Eric Schmidt on AI, the Battle with China, and the Future of America

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I honestly believe that the AI

revolution is underhyped.

Now, why is this all important?

Eric Schmidt is here. He's the former

Google executive chairman and CEO.

These agents are going to be really

powerful, and they'll start to work

together. We're soon going to be able to

have computers running on their own,

deciding what they want to do. Now we

have the arrival of a new nonhuman

intelligence which is likely to have

better reasoning skills than humans can

have.

So if you were emperor of the world for

1 hour, the most important thing I do is

make sure that the west wins.

Ladies and gentlemen, please welcome

Eric Schmidt.

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Hi.

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Hi. Looking good. Good to see you.

Good to see you.

Good to see you.

You're looking, Eric. You're looking.

Very nice.

Oh my god. David, good to see you. It's

like

David Sax is here as well.

It's like a It's like a reunion of all

of our former companies. David, why did

you quit after all?

My old

my old boss.

It was

What was it like working with Young

Freedberg? Take us back.

Can I Can I tell a story? We have to

come down to Orange County and they're

like, "Hey, we're going to take the

plane and it was Eric's plane." We get

on the plane and then he goes up and

flies the plane. I'm in the back of the

plane by myself.

Was it King Air?

I'm like, "The CEO of Google's flying me

down to Orange County." It was

incredible. That was my first time

actually hanging out with Eric.

It was It was my Gulfream.

That's right.

Um, he was way too smart.

Way too smart.

Way too smart.

Was he focused? Did he contribute? Did

he move the needle?

But he was very smart. Okay, that's kind

of our consensus off the pot as well.

Look, you guys know this guy well. He's

really that smart. So, he taught me more

stuff than most of any of the employees

at Google and then you left.

Well, tell us what you've been doing.

So um

No, no, wait. Before that, I got to ask

you this question. There was a recently

deleted video from Stanford.

Oh no.

You had a moment of clarity where you

said, "Hey, you know, like at Google,

people are like too much work life

balance. They need to commit. They need

to work harder. We had Sergey at the

last event. He's going back to work. So

Sergey got the message.

Predicting Sergey's behavior is

something I can fail at. I tried for 20

years. Um I am not in favor of um

essentially working at home. I And the

reason I mean many of you guys all work

at home to some degree, but your careers

are already established. But think about

a 20-some who has to learn how the world

works and you know they they come out of

Berkeley or Dartmouth and they're very

well educated. When I think about how

much I learned when I was at Sun just

listening to these elder people who were

5 or 10 years older than I was argue

with each other in person. I don't how

do you recreate that in this new thing?

And and I'm in favor of work life

balance and that's why people work for

the government. Um, sorry. Um,

strays.

Sorry, sorry, sorry. Um, if you're going

to be in tech and you're going to win,

you're going to have to make some

tradeoffs. And you're remember, we're up

against the Chinese. The Chinese work

life balance consists of 996, which is

9:00 a.m. to 9:00 p.m. 6 days a week. By

the way, the Chinese have clarified that

this is illegal. However, they all do

it.

That's who you're competing against. I

brought I brought everybody back to

office. It's so much better.

So, it let's just pick up on that theme.

So,

you don't need to defend the government.

No, no. Believe me, I don't I don't see

the need to. I'm an unpaid part-time

adviser to the government. So, uh but uh

but we are in this high-tech competition

with China. They obviously care about

AI, too. They're trying to race ahead.

How do you uh I I understand that you

recently ma made a trip there. How do

you um handicap this this this

competition? Well, you and I just talked

about this as part of your as your

incredibly important work in the White

House. Um, I had thought that China and

the United States were competing at the

peer level in AI and that the good work

that you have done and your predecessors

did to restrict chips were slowing them

down. They're really doing something

more different than I thought. They're

not pursuing crazy AGI strategies partly

because the hardware limitations that

you've put in place, but partly because

the depth of their capital markets don't

exist. They can't raise based on a wing

and a prayer $100 million or maybe an

equivalent to to build the data centers.

They just can't do it. And so the result

is they're very focused on taking AI and

applying it to everything. And so the

concern I have is that while we're

pursuing AGI, which is incredibly

interesting and we should talk about and

all of us will be affected by this, we

better also be competing with the

Chinese in day-to-day stuff. Consumer

apps, this is something you understand

very well, Chimath, uh, consumer apps,

uh, robots and so forth and so on. I saw

all the the Shanghai robotics companies

and these guys are attempting to do in

robots what they've successfully done

with electric vehicles, right? and

they're re they their work ethic is

incredible. They're wellunded. It's not

the crazy valuations that we have in

America. They can't raise the capital,

but they can win across that. The other

thing the Chinese are doing, and I want

to emphasize this is a major

geopolitical issue, is that my own

background is open source. In the

audience, you all know open source means

open code. Open weight open weights

means open training data.

China is competing with open weights and

open training data. And the US is

largely and majority focused on closed

weights, closed data. That means that

the majority of the world, think of it

as the belt and road initiative, are

going to use Chinese models and not

American models. Now, I happen to think

the West and democracies are correct.

And I'd much rather have the

proliferation of large language models

and that learning be done based on

Western values. Eric, we had a a major

open- source initiative um with Meta,

you know, incredible balance sheet,

tremendous technical firepower, but they

seem to have misexecuted and now are

taking a step back and reformulating

something to your point that looks a

little bit more closed source. It's not

clear. You know, Alex Wang's a good

friend. Uh he's come in, he's taken

over. He's obviously incredibly uh

incredibly capable. I would not hold

keep um I I would not say that they're

going fully closed. And I think also

they got screwed up because the deepseek

people uh R1 did such a good job, right?

If you look at the reasoning model in

deepseek and in particular their ability

to do reinforcement learning forward and

back, forward and back and forward and

back. This is a major achievement and it

appears that they're doing it with less

precision than numeric precision than

the American models. As a bit of

technical things, uh there's something

called FP64, FP32, FP16. The American

models are typically using 16 bit

precision for their training. The

Chinese are pushing eight and now even

four.

Is there is there something that um the

American you know bigger companies need

to be doing in open source so that we

can actually combat this?

Well, a number of the large companies

have said that they want to be leaders

in open source as well. Um Sam Alman

indicated that the smallest version of

the 03 model would be released I believe

open weights and they have done so and

he told me anyway that this model is

much smaller than 10 the 26. It's much

easier to train and it will fit or or

can fit on your phone. So one path is to

say that we'll have these supercomputers

doing AGI which will always be

incredibly expensive and so forth. But

we also have to watch to make sure that

the proliferation of these models for

handheld devices is under American

control whether it's OpenAI or Meta or

Gemini or what have you. recently you uh

took over uh relativity space and I

think for for the people that don't know

this is a business that effectively

whose ambition is to compete with

SpaceX.

I think you were the first investor or

the earliest investor in it.

I was

I'm sorry.

It's okay.

You lost some money in the first what

happened? Did you get crammed down?

No, no, no. I mean all of us did.

All of I mean look

I mean I've been very happily uh you

know an investor in SpaceX and Swarm and

Starlink. relativity was

and by the way swarm is a big deal

created

swarm was a

so thank you

yeah swarm has been a really great

success for for them and I think for the

world um but what I was going to ask you

is walk us through the evolution of the

space market why you decided of all the

companies you have the capital base to

kind of put your money anywhere why did

you pick that why did you pick that

business why now

rockets are really cool and they're

really hard I had I'm as you know I'm a

pilot and I know lots about jets And I

had assumed that rockets were as mature

as jet engines. They're not. It is an

art and a science. These things are very

hard to do. The amounts of power, I

mean, in our case, the rocket is 4

million pounds of thrust. Um, you have

to hold the thing down to test it. And

you can't even hold it with metal

things. You have to have other things to

hold it down as well. There's so much

force otherwise it will take off. Um,

another interesting thing about rockets

is that a rough number is that 2% of the

weight of the rocket is the payload, 18%

is roughly the rocket, and 80% is the

propellant. And my reaction as a new

person is, you're telling me you can't

do any better. And the physicists say

after 60 years of physics, that's the

best we can do to get out of the

gravitation of of the Earth. And so, I

think rockets are interesting and

they're challenging. There's always an

opportunity for competition. um in

relativity space's area, it's

essentially a LEO com a LEO competitor.

So low Earth orbit satellites, that sort

of thing. The order book is full. We

just have to launch the rocket and and

this entry into space happened and I'm

not sure how well known this is. So you

can go as far as you want to go into

this, but you've done a lot as well in

next generation warfare as well. Do you

want us just to talk about that and how

you ended up there and what role that

plays and just give us a landscape?

Maybe David asked about the China

question, but it's they're all kind of

almost interrelated.

Well, at first place, I'm a software

person, not a hardware person. I I

explain to people that hardware people

go to different schools than software

people. Um, and they think slightly

differently. So, I'm always at a

limitation in these new industries. Um,

I had worked for the Secretary of

Defense and have a top secret clearance

and all that. I was given a medal, etc.,

uh, for trying to help the Pentagon

reorganize itself. And when the Ukraine

war started, I was watching and I

thought, well, here's an opportunity to

see a country that has no navy u and no

uh and no air force how they do this

with automation. And indeed, it has been

a spectacular success as a matter of

innovation. Um and outnumbered 3 to one

with huge differences in um kinetic

strength, weapons, mobilization, and so

forth and so on. Ukraine has held on

really quite well. Um and what's

happening now is you're seeing

essentially the birth of a completely

new military national security

structure. Um one way to think about it

is that we all u so first place and I've

I've seen it live and I will tell you

that real war is much worse than the

worst movies you have ever seen about

war. And that's all I'll say. It's

really horrific and it's to be avoided

at all cost. Um and then right for

obvious reasons and the the

and I love all these people say well

we'll well you know the wararmongering

talk be careful what you wish for

because the other side gets a vote when

I started working and and trying to

understand what Ukraine was doing uh

Russia was pushed back and they've come

back with a very very strong second and

third round so the enemy gets a vote in

this situation uh but to but to go on um

The rough way in which war will evolve

is first things will have to be very

very mobile and very much not in fixed

places. This takes out most of the

military infrastructure that exists in

the world. Um things like tanks um of

which we're now building a whole bunch

more even stronger tanks here in America

don't make any sense in a world where a

2 kg payload from a a well-armed drone

can destroy the tank. It's called the

kill ratio. And that drone costs retail

$5,000, $4,000. The tank, the American

tank costs $30 million. You can see the

you can send an awful lot of those

drones to destroy those tanks. Um, the

likely evolution goes something like

this. So, first, people learn that

drones are like rifles and like

artillery. So, it's more efficient to

use drones now than to use mortars,

grenades, artillery. That's clear. If

you just look at the economics,

economics in terms of cost or

effectiveness as it's called. Um the

next thing that happens is that both

sides develop drone capabilities which

what you're seeing now and each then

becomes a war of drone against drone. So

you have drone against anti- drone. And

so then the shift moves to how do you

detect the enemy drone and how do you

destroy it before it destroys you. So

the doctrine ultimately is the drones

are forward and the people are behind.

And I've seen operations in for example

sitting in Kev where the Ukrainians are

commanding things over Starlink I might

add um in the distance in the distant

war and they're very very effective. So

we've solved the latency problems, we've

solved the timing problems and so forth

in that area. The ultimate state is very

interesting and I don't think anyone has

foreseen this. If you go back to our

conversation about RL and planning,

which is what you're seeing with AI,

let's say that that we're on one side

and we have a million drones and there's

another side over here that has another

million drones. Each side will use

reinforcement learning AI strategies to

do battle plans, but neither side can

figure out what the other side's battle

plan is. And therefore, the deterrence

against attacking each other will be

very high. Today, the way military

planners operate is that they count

weapons. They say, "Well, you have this

many and I have this many and you can do

this kind of a maneuver and so forth."

But in an AI world where you're doing

reinforcement learning, you can't count

what the other side is planning. You

can't see it. You don't know it. And I

believe that that will deter what I view

as one of the most horrendous things

ever done by humans, which is war.

Because unless there's a perfect balance

between either side, there will be some

mutual destruction of the drone supply

like there would be with any artillery

stock in traditional warfare and

whoever's left ends up winning. Like

they're just

Well, it's very important to understand

that there's no winners in war. Um, by

the time you have a drone battle of the

scale I'm describing, the entire

infrastructure of your side will be

destroyed. The entire infrastructure of

the other side will be destroyed. These

are lose-lose scenarios. Isn't there

like an an equilibrium though that that

can also create where there because of

that mutually assured destruction

there's a det or is that

well I'm arguing that it's it's not a

deterrence

right

that as deterrence can be understood as

I want to hit you which I don't but I

want to hit you so much but that if I do

that the penalty is the penalty is

greater than the value of me hitting you

right

and that's how det that's how

but that seems like an that seems like a

great um advantage antage and upside of

this move to sort of drones and

automation that we don't have today.

Well, I there are many advantages to

moving to drones and automation. One,

they're much much cheaper, right?

They're much much cheaper.

Yeah.

And two, and two, you can stockpile

algorithms. You can essentially learn

and learn and learn. And remember, you

can also build training data, right,

that's synthetic, so you can be even

better than the others. The final

question I've been asked by our military

is what's the role of the of a

traditional land army? And I wish I

could say that all of these human

behaviors can occur without humans being

at at risk. I don't think so. I think

that the way um robot war essentially

drone war will occur is there will be

these destructive waves, but eventually

humans are going to have to cross a

line. they're going to have to

after we've depleted them. So, you're

investing in this drone technology and

then do you think

Optimus and humanoid robots are the

next, you know, volley in this um new

warfare. It's going to be a long time

before humanoid robots we which is what

we see in the movies all day, right? Be

a very long time before we see that. Uh

what you're going to see is very very

fast mobility solutions, right? airly

airbased solutions and also hypersonics

hypersonics also things underwater

there's a lot of that going on it's a

different domain um if you look at the

um the muro and some other boats that

the Ukrainians used they have

essentially used USVs to destroy the uh

Russian fleet in the Black Sea this was

crucial for them because they needed to

be able to export the grain from Odessa

around and it's like 6% or 10% of their

economy It's a very big deal and they

did that with drones.

Eric, it seems like there's this

overarching worldview that you have,

meaning you have this view on AI.

There's all the stuff you're doing now

in drones, in warfare, in rocketry. It

all converges quite honestly because in

the in the next five or 10 years, these

things will all come to pass. What is

the like how do you view the world? Like

what is the role of America? What is

your role as a as a capitalist, as a

technologist, as like a statesman?

I want America to win,

right?

Uh I am here because the American dream,

the people who invested in me, in my

case, Berkeley and so forth, people took

a chance on me. I want the next

generation to have that. I also want you

all to remember I was just in in uh as

part of the World War II surrender

ceremony in in Honolulu and they talked

about fighting tyranny, right? We forget

that our ancestors or greatgrandparents

or whatever fought the Great War to keep

liberalism and democracy alive. I want

us to do that. How do we do that as

Americans? We use our strengths. What

are our strengths? We're chaotic,

confusing, loud, you know, but we're

clever. Uh we allocate capital smartly.

We have very deep financial markets. We

have this enormous industrial base of

universities and entrepreneurs which are

represented here. We should celebrate

this. We should stoke it. We should make

it go faster and faster. I spent lots of

time in Europe because of the Ukraine

stuff. They are so envious of us. When

you're in Asia, they are envious of us.

Don't screw it up, guys. That's what I

want to work on.

Can Can I Can I just ask you outside of

this external conflict? We had um a

conversation with Alex Karp today and we

actually had Tucker Carlson here

yesterday and some of the dialogue was

around the I I don't know if the right

term is the erosion of the west that

there may be social issues that are

brewing in the west that may be hurting

us from the inside. How much do you

observe or spend time on these issues?

And the metric that often is cited now

is declining birth rates in the west.

And that our population, and we're gonna

talk with Elon in a few minutes about

this. Um, oh, sorry.

Oh, we just ruined my bad. My surprise.

Oops.

Sorry. Sorry.

There's your surprise guest.

Sorry. Sorry. Sorry. Sorry.

Um, slip. Uh, but um,

Elon is a good friend and he's

addressing this issue of population

directly himself.

problem solve for it. Good for you.

Is it is it is it a reflection of

something going on? There's a rise of

Mandani getting elected in New York. Uh

some of the historic values of the West

seem to be, you know, kind of under a

state of transformation. Right now,

one metric of the success of a society

is its ability to reproduce. And so, I

think this is a legitimate concern of

the West. It's much worse in Asia. The

um the Chinese number is about 1.0 0 for

two parents. In Korea, it's now down to

78 for two. So, it's really important to

recognize that we as humans are

collectively choosing to depopulate. And

the numbers are staggering, right? And

imagine a situation where instead of

having growth, you have shrinkage. And

furthermore, they're getting older. And

so, as a business, all of a sudden, your

revenue is declining. And there's

nothing you can do because you can't

innovate with fewer and fewer customers.

So if you just put it in a business

context, ignoring the moral issues which

are all very real, it's just bad, right?

So we have to solve that problem. I

happen to be in favor broadly of

immigration because I think immigration

helps us solve that problem. But as a

global mechanism, we have to address

that. Um, in any case, from my

perspective, you're going to have these

issues, but America is organized around

the concept of American exceptionalism.

And as long as we understand that the

way we make progress is we invest in the

right people, in the right businesses,

we have a a strong capital market, we

invest in the infrastructure that they

need, um, we'll be fine. That is my

actual opinion. Can can we go back to um

AI for a second?

So um Eric, I think you can help us get

to a let's call it a a bipartisan

understanding of these issues. I think

you you you think really clearly about

this. Um you know, in in the wake of

Chad GBT launching at the end of 2022, I

think the discourse was really dominated

in 2023 and 24 by this idea of AGI and

that AGI was imminent. And I think it

created almost like a panicky atmosphere

in Washington among policy makers and

you saw things like we got to restrict

open source because you know then China

will get it and um and this is before

Deepseek launched and then we saw that

actually they're ahead of us on open

source but it feels like there's been um

a pullback a little bit from the AGI

narrative which I think I think it's

actually a good thing. I think it's more

conducive to calm rational policym.

What's your perception of AGI right now?

Where where are we on that whole train?

So So um so first place, the speech that

the president delivered about a month

ago about AI strategy, which I think you

probably wouldn't say it, but you kind

of wrote it for him, was exactly right.

Right. So thank you.

David collaborated with an amazing

leader who we all respect and admire so

much Eric.

Yes. Uh, so nevertheless,

saying I wrote it was was way too

strong. I mean, actually, but anyway,

if you didn't if you didn't write it,

then it must have been your twin. But in

any case, um, the you you got you got

the emphasis right, which was that

investment in research, investment in

the kind of stuff that we do is really,

really important.

I don't agree with you on this on this

AGI thing because there's this group

which I call the San Francisco um

narrative because they all live in San

Francisco and their narrative goes

something like this. Um today we're

doing agents uh the agentic revolution

will change businesses which I agree

with. Um that what happens is the

systems will become recursively

self-intelligent

with recursive self-improvement as it's

called. If you have a scale-free problem

and a scale-free problem for example is

programming or math where you can just

keep doing it you get these enormous

fast gains if you buy enough hardware do

enough software so forth and so on that

is still underway.

The collective of that says that in the

next three-ish years they believe that

we will get forms of super intelligence

and the way they define it is basically

a savant a chemist so a physics soant a

mathematician soant I don't agree with

the three years but I do agree that

it'll be maybe six or seven years

but if it's a savant in you know a

particular area is that general

intelligence

it's not general intelligence yet

general internal intelligence is when it

can set its own objective function.

Right?

And there's no evidence of that.

There's no evidence right now of the

ability to set your own objective

function. Um the the the thinking and

I'm writing a paper on this so I've been

studying it is that the the the

technical problem is non-stationerity of

mathematical proofs. And what you're

doing is you're trying to solve against

objective function but the objective

function keeps changing which is how

humans operate. your goal changes every

day. Whereas computers have trouble with

that. As a math problem, we don't have

an algorithm yet for LLMs that can do

that. People are working on it. Um and

the the test will be can you basically

um using the information available in

1902, can you derive the same thing that

Einstein did with special relativity

followed by general relativity? We

cannot do that today. Um and most people

believe that the way this will be solved

is through analogy. So the theory of

great geniuses is that they understand

one area of extremely well and they're

so brilliant the lady or man can then

take their ideas and apply it to a

completely different domain. If we can

solve that problem then I think it's

over. Then we get to AGI and then it's a

whole different world.

I think one of the reasons why it's hard

to replace a human and you know JK and I

debate this is that humans are end to

end. You know we can do the whole job.

You have sort of a complete

understanding. You can pivot very

easily. AI at least as we know it today

is not end to end. It has to be

prompted. You get an answer. That answer

has to be validated. Then you have to

ask a new question because it never

gives you exactly what you want. You

have to apply more context. You have to

go through an iterative loop. Finally,

you get to an answer that has business

value. The way biology puts it is that

AI is not end to end. It's middle to

middle. Humans are end to end. And so,

as a result of that, instead of AI

replacing all of us, AI will be very

synergistic with humans because we can

define the objective function. We do the

prompting and we work with it to iterate

and it does a lot of the work in the

middle. Um, that seems to me like a very

optimistic, less duoristic take on it.

What you just said is exactly what's

going to happen for the next few years

that each of us will have assistance

which on our command and our prompting

will be incredibly helpful to whatever

problem we have you know personal uh you

have people who are using these things

for relationship advice for you know

talking to their kids I mean it's all

crazy stuff um but the fact of the

matter is that's it the to me the real

question is when does it cross over to

having its own valition its own ability

to seek information and solve new

problems s that's a different animal.

But have we seen any evidence of

recursive self-improvement yet?

Um, not yet. I'm I'm I've funded a

number of startups which claim to be

close to it, but of course these are

startups and you never know, which tells

me it's 5 10 years cutting numbers.

What do you think Google's doing on this

front?

Um, well, I'm not at Google anymore. Um,

every issue of Gemini is top of the

leaderboard. So 2.5 just overcame

everybody and I'm sure there's another

one coming. Um Demis is working really

hard on this question about um

scientific discovery. So that's a p that

is a path to getting to AGI.

Eric, um we appreciate the work you're

doing. Uh we appreciate you being here

with us. We appreciate what you've done,

the impact you've had on Silicon Valley,

uh as society. Yeah. No, but it's it's

really been

I am so happy to be part of this. You

created this incredible community and

there's all of these smart people that

spend all their time listening to you.

Very concerning.

Wow. Eric

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very

Thanks, Eric. Appreciate you. Cheers.

All right.