a16z Podcast - Balaji and Steven Glinert on Network States, Supply Chains, and Allied Coalition Strategy

Episode Date: June 3, 2026

Theo Jaffee and Sophia Puccini speak with Balaji Srinivasan and Steven Glinert about the shifting balance of power between nations, networks, and technology. The conversation covers China’s industrial rise, America’s manufacturing challenges, the role of alliances in a multipolar world, and whether the internet is becoming a political force independent of traditional nation states. They discuss supply chains, technological sovereignty, decentralization, and competing visions for the future global order. Along the way, Balaji outlines ideas from the Network State and Network School, while both guests debate how technology, economics, and political power may evolve over the coming decades.   Resources: Follow Balaji Srinivasan on X: https://x.com/balajis Follow Steven Glinert on X: https://x.com/stevenglinert Follow Theo Jaffee on X: https://x.com/theojaffee Follow Sophia Puccini on X:https://x.com/schisofrenia   Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

On the left, there's a lot of people who think you can just push a button to like end homelessness, end poverty, just take all the Elon's money. And they just don't do any math and they don't have any understanding of scarce resources. Scarce resources in the physical world. They don't understand scarce resources monetarily, right? They just think there's a cornucopia, a bounteous mother, government is GOV is GOD, government is God, but the bountiest mother form of God, which can just hand out everything, right? And the rightist, while more realistic often, is subject to a different but symmetrical, somewhat symmetrical version of this, where they think if the leftist thinks there's infinite money, the rightist thinks there's infinite power. The rights does not viscerally understand, oh, I need to work for votes. I need to get political support.

Just like the leftist doesn't understand scarce resource in the physical world, the rightist doesn't understand scarce resource in the digital world. That they actually need to get all these people to agree with them that this is a good thing. and you can't just point a gun at everybody. Right? And there's limits to just brute force. Who has more power today, nations or networks. For decades, the internet has connected people across borders, creating new communities, markets, and institutions

that don't neatly fit inside traditional states. At the same time, global power is shifting as China expands its industrial capacity and countries rethink alliances, supply chains, and economic strategy. The result is a growing debate about what comes next, a world organized primarily by nation states, or one increasingly shaped by digital networks that operate across them.

Theo Jaffe and Sophia Puccini speak with Bologi Serena Vassum and Stephen Glynnard about geopolitics, technology, and the future of global power. We are live in the Situation Room. Today is Thursday, May 28. All right, so can I show some slides? or should I get started? Go ahead. You should probably talk about where this came from

and like why we're both, like, what the hell you've raised online the last couple of days too, right? Well, Helmand Helmut guy. You know, the thing is, so, like, this guy actually had a decent TikTok, which I'll talk about in a second, by the way,

which is funny. Basically, he has like a million followers on TikTok since 2022. He has never been a jingoistic nationalist on TikTok. In fact, I actually can't think of a single pro-American thing or anti-Chinese thing he's ever posted on TikTok, right? So all the patriotism, Uber patriotist, whatever kind of thing,

Uber nationalism is only on X, right? And the persona on TikTok is a completely different person. And I didn't actually understand that until actually like, you know, a few hours ago or whatever. When he has like something where he's like, oh, Ediamen did nothing wrong, basically, right? Yeah, that one was crazy. leave it just you know the problem is like you know and some of people said why are you being so nice

blah blah and the way I approach things is you know tip for tat in game theory yep like basically there's a version of tip for tat where uh like you start out nice right I will basically cooperate with someone who will cooperate with me I always start out nice Steve I mean whatever you've seen me in business over the years I always always start going you're also like like a genuinely nice person. Like, you're not that argumentative in person. I'm not, and I try, like, basically I'm always looking for the win-win.

That is to say, how can that person win, you know, like empathy? It's funny. The problem is, you know, wokes weaponize the word empathy, and they use it to mean, give me all your money and die or whatever, right? In your evil, whatever. But the thing is, empathy in the sense of understanding the other person's

incentive structure and how they get a win is important, even if you're just a completely cold-blooded, business person, right? In fact, the first thing I do, when in any slide deck, any conversation before you go and do a presentation is, how does that person win, right? How did they get a promotion? How do, you know, how did they, how does their business make money?

How do they advance in life? They have like three, sometimes they haven't even thought through their KPIs or whatever, right? And, you know, so, like as an example, a concrete example, an academic, what is their number one thing they care about, they care about getting a first author paper on a study. What do they not care about so much? Maybe the IP licensing or something like that. So there's a win-win where you can give them a grant. They do a study. They get a great new first-author paper. And then you have IP license, obviously subject to whatever other rules, the university and so on has, right? It is an example. Anyway. So coming back up, like I always try to enter every discussion as win-win as possible

and try to seek common ground. And that was basically. basically impossible here. I was just, you know, but anyway, what I want to do is, I want to actually show you what I'm thinking about here. Are the slides on screen or not? Yes? Okay, great. All right. So, do you see the thing where it says internet first? Intranet is not a place, but there will be internet places? Yep. Yep. Okay. And what on full screen, yeah, well, those are all coins. Oh, cool. Okay. Yes. Coins, not companies, right? So, because their community is not companies, right? Does it show the networkstate.com the book here?

Yes, no? Okay, great. All right. So I wrote a book on this. I just want to briefly explain what I'm trying to do first and motivate it, and then we can have a discussion perhaps. Okay. So I wrote the network state, that was theory.

And I opened up the network school and that's practice, okay? Basically to show that you can essentially print out the internet, that you can actually build physical social networks. I think that's the next step from what we're doing in tech, where we are not simply building data centers with closed doors, but we're building tech communities. Think of it as, you know, look, all these people are leaving Silicon Valley. You know, you have Larry Page and Zuck and Sergey Brin, Elon, of course, Peter Thiel, Travis Klanak of Uber, all left California, Jeff Bezos left Washington.

It's no longer the place for capital formation. And unfortunately, talent can't get into the U.S. either. And so basically, Silicon Valley, as we know it, is actually over. This year of IPOs, in my view, is like the last giant, you know, bang on the thing. And we need to decentralize Silicon Valley around the world. and in fact that already exists in a sense where there's a network of these Silicon Valley's, there's Silicon Valley of Uzbekistan

and, you know, Moldova, all these places want a Silicon Valley of X. They've wanted it for many years, but now is actually the time to decentralize Silicon Valley. Just like we have Google offices and data centers around the world, we actually have the tech community all over the world

because the tech community draws from the world, right? Okay. So that's out here behind Network School. We did the first one here. Let me give a little bit more theory. The concept of being internet first, what it means, what it means for values, what it means for the world.

So first, internet first. So can you guys see the screen where it says the internet century? Yeah. Okay. So the single most important force on the entire world, yet still underestimated, is the rise of the global internet. It is the first thing you see often when you wake up in the morning and the last thing at night.

It is perhaps it's even monitoring your sleep or doing fitness tracking. Perhaps it's even doing, you know, some sort of agent that's acting for you online, right? So it's completely ubiquitous. And, you know, fish can't see water as always. Orwell says it takes a capital effort, a huge effort to see what's in front of one's nose. The internet's in front of your nose all the time. Arguably, the key moment was 1991. It wasn't just the fall of communism in the Soviet Union.

It was also the rise of capitalism on the internet because something called the NSF acceptable use policy, that was repealed. And that was actually a thing that was blocking capitalism on the internet. Up to that point, the internet was an educational and military network only. And all the guys said, hey, if you legalize capitalism on the internet, you're going to get spam and scams and porn and malware. And of course they were right, but we also got all the dot-coms and it was net good, right? So even despite the fact that the intranet is the single most important force on the world, it is still underestimated because we put every transaction and communication online, but there's still layers that operate offline, like the currency, the presidency, the military.

That's all going to change. We're going to enter what I call an intranet-first world. And what I mean by internet first is a play on words. It means at least two things. It's both the technological idea, like, you know, you say mobile first or internet. AI first, right? You know, mobile first company, AI first company. But it's also a political idea like America first or your country first. Internet first is, in my view, the scaled alternative to both nationalism and socialism. And if I describe my ideology, I'd say I'm internet first.

That's say, global techno-capitalism. And millions of people are not really location first. Like the flags over here do not actually describe what your actual social network is. If you take your WhatsApp group chat or your Twitter followers or whatever, and you print them out on the map, it looks something like the thing below, right? The digital diaspora is the core feature of our online existence. The reason we don't see it is we don't have good maps of the internet. Now, by the way, to be clear, the mapping of the physical world was actually itself a technology because a straight line on a physical map is a very unnatural thing. You needed, you know, to establish it not just a constant latitude and launcher. You needed surveying techniques. Later,

you needed, you know, aviation and overhead flights and all the kinds of stuff, GPS coordinates that we have today. We take maps for granted, but much of the world for a long time is unmapped. And really, the internet right now, this network over here is from Facebook, and that exists on Facebook servers. Twitter's network, you can map it on Twitter servers. We're just starting to have with blockchains an open web where we can actually map at least all the financial connections and with something like Farcaster or Lens, all the social connections, but it'll take a few years to eventually get there until we have a decent web. centralized social media platform where we can make maps like the blow. Okay. The point, though,

is this is actually where you live. You live in the center of a network, not really in your location. And the reason I say that is, you know, if you take a circle of 100 meters or, you know, 100 miles, or if you instead take your top 100 contacts, the latter is much more important to you typically, right? Those could be remote workers, they could be internet contacts, they could be vendors around the world. essentially geography is not the primary mechanism of organization. This change is something that was true for 400 years since a piece of Westphalia in 1648, which is that geography was upstream of both culture and law. So people who are near each other shared the same culture, and therefore they share the same law.

No longer the case. You can live in the same apartment building, have a totally different culture. That's why people disagree on law. That's where the fights are getting so bad. Okay. So once we actually have something. Yes. Which is one of Roman Helmichai's points was that, you know, you have a physical

location and that location can be bombed. Like the network state is physically located somewhere. All of the data centers of power the internet are physically located somewhere. And if a global superpower like the United States or China wanted to destroy an internet native community, they have the guns and you don't. So like what would your response be to that? So first is the internet was actually built in part to resist exactly that, to resist a nuclear attack. Look at the graph below. Can you bomb that? The entire point is that decentralization, can you bomb Bitcoin. In theory, I suppose you could try to go and bomb every single data center around the world. Go ahead. That was not even like, sorry, I'm jumping in here. That's not the core point,

by the way. Go ahead. No, but the coherent thing, there is a coherent point here, which is like, you can seize control of the internet for most people. China does that, right? Like, there are plenty of people who VPN out of China, but, like, China has seized control of the internet. internet from 99% of people there. They, the U.S., you know, we have GDPR. I know that's like kind of a silly thing to bring up. Like, GDPR is like the EU asserting control. Like, you can assert control over the internet in your country.

Memology, there are many things in Singapore that I, I've searched like Robitusson before and like you can get blocked for it in Singapore. Yeah, and you're in America. Like you have Anna's archive and all these pirated data websites that get like taken down by the government. So hear me out. The thing is, first you have to identify the pole of network and state, cloud and land. Like these are, it's like, you know, north and south poles, for example, it's two extremes, right?

And then there's many intermediates between those two poles. But we're talking about a conflicts between the network and the state. And in China, yes, the state basically triumphed over the network. And Xi, Jack Ma, Jack Ma, before Jack Ma could Elon Xi. Okay, meaning Xi went and basically expropriated Jack Ma before Jack Ma had any ideas of maybe doing something that could undermine G's power. Okay. But in America, the network has triumphed over the state. Why?

At least up to this point, like what's upstream of all politics? X, right? What is basically taken over the financial system? Crypto, right? Stable coins, right? What is like essentially the center of the U.S. economy? Right now, AI. and data centers, right?

So, and then obviously, it's the top 10 tech companies and so and so forth. Whenever anybody talks about what America is, they're only talking about, if they're pointing to the success case, the tech start, right? And, you know, do politicians need their ex accounts? Absolutely. When Trump was deplatformed in 2021, he wasn't politically powerful, but when he was re-platformed, he was again, right? Network over state applies in the West.

State over-network applies in the East. Now, the thing you're talking about, yes, there are tension. between network and state. But first we have to, it's like capitalist and communist, right? Like it's something where there's a tension between the group and the individual. And you can frame in a few ways. I mentioned cloud and land. So you can put the network up here and the state down here. You could also say the state is top down and the network is bottom up. So you could put them like this. You could say the network is internationalist and the state is nationalist. So you can make them left and right like this. But you could also say the network is capitalist and the state is communist or socialist. And so you could flip them like this.

Okay. So these are like two forces that, you know, kind of juxtapose. And, you know, Teal, I think, had, in my view, obviously, I think it's a precursor or a forerunner. He talked about technology and politics. But I actually think network and state are more precise ways of talking about the same thing because they're actually structures, right? So it's not just technology in the abstract sense. The fundamental technology of our age is the internet. Even the electric car revolution is in part driven. by battery technology, which is improved due to smartphones, which of course, driven by the internet. So anyway, NetNet is it's not simply that the state can just, right? This is something, you know, Stephen, I'll give you the ball back and maybe I'll get some more slides in too. The, it's like a state is not all powerful. Like when an order is given, all kinds of people need to actually do it. Obviously, Trump was in his first term resisted by the deep state, right? And they didn't actually do what he said. you'd say something that wouldn't get done. And now, actually, everybody does what he's saying,

and they're building the UFC on the White House lawn or whatever, okay? So, which is, you know, that's a different failure mode. And so the, which is, by the way, that you want third worldism, that is third worldism, okay? Right, I know. Lusotropicalism. You know, yeah, there's also looser tropicalism. The thing is, with that said, there's actually some amazingly good things that are happening due in part to the administration, which is the absolute rampage of a

amazing biotech innovation, right? That is in part due to the relaxation of approvals and so and so forth. So we're getting these wonder drugs. So this is just a very high variance thing where we're getting the, it's the best of times and the worst of times times. The best of times technologically, the worst of times politically, right? Okay. The best of times network, the worst of times state. And so the more you are a internet American, the more you are associated with the global network, overall things are good to find to great, right? The less you are associated with that or the less you're associated with China. Basically, I think, you know, people who are associated with either China or the Internet,

like an offline Chinese person to the extent such a thing exists, they've got an improving Sierra Living. If you're associated with the Internet, you've got an improving Sierra Living, which is lots of people in India, Malaysia, you know, the U.S. and so on and so over who are Internet people. But if you're, you know, antithetical or opposed or economically opposed to both, like a very offline person whose, you know, factory is disrupted by the Chinese, then you've got, you know, a bad time

and you're going to be opposed to both, right? Let me pause there at Marik and say. So I think the analogy I think of whenever I think about, it's probably a rough one, but I know you know about this. Like what's the, the conflict between, it's between Henry, the something in the Pope, like the Walk to Canosa, right?

Like the Pope had no terrestrial power, but he could impose his will on emperors. He could impose his will on the Holy Loon Emperor. He could oppose his will on kings. He had power. It just, he had no armies, right? And then you, but I guess what I think about a lot is, like, you had this period where the Pope and the emperor went back and forth

in terms of the Pope could assert power over the emperor in certain city states and in certain structural ways. There's a, it starts with an eye. There's something. Investiture. Investiture crisis, yes. like there's the investiture crisis where the Pope and the emperor basically came to a solution. The Pope was the network, the proto network that you're talking about.

But Charles VIII eventually just came in and he sacked Rome, right? The Pope and like when Charles V became powerful enough, when the state became powerful enough, you do have the failure mode of the network, right? Like the state and the network, the church were like, you know, kind of like in a balance. And then Charles V came in, and he sacked Rome. And that was it. I know, no. But the thing is, it isn't the case that the state always wins because you can have religious conversions.

There's a reason people say the pen is mightier than the sword. There's reason Google is so gigantic. It's never fired a shot, right? So the thing is, it is, I think we're in an age right now, due the rise to the right, where there is a enormous overrotation on, like people will constantly tell me something like, polygy. you don't understand hard power. Let me explain to you what a gun is or whatever, you know, this kind of thing, right?

And in reality, often that person, not you guys, but that person doesn't understand hard power because I will start showing them that the U.S. military is made in China, that the supply chains are there, that you can't fight your factory, that the Tomahawk and the day jam, J-dam, all the U.S. armaments depend on China, that it's number one in steel and cemented cars. And then they start crying, right? Then they get mad, right? Because what they thought they had, and this is actually the problem. my main point of departure from, you know, I have, you know, friends all over the West, obviously,

but the Western leftist believes implicitly that if they lose the argument that they can always resort to coercion in the form of taxation. And the Western rightist believes implicitly that if they lose the argument, they can always resort to coercion in the form of invasion. And that's been true for like 500 years. And it's particularly true for America for the last 35 years since the unipolar moment of Crowthammer after right around the time of Goldfor-1. But it's no longer true. And so coercion doesn't work anymore, and you have to use persuasion. Why does coercion not work? Because even the NSS National Security Strategy of 2025, acknowledge it's a multipolar world now, right?

Like that's why, you know, there's a withdrawal from, you know, Asia. That's why there's, they're withdrawing from Iran. That's why, you know, there's at least a standstill of Russia, Ukraine. That's why there's, it's a grudging schizo pullback, but it's happening. And so what that means is that having a gun is not. not everything. You know, like somebody quoted it to me. They're like, oh, yeah, well, apology, how many divisions has the Pope, you know, which is Stalin's quote. And I, and I said back to them, you know, as the other saying goes, blue jeans and rock and roll have more power than

the Red Army. It's not like the USSR collapsed due to invasion, right? It collapsed due to essentially a dysfunctional, in a sense, nervous system. So that's a way of thinking about it. The network is like the nervous system and the state is the body, right? And if you're Christopher Reeve and you're like, you know, really muscular or you're just like a like a big person, right? And, you know, Christopher Reeve, you know, Superman, he fell off a horse, right? Tragic accident. And he had the body of Superman, but he fell off a horse. He's paralyzed.

So if the network isn't coordinating the state or if there's two networks that are smashing the state against each other, which is what's happening in America, then it doesn't, it can't just, right? Because to just do something means take away all constraints. Actually, I'll say one more thing on this. and I'll give you the guys a ball. So, you know, there's another meme that I critique recently, which was, to be clear, I think it comes from a good place,

but it's like the just push the button, you know, meme, right? Which is just restore law and order. Why don't, you know, don't ever think about pushing that button. The fix everything button, I think. The fix everything button, right. The fix everything button. Yeah, yeah. Now, the thing about this is,

it's a great meme. It's so good. It's a great meme. Right. It's like, the thing about it is, is there some truth to it? There is some truth to it, which is, like if we just had a button we could push that said, hey, enforce the law, restore law and order, you know, like,

then everything would just work and, you know, the other people have stupid ideas and so and so forth. What is missed in that is that the people who have those bad ideas, you have to uninstall those bad ideas via persuasion before the button is built. Like, that is to say, the reason that, like, or another way of putting it is, on the left, there's a lot of people who think you can just push a button

to like end homelessness, end poverty, just take all the Elon's money. He's so ungrateful. He's ungratitude, blah, blah, blah. Take all the billionaire money. They owe it to us. And they just don't do any math and they don't have any understanding of scarce resources.

Scarce resources in the physical world. They don't understand scarce resources monetarily, right? They just think there's a cornucopia, a bounteous mother. Government is G. Gov is GOD. Government is God, but the, the bountiest mother form of God, which can just hand out everything, right? And the rightist, while more realistic often,

is subject to a different but symmetrical, somewhat symmetrical version of this, where they think, if the leftist thinks there's infinite money, the rightist thinks there's infinite power. The rights does not viscerally understand, oh, I need to work for votes. I need to get political support. Just like the leftist doesn't understand

scarce resource in the physical world, the rightist doesn't understand scarce resource in the digital world, that they actually need to get all these people to agree with them that this is a good thing, and you can't just point a gun at everybody. Right? And there's limits to just brute force.

I mean, duh, but also not da. This is why, like, so many MAGAs seem to believe that, like, there's, like, adamantium under the Appalachians, that, like, America is a physical place, has, you know, some super resource, right? That, like, as if, like, the American Empire with, like, a billion people globally and allies around the world

isn't mostly held together by, diplomacy, treaties, alliances, you're not firing the gun. 99.999 whatever percent of the time, how are many nines, laws do not involve the firing of a gun? That is a very rare occasion, edge case. And while the left can not understand that force exists and it is the ultimate backstop, that's true, the right doesn't extend that it's not what you use all the time. And you don't use it except in extremely, extremely in frequent circumstances. Let me pause here.

I just want to... So I kind of want to come back to something you said. I kind of want to put a fine point on the two things. I want to put a point point on something you said, but I also kind of want to add a little bit. There's this thing about, like, it's not that the U.S. military is made in China. It's that China's productive capacity...

We don't know what supply chain looks like. I mean, I think I've spoken to a lot of people, they said we cleaned up the supply chain quite a bit, who knows? But it's that China's productive capacity for a lot of what will be future warfare, which is all going to be autonomous, is unbelievably overpowered. I think they make 93% of the world's, it's like, it's like, not mad, it's like basically like the magnet manufacturing, which you need for like any autonomous warfare, that's all China.

It's like 93%. Like, go to any robotics startup and they'll tell you like, oh my God, I can't get anything in the United States. Like PCB manufacturing, they do it faster, they do it better. They have an incredible capacity. So, like, for all the things that we care about for modern warfare, which is all economy, yeah. Like, China can scale up. Like, in a long conflict, we will lose. Like, in a short conflict, like, in a long conflict, go ahead.

Yeah, I'll get for you saying and I'll say something. Go ahead. In a short conflict, I don't know, 50-50. Who knows? That's what they say over Taiwan. But a long conflict, they will, like, crush us in production. And, like, I think that there's a lot of people in the Trump admin who have admirable ideas. I think Dave Copley, for example, has some really admirable ideas about how to get that,

to get at least claw our edge back. But it's hard. It's a 10-year effort, and who knows how many years we have until, like, no, like, who knows how much time we have. But, like, it's going to be very hard for the United States military to fight a long war against China. And, you know, unless, like, you... I want to just give some numbers here. Okay. Here's, can you see the screen?

Yeah, yeah, I've seen these numbers. Yeah, it's insane. It's wild. But here we are. So can you guys see this? The CSAS? Yeah. Yeah.

So, the U.S. military exhausted its inventory of some types of long-range missiles within the first week of a Taiwan conflict. Taiwan used up its entire inventory of anti-ship. So it's not, forget about a long war. It's basically, it like just goes to zero very, very, very, very quickly, right? And so this is also, this is a graph I was saying with the U.S. military is made in China. There's a J-DAM, the Tomahawk. The supplier-supplier is in China, okay? And this dominance has been increasing over time. there's some like, you know, attempt to kind of stop this over here. But basically, the thing about, so, you know, the thing about a supply chain is, I've actually managed supply chains in, you know, biotech and genomics.

It is, it is complicated for the following reasons. First is, the very simplest is you've got a list of your parts in a spreadsheet, and you've got supplier one, supplier two, supplier three, and country, a, country, a, country, country C, at price A, price be, pricey. And the thing is, what you first don't know is who their vendors vendors are, right? Because those vendors change over time. Any supply chain is dynamic, right? Especially when you've got crazy tariffs and trade war and so on. You're constantly re-optimizing it and so on. And I don't think that America has, like, one of the things I actually did is, you know, just as an intellectual exercise,

if you actually wanted a rational industrial policy, I actually did have a, uh, a visual of this here, which is this. Like, that's sunscreen. I had another point. I have another point here. Yeah, please. The truth is that, like, and I think this goes back to your, actually one of the other things you said,

kind of relating it a little bit full circle here. Like, the United States will struggle to fight a long war. And it's not just like we need, you know, 10 years to get there. We need, and I think, Do you know Rush Doshi? Bologi? Yeah, I have Rush Doshi, the longer telegram guy? Yeah, like he's amazing. He wrote a book on some of the U.S.-China stuff, yeah.

Yeah, yeah, he's an amazingly intelligent person. And every time you talk to him, you should have him on the show. He's such a cool person, such an intelligent person, really nice. And the thing he says quite a bit is, like, the only way for the United States to feasibly balance against China. Because there's not going to be some, you know, wonderful, like, industrial renaissance that's going to come around, you know, even in 10 years, like we'll claw our way back maybe if we do everything right. But like the only way to really do it is have allied weight. You need to build relationships.

The United States needs to maintain relationships with Japan, with Korea, with France, with Germany. And this admon is done. Because you're all getting detonated right now. Right. And these admin has done a really, really bad job. So like, like, I think that this is the, like, the core problem is like, if you want to maintain a, if you want to maintain balance against China. You need to be creating an anti-hegemonic coalition

where you can use the industrial capacity of the rest of the world. Because frankly, like, there's no world, maybe in a decade we get a lot of it back if we play our cards right. But there's no world in which we're able to actually have parity against them in 2036, right? Like, that's not a thing you can get. The thing is, the gap is growing wider because everything is becoming stupider.

But let me just show you some graphics just to compliment where you're just saying, Steve, right? Do you see this tweet, this photo changed my understanding of war? Do you have this on screen, Theo? Yeah. Okay. This is, to me, this is a very, very important photo.

Basically, World War II did not actually end with the nuclear bombs, the new king of Hiroshima Nagasaki. World War II ended with the signing ceremony a few weeks later, and this was actually no small thing because there was like a revolt within the Japanese military.

Fundamentally what the nukes were about, prior to the nukes, the question was, okay, America believes it can invade all of these islands and get to Japan, but it lost so many people on just like one of the islands or a few of the islands in the island hopping campaign that they just didn't want to go against these, you know, the Japanese were kamikazis, they were totally just there to die for the emperor, right? And there would be an enormous bloodshed, a lose-lose for both the Americans and the Japanese. is so the whole point of the war of the nukes was to in a sense punch them till they signed. That's the point.

The Pentagon punches them and the State Department offers a document to sign. And that's the reason that like Bismarck said, war is politics by other means, right? You have to have a document, unless you're actually going to quote genocide them, which is not a modern era thing. And why is that not? I actually actually explain this from first principles. But like if you go and actually truly end a civilization or whatever the hell it was that was tweeted, you know, a few weeks ago,

then you get reverse bandwagoning against you. Because then you're just like a murderer, right? And every other nation, you know, cuts off trade and so and so forth, right? So just glass them or whatever is retarded because it means actually a trade cut off and so and so forth, right? But I think a lot of these magnet people don't at the core. So the idea... They just generally go to the limits of force.

Right, no, but the idea that we're going to, on our own, get the industrial capacity back to be a counterweight to China on our own is just dumb and it's just not true and it has no factual basis. If you want to build a anti-hedromata coalition to counter China, you need to build a coalition. And given that that doesn't seem to be going better, going very well right now, we either have to rely on like Xi Jinping just breaks China or like, like we should be really black-pilling, which I'm going to get to. That's right. But- Right, but we should be blackpilling pretty hard right now, like, especially because, like, the chance that the United States had and has, and maybe there's an opportunity here still, and I remain optimistic and I'm a fundamentally

like patriotic optimist for the United States. I should establish that. This is not me dooming or whatever or being pro-China. Like, people will accuse, I got accused of that the other day, and I'm like, no, you've gotten me way wrong. Basically, the problem is you have to be pro-reality. Per reality. Reality shill, unapologetic reality show, a shill for observer really Right? Numbers, right? And so for example, let me just to your point, Stephen, this is what I would start with. Okay, I actually posted this at the very beginning of all this retarded tariff stuff or whatever. Basically, the very first thing you needed, if you had a rational industrial policy is, you would collect the data structure of what the supply chain actually is, right? It is a graph of this supplier, right? Produces, you know, these things, which is purchased by this plant, right? And it's, literally a gigantic network. How about that? Right? And how did you get this? Well, there's various tax reporting forms and so on that you could ask to the, because it's a tax, right? You're actually, you'd have to get this information from all these companies, format it in a certain way and so

and so forth, right? With this, however, you could actually get reporting. It wouldn't be just a stupid paper chase. This would be something which would be strategically important. Sorry, can I interrupt you biology and say this is, this is a dumb point. Let me like actually explain to you. Yeah, I'll tell you, like, this is dumb, right? This is irrelevant.

And I'll tell you why. Do you know what the supply chain is before? Okay. No, let's make a chip, right? And I'm going to give you a really good example here. Let's make a chip. We're making a chip.

We now need to get the chip packaged. Every chip needs to be packaged. Okay, great. Well, if you want to get a chip packaged, it has to happen in Malaysia or it has to happen in Singapore because the packaging houses, there's like five packaging houses in America and they all suck. They're all too expensive. They're like making a chip at scale, you can't do it.

Okay, great. Now we have to go to Malaysia and get a package. By the way, all the OSAC guys, the packaging guys in Malaysia are owned by Chinese companies. The other place you can get a package is China. But now you need the materials to do the packaging. You need the, there's these specialized materials. And fundamentally, the United States, it's just unprofitable for many, most countries in the West to make the ceramic material. Because I don't know company in the United States is going to accept that margins. There's like really low margin.

So we're talking about with the screw factory. But how's it? Go ahead. Screw factory. But so what I keep going back to is, okay, you want to solve that? You got to go to Mexico where someone will be able to get, we'll accept those little margins. And if you blow up the relationship with Mexico, you can't do that. So like you want to build ships for military scale?

You can't do that unless you like build relationships. So it's both and. I completely agree with you that. Well, actually, let me zoom back for a second. In general, before I try to solve a problem, I try to get the information on the problem to understand. Sure, sure. Sorry, I sounded like way more confrontational than I meant to be.

Yeah, yeah. I agree with everything you just said. Yeah. So, like, the very first thing, people talk about supply chain as an abstraction. But, like, does somebody have a printout of the supply chain? I'm sure China does because they have a gigantic, fully vertically integrated thing where they, you know, we chat a century integrated and so and so sort of. They can probably do it as a database printout, right, so to speak.

Like they can, maybe it's one giant SQL query or something. I would not be surprised. I'd be shocked, in fact, if they don't have it. I don't think, to my knowledge, that the U.S. has actually a visual into its supply chain. I think Google does, right? I think Apple does. I think Amazon does. I think Elon certainly does, but only within their scope, which is only for their, you know, kind of thing.

I don't think there is an overall visual, right? And you can't hit what you can't see. And the thing is that the actually successful version of what's called import substitution, this is in the context, by the way, of last year's conversation on tariffs, Semitech was actually rational import substitution. And the way it worked was as follows. Rather than slapping broadbush tariffs on everything from French wine to like Canadian maple syrup, none of which is strategic and it's just like the most retarded form of nationalism on the planet.

Like the instead you say, okay, I can see my full supply chain. This thing is really important. Therefore, what Semitech did is they said, okay, rather than import from the Japanese, that's supplier A. we're going to stand up supplier B in America. And we're going to do that because since we know all the customers of supplier A, since we did the mapping of the social network, they can be investors in supplier B. And it's in their interests, right, to stand up a second supplier.

And they can also make a profit if it does well, right? And now the first guy can do price discounts and so you take away their margin. That's the way you do surgery rather than butchery on a supply chain, right? Let me pause. I'm going to, can I kind of go back? I feel like I'm going to be a broken record for a moment. but like good example um silica uh pac silica is this initiative by the state department it's a very intelligent initiative jacob pulberg is is is is is running in he's very intelligent and i don't know

have you ever met him or know him i i know of him i know reboy and uh yeah you know like uh go ahead he's very intelligent he goes and he gets he goes to the uh a certain singaporean that you and i both know in common um and he goes up like let's go get together let's do this stuff stuff. Let's like, let's build a... I think the guy you're talking about as a government official, it's all very up and up. But go ahead, yes. Yeah. Go ahead.

Like, you know, we go and we, we, we, we, we, we, we're going to work together. We're going to collaborate on, on PAC Silica. And Singapore's like, hell yeah, we want to be part of your military supply chain. We want to be part of the anti-hegemona coalition against China. And then the U.S. goes and does a, it's like a trade investigation of them for dumping. And the Singaporeans are like, what is going on here? Like, they're confused by this incompetence that the Trump administration has done by, like, like, there's people who seem to maybe understand allied weight. There's people who seem to understand supply chain and the international aspect of it and they need to build an anti-hegemonic coalition within supply chains.

And then there's people who seem like they just, like, they don't get it. Like, you can't, the Singaporeans are sitting there like, what is, like, I don't, they're like, they're confused. They're genuinely confused. And, like, it is itself. on self-recognition, right? Like basically, the ultra-nationalist, the jingoists, have such an overactive immune system that they have tagged everybody

who is non-American as enemy. Yes, that's right. But they're also retarded enough to tag Elizabeth Warren and so on as Americans, so therefore, essentially a friend. So they have made enemies of friends and friends of enemies, right? And so they're basically retards, in my view, right?

Have they done this? Are there like bag of gropers who think that? Absolutely. Like literally, I just had a threat on this yesterday. Yes, because what they do is, here's why, and I'll say, because I literally just experienced this. You know how, like, Democrats will say, like, oh, our democracy. And Democrats define democracy as rule by Democrats, meaning they're always surprised when 50% of the votes roughly go to Republicans. Oh, my God, that's a crime against democracy, right? Republicans do the opposite.

Republicans define American as red American. And so therefore, they're always surprised that 50% of Americans are blue Americans, have a completely different conception of what America stands for and is, especially today, right? It's, you know, the proposition and the nation, the software definition and the hardware definition, nation comes from natality and birth and so on and so forth. Blood and soil is like the hardware definition of a nation, much more applicable for, let's say, Japan, right, which actually is a group of people that would be in the same place, speaking the same language, same culture, same genetics, whatever, for whatever number of years, right?

Japan might be the canonical nation where the Japanese nation and the Japanese, you know, state are very similar. But anyway, yes, absolutely. Like, look, the reason is they're doing it in a way where when they say American, they're just seeing patriotic flags waving and so and so forth. And then they get back and they argue with AOC or whatever in the next thread. And the fun, actually a great example of this is when, like, Trump was trying to invade Canada, right? And what'd that do? That meant Pierre Paul O'Rei, who was a Canadian conservative, libertarian, who was sympathetic to Trump, basically got destroyed in the election.

He was going to be a clear winner. All that had to do was Maga had to do was just not tweet about him. Instead, basically what happened was Carney completely won. It was like a 40-point flip. Do you remember that? Do you see that? Hold on. Right?

Let me bring up that graph. I guess, like, I don't understand how they have conceived of an America alone. world. They don't think about it. They've inherited power they can never build. Right. Is this just a, it's a LARP in the purest sense of the word? It is a complete LARP because they, like, you know, for example, actually, you know,

Biden had this also. You remember the whole semiconductor thing in the 2021 to 2024 period? Oh, we're going to beat China and semis and so and so forth. Of course you remember that, right, Steve? Yeah. The way I knew is a LARP is there's not a single tweet from the White House on, you know, studying PNP, band gap, semiconductors, there's nothing on electrical engineering, right?

Like, their bully pulpit had absolutely nothing on the actual concrete brass tacks of study this program at this school. You know, it's like the, there's a, it was a huge, I'll tell you what happened. It was a huge pot of money was given to a bunch of people. And it never got spent

because no one knew what to do with it. Well, okay, fine. So, but here's, by the way, this is what happened. Like, basically, the conservatives were totally about to win and all MAGA had to do was not say anything. Instead, all the tweeting about invading Canada

basically meant that the Canadian conservative was considered an enemy and the Canadian liberal won instead. Okay? Because MAGA, you know, basically, I don't know if you remember those, that period, but basically, you know, it's like, yeah, we're going to invade Canada and make it the 51st state, who, you know, and they were like joking, not joking, you know,

they're also threatening to invade Greenland or whatever. And that stuff has extremely high cost with zero benefit because it turns friends into enemies and it actually gives enemies new friends, right? Because all the Canadian consorters were like, well, I guess Trump is my enemy now. That sucks. I guess, you know, it's one way of praise, right?

So, yeah, I think Magas are, magas genuinely think that, You know, it's like, it's actually similar to what happened with BLM, where there was a spike of insane levels of identity and virtue signaling around something, and they just totally collapse later, right? That's what they're doing with the American brand. They're just spiked, they're signaling around it like this, and what's happening at the same time.

You know, like lots of countries, by the way, have imposed reciprocal passport restrictions. Did you see what happened on that? You're not going to be able to go to Europe without like a visa, basically, now. Yes. The U.S. password has actually crashed, unfortunately, right? and here let me bring up this graphic and the this is something here

but this is something that's going to go further now it's like an EV visa thing where you pay money and get auto approved right? Yeah yeah it's like it's an est to style thing the point is the trajectory right basically this passport is just crashed over here to 12th place okay

but that was last year this year who knows where it's going to go I think like a lot of countries... A lot of that is because, like, a bunch of, like, Sahel countries banned the U.S. like U.S. citizens from entering. It's like Brazil. You can't go to like Mali and Niger and, like, Burkina Faso anymore and North Korea.

It's also Brazil. It's Brazil. But Europe is imposing certain... No, not just Europe. Yeah, yeah. Go ahead. Sorry. No, I... Listen, this is kind of it.

I think we're tangering a little bit because I think... I guess, like, there's... There's a few resolutions that I see, and, like, one resolution that I've kind of nihilously come to that might be the MAGA game, actually, but I don't know, is, like, chimerica and everyone else, like, because, you know, everyone else basically becomes, like, we get a chimerica, we divide the pie in half, and then everyone else becomes irrelevant, and we dominate our head, you know, we dominate our hemisphere again in a way that we haven't for a hundred, you know, like a, you know, in a, in a, in a more, progressive fashion. Like, that's what's going on with Cuba. That's what's going on with Venezuela. And we just do it in America. We hand them Taiwan because it doesn't make sense to do it anymore. And we just, we go from there and, like, we, we, we like live in that world where Europe gets fed to the Russians. And, like, you know, like, not really because Europe can, like, Russia's pretty irrelevant now. But, like, Europe kind of fades into Islamic republicanism, becoming an Islamic Republic and maybe the Baltic.

get eaten by the Russians and then we divide the world of China and that's the that's the MAGA end of the story, right? Like that might be it. Maybe that's the ending of this of this tale, but you seem to, like, there's no, like, that's the ending in the tail that I'm like nihilistically looking at right now. Okay, it's going to, I think, be a lot worse than that. Um, so here's why. I don't think that's, by the way, but hold up, is that so bad? What I just said is that so bad. It's kind of, like, it's an okay ending. The problem, yeah, the problem is I would start with you know, there's the saying goes, like, who's we, Kimisabe, right? Like, you know, the old Tonto.

I mean, it's a really old reference, but who's we? What are you referencing? Yeah, that's why it might be so old. You guys don't get it. But let's start with who's we, right? Democrats and Republicans, this is from almost 10 years ago. This is 2017, and it showed that Democrats and Republicans have come apart on social media. They weren't friends with each other anymore, okay?

They're basically just there to fight. Blues were friends with blues. Reds, friends with Reds. Okay. And, you know, now, like, basically, you know, there's all these graphs of polarization and so on. You've probably seen this as well where Blue is its own group and there's all these red tribes. Okay. Like Blues are in Blue Sky and Reds are on X or Gab or whatever other places, right? And so the digital succession is already here. Literally millions of Blues left digitally for Blue Sky, right? Twitter is basically, you know, like Tower of Babel moment. Twitter doesn't exist. There's Blue Sky and X and all these other Twitters, right? you see that migration between states as well, right? The Great Sort with all kinds of reds leaving blue states. And you essentially, you know, I think the issue is that without actually understanding the history of the rest of the world, right, what happened to Korea? Is there a Korea? Does the Korean say we?

No, there's North Korea and South Korea, right? What happened to China? It was communist and nationalists. Right? What happened to India? They had was partition. All around the rest of the world. What happened to Russia?

They had the Russian Civil War and the capitalists had to leave or be murdered. Obviously, what happened in Germany, right? This is something where in much of the rest of Eurasia, they just lost their minds and they just had a serious all-out fight between left and right or whatever factions, often multiple factions. And that's obviously coming here. This is coming to the U.S. And you're in the middle of it.

And it's a cold civil war that's ramping up. So I know you, we've debated this before, but I actually like, the more salient power structure shift that I see is like a resorting of global power. And then I see that a secondary res—like, I don't know what happens to America. Like, I'm not my—not my expertise and I don't want to weigh in it. But, like, there is a resorting of global power. And, like, I see an ending in which China rules the world. I see a chim—in which I'm very scared of.

I see a chimerica ending, right? When we come to some resolution with them. and I don't know what happens to the RO rest of the world. I don't know what happens to Europe. I don't know what happens to the Middle East. And like, it might just be anarchy, right? Well, so let me give a thesis on that.

And actually, there's something that's slightly more cheery, okay, which is as follows. The most, okay, the most important. Some doerism going on in the show today. Well, I think of myself as a total, like, you know, you know what you do at a company? Bad news first, right? Right.

Right. Be an adult. Rip the Band-Aid. Give it to me straight. Right. That is, that's the only way you can manage

any numerical operation, right? Like, basically, as a CEO, you're a founder's CEO. Every day you wake up, all right, what blew up today.

Would somebody be an anti, like, imagine if Google's, like, their website was down and someone, Google's website is down, they said,

what, are you a Facebook shell? Why are you saying something bad about Google? You know, right? Like, complete and totally,

Realism is absolutely necessary for self-improvement. Okay. So with that said, let me lay the stage here. I think what's going to happen, first, have you followed what's going on with Mark Carney? I mean, I think that he's, this is like, yeah, this is the, this is the bad ending, right? Like, you know, this is the, my, my, uh, Rush Doshi, quoting him again, calls it the heroin ending, right? the heroin, like, Europe and Canada get like basically de-industrialized by China, they bleed out like a heroin addict and like we're really left alone.

And that's a China rules the world. Yes, this is exactly it. Like, this is the China rules the world scenario. Well, is it rules the world because I think it's a little more complicated than that. And here's how I think about it. Okay. So this is a really, really, really important event because, you know, in 2016, Trump came down the escalator.

And really what he was saying, though this was. was not played up, it was somewhat played up in like mainstream media, but, but actually it was one of his core things. What Trump was saying was, uh, America's losing and China's winning. That's why he said China, China, China in 2015, 2016, before that was a thing, right? And what Carney did in his own way is iconoclastic. Um, he said America's lost in China's won. And that's why Carney got the first and best terms by surrendering to China first. And what is he getting for that? Carney and Chinese Canada are getting electric cars.

They're getting their electrical grid built out by China. That's something that was underappreciated in the announcement. They're probably getting maybe drones. Why? Because Carney said something like, if Trump invades Greenland, then, you know, we'll fight or something along those lines. And I was like, that's interesting. And I wouldn't be surprised for getting drones or something. And Vancouver becomes the drop-off point for all of this kind of stuff.

And the thing is, in a sense, I mean, Carney is a very, high IQ guy. He's much higher IQ than Justin Trudeau, even though they're nominally Democrats. Carney may be the single smartest person on the left. Carney is actually the, in a real sense, Mark Carney is the most important American Democrat despite being Canadian. And Naïbe Bekelly is the most important American Republican despite being Latin American. In fact, the political innovation for Canadian, for the left and the right is coming from outside America because Carney and Bakele are both running their own countries and they're not locked within the, oh, we need to solve it within the American system constraint.

But this is the thing, like, if you have, so let me, the horror scenario, I don't want, sorry, I'm using a lot of big words here, like loaded words here, but the horror scenario is the U.S. loses its coalition. And actually what happens to China, what happens in Canada is the following. Canada gets Chinese infrastructure, Chinese cars, Canadian domestic manufacturing dies. They are a resource exporter to China. They become like, they send their raw materials. China owns the grid.

China owns all the infrastructure in Canada. It looks like an African country. And then we have, you know, we have basically a Chinese ally on one border. God knows what happens to Mexico. Probably a similar thing eventually. And, you know, we have a failing Europe. And then we're surrounded. And that is the ending in which, like, we have to bend the knee and we bend the knee last.

and that will be the worst ending of all. I hate to cut you guys up. We're coming up on time, but it's been great having you both on. We'll have to have you back eventually. Pretty soon, I hope. Thanks so much for coming on. I'll just say one thing.

One thing is, which is I do believe the free internet can and will be a balance to this. That's why decentralization, encryption. I think that we can build a coalition of global technocabitalism on the other side to balance as opposed to beat, but we just have to be absolutely realistic about like, you know, what time it is, right?

Like where the numbers are. And just I'm a reality shell and, you know, Doc, give it to me straight, you know, that kind of thing, right? And I think there can be hope and a positive sign on the thing on their side if we organize around the free internet. And I disagree with you. I want to make America actually make, get that anti-hegemona coalition together. But I feel a little blackpilled. But we're both pulling for the same thing, which is not a Chinese world world. Freedom.

Capital. Freedom. Yeah, we both love freedom here. All right. Bye-bye. Thanks so much for coming on. Thanks so much, guys. Thanks for listening to this episode of the A16Z podcast. If you like this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcast, and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.com. Thanks again for listening, and I'll see you in the next.

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