{"slug": "great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will", "title": "Great video but keep your finger over the mute button. Aschenbrenner's laugh will haunt your dreams.", "summary": "Leopold Aschenbrenner, the 24-year-old founder of hedge fund Situational Awareness, saw his $45 billion AI-focused fund unravel after excessive borrowing left him vulnerable when his bets faltered, forcing a fire sale to Citadel. His empire was built on a 165-page self-published essay, 'Situational Awareness,' which critics say merely summarized existing Silicon Valley dinner conversations about AGI arriving by 2027.", "body_md": "Random Patrick Boyle quote:\"If I left a million dollars on the table over a non-disparagement clause, I'd bang out a million dollars worth of disparagement that same afternoon\"\n\nJuly 31, 2026 12:41 pm ET\n\nWhen\nthe week began, Leopold Aschenbrenner was preparing for his wedding.\nThe plan was for a multiday celebration in Carmel, a seaside town in\nNorthern California, with the ceremony at a Tuscan-style villa and the\nsend-off at a spa in the forest. There would also be a pre-wedding\ncolloquium to discuss ideas in panels and breakout sessions. The\ncouple’s only request: no gifts.\n\nThe\n24-year-old investor had amassed a fortune by promising he could see\ninto the future, building a $45 billion investing powerhouse that\nprimarily bought stocks in the AI trade. For months, the holdings of his\nhedge fund Situational Awareness [shot up in value](https://www.wsj.com/finance/stocks/the-24-year-old-ai-wiz-who-counts-jane-street-as-an-investor-1c30d751?mod=article_inline), as did Aschenbrenner’s standing in the upper echelons of [San Francisco](https://www.wsj.com/topics/place/san-francisco)’s elite.\n\nBut by the time guests began to arrive, his fund was unraveling—and Wall Street was closing in.\n\nAschenbrenner\nborrowed too much money to make his AI bets, leaving him at risk as\nthey faltered. With the value of his portfolio tumbling, he scrambled to\nraise cash to satisfy his lenders, appealing to some of the largest\nhedge funds and selling billions of dollars in holdings in a fire sale\nto Ken Griffin’s Citadel.\n\nIn order to ... make sense may be too strong a term, but at least be prepared for what you're going to hear, there are a couple of things that you need to know about Silicon Valley culture, and they both involve stories.\n\nAmong Tech messiahs and their acolytes, few ideas are as cherished as that of the young tech bro with no background in the field showing the experts how it's done. (Seriously, these people hate experts for some inexplicable reason.) We saw that in the push for quack medical treatments in the pandemic and in the decision to hand DOGE over to completely unqualified and not very bright college dropouts.\n\nOther than being an actual college graduate, young Leopold was the stuff of dreams for these people, a genuinely gifted young man who came out of the world of Sam Bankman-Fried and OpenAI who, with absolutely no relevant training or experience, was managing a fantastically successful hedge fund.\n\nThe West Coast tech crowd desperately wanted to believe his story; they also desperately wanted to believe the story he was telling, one of a future of unimaginable AI-driven abundance just around the corner.\n\nFrom Boyle:\n\nThe cornerstone of the whole empire, however, was a 165-page essay he self-published in June 2024 called *Situational Awareness*. I read all 165 pages for this video, and I can't tell you how badly I wanted to read an AI summary instead, which, given the subject matter, might have been the intended way to consume it. You'll notice that everyone who mentions this essay brings up the page count. Nobody ever tells you that George Orwell wrote a 224-page book called *The Road to Wigan Pier*, which possibly tells you something about how gripping Leopold's essay is by comparison. I'd also be curious how many of the people who cite this essay as scripture actually reached page 165. My suspicion is that *Situational Awareness* is the most referenced and least finished document in Silicon Valley since the terms and conditions.\n\n...Now, having read the whole thing, I can report that it is less of a prophecy and more of a very long summary of what everyone in San Francisco had already been saying at dinner for about three years. He says AGI arrives in 2027, that the world will change faster than anyone believes because of recursive self-improvement, that the free world survival is at stake, and there's a great deal about China and robots, that sort of thing.\n\nThere's nothing about the essay that struck me as innovative or even interesting. It's just that describing the tech industry's group chat back to itself in 165 pages is not usually what we mean by seeing the future.\n\n...\n\nTim\nFerriss crowned Leopold the Nostradamus of AI, which is more fitting\nthan Ferriss probably intended, given that Nostradamus was a man whose\nfamous predictions only look like predictions once you already know what\nhappened.\n\nInvestors were breaking down the door.\n\nIn these stories, when the bold young hero does something that makes the old hands in the industry shake their heads in dismay, it always turns out to be a brilliant, original thought that succeeds spectacularly. Actual examples of things turning out that way are decidedly rare.\n\nCase in point, the, as it turns out, ironically named Situational Awareness was not so much of a hedge fund as an anti-hedge fund. The basic idea of a hedge fund, albeit in oversimplified terms, is that you try to control risk by hedging your bets. Hence the name. Patrick Boyle gives a characteristically sharp and informative explanation of the concept and what Situational Awareness chose to do instead, but the short version is you generally want to have some of your money spread out among investments that are inversely correlated, so that whichever way the market turns, you will have some winners in the group.\n\nFor example, if you think that good news for AI stocks translates to bad news for software-as-a-service companies like SAP, and vice versa, you might want to put some money into both sectors so that if OpenAI hits a road bump and SAP rallies, you won't take quite as large a hit.\n\nNeedless to say, if you eliminated the chances of having all losers, you've also pretty much eliminated the chance of having all winners. You have reduced your risk but also your margins. This is why hedge funds tend to be heavily leveraged. If you have a small but safe return on an investment, it makes sense to borrow as much money as you can to optimize your returns.\n\nYoung Leopold did embrace that aspect of running a hedge fund. He was leveraged to the max. But rather than distributing his bets to protect against downturns in the AI market, he simply increased his exposure. With borrowed money, he went long on AI companies and shorted software-as-a-service companies so that if the former stumbled and the latter surged, he would be absolutely screwed. Guess what happened?\n\nHere's where we get to the part that would be the most incredible if you forgot what I said at the beginning of the post. The kind of West Coast techno-optimist investors that we are talking about wanted so very badly to believe in the story of this young man and in the story he was telling. Thinking that these things were true and that this was the way that things were going to work out was such a load-bearing belief, such a fundamental part of their worldview, that a mere $30 billion loss was not going to shake that conviction.\n\nAgain from Boyle:\n\nHere's the part that tells you everything about the two coasts. One week after nearly blowing up his fund, Leopold isn't fending off furious investors demanding their money back. He's fending off new investors trying to give him more.\n\nAccording to Bloomberg, Silicon Valley money has been clamoring to get in since the collapse, and the fund is, for the moment, politely turning them away. Think about what that means. On Wall Street, losing two-thirds of your fund in a month is a career-defining catastrophe. In Silicon Valley, it's a buying opportunity.\n\nPat Grady, a partner at Sequoia, was asked about the turmoil by Bloomberg and said, \"Our suspicion is that he's going to be a fixture in Silicon Valley for a long time to come.\" And he wasted no time getting back to it. Days after Citadel bought his collapsing public book on a midnight fire sale, Leopold wired $400 million into a single privately held startup backed by Sequoia, on top of $100 million he had put into the same company a month earlier.\n\nSo the man who had been very nearly destroyed by one enormous concentrated bet marked the occasion by making another one. Now, the wedding went ahead as planned. The guests presumably enjoyed the breakout sessions, and Leopold rides off into the Silicon Valley sunset to invest his remaining billions, a little wiser, a little more married, and forever haunted by the mathematical gap between the mean and the median.", "url": "https://wpnews.pro/news/great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will", "canonical_source": "https://observationalepidemiology.blogspot.com/2026/08/great-video-but-keep-your-finger-over.html", "published_at": "2026-08-12 11:30:00+00:00", "updated_at": "2026-08-12 11:49:24.533566+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-startups", "ai-products"], "entities": ["Leopold Aschenbrenner", "Situational Awareness", "Citadel", "Ken Griffin", "Sam Bankman-Fried", "OpenAI", "Patrick Boyle", "George Orwell"], "alternates": {"html": "https://wpnews.pro/news/great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will", "markdown": "https://wpnews.pro/news/great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will.md", "text": "https://wpnews.pro/news/great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will.txt", "jsonld": "https://wpnews.pro/news/great-video-but-keep-your-finger-over-the-mute-button-aschenbrenner-s-laugh-will.jsonld"}}