This Week in Startups - TWiST News: M.G. Siegler Explains the Current Venture Crisis and Google’s Antitrust Woes | E2023

Episode Date: October 9, 2024

This Week in Startups is brought to you by…Gusto is easy online payroll, benefits, and HR built for modern small businesses. Get three months free when you run your first payroll at https://www.gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025Oracle - Save up to 50% on your cloud bill at ⁠https://w⁠⁠⁠⁠ww.oracle.com/twistLinear. Streamline issues, projects, and product roadmaps in a tool your team will actually enjoy using. Get 25% off at https://www.linear.app/twist*Todays show:M.G. Siegler joins Jason and Alex to discuss the current venture capital crisis (14:11), and challenges in the venture industry, particularly in early-stage returns and high valuations (18:42). They also address future exits and the impact of regulatory measures on M&A (27:14), Google's antitrust case (49:08), and much more!*Timestamps:(0:00) M.G. Siegler joins Jason and Alex(5:05) M.G. Siegler's journey from journalism to venture capital(8:33) Differences between journalism and venture capital(10:02) Gusto - Get three months free when you run your first payroll at https://gusto.com/twist(11:02) Media training and transparency in companies(14:11) Venture capital's current state and CRV's capital return(16:23) Challenges and opportunities in the venture industry(18:42) Early stage venture returns and the impact of high valuations(21:42) Oracle - Try OCI and save up to 50% on your cloud bill atat https://w⁠⁠⁠⁠ww.oracle.com/twist(23:07) Future exits and liquidity evaluations in startups(27:14) Acquisitions, hackquisitions, and regulatory impact on M&A(34:09) Venture capital dynamics and fundraising during market downturn(35:48) Predictions for the startup market recovery(38:02) Linear - Streamline issues, projects, and product roadmaps in a tool your team will actually enjoy using. Get 25% off at https://www.linear.app/twist(38:57) AI competition among tech giants and Meta's hardware challenges(45:47) Venture capital dynamics and favorite AI tools(49:08) Google's antitrust case(55:25) Possible effects of opening Google's search API(1:03:41) Potential Google spin-offs(1:06:27) Audience Q&A*Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.com*Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp*Mentioned on the show:https://www.cnbc.com/2024/10/08/doj-indicates-its-considering-google-breakup-following-monopoly-ruling.htmlhttps://spyglass.org/vc-crisis*Follow M.G. Siegler:X: https://x.com/mgsieglerLinkedIn: https://www.linkedin.com/in/mgsiegler/?originalSubdomain=ukCheck out: https://www.spyglass.org*Follow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm*Follow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanis*Thank you to our partners:(10:02) Gusto - Get three months free when you run your first payroll at https://gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025(21:42) Oracle - Try OCI and save up to 50% on your cloud bill atat https://w⁠⁠⁠⁠ww.oracle.com/twist(38:02) Linear - Streamline issues, projects, and product roadmaps in a tool your team will actually enjoy using. Get 25% off at https://www.linear.app/twist*Great TWIST interviews: Will Guidara,Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta,Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland*Check out Jason’s suite of newsletters: https://substack.com/@calacanis*Follow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.com*Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

Meta kept telling us to our faces that there was no truth to that whatsoever, which was also fun. It lied about a secret project. It reminds me of like asking Google if they were going to produce a browser. They're like, absolutely not Chrome. It's like, but wait on LinkedIn, you have the entire team from Mozilla Foundation working for you now. Hey, Apple, are you working on a car? It's like, absolutely not. It's like, what are these thousand people from, you know, Tesla and the car manufacturers

doing in Northern California at a racetrack. The other fun side of reporting, yes. Yeah, exactly. Straight up lying. This weekend startups is brought to you by Gusto. Gusto is easy online payroll,

benefits, and HR built for modern small businesses. Get three months free when you run your first payroll at gusto.com slash twist. Oracle. Cloud Infrastructure or OCR. is a single platform for your infrastructure, database, application development, and AI needs.

Save up to 50% on your cloud bill at oracle.com slash twist. And linear. Linear helps product teams focus on what they do best, planning and building great products. Streamline issues, projects, and product roadmaps in a tool your team will actually enjoy using. Get 25% off at linear.com. all right everybody welcome back to this week in startups i am your co-host jason calicanis here live from the battery you know that special private club in the bay area of san francisco great club on battery street

and i was here in town taping a special episode of the all-in podcast last night at david sax's lpcc meeting um and i don't know if that uh special episode will make the light of day but i did that in the favor bank with my guy david sacks so that he comes to my lpd to my events with me, of course, my co-host, the one, the only. He's cautiously optimistic. Alex Wilhelm, how are you doing, brother? I'm doing, um, I'm doing fantastic, but I struggle. We have a lot of cool stuff on the show today.

We have a live guest. Tons of great stuff. I just want to say that it's hard to focus today, just given that Hurricane Milton is coming towards our Vincent family in Florida. So just, you know, let's all love one another, show up, help your neighbors, send money, send food, whatever you can do. Let's just keep in mind. that throughout all the politics of the current era,

we're all human, we're all here, so let's just take care of every pillar. Well, and I, you know, I think it's a really beautiful sentiment that we are all Americans and then level up on that. We're all humans and we all suffer and we all are fragile

and how fragile we are, you know, to quote poet sting from the police, how fragile we are. And it is, you know, that song always stuck with me because you don't feel the fragility of life. You don't feel it until you do.

you know, and when you feel it acutely, that's when you see humanity come out. And, you know, this is something we can all, as Americans, even in this divided time, get behind. And we will on the next episode, maybe share a link or two of how you can help. Let's pray we don't need to help. We don't, that people, you know, that this is not as bad as it seems it's going to be. So, and if you're there, get the hell out of there. I mean, I got some family members. I just got a text last night that some family members were debating going, get the hell out of there. There's, this is not worth the risk, you know, to get yourself out of harm's way, you're loved. So we got a, we got a great guest.

You know, this is somebody who I watched this whole career, like you, Alex, and, you know, I'm a writer myself. And when I hear somebody, uh, writes something really good, you ever get that feeling when somebody writes something really good? And you're like, God damn, I should have wrote that myself. Oh, if I don't get that feeling three times a week, I know I'm not reading enough. But I do agree that in this case, Imji did turn out. what the kids call a banger.

He had a banger. And, you know, I read the banger and then I read it again today. And I said, you know what? He really summarizes a lot of the discussions going on on different podcasts at the LP event I was at. So we don't need to belabor this. But please intro our live guest today here on this week in terms. Formerly from Venture Beat, previously of TechCrunch, a short stint at Crunch Fund and then 11 years at G. G.V.

Ladies and gentlemen, please welcome to the show, M.G. Siegler. Yes. Here he is. How are you doing, M.G? Hey, guys. Thanks for having me. It's good to be here. Thank you for the very nice words to kick it off. So, let's get right into it. You've been a venture capitalist and a journalist. You and I share that. There's a tradition of maybe a dozen of us who have done this. Oh, Malik, of course, Michael Moritz before that. I just want to ask you before we get into your piece about venture capital and startups. What did you learn in those early days at TechCrudge when you and I overlapped a little bit in the scene, as it were, what makes this such an interesting career path in your mind?

When I was a, you know, a reporter, I never studied journalism in school. I didn't intend to go into reporting. I was just sort of writing about technology on the side. I was actually working as a web developer when I got the call, as Alex mentioned, first from Venture Beat and then eventually to TechCrunch. And so writing has always been sort of the through line and everything that I do, you know, no matter what it is. And so writing about technology, you know, ended up being very natural, but I knew it wasn't sort of the end state of what I was going to be doing. And so I honestly didn't think the path to VC was something that was open.

You mentioned some of, you know, some of our predecessors who had made the jump, but it was a different time, right, back then. And so, you know, I think that it helped being able to look at so many startups at TechCrunch and sort of recognizing patterns, obviously. and trying to see if that could, you know, translate. But there was so much that when I first made that jump that I did not know what I didn't know. And yeah, so it was a trial by fire very much in those early crunch fun days, as Alex is alluding to. Well, you know, one of the things I noticed about the two jobs, the two professions, and I'm the same story. I was not a journalism student. I just started a publication because I wanted to write about what my friends were doing and I learned journalism after it.

you know, when you, you're a journalist, you're trying to figure out reality and you're asking people questions and you're then building some sort of mental model of the story, you know, like what is actually happening here and why is it important? And, you know, you've got this journalism thing, who, what, when, where, why, it's kind of table stakes. But when you get into venture or into elite commentary, you kind of have to figure out what's the bigger story and why it matters, right? And that is, I think, the art of venture capital, which is squinting a little bit and saying, huh, if these things come together, hey, what's the world going to look like, right? And then the payoff when you write a piece, Alex, is, you know, half the people hate you,

half the people ignore it, whatever, you know, and then everybody moves on. In venture, you actually write a deal memo, and then you place a bat, and then you wait 10 years to see. You have steak in the game, right? you get a lot of skin in the game. And it's kind of like, that doesn't exist in a story, right? Like most stories don't pop up 10 years later and you say, how much money did I make or lose? Yeah, that was one of the early things I would always reference when people would ask me about that jump. It was like, in journalism and reporting, there was rarely the notion that you would sort of say no, right?

Obviously, you would turn down stories every once in a while, but sometimes a bad story, right, was more interesting than a good story, like about a bad, you know, startup that you'd viewed as not performing well, yada yada. In VC, obviously you're saying no almost all the time. And so that was probably the biggest learning curve of, you know, it's like, yeah, I don't really buy this, what they're doing, but, you know, you could sort of see the interesting story angle here. But that, you know, that just doesn't matter for VC except for the pass on it. And so, yeah, that was that was definitely a learning curve in that regard. Alex, why don't you, I don't know if you have any thoughts on this, Alex. So you're venture adjacent now.

You're in the investment team room. You work out a venture firm, but doing random acts of journalism here. I don't know if you have any questions or thoughts there, hearing us talk about it. I'd just be kind of curious, though, about the jump over because suddenly you're on the inside of the information table, MG, because as a journalist, you're always trying to get bits and bulbs of information from companies. And then suddenly, everyone's sending you their financials. So I'm just curious, how much faster did you learn once you jump from journalism to VC, and suddenly, you know, the curtains were pulled back. Yeah, this is an interesting topic to talk about with both of you.

I mean, because that was probably, I guess, the biggest eye-opening thing is just, you know, not to speak ill of anyone in particular because it was really was like an industry wide thing, but there's just so much BS, you know, that's reported on that is just taken as fact, right? Because, as you know, like, people don't have sort of that inside knowledge and there's this very weird, you know, dichotomy between. those two worlds that really very few people are able to reconcile. And so, you know, I think that great reporters are able to sort of get, you know, very close to the facts and, you know, oftentimes though the best you can hope for is sort of just directionally accurate, uh, reporting, right? Because again, there's a direct incentive not to get that information out there. And if people want to put the information out there, there's obviously, you know, all sorts of other ulterior motives at play. And again, good reporters know that.

And, you know, that comes with experience often. And so there's great ones out there who do all that stuff and have that in their minds. But there's still this asymmetry at play always. You didn't start a company to run payroll, did you? Of course not. And that's okay. Because Gusto is here to help. Gusto will help you run payroll and handle your benefits onboarding in HR all in one place.

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So, here's a simple call to action. Want all that Gusto has to offer with no hidden fees? And a discount to boot? Try Gusto and get three months free at gusto.com slash twist. That's gusto.com slash twist. I'm really curious, though, the incentives you mentioned that encourage companies to keep their information private. In my experience, one of the patterns that I've seen is when I meet a CEO of a startup

who's willing to share more and just speak pretty candidly, that company tends to do pretty darn well. And the more secretive, the more, I don't know, almost. artistic about not sharing information someone is, generally speaking, the worst their company does. And so to me, companies that are open do better. So what are these incentives that get companies to be so clamped up all the time when they're doing well and people would love to learn about that? To me, that just speaks to like, you know, a CEO, an entrepreneur who's in command of what they're doing, right? If they're able, they're sort of able to know the ins and outs of their business

to such an extent that they can talk about it openly in a way that, you know, not everything's always going to be rosy, of course, but if they're comfortable enough, both in their own skin and with where their company is ultimately going. And again, a lot of that, in my experience, at least talking to various entrepreneurs, comes from their own experience, right? Multiple time entrepreneurs are better at this than first time entrepreneurs, of course, for obvious reasons. But again, yeah, it's just like a level of confidence in knowing like, yeah, it's really hard in these early days and there's a lot that's going wrong. But we ultimately believe that we're marching towards the outcome that we want to achieve. And here's why, you know, even though

X, Y and C is not happening as well as it should be right now, here's how we're going to get to that point. I would love to read more of those stories and do more of those interviews, but I just think people are so media trained to avoid saying anything that could be construed as things are going less than 100% perfect. We end up with this very stilted conversation that you pointed out occasionally misses the mark entirely. And maybe the best we can do is get directionally accurate. I just wish we could do better. Well, I mean, if you were to look at it as a process, Right. You have journalists trying to figure it out. You might have people on the other side trying to spin it. You might have other people just being candid. And then you have Game of Thrones going on, which we haven't even gotten to, which is, hey, somebody got fired and they've got a grudge. Or there's one VC who wants to approve a merger and get a huge payout from their carry. And the other ones are already rich. And they want to go for the IPO. And, you know, you got competing factions. How often do we see something like that? You know, the Uber, example comes to mind, you know, countless other companies come to mind where you have,

you know, factions inside of a company warring, literally at war, like Game of Thrones, or just somebody got fired and, you know, they, or they got demoted or their idea didn't, you know, make it through and they have an agenda. So it is a messy process. And the messiest thing going on right now, I think, is the venture industry itself. So maybe, um, M.G. You started this piece off with this Chinese character and this JFK reference. One of the reasons I like writing is you have a point of view, but you're also a good writer. So you have some great illustrative moments and metaphors that make it worth reading, as opposed to, I would say, nine out of ten pieces I see on substack, which are just the author is trying to promote themselves or get followers.

Here, you had something you actually wanted to share. So why don't you just tell us the premise of the piece and why you wrote it? sure thing yeah well first and foremost that image as i noted in my footnote there little um tag under the the image i tried like hell to get the right uh characters to show up in in a in various different uh i generators and it just would not work for whatever reason so you know we're still we're still in the learning phase with the i obviously but um anyway yeah so it kicked off basically aaron griffith at new york times who i think all of us know you know has been has been around for a while as well at different publications.

She wrote the post about CRV, you know, that I linked to prominently up top there, basically talking about how they were going to be returning capital to their LPs because of the current situation, you know, that they view that we find ourselves in as an industry. And there's the piece right there. And, you know, and the framing of it was obviously, wow, like, this is unique because you don't hear about this often. And, you know, she goes into a bit about how this has actually happened in the past, obviously, after the dot-com crash. And a few other times, there have been, you know, individual situations where, again, VC firms have returned capital.

But, you know, where are we now? And why is this happening now? It seems like all we hear about is the Open AI fundraise, 150 plus billion valuation and boom times again. And so what's what's actually going on here? And I think, you know, I think that encapsulates that there's a few different things going on here. but, you know, it really is sort of the best of times, worst of times in many ways. And yeah, just thinking through, you know, having stepped outside of being at a VC fund for those 11 years, as Alex mentioned, and now sort of trying to look at it from a step removed a bit, it's just like, where are we actually in, in sort of a cycle if we're in one?

And it does feel like this is a strange, unique time in that we're coming off of real boom times over the past decade. and now, again, with this AI boom cycle going on, but at the same time, we came out of sort of the post-COVID era and all the ZERP stuff going on, where a lot of companies, a lot of startups are just massively overvalued, and that's sort of what, I guess, is driving CRV here.

Yeah, and the Chinese character is the word for crisis, and as you mentioned, it's composed of two characters put together, and one of them is danger and the other is opportunity. the danger here, obviously, Alex, people are going to lose a lot of money, a lot of startups are going to go out of business or valuations are overvalued and LPs are going to lose money

and the whole system feels like it's kind of stuck at times and the opportunity, of course, being, hey, if it gets unstucked. So I think maybe talking a little bit about the unstucking of the industry is, you know, part of what I think is going on here,

hi, Alex? Is the industry is trying to get unstuffed? Yeah, I think so. There's two things that MG points out in the piece. One is that there's too much capital in early stage and there's not enough, I think, good companies to absorb it. And then also that the late stage market, back to the CRV example, is pretty broken with limited exits, evaluation overhang and so forth.

But MGA, it feels like both sides of venture are broken at the same time. Is there a solution that's going to have a through line through both issues or are we going going to have to have different solutions for early and late stage investing? Yeah, I mean, the early stage stuff is fascinating. That's largely where I focused, you know, my time in VC and, you know, and I think when I tried to, again, take a step back and look at what was going on, you know, in some ways it was natural that, you know, there are things that bubble up. I talk a little bit about crypto, right? Obviously, that was, you know, something that that bubbled up before AI came about and then sort of crashed itself very quickly. And, you know, is still trying to find its legs under it right now. But AI coming into its own is interesting to. timing because again, as you note, yeah, there's so much capital out there, all these these funds from CRV, but even they're, you know, relatively small compared to some of the other players out there who just have so much capital that they've been, you know, they've

been looking for ways to put to work. And so, yeah, late stage, you know, you pile in there into the quote unquote winners and see how that works out. But the early stage stuff is where you're really going to make your returns, obviously, as a VC or you'd hope. Explain to the audience why that early stage is where you're going to make your returns. just on a back of the envelope math. And, you know, we, we two are. I'm like super early stage. Year zero is where I've chosen to focus because I agree with this premise.

Yeah. So, you know, the general rules of thumb, like early stage, you're hoping to find something that's a 10x return. Obviously, you're hoping for even more than that, right? The Ubers of the world and whatnot, that can be 1,000, 10,000 X returns. But, you know, ultimately, yeah, the 10x is sort of a reasonable expectation for a great company. And then as you go later and later, you know, the gross stage funds, looking for sort of three X return, you know, potential. And so earlier stage are looking for

things that can really, really move the needle and be things that return funds, entire funds, all, you know, everything. If it's a hundred million dollar fund, a 500 million dollar fund, if you can get one company and historically, you know, that's sort of the, the grand slam analogies, all the different analogies to hitting home runs and whatnot, if you can find one of those companies that will return the entire fund. That's how a lot of these historic funds have been made. And so these days, though, because valuations are so high, even in those early stages, it's become harder and harder to do it. And now even in our AI cycle, like when even Open AI, right, their first fundraise beyond sort of the early seating from Elon Musk and everything,

you know, in that Microsoft round, whatever was valued at, $3 billion or more, I don't even know if it's, it's ever been sort of officially announced whatever it was. But that's like the, you know, early stages of that official funding for the company is already over a billion. And you see a bunch of those now, obviously, with people who spin off from Open AI and out of Google and from other places that are sort of experts in AI, they can, you know, they still can set the price of whatever they want. And so that just makes it really, really hard, obviously at the quote unquote early stages. Like, look at safe super intelligence, right? That's one, the Ilya Satskibir one that spun out.

And that's, I guess, already valued, you know, at a billion from day one. And so that makes it just very, very, very challenging potentially to hit the 10x, let alone 1000x, 10,000 X return. Yeah, and in a fund that had 40 names in it, a venture fund when you start thinking about portfolio management, which gamblers would talk about as bankroll management, you might have 40 names in a fund, maybe 30, some funds as high as 50, taking out like seed and accelerators. That means to return the fund, one of them.

just to get to break even, one X return, you got your money back, is a 40x if there were 40 names in the fund. So that means it has to be a $40 billion company. Alex, we talked earlier this week about how few of those there are.

I got absurdly lucky to hit two. Robin Hood, I think it's worth 20 now, billion. I still have my shares in an Uber. I still have a lot of shares and it's worth 160 billion. But that list of companies that get worth above,

in this example, 40 billion, you can count in the last cycle since you, the three of us started writing and investing, you know, I was a little earlier than you, I think, MG in the right before you. I mean, you can count them on two hands? Give or take, I mean, maybe depends on what you count as like a tech company or what counts as venture back, but it's not that many names. All right, I am probably guessing you've got a huge cloud bill coming in every month. And listen, you don't want to cut your team size, right? You need all those talented people you have. But if you use Oracle Cloud infrastructure, aka OCI, and you're hearing a lot about that today because so many people are

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current cloud computing bill in half if you move to OCI. So check if your company qualifies at oracle.com slash twist. This is Oracle showing their commitment to me. your boy, J-Cal, and the startup community here on the number one podcast in the world for startups. And now there is a limit here. This is limited to new OCI customers in the U.S. minimum financial commitment and exclusions apply. Oracle.com slash twist. That's oracle.com slash twist. There's an interesting optimism, MG, in future exits and liquidity evaluations that we're not seeing today in the market that contrasts with the enthusiasm we're seeing in these investment deals. So I'm just kind of curious, what is the logic behind putting

that valuation on safe super intelligence because I get Ilya's fantastic but that just seems to be a number that's so high it almost makes me doubt that this is a traditional venture transaction at all. Yeah, I mean, I guess, and I get into this a little bit in that post, I guess the hope would be that there's a bunch of things coming into play now.

First and foremost, obviously, interest rates, you know, coming back down. And so if that helps to thaw or open the IPO window again, which obviously has been pretty close tight these past couple of years. If that happens, you know, maybe there's an opportunity for some of these AI companies to go out there. Obviously, everyone will look now at open AI given the valuation that it's at in and where else they can possibly go from a fundraise perspective privately to be able to keep bringing in more capital, which they'll obviously need to do, it seems like. And so is there a window there? And

will the market be okay with, you know, potentially non-profitable, not nonprofits, but morphing into poor profit companies, but still non-profitable in that they're not making any profits. Not non-profitable, unable to show a profit. These are two categories of companies want, do not have. Obviously, historically, you know, companies have been able to go out at various times when they're not yet showing a profit. And Amazon's famous example, right, of for years and years not showing a profit,

but the promise of profits. And so will the market be okay with that? They obviously have not been okay with that in recent years and want everyone to be able to show those profits. And it took a while, but Uber was able to get there, right? In an incredible fashion, Airbnb has gotten there. And so these companies mature into it, Tesla. And so, but are we going to be in such a world where open AIs can go out and save Super Intelligence? I mean, you know, as early as it is, like, will they be able to go out?

But a few other things obviously at play. The biggest one, there's just been no M&A activity aside for. from these, whatever you want to call it, acquisitions, you know, these sort of acquisitions by another name that the tech behemists are all sort of pulling off hiring. Did you come up with that one? Hackquisitions? I don't know if I may have heard.

Yeah, that's what I keep trying to push forward is the one that, I'm going to go with yours. It's the best one I've heard today. Officially we're calling these backdoor acquisitions, what I call the terrible branding, are hackquisitions. So there were a couple of these where Microsoft and Google bought the teams, a license to the software, and then somehow got money back to the investors?

Yeah, cap table. I'm trying to figure out on a tax basis how that occurs without it being income because it's a license and then I realized, wait a second, I think a lot of these fundings occurred on notes. And if they occurred on a note, which is technically a loan, you could pay the loan back with interest and you could do any type of deal you wanted with those investors. You could say, we're going to pay your loan back and give you 10% royalty or 10% in this or whatever, pot sweetener.

And I think it would just be a loan being paid back, which gets them out of the investment with upside in the shell company, maybe pursuing a secondary idea because it seems almost every time they leave some people behind on the island. To answer the phones when the fed's call. I mean, that's what I was thinking. It's like, wait, who gets left behind in the shell company? The B players, apparently. I mean, can you imagine how bad they must feel to watch the money show? ship sail away and you're on this little teeny island that no one wants anymore. Well, I think what they do

is they say to your point, M.G, like, hey, stay here for a couple years, answer the phones. Here's a pile of cash and you can just rest and vest. It's like a no-show mob job. Like, hey, yeah, just go sit on these chairs, like the Sopranos, go sit on these chairs outside of the esplanade and pretend you're pouring concrete and we'll pay you 200 grand a year as a supervisor and you can just sit there and drink beer. I think that's what they're doing. To be fair, I think the there, so inflection, which was the first one, right, that Microsoft pulled off, um, and got suleman, who's now like the in charge of all their AI efforts. Like that one sort of feels quite a bit like that. It's unclear what inflection is still working on. And in fact,

Microsoft just rolled out this new product, which looks like the product that inflection was doing the pie product, right, with their new AI thing. So like, it seems like that was that situation. The character one's a little bit different. It feels like because, yeah, they were brought back into Google. The founders brought back into Google and a few people, like 20% or something of the company, but they're still trying to work because they left them with, like, I guess, this is all via reporting. I guess about 18 months of runway. So sort of your standard fundraise, right? So they're still trying to make it work as like a more full on consumer company.

But yeah, for the most part, I mean, these, no one is under any illusion as to like what actually is going on with these deals. And again, it goes back to the idea that just no real M&A can happen because of the regulatory environment. And so we'll see what happens again, you know, obviously post-election and what they do from, you know, the DOJ and everything else in Lena Kahn's position. If that sort of changes the dynamics of what can actually go forward with M&A. Because right now it's just like all the tech companies that would normally be buying up some of these startups for talent, if nothing else. No, they can't really do that. Hence the acquisition model, you know, trying to be able to do that until they're told to stop, which you have to imagine. after a number of these, like, someone probably says, like, yeah, that's enough of this type of thing.

But for now, they're going forward. Did you say it worth the squeeze? I mean, that's what I'm hearing from the other side, which is after Figma paid, I don't know what Adobe paid, it might have been a billion dollars. Yeah, the kill fee was a billion, yeah. That's why Alex is here because he knows everything. He remembers everything. That's things.

Yeah. I think that, that's things. Your legal teams are bogged down forever, like, you know, trying to work through. Yeah, it's just, right. it's not worth it. Well, and then the product team, right? What happens to the product team, MG? If the product team is like, well, we got to compete against Figma,

and it's like, no, no, we're buying it. And it's like, okay, we're 18 months into buying this thing, and we're still losing market share to them, and we don't have a product in market. And our customer base is like, hey, when can we make mockups faster? And, you know, it just freezes everything. Yep. And so, so, yeah, so those two elements, obviously being huge drivers of,

of if this whole situation can fall. little bit because it's not the M&A thing everyone's like oh my god you know god forbid google or meta can't buy another company but really like and I mean you know this you know better than anyone Jason like there's like the trickle-down effects of all of this which I just think the second order effects that people especially you know the current um I guess regulatory environment just doesn't take sort of take into account is that like these diaspora's of acquired companies are like what flow back into the system and basically keep it going And because there's no exits right now, it's just like everyone is stuck and it's just not good for anyone.

And it's not just about the big companies being able to acquire things. Right. I mean, this is existential for capitalism because when you have an ecosystem, if you were to look at this like an ecosystem like the ocean, right? If you take out, you know, some of the predators and then some other species, there's too many minnows. Then the minnows eat all of the plankton, then their plankton gets screwed up and then the whales have nothing to eat. it just causes chaos. The singles and doubles are really, the tuck-in acquisitions,

we call them singles, doubles, you know, aqua-hires, all of those things, keep talent moving. They let you retire projects that are not break-out projects and shouldn't be funded

and then take up time on the dance cards of the VCs. So, you know, if you are on, I'm assuming a dozen boards or eight boards, something in that, like a typical venture capitalist is,

if you, you've got three or four of those companies that were then being able to acquired, now that gives you room to breathe and to take on three new projects to keep society and innovation moving. Now we're sitting here with 12-year-old company. Stripe is still not public. What's going on? Right. And Stripe's a great example of that, right? The Callisans had a first startup that was acquired and was fine, but it wasn't like the massive outcome. But how many of these now massive companies are a result of entrepreneurs going back out there because they were able to get some sort of exit and, you know,

move on from that initial idea. Actually, off the top of my head. Zip 2 for Elon. And red swoosh for Travis and Uber. That was like a $30 million sale. For me, Weblogs, Inc, a $30 million sale. Like, you can add up a lot of these $30 million,

$100 million, $200 million sales that, you know, get the founding team, $5,10, $20 million. Not enough for them to retire. They still have, but it's enough for them to actually fund their next company to MVP. Yes. and feel good about moving on from it and everything. And those just are not happening at all right now, which is wild.

Well, the good news, Alex, is I spoke to Reid Hoffman and Sacks and I were in the Illuminati meeting the other night. And they told me in the Illuminati meeting that Lina Khan's not going to have her job in January. So you know what? I just really want to have Jason live on camera if Lina Khan gets her term extended because his head's going to literally explode. But I want to point out a slight. of deal sizes here because I heartily agree that the singles, the doubles, the talent acquisitions

should be allowed to go through no matter of the acquiring company, small dollar deals, let's go have a lot of fun. The Adobe Figma deal was $20 billion and was an incumbent player taking out what could be a real challenger to their business. That's the creative destruction that we want to see from startups. So to me, the Figma example, I don't think fits into the we really need to have better capital recycling and so forth. I just think that's the, I just think are distinct given their size difference. I think that that's probably fair. I mean, I don't know enough about that specific deal, but like some of the others are just

when they were investigating meta for buying the fitness, the VR fitness company, Amazon not being allowed to buy, I wrote like the vacuum, the robot vacuum company. Like, what are we spending time on here? And, you know, let's like, let's, let's keep this all moving. Yeah, fight the real enemy here. Like, these are, those were tuckins. Those were tiny. And it felt like those were vindictive, slaps on the wrist.

Like, maybe I'll just show you, we're not going to let you do anything. Those were kind of like little jabs to say like, yeah, you know what? Remember you bought YouTube? Remember you bought Whole Foods? Remember you bought, you know, the, you know, WhatsApp and Instagram? We're going to stop even before that. And they worked. There was a chilling effect.

There's nothing. Like, these discussions just aren't happening now because of that. Just to not belaborable. all of this. What this also does to capital is if you're an LP in funds, you have this great excuse and a valid one to say, you know what? We're going to trim the number of funds that we commit to. And we're going to take our commitments down. And when I went on, raised my last fund, and I talked about here on the program, I had about, I would say 80% of people say to me, when I said, hey, we're raising our next fund. They said, I'll meet with you, but

we're pencils down right now. for obvious reasons. We're waiting for returns to recycle and we love you. We don't want to waste your time. But we will meet with you because we want to hear your vision. And I took the meetings and I said, happy to take the meeting because then we'll at least start the relationship building for Fund 5. And, you know, I was at this LP thing last night and some of the same LPs who were literally not allowed because of their committees to invest in our fund. There were pencils down. they told me, hey, you know, and they kind of felt bad, but they didn't participate in the fund. And they're like, we really want to talk to you about Fund Five.

Like, we got some DPI returning. We got some things happening. So talk about green shoots. If we know 2024 has been just frozen, 2025 is looking like a really good setup here. New administration, stock market at all time highs, soft landing feels baked in. Maybe we have a little recession, but we can manage it. you know, the rates and inflation broken, unemployment at a good number.

We're still hiring people, but it's not like out of control. What's the best case scenario? If we flip on both switches, M&A comes back, and the IPO market comes back and we see Stripe go out, and maybe SpaceX goes out,

or nobody needs to say information or anything, or Starlink spins out like people are saying, you know, whatever. We see five or six of these things happen in, in 2025. What's our best case scenario here, MG? Yeah, I mean, all that sounds like a sort of best case scenario. Obviously, yeah, this year is totally moot. Like, no one's going to do anything before the election.

Once the election's over, you don't have enough time, really, right? To sort of make the call on doing anything this year. And so I think all of those things, M&A is probably going to take longer than the IPO window. I would imagine to come back because there's all these, like, even today, right? Like there's there's news about all the antitrust, you know, stuff in process. And everyone's bought like legal teams are bogged down in that, right? So it's like that some of those teams would be working on different M&A deals. And so I think that that's still going to take a while to come back.

But I also think sort of going back to the earlier points, there are still just unfortunately a lot of companies that remain massively overvalued from that last cycle. And so, you know, companies are either going to have to figure out what the outcome is, that they're willing to take there and have more hard discussions. Obviously, a lot of those have been had and some companies have taken down rounds and whatnot, but there's still going to be more of that

into next year. So I think, like, your scenario is like the, the pie in the sky rosiest one that can play out, but it's probably going to be, you know, some sort of hybrid of things thawing a bit and getting better, but it's still going to be a sort of long road with the wild cards of like, whatever is going to happen with AI.

Like, what are those outcomes going to be? like what do new companies, how many new companies pop up and what do those start to look like? Because I'm also fairly fearful, I would say, about those, a lot of the early stage AI companies that are just going to sort of, I, if I had to extrapolate out, I think will quickly realize that there's not really much of a big user-based product there beyond sort of, you know, the big companies that are doing everything already right now. And so, you know, that can also have some weird effects on the overall ecosystem, I think, next year. If you want to build beautiful software products, well, you need a beautiful development

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meta, putting an AI search box at the top, Siri now, I don't know if you've been playing with the latest iOS 18, do you install the beta on your phone? Yeah, yeah, I have it. It does the glowing ring. You can see they're taking it pretty seriously,

very pretty. You know, I was talking to Sergey the other night, there's a name drop for you. They're taking it super service. I can tell you that, and you're starting to see it show up at the top of search.

results, you know, the little Google Gemini box, and Microsoft, of course, with co-pilot, and then you have chat GPT with 300, 400 million monthly active users and this incredible app. Who's going to win, let's call it, the 50% of querious questions, you know, that are pretty easy. Hey, tell me about the history of Pink Floyd, you know, hey, what's in the news today? What's a great recipe for Sam? And all that kind of, what would be the weather equivalent, the play the song for meo Cleveland in Siri and Alexa in that those early promising days when who's going to win the consumer query race? I would imagine that at massive scale.

So you talk about, yeah, like Open AI, which is an amazing scale, which at GBT with hundreds of millions of active users, which is incredible for a, you know, a relatively early company, though obviously the company's been around for a while, but a relatively early product is incredible. still, and when you think about the billions of user scale, I come back to the idea that there's, you know, there's the apples and Googles of the world, which have inherent advantages with their devices in a billion pockets already,

and are people going to go out of their way to download a new app to be able to use some of these services? They have to be above and beyond better. Now, I think chatGBT and OpenAI have done an exceptional job of becoming sort of, if not a household name, at least a brand name that people know, right? And again, all credit to them for doing that. And they've also done a good job on the product side.

Like, those are good products. And obviously they had Microsoft's help with all the capital and cloud credits and whatnot to be able to scale to where they are. But still, do they have enough to get over the chasm? And it's really a race in my head of like, once these are all baked in, you bring up Syrian Gemini. these are baked into all of those billions of devices. Is anyone going to be able to compete with that?

And that's probably, you know, like one of these real questions in the next sort of couple of years. Because you've played with it. The new series like stuff, it's so rudimentary. It's nothing compared to what Open AI is doing. And the Gemini stuff is definitely more advanced. But still, like, it still feels very, very early compared to where it's at. The way I would describe it.

Talking to Siri, you know, in this iOS 18, AI, Apple Intelligence is like talking to a toddler. And then I think Gemini is like talking to a really smart teenager. And then chat GPT is like, if you're using O-1, it's a graduate student. If you're using the regular one, it's college student. And so how quickly can that compress? And, you know, we're talking to a PhD student. And then I think we're probably arguably maybe a year or two away from, when you talk to one of these things, you're talking to the smartest human being on the planet and the next 10 smartest people in a room as your servant. Like literally, it's so clear to me

that your discussions will be as if you had the 12 smartest people in the world in a conference room and you just came in and were like, what should I have for dinner that's healthy and my daughters will enjoy? And like Einstein and Nietzsche and, you know, Elon Musk and Steve Jobs all figure out what you should. should have for dinner tonight.

Like, and they have a four-hour conversation about it. And then, yeah, that's what you're having for dinner. Twelve most effective, smartest, as cleverest people in the world.

I don't know if that's who I want to plan my dinner party per se. No. Jerry Seinfeld's in there too. Yeah. Okay. Because that's, I mean, you're going to end of like one crouton,

some duct tape. Like, that's a strange. It could be a very deconstructed dinner. But how, how are those actually translated into products, right? Like, because that's what we'll,

so we got all these other startups like the perplexities of the world and anthropics, all great products. But are they going to be enough to cross sort of, again, like the inherent advantages that Apple has, that Google has with their products and market? And obviously, that's why you hear about the reports of Sam Altman and Johnny Ive, right, whatever sort of product they're trying to work on. Because if you can have some sort of actual physical product, that's going to give you at least some opportunity. And this is what Zuckerberg has been talking about for months and years, right, that he feels like meta overall has just been at an inherent decision. advantage because they don't have a phone, right? And so now they're trying with the glasses and they

tried with... Sounds like they should have let Chimov do it. Yeah. Chimoth had the... Yeah. Yeah, no, yeah. Back in the day, he was like literally meeting with phone vendors about a Facebook phone. And even if they had just done it and it had 5% market share right now? I remember that very well, Jason, because I was reporting on that back in the day for TechCrunch and Meta kept telling us to our faces that there was no truth to that whatsoever, which was also fun. They lied? Oh, I can't believe it. Yeah.

It reminds me of like asking Google if they were going to produce a browser. They're like absolutely not Chrome. It's like, but wait on LinkedIn, you have the entire team from Mozilla Foundation working for you now. Hey, Apple, are you working on a car? It's like, absolutely not. It's like, what are these thousand people from, you know, Tesla and a car manufacturer is doing in Northern California at a racetrack? The other fun side of reporting, yes. Yeah, exactly.

Straight up lying. I was just thinking about your time at GV and how that is part of the broader alphabet world and other venture capitalists, often the ones you're describing in the piece are more traditional firms. And I was just curious, does being a CVC in a period of time in which traditional venture LPs are being more conservative, does that mean that you don't see your firepower decrease? And does that make CVC, I don't know, a more advantageous place to be investing from when the markets get weird?

Yeah, I mean, at a high level, you'd think that's the case. But like, the way Google Ventures is always set up was really to be a straightforward VC fund, right? So we're just thinking about the returns. And yeah, it's nice to have obviously one LP who happens to be one of the largest companies in the world as the capital source. Because, yeah, you have to worry less around, you know, a lot of the stuff that Jason was talking about. But still, you know, there's all the inherent tension is still there with like, if you're not. bringing capital back in, like, you know, what's, what's going on here? Is that ever going to change? Is it ever going to start to come in again? So a little bit less, but you're not free from all the considerations,

but it might be slightly more stable during periods of extreme change. Okay. That's less than I was hoping for. Yeah, yeah, I think it's, it's fair to think of it as like, if the mantra is like, we want to be long-term capital and everyone says that, but when you have the one LP again, like, that can really sort of take that, uh, and not have to have to have. volatility in that, I guess. Yeah, it's very convenient. All right. And just before you go, favorite AI tool you currently use, Jason and I were just talking

about Notion, which has lots of AI all the way through it. So, M.G., what floats your boat in the AI world today? I'm boring. I mean, like, I still use mid-journey a ton because I'm doing all this image, you know, stuff trying to, for different posts and stuff. So that's definitely something that I've been trying. But I am very interested in all the new voice stuff. So obviously, um, uh, chat GPT finally rolled out there, uh, you know, 4-0 voice.

assistant stuff and Google has theirs out there. They're pretty compelling when you compare them to what, like we talked about like the early days of Siri, but also Alexa, right? And apparently Amazon's working on coming out soon with whatever their new version is. But these voice things are pretty interesting and fun to play with. All right. Well, that's a good encouragement for me to get off my backside and use more of them.

But Jason, as long as my dad still wants to use chat GPT every day, they have found product market fit because that guy does not like technology. I am now up to 30 to 50 interactions with 01 per day. And I told my entire team, if you open a new tab, I want that tab to be 01. And I want to see everybody of our 21 person team here at launch and this weekend startups using it at least 10 times per day. Anything you're going to work on, start at 01, ask it a couple of questions, and then ask it a couple follow-up questions. And it's unbelievable. My favorite one now I do is, hey, check your work. I think

you could do better and make the answer you just gave me, you know, more concise and check your facts. And it almost always does a better job. It's like, this is like dealing with people out of college again. You know, they, whatever they bring you when you're the editor-in-chief and you're like, this is good. Can you spend two hours and make it a little bit tighter? And they say, how do you make it tired. I'm like, I'm going to leave that up to you. This is when I was busy and I was an editor. And then they bring it back and I read both of them at the same time. And I say, well, how'd you make this better? And they explained it to me. And then I start the conversation. It's like, really interesting. All right, listen, MG, you're

awesome. Come on again and congratulations on all your success. And if you want to read somebody's words that are worth reading and not a waste of your time with all these garbage chat GPT created blog posts. Go to spyglass.org. I don't know what spyglass.org is. You used to do Paris Lemon. What is spyglass.org? I always, every few years, I just have to reinvent and, yeah, go back to the...

Yeah, okay, I like it. So anyway, spyglass.org. You can get there and, yeah, you can get full access to the inner ring. Yeah, a hundred a year. Go pay for it. Go to the inner ring. For ten bucks a month. Why not?

All right, everybody. That's M.G. Siegler and we'll talk to you soon, M.G. Congrats on all your success. Thank you both. It was fun. Alex, it looks like we have time for one more news story if you have the time. I got time. We have lots of good options. So you may choose between Google getting hit with a possible dissolution or no bells for computer nerds or how the data center wars are still raging.

Your choice. I think we got to go with the Google breakup. We know that the DOJ has won this case against Google. And it has to do with the search and the advertising monopoly. That's where we left off. And we were all waiting for the other shoe to drop, which is, what is the remedy? Okay, we know that they're guilty. We know that they're guilty of maintaining a monopoly.

Am I correct in my recalling of this? Yes. So August 5th, 2004, the court found that Google was liable under quote section two of the Sherman Act for maintaining monopolies in the U.S. General Search Services and U.S. general search text advertising. Those are not small markets, Jason. They are tens and tens and tens and tens of billions of dollars a year in revenue. So what does the government want?

Well, I went through a very long filing and it's very detailed and there's lots of things that are going on. But the biggest headline that came out was the following quote. Plaintiffs, i.e. the government, are considering behavioral and structural remedies. That would prevent Google from using its products such as Chrome, Pay, and Android to advantage themselves. Structural remedies is, as it turns to, out code for this company could get broken up. So the headlines you're seeing are

DOJ considers breaking up Google. That matters. Jason, if you had to lay a bet, percent chance that Google gets broken up from this, just tell me honestly, what, 5 percent? I would say under 5 percent. Yeah, like maybe 1 percent. These things are always in negotiation. If my memory serves me correctly when this happened with Microsoft, this took a very long time to hash out. And it would probably go across in administrations. And so this DOJ case with Google, I believe, started under Trump and maybe even before Trump's term. So these things tend to go across administrations. And then the remedy, as I just said, in our closing comments with MG, I'm doing 30 queries a day, 50 queries a day on chat chepti first.

Now, will Google win me back? As I told Sergey Brin, they got to have a killer app. I want to work in an app. want to have a destination to go to that is solely for this. So I need a Gemini.com app or a Gemini app that I just go to and I live in and a domain name that doesn't have the shoehorning of Gemini into Google search. I don't want that. I want 100% experience like YouTube is, right? Like when you go to YouTube, it's not like Google, you know, YouTube. Dot Google.com or Google.com slash YouTube.

You have to hit another tab like they did with Google Plus, their social network. It's got to be its own brand with 100. percent of interface and UI around Gemina. Okay, let's put that aside for a second. The obvious remedy here is to not let them do the deals that they do with Apple. And so break up the Apple deal. That would be the obvious concession. Or, hey, if we have too much market share, we spin out YouTube.

And I believe spinning out YouTube creates more shareholder value is a very clean break. It doesn't break the advertising system. Yes, those ad networks are all integrated, etc. But what you would say is, you know, the ad interfaces have five years, a full five years, to be, you know, separated. So you have this sort of grace period of, you know, you just can't flip a switch and break those things up. They're all on common infrastructure. So YouTube has a five-year deal with Google or alphabet to host, you know, their content or whatever. They can use GCP if they want.

But then eventually the ad interoperable. and the logins have to kind of separate. They have to have, you know, Google has to have under 30% ownership of it and not have board control. So you come up with some way to kind of do that kind of spin out is I think two things that could happen. That would be a nice way to balance this. But overall,

the market will have solved this problem, is my prediction, long before the Department of Justice does. There's an interesting commentary about the legal system and its pace versus the current pace of change in technology. And can you even catch up by the time you complete the legal task? Maybe you've missed the entire next cycle. But there is some cool stuff in here, Jason.

I'm not going to like, I know that this is not the, um, the we love antitrust podcast weekly corner. Uh, but I do think there's a couple of cool things that could happen through this that might make the search more good. And this stuff, these remedies, where are they coming from? This is the government filed and said, this is what we want, where this is some leak. Oh, explain to us the providence of this. Yeah, this is the judge in the case saying, here is what we are considering for remedies.

They are still in discovery. There's more, I think they want to go learn more before they make any sort of like actual thing. And to be clear, Google is going to fight this the whole way down. But a couple of things that did stick out to me. One, you nailed it. One remedy that's being considered would, quote, limit or end Google's use of contracts, monopoly profits, and other tools to control or influence distribution channels.

That is the big search deals that Google uses. And the reason why the government cares about that, Jason, isn't just, it's a lot of money and it's buying access. It's that Google, by having access to all the searches, gets more data, more data, better search. Other people can't get in. So under, the accumulation and use of data remedy section,

the government is considering forcing Google to make, quote, available in whole or through an API, the indexes, data, feeds, and models used for Google search. Okay, wait, let's pause on that. Yeah. Explain that in plain. your interpretation of that in plain English, what would that look like?

Would that be, you know, similar to Brave and their search API they have for their excellent search product? And you can then use it as an API. I think Bing has some access to search results that they'll let you do on your website. So what do you think that would look like in plain English?

A startup could do what? I mean, I think they could build their own variety on top of Google. Now, I don't know about pricing, packaging, you know, legal access and so forth. But I think you're going to get one or the other here. If Google is allowed to continue buying default status on, you know, billions of devices as kind of MG was talking about earlier,

then the remedy would be to say, okay, cool, you can have all of that. You can be for a choice. But you have to let other providers who want to get into the search game, i.e. startups, to have access to at least some of that information you're collecting so that way they have a shot at competing with you. or if they lose the default status, then I don't see the government going after this. But it does kind of give a couple of options

about where the legal system might come down on Google here. But the idea of opening up the Google Blackbox, Jason, for other startups to build, let there be 10,000 search companies, you know? I tell you, be careful, because sometimes the remedy then creates another business line, that could make them more powerful.

And this is hilarious because they might, if they spun out YouTube, the amount of cash that Google would get would be hundreds of billions of dollars. I think it's a $500 billion company out of the gate. And Google would get $500 billion, right? If those shares had to be floated to the public or over some period of time,

I think it wouldn't take long for Google to clear that position. You know, I've never, I don't know if there's a precedent for that, but, you know, if they made it public and they owned 100% of the shares the day before, it goes public and they allow the public

to buy 20% of the, shares and then every year they commit to lowering by 20% or something. It would take four years or something, maybe to clear their position with the compounding impact of that. So that would be great. Now Google's sitting on a pile of cash that they can invest in AI in other products and services. Okay. Now let's move to the next step. There was something called Yahoo Search Monkey back in the early 2000. I'm talking like 20 years ago. This is before my time. So I'm here to be here to be. Literally. Yeah. So here's what the, I just SaaS ChatGTPT4O about it, and it said

this is the features, according to looking at some historical data from Yahoo. Enhanced search results. SearchMonkey allowed developers to enhance the display of search result with rich data, such as images, ratings, and custom layouts. Structural data integration the API supported structure data from websites

like microformance, RDF, and RSS feeds. Those were blogs. And then custom result templates, developers could create custom templates for specific websites or content, allowing search results to look more engaging and tailored. In other words, if you wanted to create perplexity, with Google, you could use Google search results and say, hey, I'm going to create something for travelers, and I'm going to make my own travel website. And with Yahoo's search monkey,

you could build that, right, and just say, I want to show flights over here, I want to show hotels here, et cetera, and you could have really interesting things. Then user control. You just had the option to enable or disable specific applications that affected how their search results were displayed. This sort of came before algorithms, but imagine a customizable. And this is in 2008 and then it shut down in 2010, despite

everybody having a really big love of this and then Brave now has their own version. Explain Brave browsers a version of this

search API. If you're curious about how AI will replace job, watching Jason ask Chad GPT questions live that he would have usually asked before the show so I would ask the dog to research. Yeah, this is literally me being slowly machined out of existence. Yeah.

I got six months left, y'all. Well, no, what this is doing is we would have done, I just remembered the search API when we were having this discussion. You triggered that. And so, you know, everybody gets to learn together. Yeah. And so, you know, this is essentially what this would do is like, let startups

really great user-first products. And so go check out the Brave search API. You love Brave, and you use the Brave browser every day. It's my standard.

I basically keep two or three browser windows open, and what I'll do is I'll use Brave as my primary, and then I'll have Chrome for maybe like one account, and then I will, on my PC, you know,

use Microsofts once in a while, keep up with that, and then on my, my, my, my Macs, sometimes I'll check out Safari,

um, and I'll also check out Firefox and Chrome. I just, I like to work around, but I think Brave has a really good job of like, keeping your privacy and everything protected. Um, and,

uh, it takes out a lot of the cruft on the web, which is like important to me because it speeds it up. So it's kind of like having an ad blocker built in, but a, a lot of the tracking, there, I'm not,

I'm not objecting to the tracking as much because I don't care if I a track because I use a VPN so like they're tracking somebody from like Boise, Idaho, it's not me. And I rotate my IP automatically with a with I use newerd VPN and Express VPN. I think one of them is a sponsor program, but I maintain

both of those accounts and I'll use different VPNs at different times, especially like when you're in cafes and stuff like that and people could be yeah, yep, or I travel a lot, right? So you want to make sure people don't intercept your web traffic over public Wi-Fi networks. Long story short, it's really a speed issue for me

too. Like the web is so much faster when you take out all these cookies and things bogging you down. So long story short, I think what will happen is this will wind up having zero impact ultimately. This entire case could

have the majority case, the 60, 70% case, that this will look as if I asked you, what was the impact of the Microsoft antitrust case? Well, okay, here's the thing about that. Microsoft was supposed to get broken up. They got out of that. Microsoft survived,

became now a $3,4 trillion company. Do you think or do you not think that the case had a impact on how companies operate? Because to me, Microsoft ended up walking away slightly unscathed, but the government said no being highly abusive platforms. And do you think it had an impact or not afterwards? I would say the blunting effect of it was distraction of the management teams. And so I think the distraction is why they probably missed the phone, the smartphone, and why we're not sitting here saying it's Microsoft versus Google versus Apple or Apple versus Microsoft for dominance in smartphones.

And Microsoft does not have an operating system on smartphone. Yeah, well, you know what? They gave up on Windows phone. Remember that meme with the guy in the diamond mind? You know, I think they were like 24 months and $24 billion dollars per way for making Windows phone stick. quickly, to be fair to Google, they did talk about this.

They have a response up, quote, this is the start of a long process. We will respond in detail. But they are trying to make the case that all of this is not just bad for Google, but it's bad for you, Jason. Quoting from them,

forcing Google to share your search queries, clicks and results with competitors, risks your privacy and security. Of course. By removing PII, but, sure. But, yeah,

that does, when you read the privacy part of it, I'm like, how does that work exactly? that one seems strange. And if it was available in a product where you could say, tell me about this user so I could target an ad

and I will give you 10% of the ad, that was retargeting and that kind of existed and then Apple broke it in the smartphones and Brave breaks it. So anyway, that seems like a weird one. I think this is going to come down to a very simple thing. They're going to just say,

they've got a gun to Google's head. They're going to say, give us something. and give us something could be Chrome, Google Chrome, could be the search deals with Apple and that 30 billion or 40 billion, whatever it is, or it could be YouTube. In other words, somebody's walking the plane. Yeah.

Right? They want a sacrifice. And they're just, you know, going to put something up as a sacrifice, and we'll see if the government gods accept that sacrifice. It's a blood sacrifice. Something's getting chopped off. Who is the least-like Chinese? amongst the Google properties

that could be spun off. Because you mentioned YouTube. By the way, I pulled up a list of the largest corporate spinouts in history. The largest one ever was $191 billion. So if YouTube was spun out, it would be the biggest ever by a multiple. So I don't think it's YouTube.

What would you sacrifice? It's not going to be prone. I mean, Chrome is an interesting one because it has over a billion users and Chrome as an independent company, could it survive or not? Without, I mean, with a billion users now, I think it could survive.

And it does make a fortune in terms of Google search revenue because it's a devolved search. So they could say, hey, you sacrifice. I mean, I think maybe they're overlooking the power of Chrome in this whole thing.

If they said you have to sacrifice Chrome or Android, that would be truly damaging. Google says, splitting off Chrome or Android would break them space and many other things. So Google really agrees with you.

This tricky thing here is, I don't think there is something that's easy to slice off without a lot of things bleeding. Your team's easy. Yeah. YouTube's easy. I mean, it's just the ad network. But if you think about it, like, if you're buying search ads and your Disney buying search ads and you're Disney buying YouTube ads, your ad agency now has to log into two different

services and upload the ads and read the metrics, guess what? They're doing that for Facebook in the Facebook interface for like three or four different products. They're doing it on Microsoft and Bing. They're doing it for TikTok. So it's like, okay, instead of having to map. manage 10 ad networks, we got to manage an 11. They've already got that issue solved in the ad industry. So that's a clean one. The thing about Chrome is, think about how integrated Chrome is into

Google Docs and Gmail and your account. That's a really dangerous one. And I think that that, and because that when we look at consumer protection, we, none of us pay for Chrome. Chrome's free. And Chrome gets better. And then they put a password manager in it. And then they put ad optimization. into it. They, you know, all these different pieces they put into it for free, kind of like harming consumers by making that paid or making it its own thing. So anyway, it's, it's messy. They're going to put a gun to their head, you know, they could give up home automation. That would be like such an easy one. Like here's next. Here's Google Home. Like nobody cares. And so that's not like it's a hundred billion dollar asset or a trillion dollar asset or anything.

So, man, can you imagine how sad that would be? be like the government brings this big case against Google, gets them declared monopoly and the courts goes to remedy and it gets nest. Like I mean, that would just, no offense to nest. I mean, my wife's family uses them. They're great. But that's not what I think of when I think of Google. Any other great questions or comments from the audience? Well, there's a couple of comments that are interesting. Seven Racker says there is no capitalism once advanced superintelligence. I think they've an AGI there. I'm sure there is a transition period, but once AGI communism is where we are headed. You know, here's the thing, everybody. I joker about my job getting taken away. I'm not

actually worried about that to be clear, but we are going to see a lot of displacement. And, you know, Jason, we've talked about ports and strikes and such. I do become curious if something like basic from the expanse series of books and shows does become the norm. The point, point of basic was that it wasn't a luxurious support, but it was you will not starve if you live on Earth. And I wouldn't be shocked if we ended up with something that's not a good living for free, but as we automate and machinize our economy, something comes up. Yeah, I mean, in the United States today and in some of, you know, Canada advanced civilizations in Europe, the idea that somebody would starve to death

like they did a hundred years ago it was very common or today in certain caterships where you just can't get food to people because the dictator stop it. The idea of somebody on planet Earth starving is like, what? I mean, many more people dying from obesity and obesity-related diseases than starving

seem to have that one. And then shelter, it's kind of like, well, you know, if you live in a modern American city, you might not like the, you know, shelters you would have to go to and they would be dangerous and there's all sorts of issues, but you would not be without a place to get shelter. And if you beg some family member, if you had them to stay, you know, in their shed, you would have it. Again, not super luxurious. So, but I do think that concept of the basic, yeah.

And that's in the, that's in the series expanse as basic universal life credits. Yeah, there's some sort of currency you get and there's a subplod in which they come back to earth and then they have to exchange their currency. It's interesting, but the point is it's a coffee and a muffin. It's not catered lunch. Just one last one before we go. So Sebastian Asprella says, with Chad GPT, we will no longer need consultants. I wonder

if the likes of Deloitte, KP and G, McKenzie, etc. are taking this into consideration. Wrong. You are correct that Chad ChbD can replace most of the work consultants do. But you do not hire consultants because you think they are actually smarter than you. You hire them so that way they tell you to lay off staff. And then when you cut,

You don't feel bad about it because you're just doing what the experts recommended. Consultancies are ways to sync accountability somewhere else. So while chat GPT is great, no, it cannot do that. So McKinsey will still be employed. Cockroaches will outlive consultancies, Jason, but that's it. Well, you know, with the consultants, I think what you'll see is because one of the firms that had part of their mandate was they never did a layoff in their history. It might have been McKinsey was the one that never did a layoff.

I'm trying to remember which one had that rule or that. that like bragging rights, they have recently started offering buyouts, which are technically not layoffs, people choose to leave, because I do think when you watch people do queries on, you know, oh one and Claude,

yeah, you, there's probably the bottom third of consultants are not necessary anymore. And so then the question is, does it become the bottom two thirds? And can one of those consultants do the work of a hundred? and the answer is yes.

Like the query I just did about, give me the history of Yahoo Search Monkey was about five hours of work for an average producer, I think. Maybe two for a good one. And so that's two to five hours that I didn't need somebody to do for me, right? Yeah.

AI then is the death of billable hour wastage, maybe is the way to think about this? Sure. Yeah. And so then the question is, is there more advanced stuff to do? I don't know because some problems are finite. So as but one example, doing your taxes, I was talking to somebody in that industry and they said, listen, I said to them, hey, but isn't there always some more financial modeling and stuff to do? And they said to me, not really. He said, he thought that they would need to be a much smaller organization, that they would be more profitable. But the top line could, the top line billing could be challenged. And certainly the number of employees needed would be less.

So he agreed with me that earnings would be dramatically more and that headcount would be less, which then goes to static team size. But in this case, it would be earnings. We've got to come up with our own thing about surging earnings. So we'll call it surging earnings for now or earnings expansion. So earnings expansion, static team size, you know, are the sort of two sides of the same coin there or part of the same system that we're going to see. So it wouldn't be surprised if you saw a top law firm say, you know, we're going to have 20% less lawyers and be 30% more profitable.

So I think, well, also, acquisition is going to go on the themes list from earlier. I wrote that. I wrote that down. So here's a fun combination of things. Savings accounts for kids, investing in the stock market and AGI and UBI. Corporations are going to get more profitable. They need fewer people. Ergo, corporate profitability will rise and be very strong.

Employment could get hit. People have also talked about giving every child $1,000, in the S&P 500 when they're born to get them invested in the U.S. economy to own a piece of the country, if you will. Smush all that together. And I wonder if some portion of corporate profitability that would go to taxes

today ends up in I brought it up again, ends up being funneled in that way towards people. Maybe the dividends are basic or UBI or whatever. Yeah. So this is all flavors of the same theme

and Invest America is where Brad Gerson and some other folks are working on, put $1,000, $10,000, $5,000 in every kid's savings account, index funds, and let them have access to it maybe twice in their life, maybe once, you know, you can take out 25% of river for college, and then a second time maybe to put a down payment on a home

for 25% of the other 50% you get in retirement, and it would be like the super annotation funds in Australia. And then kids getting more savvy, Gen Bet, as we call them. Yes. I started kids investment, Club.com and I'm looking for somebody to, I'm looking to incubate this as a startup, so I need a co-founder or two who want to build this into a company. I have the domain name. I have the concept. I've got a couple thousand people. I think I've subscribed already to Kids Investment Club.com. My concept is to have young adults, uh, put money into an account. They make trades. Those trades are not real. But then the parents have a shadow account in Robin Hood or another product. So kids do the trades. The parents do the trades. The parents,

If they want to, can confirm those trades and make them on behalf of their kids. Kids get to make a model. They say, I want to do this. Parents get to execute it or not. And if they don't, the kids get to say, look, I said to buy Nvidia, you didn't do it. You didn't push the trade through. So almost like making your kids junior traders, I think this would be like a really noble thing.

If there's two or three folks out there who want to take this on and they can make a great app, I'm here for it and I will fund it. I'm going to have the domain name and I have the first thousand customers ready to go and people will pay for this by the way. I talk to parents, they'd say they pay $100 bucks a month for a product like this

or $25 a month for a product like this and I think it could change the world. Oh no. Jason, I just had a horrible, a horrible impulse during that point. You're like all funded and I was like, oh, I'm in for 10, I'm in for 15.

And then I was like, no, bad Alex, journalism, not investing. That's the first time. No, no conflict, no interest. You can. You can. Absolutely, and I'll cut you in on it. No, no, we'll get you conflicted.

I'm hanging out with you too much. We'll get you conflict, no conflict, no interest. Trust me. We'll see you all next time. Bye bye, bye-bye.