Robotics and Geopolitics: Current Trends

We're in this very interesting moment where it looks like general purpose robotics for many different applications is about to tip over. Like, you know, in the next few years, it's going to tip over and start to really happen. And then there's a software side of the problem, which we're ahead on. But there's a hardware side of the problem where China has a major, major lead. It's the entire supply chain. So this is where it gets very dangerous because there are many parts in these things. And they're all coming from China right now. But we're doing nothing in the U.S. In the very best case, we're going to have a dependency on a friend. And in the worst case. a dependency on an enemy so ben uh robotics so yeah actually why don't we start actually uh if if you're okay with it why don't we actually start with you like what what what's your assessment for kind of what's happening in robotics specifically like advances in ai over over the last five years and advances in software like what what's what's your read on basically what's happening with robotics and then i'll and then i'll fill in Yeah, so I think on the software side, we're in a very interesting place because we now have AI that can really learn, as we've seen, and can learn all kinds of stuff. And if you think about robotics, historically, the applications have been limited because the robots are, I would say, extremely rigid. when they're programmed, like, for example, at General Motors, when they're programmed to make a car, you know, they're very big machines. And, you know, they're gonna, like, put a bolt on something. But like, or, you know, screw a nut on a bolt, or, you know, hammer something in, or what have you. But if that thing is off by like, two millimeters, you know, it could put a hole through a wall, or if there's a person in the way, it could like slam the human. And then they have to be very carefully programmed for each task. Whereas in an AI world, you could imagine just demonstrating to the robot how to do something. And then it would learn it. And it would learn it more flexibly because it would understand, look, I just want the nut on the bolt. I don't care that you're a millimeter over here, a millimeter over there. I just want the nut on the bolt, figure out how to do it. The current models. are a little, you know, kind of, they're not totally generalizable. They're getting very, very good. And you can talk about robot dogs and so forth. But there's a kind of new wave of models coming. There's a few companies. One is World Labs, founded by Fei-Fei Li, the great computer science professor. And another is, you know, XAI, run by Elon. who are both like looking at, okay, how does a real world model, what about a model that doesn't just understand language or images, but understands the actually underlying physics and these kinds of things, which could be like very, very interesting for doing more advanced robotic tasks. And so there's a lot of work on the software side that looks like it will kind of bring us to the age of robotics. And then if you combine that with the fact that, okay, these robots can see and speak English, so they're very easy to instruct and so on. You can imagine all kinds of applications for them. And so we're at a really, I would say, important part on the software side over the next five years where all kinds of things are going to be possible that haven't been today. And then, of course, we've seen this also. It's very, very important geopolitically because the kind of next generation of weapons and, you know, drones and autonomous aircraft, autonomous submarines and so forth are all kinds of some kind of robot. And then, you know, I'm sure we'll have autonomous soldiers and all that kind of thing as well. So the good news, I think, out of everything that you described is like America, specifically the U.S. is like leading on this on the software here, right? So a lot of what we're talking about here, maybe even everything you just talked about is primarily in the U.S. or mostly in the US or you know some a little bit maybe in the UK but mostly here and so you know the US west free world is you know is out ahead on this in the software side which is good which is really important both economically and it's been said kind of strategically militarily the hardware side I'm starting to get worried about and so here's my concern of what's happening on the hardware side and this is a good thing to be worried about by the way Yes. And this gets straight into every basically big issue right now around basically international relations, geopolitics, a fair number of issues actually in the current political landscape around things like industrial policy. So basically, here's my read on what's happening. So if you go back in time, basically what happens is whenever there's basically a complex physical thing to get built, and let's just use the canonical example of this being the automobile. You don't just have a car company. What you have is you have an entire ecosystem of parts. And you could even say there's like actually two kinds of parts. There's actually the parts for building the parts. And so there's like the machines for building the machines, right? So, you know, the machines for like crafting, like all the car parts. And then there's all the car parts themselves. And, you know, everything involved, the sheet metal and the carburetors and the engines and everything else. And, you know, and obviously like... As cars got very complex, as the technological internals of cars got very complex, the supply chain for cars got very complex. And so a car that you buy today has parts in it from, I don't even know, hundreds and hundreds of upstream suppliers of components. If you look at basically how the auto industry works, that's basically how it works, is the cars are basically assembled out of all these parts. There's an ecosystem of basically parts for making cars in Detroit. There's an ecosystem in Germany. There's an ecosystem in Japan. And this is important because it means that it's not just the car company. It means it's like there's like a thousand other companies that are right behind the car company. And basically, if you like have those thousand other companies, you can have a car industry. And if you don't have those thousand other companies, you can't have a car industry. And so this was really key to the development of the American auto industry. Germany built the exact same thing. In fact, Germany kind of famously has this thing. I think I'll get hopefully the pronunciation right. Mittelstadt. which is sort of, they have this like, basically this archipelago of thousands of small, basically mid-size manufacturing companies, by the way, most of them family held, that are basically like world-class at building like all the specific componentry that go, you know, and German cars are like fantastically high quality. And so when you buy a Mercedes or BMW, it's basically made up of parts from all these thousands of mid-size specialist companies. And this is, you know, and by the way, that, you know, in Germany, you know, American car industry is important for America, but in Germany, the car industry is like very important to the economy. um it's like a large it's like the whole economy or not it's a very huge percentage of g it's a huge percentage and and uh you know vw is you know is like the you know percent i don't know for exactly the number but like a very large percentage of people in germany either work for you know work for the car car industry or work or have family members who do um or the supply chain yeah or the supply chain behind it um um and then and then japan you know japan as japan came up in cars in the 60s and 70s and 80s they they did they did a similar thing and so um And by the way, I should also say the presumption is in a world of like, you know, completely free trade, right? You could have the parts, you know, suppliers anywhere, because you could just buy parts from, you know, from anywhere, you know, that assumes number one, that you have a world of like completely liquid free trade, which is, you know, always difficult under any, by the way, under any modern government of any kind. You know, we were far from free trade, and basically every presidential regime in our lifetimes. And then, by the way, it also assumes that there's no geopolitical conflict, right? Because if you get into a war with somebody, you're going to stop selling parts to them. And so this gets into the issue, sort of economic nationalism issues, which is like, okay, if you have a car company in country X, and if they can't get access to foreign parts, can they build the car? Oh, and this is actually really important. So built objects like cars, you cannot make a car if you do not have 100% of the parts. yeah right and so right and so if there's a thousand parts that go into a car and you have 999 of them you can't make a car right you are done right you are done and and what happens to the car companies for example is when they can't make cars they start burning cash like crazy oh yeah they're on it because yeah they're because of all their fixed costs and so they are and they can't make cars and so they are on a fuse to bankruptcy like in a hurry And so, and this goes to this idea of supply chain fragility, which is like, if you can't get parts, like this is a problem. And by the way, we saw this during COVID because there were supply chain disruptions and the American automakers actually had to stop making cars for a while. And things actually got quite dicey because they couldn't get all the parts. And things like that. Yeah. Yeah. And that, you know, that was a pandemic, not a war. Right. You know, so imagine what would happen in a war. It's a lot of leverage. A lot of leverage. Okay. So, okay. So that's like the historical basis for all this. And then basically, if you look at what's happened specifically, I'm going to hone in on three areas of sort of advanced technology, physical built objects that I'm very focused on. The first one is drones. And so basically what happened is, you know, a lot of drone technology was invented in the United States. Basically what happened was China, you know, picked it up, developed some of their own and then created this national champion company called DJI. that is by far the largest drone company. And one of the interesting things about that is the DJI basically itself and then in its sort of situated location in China, it's not just a drone. It's the entire supply chain of parts they're going to make in drones. And China has had this phenomenon they've been building up for the last, I don't know, 30 years or something, which is called the Shenzhen region, which is where they've got basically their equivalent of that German middle shop thing. They've built up this big ecosystem of basically parts makers. for all these kinds, you know, for all these things, but you know, they make a lot of parts for phones and other things, but they make a lot of, a lot of parts for drones. Um, And then, you know, here in the U.S., we had, you know, we had, you know, the FAA basically, you know, make American drones, you know, essentially illegal, you know, by, you know, requiring what was it requiring pilot licenses for to operate drones. And then, you know, and then I should also say, I'll come back to this. But in the U.S., like it is nearly illegal to create a new manufacturing company in the U.S. for a wide variety of reasons. And by the way, if you try, you come under incredible levels of attacks, which we can also talk about. Yeah, well, I mean, you know, Elon Musk is. been going through that getting sued you know multiple times by the department of justice by the state of california um et cetera et cetera et cetera yeah yeah so elon committed the enormous sin of creating a new american manufacturing dynamo of a company yeah that's the worst thing you can do of tesla he employs you know many many many i don't know 100 at this point i don't tell you what it was tens now brought hundreds of thousands of manufacturing workers in the u.s um and by the way the the best paid manufacturing workers in the world because they have yeah Tesla and SpaceX stock and so forth. Stock. And yeah, a fair number of like manufacturer workers at Tesla are millionaires now as a consequence of the stock. And, you know, there's a certain class of politician that just absolutely hates him for doing this. And the state of California. Elizabeth Warren. Yes. And our own, a lot of our own California politicians. Yeah. And so, and he actually basically got chased out of California by these politicians. He's been repeatedly sued. He's been, you know, basically complete, you know, just like, it's just, I could go on for hours on this, but. It's just say this is not easy, right? It is not easy for somebody to do to just like build it. Like, like, every time you see a politician talk in public, they talk about how they want to create middle class jobs and working class jobs. And yeah, you know, good and good manufacturing jobs. And then you know, when it happens, you just come under this withering assault. And then the other problem in the US is, you know, you can't build, you generally can't build factories anyway, because you can't get through environmental review. And, you know, you can't, you know, you just like you're not allowed to and then you know, the government has these programs like the CHIPS Act that are supposed to encourage like they're building a chip factories in the US and then they don't get built because they attach every other political hobby horse issue to them. And so it's just like this, you know, we have this kind of just generalized nightmare scenario in the US in terms of building manufacturing. But China doesn't. China has like, you know, this Chinese government, this is something the Chinese government wants to happen. So They have fostered this DJI DJI is the world beating drone company today. They're I don't know 90% or something of drones. There are excellent American drone companies, including some of our companies that we would certainly argue have better technology. And you know, we have high hopes for and you know, they're doing are doing well. But like DJI is this like has become this global monster. And again, it's DJI and there's the entire supply chain of parts that go into it in China. Consequence of that is DJI is the most widely used drone today by many, many large American customers, including the United States Department of Defense. Right. The DOD's primary drone supplier is DJI. They never, by the way, that's not by design. They didn't decide they wanted that. It's just it's the easy drone to buy. So if you're a squad leader of a soldier on the battlefield and needed a drone to look over the next hill, this is the drone you buy and you put your backpack. And so as a consequence, there's, you know. I don't know what the number is, but at this point it has to be hundreds of thousands or millions of Chinese drones being used by the American military, which is just like such a catastrophically bad idea. It's hard to even wrap your head around it, right? Because every single one of those drones is a potential surveillance platform by the Chinese Communist Party and a potential weapon, right, to be subverted and used in, you know, if there's ever a war, you know, if we go to war with China over Taiwan or something crazy like that, like these drones could all become weapons that are used against our own soldiers. Oh, yeah. Well, and then, you know, they're getting to play in a lot of public safety applications in the U.S. with, you know, police forces and so forth. I mean, we, of course, support a better drone from a company called Skydio. But many, many people are buying the DJI drones for public safety. And you could imagine that could quickly be turned on us. Yeah. So, you know, these drones basically could, I mean, these drones at scale could disable a city, right? They could, you know, if they go rogue, if they get, you know, if the CCP were to weaponize them, you know, they could drive everybody indoors. Just from an intelligence standpoint, you know, you got drones flying all over the place, you know, filming and sending that signal back to the Chinese government in a war scenario would be quite dangerous. Quite dangerous. And so, you know, this is generally a nightmare scenario. Yeah. So this is like a nightmare scenario. This is a nightmare scenario. on multiple fronts um and then it's look it's a nightmare scenario you know economically because it's just like all right like you know if we can't have a uh an equal you know the thousands of like manufacturing companies building the parts here and if we can't have the scale thing and you know if we can't even like have it you know drone drones american drone companies be able to legally fly drones in the us uh because of the faa then um you know then it's just we're just by default you know handing victory to china with all the consequences that are downstream of that So that was sort of step one. I mean, that's the one where, you know, China's done a lot of things over the last 30, 40 years. But this is the one where I'm just like, all right, this is a real problem. And, you know, we can't let this happen again. And then, of course, it's about to happen again. And so the second category is happening in its cars. And basically, China is following the exact same trajectory that Germany, Japan and Korea did before it, which is, you know, there have been domestic Chinese car companies for a long time now. But, you know, generally they've been building cars that are substandard in quality from an American perspective or Western European perspective, generally not actually allowed, you know, because of safety issues to be sold into like the American market. And by the way, that's how the Japanese started. That's how the Koreans started. And, you know, what happened was the Japanese and Koreans climbed the curve. They got good at it and they started building really good cars and they started having really good car companies. And, you know, I was I was a kid in the Midwest in the 70s and 80s when the Japanese really invaded. And the three of those. tremendous anguish on the part of the American government, the American population, the media about the collapse of the American auto industry and the rise of the Japanese car makers. I think in the town I grew up in, I think if you had driven a Japanese car, I think it would have been a firebombed. There was a very high level of animosity, well, because we're adjacent to Michigan. And this was a huge and very potent political issue. It wasn't that way in California, but it definitely was that way in Wisconsin. Well, in California, of course, if you grew up where Ben grew up in Berkeley, you hate America. So, of course, you love Japanese cars. Fair. If you grew up in Wisconsin, you love America. Actually, in a way, it was the opposite in Berkeley. It was, now that I think about it, one, American cars were rare, and then you were definitely frowned upon for driving one. Yeah, exactly. See? Of course. So anyway, but, but like, look, you know, it worked and the brutal truth, the brutal truth of it was, um, and there's, there's a, there's a great book. Actually, David Halberstam wrote a great book called the reckoning where he, he actually told the story. It's a really good book. Um, the, the, the brutal truth of it was the Japanese cars got better. Yeah. Like they, they just, they just got better. By the way, the Korean cars got really, really good. They're, you know, they're really good today. Hyundai and Kia and so forth are like really good cars now. Um, you know, fully modern state of the art, like every bit as good as anything else. Um, and, um, and obviously the German cars got, you know, to be incredibly good. And so, you know, they got really good. And so, you know, and at some point there's consumer choice and, you know, people want to buy the car they want to buy. And, you know, from a consumer welfare standpoint, if there's a better car available and, you know, maybe with better technology at a cheaper price, you know, your Americans are better off buying that. So it's hard to maintain, you know, it's hard to just like blockade these things. You know, you do kind of want the market to work, you know, but the American car companies got like completely, I mean, they had a whole bunch of issues and this is a whole nother topic. But, you know, they ended up with a whole bunch of issues. part of it was they were an oligopoly so there there was no you know innovation they had a captive market for too long part of it was technological change happened that they didn't stay in front of um part of it was regulations change there are a whole bunch of reasons why the american car companies caved in in the 70s and 80s they had to get bailed out the first time um um um but um uh you know it was it was it was a it was a giant problem then um and you know this continues to be a big source of political tension um but like it happened and so basically what's happening is trying to following that path. But China's doing it basically down. What China's doing with the Chinese cars is they're doing it downstream of the cell phone supply chain and of the drone supply chain. And so what China has now is not just really good car companies, but they've got this entire constellation of supply chain componentry, these thousands of other companies right behind them and in the same ecosystem. And you can see this if you do the easiest thing here is just go on YouTube and look for video reviews of the new Xiaomi car. So Xiaomi is one of the big Chinese makers of smartphones. They now have a car. And it's like sort of the equivalent of a Porsche Cayenne SUV, but it's like $20,000 and it's really good. And it's just crystal clear in the reviews. You just read the reviews and watch the reviews. It's crystal clear how good the thing is. Right. And so when you go to other countries, like everybody is driving me like in Mexico, you know, it's just been all around the world in Mexico and the Middle East and so forth. They love these Chinese cars. They like them better than their Porsche Cayenne. So you and I, actually, that's exactly right. In fact, you and I just met with a guy who's one of the most successful guys in Dubai. Yes. And what did he tell us? Yeah, no, he loves his Chinese cars. He loves cars, but that's the one he drives, yeah. So he told us, he told Ben and me. This guy, by the way, is extremely rich. Extremely rich. He can get however many cars he wants. Yes, 100%. When this guy meets with you, the buildings that he, the towers that he has built are in the backdrop of the, like out the window. Like this is one of those guys. Yeah. A wonderful person as well. A very wonderful person. And he told us he literally has replaced his entire personal fleet of cars has been replaced by Chinese cars. Not because they're cheaper, but because they're better. Yeah. And, you know, Ben and I, you know, our eyes snapped open so big at that comment, you know, the size of dinner plates. And by the way, these cars are like the Chinese cars are super technologically sophisticated. And so like, for example, they've got this feature where you just come in and you just drop your phone down on the on the basically in the on the center divider. And basically the car lights up and basically the whole system inside the car becomes, you know, comes off your phone. Right. So like all your music and your maps and your calendar and like all that stuff is just like automatically there. And then there's the new version of the car. They have a thing where it actually gets excited when it sees you and it does all of these customized dancing animations with its LED headlights to show how excited it is. But it's like that for everything in the car. It's just tremendously sophisticated, fully computerized, electric, self-driving, all these things. Right? And so again, it's this thing where there's this whole supply chain behind it. And so both the US and the Europeans already are slapping big import duties on these cars to try to prevent them from coming in. And who knows, that may block them for a bit, but the truth is they're really good. And the truth is Americans ought to be able to buy a car that costs $20,000 and is that good. And of course, it'd be great if they could buy it from an American company, but if they can't, they should be able to buy it from a Chinese company. So history shows those kinds of barriers don't last forever. If we don't want to just lose the auto industry, at some point we have to do this in the U.S. By the way, the guy who has the highest odds of fighting off the Chinese in the U.S. auto market is, of course, Elon. He's being tortured to death by his own government. By his own government. So that is yet another in a long, long, long list of just kind of crazy ironies happening right now. Okay, but this takes us to number three, which is robotics. And this is sort of the thing that I'm really starting to get worried about. You know, everybody has probably seen at this point, you've seen videos of, you know, advanced, you know, kind of personal robotics. And so the classic video that goes around is the, this company, Boston Dynamics, that has been working on, you know, these sort of smart, you know, personal robots for, you know, I don't know, 30 years or something. And they're kind of most famous for the robot dog. And so you've seen all these videos of the robot dog that does backflips and climb stairs and does all this stuff. And then, you know, there's all these humanoid robots. And by the way, you know, Elon just demonstrated the Optimus humanoid robot at his thing. And there's other, you know, there's a bunch of startups doing humanoid robots in the US. you know, that looked very promising. But there, you know, there's also the human robots coming. And so, okay, but like, these have been like things that you can like see videos of or see demos of, but these have not been like products that you would buy. They haven't been products that you would buy for two reasons. One is the software wasn't ready yet, which is what Ben just talked about, which we think is about to change. So we like, we think this may be the turning point for that. But the other is they've just been too expensive. And it's just the classic thing, which is the Boston Dynamics robot dog. They're not yet manufactured. manufacturing them at scale. They don't have a whole supply chain behind them. And so as a consequence, I don't even know if they have a list price because that company doesn't really ship product in the way that it would be like 50 grand. Yeah, I think it's on the order of $50,000. Like I don't think you can buy an American robot dog for less than $50,000. My nine year old's favorite toy slash companion right now is a $1,500 robot dog from China from a company called Unitree. So $50,000 to $1,500. And it basically is the Boston Dynamics robot dog. It is, by the way, it is so clearly like the Boston Dynamics robot dog that really puts your eyebrows up wondering where do they get the tech. But it is equivalent to the Boston Dynamics robot dog. Again, you can go on YouTube and see videos of this thing. And then I now own one. And I can tell you like this thing, the videos are real. So it does what's in the video. The thing is real. You can buy it online. They'll ship it to you. And you charge it up, and it has a phone app, and you're off to the races. But this thing is an autonomous, self-guiding robot dog. It has a full sensor suite, including LiDAR, which is the light-based radar, which historically has been the expensive component that's kept the price of things like this out of reach. But it has full 360-degree LiDAR, which is amazing. And by the way, you can see it in the app. You can actually see a full 360. You can see it does have 360 video and it has 360 full depth sensing. And so, you know, like, for example, the Waymo self-driving cars, like it really knows what's going on in its environment. It can run. It can climb stairs. It can do flips. It can dance. It's hooked up to an LLM. It can talk. It can teach you quantum physics. It will follow you. It will run autonomous. um they have a version by the way that's on wheels um that will go like 30 miles an hour that's fast um and and by the way it's very it's very compelling it it can it on on on flat ground it goes on the wheels and then but if it needs to like climb stairs it just locks the wheels and then it's back to being able to climb stairs and being able to walk on uneven surfaces and so like it's completely it's completely flexible and then that company is also building the humanoids um and the the price point in those i think it's on the order of twenty thousand dollars and up um But, you know, we'll see, we'll see where the, and, you know, and these are, by the way, these are like five feet, you know, these are like sizable, you know, kind of sizable things. And you can see the videos, they, they, and they're making like incredible advances in the, in the, you know, in the technology very quickly. So this is starting to happen. And again, the concern here is it's not just that there's one robot company or even that there's going to be a dozen robot companies like this in China. It's that there's this entire ecosystem, this entire supply chain behind that. And in the U.S., and we'll see what Elon's able to do, and we'll see what these other startups are able to do, but that kind of supply chain ecosystem for this kind of product just doesn't exist in the U.S. Or in Europe, by the way. Yeah, right. Or in Europe, right. Yeah, the Germans are in no way adapting, or at least not yet, have not adapted to this, and then there's no place else. yeah, that would have anything remotely similar to this. And so we're in this, Ben, going back to where we started, we're in this very interesting moment where it looks like general purpose robotics for many different applications is about to tip over. Like, you know, in the next few years, it's going to tip over and start to really happen. And then there's a software side of the problem, which we're ahead on, but there's a hardware side of the problem where China has a major, major lead. Well, and when you say hardware, It's the entire supply chain. So this is where it gets very dangerous because there are many parts in these things. And they're all coming from China right now. Yeah, that's right. And we're hoping like Japan will heat up and start to make some robot stuff. You know, they have a good history with robots. But we're doing nothing in the U.S. So in the very best case, we're going to have a dependency on a friend. And in the worst case. a dependency on an enemy. Yeah, that's right. That's exactly right. And so, yeah, this goes right back to, okay, why can't this happen in the US? And there's a combination of issues here. And by the way, look, there's a cost issue, at least historically, a lot of the reasons why the sort of factories for building all these kinds of parts went to China was because of the cost. But that's not the only reason. It's also because, as we discussed, it's actually quite brutally difficult to build these kinds of companies actually in the US and actually make things. And so there's like a real... Yeah. And then you mentioned this earlier, but yeah, look, I mean, this is all, you know, there are, you know, a lot of this, you know, the robot dog is just fun to play with. But like there are obvious law enforcement applications for this technology. There's obvious military applications. Yep. And so, you know, this is going to be a, you know, this kind of thing is going to be a strategic linchpin. Because it's the same supply chain that you used to do the robot dog for the nine-year-old. It's that same supply chain that would go into making the robot soldier. Yep. Right. Or by the way, the weaponized, you know, military drone. or the defensive drone, right? And so, you know, or the robot guard, right? Or, you know, so, yeah. So this is a big thing. And, you know, this, I guess I would say like, you know, I think people in Washington, we talked to are, you know, kind of, you know, learning about this, starting to wrap their head around it. It, you know, this directly cross cuts into, you know, a whole bunch of major policy issues. So one is just environmental, you know, in the US, like, can you build things or do you get blocked with environmental approvals? By the way, another this goes into is energy and cost of energy, because energy is a key input to doing all this. Actually this is important. Germany is currently de-industrializing. They're actually going backwards. They're actually shutting factories down. And the reason they're shutting factories down is because energy is too expensive. Well, they shut down all their nuclear power. They shut down their nuclear power and then they got dependent on Russian energy. And now they're hung up. And so the manufacturing plants in Germany are actually being shut down. It's even worse than not being built. They're being shut down. And so, you know, how expensive do we want energy to be? So it gets into that policy. By the way, this also gets into labor policy. One of the reasons Elon comes under so much fire for his manufacturing businesses is he refuses to have them be unionized. That means large sectors of the political system, you know, hate him for that and want to put just endless pressure on him that like the most important thing in the world is to get them to be unionized. You know, do all these new factories also need to be unionized? Then there's the question like with the CHIPS Act of government money, which is the government. Unionization is very tricky in the modern world because of what you referred to earlier, which is, you know, kind of cost of labor, which the way around that for America is highly automated factories, which are almost impossible to build if you have union labor. And so you get into this very tricky global competitiveness issue if you're forced down that road, which is, you know, most of the kind of issues that he's run into. been based on the fact that he is a modern manufacturing facility that's highly automated. And that's why California in particular has basically kicked him out of the state. Yep, that's right. And there's actually a recent thing in the news that's a case study of this. So the Longshoremen strike that just happened in the US for the people who work on docks, which is a very difficult job. And those people are great people. But their leadership put them on strike recently, renegotiate their terms of their employment. If you go to, to Ben's point, if you go to a Chinese, modern Chinese dock or like a Chinese built dock in Africa or basically any place new, what you see is like fully automated docks. And you see, you know, docks where, you know, containers are loaded, unloaded, you know, very quickly, very cheaply. It's therefore, you know, very easy to import and export things. It's very easy to like bring in parts from other places. It's very easy to send, you know, goods out for export. You go to American docs and it's just like much more manually labor intensive and therefore slower. And by the way, dangerous because, you know, it's a very dangerous jobs. And by the way, not just dangerous in terms of death, but like injury is incredibly dangerous. Yeah, exactly. And so one of the things that was so striking about the striking about the strike, one of the things that was so amazing about the dock worker strike is not only did they want to raise, which fair enough, but they wanted to basically bans on additional automation. So they wanted to basically lock in the current employment model forever. And at first, my first reaction to that was, you know, wow, you know that, okay, that sounds, you know, that sounds, you know, that sounds like kind of what you'd expect in this case. And then it actually turned out after the strike, what I learned was actually. It's actually really interesting. 25,000 dock workers work on the docks in the union, but 50,000 dock workers went on strike. Yeah, yeah, yeah. Yes, yes. Because it turns out that in prior bargaining agreements, in prior time periods, there had been a similar dynamic where they had basically demanded that there would not be automation. And so the automation that has been put into docks over the last 30 years, there's basically been deals where the jobs don't go away. And so for every dock worker in the US who actually works on the dock, there's actually somebody sitting, there's a dock worker sitting at home doing nothing, still getting paid. Right. And so, and so, and this is a classic, this is a classic, classic economics thing of concentrated benefits diffuse harms, right? Which is if you're one of the 25,000 dock workers with a fake job sitting home playing, you know, playing video games, you know, that's great. if you're any downstream producer consumer in the US economy that needs to move around, you know, goods, that's terrible, because it's deadweight loss, but the benefits are very concentrated, the harms are diffuse, right, and individually small. And so this is this is exactly the kind of thing that our system has trouble dealing with, which, which, by the way, is why you get just these like completely inexplicable, apparently inexplicable politics, like hating, hating Elon, who's the guy literally who's going to save the American auto industry. hating him for not being unionized or another bananas example of this kind of problem is there are high tariffs on importation of chinese solar panels um right which is like we we want solar energy in the u.s we want like a clean environment like we want to stop using fossil fuels and yet we like basically tariff you know the the f out of uh import if and by the way this is like you know this is not these are politicians who normally would tell you that they're trying to save the climate um and they put On every other day of the week, yeah. On every other day of the week, but they still tear it up. Because it sounds like there are a lot of U.S. solar panel companies, other than, I guess, Elon's. Yeah, well, that's the other thing. That's the other business that he's in, which they also hate him for. So anyway, you can sense the theme. So anyway, like... These are this is like every issue and then you've got basically in the political kind of debate back and forth You know you have this kind of amazing political dynamic in the US where historically the left the Democrats are the party of labor And so they're the party that basically does trade barriers to protect labor there You know their pro-union and so forth and trying to support American manufacturing and then you know At least historically the American right was kind of the pro free trade party that didn't want any of that The the politics in that are like gone completely upside down now because Trump, you know, basically reoriented the Republican Party to be much more focused on these topics and to be much more pro-American labor, much more protectionist, much more pro-tariff, put up trade barriers for strategic reasons, including protecting American industries. And then the Trump campaign is now making an explicit appeal to union voters, which for the first and they had the head of the UAW, I think, speak at the RNC convention, which was like a completely unrealistic thing. The UAW or the team? I'm so stressed. I can't I think it was the Teamsters. I think you're right. It was the Teamsters. But and then I think it was one of the other big unions refused to endorse a candidate this time, which again, again, like these these unions have been like hardcore Democrat for like 50 years. And so, you know, so anyway, so the geopolitics of this are changing. And then there's this, you know, kind of question around, you know, kind of, you know, well, it's actually funny. It's like the right basically calls it economic nationalism. And so you want basically American you want products basically that are bought in America to be built in America because you're trying to basically support American domestic manufacturing. um and then um the um the uh the um oh and then the democrat version of that is so-called industrial policy um right which is like what they're doing with the chips act where they want to deploy government money to be able to basically have the government be more involved in having domestic manufacturing and be able to you know basically you know determine its policies um and so like this issue is kind of right at the heart of a lot of our current political debates um but you know these political debates are happening while the robot market is i think about to run away And so, like, if these issues stay as snarled as they are right now, like, I think there's a really big, really big strategic economic national security question in front of us in robotics. Yep. It's actually, so I think it's, you know, if you think about what we're concerned about in terms of our AI policy, which is really at the federal level, almost 100% kind of competitiveness with China, we're probably... focus on entirely the wrong issue because the real issue competitively, particularly geopolitically, particularly militarily, is going to be robotics and embodied AI and the kind of software part and so forth. is a, you know, it's a, it's nothing. It's a, it's a gnat compared to the robotic supply chain issue. And so we're entirely focused on regulating the wrong thing and encouraging the wrong thing. Yeah. And we're discouraging the thing that we're good at and we're not encouraging the thing that we need to be good at. Yes. Correct. In fact, I suggest we end it right there. Yes. All right. On that happy note. Yes. The good news is we are working on this with both parties as hard as we can. Yes, we are. And we will continue to do that. Thank you again for all the questions. We will have more episodes coming up where we answer more of the questions. But thanks, everybody, for being with us.

So this is where it gets very dangerous because there are many parts in these things. And they're all coming from China right now. But we're doing nothing in the U.S.

In the very best case, we're going to have a dependency on a friend. And in the worst case. a dependency on an enemy so ben uh robotics so yeah actually why don't we start actually uh if if you're okay with it why don't we actually start with you like what what what's your assessment for kind of what's happening in robotics specifically like advances in ai over over the last five years and advances in software like what what's what's your read on basically what's happening with robotics and then i'll and then i'll fill in Yeah, so I think on the software side, we're in a very interesting place because we now have AI that can really learn, as we've seen, and can learn all kinds of stuff. And if you think about robotics, historically, the applications have been limited because the robots are, I would say, extremely rigid. when they're programmed, like, for example, at General Motors, when they're programmed to make a car, you know, they're very big machines.

And, you know, they're gonna, like, put a bolt on something. But like, or, you know, screw a nut on a bolt, or, you know, hammer something in, or what have you. But if that thing is off by like, two millimeters, you know, it could put a hole through a wall, or if there's a person in the way, it could like slam the human.

And then they have to be very carefully programmed for each task. Whereas in an AI world, you could imagine just demonstrating to the robot how to do something. And then it would learn it. And it would learn it more flexibly because it would understand, look, I just want the nut on the bolt.

I don't care that you're a millimeter over here, a millimeter over there. I just want the nut on the bolt, figure out how to do it. The current models. are a little, you know, kind of, they're not totally generalizable. They're getting very, very good.

And you can talk about robot dogs and so forth. But there's a kind of new wave of models coming. There's a few companies.

One is World Labs, founded by Fei-Fei Li, the great computer science professor. And another is, you know, XAI, run by Elon. who are both like looking at, okay, how does a real world model, what about a model that doesn't just understand language or images, but understands the actually underlying physics and these kinds of things, which could be like very, very interesting for doing more advanced robotic tasks. And so there's a lot of work on the software side that looks like it will kind of bring us to the age of robotics. And then if you combine that with the fact that, okay, these robots can see and speak English, so they're very easy to instruct and so on.

You can imagine all kinds of applications for them. And so we're at a really, I would say, important part on the software side over the next five years where all kinds of things are going to be possible that haven't been today. And then, of course, we've seen this also.

It's very, very important geopolitically because the kind of next generation of weapons and, you know, drones and autonomous aircraft, autonomous submarines and so forth are all kinds of some kind of robot. And then, you know, I'm sure we'll have autonomous soldiers and all that kind of thing as well. So the good news, I think, out of everything that you described is like America, specifically the U.S. is like leading on this on the software here, right?

So a lot of what we're talking about here, maybe even everything you just talked about is primarily in the U.S. or mostly in the US or you know some a little bit maybe in the UK but mostly here and so you know the US west free world is you know is out ahead on this in the software side which is good which is really important both economically and it's been said kind of strategically militarily the hardware side I'm starting to get worried about and so here's my concern of what's happening on the hardware side and this is a good thing to be worried about by the way Yes. And this gets straight into every basically big issue right now around basically international relations, geopolitics, a fair number of issues actually in the current political landscape around things like industrial policy. So basically, here's my read on what's happening. So if you go back in time, basically what happens is whenever there's basically a complex physical thing to get built, and let's just use the canonical example of this being the automobile.

You don't just have a car company. What you have is you have an entire ecosystem of parts. And you could even say there's like actually two kinds of parts.

There's actually the parts for building the parts. And so there's like the machines for building the machines, right? So, you know, the machines for like crafting, like all the car parts.

And then there's all the car parts themselves. And, you know, everything involved, the sheet metal and the carburetors and the engines and everything else. And, you know, and obviously like... As cars got very complex, as the technological internals of cars got very complex, the supply chain for cars got very complex.

And so a car that you buy today has parts in it from, I don't even know, hundreds and hundreds of upstream suppliers of components. If you look at basically how the auto industry works, that's basically how it works, is the cars are basically assembled out of all these parts. There's an ecosystem of basically parts for making cars in Detroit.

There's an ecosystem in Germany. There's an ecosystem in Japan. And this is important because it means that it's not just the car company. It means it's like there's like a thousand other companies that are right behind the car company. And basically, if you like have those thousand other companies, you can have a car industry.

And if you don't have those thousand other companies, you can't have a car industry. And so this was really key to the development of the American auto industry. Germany built the exact same thing. In fact, Germany kind of famously has this thing.

I think I'll get hopefully the pronunciation right. Mittelstadt. which is sort of, they have this like, basically this archipelago of thousands of small, basically mid-size manufacturing companies, by the way, most of them family held, that are basically like world-class at building like all the specific componentry that go, you know, and German cars are like fantastically high quality.

And so when you buy a Mercedes or BMW, it's basically made up of parts from all these thousands of mid-size specialist companies. And this is, you know, and by the way, that, you know, in Germany, you know, American car industry is important for America, but in Germany, the car industry is like very important to the economy. um it's like a large it's like the whole economy or not it's a very huge percentage of g it's a huge percentage and and uh you know vw is you know is like the you know percent i don't know for exactly the number but like a very large percentage of people in germany either work for you know work for the car car industry or work or have family members who do um or the supply chain yeah or the supply chain behind it um um and then and then japan you know japan as japan came up in cars in the 60s and 70s and 80s they they did they did a similar thing and so um And by the way, I should also say the presumption is in a world of like, you know, completely free trade, right? You could have the parts, you know, suppliers anywhere, because you could just buy parts from, you know, from anywhere, you know, that assumes number one, that you have a world of like completely liquid free trade, which is, you know, always difficult under any, by the way, under any modern government of any kind. You know, we were far from free trade, and basically every presidential regime in our lifetimes.

And then, by the way, it also assumes that there's no geopolitical conflict, right? Because if you get into a war with somebody, you're going to stop selling parts to them. And so this gets into the issue, sort of economic nationalism issues, which is like, okay, if you have a car company in country X, and if they can't get access to foreign parts, can they build the car? Oh, and this is actually really important.

So built objects like cars, you cannot make a car if you do not have 100% of the parts. yeah right and so right and so if there's a thousand parts that go into a car and you have 999 of them you can't make a car right you are done right you are done and and what happens to the car companies for example is when they can't make cars they start burning cash like crazy oh yeah they're on it because yeah they're because of all their fixed costs and so they are and they can't make cars and so they are on a fuse to bankruptcy like in a hurry And so, and this goes to this idea of supply chain fragility, which is like, if you can't get parts, like this is a problem. And by the way, we saw this during COVID because there were supply chain disruptions and the American automakers actually had to stop making cars for a while.

And things actually got quite dicey because they couldn't get all the parts. And things like that. Yeah. Yeah.

And that, you know, that was a pandemic, not a war. Right. You know, so imagine what would happen in a war. It's a lot of leverage. A lot of leverage.

Okay. So, okay. So that's like the historical basis for all this. And then basically, if you look at what's happened specifically, I'm going to hone in on three areas of sort of advanced technology, physical built objects that I'm very focused on.

The first one is drones. And so basically what happened is, you know, a lot of drone technology was invented in the United States. Basically what happened was China, you know, picked it up, developed some of their own and then created this national champion company called DJI. that is by far the largest drone company.

And one of the interesting things about that is the DJI basically itself and then in its sort of situated location in China, it's not just a drone. It's the entire supply chain of parts they're going to make in drones. And China has had this phenomenon they've been building up for the last, I don't know, 30 years or something, which is called the Shenzhen region, which is where they've got basically their equivalent of that German middle shop thing.

They've built up this big ecosystem of basically parts makers. for all these kinds, you know, for all these things, but you know, they make a lot of parts for phones and other things, but they make a lot of, a lot of parts for drones. Um, And then, you know, here in the U.S., we had, you know, we had, you know, the FAA basically, you know, make American drones, you know, essentially illegal, you know, by, you know, requiring what was it requiring pilot licenses for to operate drones.

And then, you know, and then I should also say, I'll come back to this. But in the U.S., like it is nearly illegal to create a new manufacturing company in the U.S. for a wide variety of reasons. And by the way, if you try, you come under incredible levels of attacks, which we can also talk about. Yeah, well, I mean, you know, Elon Musk is. been going through that getting sued you know multiple times by the department of justice by the state of california um et cetera et cetera et cetera yeah yeah so elon committed the enormous sin of creating a new american manufacturing dynamo of a company yeah that's the worst thing you can do of tesla he employs you know many many many i don't know 100 at this point i don't tell you what it was tens now brought hundreds of thousands of manufacturing workers in the u.s um and by the way the the best paid manufacturing workers in the world because they have yeah Tesla and SpaceX stock and so forth. Stock.

And yeah, a fair number of like manufacturer workers at Tesla are millionaires now as a consequence of the stock. And, you know, there's a certain class of politician that just absolutely hates him for doing this. And the state of California. Elizabeth Warren. Yes.

And our own, a lot of our own California politicians. Yeah. And so, and he actually basically got chased out of California by these politicians.

He's been repeatedly sued. He's been, you know, basically complete, you know, just like, it's just, I could go on for hours on this, but. It's just say this is not easy, right?

It is not easy for somebody to do to just like build it. Like, like, every time you see a politician talk in public, they talk about how they want to create middle class jobs and working class jobs. And yeah, you know, good and good manufacturing jobs.

And then you know, when it happens, you just come under this withering assault. And then the other problem in the US is, you know, you can't build, you generally can't build factories anyway, because you can't get through environmental review. And, you know, you can't, you know, you just like you're not allowed to and then you know, the government has these programs like the CHIPS Act that are supposed to encourage like they're building a chip factories in the US and then they don't get built because they attach every other political hobby horse issue to them. And so it's just like this, you know, we have this kind of just generalized nightmare scenario in the US in terms of building manufacturing.

But China doesn't. China has like, you know, this Chinese government, this is something the Chinese government wants to happen. So They have fostered this DJI DJI is the world beating drone company today.

They're I don't know 90% or something of drones. There are excellent American drone companies, including some of our companies that we would certainly argue have better technology. And you know, we have high hopes for and you know, they're doing are doing well.

But like DJI is this like has become this global monster. And again, it's DJI and there's the entire supply chain of parts that go into it in China. Consequence of that is DJI is the most widely used drone today by many, many large American customers, including the United States Department of Defense.

Right. The DOD's primary drone supplier is DJI. They never, by the way, that's not by design. They didn't decide they wanted that. It's just it's the easy drone to buy.

So if you're a squad leader of a soldier on the battlefield and needed a drone to look over the next hill, this is the drone you buy and you put your backpack. And so as a consequence, there's, you know. I don't know what the number is, but at this point it has to be hundreds of thousands or millions of Chinese drones being used by the American military, which is just like such a catastrophically bad idea.

It's hard to even wrap your head around it, right? Because every single one of those drones is a potential surveillance platform by the Chinese Communist Party and a potential weapon, right, to be subverted and used in, you know, if there's ever a war, you know, if we go to war with China over Taiwan or something crazy like that, like these drones could all become weapons that are used against our own soldiers. Oh, yeah.

Well, and then, you know, they're getting to play in a lot of public safety applications in the U.S. with, you know, police forces and so forth. I mean, we, of course, support a better drone from a company called Skydio. But many, many people are buying the DJI drones for public safety.

And you could imagine that could quickly be turned on us. Yeah. So, you know, these drones basically could, I mean, these drones at scale could disable a city, right? They could, you know, if they go rogue, if they get, you know, if the CCP were to weaponize them, you know, they could drive everybody indoors. Just from an intelligence standpoint, you know, you got drones flying all over the place, you know, filming and sending that signal back to the Chinese government in a war scenario would be quite dangerous.

Quite dangerous. And so, you know, this is generally a nightmare scenario. Yeah. So this is like a nightmare scenario. This is a nightmare scenario.

on multiple fronts um and then it's look it's a nightmare scenario you know economically because it's just like all right like you know if we can't have a uh an equal you know the thousands of like manufacturing companies building the parts here and if we can't have the scale thing and you know if we can't even like have it you know drone drones american drone companies be able to legally fly drones in the us uh because of the faa then um you know then it's just we're just by default you know handing victory to china with all the consequences that are downstream of that So that was sort of step one. I mean, that's the one where, you know, China's done a lot of things over the last 30, 40 years. But this is the one where I'm just like, all right, this is a real problem. And, you know, we can't let this happen again.

And then, of course, it's about to happen again. And so the second category is happening in its cars. And basically, China is following the exact same trajectory that Germany, Japan and Korea did before it, which is, you know, there have been domestic Chinese car companies for a long time now.

But, you know, generally they've been building cars that are substandard in quality from an American perspective or Western European perspective, generally not actually allowed, you know, because of safety issues to be sold into like the American market. And by the way, that's how the Japanese started. That's how the Koreans started. And, you know, what happened was the Japanese and Koreans climbed the curve.

They got good at it and they started building really good cars and they started having really good car companies. And, you know, I was I was a kid in the Midwest in the 70s and 80s when the Japanese really invaded. And the three of those. tremendous anguish on the part of the American government, the American population, the media about the collapse of the American auto industry and the rise of the Japanese car makers.

I think in the town I grew up in, I think if you had driven a Japanese car, I think it would have been a firebombed. There was a very high level of animosity, well, because we're adjacent to Michigan. And this was a huge and very potent political issue. It wasn't that way in California, but it definitely was that way in Wisconsin.

Well, in California, of course, if you grew up where Ben grew up in Berkeley, you hate America. So, of course, you love Japanese cars. Fair.

If you grew up in Wisconsin, you love America. Actually, in a way, it was the opposite in Berkeley. It was, now that I think about it, one, American cars were rare, and then you were definitely frowned upon for driving one. Yeah, exactly. See?

Of course. So anyway, but, but like, look, you know, it worked and the brutal truth, the brutal truth of it was, um, and there's, there's a, there's a great book. Actually, David Halberstam wrote a great book called the reckoning where he, he actually told the story. It's a really good book. Um, the, the, the brutal truth of it was the Japanese cars got better.

Yeah. Like they, they just, they just got better. By the way, the Korean cars got really, really good.

They're, you know, they're really good today. Hyundai and Kia and so forth are like really good cars now. Um, you know, fully modern state of the art, like every bit as good as anything else.

Um, and, um, and obviously the German cars got, you know, to be incredibly good. And so, you know, they got really good. And so, you know, and at some point there's consumer choice and, you know, people want to buy the car they want to buy.

And, you know, from a consumer welfare standpoint, if there's a better car available and, you know, maybe with better technology at a cheaper price, you know, your Americans are better off buying that. So it's hard to maintain, you know, it's hard to just like blockade these things. You know, you do kind of want the market to work, you know, but the American car companies got like completely, I mean, they had a whole bunch of issues and this is a whole nother topic. But, you know, they ended up with a whole bunch of issues. part of it was they were an oligopoly so there there was no you know innovation they had a captive market for too long part of it was technological change happened that they didn't stay in front of um part of it was regulations change there are a whole bunch of reasons why the american car companies caved in in the 70s and 80s they had to get bailed out the first time um um um but um uh you know it was it was it was a it was a giant problem then um and you know this continues to be a big source of political tension um but like it happened and so basically what's happening is trying to following that path.

But China's doing it basically down. What China's doing with the Chinese cars is they're doing it downstream of the cell phone supply chain and of the drone supply chain. And so what China has now is not just really good car companies, but they've got this entire constellation of supply chain componentry, these thousands of other companies right behind them and in the same ecosystem. And you can see this if you do the easiest thing here is just go on YouTube and look for video reviews of the new Xiaomi car. So Xiaomi is one of the big Chinese makers of smartphones.

They now have a car. And it's like sort of the equivalent of a Porsche Cayenne SUV, but it's like $20,000 and it's really good. And it's just crystal clear in the reviews. You just read the reviews and watch the reviews.

It's crystal clear how good the thing is. Right. And so when you go to other countries, like everybody is driving me like in Mexico, you know, it's just been all around the world in Mexico and the Middle East and so forth. They love these Chinese cars.

They like them better than their Porsche Cayenne. So you and I, actually, that's exactly right. In fact, you and I just met with a guy who's one of the most successful guys in Dubai. Yes. And what did he tell us?

Yeah, no, he loves his Chinese cars. He loves cars, but that's the one he drives, yeah. So he told us, he told Ben and me. This guy, by the way, is extremely rich. Extremely rich.

He can get however many cars he wants. Yes, 100%. When this guy meets with you, the buildings that he, the towers that he has built are in the backdrop of the, like out the window.

Like this is one of those guys. Yeah. A wonderful person as well. A very wonderful person. And he told us he literally has replaced his entire personal fleet of cars has been replaced by Chinese cars.

Not because they're cheaper, but because they're better. Yeah. And, you know, Ben and I, you know, our eyes snapped open so big at that comment, you know, the size of dinner plates.

And by the way, these cars are like the Chinese cars are super technologically sophisticated. And so like, for example, they've got this feature where you just come in and you just drop your phone down on the on the basically in the on the center divider. And basically the car lights up and basically the whole system inside the car becomes, you know, comes off your phone.

Right. So like all your music and your maps and your calendar and like all that stuff is just like automatically there. And then there's the new version of the car. They have a thing where it actually gets excited when it sees you and it does all of these customized dancing animations with its LED headlights to show how excited it is.

But it's like that for everything in the car. It's just tremendously sophisticated, fully computerized, electric, self-driving, all these things. Right?

And so again, it's this thing where there's this whole supply chain behind it. And so both the US and the Europeans already are slapping big import duties on these cars to try to prevent them from coming in. And who knows, that may block them for a bit, but the truth is they're really good.

And the truth is Americans ought to be able to buy a car that costs $20,000 and is that good. And of course, it'd be great if they could buy it from an American company, but if they can't, they should be able to buy it from a Chinese company. So history shows those kinds of barriers don't last forever. If we don't want to just lose the auto industry, at some point we have to do this in the U.S.

By the way, the guy who has the highest odds of fighting off the Chinese in the U.S. auto market is, of course, Elon. He's being tortured to death by his own government. By his own government.

So that is yet another in a long, long, long list of just kind of crazy ironies happening right now. Okay, but this takes us to number three, which is robotics. And this is sort of the thing that I'm really starting to get worried about. You know, everybody has probably seen at this point, you've seen videos of, you know, advanced, you know, kind of personal robotics. And so the classic video that goes around is the, this company, Boston Dynamics, that has been working on, you know, these sort of smart, you know, personal robots for, you know, I don't know, 30 years or something.

And they're kind of most famous for the robot dog. And so you've seen all these videos of the robot dog that does backflips and climb stairs and does all this stuff. And then, you know, there's all these humanoid robots.

And by the way, you know, Elon just demonstrated the Optimus humanoid robot at his thing. And there's other, you know, there's a bunch of startups doing humanoid robots in the US. you know, that looked very promising.

But there, you know, there's also the human robots coming. And so, okay, but like, these have been like things that you can like see videos of or see demos of, but these have not been like products that you would buy. They haven't been products that you would buy for two reasons.

One is the software wasn't ready yet, which is what Ben just talked about, which we think is about to change. So we like, we think this may be the turning point for that. But the other is they've just been too expensive. And it's just the classic thing, which is the Boston Dynamics robot dog. They're not yet manufactured.

manufacturing them at scale. They don't have a whole supply chain behind them. And so as a consequence, I don't even know if they have a list price because that company doesn't really ship product in the way that it would be like 50 grand.

Yeah, I think it's on the order of $50,000. Like I don't think you can buy an American robot dog for less than $50,000. My nine year old's favorite toy slash companion right now is a $1,500 robot dog from China from a company called Unitree.

So $50,000 to $1,500. And it basically is the Boston Dynamics robot dog. It is, by the way, it is so clearly like the Boston Dynamics robot dog that really puts your eyebrows up wondering where do they get the tech.

But it is equivalent to the Boston Dynamics robot dog. Again, you can go on YouTube and see videos of this thing. And then I now own one.

And I can tell you like this thing, the videos are real. So it does what's in the video. The thing is real. You can buy it online. They'll ship it to you.

And you charge it up, and it has a phone app, and you're off to the races. But this thing is an autonomous, self-guiding robot dog. It has a full sensor suite, including LiDAR, which is the light-based radar, which historically has been the expensive component that's kept the price of things like this out of reach.

But it has full 360-degree LiDAR, which is amazing. And by the way, you can see it in the app. You can actually see a full 360. You can see it does have 360 video and it has 360 full depth sensing.

And so, you know, like, for example, the Waymo self-driving cars, like it really knows what's going on in its environment. It can run. It can climb stairs.

It can do flips. It can dance. It's hooked up to an LLM. It can talk. It can teach you quantum physics.

It will follow you. It will run autonomous. um they have a version by the way that's on wheels um that will go like 30 miles an hour that's fast um and and by the way it's very it's very compelling it it can it on on on flat ground it goes on the wheels and then but if it needs to like climb stairs it just locks the wheels and then it's back to being able to climb stairs and being able to walk on uneven surfaces and so like it's completely it's completely flexible and then that company is also building the humanoids um and the the price point in those i think it's on the order of twenty thousand dollars and up um But, you know, we'll see, we'll see where the, and, you know, and these are, by the way, these are like five feet, you know, these are like sizable, you know, kind of sizable things.

And you can see the videos, they, they, and they're making like incredible advances in the, in the, you know, in the technology very quickly. So this is starting to happen. And again, the concern here is it's not just that there's one robot company or even that there's going to be a dozen robot companies like this in China. It's that there's this entire ecosystem, this entire supply chain behind that. And in the U.S., and we'll see what Elon's able to do, and we'll see what these other startups are able to do, but that kind of supply chain ecosystem for this kind of product just doesn't exist in the U.S.

Or in Europe, by the way. Yeah, right. Or in Europe, right. Yeah, the Germans are in no way adapting, or at least not yet, have not adapted to this, and then there's no place else. yeah, that would have anything remotely similar to this.

And so we're in this, Ben, going back to where we started, we're in this very interesting moment where it looks like general purpose robotics for many different applications is about to tip over. Like, you know, in the next few years, it's going to tip over and start to really happen. And then there's a software side of the problem, which we're ahead on, but there's a hardware side of the problem where China has a major, major lead.

Well, and when you say hardware, It's the entire supply chain. So this is where it gets very dangerous because there are many parts in these things. And they're all coming from China right now.

Yeah, that's right. And we're hoping like Japan will heat up and start to make some robot stuff. You know, they have a good history with robots.

But we're doing nothing in the U.S. So in the very best case, we're going to have a dependency on a friend. And in the worst case. a dependency on an enemy. Yeah, that's right.

That's exactly right. And so, yeah, this goes right back to, okay, why can't this happen in the US? And there's a combination of issues here. And by the way, look, there's a cost issue, at least historically, a lot of the reasons why the sort of factories for building all these kinds of parts went to China was because of the cost.

But that's not the only reason. It's also because, as we discussed, it's actually quite brutally difficult to build these kinds of companies actually in the US and actually make things. And so there's like a real... Yeah.

And then you mentioned this earlier, but yeah, look, I mean, this is all, you know, there are, you know, a lot of this, you know, the robot dog is just fun to play with. But like there are obvious law enforcement applications for this technology. There's obvious military applications.

Yep. And so, you know, this is going to be a, you know, this kind of thing is going to be a strategic linchpin. Because it's the same supply chain that you used to do the robot dog for the nine-year-old.

It's that same supply chain that would go into making the robot soldier. Yep. Right. Or by the way, the weaponized, you know, military drone.

or the defensive drone, right? And so, you know, or the robot guard, right? Or, you know, so, yeah.

So this is a big thing. And, you know, this, I guess I would say like, you know, I think people in Washington, we talked to are, you know, kind of, you know, learning about this, starting to wrap their head around it. It, you know, this directly cross cuts into, you know, a whole bunch of major policy issues.

So one is just environmental, you know, in the US, like, can you build things or do you get blocked with environmental approvals? By the way, another this goes into is energy and cost of energy, because energy is a key input to doing all this. Actually this is important.

Germany is currently de-industrializing. They're actually going backwards. They're actually shutting factories down. And the reason they're shutting factories down is because energy is too expensive.

Well, they shut down all their nuclear power. They shut down their nuclear power and then they got dependent on Russian energy. And now they're hung up. And so the manufacturing plants in Germany are actually being shut down. It's even worse than not being built.

They're being shut down. And so, you know, how expensive do we want energy to be? So it gets into that policy.

By the way, this also gets into labor policy. One of the reasons Elon comes under so much fire for his manufacturing businesses is he refuses to have them be unionized. That means large sectors of the political system, you know, hate him for that and want to put just endless pressure on him that like the most important thing in the world is to get them to be unionized. You know, do all these new factories also need to be unionized? Then there's the question like with the CHIPS Act of government money, which is the government.

Unionization is very tricky in the modern world because of what you referred to earlier, which is, you know, kind of cost of labor, which the way around that for America is highly automated factories, which are almost impossible to build if you have union labor. And so you get into this very tricky global competitiveness issue if you're forced down that road, which is, you know, most of the kind of issues that he's run into. been based on the fact that he is a modern manufacturing facility that's highly automated. And that's why California in particular has basically kicked him out of the state. Yep, that's right.

And there's actually a recent thing in the news that's a case study of this. So the Longshoremen strike that just happened in the US for the people who work on docks, which is a very difficult job. And those people are great people. But their leadership put them on strike recently, renegotiate their terms of their employment.

If you go to, to Ben's point, if you go to a Chinese, modern Chinese dock or like a Chinese built dock in Africa or basically any place new, what you see is like fully automated docks. And you see, you know, docks where, you know, containers are loaded, unloaded, you know, very quickly, very cheaply. It's therefore, you know, very easy to import and export things.

It's very easy to like bring in parts from other places. It's very easy to send, you know, goods out for export. You go to American docs and it's just like much more manually labor intensive and therefore slower. And by the way, dangerous because, you know, it's a very dangerous jobs. And by the way, not just dangerous in terms of death, but like injury is incredibly dangerous.

Yeah, exactly. And so one of the things that was so striking about the striking about the strike, one of the things that was so amazing about the dock worker strike is not only did they want to raise, which fair enough, but they wanted to basically bans on additional automation. So they wanted to basically lock in the current employment model forever. And at first, my first reaction to that was, you know, wow, you know that, okay, that sounds, you know, that sounds, you know, that sounds like kind of what you'd expect in this case.

And then it actually turned out after the strike, what I learned was actually. It's actually really interesting. 25,000 dock workers work on the docks in the union, but 50,000 dock workers went on strike.

Yeah, yeah, yeah. Yes, yes. Because it turns out that in prior bargaining agreements, in prior time periods, there had been a similar dynamic where they had basically demanded that there would not be automation.

And so the automation that has been put into docks over the last 30 years, there's basically been deals where the jobs don't go away. And so for every dock worker in the US who actually works on the dock, there's actually somebody sitting, there's a dock worker sitting at home doing nothing, still getting paid. Right. And so, and so, and this is a classic, this is a classic, classic economics thing of concentrated benefits diffuse harms, right? Which is if you're one of the 25,000 dock workers with a fake job sitting home playing, you know, playing video games, you know, that's great.

if you're any downstream producer consumer in the US economy that needs to move around, you know, goods, that's terrible, because it's deadweight loss, but the benefits are very concentrated, the harms are diffuse, right, and individually small. And so this is this is exactly the kind of thing that our system has trouble dealing with, which, which, by the way, is why you get just these like completely inexplicable, apparently inexplicable politics, like hating, hating Elon, who's the guy literally who's going to save the American auto industry. hating him for not being unionized or another bananas example of this kind of problem is there are high tariffs on importation of chinese solar panels um right which is like we we want solar energy in the u.s we want like a clean environment like we want to stop using fossil fuels and yet we like basically tariff you know the the f out of uh import if and by the way this is like you know this is not these are politicians who normally would tell you that they're trying to save the climate um and they put On every other day of the week, yeah.

On every other day of the week, but they still tear it up. Because it sounds like there are a lot of U.S. solar panel companies, other than, I guess, Elon's. Yeah, well, that's the other thing.

That's the other business that he's in, which they also hate him for. So anyway, you can sense the theme. So anyway, like... These are this is like every issue and then you've got basically in the political kind of debate back and forth You know you have this kind of amazing political dynamic in the US where historically the left the Democrats are the party of labor And so they're the party that basically does trade barriers to protect labor there You know their pro-union and so forth and trying to support American manufacturing and then you know At least historically the American right was kind of the pro free trade party that didn't want any of that The the politics in that are like gone completely upside down now because Trump, you know, basically reoriented the Republican Party to be much more focused on these topics and to be much more pro-American labor, much more protectionist, much more pro-tariff, put up trade barriers for strategic reasons, including protecting American industries. And then the Trump campaign is now making an explicit appeal to union voters, which for the first and they had the head of the UAW, I think, speak at the RNC convention, which was like a completely unrealistic thing.

The UAW or the team? I'm so stressed. I can't I think it was the Teamsters. I think you're right. It was the Teamsters.

But and then I think it was one of the other big unions refused to endorse a candidate this time, which again, again, like these these unions have been like hardcore Democrat for like 50 years. And so, you know, so anyway, so the geopolitics of this are changing. And then there's this, you know, kind of question around, you know, kind of, you know, well, it's actually funny.

It's like the right basically calls it economic nationalism. And so you want basically American you want products basically that are bought in America to be built in America because you're trying to basically support American domestic manufacturing. um and then um the um the uh the um oh and then the democrat version of that is so-called industrial policy um right which is like what they're doing with the chips act where they want to deploy government money to be able to basically have the government be more involved in having domestic manufacturing and be able to you know basically you know determine its policies um and so like this issue is kind of right at the heart of a lot of our current political debates um but you know these political debates are happening while the robot market is i think about to run away And so, like, if these issues stay as snarled as they are right now, like, I think there's a really big, really big strategic economic national security question in front of us in robotics.

Yep. It's actually, so I think it's, you know, if you think about what we're concerned about in terms of our AI policy, which is really at the federal level, almost 100% kind of competitiveness with China, we're probably... focus on entirely the wrong issue because the real issue competitively, particularly geopolitically, particularly militarily, is going to be robotics and embodied AI and the kind of software part and so forth. is a, you know, it's a, it's nothing.

It's a, it's a gnat compared to the robotic supply chain issue. And so we're entirely focused on regulating the wrong thing and encouraging the wrong thing. Yeah. And we're discouraging the thing that we're good at and we're not encouraging the thing that we need to be good at. Yes.

Correct. In fact, I suggest we end it right there. Yes.

All right. On that happy note. Yes. The good news is we are working on this with both parties as hard as we can.

Yes, we are. And we will continue to do that. Thank you again for all the questions.

We will have more episodes coming up where we answer more of the questions. But thanks, everybody, for being with us.

Transcript for:Robotics and Geopolitics: Current Trends

Transcript for:
Robotics and Geopolitics: Current Trends