Semafor's Ben Smith on the Jensen story as a Washington scandal: chip smuggling, Marco Rubio's memo, and Anthropic's IPO

Speaker 1: We were close. We were close there. Our next guest is in the waiting room already. We got Ben Smith from Semaphore, the co founder and editor in chief. Ben Smith, how are you doing? Happy Friday.

Speaker 2: Here he is.

Speaker 1: Welcome to the show.

Speaker 4: Nice to see you. I am... I'm overwhelmed with news, but

Speaker 1: Oh, yeah.

Speaker 4: What a week.

Speaker 1: Everyone's having

Speaker 2: indigestion. You're mostly focused on GTA launch next week. Yes. What kind of leaks around that or or...

Speaker 4: We're we're we're locked in on on that. Yeah. Thanks for asking. Top story There's of this nothing else going on.

Speaker 1: Nothing else going on. How how do you think... I mean, we've been talking about the Jensen news all all week. How do you think this changes tax relationship with DC? How do you think things will will shape up over the next couple weeks?

Speaker 4: Yeah. I mean, think, you know, it's funny because we're we're hosting this conference next week, which is now incredible time. It was sort of... Whose premise was, well, know what? Policymakers and technologists ought to be talking to each other more. And now it just really feels like because they're on a collision course. And now it just feels like they crashed. The cars crashed.

Speaker 1: And

Speaker 4: you know, I think in some ways one way to interpret it is that the Silicon Valley figures who made a big bet on the Trump administration, Jensen being kind of like one of the central ones, are now paying a price for that. Yeah. Because in a way, I think if you put aside the alleged spying and you put aside the sex, which I realize are a lot of things to put aside, what you have is this story about chip exports and about the Trump administration kind of deciding that it seems that they were gonna let a certain amount of gray market chip exports go into China.

Speaker 1: Mhmm.

Speaker 4: And it's administrations that are just doing that stuff unilaterally. Yeah. And and between Jensen and Trump and and and Howard Lutnick and a few others. And what you're seeing now feels like kind of the revenge of the system, of the national security bureaucracy.

Speaker 2: So I can't fully remember, but I'm trying to to think if I it's so easy to visualize a bunch of different moments where Jensen was next to Trump or on stage somewhere just singing the admins praises and you know, more more so than pretty much any other tech CEO that I can think of. Like even with Zuck, who started to look at least right wing coded with some of his interests, right? MMA and wakeboarding and all these things. The only thing I can remember with Zuck is him being like kind of maybe over promising on the CapEx side. It felt like that at the time, but now he's actually delivering it. Whereas with Jensen over the last year, it's like, yeah, really really really just heavy heavy heavy support, and it felt like just not a politically smart thing to do, right? Maybe you didn't need to go that far, but in hindsight, the Mega Speed story first broke over a year ago. Alice Wong was in the news a year ago. It almost feels like in hindsight, maybe that just like overly praising the admin was like a reaction to the beginning of the story, which we still don't have a lot of clarity on, right? And sort of speculation that Trump had his 60 interview, There's speculation that the AI leader that Trump was saying, Take off that. And then he paused, and he said, Get ready to put on an orange suit. Speculation that that was about Jensen, and so maybe the overwhelming praise was was just part of this whole story and something that he felt like he needed to do to to keep the game going.

Speaker 4: Yeah. Yeah. That's that's... I kind of... I mean, that is a fascinating theory, Because I think so much is being interpreted and I think the way I've mostly seen it is look how much NVIDIA got out of the administration

Speaker 1: Mhmm.

Speaker 4: In terms of just opening these markets. You know, and and there was a real alignment of interests. Like, I don't think you necessarily need to imagine that there's more. Trump just loves the big investment numbers. He sees this as... He sees and perfectly the first year saw the central element of his presidency. Just huge investments in AI and NVIDIA, in some sense, at the heart of it. I mean, I think one thing that you see that Congress really, really wants to know about is Jensen getting blocked from the plane, Trump texting him and saying meet us in Anchorage and then jumping on the plane. That really feels like... Whatever it is that happened, that is a metaphor for it. And that image of him on the tarmac in his leather jacket, I think, is going be kind of the indelible image of this mess, which is... It's a huge Washington mess. Like, is... Have your... There are always scandals, there's news cycles, and just it's been a while since one just kind of escaped containment like this. And there's going to be committees on the hill looking into this. There's going to be probably internal investigations on the administration side. It's totally entangled with the financing and the infrastructure of the AI boom. Like, I don't really see this news cycle slowing or stopping. Think we actually just published an amazing story on semaphore as I speak about some of the inner workings. But it is like it's... I don't remember a story this big. It's been a while. Like, it it has slightly blocked out the sun of the midterm elections, which were a pretty big story.

Speaker 2: Yeah. Totally. I... You know, I was... For me, Jensen's been CEO of NVIDIA my entire life. And it's never felt felt like there was this monumental of a of a story throughout that entire period. Yeah. At least that I that I can remember.

Speaker 1: I'm still going back and forth...

Speaker 4: NVIDIA without Jensen? What's your is your view on NVIDIA?

Speaker 2: Oh, I think it's immediately a shell of its a shell of its former self. And, you know, it's tough enough to pull a founder out of an organization. The the culture is very strong. The culture will endure for some amount of time. But, everyone that talks about NVIDIA on a go forward basis is saying, well, well, this person will be this part of Jensen, and this person will play this other role that Jensen played. And you end up all roads to me lead to like, you know, running a company by committee. And what has made NVIDIA so successful is that like, you know, effectively running it like dictatorship style, willing to make Mhmm. You know, fast decisions, willing to do this sort of like... I just... I don't believe there is a CEO out there that can do the deal making and and navigate the supply chain relationships and all of the downstream customers, the hyperscalers, the neo clouds, the application companies, open source, and then also do all the engineering and and product leadership that that Jensen was so good at. So like completely irreplaceable. And that's why I think you see calls from shareholders and employees right now to bring him back even though there was like a very severe, you know, code of conduct violation that that is inexcusable in pretty much every...

Speaker 1: I think I I firmly disagree with this. I think if you bring... If you find the Tim Cook of NVIDIA to Jensen Steve Jobs, you can see serious appreciation in the value of the business. I agree I didn't

Speaker 2: I didn't say there's no world like like Apple's like market cap has

Speaker 1: Yes.

Speaker 2: Increased dramatically. Yes. And I think that that's possible. Yes. I still would that the the soul of the company

Speaker 1: Agree. Agree.

Speaker 2: That and it's and it's naturally whatever, you know, think about... I I still believe if Apple if if if Steve Jobs was running Apple and you still had Tim Cook doing his thing

Speaker 1: Yeah.

Speaker 2: You might be looking at a $10,000,000,000,000

Speaker 1: Sure.

Speaker 2: Company right now and I think the same thing for NVIDIA. It's like

Speaker 1: Yeah.

Speaker 2: The stock price can appreciate, the company can get bigger, they can continue to be a beneficiary but Yeah. It just, you know, five years out from now, ten years out from now, there will be a Jensen discount.

Speaker 1: And and to be fair, I mean, it seems like when Steve Jobs passed the torch to Tim Cook prior to his his passing, he had gifted Apple a stronger monopoly than Jensen gifted NVIDIA. I would say that the Apple monopoly is stronger than the... Market share is flipped.

Speaker 2: Yeah. Like Steve's gift wasn't the like I'm giving you, you know, the entire market.

Speaker 1: Yeah.

Speaker 2: But it was I'm giving you a real monopoly

Speaker 1: Yeah.

Speaker 2: That's gonna come on.

Speaker 1: On the App Store and that will just produce Yeah. Flow forever.

Speaker 4: Yeah. And then the Apple analogy is interesting. Right? Because also... I mean, the critique of Apple since jobs is they stopped innovating, but also were super focused on profits and margins and a lot of things Wall Street likes. And we did a story today on that. Just, you know, the trade off... Mean, innovation's expensive and the Wall Street doesn't always like it. And NVIDIA was spending a lot of money on big bets and things like that. That a more disciplined company may be a company that at least for a while that Wall Street likes better even if it innovates less.

Speaker 1: Yeah. How do you think about the scale of what NVIDIA got from the administration with sales to China? Because it's always seemed small relative to NVIDIA. Mean, they're big numbers. It's like $8,000,000,000 here. Mega Speed was doing billions of dollars, but NVIDIA has $60,000,000,000 of cash on its balance sheet, a $100,000,000,000 sometimes. I think the the the buyback program is $250,000,000,000. And over the last two years, like during the Trump administration, even if you include all of Singapore, all of Hong Kong, all of Malaysia, you're you're only looking at 40,000,000,000 of revenue. It's not that much at the NVIDIA scale, which is Yeah. Crazy to say because that's a ton of money. But it is it is marginal in the NVIDIA ecosystem for a $5,000,000,000,000 company.

Speaker 4: Yeah. And and what's more, of course, is they're gonna be... They're willing buyers for those things. There's a lot of people awaiting the big news, obviously, of the season with the GTA release who who would like a nicer GPU and can't Yeah. Afford That's true. Yeah. They... Right.

Speaker 3: It's not like if the

Speaker 4: sort of Singapore based smuggling companies went out of business, nobody would be buying that stuff at all. There's huge demand.

Speaker 1: I mean, you hear that story. Yeah. Of like of like Elon and Larry Ellison begging Jensen for GPUs. I don't know how that exact story is but like there's clearly insane Subversion

Speaker 6: of that.

Speaker 1: Labs and and the hyperscalers like you could sell those chips in America. Yeah.

Speaker 4: Yeah. And they may be winners in the short term. Right? Like, it's gonna be easier for OpenAI to get chips. Totally.

Speaker 1: Totally.

Speaker 4: I mean, I think... But, you know, I think the Jensen would have this sort of bet on world domination and on particularly dominating these Asian markets on, I guess, also in the medium term, trying to run ahead of a huge Chinese investment in competitors.

Speaker 1: Sure. Sure. Yeah. And, I mean, if you play it out, if he's thinking in thirty year time horizons and you look at the the energy production and the energy curve, the energy generation curve in China, they will have vastly more power than America. And if that becomes the most important bottleneck in AI and super intelligence, well then, if you're... If you don't have a business there, you are truly not in the game. And so, yeah, that that global thinking, that that that world domination mindset leads you to a strange place for sure. For sure.

Speaker 2: How how have you processed, like, the way in which the story broke? Quite a bit, you know, bombshell, but quite a bit different than, let's say, you know, other major stories, you know, looking at Theranos as an example, you know, one one sort of key figurehead journalist. John Kerry Rueh. Yeah, John.

Speaker 1: Same thing with Ronan Farrow with the Harvey Weinstein story. This story doesn't seem to have a hero journalist, at least that I'm aware of.

Speaker 4: You know, I would add. I don't know if he's a hero, but Dimitri Sebastopolo from the Feet is somebody who always ought to read.

Speaker 1: Okay.

Speaker 4: And then there's a bunch of people at The New York Times who broke pieces. But it has broken in a much more Washington way, right? Like the most classic Washington way, which Marco Rubio wrote a memo.

Speaker 1: Yeah.

Speaker 4: And, like, whenever somebody... Whenever in Washington, you write a memo, then you give it to, like, 10 people, and they all know that that is a hand gremade. Got it. Right? Like, you get that memo, and you're like, oh, crap. Now I've seen it.

Speaker 1: Okay.

Speaker 4: And at some point, somebody's gonna leak it. A memo like that is written solely to leak, essentially.

Speaker 1: Got it.

Speaker 4: And to sort of cover your ass. And so at some point, Ruby months ago distributes this memo, and that sort of sets a ticking time, sets a clock on when is this thing going to leak. And then the way it leaked was totally in the terms essentially that Rubio had set, like this woman that appears to be a spy, there's an inappropriate relationship, national security risk. It now seems like the appears to be a spy thing is a little more complicated. And there's some descent inside the intelligence community of exactly what her relationship with the Chinese government is. Also, she's not like a, you know, movie, Red Sparrow agent type. Seems to play like kind of a different role in the Chinese business ecosystem. So I don't know. Like, it's but it definitely... It's like came out of Washington at a thousand miles an hour with a narrative that was, like, really clearly set by by, you know, one side of the argument. I think everyone is sort of untangling that now. It's sort of striking how little the administration has really even tried to get out its its point of view here. Like, obviously, at some level, like, and Lutnick and Vesem, like, all knew

Speaker 1: Yeah. That may... Well, David Saxe did cut

Speaker 4: out because they could have read it in New York Times.

Speaker 1: Yeah. I mean, David Sachs did post sort of a line by line rebuttal of the spy allegations on Alice Wong saying that Yeah. Various pieces of the investigation are either inconclusive or dispositive towards exactly what role she was playing and he kind of outlined a little bit more of what you described there about maybe more of an asset than a spy, someone who wasn't necessarily trained internally.

Speaker 2: Don't worry

Speaker 4: about it. Just an asset.

Speaker 1: I don't know. Yeah. Well, it's a different... So it's of... Primarily, is primary job you check-in at the spy facility, the spy job or or are you a real business person who just takes phone calls from the the spying agency on occasion? These are two separate designations. Yeah. Confidential source or whatever is what they call it in America, I think.

Speaker 4: Right. So that's... That... And but I think the other... I mean, just sort the big... I think if you put that aside, it's just like all... You know, the administration knew that these companies were smuggling chips to China. And they knew it because they could have read it in the New York Times or on X or a million other places. Like, we all kind of knew it. And there has just been this question of, okay, so why are you letting them do it? And it still remains a bit of an open question. Mean, I think you saw... Somebody was quoted today saying, well, it's in the context of bigger trade negotiations with the Chinese. And the last time they put things on the entities list, it blew up the whole relationship. And so maybe they're letting a certain amount get through as in some tacit part of that bilateral relationship with China. But that hasn't really been explored. And we have a big story that I'm hoping published in the last five or ten minutes Mhmm. About the tight tight relationship with NVIDIA and the bureau that was supposed to be overseeing at the extent to which Trump was just kind of steamrolling, and Wang and Trump were just steamrolling the bureaucracy. But I think there's just so much more still to come out.

Speaker 1: Yeah. What else do you want to highlight at Semaphore's new Silicon Valley and the World Summit? What else? Is there anything outside of AI that people want to talk about? Do they want to talk about bio yet or things that are at least adjacent to AI? And then also I'm interested in I mean what what how else do you expand the world? Because again, the only two countries you've mentioned so far on this fifteen minute show is China and The United States. Is there anyone else that's interesting or relevant these days?

Speaker 4: Yeah. I mean, think the the idea of this this event that we're having Yeah. Monday and Tuesday or next week, Silicon Valley and the World is, you know, that policymakers everywhere are obsessed with Silicon Valley. And Silicon Valley leaders often don't love to go to Davos and are pretty busy. And so, we sort of said to a bunch of the leaders at where you are, like, If we bring these policymakers to you, is there interest in having these conversations? And so, yeah, we'll have the president of South Africa, Cyril Ramaphosa. We've got the Mistral CEO from France, He's the leading European AI figure along with some European leaders. Prime Minister of Estonia will be there. They love tech. And then Paxilica, which is sort of The US led Sure. Sort of attempt to build a kind of alliance. We'll have ministers from The UK, from Taiwan, from all over. Fantastic. You know, and I think, obviously, though, the questions are about AI. They're about they're about Anthropix IP. I'm sure. Mean, like, what a week Yeah. To do this, honestly. Like, I I feel very lucky, but it's all just, like, converging.

Speaker 1: Yeah. Yeah. Lots to talk about. Well Yeah. And like

Speaker 2: you said earlier too, GTA.

Speaker 1: GTA six.

Speaker 2: Most of convergence. The GTA six.

Speaker 4: Well, thank so remote in and do a panel on GTA and we can figure it out. We would have loved to have you. But We you were on

Speaker 2: the special we have a special guest that day.

Speaker 1: Yeah. And also it's Thursday. So we we won't have spoilers for for GTA six. Yes. Jensen. We're doing a live play. No questions. Just try and beat the main story immediately. Have a great one, Ben. Thanks so much for coming up.

Speaker 2: Good luck with all the prep and I'm sure it'll be a great Thank

Speaker 1: time to

Speaker 2: meet See you, Ben.

Speaker 1: Goodbye. Let me tell you about public. Invest across all asset classes, automate anything with AI agents, run training strategies, risk management, money movements, and monitor markets with AI agents for investing on public. Up next, we have someone from the Wall Street Journal. Gunjan Banerji is the markets reporter and host of the WSJ money Interview.