Trump's Cabinet, Google's Quantum Chip, Apple's iOS Flop, TikTok Ban, State of VC with Keith Rabois

all right everybody welcome back to the number one podcast in the world the Allin podcast with me again today jamath poaa your chairman dictator how you doing brother how you feeling doing great Fresh Off The Holiday Spectacular oh good times and then uh getting ready for a little ski you and I will be doing a little skiing together with Friedberg that'll be quite nice freeberg I don't think you've skied with me and Jason Jason is an excellent skier I mean I've heard his for have I you Jason I don't think I have his brother is

excellent too they're both Josh the black bomber is good yeah yeah shout out to Josh the black bomber it's gonna beas's got those hips he's got he's got skiing hips they kind of shift left right right yeah child it's kind of like when I the hips are wider than the shoulders yeah it reminds me of I went to the Tom Ford uh out I went when I went to Tom Ford to get my suit I'll do that in just a second but with us again of course you're cackling Sultan of science freeberg how are you

doing have you guys seen that clip of the guy with the fake bum that runs around the city yes with security guards it's like some sort of a crypto put on or something it's hilarious this guy he's got like a big Brazilian butt and he just runs around in tight Tac you find a clip of this guy oh my God it's so ridiculous so funny all right with us the cackling with his afterlove from the Holiday Spectacular let's call it what it is it's the Christmas Spectacular we're going to pick a side freedberg how did

you like our Christmas why are you being anti-semitic bro how dare you how dare you you can have the Hanukkah special with your two specials and now with us in The Red Throne it's fit Sachs it is stylish Sachs it is goes to work every day in Venture Sachs his name is Keith raboy how are you my brother welcome great great Jason thanks happy to be here you know it's great being more fit and more fashionable with socks is a pretty low bar yes so I'm really excited to drill [Music] let your winners [Music] ride

and instead we open sources to the fans and they've just gone crazy with it queen of and as we love about you you've got a little American exceptionalism Supremacy dare I say you don't f with dictators that's true you with them yeah I don't really love dictators they're not good for society they're not good for America but you know it's not always America's job to fix all of that all right well listen what about running companies should company CEOs be dictators Yes actually um so I believe in the founder mode the Brian chesky founder mode

I held a conference in New York recently that Brian was nice enough to speak at called hiring the art of hiring for founder mode so specifically for people who subscribe Founders that subscribe to that view how do you hire people and how is that different which you would hire in a standard you know monstrosity of a company like Google or something yeah good founder mode in New York by the way just history if I remember correctly lots of good founder mode in New York J do you want to give Keith's background the of course went

to Stanford with the boys saaks and Peter teal went on to do PayPal he had a stinet square he started a bunch of other companies Founders fund he work he worked he he went to LinkedIn that's how it all started LinkedIn was pretty key like re left PayPal started LinkedIn I joined him so yes that's true and then after that I went back with back stion from PayPal days to slide which is on the as of History we don't have to talk about that but then uh I did jump into square as the 20th employee

and helped build a pretty good company yeah and then Founders I got Lac you know became lazy you know decided to be VC in 2013 spent six years at Coastal Adventures five at Founders fund the last year almost last year now before we jump in I actually have a question for you starting already how does that happen Keith how do you you're at Founders sorry and then you get what like what pulled you to go and work with v note and then what pulled you back like how does that process work because these things are

typically meant to be sort of forever jobs that's true so I you know had the benefit of having the note on the board of square which I think is typically how Executives uh wind up turning into VCS is you forge a relationship with board members so like for example Roa B who runs tooa had Mike Mor on his board roaf was our CFO at PayPal and Mike recruited him so that's a very common same thing Ravi at Sequoia today was the COO and CFO of instacart again same thing Mike recruited him into scya so I

think that's typically uh how people become VCS I always knew I wanted to be a VC since 2003 I was a very active inial investor as you know even when I was was you know concentrating on all these other jobs I was writing a lot of checks and so anybody who's writing a lot of active Angel checks probably has in the back of their mind one day I might want to be a professional investor we could talk about the merits or demerits of that but like the goal was pretty clear in my mind and then

at some point I think you have to make a decision what do you want to be in life um you know venture has long time Horizons it is a job for life like 15 20 years is pretty much what you have to commit to so you don't really want to start Venture when you get to old because 20 years you know you'll be like Donald Trump age yeah so I can run for president I can run for president in 25 years or something Keith why did you leave Founders fund to go to kosa so kosa

was great I spent six years there the truthful reason why I left it's kind of funny given covid and how history changed is I hated commuting a sa Hill Road every day we were one office period in office every single day and I felt like the future of investing was more in sanan Francisco than in paloalto at the time and I just despised sitting in a car 45 minutes each Direction turns out you know Co changed everything how people do their work like we're recording this by Zoom before covid we'd probably all be in the

same studio recording a podcast like this and so but the node and the team was very inflexible about it and Founders phone was located in the city obviously I knew Peter since College as Jason alluded to and I decided that you know it was better for me I remember talking to Sam Alton and I said am I crazy for changing funds mostly on a commute basis and Sam said you're human and every single study of human happiness is it's inversely correlated to your commute time it's like there's nothing wrong with being human in any event

there are a lot of similarities between FF and KB both are great funds that have put up you know incredible returns have funded iconic Founders and companies but they're very different KV is involved as early as possible and FF is a momentum investor and is maybe the best in the Planet as at being a momentum investor so almost every successful investment of Founders fund over eight funds was invested at $500 million or more in true valuation and almost every single investment at KV in eight funds was like the seed or series a investment with very

few exceptions ever and so andreil and ramp were the only exceptions at Founders fund and at KD The Only Exception would be stripe which I led in you know 2013 or so which is an order of magnitude higher valuation than any KV investment initial investment ever so KV is much more an input driven organization Founders funds much more output driven and you know there's great technology companies that are input driven think Amazon apple and there's great technology companies that are output driven so you can choose but certain people are going to be better in some

environments and other people are going to thrive you know in other environments i f in really really well at KV you enjoy the early stage you enjoy year zero year one year two I'm very good at it you know I think I prefer to invest as early as possible on a keynote deck only like if I meet a founder and there's a keynote deck there's no product there's no metrics that's my sweet spot because I also know nobody else in Venture is good at that nobody else is still active in Venture what's the secret what's

the secret from a key note to a check it comes out a Founder assessment at the end of the day the only data point is is this founder capable of building an iconic company period And I prefer to compete when there's no metrics because you all the metrics are going to do is confuse you that said there's a lot of investors who are very good once there's product metrics Financial metrics and so I have to compete with people who are pretty good at what they do so I'd prefer to go as early as possible and

then secondly I like companyb building like I think part of my role is to help the founder increase the amplitude or probability of success and I enjoy that at FF that's very controversial yeah ah right yeah the founder Reigns Supreme and everybody else is there to get out of the way right yeah I've had both KV and FF as investors lead investors in both climate and at ohal now so I know both firms really well and it's really I always people always ask me about the difference between the two that's always what I get to

it's like Founders fund they have this kind of Mantra they find great Founders and just get out of the way let them run and they don't want to be helpful that's not their objective they feel like if they have to be helpful it's not the kind of founder I mean Keith obviously speaking outside of yourself and then at kosla as you know venod has been extremely and and the whole team there especially climate and always have always been extremely helpful so adding board members introducing commercial Partners being like very traditionally proactive participatory VCS on the

board very different both very valuable when I had a board issue at Founders fund and there were some board members that did not like my strategy had issues with what I was doing with the company at climate Corp at the time Founders fund actually stepped up and protected me and they got the board the rest of the board together to protect me uh in a way that was like actually at a very kind of crucial moment for the for the business and as a result we had a massive exit within a year I saw Brian

singerman uh is leaving so does anybody know which ambassadorship he's taking I mean the timing's a little interesting is it not I don't know he's go compete with our friend Kenny Howry yeah Ken Howry where is he off to next hope hopefully some great destination I'm sure I know we can all crash yeah something warm this time okay Sweden's a little bit much swed I'll send in my wish list for you yeah let's go like maybe like is there like Turks and caos or something what about an embassy tour we should do an embassy tour

this year St Barts do they have an embassy there St Barts yeah that's a great idea they don't unfortunately it's a French protectorate but well you know what everything's on the table now we could make them the 51st second third or fourth state I mean we're in the game right now Canada is coming on board did you not want to roll uh in the administration yourself no you know the than you I love politics if you you know follow my Twitter feed I pay a lot of attention I used to be involved in politics before

I got into TCH however what I realized about where I am in my career in Tech is if I stop doing what I do I'm never going to come back like technology is rapidly emerging we're going to talk about all the latest developments this week like you can't take your foot off the gas and the network building parts of venture for two to five years and come back when you're like 50 years old and so I felt like I'm not ready to give up on Venture I'm in like the prime of my Venture career I'm

only 12 years in actually chth so figure five 10 more years like is is The Sweet Spot and so I'd like to see the companies I was involved in grow up become public companies Etc and I didn't feel like I could ever come back if I quit at some point when I like to get involved in politics probably yes but it's a decade out well the household's involved uh big announcement your husband Jacob is joining the administration maybe you could tell us a little bit about that obviously very proud of that yeah it's extremely exciting

for him obviously for the country I think which is he's going to be the chief economic officer really for the for the for the country his job is to build foreign policy from the business standpoint which if you think about it what's the foundation of power in the world it's economic success why did the United States win World War Two is we had an economic Engine That Could outcompete Germany plus Russia plus Japan we could build more tanks you know blah blah blah blah Etc and so the economic engine is critical to this Administration obviously

Trump understands that we had a great three years under his first Administration as he likes to say best economy ever before covid which may you know may be true and we need to rebuild American strength and Jacob's job is to export that you know philosophy and sometimes you can build economic strength through working through Foreign Affairs and so that's his main job is to be the primary Point person under Secretary of economic Affairs and then they've got a bunch the Democrats and the W people added a bunch of other things to the title it used

to be just under Secretary of State for economic um and they added like a you know environment and all these politically correct things so hopefully they'll subtract all that stuff and just go back to under Secretary of State for economic Affairs and interestingly what what's turning out to be interesting as Trump assembles this group I love to get the panel's thoughts on it is not everybody thinks the same Jacob's position on Tik Tok which we'll get to in this show very different than some other people in the administration and even Trump himself flip-flopped a little

bit on that so what are your thoughts as we get started here just on that assembly of people you know including saxs obviously who couldn't be here this week but we'll be on future episodes there's your announcement folks what are your thoughts on that the sort of diversity and opinion in the administration and how that all sorts out because some people exem exciting I think it's very obvious watching from afar that the way Trump makes decision is he likes to ask a lot of people a lot of different questions and then he makes the decision

that's why to some people the media enem is very unpredictable is he doesn't just take one source of input and so you can never totally predict the output but he arrays an interesting cast of characters and listens to them like so for example I haven't spent that much time with him but in so far as I have he would go around the room and ask every single person a dinner what's your view on act and literally go around the room of 28 people and listen to every single person so I think that's how he makes

decisions X being a topic not the website X not X yeah everybody knows what op I think he likes X chth any thoughts on this um The Wider team as we see it get assembled we obviously don't have saxs here he joined the team but just your thoughts on the collection of characters and Executives here's an interesting tweet that I saw Nick can you just share it with the with the guys oh net worth of each one now the reason why it was interesting to me was not the net worth per se but I think

this is the first time that I can remember in modern history at least that I've been in the United States and following us politics where such an enormous number of business people have been motivated to come and work inside of the administration and I think that it creates this very interesting contrast and compare I think that the Democrats would never have assembled a group of people like this even though the Democratic party has a version of this chart that they could have made there's a lot of extremely talented business people that support the Democratic party

the problem is that they believe it's deeply unfashionable to get strong competent business people to take a pause in their business career and come work in government and you almost look down on people that are successful whereas the Republican alternative Here If it creates a movement so to speak so that subsequent presidents tap folks on the shoulder I think we'll be much better off and the reason is pretty simple I think that the United States economy is too complicated to be managed by theoreticians by folks with random phds in absolutely no working experience in the

real world and when you bring those people in to oversee those phds I think you probably get better outcomes so I hope this becomes a standard which is ask these very talented clearly demonstrated successful people with judgment to hit the pause for a year or three or five whatever it is step into government help the country and then go back and this was what the founding fathers Dave actually prescribed this is what they wanted they wanted people who were in business to do a tour of Duty to serve their country and then to get out

they were not interested in career politicians correct I've said this a number of times but of the founding fathers had jobs had professions and they stepped in to serve their country as a civic duty participated in the process of executing the the responsibilities of government and then stepped out and went back to their private lives I think it is such a more powerful model for government than people who choose to to be politicians to represent people as a living because it creates extraordinarily nasty and incentive structures if that's the model which is for example to

Curry favor With Private Industry participants and then go cash that favor in after you leave and I think that this alternative where you have people who are everyone looks at them oh they're all billionaires and so on they're actually as because they're independently wealthy and they have enough money than they'll ever spend I think Larry pagee once said you can never spend more than a billion dollars in your life no matter how hard you try it's literally impossible people think like oh you could spend all that money actually when you buy stuff most of the

stuff you buy are capital assets that you end up selling later it's very hard to spend at that level so when you have people that are truly independently wealthy their motivation is actually quite different than someone who's trying to make it from 100K to 500k of net worth or 50k to a million of net worth and I think it actually creates a higher degree of freedom and it aligns the people much more in the long-term outcome of government rather than their own personal interests and they're just smarter so I'll give you a a simple example

maybe we'll talk about this later jcal I'm not sure but when I saw the doj's theoretical guidance on the Google antitrust matter their idea is to divest the browser and I kind of scratched my head thinking would any reasonable business person think that that was the right remedy meanwhile three weeks later Google's like here's a super chip in Quantum Computing here's a Quantum Computing that breaks the world yeah and thought how is it that these folks are so disconnected from reality that they don't understand what's actually sitting inside this company and I think it's in

part because they don't know the right questions to ask and the reason they don't know what the right questions to ask is they've never worked in the real working world we have a professional class of politicians and and their understanding is 10 years old but it's not just politicians this is also bureaucrats so my point is these folks need to get off the sideline and work in a company for a while know the ballot they'll be much better able to guide these Regulatory Agencies if they actually just know what's going on so if the right

answer is some antitrust issue with a company where you need to divest wouldn't it be great where like a 100 smart businessmen looked at that said that makes sense but let me give you the counter to that jth because the counter to that which it comes up a lot just so you can like frame the response is why are all these people coming out of Pharma companies to regulate Pharma why are all these people coming out of big a companies to regulate big a why are all these people that come from energy companies coming to

regulate energy the common refrain is business people are basically bringing business interests into the government by transporting themselves into these regulatory bodies versus having career politicians or what you call bureaucrats be kind of independent regulatory authorities so what's the response in that context to that that refrain they're absolutely right and that's how it should work the United States can no longer afford to be a bleeding piggy bank for bad ideas so yeah like if a bureaucrat thinks the right thing to do is to divest a random browser to fix Google's monopolistic Tendencies that's not a

remedy or spend tens of billions of dollars on a super on a high-speed rail like you were talking about earli this week this is not logical it's not meaningful it's misguided so if what we want is kindergarten soccer where everybody gets to touch the ball that's what we are getting right now which is it's not useful so I would rather have a business person with a direct point of view and by the way with the level of transparency the big issue I guess fre Brook that that would create is could these people Advantage themselves somehow

to make more wealth but the reality is that would be so obvious and laid bare what happens today is they burrow at this midlevel of an organization and they do exactly this but it's not laid bare yep so I'd rather be a transparent where some guy tries to take the government for $500 million and we castigate that person than what's happening today which is you slip in the back door you get paid four 500 Grand from a company then you come back to the government then you go back nobody knows who these people are Nobody

Knows the decisions they're making and they're altogether misguided because they're not grounded in an understanding of the real economy Keith where do you fall yeah well I share actually you're both right in some ways if you look at what who's Trump's picked these successful people they're not typically being assigned to Industries they came from so it's not like he's taking drug you know he's actually taking the opposite like think of RFK for example so actually I think you can take successful people who have proven themselves through Merit like I think what that's one of the

other benefits of the real world is the only way you get ahead is you're in a darnis experiment with other people that are comparable and to be successful you have to out think outwork Etc and that shows up ultimately in promotions and net worths and various other metrics so Trump has taking a lot of successful people and I think we want a society where we Aspire for our kids to be successful we want to emulate successful people that needs more that will yield more success like having Elon involved in the government will yield more success

than you know if you penalize successful people you'll get you stigmatize it you get less of so I think if you transplant successful people into industries that they're not from and that they have no interest in going to after the government you might get the best of both worlds because I can see some of the critiques of you know you're regulating you know your friends companies and you're going to make money later that said most of Trump's people are not going to do that you can also pass laws like you know you can't Lobby you

can't work for for X years after there's also this great data point I think it's in the last 60 years Trump is the only president whose net worth went down after office every other president that you know took a relatively modest net worth or mediocre net worth and turned it into the stratosphere so you think about the president as the you know signature example it's great that Trump like is setting the opposite illustration well I mean we've discussed this on the other pod Keith a couple of times which is domain expertise can be an ankle

for a Founder you know you got a founding team that works in the hotel business they're going to look at something like Airbnb and say this will never work you got somebody who worked in transportation they're going to look at Uber and say that'll never work look at PayPal if they worked in finance and they did say to you and the team that's never going to work yeah I mean I think it's critical adventure to not really fall for that trap I always mention that I don't like people with um expertise typically as Founders uh

I think and when I call Dil due diligence and call experts I only ask one question which is what is metaphysically impossible about this working like is there a law of physics that I don't understand that makes this actually possible and if they can't isolate a very specific principle that makes it or fact that makes it actually impossible then I just ignore everything they say and you know write a cheat yeah because it it's just all Vibes and opinions Etc so well they're experts in a prior world right they've learned why not and this is

actually like to combine a couple topics here the reason why Trump is so effective so the most interesting question to me over the last year was how is this guy who everybody in the media and everybody in you know the legal groups of various things is trying to attack and hatte and all these people publish these you know books why is he on the price of being elected president of the United States twice you must have a superpower or two most people do not get elected president of the United States twice and most of the

people who are attacked by everybody who has power in the establishment definitely do not get elect the president so what it come came down to and I interviewed a lot of people who are critics of him but knew him well like ex-cabinet people that don't like him comes down to he just asks a lot of why like why do we do this why do we have to do it this way why have we done this way and it turns out in politics and in DC most of the answers are pretty mediocre or weak or poor

or haven't been rethought for 20 30 40 50 60 70 years and so he just constantly Dives in and says why why why why and that's actually what predicts success for Founders is in a domain they don't know anything about they're just like why why do we take these Hotel things for granted in the Airbnb case why should they be so expensive why should scarcity you know Prevail in New York for four months of the year etc etc all right let's get to our docket we got a ton of stuff to get to Google's new

Quantum chip is super impressive freeberg and I were talking about that on the group chat on Monday Google announced its latest Quantum chip it's called Willow here's the chip if you haven't seen it it's uh beautiful it was fabricated in Google's new chip plant in Santa Barbara they started this project back in 2012 their Quantum Computing project and the headline basically is Willow performed a standard Benchmark computation under five minutes that would have taken today's fastest Supercut 10 septian years or 10 to the 25th power which is billions of times older than the universe if

you don't know what Quantum Computing is freeberg will expand on it but basically computers are binary you've heard this before one and zeros quantums use cubits you know those are Z1 or both at the same time and uh Google got a a 5% pop they're up 13% in the last 5 days probably on the other news that Gemini 2.0 is out as well which is unbelievable have been playing with it what do you think freedberg of this big announcement Google's announcement is a paper published in nature that follows a pre-print they actually put out in

August so this news has been out for a little bit there's obviously a press cycle this week around it to kind of make a big thing about it but it is a very kind of important milestone in the evolution of quantum Computing so do you want me to kind of talk about Quantum Computing again I think we've talked about this in the past I mean maybe a brief primer for people but like what what does this mean practically I think what people want to know is when did these things actually have an impact in the

way say nvidia's gpus have had yeah the big breakthrough here is that the whole basis of a quantum computer is called a qbit or Quantum bit it's radically different than a bit a binary digit which we use in traditional digital Computing which is a one or a zero a Quantum bit you can kind of think about it as a wave function it's sort of a Quantum state of a of a molecule and if we can contain that Quantum State and get it to interact with other molecules based on their Quantum State you can start to

gather information as an output that can be the result of what we would call Quantum computation and that sounds complicated but what it really means is that instead of doing kind of binary computation where we're adding numbers together or doing kind of other traditional arithmetic there are really interesting functions you can do with cubits cubits can for example be entangle so two of these molecules can actually relate to one another at a distance they can also interfere with each other so canceling out the wave function and then when you read it out you get a

a result that is basically a very very complex problem that is solved through this Quantum interpretation it's really hard to of highlight how different this is from traditional Computing so Quantum Computing creates entirely new opportunities for algorithms that can do really incredible things that really don't even make sense on a traditional computer they're not possible to kind of resolve on a traditional computer and sorry let me just State one thing the quantum bit needs to hold its state for a period of time in order for a computation to be done and so the Big Challenge

in Quantum Computing is how do you build a quantum computer that has multiple cubits that hold their state for a long enough period of time that they don't make enough errors that you can actually do a computation with them so what Google was able to demonstrate here is they created these call it logical cubits so they put several cubits together and by putting several cubits together they were able to kind of have an algorithm that sits on top of it that figures out hey this this group of physical cubits is now one logical Cubit they

balance the results of each one of them so each one of them has some error and as they put more of these together what they were able to demonstrate for the first time ever is that the error went down so when they did a 3X3 Cubit structure the error was higher than when they went to 5x5 and then they went to 7 by seven and the error rate kep going down and down and down so this is an important Milestone because now it means that they have the technical architecture to build a chip or a

computer using multiple cubits that can all kind of interact with each other with a low enough fault tolerance or low enough error rate that they can start to do these Quantum calculations this is a a big area of opportunity one of the very interesting areas that a lot of people are talking about is in cryptography so there's an algorithm by a professor who was at MIT for many years named sh it's called sh's algorithm and in 1994 1995 I think around that time he basically came up with this idea that you could use a quantum

computer to factor numbers almost instantly and all modern encryption standards so all of the RSA standard everything that bitcoin's blockchain is built on all of our browsers all server technology all computer security technology is built on algorithms that are based on number factorization so if you can factor a very large number a number that's 256 digits long theoretically you could break a code and it's really impossible to do that with traditional computers at the scale that we operate our encryption standards at today but a quantum computer can do it in seconds or minutes and that's

based on Sha's algorithm and if you want there's some great YouTube videos that describe sh's algorithm and how it works but it's like mind-blowing when you look at it it's like this really like non-intuitive but simple set of steps that when you put them together on a quantum computer it's like this thing can instantly figure out all the factors and then you can break a code one of the things that this highlights is that in a couple of years theoretically if Google continues on this track and now they build a large scale cubid computer they

theoretically would be in a position to to start to run some of these Quantum algorithms like shortes algorithm and so we're now kind of spitting distance or a couple of year it's not really clear is it three years five years seven years but a couple years away from having computers that theoretically could crack all encryption standards and there are a set of encryption standards that are called postquantum encryption and all of computing and all software is going to need to move to post Quantum encryption in the next couple years so there's like this big kind

of push now to like how do we do that how do we accelerate it I saw Sundar post it I saw it in my feed I ended up missing my next meeting because I had to figure out how long will it take for us to crack the encryption standards that we use for Bitcoin Nick here's the answer because I was so tilted by this idea so if you think of Willow as essentially like one stable logical Cubit equivalent in a chip we need about 4,000 to break RSA 2048 and we need about 8,000 to to

break sha 256 which is the underlying encryption framework for Bitcoin so I think you're right I think we're in the sort of like the end game two to five year shock clock no I mean I think what'll have to happen is some of these chains will need to obviously reimplement something at a pretty foundational level the weird thing as free Brook says is like the willow chips error correction gets better the more of these things you start to use together now there are some really big problems in see inside these chips like logical interconnects are

very complicated if you put two chips on a board like the ctoc communication is comp this all this stuff that we haven't figured out how to do but this is a big deal and I was I was really like my God what's going on here other projects at Google are finally Landing you have whc and you have this now I mean project Lon might be gone but you know I think those projects we're going to see a couple of them change the world yeah just to give you a sense on the numbers like Google's Target

for fault Tolerance on a Quantum chip to make it logically useful is 1 * 10 -6 right now this Willow chip is kind of running at 99.7% so it's still a few orders of magnitude away they have a long way to go in getting the fall tolerance low enough to actually build uh logical Gates using cubits that can resolve kind of computational output and so there's still there's still a build cycle ahead and that pathway is a little bit unclear but what they've shown is this almost feels like the shockly transistor moment it's like you

know here's this this transistor now everyone's like you have a lossy transistor and then you'll figure out P injunctions you'll figure out all of these ways of just like getting the error correction down but by the way this reinforces what you said before which is it's hard for an outsider like us to comprehend what's really happening inside of Google because the business they built was able to fund this I mean and and I I went down a rabbit hole because I'd never heard of who this guy was that that runs his helmet Nevan he's in

Santa bar they have a whole team in Santa Barbara they've been running for like 10 years he has his own law nevan's law and then I went down the rabbit hole of that but what's amazing is so valuable for Humanity Google had the money to fund him for the last 12 years exactly and the greatest money printing machine of all time is paying dividends yeah but isn't it great to know that Google takes these resources from search and sure maybe there's waste and or maybe they could have done better with the black George Washington or

maybe they could have done better with YouTube but the other side is they've been able to like incubate and germinate these brilliant people that can toil away and create these important step function advances for Humanity it's really awesome Deep Mind is on that list as well Keith what are your thoughts de mind yeah yeah so I I think first of all I think there's a long time before this becomes a commercial product or application of any sort so you know it's great that they're taking money but think about it like almost like Stanford takes money

or the US government funds basic research in some ways this is at least a decade out kind of thing um there's another I mean this area Way Beyond my expertise but I've been talking to a lot of smart people because I do do Financial Services Innovation and obviously encryption is pretty critical whether it's Bitcoin or other places and there's a couple concerns one is it's not even clear that you can verify that this is true um by the way like Computing to explain sort of the magnitude of difference standard Computing would take 10 to the

25th years uh to verify that what uh Google analys is accurate so there's a chance that it's not even true for the thing for the for the sampling test they ran yeah to 20 50 number of years that's the big I think hole in the whole RCS Benchmark that they use that it only is it's a it's a framework that only a quantum computer could theoretically even so how how you know the answer is correct is I guess the question it takes that long to solve and then to be practical like so assuming you solve

all this and it's accurate and blah blah blah you make it fast all second then there is the postquantum Computing encryption which you know a lot of people a lot of things a lot of important things have switched over to so you have historical Communications that were encrypted under an old Paradigm that would be vulnerable and you know every year that goes by like the embarrassment level or the threatening level of old historical Communications will probably has some Decay function or some halflife so if it takes another 10 years Communications that were drafted 20 years

ago yeah there'll be some embarrassing things and blah blah blah blah but the more time it takes the more safe you know sort of private Communications and exchanges will be so I think that's positive third is there's a question of order magnitude here you mentioned you need like three orders of magnitude sort of improvement is each step function you know incrementally easier and faster or is each step function you know 10 years and I don't know that anybody knows the answer to that that's right that's right yeah a lot more work here to to to

be done you're not buying any Quantum Computing stock yet uh not yet we have looked at KB you know talk about like technology forward you know VCS over the years I've sat three partner presentations and we've never really pulled the trigger um there's other reasons like including like even if you have Quantum Computing you have to rewrite software on top of it uh from a different it's a completely different you know world and who know nothing Maps nothing m at all so you're starting from scratch so you have an application layer which might be actually

an interesting business opportunity yeah how are these things actually going to be coded and how our developer is going to interact with them if at all Maybe by that time it'll just be AI running how do you build a compiler who the hell knows how do you build language properly these are all complicated yeah Who's Gonna Write the basic who's gonna write like the Microsoft basic the interesting thing is there's a lot of work that's been done in the space like thinking about Quantum Computing and Quantum algorithms is like an entire Branch people do spend

a lot of time thinking about this and working on this and there are ways you can kind of simulate and test and start to build out models for how you could utilize quantum computers but obviously we just don't have you know industrial scale systems at this point there was one Interstellar Marvel Easter egg in their announcement that I wanted to get your thoughts on freeberg Google said that this massive jump in performance quote lends Credence to the notion that Quantum computation occurs in many parallel universes in line with the idea that we live in a

Multiverse so is that somebody in PR is high AF or reads too much science fiction you know you know the crazy down for us so the crazy thing about quantum physics is such a mind have you guys taken quantum mechanics like have not I have yeah I remember the summer I took it like the quantum the first quantum mechanics class and I was like glad it was a summer course you really have to like think like pretty deeply about what you learn in quantum mechanics there's just nothing about it that's intuitive like the way we

kind of think about the world is not the way the quantum World operates in the case of a cubit as soon as you measure the Cubit it collapses to a value if you try and measure it if you try and look at it it goes to zero or one the probability by which it goes to zero or one is defined by you know the the quantum state right at the moment You observe it it's just such a mind so effectively this thing is existing in a super position in multiple States at the same time until

you try to observe it and that's the case of quantum mechanics so what's kind of happening I think in that language jcal is nothing novel was kind of discovered or represented that's just quantum mechanics it's a mind and you could go watch hours of YouTube videos if you want to like get taken down the Mind Rabbit Hole of quantum mechanics and realize like one thing I've always found fascinating about this discipline is that looking at a cubit changes it like it understands it's being particle there's a slit experiment and if you try and observe a

light as a particle versus a wave it actually changes what happens what the the outcome is of it being a particle or a wave same with electrons the thing about quantum mechanics is the observation of a particle changes what happens serious question serious question here it comes here Buckle in when you look at the the quantum bit can you get a better idea of the scale of Uranus let's move on no let's move i s jamat was doing a joke he was queuing up a joke at the same time no I was I was thinking

about Schrodinger's cat that's like a another ridic ridiculous thought experiment that when you you go the same concept it's the same qu the quantum state of the cat is it's both in the box and not in the Box you don't know whether it's in the box until you open the box and then you open the box and there's a x probability that it's in the Box X probability it's not in the box but when when you don't see it it's both it's both and if you're a cat lady you have three of those boxes and

I'm a dog person well we got more engagement from Keith on that science Corner than we have from so he's more he's more open science inness I need to I need to Def they both said this is stupid and I'll never touch it except Keith was Kinder and more articulate in getting there would have just been snoring yeah he would have done this he would he would have done his move where he goes stupid and then like he would next topic there's an advantage of Monday partner meetings is I get to watch the science fiction

stuff you know every week if I don't really understand it but like a decade of watching science fiction you pick up some tricks you play chess with Peter teal while that discussion is going oness actually so I don't play Chess at all ever Okay the reason why is if I do something I want to be really proficient at it and I don't have the time got it got it also you have a life you have a life yeah I like to do other things things in the real worlda big big shout out to gesd my

my my Indian friend 18 years old new world champion I saw Champion yeah know world champion did was he playing Magnus is that every Brown guy that's done any random useful thing in the world we all know each other we're in a huge group chat oh is it really yeah how it is the name of the group chat isn't like the top 10 tech companies the group chat's name is what can Brown do for you what can Brown do for you okay there it is also UPS is filing a treadmark infringement case hey um speaking

of Chip news apple is making its own AI server chips for internal use a report just came out that broadcom and tsmc are helping them develop AI inference chips you know inference chips like rock uh H moth and there are obviously gpus like Nvidia gpus those are like the giant dump trucks that help you build large language models these infrin chips are kind of like speeder bikes you know motorcycles quickly getting you the results from those same ones it's called balra btra I don't know what that's in reference to mass production in 2026 they don't

plan on selling the chips they don't plan on cloud computing the reason they're doing this obviously is because they really want the iPhone to be the interface and they have planted their flag that they want to have privacy and have ai working off of your local device and not having access to your data but having a compelling AI experience gosh my my iPhone does not work I'm sorry I'm just going to say it okay I don't know what happened in you upgraded your software is what happened you're on iOS 18 it doesn't work I after

3 years I upgraded to the newest phone I upgraded to the newest OS the phone doesn't work meaning like to call people I can't call my wife anymore I can't call my kids anymore the phone bricks constantly my photos app doesn't work it is just really bad and I think for a company of this scale I don't understand how it does not go through a more complicated test harness that catches all of this I'm I'm not trying to complain but because I know it's hard for them and I know it's complicated and but it's really

bad you're not the only person people are freaking out about the infras changes on photos crashing is a major thing and apple intelligence just doesn't work so it does seem Keith that Apple has gotten off their game of making Polish stuff to race to try and I guess catch up to their perception of you know AI being a disruptive Force at the interface level I.E your phone or desktop what what are your thoughts on uh this new story about them doing more chips they've obviously had great success with the processors and phones now the M4

incredible if you haven't tried the Mac Mini best computer for the dollar in the world right now but what are your thoughts on Apple so the most important thing about Apple is to remember it's vertically integrated and vertically integrated companies when you construct them properly have a competitive advantage that really cannot be assaulted for a decade 20 30 40 50 years and so chips classic illustration go all the way down to the metal in build a chip that's perfect for your desired interface your desired use cases your desired UI and nobody's going to be able

to compete with you and if you have the resources that you know because you need balance sheet resources to go the chip Direction um it just gives you another five to 10 year sort of competitive advantage and so I love vertically integrated companies uh you know I posted a pin tweet I think it's still my pin tweet about vertically integrate is the solution to the best possible companies uh but it's very difficult you need different teams with different skill sets and you need probably more money truthly more Capital but Apple's just going to keep going

down the vertical integration software Hardware you know all day long and there's nobody else who does hardware and software together in the planet which is kind of shocking in some ways is there a world class company a company that's world class it's both software and Hardware other than yeah maybe Nvidia well may not really could they do a world class UI you know maybe maybe there's a foundation you have have a different Vision maybe a different team not clear Tesla's close I guess I'd say the software's good if you Define software as it touches a

consumer Tesla Apple in some ways Google maybe meta with the meta glasses trying trying attempting you can't say Nvidia because I think Nvidia touches the consumer through an app that then sits on top of Cuda which I think is that's a brilliant strategy for them but it's it be apple then Tesla and then a long tail of people right anyway the point a lot of competitive advantages that they you know been actually leveraging for about 15 years now and even back then Steve there's some old great Steve videos I I'll see if I can find

you a clip where he talks about this very intentionally from the 1990s you know when he came back to Apple he said we're doing vertical integration basically using those words of software and hardware and there's going to be nobody else that can compete with us I think it's in an interview he did in it's published in uh in the company of giants I believe and he's perfect on point he just follow that strategy for you know the next 25 years now you're seeing some of the manifestations though of a competitive strategy that gives you incredible

advantages is you get very sloppy in other places especially over time because you have such great competitive modes that you don't have to compete at The Cutting Edge of this like the photos app is completely unusable I'm the biggest apple Fanboy in the world like I I I remember interviewing once with a job for Tim Cook and I walked in and I said he's like why you know why are you interested and I said well you know I own every skew of every product you've ever produced except I don't have every color of each you

know iPod and he was like blown away and but now like my photoos app is completely unusable so I totally understand you know about the frustration and they they're showing like the Decay function you know culturally and otherwise that eventually somebody will figure out an angle to rip them out yeah I'll tell you we talked about dictators at the beginning of this shath and obviously this is your real house as a dictator yourself is you know there has to be a constant fear that some a-hole is going to come to your office and be like

what did you do to the photos at and that fear does not exist inside of Apple it's not like the mobile me you ever hear the mobile me story where he brought the mobile me team in he said how is mobile me supposed to work they said well it's supposed to back up everything when you buy your new phone you get everything you never have to worry about losing a f slammed his hand down and said well why the F doesn't work that way fired the person brought the next person in and said now make

the way he said it's supposed to be game over I don't think Tim Cook's doing that Johnny IV's not there and obviously Steve Jobs not there to terrorize people well I don't think you look you don't need to necessarily terrorize people but I do think you have to go through uat so I think it's pretty reasonable when you have a large footprint of consumers using an app to go through user acceptance testing is like first base and typically what happens is you can do a process of a few months where several hundred thousand people get

it all over the world and as long as you do an okay job of getting a decent distribution of people this would have come out but I want to just talk about what Keith said as well it's literally not just photos it's like the phone doesn't work so there are just core structural issues with this operating system now that makes the Iphone maybe 10 to 30% less usable and that everything is everything really frustrating the command center you know when you pull up your little Command Center to change the brightness and the your airpods it's

just like what are they doing here I mean by the way so do you need a chip do you need a machine learning chip to do inference to figure out that when you constantly run your phone at a certain level of brightness you should just allow the phone to be at a certain level of brightness stop changing the damn brightness why does it re like I me this is not this is not complicated software engineering guys no but this is my point there's no Arbiter of taste anymore who is the back yeah let me let

me pause double click on that for a second so I think taste is great if you have it but there's only so many people on the planet that are going to have you know Cutting Edge taste and be right if you don't have taste what most tech companies do is they use data data is something that's approachable and leverageable because Apple has like this the antibodies to using data to measure success with the user experience to measure whatever success if you subtract taste even by a bit you don't have the scaffolding that every other company

would use and so you see the worst of Both Worlds that's a great take that's a great good take the rails right you go off the rails so Keith do you think that you think that what happened is like when Steve Jobs isn't there and Johnny IV isn't there there's still a bunch of folks that probably think they have taste but the real taste folks left and there's really no scaffolding left to more scaffolding you had at Facebook meta obviously or that Google uses would catch some of the stuff without a doubt about it you

know that users are less thrilled and they' use things less and you'd fix it and maybe even you take that too to extreme you never develop taste like I could argue that about Google or meta they don't really have taste but like yeah you could AR You could argue the paradigms but fundamentally if you don't have that back stop if the taste of tracks even 10% not all the way down you're just not going to catch this stuff and I think there's only like how many people in the world really have Cutting Edge technology user

experience taste I don't know too many I would fund them right away he might have it it's an incredible point because I if I'm being really insecure I would want to say oh yeah no we had a lot of taste at Facebook back in the day but actually we had so much scaffolding around data probably because intuitively we knew that that was way more reliable for us it's more predictable scal it's certainly more scalable right like you take Steve out you don't need a dictator but you do need a a taste and taste is Artistic

the same thing Venture like you know like scaling venture is really really challenging because early stage investing is more like taste than data driven and later stage you can use data and scale it and Scaffolding so I think there's just Fields it's a little bit also you see like the sports teams they just happened at Stanford when Jim Harbaugh left it took years for the Decay function for like the next coaching regime to show they were completely incompetent like the next year they're pretty good next year they lost one more game than they should have

next year they lost two more games than they should have blah blah blah then eventually they became like horrible and you know there's a Decay function with an organization when you take out the person who is the original thinker or the leader or the dictator or whatever and so I think some of this is showing up now and then you know playing on a field that's not favorable to them which is there are advantages Apple has in AI but there's some significant organizational structural disadvantages and that's the field that people are going to be competing

on for the next five years from a consumer perspective and they're playing on a field where they don't have all the advantages in their favor yeah yeah true let's go to the app level here Tik Tok is scrambling right now after an appeals court upheld the January 19th deadline for divestment here we go here we go I refer you to my Twitter feed my I mean you and Jacob must sit I mean what do you do you just sit at dinner and feed the kids and then uh talk about Tik Tok in China it's it's

well I think Tik Tok is pretty obvious like you don't even have to have a conversation in my view like Tik Tok is a threat to the National Security of the United States and that's why whyl to people who are like it's just an app it's just an app why why so I think there's different dimensions one of the problems is there's so many things wrong with Tik Tok that actually sometimes people get confused because there's not just one it' be easier sometimes if there's just one thing so they are definitely using the app to

track data about Americans and there's evidence that regardless of what alleged protections exist there are people in China monitoring what certain people in the United States are doing and the CEO lied under oath to congressional committees about this and the evidence is now in the public domain hopefully this justice department will prosecute him for lying under oath I think setting a really good example that you cannot just purg yourself before Congress sorry Keith can you double click into that so what how did it come into the into the open source that what he said was

a lie like what so there are people in China who on the record have said they had access and have had access to American user data which he swore to under oath to the Congress that they were storing the data in Texas somewhere and that there's no possibility that you know Chinese Nationals in China could access the data there is now several um instantiations of this in the public record let alone what's privately available yeah I mean the case specifically too back in 2022 by Dan the parent company of Tik Tock had used an app

to track Loc had used their app to track the location of journalists because they were trying to track leaks outside then secondly let me let me keep going here because it's worse so there's a law the fundamental problem is in China there's a law that says if you're a Chinese company upon request of the CCP you must provide all user data so any Chinese company is subject to that law period there's no court intervention you don't need a subpoena blah blah blah and so it any Chinese any executive of that company is subject to significant

penalties on the record for not providing any user data at the request of the CCP so as long as that law exists there's a real structural threat to the United States now then there's the is the app being used manipulated on a Content basis to influence you know policy in the United States to disadvantage this or that or create hostilities I don't really know the answer I think there's been studies that suggests that and you know pretty rigorous methodologies but that's a second level and then third is there's the why the hell are we allowing

Chinese companies to compete with us when no American content based organization is allowed into the Chinese market whether it's meta Google a you know there's a strong argument there that Reddit if you don't allow our content or non you know non chines content into your Market why should we be enabling Chinese companies to be successful in quotes in the US market and that's more of a a fair trade free trade Keith do you think that the Pegasus spyware that can infiltrate WhatsApp so that you can turn on the mic and listen remotely and it has

no fingerprints it's very difficult to detect do you think an equivalent let's call it a back door exists inside of Tik Tok yes so my evidence for this that I believe is in interpolation of what's in the public domain is if you looked at that vote to ban Tik Tok it was extremely bipartisan despite you know controversy and what happened was that vote was taken a week after there was an intelligence briefing to both the House and Senate intelligence committees that was that's confidential and the votes you know all of a sudden flowed through I

think there's things that are not in the public domain about Tik Tock that spooked a lot of elected officials and led to this bipartisan consens is how many bar parters votes do we see on an allegedly controversial issue that you know basically didn't the vote was like you know like not even close in either house 360 to 58 yeah when do you see a vote like that on something meaningful never right they got they definitely got spooked and I mean if you just think about Navy SEAL Special Forces they're not allowed to use a lot

of these apps government officials aren't to use these apps because they know that all you have to do is if you track somebody's child and their Tik Tock usage now you know where the parent is you start thinking about the security and safety of individuals in our government it's crazy so 352 votes for an incredibly popular product yes think about how bad something has to be to get a consensus of 352 votes on a on an out that's used by you know huge fraction of the American public pass the Senate 79 to8 and you are

right if you say you're going to ban Tik Tok the was against TI to but then he opened one because that's where voters are you you're going to lose that generation of Voters arguably arguably Theory there's some risk I I can see that Biden can if he's awake extend this window by 90 days I don't know if grandpa is up for it but he could extend it a bit and obviously this with the Trump campaign you know he says a lot of different things Trump has flip-flopped a couple of times during his first time he

tried to band it wait till he gets the readout that the rest of these guys got yeah and well and then he had a mega Dona and Tik Tok investor Jeff y gave Pax $50 million and he owns 15% of it when I had dinner with him that's is this is the one of the things that I pointed out to him was this specific thing I said you have to look at the Pegasus like equivalent INF infiltration of WhatsApp having been done on Tik Tok because the reality is if Tik Tok has 200 million users

it is true that you know 199,999 th000 just don't matter so you could turn on the microphone you're not going to hear anything but there is probably a thousand to 10,000 to 15,000 people and I do suspect that state actors are smart enough to figure out how to triangulate who you would want to be able to turn it on when that phone is in your pocket or when that phone is on a desk and I'm sure you will hear all kinds of random things and many of those things could be quite sensitive in nature so

I think that this is something that the the government's going to have to look at really intensely there's such a simple test here what are they doing with their own people in China they are in a police state there they make the stazzy jealous how much they're tracking individuals in China so if they'll do it to their own people they would have no problem doing it to an adversary and ask yourself if the shareholders care about money they would be willing to divest right no problem they want to take the company public so if you

won't divest and get off the board as a CCP it's because you see this as a valuable tool right I mean just work through the basic logic folks right it's some price point right like what I would do if I were president I'd say you tell me the fair market price for Tik Tok and I'll go f you know I'll make sure that there's buyers right because CCB won't name any price there is no great tool the point right that would be like giving up your nukes I don't think they should have to sell at

a less and fair market Price I think that's you know legit like I believe in capitalism but there any free market should allow for you know some price Discovery and if they can't name any price period that suggests that you're doing something that's nefarious there there's Reason by the way Cham you probably know this you know if you meet like at least you know some of the times I've met with the president they take your phone away why they why do they take your phone away 100% why exactly pretty obvious yeah exactly also there are

phones that can be designed to be weapons as we've seen a number of people got some nutshots with their pagers recently all right let's talk about Venture as we wrap up here man Keith for boy cooking with oil new sacks new red meat sacks are you a steak guy too ke you you eat a steak once in a while oh of course what's your cut what's your cut are you kolette are you a ribeye guy I like Tom eight to 10 12 ounces Max medium you know solid I don't really care pretty much wagu I'll

be a little non-american go wagu you know like Australia or Japanese yeah sure all right all right I think uh just shout out to my friend Kimo I'm a you know red meat Republicans of course of course I'm a big fan of this kolette slash on it yes I just bought recently a Denver Cut which i' never tried incredible Denver Cut okay cut all right let's wrap up with Aventure update here at The Darkest Hour Keith sometimes before the dawn VC deal activity has uh getting close to uh preco numbers in 2019 obviously major funding

drop off happened in 2022 yeah it's been a couple of years of this but deals uh the number of deals is coming back the amount being put to work coming back to I would say the steady state perhaps even normal level uh and um but VCA exits sadly are not keeping up but we did have service now go public today up 50% and the wrath of lenina con is officially over she's out Andrew Ferguson is in this looks like a great appointment another one by Trump in the column of somebody who wants to allow business

to occur and wants a free market he wants to do basically everything Lena KH con uh didn't do which is allow some m&a boy what's your pulse like here uh and what's your take on the Venture industry and then we'll go into m&a and exits we'll start with just investing is it is it ramping up you seeing high quality companies well I'd say that you should cut that data by Ai and non- Ai and you might see a t to different cities my anecdotal experience is there's AI companies where the Market's pretty hot maybe cooling

a little bit but hot and AI companies with the right team are getting funded you know frequently quickly Etc and then there's non AI companies and I think you'll see a very different you know sort of chart there I do think net net you're probably at a city state that looks reasonable across 40 years you know like Etc but um it would be interesting and you know you have to make some methodological decisions about what's an AI company what's not but if you could do that it'd be interesting to see if the lines you know

look similar or not but it's pretty hot like people starting companies found Founders are optimistic crypto companies also you know are back in Vogue obviously due to the change in Administration I think a lot of people had been hesitant to start new crypto companies and you know there's belief and confidence in the new Administration thec Etc so we'll see if Innovation accelerates you know with all the new capital and all the new Founders uh back in crypto in Enterprise software it had been pretty cool non AI based enterprise software but you know like as you

mentioned with the IPO this week trading very aggressively I think you know maybe there's some inspire inspiration there for you know more traditional boring companies stripe stripe stripe should go public but uh you know they don't listen to me so yeah you didn't know why aren't they going public Keith what's what's the story with the boys over there why they're waiting to get disrupted by crypto stable coins I mean seriously talk about missing your window get out there boys they bought that crypto stable Coin Company for like a billion dollar defensive yeah defensive I I

personally believe and subscribe to the view that Comey should go public as early as possible I'm on the group bill girley you know sort of school of thought what amount of Revenue what amount of Revenue put 50 million minimum but predictability matters you know definitely so not just 50 like but 50 with line of sight to 100 and knowing 100 to 200 I wrote a whole chapter in Eli Gill's you know high growth handbook on why call me should go public as early as possible so I've been on this Chris a forever I like accountability

transparency discipline I think they're good things and you know there's a critique that like oh you're not going to be Innovative anymore if you look at some of the companies we've been talking about what are some of the most Innovative companies in the world they're public companies it just takes the Right leader to say I'm going to be Innovative and I don't care with the bureaucrats and lawyers you know I'm just not going to get distracted with that and so I I like public companies and so I think you'll see a lot of the companies

I am involved in go public at a fairly rapid clip by his historical standards different Founders though have different yeah sort of abuse on this it's very reasonable stripe SpaceX you know for example found in 2003 who knows you know when it's going to be a public company so you can have a very successful company like SpaceX or stripe but my preference is to go public early and then you have the capital resources Equity or Capital to be strategic and per your point about potentially missing window now they were able to transact you know in

that particular case and get ahead of the curve or at least not miss the curve but sometimes when you're a private company there are strategic assets that you can't get your hands on and you know think Facebook buying Instagram we talked about the taste issue Instagram had taste at the time like Kevin had taste and think about where meta would be had they not been able to acquire Instagram yeah totally totally different timeline or the public currency to have bought what'sapp yeah or what'sapp so optionality increases as you have that public currency if you're a

private buying a private the acquired company needs to believe that you're going to get it over the finish line they're going to have some liquidity at some point whereas with the public government they just sell within whatever their window is jamat your thoughts well I was just going to ask Keith a question which is what is the game theory behind stripe not going out like what's the what's the Strategic rationale you know honestly yeah without sharing like you know one-on-one conversation sort of stuff I think the question the burden they they inverted the burden which

is why should we go public a lot of a lot of people ask the question the opposite way which is you know why wouldn't I go public I think their first principal thinkers like put per my point about Trump and I think true of Elon they ask like why and they're like well what advantages would we get and I actually think the m&a one is very real it is but I think I think they've been able to construct alternatives to most of the advantages but not every company's going to be able to do that it

took a lot of effort energy and then the question is would you substitute that energy into something else that might be higher value creation if you weren't to like Pro you know creating the alternatives to a public structure it's a great answer freeberg your thoughts here on public markets m&a the end of the wrath of Lena Khan and what we might see in the New Year Post January you I I disagree with the conflation of Lena KH into all this stuff too much it's she's a big company break aart kind of mandate it has nothing

to do with tech m&a small like the typical kind of deal flow stuff that I think you're focused on I've said this a number of times I'll just say it again but I think on the um on the ener liquidity thing I don't think that the thing holding up Acquisitions and IPOs is markets I actually think it's investor and board expectations on valuation relative to where they put money in the last couple of years so if you look at the valuations from 21 to 23 you know early 23 so much money went in at such

high prices those investors can take those companies public today there are public there's a public market appetite at all times for anything just depends on the valuation and the real issue right now is that a lot of the VCS the late stage private equities the ones that did the big markups and the late stage D rounds e- rounds Etc they don't want to take these things out and take a 60 70% haircut on the IPO they'd rather kind of let this thing sit private and see if they can earn their way back into the valuation

that they did the Mark at when they put the round together so I 100% agree 100% agree with this yeah I mean there there is these overhangs are very real I don't think the exit liquidity dir fundamentally is driven by markets I think it's just driven the the sell side and the investor expectations there's also a culture thing I have to say like in talking to a number of like the leaders of these public companies that were very inquisitive and m&a they are taking the position it's easier for us to build a competing function a

competing adjacency than do any tuck-ins they just told the the Corp Dev people pencils down and they are not wanting to spend a year or two on a deal when they have a breakup fee when they see what happened with ad doobe or they just think well why don't those are big deal our those are big deals the small deals are different the small deals are more the small deals are the fact that over a couple years like Google bought at cyber security like there are these Acquisitions that happened at 800 million that maybe should

have been done at 200 250 and again it's the same problem that the sellers of the high quality companies demand too high a premium that the buyers of these rational scaled companies are like that's not worth it just like IPO candidates so I don't know keth if you've got a experience well I also agree so I used to be an anti trust litigator which I know knows and I think I hate like you know the current leadership the an trust Division I called her a fraud and I think she is intellectually a fraud why why

she well she published a paper that was false like like there her whole claim to fame is this paper about Amazon and the data in the Amazon the data she used in the in the paper at Yale was false and int she's too smart to have done it accidentally Benedict Evans wrote a good critique of it if you want to read all about the data second thing is you look at Amazon which is this alleged like quintessential example have you heard of Shopify Shopify is one of the biggest success stories of the last decade right

down the middle competitive with Amazon and there was nothing Amazon could do they lost the core Market to a competitor that was started and you know went public at a very low valuation and Shopify is dominating DTC Commerce nobody builds a DTC Commerce brand except on Shopify so everything about her is like a fra that said I don't believe that what she's done has affected did you know exits very much at all because like the truth is in highend Venture like institutional Venture Capital other than the WhatsApp and like maybe like a plot acquisition or

something you know one every two years you don't drive returns in venture to an Institutional Venture Capital fund through an m&a like like whatap may be the only one that really drove a fund returning exit to a serious fund it just doesn't happen that way I need IPOs like to return our funds our funds are like billions of dollars you don't get Returns on lot Acquisitions at $50 million to $100 million yeah but $300 million fund 10 yeah but there but most funds have ballooned for lots of reasons L big ones and that's actually led

to some of the perversity that you know David talking about if the funds get large their tendency to do these things also increases so yes a seed fund can drive Returns on m&a Acquisitions that might be deterred in a bad you know hostile Administration Venture fund of 500 million to2 billion do Drive returns through m&a no no I mean they could fill in the first one X maybe yeah I've been lobbying officials for a long time on this Crusade they come in and they expect that oh you know m&a blah blah blah blah and I'm

like no no no I could care less only my most mediocre companies are acquired and the IPO window has started to crack open just to give you a couple more data points Gentlemen We Ride the chinese-based uh self-driving car company went public on the NASDAQ last month 4. .5 billion market cap Pony AI another chinese-based uh self-driving car company went public in November Clara plans to go public in the US I think they quietly filed service Titan today the taping of this on Thursday and Sheen the fast fashion company well she's gonna have some real

problems in the new Administration yeah right tariffs as we wrap here that's a good place to wrap on what what do you think of I guess two issues Keith we'll end with politics since we started there two things seem perplexing to people in finance one is tariffs and how that's going to work and the other is inflation and what the impact would be on 15 million people being shipped out of the country and the impact that would have on inflation Visa the unemployment rate getting even lower than the historic low it's been in our lifetimes

what do you think of those two issues take either one well I think first of the treasury secretary understands this like I think Scott actually from everybody I've talked I don't know him but I I've interviewed about 10 or 12 people that are very successful Wall Street and every single one of them universally has a claim for him and they've all made points to me that these kind of subtleties he really does grock and so when he when he says you can raise tariffs without inflation he understands how all the substitution works and is running

an equation in his brain he's a very successful Trader and that that's a really good skill Also chat's earlier points about Daris evolution of brilliant people being successful understanding how the economy actually works he's perfect so I think you're going to see real tariffs like especially against China and the Trump Administration is completely committed to reducing inflation the cost of eggs you know and groceries and I think those things can be reconciled I know amateur Economist you know with random degrees from Wharton don't think so but as Trump pointed out in the debate and you

know JD pointed out with some research his first Administration imposed all these tariffs and there was no inflation and then JD Vance pointed out that the FED Reserve has a study that says you know housing prices which are primary driver of affordability for a normal American are inflated because of illegal immigration so I I think this Administration and not making more units I mean well I think this Administration there there is substitution right if the price of one good goes up consumers typically have you know unlike people on this podcast typically have a limited budget

and at the end of the day if one price goes up you have to substitute somewhere else so the net inflation might be negative even so in any event this Administration is not naive and the people that Trump has put in place to drive this in treasury the National Economic Council absolutely understand this and they're committed to driving down actual prices the hardest area is going to be Healthcare that is really really difficult and it is a major driver of cost to a normal person and ObamaCare has been a disaster the question is what do

you do about that and I don't have an answer for you right away I have some ideas uh chth your thoughts on tariffs Andor immigration and inflation and that seems to be a place where even across the a you got people debating it I think Keith said it pretty well which is that we do have a lot of experience with how tariffs can be implemented and that the the Practical experience is not what the fear-mongering is that being said I think the devil will be in the details which markets for which Goods what is the

Tariff and why what I hope happens is that if we can really study the second and third order degree impacts of some of these markets what the Tariff does is it acts almost as a reverse subsidy for American companies to compete I'll give you one very narrow example if you believe in electrifying the Amer economy one of the underlying things that you need are electric motors right electric motors and electric batteries and just to double click on electric motors for a second electric motors needs a permanent magnet if you look inside of a permanent magnet

there are these rare Earths that are just required to make these magnets but as it turns out it is impossible for any company that is not a Chinese company to be able to manufacture these magnets in an economically viable way and the reason is because not only can China make it and they can make it in the absence of a lot of environmental controls they'll also subsidize so if anybody tries to compete they'll just inject a subsidy into that economic supply chain where they're always cheaper so what do you do Jason if you can observe

that and realize that we want supply chain diversity what the Tariff does is it starts to push back on those kinds of activities because it doesn't allow it to continue to work then if you take that with what the United States government already does through the doe which is through subsidies and underwriting this is what I mean by it could be a really amazing new moment for the American economy and that would please a lot of people including a lot of people on the left if they just took the time to understand what's being proposed

I mean look at rare Earths you you mentioned them we have some of the great deposits in the world in our country why can't largest deposits in the world it's because of environmental regulations and it's the same thing with Starship going up we got a lot of regulations this country I understand people want to do the right thing but we also have a lot of debt and if we could start mining rare earth metals here and maybe loosen the regulations the lithium supply chain is another really good one that's emblematic of all of this but

there are so many other markets like I'm sure that if you looked in something that's a little bit more down the middle like appliances what you would also see is the same thing where wh poool will try to make an appliance or Bissell will try to make a vacuum cleaner and the Chinese equivalent makes it almost like fighting uphill and there has to be a way to course correct that well I mean look at byd some of these cars they're just copying wholesale everything Tesla's done in their design and uh feature set and they're half

the price and so they were selling really well in countries that allowed them and they would decimate us automakers and German automakers by the way a different a different version of this I wrote this in my Weekly Newsletter but I was curious why these Chinese models are so good and I was like the training of these models seems to be quite fast the quality of these models are really good the Alibaba model Etc and part of what you realize is when they do their training runs the Chinese models have no guard drills in the sense

that there's no copyright checks no there's just none of these things that otherwise slow down in ameran company to make a useful model they don't have any of those things so that's another example where maybe there's not an economic tariff but there has to be a simple reciprocity and in the absence of reciprocity I think it's reasonable to say that there needs to be checks imbalances freir you anything to add there on tariffs or okay four jamath P haaa your chairman dictator the Sultan of Science and new Sachs better BMI hates dictators what's your take

on Ukraine maybe we could fire up a Ukraine discuss I how do you feel [Music] Ukraine ke by the time you have me back hopefully that's solved hopefully that's solved day one we're gonna solve it on day one okay Keith you excellent you're EXC tremendous Keith boy excellent husband very very effective great great American great host great coost aesome you may have heard of two words Allin okay you may have heard of it David Sachs brilliant crypto I mean we didn't even dive into crypto I mean people are going a little nutty on this crypto

what do you think about all this crazy crypto going on here Keith everything's spiking back up xrp Bitcoin what do you think of uh salor I know the salor fans are like obsessing about him coming on the Pod what do you think of seller taking these loans to buy Bitcoin and that other people are following suit to put it in their treasury well sure version on crypto generally is I still think the primary use case is speculation and not that there's anything wrong with that people speculate on stocks retail trading people speculate on football games

gambling like the natural tendency for humans to want to speculate is very real the the art to me is because everybody's now a node connected into these crypto let's call Bitcoin you know can you build an application on top that would have too much inertia too much friction to start from scratch but it has real value and I think think it's possible because so many people are now connected based upon speculation initially so that's what's exciting to me but you know we've watched speculation before in crypto markets and you know it's very volatile so hopefully

someone builds real layers of productivity or utility on top but takes advantage of the network it's a little bit like back in your days at Facebook toath you know you had the social graph and you'd say you know you can build applications on top of the social graph but if you had to create a social graph from scratch that was heroic effort and nobody else is going to do it that was like literally the Facebook Monopoly story and so I think that's true of crypto there's lots of nodes someone's got a soci social graphic and

there's no Zuckerberg to rug pull and say you can't build someone's got to build the application on top and then it'd be extremely exciting what do you think freeberg you you you were monitoring this sailor situation the the mister micro strategy people seems well I think the way the Sailor Financial structure is set up is it looks a lot like a synthetic call option on bitcoin you get a convertible note so you earn a coupon on the note and then you have a conversion price which is a premium to the stock price which you can

translate if you look at the book value or the net asset value of the stock that's how much Bitcoin there is and the premium was two to one I think or two and a half to one yeah the premium that the conversion price is at tells you what Bitcoin needs to be for you to have Equity upside so it's effectively convertible note you earn a coupon and then you have a conversion premium that you can kind of convert to equity which basically gives you a call option you're saying the premium you're paying is the price

for the call option effectively and you're earning this kind of coupon in the meantime so it's a way for some people to kind of trade the price of Bitcoin seems like this guy said a lot of hedge funds and I don't know if you guys saw the CNBC article that it's kind of like Bloomberg it's like the hottest trade in hedge fund land right now is to buy up these convertible notes that he's issuing so if you actually were to sit down and do the black shells modeling of the uh the value of the synthetic

call option that he's selling you with the convertiable note there's a reason people are paying for it they think that there's value there so there's certainly something to the structure that makes sense all right so for your Sultan of science the dictator and fit saacks fit saacks here low BMI low heart rate what's the heart rate at right now ke uh 40 to 42 uh like by measured by eight sleep typical oh eight S wonderful what do you think of our Knicks by the way we'll see I don't know if I would have made that

trade honestly but car Anthony towns really fascinating he's playing so good I know but like I think you had the chemistry all dialed in and hopefully they can build back better you know like bu back better absolutely all right listen uh we'll see you all next time don't worry saaks isn't going anywhere it's just a little bit busy right now there's a transition going on saaks is transitioning and we'll see the the Pod will transition as well we see what it looks like in the New Year we have a good lineup of co-hosts we're going

to do eight weeks uh it's going to be all in idle all in idle is occurring we're rotating people in and you get to vote audience ke that was great thank you you did great thank you for joining us EXC love you boys love let your winners ride rain David and instead we open source it to the fans and they've just gone crazy with [Music] it besties are that's my dog taking your driveway oh man myit will meet me we should all just get a room and just have one big huge orgy they all this

useless it's like this like sexual tension that they just need to release [Music] somehow we need to get merch [Music] our I'm going [Music]