fucked up.
Even if you don't say, I fucked up, you have to show a scar or wound or bleed a little bit.
What actually matters in AI right now?
Better models or better businesses?
A few years ago, the focus was intelligence.
Who had the best system, benchmarks, and breakthroughs?
Increasingly, the real question is economic.
Who captures the value?
how it's priced, and where the bottlenecks are.
At the same time, we're hitting limits.
Compute is getting more expensive, and new approaches from photonic computing to specialized hardware are becoming more necessary.
That creates a tension.
Software is easier to build, but harder to differentiate.
Meanwhile, industries like finance and biotech still require deep expertise and real-world validation.
In this episode, I try to understand where the real leverage is shifting across AI, hardware, and pharma.
I speak with Martin Shkreli, American investor and businessman.
We're talking a very exciting day.
We have OpenAI about to make an announcement.
I thought I'd start by just asking for you to broadly reflect on sort of the OpenAI, versanthropic, what's happening here?
How do you make sense of the ecosystem?
Yeah.
So just, you know, obviously, disclosure, you know, my wife sat OpenAI.
She's one of the first people there.
So I have a bit of a bias.
You know, I have a bias against Anthropic as well.
So it's kind of like dual bias.
But basically, just trying to be objective.
If you monetized ChatGPT, both enterprise and consumer fully, you'd actually have, I think, quite a lot more revenue.
than today.
So just case in point, my financial software company, we have about 10 licenses to Anthropic and it's supposed to be 20 bucks a seat.
We get a bill for a thousand dollars and, you know, or like 1500 bucks.
And that's, you know, it's good, you know, five to seven X kind of what we, what we asked for.
And, you know, OpenAI could do that to their customers too.
Their customers will pay it.
They don't really care.
It's a bargain either way.
But if you, if you try to ring every dollar, out of your user, you know, that has some adverse consequences, I think.
And OpenAI, I think, has figured this out and wants to sort of boost their ASP or whatever dollars per seat.
And so they're working their way upstream.
But I think the traditional VC, you know, entrepreneur advice would be don't, you know, rinse your customer if you can't help it.
And I think that, you know, for Anthropic, for whatever reason, they want to price.
through the roof with all these overages.
I mean, people complain that two prompts eats up their entire allotted, you know, amount.
And so I think if OpenAI did that, they probably could get their today's enterprise revenue to something like $100 billion.
I know some people would be very surprised to hear that, but I think that's the case.
And then on consumer, the same thing with ads, right?
So they might have, you know, and again, this sounds preposterous to anybody listening, but, you know, if they were steady, if they did the same monetization effort as Anthropic, their real, revenue right now would be about 200 versus their 30.
So I think this idea that, you know, Anthropic's taking the lead or something like that, I mean, it's pretty far-fetched.
Now, having said that, obviously, we're super impressive product, really great people that work there.
I think Dario is, you know, he's not my favorite guy.
You know, obviously, incredible entrepreneur, beautiful business he's made.
But, you know, the whole, like, you know, he tried to scare the world by saying, AI's going to kill you.
It's going to take over the world.
Nobody really believed that.
It's, you know, nonsense.
And he says, well, let me shrink that down a little bit to, oh, the AI is going to hack you.
And everyone's like, oh, well, you know, what could happen?
And so it's kind of the greatest marketing trick.
But, you know, I don't think it's in great faith.
And, you know, I do think to some extent these guys are true believers of the Doomer hypothesis.
And, you know, so it's hard to tell what's real and what isn't.
It's just conveniently also good marketing.
The Anthropic D.O.W.
incident, you know, about a month ago now, why there was so much support for for Anthropic on this.
To me, it felt as obvious as like a bullet maker saying, hey, we're only going to sell you these bullets, but only if we can help influence how you use them, you know, separate from U.S.
law.
Now, I know I'm definitely simplifying it and we'll get I'm sure we'll get some defenders to come on the show at some point.
But to me, it kind of felt.
obvious that they, you know, we should sort of leave things to, you know, private companies shouldn't be dictating, you know, foreign policy.
I get their concerns about domestic surveillance, but we have laws for that to protect us from that, from government overreach.
And it just doesn't seem like the realm of private companies to get into.
What am I missing there?
No, I don't think you're going to say anything.
I mean, I think that the idea that there would be some super governmental, you know, authority is a little scary.
You know, I used to, back in the hedge fund days, When the markets were shaky around 2008, I actually asked, I would ask some hedge fund friends, would you rather buy bonds in Johnson & Johnson or bonds in the U.S.
government?
And it's a very interesting question because in some ways at the time, it seemed like, you know, the U.S.
could default.
It could, you know, the financial markets could collapse.
Johnson & Johnson is not going to collapse.
You know, anywhere in the world where there's consumer health care, pharmaceutical and med tech, they did all three, every part of health care.
You know, every country in the world buys Johnson & Johnson.
The dollar could go worthless.
J&J will survive.
United States of America would not, at least financially.
Now, obviously, you know, the U.S.
is very, you know, is extremely resilient.
It's the greatest country on earth, etc.
But at the time, you know, there was a question as to whether bond yields would be better for a high quality corporate versus a, you know, a sovereign.
And certainly, if you look at some sovereigns like Brazil, you know, J&J bonds do yield less.
Then Brazilian bonds are riskier.
They're more likely to default than J&J.
And part of that comes from this, like, again, super governmental, like J&J, in a sense, is its own country.
You know, it has employees.
It has a couple hundred thousand people.
It's got a lot of revenue.
It's bigger than the country I come from called Albania.
You know, so in a lot of ways, you know.
anthropic in some ways is going to be sort of going to be its own entity.
And this is sort of a nation, sort of network state kind of thinking, corporate state in some ways.
And, you know, with all that revenue and all that power that comes from having a powerful piece of software, you know, I could see that sort of getting to somebody like Dario's head of thinking about, you know, oh, my gosh, with great responsibility comes great power.
And it's sort of like over, you know, obviously way overwrought.
Whereas people, I think, at OpenAI and other companies, even Google.
are just sort of like, yeah, it's just software, man.
You know, our job is to sell it.
You know, it's not that big of a deal.
Meanwhile, he's like, I am Spider-Man.
You know, I must be Batman.
He wants to be a superhero.
And it's like, you know, obviously he's selling software really well, but I think the theatrics are kind of ridiculous.
Yeah.
Let's get into other parts of the ecosystem.
Are you still a huge NVIDIA bull?
I don't know if you saw the Jensen versus Dorkesh, but what's your latest thinking on NVIDIA?
So I'm starting a...
sort of a hardware startup.
So I was shorting these stocks, quantum computing stocks, and I had to learn computing.
Quantum computing is really useful for one algorithm, Shor's algorithm.
So unless you're a codebreaker, and I don't have any corporate codebreakers, there aren't really too many avenues there.
So I started thinking about frontier computing in general, and I stumbled upon photonic computing, and now I have a startup in this space.
Interestingly, we're already a publicly traded company, but that's sort of You know, your configuration kind of doesn't matter much, whether public, private, or, you know, even not for profit.
So I think photonic computing is really exciting.
It's not going to challenge NVIDIA anytime soon, but I think that what I've learned trying to program some AI, you know, a couple of pivots ago before we settled in on financial software.
I learned that if you do the flame trace or the perfetto of a really zoomed in like nanosecond level instructions, basically all the GPU is doing is Mammals, so-called gem, generalized Mammal on the NVIDIA hardware.
And light does Mammals for free.
So you have a Mammal machine in light.
God kind of made light to do Mammals whenever it diffracts.
So you get the speed of light Mammal.
And if we had an optical computer, I think it would have like a thousand X to a million X.
performance depending on whether it's speed or speed and energy included.
And so like, you know, flops per watt or something like that, flops per joule.
So I think there's like, you know, I think eventually, you know, Moore's Law, you know, Jensen's already said it's dead.
I think everyone's seen that.
But, you know, I don't think processor speed is going to really improve at all.
And I think just shoving more energy through the system.
you know, making bigger systems.
These are like the only things we can do.
We need to do something.
I don't want to have data centers in space.
I don't want to have nuclear reactors in my backyard.
And I think that, you know, it'd be a lot easier if we just made a freaking better computer.
And I think that's what's going to happen.
So there's Neurofos.
They raised $150.
There's a company called Flux Computing that renamed to OLIX.
They raised $250.
We're out there.
There's a couple of little smaller guys, too.
And I think that one of us, hopefully all of us in some ways, will, you know, and there's obviously unconventional.
which has its, it's a little opaque exactly what it's doing, but, you know, very highly funded effort.
It raised a billion dollars, I think.
And, you know, I think it's time for a new computer.
And ultimately, you know, we're working on the hard parts of this.
So it sounds great, but there's a bunch of catches.
And one of the catches is non-linearity is very hard to do in optical computing.
We think we figured out a way to do it.
The other catch is there's no memory.
So we think we've got a way to do that.
So I think that, you know, we're going to see a lot of like bankruptcies.
We're going to see a lot of startups in this space.
But I think it's sort of time for the end of Silicon and the end of, maybe not the end of Silicon, maybe the end of transistors.
And so there's $10 trillion, whether you include all the other hardware coming out, the rest of the ecosystem, et cetera.
Maybe it's $5 to $10 trillion market cap up for grabs.
And it's not an area where there's a lot of startups.
which is like really shocking.
Like the amount of agent startups is in the thousands and thousands.
I can name all the, every single optical computing company on my hand.
And compared to biological computing or quantum or some of the other alternative computings, those aren't really that exciting.
So Photonic is, you know, many people I've talked to at OpenAI or Meta and other places, they sort of all agree inevitably Photonic's going to be here.
And I feel like, you know, whether it's five years, 10 years, or even 20 years, it's still worth making that computer because you need to hand the baton off.
I don't think NVIDIA is going to...
stay asleep.
But I also don't think that, you know, this is necessarily an easy thing to sort of embark on.
You know, most of the time, these bigger companies will resist kind of uprooting themselves.
Yeah.
Well, first, I just want to say you did this epically hilarious debate.
with somebody on quantum that we'll link to.
And, you know, he was a bull and you got into the technology and he couldn't really, he couldn't really defend himself there, although I'm sure he's a nice guy.
Yeah, very nice guy.
Yeah, yeah.
But it just goes, yeah, it goes to show that, you know, this is very complex stuff.
Quantum sounds futuristic, right?
It's a quantum that sounds really cool.
Like, well, you know, it's not that cool if you understand that computers basically be measured in...
It's sort of two ways.
You have the number of threads, number of operations at a time, kind of parallelization, which is why NVIDIA is so cool, 16,000 threads versus your average computer's 16 threads.
And then it's 1,000x, literally 1,000x more threads.
And then you have clock speed.
And you basically multiply the two.
And clock speed's in the gigahertz for both of those computers.
So you have 1,000x speed up with NVIDIA if you can parallelize the instructions.
The fastest quantum computer I'm aware of is a megahertz, which is, you know, your calculator is faster than that.
And it's literally a thousand times slower than a normal computer.
It's single threaded.
And the only way the tortoise beats the hare is when you have an algorithmic advantage.
And the algorithmic advantage exists, you know, in shores, but it doesn't exist anywhere else.
And what's interesting is you have these market caps.
A quantum is about an aggregate, about 100 billion.
And so, you know, obviously Naveen's company, my company, the other.
a couple of companies I mentioned, why don't we have a market cap of aggregate 100 billion?
Why not?
In fact, because it's actually useful, the world, nobody wants to do integer factorization.
Everyone wants to do MATMLs.
Why don't we have a market cap of 500 billion?
And I think we will, you know, and so that's kind of the, you know, the pitch there.
And I know, you know, your company, you know, is I think one of the major investors in this new thing, in the beans company, amongst many others, you know, all-star list of investors.
You know, I don't know what they're doing at all, but, you know, I understand that, you know, the race to make the next computer is on.
And, you know, some people are sort of half-stepping it.
Like there's some great companies doing ASICs, which is fantastic.
TPUs even are sort of half-steps.
You know, you're still on transistors and you're still limited by, you know, kind of the problems that come with, you know, scaling transistors, which are well-known.
And we'll eke out.
There's a little bit more performance out of that.
But I think to get a thousand X improvement, you need to do something pretty, pretty different.
Is there a particular milestone where you will know you're, you know, you're being successful or onto the right thing?
Or how are you, you know, don't share anything confidential, but how are you thinking about it?
Yeah, I think you have to, you know, we talk about this internally because taping something out is sort of a, you know, to some extent, it's a waste of time.
Unlike electronics.
you can actually set up these experiments in free space.
So that's the nice thing about light is like a light lab, you know, an optics photonics lab is pretty easy to set up.
I'd say that unless you get a thousand X or at bare minimum, a hundred X improvement, you know, it's not even worth taping out.
Our rivals are using SRAM and some other, you know, analog electronics.
I think you have to stay in all optics.
The conversion kills you if you go from electric to optical back to electric back to optical.
I mean, you know, you might as well not make the chip in my opinion.
But, you know, folks want to try it anyway.
They want to do their best Grok imitation.
And, you know, Grok, you know, is obviously great, great success from an investor standpoint.
And so I think you stay in optics.
If you can make a whole LM in optics, then you tape it out and you hopefully get the performance characteristics we're talking about.
But actually, what's interesting about it is, you know, your question kind of is revealing because what's not well known about this is that guys have been doing this in academics for many years now.
So UT Austin showed a optical transformer.
A guy at UCLA showed optical non-linearity very recently.
So work has been done on this.
That's pretty impressive.
It's not like biological computing.
We're still trying to get the machine to add two numbers.
I don't know how we're going to do it.
The soup of neurons might magically start thinking.
Optical computing is sort of here.
It's just a matter of scaling it, some of the other challenges I mentioned.
So I think if you can get some of these tricks down, we're actually closer than we think.
But I still think, you know, you got to be realistic.
No matter how much of an optimism you need as an entrepreneur, you have to be a little bit realistic that you're not going to.
you know, killing video overnight, you're not even going to kill 5% of it.
You know, it's like, look at Grok, you know, Grok, this like very small, ultra fast segment of the market, then you take it all.
But, you know, for people that really need like very low latency, Grok's a decent solution.
And that's a $20 billion win.
And that's, there's nothing wrong with that.
So I think, you know, you might carve a niche out that, oh, optics is really good, say for video, because video and optics kind of, you know, they're naturally the same thing.
So maybe you do that or something like that.
And I think that, you know, you'll sort of see it.
You'll know when you see it.
And I think that the key is, in my opinion, is investor mismatch.
So the problem, if you go to your investors and you say, I'm going to have something 10x better than NVIDIA next year, well, you better deliver that.
And if you don't, if it comes out at like 5x or 3x, your investors will probably balk on another round because, you know, ultimately, you know, NVIDIA is not staying still.
You know, your investors, your employees, everyone around you is just sort of going to feel despondent that, you know, you're not getting anywhere.
Google had the power to live through lots of crap with TPUs, right?
Like they just didn't work.
They didn't scale.
And finally, they got through a break.
They took 15 years.
So you need to make sure investors.
I've talked to some people recently where I said, I might need 20 years.
You know, are you ready to sort of like live that through?
You know, and for most people, the answer is no.
And so we're focused almost exclusively in corporates instead of VCs, because I think that, you know, corporates sort of get that, you know, especially corporates that have been through it.
You know, they've been around for 40 years.
They get that, like, it's worth it to stick around and wait and look at NVIDIA.
If NVIDIA had no revenue, this is a good thought experiment, zero out all the revenue for NVIDIA of gaming and look at the annual financials.
what's the net present value of NVIDIA back in 2020?
It's actually the same as the net present value of it with or without gaming GPUs, because ultimately it was worth the wait for that gigantic hockey stick.
So if you knew 25 years ago, oh, in 20 years there's going to be a thing called AI and we're going to dominate the hardware for that, you still should have invested.
You still should have made it no less of your biggest investment than as if they had the revenue and the GPUs.
So I think that this idea...
of really long-termism.
I almost want to think about it like a lab, you know, the same, you know, it's kind of way OpenAI sort of thought about their business was we're going to monetize something in AI.
We don't know what it is, but, you know, eventually it'll hit us and we'll know.
This is a more directed effort, but I think that, you know, there's something powerful about some investors now being willing to wait 10 years or wait 20 years.
And the fact there's some entrepreneurs out there like SSI.
you know, they're willing to actually tell their investors, you know, you're going to have to be really, really patient with this one.
You know, don't expect cursor here.
Yeah, absolutely.
To that end, you're super bullish on NVIDIA.
Is there any major, you know, MAG7 or major tech incumbent or emerging incumbent that you're bearish on going forward?
Oh, good question.
You know, it's so funny because like in Pharma, you have this dynamic as well where it's sort of very hard to sort of lose your long-term edge.
You have to be...
Because these businesses are so valuable that, you know, they have a hard time falling apart.
I thought you were going to ask me the other question, which is, you know, a lot easier to answer.
But you can answer that too.
Yeah, I think Facebook's met us the greatest thing ever.
You know, I'm just such a big fan of Zuck.
And, you know, this amazing thing, this distribution he has, it almost doesn't matter if he makes his AI himself.
Like, all he has to do is like...
You know, he could just literally take an open source model and it doesn't, you know, the problem with AI, I think, is that if you're open AI or Anthropic, pushing for more intelligence, like going from 150 IQ to 160 IQ, the kind of kids I went to high school with, you know, it doesn't make them more interesting.
You don't sit down with those kids at the lunchroom anyway.
You know, you mostly Instagram users and Facebook users, most of their questions.
are sort of normal-ish stuff.
You know, nobody's asking the Facebook AI, prove the Riemann hypothesis.
You know, that's something that DeepMind and all these other guys want to do.
But who actually needs that?
I think that the average person doesn't need questions that complicated, and it'd be cool to see it happen.
But for Zuck, I mean, he's got the distribution, and he's got the best product guys in the world, you know, hence the Snapchat battle that he sort of won and stole from.
And I think that he's going to continue to do that and win.
So I don't know.
I feel like, you know...
uh, it's so hard to like lose to the mag seven.
I do think we're going to get surprised.
Like if you look at the history of, of capitalism and big stocks, you wouldn't recognize most of the Dell 30 from a hundred years ago.
Um, United cigar, you know, you know, some companies you've never heard of and, um, American can, no joke, you know, and, and we laugh at that now, but like, that's going to happen again.
You know, all the, some of these companies, maybe half these companies are going to disappear.
And, you know, I certainly think Apple is like one of these things you raise your eyebrow at because, you know.
But obviously it's hard to count them out.
It's hard to bet against them.
But Apple's one, if I had to pick one that I wouldn't like bet on, you know, I wouldn't say I'm ready to bet against it.
But Apple seems like it's now old hat and there's nothing that special or charismatic about the company and their products.
It used to be super cool and sleek and edgy.
You know, that design, like in fashion, you have to stay fresh.
You have to stay pushing the envelope.
You stay dangerous.
And Apple was dangerous 20 years ago.
It was new and nouveau.
it's kind of whatever now.
And I feel like, you know, that's a monopoly that can start to fracture a little bit depending on how other players play.
Google is another one where, you know, it seems like, you know, no matter what they do with Gemini, it just kind of sucks and people don't want to use it.
You know, they have the distribution, but they don't have, they just sort of feel like a pocket protector.
They feel like Yahoo in 2000.
They feel like, yeah, you know, it's not cool.
It's not interesting.
You know, people want to do other things.
So we'll have to see, you know, if Google will.
will fail or what will happen.
Obviously, TPUs are an exciting business.
Search is never going away in some ways.
But, you know, it feels like there's some changing of the guard.
And moments like this is when the Xeroxes become Xerox.
And, you know, those types of things, those transitions start to happen before your eyes and you don't necessarily feel it or notice it right away.
But they do happen.
And I don't know what Mag7 is going to become a Lag7, but eventually you're going to get the Lag7.
Yeah.
You could, to your point on meta, I mean, you could tell they're a live player by them, you know, in the arena, you know, paying billions of dollars for Alexander Wang, for Daniel Gross, for Nat Friedman.
Like, Apple's not doing that.
Exactly.
They could attract the money.
They're almost sitting on a resource curse of the iPhone, but not willing to make it.
Yeah, doing buybacks.
Yeah, exactly.
I mean, why do buybacks?
Like, you know, if you can't pick the winner...
And again, this may sound strange or stupid, but like, if it were me, I can't pick the winner.
I don't know what company to buy.
You know, you can buy five or 10% of each of these.
You could buy, you could, you know, give, you know, Sequoia or A16Z, here's $100 billion, you know, go invest it for us.
You know, but, you know, doing buybacks is like historically, it's the worst thing you could do.
I mean, it really is kind of this admission that you don't know what, you know.
You kind of don't know what to do with the capital.
You don't know where the future is heading.
It's a financial – it's the kind of stuff I do.
Like it's a very financial engineering kind of nerdy, you know, not that innovative thing.
And it kind of like, you know, it's indicative of their business, I think, being sort of like they haven't released new products.
It just refreshes the same old products.
You know, all the new stuff they did has sort of been bad other than AirPods.
So I feel like, you know, it's also going to be other companies.
You know, Microsoft is sort of also sitting on a perch that's not great.
I mean, you know.
They make OS software, don't need OS software anymore.
You make Office tools, you can vibe code those, you know, et cetera, et cetera.
It's kind of like, you know, that's sort of a dangerous perch.
I don't think anything's going to happen in Excel, but I feel like, you know, there is a fear that all of Mac 7 could be in trouble and that, you know, maybe it is hardware that rules the future.
Yeah, we see, you know, anthropic open AI, you know, threatening startups or even very big companies on a seemingly weekly basis.
And, you know, Alad Gill, the legendary investor, tweeted out the other day something like, if you're a company in AI, you know, if you're an AI company, consider getting sold in the next 18 months.
You're just speaking to the power that these big companies have.
And I think there's also just a broader question as to whether the AI sort of platform shift will look like the...
internet in that application companies will accrue a lot of the value, or if it'll look more like the cloud in the sense that maybe the hardware layer has the better margins, like we're seeing with NVIDIA right now.
Yeah, nobody knows.
But one thing I think is that software is not dead yet.
And I think that, you know, we're making this financial software.
We've been working at it two years.
We're sort of still in beta.
We have some nice revenue.
We're almost profitable.
We haven't launched it yet.
And it's this sort of, you know, many people try to make this thing.
It's sort of a Bloomberg killer.
You know, killer is a strong word.
You know, Bloomberg's been this like software monopoly for 40 years.
And the reason it works is because it's actually very hard software to make.
And your customer expects, I was just sitting down with a customer, he expects the bond prices when he looks up a bond to be right.
And, you know, bonds are something that like 90% of these apps, like Perplexity Finance, for example, doesn't have bonds.
You know, half of Wall Street or even 60 or 70% of Wall Street is related to bonds.
And if you don't have your bond prices in there and you vibe coded it, well, a bond API player takes six months.
to do a contract.
Like, these guys are so sleepy.
They don't want to talk to you.
They almost don't want a new customer.
And if you want bond prices and you have to, like, make sure, oh, when you look up this French bond, it's correct.
Like, that's something that, like, that kind of taste and that kind of, like, attention to detail, it's just not something you can vibe code.
And it's so hard to get right.
Customers...
A customer at Citadel, he's not vibe coding something.
He wants to buy something.
He wants to buy something that works all the time.
And if it breaks, he wants to yell at somebody and take his business somewhere else.
That's the kind of thing you get out of software.
And the relationships matter.
Sal, my wonderful Bloomberg rep or whatever it is, you know, those are those kinds of things sell software.
So I sort of think the panic is most panics aren't, you know, really what you expect.
Something's going to change.
But I think some of this panic is.
is unrealistic.
And then, you know, again, you know, going back to like, you know, the Bloomberg example, we have like 1800 news relationships with news companies.
And, you know, if you vibe coded it yourself, I've seen people do this, they get five.
And it's like, well, the trader cares about the 1713th news source that's going to screw up his portfolio.
He doesn't care about, you know, the five that everyone know about.
So I feel like, you know, vibe coding is kind of, it's a fantastic thing.
you know, where you can cut your software costs a little bit or just raise the, you know, the ability of your software.
But it doesn't replace marketing and sales.
It doesn't replace product and taste.
It doesn't replace, you know, personal relationships.
And it doesn't replace the customer who wants to have really well-made software.
It may increase your ability to compete, but it's, you know, I feel like, you know, the changes that, you know, where like software stocks have dropped like a rock.
Those are probably opportunities to buy.
And I feel like depending on the stock, you can get some bargains out there.
Yeah, that's encouraging.
I want to shift to biotech and pharma.
If you were building a pharma company today, I'm curious what you might pursue.
It's sort of one range of questions.
The other thing I'm curious to get into is sort of, you know, you had this great peptide debate.
um, on, on, on TVPN, uh, which we loved.
Um, and you know, it seems like that's, that's all the rage and only going to be increasingly.
So, and, and yet it seems you're, you're bearish on it.
Um, and, um, and then also just GLP ones and, and, and, and what, what that means.
So, so let, let, let you take it away.
Yeah.
I couldn't have more, I couldn't have higher conviction.
The peptide thing is all bullshit.
You know, it's, it's, uh, you know, self-diagnosing and self-administering medicine that you don't know anything about.
I mean, this looks literally craziest thing ever, right?
I mean, you know, you have to be out of your mind, you know, and I understand like, all right, you're Patrick Carlson, you're a super billionaire, you're, you know, maybe one of my investors, Naval, you know, you kind of like, you want to take health into your own hands.
You have a lot of doctors around.
OK, that you're a special case, but you want to impersonate those guys.
I think that, you know, that's where that's where it sort of ends.
I mean, you know, the star, you know, the star asset for these guys is drug BPC 157.
I spent a few days on this thing.
I took a few days out of my life, wasted one percent of my year to look at the stupid drug.
It's the worst drug ever.
And, you know, nobody understands medicine unless you've actually made medicine successfully.
My first I got my first FDA approved drug.
It was like four or five years ago.
We got three or four years ago.
It was like accelerator approval.
We finally got final approval, which is cool.
Accelerated approval is actually contingent.
So, you know, I got a drug through the FDA.
There are not that many.
There are about 30 or 40 a year they got through FDA.
So, you know, it's a pretty, pretty hollowed haul.
And unless you've done that, you know, you really don't know what it looks like.
Drugs are like seemingly simplistic.
You know, you look at a.
You look at, you know, this Claritin on my desk or something and you sort of say, oh, you know, I could do this too.
And the reality is, you know, it's pretty freaking difficult.
In fact, some people say, well, how hard would it be to make this drug or something like that?
I said, imagine the SpaceX landing like the chopstick, you know, or the landing on its head.
Drug development makes that look easy.
And, you know, because I want you to, in your mind, shrink down the molecule to the molecular nanomolecular.
you know, where angstroms are your unit of length, you know, 100 nanometer.
And imagine the atoms of, you know, some kind of organic molecule.
And imagine those atoms interacting with proteins atoms.
And you're telling me you understand what's going on there.
It's really not easy.
And I think when I see people do like 10 minutes of pharmacology and they feel like they're experts all of a sudden, no offense to the guy who's debating, Max, who's a very nice guy, you know, they...
you know, sitting down with Max and like teaching in pharmacology over a few hours is like, to me, it's like, you should not be, you know, advocating for this stuff.
I mean, it's, it's, it's peptides, for example, are kind of one of the lowest desired drug to drug classes in pharma for the longest time because their half-lives are generally in the minutes.
And GLPs are frankenpeptides.
You know, they're, they're, they're, they take GLPs and they add these fatty acids, they conjugate these different things that make the half-life better.
And they sort of become.
biological peptides that are like, you know, they're hybrid drugs, basically.
Amgen called them peptibodies.
You know, so peptides in general are just this terrible asset class for pharma because you need drugs that have long half-lives.
So BPC-7 is not dangerous because it's gone within like 60 seconds.
The time you inject it, it's dead.
And so it doesn't have the time to do anything useful.
Any drug guy could tell you that, but I think...
What this really is about isn't about pharmacology or science.
This is about rebellion.
You know, I'm a I'm a rebel.
I get this.
You know, it's it's I don't want to pay Pfizer.
I don't want to see my doctor.
I don't want to pay insurance.
I don't want to get a prescription for all that.
You know, I'm going to do this myself.
OK, you know, I get it.
I mean, I'm I you know, it's crazy that maybe it was crazy for me to tell Congress to go F itself.
And, you know, it's just as crazy to go, you know, you know, make your own medicine.
You know, DIY medicine, this is the dumbest thing ever.
So to me as a pharma guy, I would focus on, you know, and this is where like, you know, I don't want to tear jerk anybody, but like somebody sent me a message today or last few days, you might've seen on social media about a West Point guy.
It was a strong military network.
His son just died.
His two more sons or two more kids that have the same disease.
They're going to die too.
I just had a baby boy.
Look, you'd move heaven and earth for anything for your kids.
You know, how many people in the world know how to develop rare disease drugs?
Well, I got one approved.
You know, there's, you know, maybe 100 guys on planet Earth that can say that.
And I would happily, you know, try to develop a drug for this guy.
I got banned, you know, from the farm industry for sort of political reasons.
I still might want to try and do it in Europe or something or get a special exemption.
But, you know, there are people dying.
You know, there are people dying of hundreds of rare diseases, tons of cancers.
Go to go where the hardest stuff is, you know, go where the people are suffering the most, because, you know, that's where, you know, ironically, that's where the money is.
And for the longest time, these kind of cosmetic diseases actually weren't moneymakers.
And GLP has been around 20 years.
And finally, a lot of pharma guys are scratching their heads like, why now?
We've had these for a while.
And they just finally got mainstream after 18 years of like watching this drug class be kind of like, you know, they finally broke through.
Because they are fantastic drugs.
But like for the longest time, the way you made money in pharma was you went after the most heinous, horrible, terrible illness and made a change, made a difference in somebody's life.
And that's how you made money.
And I think that that's still the case.
You know, it's still the case.
You have to go after the toughest cancer.
The Duchenne muscular dystrophy has been a passion of mine for the longest time.
My first company was named after muscular dystrophy.
That's, you know, it's a death sentence disease.
You get a million dollars a kid if you save their lives.
I think Elon, you know, Elon's not a drug company, but he's sort of going to do the same thing with Neuralink.
I mean, I think Neuralink is going to be $100 billion plus, maybe even $200 billion company because those patients, and there's many of them, they want to walk.
They want to talk.
They want to be productive members of society.
And he's making it happen.
And again, that's a million dollars per patient productivity, which insurance is happy to pay.
So I feel like, you know.
The rare diseases, the Alzheimer's, the terrible cancers, this is where you go.
I mean, the playbook hasn't changed.
I think that, you know, the science is still really hard.
I think AI is going to help a lot there.
Coming up with new ideas.
Fundamentally, the drug game is an idea game.
You know, you have to sit, toss and turn and say, I wonder if you inhibited, you know.
aisle one, would that work for Alzheimer's?
Nah, I don't think it crosses the blood brain barrier.
Inflammation is not that important.
But what if we did this?
And you keep thinking and thinking and you have these ideas before you even put a drug into an animal or in a Petri dish.
You know, it's a theory game.
And AI can actually do that.
You know, it can actually zip through thousands of ideas and come up with something.
So I think there's something to work on there.
And I feel like, you know, maybe it's Anthropic that does a drug company.
Maybe it's OpenAI or maybe somebody else.
There could and should be a way to make this work.
The drug companies themselves don't take to technology very easily or quickly.
You know, they're probably not the place to do this, but you still have to be a drug company.
And I think that's what a lot of the Valley kind of doesn't get.
They're like, we want it.
We want to tackle the farm industry.
In the pharma industry.
And it's like, no, you have to go do trials.
You have to go do the stuff that nobody wants to do.
And that makes drugs kind of boring and shitty.
And that's why like Vivek and myself were like two big interlopers in pharma.
And we're both kind of not loved, you know, for lots of reasons.
Because like pharma is this old guy's game.
I mean, the average pharma CEO is like 60.
There's no Patrick Collison in pharma.
And there never will be.
You know, it's kind of, you know, a tough space to be an entrepreneur in.
You know, it's a pretty ivory tower.
Yeah.
Well, you guys were to some degree.
So it's you guys.
But I hear you on the barriers being there.
So just to close the loop on the predictions.
So are you, is you're thinking that in the next year we'll sort of see that peptides don't really work or aren't?
Because a lot of companies are getting funded in this space.
Do you think it's just all going to collapse?
And then I'm also curious on the GLP-1 side, Eli Lilly, there's just an Amazon announcement today.
It's over a trillion dollars.
Do you think it's going to be a five trillion?
Like how big can this get?
Drugs have a big, big problem.
A friend of mine talked to Warren Buffett about this.
He wanted to sell his drug company.
It was privately held.
He wanted to sell it to Warren Buffett.
Buffett said no.
And he said, the problem with pharma is IP.
So we have to recreate our business every 10 years.
Drug goes generic.
I have to go find another one.
Are you effing kidding me?
You know, so like imagine being open AI or, you know, imagine 10 years after A16C.
Actually, your patent on venture capital expired.
You got to go find a new business.
Go do PE or go do lending or something.
It's like I was just getting started.
I was just hitting my stride, you know, and in pharma, you literally have to go do something else.
And so Zempix generic in like a year or two.
Zempix is pretty good.
And so the problem with.
With drugs is you make a better and better drug and you reach this asymptote where it's like nobody's making a better hypertension drug because we have solved that problem.
You can lower blood pressure.
You don't need another one.
And so once that patent expires, it sort of permanently has lifted the bar for that disease.
And eventually, GLPs, you know, they're perfect.
I mean, you really can't get a better one.
So at the end of the day, Ozempic going generic.
Munjaro, eventually it's, you know, 2040 or something, but eventually going generic.
markets price long-term asset value, long-term cash flows.
So Lilly's kind of screwed.
They have to find a way to perpetuate their product.
And one of the ways you could do that is manufacturing.
But the problem is you sort of have to design a drug that's hard to manufacture if you want to keep it in the long run.
And J&J figured out how to do this where for the longest times, small molecules like Claritin go generic very quickly because any Indian company can make it.
But antibodies...
sort of even still haven't just now are starting to be able to get disintermediated by generics.
So like in some ways, like the more complex the molecule, the harder it is to make, the more cash flow you're going to get out of it.
Because somebody else may not be able to make it.
The patents expire and they expire quickly in pharma because you have to develop the drug over 10 years.
So your 17 to 10, 20 year patent life kind of gets cut in half because of your development timeline.
So you have 10, 15 years of cash flow.
Lily has brilliantly staged each.
GLP to come out one after another in this really smart way.
But at some point, the consumers and the insurers say, I don't need super GLP Max Pro Plus.
Good old, you know, generic Ozenpic works and it's $3 instead of super GLP max flow for us, which is $250.
Consumers have zero brand identity with these companies, right?
Nobody gives a crap that they're drugs from Lilly versus Merck versus Pfizer.
And they just want the cheap version.
And I think that sort of plagues these companies.
So I think that's unfortunate.
I do think the peptide stuff, it's going to be weird to see this happen because drugs are...
The reason we have an FDA and it's good is because snake oil sort of works for people.
People want to think.
They want to believe.
And so if you think BPC-157 is working for you, you're not going to stop taking it.
You love it.
And you think, oh, well, it works for me.
And you might think that, but you have to look at the trials.
But nobody can convince the populace that statistics matter.
It's so hard.
Your individual response.
Even though it's a non-response, it's just random noise around a distribution.
You want to believe that it's relevant to you, that it changed something for you.
So it's going to be hard to like defeat that.
I think regulations are the way to defeat it.
But, you know, we're in this regulatory environment that that's really laissez faire.
I feel bad for it because there's actually drug companies.
There was a Huntington's drug that was promising, maybe not perfect.
And FDA rejected it.
And so.
Huntington's disease is deadly disease, horrible genetic disease.
Companies spent a couple hundred million dollars making this drug, and the people who are suffering, dying from this disease can't get it, but I can get BPC-157, totally unregulated, stupid medicine that doesn't do anything.
I can go inject that.
It's sort of tough.
I think that's terrible.
And I feel like peptides are so safe, that's the one benefit, that maybe people will just trick themselves into doing it.
It'll be this weird Veblen good where it's like...
Oh, yeah, I take this, this and that.
That's my stack.
And it's it's like it's not doing anything for you, but you're spending a thousand dollars a month on it and you feel better about it.
And it gives you some placebo effect.
I mean, it's a business, not a business I want to be in.
You know, business of pharma is, you know, again, Neuralink, you know, casting this pharma company for a second.
I'm literally giving a million dollars a year productivity to this person.
You know, I'm cutting the costs of everyone taking care of them and feeding them and doing all this stuff for them.
Now they can work.
And the medical system that maybe has been spending a million a year per patient on this person and their productivity, you know, you flip that around.
And it's an amazing, like, beautiful thing that you will get paid for.
You know, to get paid for something, you have to show the value.
And if Peptide, you can't show the value, yeah, you're going to get some suckers to buy it.
But, like, you know, that's not really exciting.
So I don't know why I'd want to be an entrepreneur in this space when there's...
You know, it's easy, I guess.
You know, it's like a go-to-market, go-to-consumer, you know, direct-to-consumer kind of thing where you can, you know, finagle your way into, you know, getting some demand.
But, you know, this isn't going to scale to like, the reason Lily scaled is product really freaking works, you know, and that's how you win.
So I feel like, you know, you know, good luck to it.
I mean, I just don't think it's going to be a great place to play.
Yeah.
So we did some AI ecosystem analysis and then we just recently we just did some pharma analysis.
I want to end on a little bit of off the wall question, which is hearkening back to your interview with Laura Shin a few years ago.
Excellent interview where you analyzed sort of SBF's case and gave some advice.
I'm curious to do a thought experiment, which is imagine SBF gets out early.
He gets lucky, there's some sort of pardon, or he just, you know, he gets out on good behavior.
Maybe it's unrealistic, but imagine he gets out the next five years, something like that, a shortened sentence, maybe 10 years.
What advice might you have for him in terms of, you know, a redemption arc or just reacclimating to society?
Yeah, I mean, I talked to Sam, you know, I like him a lot.
I think he should be out.
I think the hard part here, and having talked to like even the Trump administration about this is, The hard part is Sam has got to show he's a normal guy.
And I think he's struggled with that.
You know, he's obviously not that normal, you know, in a lot of ways.
How many of us go to MIT?
How many of us start a, you know, a huge company?
How many of us pick Anthropic as a first, you know?
So there's something about Sam that people don't trust.
And there's something about Sam that, you know, he's got to really let his human side out.
And one of the problems here is maybe he doesn't have one.
You know, and I don't think that I don't say that as a bad thing necessarily.
But as somebody who understands his path in life, being a prodigy, being pushed on stage as like this intellectual guy and being shoved into this like different room to room math camp, MIT, you know, Jane Street, you know, all this stuff.
He maybe didn't have the time to like be a normal person.
And I think that that's what makes it so awkward and so untrusting.
People look at him.
They're like, I don't know about this guy.
There's something about this guy I don't trust.
And he's got to fight hard.
to make it real, that he's a real dude with real life, with real friends, with real emotions, and then people will feel bad for him.
But until then, it's like, how do we know this guy doesn't come and pull the wool over our eyes again?
And I feel like, truth be told, as much as Anthropic was a successful investment, if you look back at that announcement, Anthropic was, those profits seemed like they were going to go in his pocket.
And, you know, not in the depositor's pocket, not even in FTX's pocket.
So, like, you know, if you look at the round, it was Series A by Sam Bankman.
You know, and it was like, well, at the time, that was the tell.
That actually is how you would have told because where is this $400 million coming from?
I mean, most people don't have $400 million.
You know, Bezos doesn't put $400 million in deals.
You know, Zuck doesn't.
You know, the richest guys in the world don't just drop $400 million in a single deal.
The biggest VCs, maybe.
That's still, like, a lot.
So, like, how'd this guy show up with $400 million to drop?
And the answer is obvious.
You know, he took everyone's money to do it.
And that's wrong.
And, you know, you could almost allow it if.
Like, hey, it was going to go to all of us depositors somehow is going to give us one hundred and five cents on the dollar.
OK, you know, whatever.
I didn't ask for this gambling, but, you know, if it helps me, I'll take it.
And that's kind of my case.
That's that's what I went to jail for.
And so, you know, at least I gave I gave the profits to the people.
But I think that, you know, it's no matter how bad or how big of a mistake you made, there's always redemption.
It's just you have to show the vulnerability.
You have to say I fucked up.
You have to say even if you don't say I fucked up.
you have to show a scar or wound or bleed a little bit.
And I think that his thing is like, you know, he wants to fight, but he's not connecting.
And connecting is so important.
And I feel like his upbringing, you know, his sort of like MIT math camp, Jane Street life has led him to this position where he's hard to feel sorry for.
He's hard to connect to him.
And I feel like...
If he does get early, which, again, I'm advocating for, but it's been met with this very stiff resistance of who really is this guy as a human?
You know, that's the question I get back from the Trump camp.
I think that, you know, once he does that, not only will people in politics feel bad for him, America will feel bad for him.
America will want to give him a second chance because the promise is there.
The guy's obviously a genius.
We're the best businessmen ever.
But how do you take that and – Get the trust.
I like this guy.
I want to root for this guy.
That's what he's got to focus on.
And he's brilliant.
So I think he might be able to do it.
But it's going to take some soul searching.
It might even take some pain.
He's obviously going through pain right now.
But I'd love to see him out.
I'd love to see what he could do for society.
And I feel like as long as he can be a human, which is, you know, some people, we joke about them being lizards or robots or whatever.
And there's a human in everyone.
And, you know, I think this experience may actually, it's going to sound really crazy, might actually be the best thing for him.
Because, you know, it's the pain of learning who you are, the pain of going through this pressure chamber that prison is and forcing you to reflect on like, what did I miss?
What did I, what am I, what is this all about?
And five years in prison and then coming out and, you know, I've heard a rumor that there are investors who have already lined up for Sam's next thing.
I'm not kidding.
I've heard this from very serious people that, and the numbers are like.
They're staggering that they're willing to drop hundreds of millions or even billions on Sam's next thing.
And so obviously, you know, there's something here.
And to throw a life away, you know, that like such a unique life away, you know, and I was I was making fun of Sam, you know, you know, as I was digging a little bit.
And now, like, you know, I feel like, you know, he has to go through that journey, that hero's journey of like he's got to hit rock bottom.
And then I think, you know.
Perhaps, you know, the time will be where he gets out.
Maybe it's this administration, maybe it's the next one.
But I see a big glorious comeback if he can find this humanity, find this like, you know, this new person.
Yeah, that's a great note to wrap on.
Martin, thanks so much for coming to my situation.
See you soon.
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