From iron horses to infinity machines, every great technological revolution starts with a curious mind chasing discovery for its own sake. Discoveries lead to technological breakthroughs that, when commercialized, change the capital markets, organizational structures, and living conditions.
As a follow up to our railroad series, we chat with Sebastian Mallaby—Paul A. Volcker Senior Fellow for International Economics at the Council on Foreign Relations, co-host of The Spillover podcast, and author of books on hedge funds (More Money Than God), Alan Greenspan (The Man Who Knew), and venture capital (The Power Law). His latest book, The Infinity Machine, is a riveting biography of DeepMind’s Demis Hassabis.
Railroads changed more than transportation—they changed corporate scale, financing, market power, the social contract, and the relationship between technological progress and investor returns. Measured as a share of GDP, the railroads were the largest capital investment wave in history. AI is on pace to overtake them.
We explore how the market history of railroads helps frame the AI era. We also contrast the similarities and differences between the AI boom and railroads by exploring market power, competitive dynamics, and capital formation.
You can find Sebastian at the Council on Foreign Relations (https://www.cfr.org/experts/sebastian-mallaby) and on X (@scmallaby).
Chapters
(01:37) The sweetness of discovery: why Hinton and Hassabis chased AI
(06:01) Why AI carries risk but extinction talk may be overblown
(10:16) Railroads, the corporation, and AI’s governance experiments
(14:31) How AI outgrew venture capital
(23:42) Where the profits will accrue and the fight over open weights
(30:18) Bottlenecks, chips, and why AI competition is political
(36:57) Data center backlash and the new social contract
(40:32) Will AI break the labor market?
(53:46) Safety, capital, and the limits of governance
(1:03:07) What could knock AI off its trajectory
(1:13:09) AI as a tool for learning, not rote output
Sponsors
Big thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.
Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed.
