All right, everybody, welcome back to the number one podcast in the world, the all in podcast with me again today to mock polyhypertia. Your chairman dictator. How you doing, brother? How you feeling? Doing great. Fresh off the holiday spectacular. Good times. And then getting ready for a little ski.

You and I will be doing a little skiing together with Friedberg. That'll be quite nice. Friedberg. I don't think you've skied with me and Jason. Jason is an excellent skier. I mean, I've heard his for 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. He's got skiing hips. They kind of shift left, right. Yeah. It's kind of like when I went to the hips are wider than the shoulders. Yeah. It reminds me of I went to the Tom Ford.

I went when I went to Tom Ford to get my suit. I'll do that in a second. But with us again, of course, you're cackling Sultan of science. Friedberg, how are you doing? Have you guys seen that clip of the guy with the fake bomb that runs around the city?

Yes, with security guards. It's like some sort of a crypto put on or something. It's hilarious. He's got like a big Brazilian butt and he just runs around in tight catches. Can you find a clip of this guy? Oh my God, it's so ridiculous. So funny. All right, with us the cackling with his afterglow from the holiday spectacular.

Let's call it what it is. It's the Christmas spectacular. We're gonna pick a side Friedberg. How did you like our Christmas? 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 sacks. It is stylish sacks. It is goes to work every day in venture sacks. His name is Rob boy. How are you my brother? Welcome. Jason. Happy to be here. You know, it's great being more fit and more fashionable that socks is a pretty low bar. So I'm really excited to be with rain man David.

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 don't have 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, what about running companies? Should company CEOs be dictators? Yes, actually. 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 out 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 than what 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 as history as I remember correctly, lots of good founder mode in New York.

Hey, Cal, do you want to give Keith's background? Well, the audience, of course, went to Stanford with the boys, sacks, and Peter Thiel went on to do PayPal. He had a stint at Square. He started a bunch of other founders fund. He was he worked, he went to LinkedIn.

That's how it all started. LinkedIn was pretty key. Like read left PayPal started LinkedIn. So yes, that's true. And then after that, I went back with back selection from PayPal days to slide, which is on the outsheet of history. We don't have to talk about that. But then I did jump into Square as the 20th employee and helped build a pretty good company.

Yeah. And then founders. became lazy, you know, decided to be VC in 2013. Spent six years of coastal ventures by the founders fund 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 the 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 wind up turning into VCs, is you forge a relationship with board members.

So like, for example, Roloff Bote, who runs Sequoia, had Mike Moritz on his board, Roloff 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 Sequoia.

So I think that's typically how people become VCs. I always knew I wanted to be a VC since 2003. I was a very active angel investor, as you know, even when I 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 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? 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 too old, because 20 years, you know, you'll be like Donald Trump age. Yeah. So I can run for president in 25 years or something. Keith, why did you leave Founders Fund to go to COSA? So COSA was great.

I spent six years there. The truthful reason why I left, it's kind of funny given COVID and how history changes. I hated commuting a Sand 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 San Francisco, than in Palo Alto at the time.

And I just despise sitting in a car 45 minutes each direction. Turns out, you know, COVID 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 Vinod and the team was very inflexible about it and Founders Fund 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 Altman. 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." He's like, "There's nothing wrong with being human." In any event, there are a lot of similarities between FF and KV.

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 on the planet at being a momentum investor. So almost every successful investment of Founders Fund over eight funds was invested at $500 million or more entry 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 Anduril and Ramp were the only exceptions at Founders Fund. And at KV, the only exception would be Stripe, which I led in, you know, 2013 or so, which was an order of magnitude higher valuation than any KV investment, initial investment ever.

So KV is much more an input driven organization. Founders Fund is 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 fit in really, really well at KV. You enjoy the early stage, you enjoy year zero, year one, year two. Well, I am 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 keynote to a check? It comes down to 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 reduce confuse you. That said, there's a lot of investors who are very good once there's product metrics, financial metrics. And so I can 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 company 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, right. Yeah, the founder reigns supreme, and everybody else is there to get out of the way, right.

I've had both KV and FF as investors, lead investors in both climate and at Ohalo 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, keep obviously speaking outside of yourself. And then at coastal, as you know, Vinod has been extremely 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, they had issues with what I was doing with the company 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 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 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 got to compete with our friend Kenny Howery. Yeah, Ken Howery. Where's he off to? Hopefully some great destination. I'm sure this time.

Okay, Sweden's a little bit much. I'll send him my wishlist for you. Yeah, let's go. Like maybe like, is there like a Turks and Caicos or something? embassy tour, we should do an embassy tour this year. St. Barts. They have an embassy there. St. Barts. Yeah, that's a great idea.

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 and we're in the game right now. Canada's coming on board. Yeah, Keith, did you not want to roll in the administration yourself? Oh, you know, the thinking I love politics.

If you follow my Twitter feed, I pay a lot of attention. I used to be involved in politics before I got into tech. However, what I realized about where I am in my career in tech is if I stopped 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 in the network building parts of venture for two to five years and come back when you're like 50 years old. I felt like I'm not ready to give up on venture.

I'm in the prime of my venture career. I'm only 12 years in actually Chamath. So figure five or 10 more years is the sweet spot. I'd like to see the companies that I was involved in grow up, become public companies, et cetera. I didn't feel like I could ever come back if I quit.

At some point, would I like to get involved in politics? Probably yes. But it's a decade out. Well, the households involved, big announcement, your husband Jacob is joining the administration. You can tell us a little bit about that. Yes, Jacob's 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 out compete Germany plus Russia plus Japan, we could build more tanks, you know, blah, blah, blah, blah, et cetera.

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 or 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 woke people added a bunch of other things to the title, it used to be just undersecretary of state for economic affairs.

And they added like, you know, environment and all these politically correct things. So hopefully, they'll subtract all that stuff and just go back to undersecretary of state for economic affairs. And interestingly, what's turning out to be interesting as Trump assembles this group, I'd love to get the panel's thoughts on it is not everybody thinks the same.

Jacob's position on Tick Tock, which we'll get to in this show, very different than some other people in the administration, 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 sacks, 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 this sort of diversity and opinion in the administration and how that all sorts out? Because some people are extremely exciting. I think it's very obvious watching from afar, that the way Trump's 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 he's, to some people, the media, and he's 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 insofar as I have, he would go around the room and ask every single person at dinner, what's your view on X and literally go around a 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 actually. Yeah, everybody knows what I think he likes. Chamath, any thoughts on this? The wider team as we see it get assembled. We obviously don't have sacks here. He joined the team. What's 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 and 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 asked 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 are 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 all 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 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 and 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 Page once said, you can never spend more than a billion dollars in your life that 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 and, and they're just smarter. So I'll give you a simple example. Maybe we'll talk about this later. J. Cal, I'm not sure.

But when I saw the DOJ 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, that breaks the world.

And I 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 is asked is they've never worked in the real working world.

We have a professional class of politicians 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 bowels, 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? We're like 100 smart businessmen looked at that said that makes sense. But let me give you the counter to that. Because the counter to that, which 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 ag companies to regulate big ag? 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 authority.

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 10s of billions of dollars on a super on a high speed rail like we were talking about earlier 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, free book 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 with this mid level 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, then what's happening today, which is you slip in the back door, you get paid for 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 pick 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 a figure 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 Darwinistic experiment with other people that are comparable.

And to be successful, you have to outthink, outwork, etc. And that shows up ultimately, in promotions and net worths and various other metrics. So Trump has taken 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 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 stigmatized, you get less. 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 gonna 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 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 a stratosphere. So you think about the President is the 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 gonna look at Uber and say that I'll never work, they'll look at PayPal, 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 and venture to not really fall for that trap.

I always mentioned that I don't like people with expertise, typically, as founders, I think in when I call diligence, due diligence, or call experts, I only ask one question, which is, what is metaphysically impossible about this working? Like, is there a lot of physics that I don't understand that makes this actually impossible?

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're saying, you know, write a check. Yeah, because then it's just all vibes and opinions, etc. So 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 hate and all these people publish these books.

Why is he on the precipice of being elected President of the United States twice, you must have a superpower or two. Most of us are not going to like the 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 elected President.

So what it kind of 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 asked a lot of why, like, why do we do this? Why do we have to do it this way?

Why have we done it 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 2030 4050 6070 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?

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 we're 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 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 supercubers 10 septillion 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 qubits, you know, those are 01 or both at the same time. And Google got a 5% pop, they're up 13% in the last five days, probably on the other news that Gemini 2.0 is out as well, which is unbelievable.

I've been playing with it. What do you think Freeberg of this big announcement? Google's announcement is a paper published in nature that follows the 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? And I think we've talked about this in the past, like, I mean, maybe a brief primer for people. But like, 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 qubit or a 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 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 qubits.

qubits can, for example, be entangled. 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 result that is basically a very, very complex problem that is solved through this quantum interpretation.

It's really hard to kind 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 qubits 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 qubits.

So they put several qubits together. And by putting several qubits 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 qubits is now one logical qubit may 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 three by three qubit structure, the error was higher than when they went to five by five, and then they went to seven by seven, and the error rate kept 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 qubits 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 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 short called shores 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 standards, everything that bitcoins 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 shores algorithm. And if you want, there's some great YouTube videos that describe shores 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 that in a couple of years, theoretically, if Google continues on this track, and now they build a large scale cubic computer, they theoretically would be in a position to to start to run some of these quantum algorithms like shorts algorithm.

And so we're now kind of spitting distance or a couple of years, it's not really clear as a 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 post quantum 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? Now, here's the answer, because I was so tilted by this idea. So if you think of willow, as essentially like one stable, logical qubit equivalent in a chip, we need about 4000 to break RSA 2048.

And we need about 8000 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 endgame two to five year shot clock. No, I mean, I think what will have to happen is some of these chains will need to obviously reimplement something at a pretty foundational level.

The weird thing is, freebrook says is like, the willow chips error correction gets better, the more of these things you start to use together. Now, there's some really big problems and see inside these chips, like logical interconnects are very complicated. If you put two chips on a board, like the CTC communication is called this all this stuff that we haven't figured out how to do.

But this is a big deal. I was really like, my god, what's going on here? Other projects at Google are finally landing, you have way more incredible and you have this now I mean, project moon 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 one times 10 to the negative six. 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 fault tolerance low enough to actually build logical gates using qubits 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 Shockley transistor moment. It's like, you know, here's 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 I went down a rabbit hole, because I'd never heard of who this guy was that that runs his helmet, Nevin.

He's in Santa Barbara, they have a whole team in Santa Barbara, they've been running for like 10 years, he has his own law, Nevin'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 in 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. DeepMind is on that list as well. Keith, what are your thoughts? Yeah, so I think, first of all, I think there's a long time before this becomes a commercial product or application of any sort.

So it's great that they're taking money, but think about it as 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. 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. By the way, like standard computing to explain sort of the magnitude of difference. Standard computing would take 10 to the 25th years to verify that what Google analysis accurate.

So there's a chance that it's not even true. But for the thing for the for the sampling test, they ran. Yeah. 2050 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 do you know the answer is correct?

It takes that long to solve. And then to be practical, like, assuming you solve all this and it's accurate above all, you make it fast off. Second, then there is the post quantum computing encryption, which, you know, a lot of people, a lot of things, a lot of poor 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 have some decay function or some half life. So 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 of magnitude here, you mentioned you need like three words 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 be done. You're not buying any quantum computing stock yet.

Not yet. We have looked at KB, you know, talk about like technology forward, you know, VCs. Over the years, I've sat through partner presentations, and we've never really pulled the trigger. There's other reasons like including like, even if you have quantum computing, you have to rewrite software on top of it.

From a different, it's a completely different, you know, world. Nothing maps, nothing maps at all. Nothing. 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 developers going to interact with them, if at all, maybe by that time, we'll just be AI.

How do you build a compiler? Who the hell knows? How do you build a language properly? These are all complicated. Yeah. Who's going to write the basic? Who's going to write like the Microsoft basic? The interesting thing is there's a lot of work that's been done in this 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 your 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 thing for us.

So the crazy thing about quantum physics is such a mind. Have you guys taken quantum mechanics? I 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, because you really have to like think pretty deeply about what you've learned in quantum mechanics, there's just nothing about it that's intuitive.

Like the way we've kind of think about the world is not the way the quantum world operates. In the case of a qubit, as soon as you measure the qubit, it collapses to a value. If you try and measure it, if you try and look at it goes to zero or one, the probability by which it goes to zero or one is defined by, you know, the quantum state, right at the moment you observe it, it's just such a mind.

So effectively, this thing is existing in a superposition 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, J kal is nothing novel was kind of discovered or represented, that's just quantum mechanics, it's a mind.

And you can go watch hours of YouTube videos, if you want to, like, get taken down the mind rabbit hole of quantum mechanics and realize, like, nothing, one thing I've always found fascinating about this discipline is that looking at a qubit changes it, like it understands, it's article, 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 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. There's a question here comes here.

When you look at the quantum, can you get a better idea of the scale of Uranus? Let's move on. No, let's move on. He was queuing up and joke at the same time I was, I was thinking about Schrodinger's cat. That's like a another ridiculous thought experiment that when you it's the same concept.

It's the quantum state of the cat. Is it's both in the box and not in the box. And I don't know whether it's in the box until you open 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. I need to I need to be on your socks.

They both said, this is stupid. And I'll never touch it except Keith was kinder and more articulate and getting there. He did. That's right. It's just been snoring. He wouldn't he would have done his move where he goes stupid. I mean, next topic, there's an advantage of Monday partner meetings is I get to watch the science fiction stuff in every week, right?

If I don't really understand it, but like a decade of watching science fiction, you pick up some tricks. Exactly. You play chess with Peter Thiel while that discussion is going on. Actually, so I don't play chess at all. Okay. The reason why is if I do something, I want to be really proficient at it.

I don't have the time. Got it. Got it. Also, you have a life. You have a life. Yeah. Other things, things in the real world, etc. Big, big shout out to go cash D. My, my, my Indian friend, 18 years old new world champion. I saw world champion. Yeah, do you know world champion?

Did was he playing Magnus? 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? Yeah. The group chat isn't like the top 10 tech companies, the group chats name is what can Brown do for you?

What can Brown do for you? Okay, there is also UPS is filing a trademark infringement case. Hey, I'm 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, Hatchimals.

And there are obviously GPUs like NVIDIA GPUs are sort of like the giant dump trucks that help you build large language models. These inference chips are kind of like speeder bikes, you know, motorcycles quickly getting you the results from the same ones. It's called belt for Valtra. 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.

My iPhone does not work. I'm sorry, I'm just gonna say it. Okay, I don't know what happened in you upgraded your software is happy. You're on iOS 18. It doesn't work. I after three 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 not trying to complain, but because I know it's hard for them.

I know it's complicated. And, but it's really bad. You're not the only person people are freaking out about the interface changes on photos crashing is a major thing. And Apple Intelligence just doesn't work. So it does seem key that Apple has gotten off their game of making polished 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, ie your phone or desktop, but what are your thoughts on this new story about them doing more chips, they've obviously had great success with the processors and phones.

And now the M four, 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, 2030 4050 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 gonna be able to compete with you. And if you have the resources, you know, because you need balance sheet resources to go in the chip direction, it just gives you another five inch hang your sort of competitive advantage.

And so I love vertically integrated companies, 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. But it's very difficult, you need different teams with different skill sets, and you need probably more money, truthfully, more capital.

But Apple 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 Tesla?

Yeah, maybe NVIDIA could be good. Well, maybe not really. Could they do a world class UI, you know, maybe maybe there's a foundation, but you don't have a different vision, maybe a different team, not clear. Tesla's close, I guess. I'd say the software is 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's, yeah, it's a hard Tesla, and then a long tail of people.

Right. So anyway, this is the point, Apple has a lot of competitive advantages, that, you know, been actually leveraging for about 15 years now. And even back then, Steve, there's some old great Steve videos, I'll see if I can find you a clip where he talks about this very intentionally from the 1990s.

You know, he came back to Apple, he said, we're doing vertical integration, basically using those words of software and hardware, and there's gonna be nobody else that can compete with us. I think it's in an interview he did, it's published in, in the company of giants, I believe, in these perfect on point, just follow that strategy for 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 remember interviewing once with a job for Tim Cook. And I walked in, and I said, he's like, why, you know, why you're interested. And I said, Well, you know, I own every SKU 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 photos app is completely unusable. So I totally understand, you know, to off the frustration. And they are 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 chamath. And obviously, this is your wheelhouse 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 app.

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 and said, How's 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 phone, 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 it the way he said it's supposed to be game over. I don't think Tim Cook's doing that. Johnny Ives not there. And obviously, Steve Jobs not there to terrorize people. Well, I don't think he 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 100,000 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 everything is really, everything is really frustrating, the command center, you know, when you pull up your little command center to change the brightness and your AirPods, it's just like, what are they doing? 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? Yes. Why does it read? This is not this is not complicated software engineering, guys.

No, but this is my point. There's no arbiter of taste anymore. Taste is the backstop. 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 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 take. It's just go off the rails, right? You go off the rails. So Keith, you think that you think that what happened is like when Steve Jobs isn't there and Johnny Ive 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 scaffolding you had at Facebook meta, obviously, or the Google uses would catch some of the stuff without a doubt, like no doubt about it, you know, that users are less thrilled and they'd use things less and you'd fix it.

And maybe even you take that to a stream, you never develop taste. Like I could argue that about Google or meta. They don't really have taste. But like, yeah, you could, you could argue the paradigms. But fundamentally, if you don't have that backstop, if the taste subtracts, 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 case. I don't know too many, I would fund them right away. It's an incredible chess game. I 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 scale. It's certainly more scalable, right? Like you take Steve out, you don't need a dictator, but you need a taste and taste is artistic. The same thing in venture like, you know, like scaling venture funds is really, really challenging.

Because early stage investing is more like taste, then 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 these 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, they should have next year lost two more games, they should have a lot and then eventually 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 an 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. Tick tock is scrambling right now after an appeals court upheld the January 19 deadline red for investment. Here we go. Here we go. I refer you to my Twitter feed.

I mean, you and Jacob must sit. I mean, what do you do? You just sit at dinner and feed the kids and then talk about Tick Tock and China. It's well, I think you don't even have a conversation in my view, like, Tick Tock is a threat to the national security in the United States.

And that's why why people who are like, it's just an app. It's just a hundred percent. Why? Why? Why? So I think there's different dimensions. One of the problems is there's so many things wrong with you. Actually, sometimes people get confused because there's not just one of these or sometimes it's just one that 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 purge 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? Yeah, 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 instantiations of this in the public record, let alone what's privately about Yeah, I mean, the case specifically to back in 2022, by dance, the parent company of Tick Tock had used an app to track locations 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 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 suggest that and you're 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 whether it's meta, Google, x, you know, there's a strong argument there that Reddit, if you don't allow our content or non, you know, non Chinese 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 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 backdoor exists inside of tick tock? Yes. So my evidence for this that I believe is an interpolation of what's in the public domain, is if you looked at that vote to ban tick tock, 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 flow through, I think there's things that are not in the public domain about tick tock, that spooked a lot of elected officials and led to this bipartisan consensus.

How many bipartisan votes do we see on a allegedly controversial issue that, you know, basically, 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? Yeah. They got they definitely got spooked.

And I mean, if you just think about Navy SEALs, 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 tick tock usage, now you know what the parent is, you start thinking about the security and safety of individuals.

It's crazy. So 352 votes for an incredibly popular product. Yeah, about how bad something has to be to get a consensus of 352 votes on an app that's used by you know, huge fraction of the American public past the Senate 79 to 18. And you are right, if you say you're going to ban tick tock, the vague was against tick tock, but then he opened one, because that's where voters are, you're going to lose that generation of voters are going to scare arguably, arguably, in theory, there's some risk, I can sum it back.

Biden 10. 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 term, he tried to bandit wait till he gets the readout that the rest of these guys got.

Yeah, well, and then he had mega donor and tick tock investor, Jeff Yoss gave PAX $50 million, and he owns 15% of it. When I had dinner with him, that's his 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 infant infiltration of WhatsApp, having been done on tick tock, because the reality is, if tick tock has 200 million users, it is true, that will, you know, 199,999,000 just don't matter.

So you could turn on the microphone, you're not going to hear anything. But there's probably 1000 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 government's gonna 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 Stasi 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 the CCP, it's because you see this as a valuable tool, right?

I mean, just work through the basic logic, folks, right at some price point, right? What I would do if I were president, I'd say, you tell me the fair market price for tick tock. And I'll go far, you know, I'll make sure that there's buyers, right? Because CCB won't name any price.

There is no greatest point, right? That'd be like giving up your nukes. I don't think they should have to sell at a less than 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's no reason by the way, come off, 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 do they take your phone away? 100%? 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? He needs to eat a steak once in a while. Oh, of course. What's your cut? What's your cut? Are you cool? Ed? Are you a ribeye guy? eight to 1012 ounces max. medium, you know, solid. I don't really care. Yeah, but why do you all I'll be a little non American go Wagyu.

You know, like, yeah, sure. All right. All right. I think just shout out to my friend Kimbo. You know, red meat Republic. Of course, of course, I'm a big fan of this cool let slash the Kanye. Oh, you know, you know what? Yes, I just bought recently a Denver cut, which I'd never tried.

Incredible. Denver. All right, let's wrap up with a venture update here at the darkest hour Keith sometimes before the dawn VC deal activity has getting close to pre COVID numbers in 2019. Obviously, major funding drop off happened in 2022. Yeah, it's been a couple of years of this. But deals, 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.

And but VC exits, sadly, are not keeping up. But we did have service now go public today up 50%. And the wrath of Lena Khan 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 Khan didn't do, which is allow some M&A. Roy, what's your pulse like here? 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 tell two different cities. My anecdotal experiences, 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 steady state that looks reasonable across 40 years, you know, like etc. But 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 started 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 of course, yeah, confidence in the new administration, SEC, etc.

So we'll see if innovation accelerates, you know, with all the new capital and all the new founders 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 inspired inspiration there for, you know, more traditional, boring companies, Stripe, Stripe, Stripe should go public.

But, 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 are they waiting to get disrupted by crypto stablecoins? So seriously, talk about missing your window. Get out there, boys. They bought that crypto stablecoin company for like a billion dollars.

Yeah. And I personally believe and subscribe to the the company should go public as early as possible. And the group Bill Gurley, you know, sort of school thought, what amount of revenue, what amount of revenue for 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, 200, I wrote a whole chapter in Ilad Gil's, you know, high growth handbook on why companies should go public as early as possible. So I've been on this crusade forever. I like accountability, transparency, discipline, I think are good things. And, you know, there's a critique that like, oh, you're not gonna 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 what the bureaucrats and lawyers, you know, I'm just not going to get distracted with that.

And so 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 hysterical standards. Different founders, though, have different sort of views on this. It's very reasonable. Stripe, SpaceX, you know, for example, founded 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, 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 about 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. Have they not been able to acquire Instagram?

Yeah, we totally totally different timeline for the public currency to have bought. What's up? Yeah, well, what's up? 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, I mean, they just sell within whatever their window is, Chamath, your thoughts?

Well, I was just gonna ask you the 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 inverted the burden, which is why should we go public?

A lot of fat, a lot of people ask the question the opposite way, which is, you know, why wouldn't I go public? I think their first principle thinkers like put put my point about Trump, and I think true of Elon, they asked, like, why? And they're like, well, what advantages would we get?

And I actually think the M&A one is very real. I think they've been able to construct alternatives to most of the advantages, but not every company is 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, you know, creating the alternatives to a public structure?

That is 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. I disagree with the conflation of Lena Khan into all this stuff too much. It's she's a big company break apart, kind of mandated 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, so I'll just say it again. But I think on the on the general 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 evaluation. 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 in 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 market 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 dearth fundamentally, is driven by markets. I think it's just driven by 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.

If 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 Adobe, or they just think, well, why don't those are big build it ourselves?

Yeah, 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 a cybersecurity, like there are these acquisitions that happened at 800 million that maybe should have been done at 200 to 50.

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 if you've got a experience. I also agree. So I used to be an antitrust litigator, which I know Jason knows.

And I think I hate like, you know, the current leadership antitrust division, I called her a fraud. And I think she is intellectually a fraud. Why? Why Why? Well, she published a paper that was false, like, like, 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 in fact, 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 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 fraud. That said, I don't believe that what she's done has affected, you know, exits very much at all.

Because like the truth is in high end 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 WhatsApp 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 to return our funds. Our funds are like billions of dollars. You don't get returns on lots of acquisitions at $50 million to $100 million. Yeah, but a $300 million fund can. Yeah, but most funds have ballooned for lots of reasons.

There are a lot of big ones. And that's actually led to some of the perversity that, you know, David talked 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.

But a venture fund of $500 million to $2 billion 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 quiet. And the IPO window has started to crack open. Just give me a couple more data points. Gentlemen, we ride the Chinese based self driving car company went public on the NASDAQ last month $4.5 billion market cap pony AI, another Chinese based self driving car company went public in November.

Klarna 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 do you think of, I guess, two issues, Keith, we'll end with politics as 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 vis a vis 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 all, the Treasury Secretary understands this, like I think Scott actually, from everybody I've talked to, I don't know him. But 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 grok. And so when he when he says you can raise tariffs without inflation, he understands how all this substitution works and is running an equation in his brain. He's a very successful trader. And that's a really good skill.

Also, Chamath's earlier points about Darwinistic 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 economists, you know, with random degrees from Warren don't think so. But as Trump pointed out in the debate, and you know, JD Vance 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 think this administration and not making more units, I mean, well, I think this administration, there is substitution, right?

If the price of one good goes up, consumers typically have, you know, like 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 debt deflation 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. Jamal, your thoughts on tariffs and or immigration and inflation. And that seems to be a place where even across the aisle, you got people debating, I think he said it pretty well, which is that we do have a lot of experience with how tariffs can be implemented, and that the practical experience is not what the fear mongering is about.

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 American 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 mentioned them, we have some of the great deposits in the world in our country, why largest lithium 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 Whirlpool 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. But I mean, look at BYD, some of these cars, they're just copying wholesale, everything Tesla has done in their design and feature set, and they're half the price. And so they're selling really well in countries that allow them and they would decimate us automakers, and German automakers, if by the way, 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 rails, in the sense that there's no copyright checks.

No, there's just none of these things that otherwise slow down an American 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 and balances.

Freeberg, anything to add there on tariffs, or okay, for jamaath palya hapatia, your chairman, dictator, the Sultan of science, and new sacks, better BMI hates dictators, what's your take on Ukraine? Maybe we could fire up. Discussion. By the time you have me back, hopefully that's solved. Hopefully that's up day one.

We're gonna solve it on day one. Okay. Keith, you were excellent. You're tremendous. Keith. Excellent husband. Very, very effective. Great, great American great hosts. Great. Awesome. On you may have heard of two words all in. 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 bit on this. What do you think about all this crazy crypto going on here, Keith, everything spiking back up XRP, Bitcoin? What do you think of sailor? I know the sailor fans are like obsessing about him coming on the pod. What do you think of sailor taking these loans to buy Bitcoin and then other people are following suit to put it in their treasury?

Well, short 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 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, it takes advantage of the network.

It's a little bit like back in your days at Facebook tomorrow, you know, you had the social graph and you'd say, you know, you could build applications on top of the social graph. But if you had to create a social graph from scratch, that was a 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 social graphic, and there's no Zuckerberg to rug pull and say you can't use it. Someone's got to build the application on top, and then it'd be extremely exciting.

What do you think, Freeberg? You you were monitoring this sailor situation, the Mr. MicroStrategy. The way it 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 is 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 a convertible note, you're in 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 we're 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 souls modeling of the value of the synthetic call option that he's selling you with the convertible 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 sacks, fit sacks here, low BMI, low heart rate, what's the heart rate at right now? 40 to 42. Like by measure by age, sleep, typical. Oh, it's the one what do you think of our next by the way?

Oh, well, we'll see. I don't know if I would have made that trade, honestly, but for Carl Anthony Towns, really? Yeah. Fascinating. He's playing so good. I know. But like, I think you had the chemistry all dialed in and hopefully they get billed back better, you know, like, All right, listen, we'll see you all next time.

Don't worry, sacks isn't going anywhere. It's just a little bit busy right now. There's a transition going on. sacks is transitioning. And we'll see the pot will transition as well. We'll see what it looks like in the new year. We have a good lineup of co hosts, we're going to do eight weeks, it's going to be all in idle, all in idle is occurring.

We're rotating people in and you get to vote on it. That was great. Thank you. You did great. Thank you. Thank you for joining us. Really? Okay, guys. Love you, boys. Let your winners ride. Rain Man David. We open source it to the fans and they've just gone crazy.

Love you as a queen. Wow. Besties are gone. That is my dog taking a notice in your driveway. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension that they just need to release somehow.

What you're about to be. We need to get Merck. I'm going all in. I'm going all in. (upbeat music)