WEBVTT

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And I'm sorry to upset people in Texas.

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Um it sure looks to me like um China is

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going to dominate the low-end robotic

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space. They're driving
the cost of humanoid and

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nonhumanoid robots down to thousands of

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dollars from 10 $20,000.

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Their hardware, which is derived
from their electronic vehicle work, is

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extraordinary. We in America don't
have access to the Chinese EV cars, but

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they're phenomenally good at it,
and they're getting better and better, and

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they're doing it the Chinese way, which
means it scales. So, ex Google CEO Dr.

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Eric Schmidt just gave another
controversial take about the AI and

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automation race between the US and China.
It's so profound that this will

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define the future of warfare with AI
advancements, and the Ukraine war is a

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perfect example. Let's unwrap the big
picture with Eric before we dissect

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deeper into how AI
is already changing real wars.

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>> I think the Ukraine war is a very good

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test bed to try to understand how AI

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will change war. And I'm not trying to

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minimize the horrific nature of the war.

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I've been in it. I've been on the front
lines. Uh real wars are much worse than

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you all think they are if you've not

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been in them. It's really horrific.

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Um I think that there's a couple of

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principles that I would offer. The first

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is that there's no place to hide. Um

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that modern sensors see everything. So,

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for example, um if you're on the front,

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uh which is a horrible place to be, you

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can only come in and out of your

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foxholes at dawn and dusk every 12 hours

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because those are the only times when

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you can move without being detected by

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the uh daytime cameras or the infrared

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nighttime cameras. And the infrared

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cameras are getting so good now that the

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visibility at night is very similar to

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what you need for the day. I mean, it's
astounding. Um, so if there's no place

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to hide, then why are you building
aircraft carriers? The US Army just

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announced a brand new huge tank, uh,

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which is a sitting duck for the next
generation of drones. And by the time

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the tank is deployed, the drones will
be incredibly powerful. You have the same

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principle with aircraft carriers and so
forth. Um, it's my own view is that the

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fastest learner wins. What's happening
on Ukraine's side is that they're

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outnumbered three or four to one and

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Ukraine is moving very very quickly
to innovate ahead of the Russians. The

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Russians are good, but the Ukrainians
are better and that's why the fight is

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kind of balanced right now. It's it's
not a stalemate. It's a tough fight, but

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Russia has not been able to achieve her

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objectives. Uh, which in my view is very

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good. Um, you know, if you go back to

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all of this hardware, when you go to
the actual front, there's nothing on it.

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They don't have tanks or armored
personnel carriers. All those things

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that are sitting in warehouses, you
can't use them. They're too dangerous to

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be in. And I think what's going to

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happen is that the autonomy aspects will

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make automatic killing machines in war

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much more likely. And I'm not talking
about the robots that you see in movies.

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I'm talking about the equivalent of drones
whether they're sea drones or air

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drones that are highly automated
with highly automated kill chains. And I

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think the final observation, sorry to go
on, is that this is integrated in an AI

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software framework using reinforcement
learning and that integrated software

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framework with reinforcement learning

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means that you can have optimal battle
plans. My observation of military having

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spent lots of time with them is they
have thousands of people who consider

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themselves planners. Why do we need
planners when we can have the computer

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do a better plan than humans can? The
planners can obviously oversee what the

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computer's doing, but computers are
going to be better at planning and

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vision and frankly killing. Just so
you know, reinforcement learning AI is

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terrifyingly powerful in war. Basically,
it works as simply as this diagram. But

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the scary part is it doesn't just follow
human rules. It learns by simulating

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millions of battles, discovers
strategies no human planner would ever

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think of, and then executes them at
machine speed. And here's a real example

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from Eric, which sparked from the famous

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Google Alph Go move 37.

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So, I was present when AlphaGo won the

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first Korean uh championship against the

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human and I was literally in Korea and

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there was a famous move called move 37

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and go has been a game that's been

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played for 2,500 years which made no

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sense and I was with the room with the

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humans and the human says proof

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proof that the game is going to lo the

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computer's going to lose to humans
because no human would make such a

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stupid mistake.
When they re when they reverse

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engineered the algorithm,
the computer had discovered a new move.

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And this was the first example that I'm

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aware of in a gaming context of a

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completely new strategy being invented

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that was not visible to humans who were

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real experts in it. So I'm of the

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opinion that if you have a hundred
humans who are busy controlling all the

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drones and these are smart people
and they're well trained and so forth, my

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computer using reinforcement algorithms
can actually come up with moves that you

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cannot anticipate and I can beat you.

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That is my opinion. So my guess is that

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the key things you need for for winning

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a war on a go forward basis is you're
going to need millions of drones of many

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different kinds. by the way,
not you know, you think of one type drone,

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different sizes and power that the
algorithms will run in simulation and

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they'll learn what combinations to do

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based on what the enemy is doing and the

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the battle will occur very quickly. So

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the enemy comes in with a particular

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force projection and the computer says

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ah the optimal winning algorithm is to

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do A, B and C. The humans will watch

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this and go, "Holy crap, look at what it

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just did." Um, and this is equivalent of

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of uh sacrificing your queen in chess.

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But as a mathematical uh ability, the

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goal in war is to increase the

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probability of winning from 50/50, say,

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all the way up to 100%. We we know
how to do that algorithmically. Eric is

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quite confident about the Ukraine war,
but China as well as its AI and

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autonomous power, it's a different story.

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>> Well, it's interesting. I was just
there. Um, I visited a whole bunch of

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robotic factories and um, and I'm sorry

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to upset people in Texas. Um, it sure

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looks to me like, um, China is going to

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dominate the low-end robotic space.

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They're driving the cost of humanoid and

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nonh humanoid robots down to thousands

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of dollars from 10 $20,000.

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Their hardware, which is derived
from their electronic vehicle work, is

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extraordinary. We in America don't
have access to the Chinese EV cars, but

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they're phenomenally good at it,
and they're getting better and better, and

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they're doing it the Chinese way, which
means at scale. So, my conclusion was

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that the ideal scenario is Chinese
hardware and American software. which is

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geopolitically not possible, but that's
the way I would phrase it. On the AI

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side, and I've written
publicly about this, it

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sure looks to me like China's pursuing
a different strategy than the US. The US

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is, and I'm very excited about this,

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working toward general intelligence. If

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you look at the planning gains and the

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incredible look at whether it's the

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latest 2.5 Gemini um OpenAI's

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successor to 03, it just goes on and on.

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Look at the coding capabilities of

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Claude. Um it it's unbelievable what

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they're doing that and and by the way

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that's at huge cost, right? Hundreds of
billions of dollars of capital. You know

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the story about we're running out
of electricity. We need God knows I

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testified in Congress 92 gawatt more

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power. An average nuclear power plant is

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1.5 gawatt. You see the problem. China

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has all the power that it needs.
It's built the infrastructure by the way

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using solar largely. Um and they have
all the power they need. They don't have

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the chips because of chips resorts. And

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they're also don't have the depth of the

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financial markets to fund $50 billion

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worth of hardware. At least today. It
looks to me like because of all of those

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factors, they're going to focus
on consumer products and enterprise

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applications for the rest of the world.

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I don't think that America will allow
those things in. There's a pretty good

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chance that Chinese software is going to

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power the majority of the world's, you

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know, um human interfaces with computers

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and business interfaces. Uh that's of

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concern. I think it's very important

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that US technology dominate all of the

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spaces. I want America to win and I
think we need to win in all of those. I

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think we're not spending enough time
on the more mundane stuff. We're spending

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as we're spending a good amount of time
on the exciting stuff which is great. We

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need to spend more time
on the mundane stuff as well.

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>> Economically, Eric sees a split. The US

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leads in cutting edge, very expensive
models. China leads in scaled, cheap

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hardware and may capture massive
global market share in day-to-day AI

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applications. But what about Chinese

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military AI? Um there's no hint at all.

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Um the people I was with were not
military. The Chinese military does not

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welcome me to chat with them. Um I

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always when I visit a Chinese company, I

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always believe because of civil military
fusion. I'm in one building and I always

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believe in my mind that there's another
building next door which I'm not allowed

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into where they do all the military

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work. So remember in their model the the

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companies the the national champions do

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both military and and civil stuff
together presumably in different

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buildings with different classification.

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So you have to assume that every product
that I see which includes by the way the

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robotic stuff there's a military
division as well. I did not see them.

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>> So it's shrouded in secrecy which
is understandable cuz yeah it's a state

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military secret. But Eric also assumed
that civilian AI and robotics advances

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in China are tightly coupled to military
programs, even if that part is kept

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hidden. Unfortunately, the US is not
keeping up in this future of warfare.

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Here's why. Well,
the the US is at the moment well

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behind in the areas that I'm speaking

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about. Um, the Secretary of Defense has

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issued a very important and positive

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order to get organized around drones.

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The US spends I think it's a trillion

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dollars a year roughly in military

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national security spending. It's it's on

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that order. Um so there's plenty of

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money in the system.
One way to understand the US military is

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and thank God we're at peace is it's

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sort of a large it's sort of a jobs

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subsidy program for existing industries.

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If we're really at war, which hopefully

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never will occur, if we're really at war,
I think you would see our military

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change very, very quickly, we have

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plenty of US companies that understand

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what I'm talking about, many of which
are in the room, and they have trouble

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getting big contracts because that's
not how the primes work. The US military

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does not have very good software
capabilities compared to their hardware

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capabilities. The procurement systems

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are not organized around these. So

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again, if it were possible, I would

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accelerate this transition to offset X,

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autonomy, and drones. I see no reason

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why America should give an inch. Um I

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want us to uh the phrase is we bow to no

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one, right? America's dominance in the

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world is very important to American

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exceptionalism, to American economy, to

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freedom. I think America is committed
to fighting against tyranny. That's why we

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fought in World War II. I'm a strong

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supporter of all of this. I worry that

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we're still spending 99.9%

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of the money on stuff that's not very

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important. Um, another example for the

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last 15 years that I've worked on this,

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when you have a person with a rifle in

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in the enemy, they typically use a

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missile from a jet to to kill that

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person. That's that doesn't make any

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sense. Um, in the initial war in

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Ukraine,

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before the Ukrainians had what they have

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now, they would use milliondoll U S300,

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S400 missiles to shoot down shaheds,

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which cost about $27,000 at a time.

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Again, the math doesn't work.
It's really important in this new world to

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have defensive systems, which are,
by the way, dual use, that you can

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massroduce at scale. What I'd like to

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see in America is a commitment to large

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manufacturing capabilities in the United

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States with stockpiled parts. I I
was talking to some of my general friends

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and they pointed out that in a China
conflict, which again we hope will never

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occur, we're going to also want
to have those kinds of factories in the

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Philippines, Japan, Korea, you know, our

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allies as well because of the tyranny of

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distance, which makes sense to me. It's

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a it's a complete rethink of this

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Well, you know, our military,
these these are real heroes. I I I love

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working with them and they have
a doctrine of fight tonight. They have

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enormous courage, much greater courage

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than I do. We do not have the tools and

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the systems

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that they need. We are failing our

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leaders uh people in this room. Part
of the reason we're having this meeting is

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because collectively I think we all kind

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of agree with this in philosophy.

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And so America's strength is innovation.

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So why are we not u applying the same
principles of innovation that are in the

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consumer sector to the military? And it's
because of the procurement systems.

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Right? The average time to weapon system

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is something like 17 years now. Right?

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By then the thing is is obsolete. Um I

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can't remember which of the jets it
is but it has some it has like a pennium 4

00:14:34.240 --> 00:14:36.557
processor in it. It's still programming.

00:14:36.640 --> 00:14:41.597
When I was uh flying, when I was in
the Pentagon, I discovered a burrow 6600

00:14:41.680 --> 00:14:46.237
deep in the bow of someone where
people were afraid to turn off. Like the

00:14:46.320 --> 00:14:47.997
programmers who wrote that are literally

00:14:48.080 --> 00:14:51.277
dead, right? So, come on, guys. We can

00:14:51.360 --> 00:14:56.237
do better than this. And so, this part
of the conversation, part of what you're

00:14:56.320 --> 00:15:00.077
trying to do, Gene, is to to get
everyone to talk about this. Um, it

00:15:00.160 --> 00:15:02.717
seems to me that the way America changes

00:15:02.800 --> 00:15:05.597
is either from a crisis, which we do not

00:15:05.680 --> 00:15:07.917
want because it's war, or because we

00:15:08.000 --> 00:15:09.757
collectively agree that we want to win

00:15:09.840 --> 00:15:12.717
in a new space. And for all of you,

00:15:12.800 --> 00:15:15.277
there's enormous revenue here. Now, you

00:15:15.360 --> 00:15:19.277
have this explosion in um fantastic

00:15:19.360 --> 00:15:23.837
startups and I want them to I want them
to get through the valley of the death.

00:15:23.920 --> 00:15:26.557
I want the government to have a way
of working with them. I want them to know

00:15:26.640 --> 00:15:28.797
who to call. The thought experiment that

00:15:28.880 --> 00:15:32.237
I used to give is let's imagine that I

00:15:32.320 --> 00:15:33.997
collect all the venture capitalists in

00:15:34.080 --> 00:15:37.597
the Bay Area in a room for a military

00:15:37.680 --> 00:15:40.397
procurement venture conversation. Who

00:15:40.480 --> 00:15:42.957
from the government is going to come and

00:15:43.040 --> 00:15:45.757
present to them and what is he or she

00:15:45.840 --> 00:15:48.717
going to say? Right? If you can't answer

00:15:48.800 --> 00:15:51.597
that question, right, then you're not

00:15:51.680 --> 00:15:56.557
going to win. Now, our venture capital
community loves to talk to CEOs and they

00:15:56.640 --> 00:16:00.717
imagine who the customer are, but this
is a single source customer, right? For

00:16:00.800 --> 00:16:04.717
good reason, by the way. We don't want
separate militaries. The the military

00:16:04.800 --> 00:16:07.277
has got to learn how to work with us.

00:16:07.360 --> 00:16:09.517
And of course, they're very law-abiding.

00:16:09.600 --> 00:16:13.117
The laws have to change to allow for this.
And I'm excited for that to occur.

00:16:13.200 --> 00:16:16.237
I'd like it to occur during my lifetime.

00:16:16.320 --> 00:16:18.317
To me, it's almost like China and the US

00:16:18.400 --> 00:16:23.277
are in an AI race similar to the Cold
War arms race. Except this time, instead

00:16:23.360 --> 00:16:26.957
of the US duping the Soviets into
spending themselves into oblivion,

00:16:27.040 --> 00:16:31.117
developing a tech that won't actually
benefit their population while severely

00:16:31.200 --> 00:16:35.677
neglecting their infrastructure, cost
of living and corruption, China is the one

00:16:35.760 --> 00:16:39.597
pulling these moves on the US. Seems
to me like China just read the playbook on

00:16:39.680 --> 00:16:43.277
how the last challenger to world
hegemony was overcome and is turning it

00:16:43.360 --> 00:16:45.437
on the current hegeimon. But you know,

00:16:45.520 --> 00:16:52.480
the future is always hard to tell.
So stay tuned and thanks for watching.
