All-In with Chamath, Jason, Sacks & Friedberg - Fed Hesitates on Tariffs, The New Mag 7, Death of VC, Google's Value in a Post-Search World

Episode Date: May 9, 2025

(0:00) The Besties intro Philippe Laffont! (2:12) Miami F1 Recap! (12:10) Fed holds rates steady on tariff uncertainty (32:47) Google drops after Apple sees fall in search queries on Safari (56:48) Creating a new Mag 7 (1:07:00) Private markets: Is traditional VC dead? Philippe details Coatue's new fund structure and what makes a great investor Follow Philippe Laffont: https://x.com/plaffont Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://polymarket.com/event/fed-decision-in-june/fed-decreases-interest-rates-by-50-bps-after-june-2025-meeting?tid=1746821096114 https://www.federalreserve.gov/newsevents/pressreleases/monetary20250507a.htm https://www.mlex.com/mlex/antitrust/articles/2337168/apple-exec-testimony-on-search-volume-drop-hurts-google-stock-price https://www.bloomberg.com/news/articles/2025-05-07/apple-working-to-move-to-ai-search-in-browser-amid-google-fallout https://blog.google/products/search/statement-press-reports-about-search-traffic https://x.com/EconomyApp/status/1915501252420784499 https://x.com/Similarweb/status/1920026287625658628 https://openai.com/index/leadership-expansion-with-fidji-simo https://files.pitchbook.com/website/files/pdf/Q1_2025_PitchBook-NVCA_Venture_Monitor_19001.pdf https://stockanalysis.com/ipos/statistics

We went to an amazing restaurant Friday night. Shiso is the name of this restaurant. Wonderful food. The owner of this restaurant, Shamath, is a super fan as well of the All in Bocas. Is that a French restaurant, Jason? Shiso was more like an Asian fusion restaurant, like Great Sushi, we had this incredible

some yellowtail. It was delicious. Delicious, just aces all the way. The guy comes and we go to pay. He said, Oh my god, Philippe, listen to this story. This is the most embarrassing good here. Your money is no good here. All this is the most useless. Let's pay after we ran up a hell of a bill. And now you see freeburgs running freeburg just ran off the show. Why did he run off the show tomorrow?

Okay, so Jason says to me, Chamath. This is absolute, this is an absolute bullshit story that you guys made up. No, no, no, no, stop, stop. You guys make this shit up. We didn't make entertainment out of me. I'll tell you the truth because, okay, I'll just tell the truth.

Yeah, you tell me the truth. I'll tell you the truth. You know what, okay, ready? I'm gonna tell the truth. So Jason says, guys, if they're gonna... Bullshit, I'll see you guys later. If they're gonna... Don't care. It's not like he's gonna talk for more than three minutes anyway. So Jason says, guys, I'll see you guys later. If they're... Who cares?

It's not like he's gonna talk for more than three minutes anyway. Go ahead. You said if they're gonna comp all the food, just make sure you give a great tip. Huge tip. Huge tip. Shmoff and J-count level tip.

Totally makes sense. Freeberg's like, yeah, got it, no problem. We had like 19,000 pounds of food. And he goes, is $175 appropriate? Literally. Freeberg calculates it. And so Jason says, Jason says no. And then Freeberg says, hold on, oh fine, fine.

I'll double it to 350. Now he was f***ing around, he was joking. I gave the guy a thousand bucks. Gave a thousand bucks and I said, actually I think we should give three thousand. So then we tipped the woman an extra 2K. So we gave her 3K for a 10 person dinner, which I think is appropriate.

She was ecstatic. The food was phenomenal. It was great. Go to SheSo if you're in Miami. Dave, are you adjusting the tips for the no tax on tips? So you're like making them a little smaller? Hey, everybody. Hey, everybody. Welcome back to the number one podcast in the world. We're going to have an amazing episode today. The besties are riding high. Why are we riding high

because we went to Miami. Oh my goodness, we had so much fun and F1. That was fun. That was fun. I mean, it was fun. I mean, so many great stories. So much good time. We're laughing the whole time. We did a little stage show. And Tony Robbins came up, we had Nico Rossberg, he's a Formula F1 champion, our guy Antonio Gracia's who's working on Doge Valor Capital front of the pod, and Mayor Francis Suarez joined us. And then at the end of the show, surprise guest, none other than Sergey Brin, who is punching a clock. He's working like 70 hours a week over at a

alphabet. And we'll talk about that today a bit. Did you have a favorite speaker? Mr. Sultan of science, the one and only David Freiburg. Do you have a favorite speaker or a moment? I'm Sergey. Sergey. Sergey did a great job. He was very casual, very chill. We had a great conversation. I think we should probably publish that as a standalone. I thought it was really good. So drop them like a little midweek drop or something.

But I will say Antonio, I gave him a shout out just because I think the work Antonio is doing is so important. I am super impressed and I was really appreciative of him taking time to come hang out with us. But obviously he's working with Elon on Doge but he's also uncovering a lot of stuff in the government that it's really powerful to see someone actually go in,

do the digging and present it the way they are with the transparency he is. And he's not doing it for any angle. There's no money, there's no benefit to him individually. He's just doing it. That's probably net negative on the margins for him. Really hard for him. And yeah, and it's just amazing.

Based on Elon's experience, it's definitely negative. People maybe don't like having their grift canceled Chamath, polyhapity or our chairman dictator. Do you have a favorite moment with the speakers or a favorite speaker, you know, highlight from the programming specifically? I thought all five of them were amazing. I did I did think that Sergey did a really good job. I like Nico Rosberg a lot. I did too. For sure. I'm really excited to see what Francis does next

after being the mayor of Miami. Maybe governor. We'll see what the party says. I think they were all great. Tony Robbins, I have to say, his energy is very unique. And when you're near it, I didn't have many interactions with Tony up until that first time, really, I'd met him through Peter Goober a couple of times, when I was part of the ownership team of the Warriors, Peter is a co owner. They're very good friends, but I'd never really spent much time with him. He's a special person, you can tell there's a there's a big energy there. They're all

great. You know, I'm interested to see how the audience likes that interview, because you know, he, he is yeah, you know, I'm interested to see how the audience likes that interview because you know, he he is a ball of energy. I tried to get him to open up talk about himself a little bit. But you know, he was kind of on his own tip, but the audience loved

him. And we did a great like meditation exercise that everybody loved. It was a lot of fun. Joining us this week from Co2 management. Yes, we have Philippe Lafont, who is his older brother. And Philippe, welcome to the program for the first time. Thanks, guys. Great to be here. Have you heard the show before? Have you listened to the all in

podcast? Let me ask you that question. I've been listening about it for a week at speed of 1.8. So I think I've gone through about like 10 or 12 episodes. Okay, catching up. And all right. Are you an F1 fan? You're French. So I don't know. Is that like popular in France? The F1? Hey, we had a good F1 pilot, right? Alan Prost. Alan Prost. He won a few years, you know, so okay, it's incredibly popular in Europe. What did you think of Formula One? That was your first time, right? It was my first time to f1. You know, there was a lot of pomp and circumstance, we're very lucky that the trophy house my friend Ford, whose partners on the trophy house, included us he

gave us a level of trophy house trophy house, there it is beautiful structure, three amazing floors, tons of activations activations which means free stuff and for those of you who are not in these like circles where celebrities get all kinds of free stuff and we had a poker game was wonderful best way to watch the f1 play poker by the way when you're live at the f1 it's a little bit hard to get into the experience because like the cars just zip by you so you get to see the car for like a few seconds and then kind of like dead time. Yeah, it was very exciting. I have to say it was a very social experience and we made an executive decision because raining to pull the table and put it inside the trophy house and then we had an incredible view of like

the finish line and there's Friedberg standing up me next to him. We had an incredible lineup Travis joined us. You can see there Phil Helmuth haranguing poor Travis from Uber sitting next to me. I mean, this is always have to have his hand on a billionaire. He has to be within five feet of a billionaire. He has a panic attack. So and there's Helmuth, poor Helmuth. My friend, Timothy Chalamet came by to say hi to me. And of course, he's just being a constant. Like, look at those meat hooks just going over. Like a giant panda bear. And Chalamet is the bamboo stick. So bad for Timothy. You know, he's done such amazing work.

He's done such amazing work. He's done such amazing work. You can see how engaged he is in Phil Hellmuth. He's like, who is that person? Why is he grabbing me? But you know, then again, Phil Hellmuth is presenting him. And now here's a proper way. Can I say something? Is that dealer? Is that dealer Larry Summers? He sort of looks like Larry Summers after his appearance.

It is Larry Summers after his appearance. Did you guys get the cards dealt by Larry? You're a new bachelor. After he was here, he lost so much sponsorship and so many deals that he now is working moonlighting as a dealer. He wanted to continue the great debate. But can I just point out here, the proper way to embrace an A-list celebrity who you're friends with

is to just let them come celebrity who you're friends with. So Timothy and I are just me just a friend. This is your good friend, Timothy Chalamet, right? I will not say good friends. We've met a couple of times, like a handful of times, because we're both Knicks fans. And I'm friends with Ben Stiller. Ben Stiller, myself, Timothy, and my brother Josh went to the Pistons game. You know, versus the Knicks when we crush them and crush their soul. So Timothy came over just to say hi to me and his friend. Yeah, Frankie and his other friend, Cody block, Frankie bones. He's got a great crew. And you know, he came over to say hi to me and thanking me for the tickets I was able to get

because it was hard to get tickets for that. Anyway, for helm youth, don't tackle people at all in events. This is why your mouth banjo just completes inappropriate. And then helm was going around. I don't know if you knew this. He was telling everybody that he created all in and that he was like the executive producer for life. Just so much inappropriate. And so helm youth, it was brutal. And if I may, let me also thank we had a partner okay x the new money app. They they're a big major sponsor of the McLaren f1 team. They're the main sponsor

on McLaren. Oh, they're the main and they won the race. So we were there with hider the C CMO very cool guy in his team super guy. And we had dinner with them. Shout out to those guys. And they just launched their crypto exchange here in the US. So if you love all in do me a favor, go check out OKX. And thanks to some of our other partners Solana, Google Cloud, BVNK, Circle, shout out my guy, Jeremy Lair and my brother in Nix fandom, Shane from Polymarket, who I got to hang out with a

whole bunch is a really great guy. Wonderful event. We're going going to do it again we're going to run it back I think for maybe f1 Austin Vegas and we're going to and maybe Vegas who knows maybe a Super Bowl maybe NBA finals but we're going to do some more of these 200 to 500 person events I gotta say it was so fun to hang out also with the fans that came in for the show the sponsors it was just so great to like go to these events and hang out with people. So thanks for that. I need to ask you guys a question.

What was the most fun, the Friday, the Saturday or the day of the race? Saturday for me. So you like the content best, okay. Saturday was, I woke up, I went straight to Jeff Gross's house, me, Travis, Helen Youth and a couple of others. We played poker until four. I ran to the Gross's house, me, Travis, Helen Youth, and a couple of others. We played poker until four.

I ran to the hotel, took a shower, went on stage at five. At that point, to dinner. I spent four hours prepping. Five hours prepping to make sure it was time. Money pouring out of your pockets. It was great. Yeah, he should hit the run. I was in the nightclub till five a.m.

That's a true story. All right, start the show. Let's get the show on the road. I'm gonna start the show Once I remind people that September 7, eighth and ninth will be in Los Angeles, if you want to come hang with us, like we did an F1 for the all in summit the fourth year, and my Lord, I got a preview from Friedberg of the content, it is going to be another peak all in event. You

know, and our goal is to have the world's most important conversations, yada, yada, yada, I think the experience at the summit this year is what's going to be awesome. It's going to in addition to the content being great, we've got some really awesome experience party location, which I would say here, but you also told me that your I did 900 K was the peak two years ago, then you spent 1.2 million on the party last year. And now you tell me you're spending 2 million on this year's party. Forget that.

Is that true? The 2 million was was gonna be more than that. Oh my anyway, if you want to apply for tickets, all in calm slash summit. And yeah, two months and I were on Meg and Kelly. Let's get started. I love it when Jay Cal and Meg and Kelly like have their it's the best. Well, she likes that she understands it's broadcaster on broadcaster action. We like to mix it up. We know how to do ratings. These are ratings. Come on. All right, the Fed held their rates

steady again this week. If you remember last year, the Fed cut 50 bips in September, then 25 bips in November and December. But so far in 2025, the Fed has kept rates in steady range 4.25 to 4.5%. They said they want to wait and see they're in wait and see mode because they don't know what Trump's doing with these tariffs and how that's going to impact the economy. Here's the quote from the Fed economic activity has continued to expand at a solid pace. But they warned about potential stagflation risks of higher unemployment and higher inflation are their concerns. and I talked about that last week, I'm hearing a lot of hand wringing about layoffs coming soon. So what do you

think, Philippe about the Fed not taking any action and what's your general take on the markets, you know, the the markets have seemed to recover largely from the Trump Independence Day tariff announcement, but it feels like pretty shaky out there. A lot of M&A on hold, a lot of hiring on hold. What are you seeing on the streets? Yeah. Well, it hasn't been a boring year, has it?

So I would say on the Fed, right? A lot of people are saying, oh, you know, the Fed should cut and this and that. I actually think that there's also the scenario that what if the Fed is cutting because things are not so great? Maybe that's actually not a good message. And what if the Fed is not cutting because actually the economy is really strong. And so I think that the Fed not cutting is actually not that bad of a

message. And I'm surprised just in general how bad sentiment is, but how good the hard data is. And we have this ratio at GoTo where we sort of divide hard news as a numerator

and sentiment as a denominator. And it's the first time where the news is so good and the sentiment is so bad. And I don't know if the sentiment is bad because just the market went down a lot or for other reasons, but I actually think the economy is doing really well. And we also learned two really important things.

One is when the market did go down a lot, the government did budge and said, hey, we need to step in here. And the second part is the Fed did something that I thought was very clever. They basically said, we're not going to cut just to bail out the equity market, but if the market's liquidity is no longer functioning, emphasis on liquidity, then we'll step in to restore liquidity. And I think those two things really brought the market back up. And I think it's more a little bit the case of a tariff correction or a tariff tantrum, but not a tariff crisis.

So you said there was a lot of good fundamental news. What would you put at the top of that list? And you said there were things in terms of sentiment that were making people quite negative. The economy as viewed by consumers is really shaking. So what is the sentiment news that you are most tuned into? And what are the hard data that you're most tuned into? On the hard data, the part that's most surprising is that consumers have very weak sentiment, but in the meantime, consumer spending is remarkably resilient. You can see this in a number of ways.

You can look at the Visa and MasterCard earnings, but I also like just to listen to like little quotes, little tidbits that you pick up in the transcripts of companies reporting earnings and stuff. And people will say like, even in the month of April, consumer spending is very strong. And even in the last week, when we adjust for the front loading, some people are pre-buying ahead of the tariffs. Even when we strip that out, consumers really good. So I think the part that to me is most surprising, consumers great. With respect to sentiment, it's really bad. But one thing that's funny is whenever the market goes down, sentiment is bad.

And so I don't think sentiment is necessarily a good leading indicator. I almost think it's like a lagging indicator. I bet you that now that the market's gone up, we look at sentiment in a month from now, and they'll be like, Oh, sentiment's getting better. So I think that's what's going on. Chamath, our friends at Polymarket are showing in June, 84% chance of no change, July, 51% chance of no change, and then September 48% chance of a cut. And then Powell, obviously, Trump's been mixing it up with him saying he's going to fire him, he's not going to fire him. What's your take on the Fed and what they should

be doing here at this moment in time? And then maybe you could respond to Philippe's sort of insight there that I think was pretty good that there is a juxtaposition between what people are saying they're going to do consumers and how they feel about the economy and then what they're actually doing. I agree with Philippe's diagnosis that the Fed will really be focused on liquidity. I agree with that. In fact, Nick, I just sent you something on signal, if you could just throw

it up here, which is a really interesting view on subprime. And what it shows you is the spread between where credit acceptance is versus capital wants. And the point in bringing this up is that when you look back historically, around these subprime lemdors, whenever these guys start to see price to books just start to escalate and get to highs, it tends to portend a liquidity crisis. It tends to show that things are about to roll over. From that perspective, I think that there are some blinking yellow lights that the Fed needs to take seriously. But then where I deviate from Philippe's perspective is I think that the Fed needs to take seriously. But then where I deviate from Philippe's perspective is I think that the Fed is getting increasingly political in how they want to react to the conditions on the ground. I'll give you two perspectives. The first is if

you actually read the press release, either the word wait, weighting or some synonym of that word was littered in there 22 times. It just seemed like an incredible amount of verbal gymnastics to try to justify why they weren't cutting. And if I had to just take that at its face value, I would at least put some percentage of probability that you have to assign to this case where Powell views that if this lever is the only thing that he has

going into the midterms, it's almost as if he's holding it back. Because I think that if you look at some of these leading indicators, particularly on the liquidity side, I agree with Philippe about how important that specific metric is. I don't believe in the Fed put, we've talked about this, but I think the liquidity measures are starting to blink yellow. And I think that if the Fed really wanted to get ahead of it, they could cut. But the political overlay is cutting helps Trump. And I think there's this tension between these two people. And I think that the Fed is saying we're not going to cut. So your position is or what you're hypothesizing here is that the Fed is saying, hey, we have to wait for Trump to clean up the tariff stuff, the trade war stuff. And that that's a political act by Powell in retaliation for Trump saying he wanted to fire him? Is that

what you're insinuating? No, no, no. It's not what I'm insinuating. What I'm saying very directly is that the Fed is acting in a manner that is as much politically motivated as financially metric-motivated, because the financial metrics, some of the most critical leading indicators, particularly around liquidity and the credit health of the American consumer, are blinking yellow. So right now they are choosing to ignore these historically useful leading indicators. And the only reason that I can come up with to ignore it

are political reasons. So, Freeberg, do you think there's a political beef going on here between the two parties? And what do you think about subprime? And maybe this being a lead indicator that maybe it's time for a cut, maybe we're going to see people miss mortgage payments, car loans, etc. I was just looking at the mortgage delinquency rates, they're pretty flat right now. And that's I think, because so many people did refinance when rates were low, and there's a

tremendous amount of, you know, because so many people did refinance when rates were low and there's a tremendous amount of mortgage balance with a low rate outstanding. But remember, I think the Fed has a whole bunch of data that they're still gonna need to wait on. The CPI data for March was 2.4%. Their target is 2%. The next CPI report comes out I think next Tuesday. And so that's going to be an important indicator. But I

do think one other data point that is now going to be part of the calculus is what do these trade deals look like? So this morning it was announced that there's a trade deal with the UK. And in that trade deal, there are lots of provisions that relate to parity, and what is expected to provide better market access for American businesses into the UK. But there's also a really important piece of data there, which is that there is a 10% tariff rate for imports from the UK into the US. So this is the first time we're seeing a trade deal that actually gets announced and finalized through this whole tariff trade negotiation process that's been underway now for several weeks with all the hoopla and all the drama

attached to it. And what we're seeing is that for one of our friendliest allies, for one of our best trade partners, we are keeping in place a 10% tariff rate. So if that holds with other trade deals, and that becomes kind of a standard across the board as they get more of these trade deals done, perhaps with countries that are less friendly, with more onerous with less regulatory parity in the trade relationship between the US and that country, maybe there's higher tariff rates.

What that means ultimately is that there is now maybe a pretty sizable long-term revenue stream for the federal government that didn't exist before, which means that there's room to cut taxes, which means that this is all going to be part of the calculus of the Fed's decision on whether or not and why they would need to cut rates, because this is going to drive inflation, it's going to drive GDP growth, it's going to drive employment. And so I think that there is a pretty dynamic

situation at play right now. It's not just that there's a static tax revenue base and a static federal spending model, and then CPI and employment data that is going to follow them. Do you think Powell thinks that this Trump thing is going to work so he's holding bullets in the chamber because he's worried about inflation? I think they're going to wait for data. I would agree with that. Yeah, Dave, in fact, a couple things I was wondering your opinion on is one, I was with this retailer, gigantic retailer in the US, and there's this sort of false narrative that when you have tariffs, like 100% of tariffs are going to get passed through in pricing and therefore tariff is like a tax, right? That retailer told us that they think only about 50% of the tariff gets passed in pricing. So I sort of agree with you.

There is going to be a net positive and that retailers have way to work things around and stuff like that. I would also say today, post this announcement, the market's very strong. And initially I was a little bit surprised because we're taxing 10%, not only the most friendly country, but one where we actually have a surplus. So it's like, if it's 10% when we have a surplus, what is it when we have a deficit? But on the other hand, the market is speaking as we speak. And I also think that there were a lot of announcements that seem to make it like, hey, we're going to make a deal

with China. We want China to do well, but we need to do well too. It seems to me that at some point, maybe there'll be a bit more of a win-win versus such an acrimonious, and maybe that's why the market's reacting a little bit more positively. By the way, that trade deal, we also eliminated the 2% surtax on big tech companies. And then, Howard just said today that they're going to announce a $10 billion order from Boeing on top of that as well. So these are going to drive GDP, they're going to drive employment. It's really hard to cut rates into a market where there is not yet priced in or not yet well understood, but an expectation of a driver for GDP, driver for employment, and potentially an impact on inflation.

It's really hard to go into that sort of an environment and cut. I mean, if we're in a sustained period of four to 5% rates, I mean, we should talk about that at some point, but there's huge implications to the economy. If this thing stays where it is huge. Philippe, are you in the camp of 4D chess with these tariffs and these negotiations or, you know, throw some stuff against the wall, react to it in real time, you know, he's shaking the snow globe, it's chaos, etc. Where do you sit between those two opinions we've heard on this podcast over and over? You know, when you ask a tech investor for like his opinion on macro,

this is the beginning of the end, right? I think I've like predicted, I think I've like predicted like seven of the last three recessions, you know? So I'm like, my track record is pretty weak. Well, let me ask you a different then question. How is this impacting the tech market? Private companies that are thinking about going public M&A

was sort of door dashed by two companies this week, we've seen a bunch of companies file to go public, we've seen them pausing. Does this kind of uncertainty which it seems like is causing the disconnect, right? You explain this disconnect, how people feel about the economy, and then their behavior. Is that disconnect caused by the sort of communication that Chamath and I and other folks were saying, hey, needs to be improved here. And it seems to

be with this UK. If this had been the process from the start, we were like, hey, we're going to do one of these a week for 50 weeks. And you're going to get this good news each week as we sort this out. That seems to me like something that would build confidence as opposed to, hey, everybody're going to get this good news each week as we sort this out. That seems to me like something that would build confidence as opposed to, hey, everybody's going to go back and forth. You say 50, we're going to go to 150 tit for tat. So maybe talk about the impact this has

for founders, startups, executive teams. I think for tech guys, by and large, a lot of the tech is in services. So that's out of the picture for now. But there's obviously going to be a lot of tariffs for semis and then for the assembling of the motherboards into computers. So those are the two key areas. And one of the difficulties is we have these sort of base tariffs, but we also have these sector tariffs. And we've had sector tariffs in cars, 25%. There's rumored to be sector tariffs in pharma that had sector tariffs in cars, 25%. There's rumor to be sector tariffs in

pharma that could come out next week. And there's also been potential sector tariffs in semis. So it's been pretty disruptive. And I don't really know how to think about it. And I think nobody knew, which is why the market just took a 25% peak to trough down. And then after that, we learned, well, the government is actually smarter. They're going to, one of the things that I love to see is all these executives that get to come to also plead their case in Washington. And maybe that was never the case, you know, a few months ago, and there seems to at least be a feedback loop. Okay, we do something, we see what breaks, we listen, we readjust and stuff like that. But to be honest, I don't really know how it's going to play out. And I sort of was very conservative for a period of time just waiting.

And then to me, what happened last week with Microsoft saying that AI had really picked up, that was a really big deal. I almost coined it in my own mind, tokens greater, greater than tariffs. I think one of the reasons why the market's moving up right now- Hold on, hold on. Just explain that just a little bit. What do you mean by that? Tokens over tariffs.

Tokens, I don't know. I put the greater, greater sign. Tokens are much greater than tariffs. Tokens, you don't know, I put the greater, greater sign. Tokens are much greater than tariffs. Tokens, you mean AI tokens. AI tokens, yeah. So I sort of view tokens, I don't really understand as well as Dave for sure, all the AI models and stuff like that, but I sort of view tokens to an AI model is like fuel to a car or electricity to a computer, right? And Microsoft said that in their

Q1, they processed 100 trillion tokens, 50 trillion alone in March. And so the tokens are really going basically vertical, which is probably because of these reasoning engines, which are much more sophisticated and require more compute power. And I think the market, it's a bit unfair for Trump, but the market did not just go down because of tariffs. If you remember, it went down because people freaked out, we're in an AI bubble, AI's not really working, what's the ROI on AI? That was maybe, I don't know, half,

a third to a half of the problem. And I think what Microsoft said is like, Cappex is going up and everybody has a gigantic shortage of chips right now. That I know for sure from all of our private companies, public companies, there's a shortage of chip, a shortage of compute power. And so I think that's also maybe why the market's going up. And so for me, it was sort of a way emotionally, I got so drained with the tariffs and thinking about tariffs and having to think about something I don't really understand.

And I feel now there's a chance when you look at the next year or two, at some point, tariffs goes away. Trump makes this big deal with deregulation, the tax breaks sort of cancel out the tariffs. We move on and what are we left with? We're left with tokens. And I think the world of tokens for me, I've been doing this for 35 years. It's maybe the most exciting trend and thing that I've seen. And all these people that say, oh, this is the end of American exceptionalism. I almost wanted to say, no, you guys are wrong. This is the beginning of American exceptionalism because we've got Wall

Street, we've got Silicon Valley, and we still got a pretty good government that at least tries to get stuff done. So I'm pretty excited by that. I've been talking with my management team a lot about AI first principles, and we're actually doing an offsite in two weeks on this, because I've been following a lot of what the other CEOs have been doing and hearing stories. We had a great conversation with Sergey. He gave us two anecdotes of how he personally has used some of these tools to make management decisions.

And his observation was managers are the first to go. And if you zoom out from that statement and you zoom out from the comments you're making, Philippe, there's, I would say, like a once in a generational opportunity to select companies that are going to accelerate growth because of the leverage they're going to create by adoption of these tools, not tech companies in the traditional sense, but across the entire economy. And some of what we're seeing right now, in the reformation of venture capitalists, and I know

you're going to talk a little bit about Co2 here in a bit. But so much of the thesis is around traditional businesses being reinvented using AI. And as a result, it's not just the few tech companies that are providing the fuel, but there are these fires that are going to take off in all these different markets that we could sit and spend probably hours kind of, you know, extrapolating and theorizing on that creates a real opportunity for incredible market value

creation. And traditionally, it's like the market grows and the differentiation among the competitors is minimized once the market has matured. But for the first time ever, every mature market can be completely disrupted. And so if you're smart about selecting management teams and selecting companies, it seems to be an incredible opportunity to realize investment returns, okay, even in a mature equity market. Let's move on to our next topic, which is obviously super

related. Google was down 8% on Wednesday, after some bad search data came out because the Justice Department, as everybody probably knows, is doing this antitrust lawsuit with Google. And the key part of that lawsuit is Google paying Apple 20 billion a year to be the default search engine on iPhones. Obviously, we all know iPhones have elite customers. Those are very precious searches from people with a lot of money because iPhones are expensive. Anyway, Eddie Q who's been with Apple for 35 years, he said, quote, for the first time ever last month, our search volume actually went down. Quote, that has never happened in 20 years.

If you ask what's happening, it's because people are using chat GPT, they're using perplexity i use it at times he believes that i search is gonna replace classic search like google quote again there's enough money now enough large players that i don't see how it doesn't happen bloomberg reported on cues comments at eleven a.m. an hour later google is down a hundred billion dollars in market cap bounce back a little bit today we're taping this on Thursday. Here's the statement from Google. responding to Q's comments, we continue to see overall query growth in search that includes an increase in total queries coming from Apple's devices and platforms. Freeberg. Is it time for Google

to panic? Google shareholders to panic? We talked last week about making bold decisions about what is the default? And how might Google get out of this classic innovators dilemma? What do you think? that the search, click, repeat paradigm is over. And there's a new model in what I would zoom out a little bit and say is kind of the difference in human computer interaction for knowledge, information and services. It may not be that I type something into a search box. It may be that I'm having a chat. That chat may happen in a chat window. It may happen via voice. It may happen on a screen. chat may happen in a chat window. It may happen via voice.

It may happen on a screen. It may happen in an ear pod. We don't yet know where the consumer is going to go with this, but there's a lot of paradigm shifts underway. I will say Google has models that are, if not the best, competitive. So the underlying models, the underlying technology exists. They are certainly aware of the shift in the paradigm.

And so the transition for Google doesn't need to happen overnight to a chat interface that looks like chat GPT. It may be a standalone app. They have a standalone app. As Chamath has pointed out in the past, they don't do a great job promoting it. They don't do a great job integrating the chat interface into search or replacing search of a chat interface. Because remember, search ad revenue today is $200 billion. And the cost to serve an AI query is

order of magnitude higher than the cost to serve a search query. So flipping the search interface over to a chat interface overnight doesn't make sense. And they don't need to. They have the users, they have the models, they already have the product. So it's going to be a slow kind of process of finding the optimal course for them to make the transition would be my guess on what they're doing. It's a question of at what point do you change the default on Google? Do you make it a slow one box, which is that answer section at the top of the search page,

and you slowly get people used to that, and you lead them over to the chat interface, or do you do it all at once, or do you tell people, hey, go use the app instead of the search box? So there's a lot that I think they're gonna discover. And if anything, this is an organization that is used to doing testing and then making incremental changes and then making big changes once they're, you know, kind of tested and proven.

I'm pretty positive on their ability to respond to the shift if there is one underway. I guess two important data points to mouth. I'd like you to respond to search is only like 56% of Google's revenue right now. People forget they have clouds, so they have diversified. It's not a one revenue stream company anymore and then also these Google search results at the top of the page they're dropping precipitously the number of clicks below it so different studies 15 to 35 percent of the clicks below the box are not get you know are dropping so this is significant but it seems manageable where do you stand on it right now?

Time to panic or as Freeberg was saying before, hey, maybe it's a great opportunity for Google to add yet another product line, yet another revenue stream. They definitely have the best models in many domains. I would say that the CodeGen models from Anthropic are really good, but in many other domains including general information and chat, I think Gemini is exceptional. So what is the problem? The problem is that they were effectively at 99% share. And now we were always just waiting

for that shoe to drop, which is where they started to go from 99 to something less than 99. And the point is, now that it has happened, it is very easy for anybody to build a model that precisely calculates the economic value of every single basis point of share shift that happens. And what you saw was an initiation of that process this week. So what you saw was an initiation of that process this week. So what do you do? The problem is that this is not

Google's problem. This is a consumer choice issue, and they have chosen something different. And whether we like it or not, and whether they like it or not, the reality is that chat GPT is running away with it. And if you look at the growth and the share that OpenAI is seeing, it's quite an incredible thing. So what does one do? I think that instead of waiting for data, I think that you have to assume

that you're gonna go from 99% share to 75% in the next two years, as an example, and you need to start asking yourself what will go wrong. And if you can ask yourself that question honestly and red team that, then I think the conclusion you get to is you need to start very aggressively integrating Gemini as the front-facing window to Google Inc. But again, as I sort of said last week, that requires a combination of taste and courage. Otherwise, what will happen is if you're waiting for the data, you're just going to get caught off guard. Because Apple will do

things and then make a press release months after the fact, OpenAI will announce a press release, Facebook will do things and then make a press release months after the fact. Open AI will announce a press release. Facebook will do something. And what that does is it destroys the morale of the company, of the brilliant product managers, of which there are many, and the brilliant engineers, of which there are many inside of Google. If you're sitting around waiting to react to some sandwich served up by your competitors. That is a terrible approach. Philippe, what are your thoughts here on Google? You obviously participate in public markets. Is it a buy right now?

I mean, I don't wanna give investment advice, but do you think the company has the talent, the temperament to make these hard decisions and to turn this around or avoid the iceberg? If the iceberg being chat GPT and people getting answers instead of links. Well, I think you guys have summarized the situation pretty well.

I would just add just a couple of small things. One is the market cap of Google is like 1.8 trillion and that of chat GPT is let's say 300. So Google is worth six ChatGPT. Is that the correct ratio into the future or not? The second one is I was around sadly in the times of the Yellow Pages. I remember when the Yellow Pages, the way you go somewhere to bounce and go somewhere else.

Basically, these yellow links got replaced by the blue link. And the yellow page companies went away. Now part of the reason they went away is they were very levered. Google has no leverage, sits on a lot of cash. And imagine what someone like Elon would do if he had to re-engineer Google. I think they have a much larger company, let's say, than Twitter.

So the part that I'm wondering about, I haven't made an opinion on Google is like, hey, is this the next IBM? You're going to stick around for a really, really long time, but you're just not going to be like a company growing as fast as you used to, and maybe there'll be little growth and you just sort of struggle ahead. Or can they completely re-engineer their business? And they do have two great businesses, Waymo and YouTube, and really cloud and all the cloud apps. So they have three great businesses. And then they have this one search business. Like you said, maybe it's 60% of the revenue. It's probably 85% of the profits because it's

just so profitable. No, I would say it's 110% of the profits because it's just so profitable. No, I would say 110% of the profits. 110, right? So you're right, because some of these others lose money. That's actually a good point. So if you put that together, it's just a classic innovators dilemma. Imagine that they create a Gemini app and we start downloading the Gemini app. I would love to be the fly on the wall between the head of the Gemini app and then the head of like the search box. And they're both fighting because one guy is stealing the business from the other and stuff like that.

Personally, me, I found that these stocks, they're like a little bit too complicated for me. And I think that sometimes in life, you just got to say, hey, this is just tricky. There's like a lot of forces at work. But the one thing stepping out that I would think about is there was this concept of the Mach 7. And for the last two or three years, everybody is like, oh, you just need to own the Mach

7. It's really easy. I can do it on my own. And I think what AI is showing is that at a time of great change, and like you guys said on the show, a couple of you, AI is sort of precipitating so many fast changes, to me it's a little bit like the end of the Mac 7. What we should do is almost think like, hey, what is the next? Remember when the Mac 7 used to be Fang and then Fang++ and nobody talks about Fang anymore. And now, I don't know, like with the Mac 7,

the Sexy 6, the Fabulous 5, there's gonna be a new index that comes up. And I think we should think about like, who's gonna be on the new index, which private companies, which public companies. And I think Google for sure has some struggles, but it's got a lot of advantages and a lot of cash. So it's going to be, to your point though,

to just to add one thing, which I love this framing. Here's another data point. If you were going to make the case that we need to go into harvest mode, right? And say, we don't know the rate of change of the search business. So let's just have as much money on hand so that we have as much optionality. That's a very reasonable and fair strategy. You would

probably not spend $75 billion a year of CapEx on making these models. The opposite is also true. If you're going to drain your cash at a rate of change that's greater than it needs to be to the tune of an extra $75 billion a year, there's probably a case to be made, well, if we've made the cake, let's sell the cake. You know, we've made the dog food, let's have the dogs eat the dog food. It's the in the middle strategy of both spending the money, but then stage gating the product that is the worst outcome, in my opinion. I think they're right to invest. I find these companies that decide to harvest the cash cow and buy all their shares back, it never really works.

I think that the only chance that Google has to create an amazing company is you got to take some risks. At the end of the day, the man in the arena, he who takes the risk usually gets the spoil and they've got to invest in the future. It'll be interesting to see if their shareholders, you know, agree with that or not. What do you do, J. Cal? What do you think? Great question. You guys teed it up perfectly. I think they're going to cut a large number of employees, get people to return back to office and take this a little more seriously on a corporate level because you got that sense from Sergey who's in the office

every day. And I use Gemini and I have a sort of AI first company where everybody's required to do their work on AI two or three different quad Gemini, grok, etc. And what I've been noticing inside these products is they're very deeply integrated. I got surprised just the other day. I was asking it about a travel question and it referenced my G calendar. I didn't know they could do that. Then obviously you can use chat.

You can use Gemini inside of Google Docs. They have four or five products right now that are one or two billion users per month. Obviously Chrome might get spun out, but you have YouTube, you have Google Docs, you have Android. They have such a data advantage and such a deep integration into people's lives because they use three or four services. I use YouTube TV, I use YouTube and have a subscription to that YouTube music. They have such integration. I think Google is going to figure this out. And if they cut their team size down, earnings are going to go massively up and they're spending $75 billion on infrastructure, I think it's

going to be Would you integrate these models more aggressively into in front of the consumer? Or would you Is this the rate that makes the most sense in your mind? I think you mentioned like maybe go all in on certain other services I think YouTube search is the place to go all in right now when you do a YouTube search It just gives you ten links, right? Just give you that rolling bang

You should be able to ask a question to YouTube and you should be able to ask questions to your calendar You should be able to say who have I met with over the last ten years who I'm no longer in touch with and what? Are they up to and it should do a Gemini search inside of Google Calendar. It's very light right now. And then if you did that on YouTube, hey, tell me everybody's opinion on CO2 and their strategy over the years and how it's changed. And you asked that on YouTube, with all their transcripts, they can make a super cut of all of that. This would train people, you know, at the point of pain in a very deep way without sacrificing Google search queries, you know, at the point of pain in a very deep way without sacrificing Google search queries, you know, too aggressively. So there's YouTube such

a secret weapon. I hear you. I would just remind the Google management team that very, very, very smart people like Philippe and others who control trillions of dollars. I wish. Well collectively are not making the decisions about today but are taking the trail of breadcrumbs of what they see today and guesstimating what 18 to 24 months in the future looks like. And all I'm encouraging them to do is I think that that data point from Eddie is the beginning of a stream of such data points. And I just encourage them to inoculate them from the morale hit that will come if they

don't have an explicit aggressive strategy. And instead, if they become reactive to external data, it's really demoralizing. But what if they're actually tracking the data and they're seeing their own sense of search queries driving clicks and then driving positive response to the AI-driven one-box results that they show at the top? Well, I think that's exactly what they're seeing. But that does not- And they're just making the requis they're making the requisite kind of balancing decisions, right?

No, no, no. What I'm saying is that's absolutely what they're seeing. The demonstrated strategy is emblematic of exactly that. It's the rationalization. My point is there's something that you can't rationalize because you don't know until it's presented to you, which is what is the other company doing? They don't have spies inside of open AI. They

don't know what the open AI product strategy looks like. They only hear secondhand what the open AI growth looks like. All I'm saying is it's a bit of a sword of Damocles. At some point, the sword drops. You're not in control of it. Once you start to see a trend, that's the rationalization that I think puts companies in a very difficult and tricky strategic situation. It takes a lot of courage to say, oh my God, like it's like, but Buffett said this, like Buffett has this very famous thing of just putting his CEOs on the spot and saying, stop telling me all these things that can go right. Let's go paint the death case, what can absolutely go wrong and bread team me the solution

and then justify for me why you haven't done it. And all I'm saying is, if you start to think about, like for example, you saw OpenAI today, Fiji Simo, she's leaving Instacart, right? She's gonna go and be the CEO of apps inside of OpenAI. You're seeing a level of talent concentrate that I have not seen since I was at Facebook. There was nobody we couldn't get

when we thought we were building a model that was totally orthogonal to Google. Now, it did not mean that Google diminished in any way, but it creates a different use case. In that example, though, the social use case was very much non-cannibalistic to the blue links. And to your point, David, if it turns out that question asking is not cannibalistic to search, Google will be fine. All I'm encouraging them to do is play the scenario where it is cannibalistic and figure out what to do.

I think there is a chance that we're underestimating the power of Google's ad network right now. It's quite possible that knowing your queries in Gemini, knowing what you're doing in calendar, knowing what you're watching on YouTube could lead to a stream of more target ads that do better and are more valuable. And so we've been seeing a number of companies, startups, you know, in the early stages and year one startups that are figuring out how to use your queries, and what you're

doing in AI to present to you search results. So imagine you're doing a Gemini search term off and or fully but on the side of it, it's giving you a rolling list of ads or offers that you might be more interested in. That could be a better advertising product than even search itself. Rebert your thoughts. Well, let me ask all three of you a question, which is since chat GPTs come out and Gemini and other tools like it, do you find that you're doing generally more stuff or less

stuff? I find that I am using search a lot less. But the aggregate, is your aggregate like usage of the internet to do things for yourself for work kind of are you getting more yeah yeah i've learned how to ask things that i've always wanted to know but didn't even know were possible right but all of that to me goes to open ai and to x i use right right that's fine but i'm just saying like like if you were to because i'm what i'm trying to do is paint the picture of where the denominator of Quote search queries is going because if search queries is no longer the wrong way to think about this

No, I like your I like it. I'm doing five times as many queries and I would say they're spread across a number of different Platforms because instead of asking humans to do work. I'm now doing it myself. You used to ask a human Hey, can you do this research? You hire somebody you use a consultant now I'm doing it myself. So you're on to something that the total volume, the total pie could be five, 10 times bigger per person. Yeah, if the old paradigm is like measuring search queries and quote market share as a function of search queries, I

don't know if I care about having 99% of that. Or if I'm actually better off having 80% of something that's now three times bigger. Where there's so much more usage. Imagine you lose 99% of one bucket, but you're only getting 10 or 20% of the new bucket. That's the bad scenario. That's exactly right.

That is the bad scenario. That's the issue. Guys, that bucket is getting built right now, and there are no where'sville in that bucket. How are you going to show up in 18 months and say, oh, that new bucket that's so shiny, pick me, pick me. This is why it's a strategic error. Well, think about the, let's say you're running growth at Facebook, Chamath, and you guys

have a new product you want to launch. You've got a billion users. How do you get them to use that new product? Because Google has a chat GPT competitor. how do you get them to use that product? Yeah, I walked through this last week, but I'll do it again, which is, I think that today, the part that I agree with you is this whole view on search is antiquated and it makes no sense. I think instead, what you need to think about is where are the inbound actions into the house that is Google, right? Google Inc.

And you have to have a very simple way of deducing what is the value of that inbound action. And if you rank them, the inbound actions to the Google search bar are obviously way more valuable than the inbound actions in all these other apps. I would start in those places that are more bottom of the list on the money side, but high on the list in terms of intention and behavior. And I would redo the experience around Gemini. But that requires taste. And cannibalization that you're that you have to be willing to take the hit on. Which service you think is number one, YouTube? I think your idea, Jason, around YouTube is a very smart one because it's a juggernaut business. I also think workspace, we use workspace here every day. Gmail, calendar. I think workspace could be really interesting as well.

Gmail's a great one, yeah. Inside of Gmail. And it is going to get better. Like there are smart people thinking about this. All I'm saying is that the market will now start to price this decay in. I'm long. Well, Philippe, I want to know your bucket of what are the most important companies that matter the most. Okay, I'll try. But I have to ask you guys a question before. Do you guys think that the two founders come back in a very forceful way into the company? I don't know exactly why. But one thing that I was wondering, Chamath, is you bring up a very important word, taste.

Do you have to be a founder to be able to impose this sort of new taste? And do you need sort of founder credibility at the junction at which Google is at? It seems like this is a big junction, right? This is the first time in their 2025 year history where I feel like whoa, there's a real threat. How do you do that without the founders? Yes, and on top of that they're alive, you know, it's just they may not be at the company. Sergey asked Larry no Sergey's gonna do it. I think he's building up the reason we're seeing are the all-in events The reason he's going to work every day is that he's building up his knowledge

base here and I don't want to speak for him, but I've seen him really engaged on this stuff and the Gemini app is kick ass and I've had long conversations with him about like little details in the Gemini app. He is super engaged. I've had conversations with him about granular details of Google local and YouTube searches and how they should be presented in the results in the Gemini app, he's into it. He is into it. You're bringing up something which I think is very important. When you're at a junction this important,

who has the gravitas to come in and actually make a difficult change like this? I think in general, it's the founders. And in fairness to Larry and Sergey, I think in general, it's the founders. And in fairness to Larry and Sergey, these are two brilliant, brilliant guys. They've done it once. And in fairness, they probably did it kind of a second time when they created Alphabet because now you have these other businesses that are pretty impressive. Now they're just going to have to do it a third time, but they're going to have to impose their will and they're going to have to

develop some very specific days. This is nothing against Sundar and the team, by the way. This is just to say that the only people that can come in and say, guys, we're going to make a change that could have this negative impact to a $1.8 trillion company are people that are going to feel it the most. They will feel it more than anybody else. And so if they say that it should happen, they'll have the moral credibility to make it so. I love this question that you were just asked, Philippe. Go through your top 10 companies, why you love them. No, what's the number?

Not top 10, what's the number, Philippe? What are the companies that matter the most? Yeah. So, I've thought about that a lot. I'm not sure I have great answers, but the first one is I keep defaulting to the number 25. I can't explain to you why, but there are not 100 companies. But if you think there are only five and all these money managers, they have like five

stocks that represent 80%, I feel the level of risk that you're taking is too high. I started with a home, with a public market. I would say most French people are not known to be particularly humble. But at least if you've been in the stock market as a French guy, you've been beaten up so bad. I started January 1st, 2000. So imagine what my first three years looked at. I got reduced to, you know to ashes, just beaten up by the market. We did reasonably well because, thank God, being a hedge fund, you have different

tools that you can do. And so I think you need to have a certain number of stocks. You need to know that some stuff you get lucky, some stuff you get unlucky, some stuff you get right, and some stuff you get wrong. And then I think that there's a second phenomenon once you agree to the 25, you say, wait a minute, why are there no IPOs? Why are these private companies, amazing private companies, some of the best in the world, SpaceX, Stripe. Answer that question. Why open AI? Why in your mind? I think that the cost of being public is too difficult. One, what I think the reputation, the regulatory, like you get busted,

like left and right by agencies. When's the last time that a public company, I think that during the last administration, someone told me, I don't know if it's true or not, but I love the quote so much that I'm using it without checking if it's 100% true or not. Something like 35% of the SNP had an issue with a government agency in the last few years. When's the last time that you guys remember a private company that has an issue with a government agency? I'm sure it happens, but off the top of my mind, it seems like a fraction of that, right? And then I also think that the private markets have become so sophisticated that in essence, our private markets, public markets that just trade three times a year.

You know, these companies, they do these rounds once or twice. They're becoming pretty sophisticated. They match buyers and sellers, and I think that's okay. And then the last piece, which I think that's a very bad piece for the four of us and all of us on this call and many of your listeners, is that there's such a view that large companies are bad and we got to bust them and we're not going to let them do any M&A. And as a result of that, small companies no longer get bought by big ones.

And for me, it's a disaster because if I fund small companies, but now you take away one of the best ways that I have to monetize my investment, why should I invest in risky private companies? I can just buy the public one. And so I'm really hoping that as part of this deregulatory move, and you guys and Sachs will have way more influence than we. But to convince people that in my mind,

the best way to create competition is to allow these large companies to fight against each other. And the battle between OpenAI and Google is the best way to do that, but not by telling Google not to buy something or telling OpenAI not to buy something. Let's double click on that.

I think it's a super important point to singles that doubles in the industry. I've been harping about this on this program as well. So we're some PataCo. What about a proposal where maybe the non mag seven, let's let's pick a number under a trillion market cap under 750 billion. We let those companies buy and sell each other at a very vibrant pace. We saw chat GPT buy a $3 billion company, I think this past week in the kind of coding space, like I mentioned earlier in the program door dash bought two companies. What if we said,

Hey, okay, we understand Google getting bigger, Apple getting bigger, Microsoft getting bigger. What's the rationale for that? How does this rationale would be, but how does size make a difference to whether or not someone should buy a company? Very simple, because they have such a market dominant position. That's different. Just hold on. Let me finish my sentence. They have such a market dominant position when a company like Apple has, you know, half of the mobile phones or Google has Chrome, Android, plus all these things that they could shove that product for free down the throats of users price dump it, which is illegal, and create

less competition in the future. But if you said DoorDash and Lyft or, you know, Coinbase plus a stable coin company, this would build the Mag 7 to the Mag 70. And then you would have many more larger companies. What do you think of this? Philippe? I'll respond to that because I don't think that that makes sense. And I think the comments you're making about size shouldn't drive these decisions. The fact that Apple, for example, has a minority market share in operating systems on mobile phones. Remember, Android is the majority.

It's no longer true in the US, by the way. Right now, right. And Apple comes along and says, Hey, I want to buy a car company, or I want to buy something else. Why should that affect consumers in any way whatsoever? The ultimate objective of antitrust authority is to prevent monopolistic practices that hurt consumers and hurt the market and take away options and choice and freedom in the market. But if companies want to make orthogonal acquisitions, if companies want to continue

to grow and become a large holding company, why should we step in and say, oh, you're too big now? Ultimately, Jason, you could see that threshold very quickly becoming a slippery slope that leads to a general like anti capitalist concept where people say, well, let's stop all companies from getting bigger than a billion, or let's stop them all getting bigger than 100 million now. And that that is a very slippery slope scale shouldn't matter. At the end of the day, protecting consumers from monopolistic or antitrust practices should be the objective of these antitrust authorities.

Yeah, I think my response to that would be except in the case where the bundling as we talked about in previous episodes makes so any of the large companies can dish hold on, let me finish my sentence again. In the case that a large company could kill all the competitors instantly by price dumping. So you take something that people are paying for, you know, like say, Robin Hood, Coinbase, you know, Google buys Robin Hood, or Apple buys Coinbase, and they just say everything's free, we're going to make our money from our main

business. Yes, it's better for consumers, but it's not as good for a competition. And in the long term, then you would kill all the competitors and then they can do unnatural acts. That would be the argument. I'm not saying it's a great argument. That's a great argument for what you're talking about. It is not a great argument for stopping companies above a threshold of market cap from doing stuff and companies because the company below a threshold in market cap could have the same effect as what you're describing in a smaller market. And they could have this-

You have to be thoughtful about it. You're 100% correct if they're in the same arena. So Coinbase, Robinhood and E-Trade merging could cause the same effect, you're right. Philippe, what are your thoughts on just how to get the country out of this debate? Because big companies bad, we shouldn't let them do any M&A, the of Lena con, is there a is there an off ramp

here? Can Trump just unilaterally kind of make this happen? What are your thoughts? Or should he? Oh, I think that, to me, one of the best part, being an investor of venture capital is when you have a really big idea and it works out, it takes care of a lot of sins. There's a little aspect like, would you like to play the lottery? If the lottery was capped, like, hey, if you win the lottery, you can't win more than $30 million. $30 million is an insane amount of money, but I read that there's some lottery guys who make $1 billion and $2 billion. And the

reason why people are willing to bet so much and most people are willing to lose is they all think that they're going to have this one ticket that's worth a billion. And I think when you reduce the incentive, the financial incentive of, and I agree with Dave, like success should be rewarded as much as possible. But if you've done something wrong, then use these, you know, the existing laws to define what success is. I don't think you can cap because once you start capping and then what happens if the stock market goes down, do you then have to just recap?

So, but I agree with you. You bring up an interesting point, which is in these bundles like Amazon Prime bundle, Apple bundle, there's a Costco bundle, right? We seem to be living in this world of bundles where the stock market is willing to pay 40, 50 times earnings just for the membership fee. As long as whatever you do on the side, you basically make no money. Like Costco, I think makes 100% of its money more or less on a membership fee and

trades for 50, 60 times earnings, there is a limit to like how big the bundle is before you start dumping. So I don't think I'm saying anything super interesting. I just hope that you don't cap the upside because that's what enables all of us to fund these new companies. The reason why all of you guys and me were willing to fund these companies, knowing that many of them are going to fail, is the hope that you get the next open AI. Yeah, it's well said, the power law. Chamath, I think maybe a good time to maybe talk about private markets and liquidity in VC, yeah? I mean, it's just so hard. It's hard to make money. And if you view making money as some

derogatory thing, and you put a bunch of impediments in the way, the downstream impact is interesting ways to make money will be out of fashion and simple ways of making money will be the only things that people do. The problem is that society doesn't move forward if all you do are simple things. You need people who are willing to put risk capital to buy these lottery tickets. And if you marginalize the upside,

you're just gonna have exactly that, a stagnant society of marginal things that doesn't move along. And unless people fundamentally embrace that idea, we're going to lose we being America. Yeah, if you look, for example, in the last five year period, in China or Canada, where both of them two totally different political regimes, but they both had the same thing happen, which is the amount of investment capital that went into both of those countries fell off of a cliff for two totally separate reasons. What is interesting is going to be, what is the downstream impact of that in 10 and 15 and 20 years?

And you can look historically back and we know what this looks like, which is countries stagnate. In the absence of investment in risk capital, so you will become a marginalized also ran country. And you know, not to slag Europe, but part of what Europe got wrong was that compact didn't exist.

Too many administrators, too many hall monitors, not enough ability to put risk capital to work and actually get gigantic outcomes. So the most important thing we can do on that dimension is to figure out how to have less regulation, have these companies fight it out, and create the incentives for for these smaller businesses to be bought and or to go public. So let's back this up with some data here. Nick, pull up the chart on exits.

This is an important one for people to see. We've had since the wrath of Lena Kahn last four years under Biden, you know, you had this 2021 spike of IPOs, peak ZERP, a lot of inventory, a lot of risk capital had been put to work for 10 years. And after that 2021 spike, things have been flatlined and companies are preferring to stay private.

And now we have venture capital constricting in terms of new funds being done and people are making larger funds to do later and later stage investments and- Jason, it's constricting at the absolute worst time because what Philippe said before is we're in the midst in the early phases of an entirely new economy that's going absolutely parabolic. But the people that are supposed to accelerate that innovation and make these companies come to life are going to run out of gas because if they don't return money to their limited partners, where are they going to get the incremental capital from? Yeah, it's retail investors and sovereign wealth funds outside the US seem to be the answer to that

question. But doesn't this just lead to a normalized market, Philippe and Chamath? So ultimately, shouldn't the exit volume define the amount of capital that LPs should invest in this asset class to get an out a return that compensates them for the illiquidity relative to public markets, the same kind of risk levels. At the end of the day, it is what it is. And you're going to see a reduction in venture dollars. And that's just the market normalizing the economy only grows and only innovates at a certain pace is maybe is what the data shows.

I think the way that I think about this as an LP, and maybe Philippe can talk about this as a GP, but as an LP, when I think the way that I think about this as an LP, and maybe Philippe can talk about this as a GP, but as an LP, when I think about putting capital into different funds, I have a base return in my mind, which is I want after taxes, net of everything to generate about 10% a year. That's where my risk of ruin is basically zero, it compounds to infinity. I like the profile of my return and my assets. How do I get to 10%? Well, sometimes when I'm holding short-term stuff, I'm only generating four or 5% in paper.

So then I have to go out on the risk curve. So I talked to a hedge fund, they're gonna give me 12 or 13% net maybe in some cases. I try to understand their risk, but I can only get so much working. So then I have to go further out on the risk curve. Then I talked to some private credit and private equity guys who tell me, yes, I can give you mid-teens returns. Then I do the analysis on that. And I think, okay, I'll give you some money, but they are going to lock me up for five or six years. It's still

not enough to get to a blended rate of return of 10%. So then I go yet further out on the risk curve. I call my friends at Sequoia and all these other places. And when you talk to the venture investors, the problem is you are so illiquid for so long that the rates of return need to be in the mid to high 20s net to me. But when you look at the data of what's possible, they actually look

like a three and four year hedge fund. And part of the reason is because of this strangulation of illiquidity that's caused artificially by administrations, by regulations, and by agencies like the FTC. The question is, if they didn't exist, or if the regulations were a lot smaller, what would the upside return be? It's probably 500 to 1000 basis points higher, much higher 100%. But I think at current course and speed, with the lack of IPOs, and with the lack of M&A, you can't justify that asset class on its own,

in my opinion, unless you think about it as like something that you're doing almost philanthropically. Unless capital comes out and then prices come down and then return multiples go up. Let me put some numbers on this. Here's the second chart, annual IPOs, and just give you some broad strokes here of how amazing 2021 was for a lot of firms.

Rivian went out at 66 billion, a firm at 24 billion, Qualtrics 25 billion, Robinhood, which I was involved in when the first investors 30 billion, Duolingo 5 billion, Toast, etc. or Roblox 42 billion, Squarespace. And then you had all this M&A, Square bought Afterpay for 29 billion, Zoom acquired 5.9 for 15 billion MailChimp remember that one 12 billion Microsoft and nuance the spoken the Jason, you know, 20 million Do you know what the distribution Do you know what the distribution of these IPOs were by method? SPAC versus direct listing versus traditional IPO?

I don't have that here. We'd have to do it not just on the names, but also on the amount distributed. Yeah. That's a good question. You know, when I look at that data, what, what, what I look at, if, if you just bring it back for one second is ever since, you know, the 20 and 21, which were very high, if you look at 22, 23, 24, and now the 25, I'm like, how is this that it's worse than 04 or 506 that were normal years? How is this worse than 13 and 14 and 15? Yeah. And that's

exactly right. She scared people. Correct. M&A, I've talked to M&A people, Philippe, and they have said it's not even worth bringing it to the correct discussion. She can't connect the dots. You know, she's like, I want people to not, you know, play the lottery anymore. I don't care for them. She doesn't understand that our system is based on this risk taking. And so listen, I think it's almost I think it's also a change. It's also worse than that. I

think that they probably look at like Adobe Figma. And they look at the cap table, and they probably just make a judgment that hey, I don't want these people to be billionaires. Yuck, I hate these people. But they don't understand to your point, the waterfall effect of not returning capital to all kinds of other investors who are in the business of taking risks. It's this like collateral damage, you know, one of the things I feel none of these people understand so well is like all the collateral damage you think you're moving in one direction and all these dominoes sort of fall around you. Exactly. Well, the second and third order impacts this cascade, you know, it's Ford

Foundation, it's Harvard, it's California retirement, those are the people who are the going to be the beneficiaries. And the third thing, because I've been talking to a lot of geographies in the Middle East, Japan, Australia, Singapore, etc. Asia, they all want to recreate what we have here. Well, what we've created here in Silicon Valley and in America is these diasporas that start when a company like Google goes public and then those people go create Facebook or go work at Facebook like Sheryl Sandberg did and they accelerate the growth there and then those people become angel investors. They

become LPs. This incredible flywheel was cooking. I mean, it was so smooth and now we've literally stuck a stick in it. And Jason over and you don't have the downstream effect of Canva in Australia. But I don't know if you know that company is done incredibly well. Phenomenal. They were Oh, you are involved. Yeah, we're involved. But sorry, just one thing I would add, because it makes what you said so much more powerful. On top of that, when these people die, most of them gave all their money away to foundation, which is something very different between the US and Europe.

In Europe, a lot of the wealth and in many other countries outside of Europe, the wealth basically continues for generations. In America, these people build companies, create new companies, invest in new companies, coach new companies, mentor new companies, and when they die, all that money goes to foundation that continue to promote and do some of the work that governments were doing. Finally, how great is it that some foundations are competing with the government to decide what needs to be done? As opposed to a larger government, right? And so that ultimately serves the Doge mission. Atlassian and those incredible founders who did Jira, etc. bought other companies,

they wound up being the seed investors in Blackbird, the venture firm in Australia that did Canva and they were the investors in Canva. Both of those companies are creating this incredible flood of entrepreneurship in Australia. And we're breaking that in America, Australia, copy that playbook. I want to know about the new fund you're doing, Philippe, and why maybe you could explain to people, I guess this is one of these, what do they call it closed or open end funds, and they operate differently than venture ones. And also the seating, you you seeded it in a very unique way with a couple of very unique family offices. Yeah. Well, you guys are nice to ask and a couple of you have tweeted some

nice things about it. So, I really appreciate it. I loved it. I loved it. Let me tell you a bit the story behind it, right? So, I was like, on one hand, you've got private funds. They're only available for the super, super rich. Like you gotta be like, you know, a super duper accredited investor. You put your money in there and you might not see anything for 10 years. And then for me as a GP, every three years,

I need to raise a new one of these funds. So God forbid we have one fund that doesn't work and we raise the next one or not, right? So that was on one side of it. And then on the public side, what basically is going on in the public is very strange. But in essence, the black rocks of the world and the vanguards of the world and make it that almost everybody wants to invest in an index. And as a result of that, the people who are still active managers, they're all basically closet

indexers, because the risk of being wrong, you do better for 10 years and then you do worse for one year, you're out. So basically, the public market, everybody wants to index, which is, I think, why the Max 7 is so big and stuff like that. The other part that's weird with the public markets is since everybody needs to be indexed, everybody needs to be fully invested at all times. I'm like, why?

Why is it that you need to be fully invested in 1999 if the P multiple of the market is 60? Why is it that you wanna be fully invested when you're already down 10%, things are not working? Why not raise cash a lot? Sort of freshen up your ideas a little bit. Go take a long walk on the beach and try to understand. Maybe you've made some mistakes and stuff like that.

So I've always wanted to do two things, which is one, on the public side, have the ability to be different in the stocks that I own, but also that if I'm nervous, then what's wrong with holding cash? And I hate to put this in the same word, but you look at Berkshire Hathaway today and everybody wants to compare themselves to Berkshire a little bit. But Berkshire today is a trillion dollar company, a third in cash, a third in public equities, a third in private equities, right? And so I was like, okay, well, what if we have a system where we can be in public

stocks, we can be in private companies, but we also can be in lots of cash and where investors know on day one, please do not compare me to an index. If you come in, you got to give me sort of five or seven years to do my work. And I'm also going to let you take a little bit of money every year. So in essence, I'm willing to work at much lower fees because you give me capital for longer, but you don't give me the capital forever and you're not stuck forever. And so these interval funds are really interesting because I think the minimum investment is like $50,000 or something like that. The conditions to qualify for such a fund are much smaller.

There's many more investors that can come. I look at it a little bit like this is the democratization of tech investing. I really believe in it. I've been doing my thing for 30 years for institutional investors. Why can't I do it for like people who don't have access to? Let me ask you a question. You have what? 53 billion under management? Something like that. Something in that zone. So I mean, obviously you've been phenomenally successful.

Talk about the fees and the carry and how you decided how to set that. And then tell us how your competitors reacted when you announced this fund. I'm very curious about that, both of those two things. Yeah. So we got a little bit lucky in that we studied the fees of other funds, these are things called interval funds. And it seems like the fees were more like 1.25 and 12. And so we're like, well, can we live at 1.25 and 12? And I was like, yeah, you know, it's a really good deal for other people, but I get something for it, which is I get near permanent capital. And in exchange for that near permanent capital, I'm willing to lay at lower fees because I think I'm going to be able to compound it for longer. So in essence, it's not like I'm being altruistic.

I'm not claiming, oh, I just want to do a good deal for people. Is I'm being selfish. If I can compound capital at 12.5% incentive fee for a very long time, it's better than 20% for a short period of time. And for the investor, I love the fact that I'm sort of investing like if you told me, Philippe, start from scratch, write on a little blank piece of paper, what would you do? I think all of us on the show would say, well, it would have to be something that looks like Berkshire Hathaway, right? Berkshire is the model. And you want to do cash, you want to do publics, you want to do private, you want it to be a good deal for people, you want it to be permanent capital

for you and you want to try to be able to do that for a long time. I think that's sort of what those things do. And then I was like, okay, but then the problem is like you have a snowball at the top of the mountain, how do you get it to roll and to be big? And I was like, you know, we're not very well known. I have to admit, this is sort of one of my first podcasts, you know, ever. So I really appreciate you're doing great being here with you guys. So I was like, I got to get the ball rolling at the top. And so I thought, okay, maybe I can get some tech entrepreneurs to help me out who believe in this concept

that democratizing tech investing and stuff like that. So I went to see the family offices. I didn't quite see the founders directly, but the family offices for both the Bezos family and then the Dale family. And I sort of pitched them the idea. They liked the idea. Then we pitched it to the founders. And then we got to some agreement and they gave us a combined billion

dollars to get going and then we're also going to put a lot of personal money in it and I was like great and I had read I don't know if it's true that the largest fund that was ever launched was the one of the first Blackstone song was 1.3 so then I said okay I need to launch the fund that's 1.301 like that I can claim that it's the largest launch ever. So I don't know if I'll get there or not, but that was the idea. I think it's nice to have the backing of these guys. So typically what happens is people come to see me

in my office, I'll ask some folks to do diligence, and then I sign up to an LPA. Is that how this works? Like if I'm interested, is that what I do now? Or is this totally different? You mean you as an LPA. Is that how this works? Like if I'm interested, is that what I do now? Or is this totally different? You mean you as an LPA now? Yeah, yeah, yeah. Me, it's just a normal person. So this fund in particular starts to be marketed by one of the Wall Street firms. In this one, we picked UBS. They were the first ones who believed in us, but many other firms will work with others.

And we have great relationships with JP Morgan and others. So in time, you'll be available on all these different platforms. And then most of the people that we target usually have a relationship with a wealth management firm. And our hope in time is to work with a bit the leading wealth management firms, and you can invest in frankly, I'm like, hey, just start giving me a little bit of money. See if you like what I do on that how many people can be involved because when you do venture obviously there are caps, you can only sell to accredited and qualified purchases,

that's about 6% of the country and And you can only have 99 accredited investors in a venture fund. And then it's, I think uncapped. And then you can have 200, you can have up to 10 million and they can be 250. I did this when I did our fourth fund and I had 120 million in interest. I can only take 10 million of the accredits.

So it really is capped in the venture space, but you're doing a different type of vehicle. Is there a cap on the number of LPs you can have? And of course, I knew I should be more prepared doing this. I don't remember exactly all the caps are but the point is, is that the number of people that can join the fund is much greater. And the number and the amount of money that can put in is also much smaller.

And as a result of that, you're reaching a wider audience. And that particular audience, they're happy because if you think about that fund, right, one thing that's a pain in the ass. How do you manage all the capital calls? They drive me crazy. How do you manage all the distributions? Oh, I just got some stock in a public IPO. Should I keep it? Should I not keep it? Is it a good company like Google that's going to 20X post IPO, or is it another company that I should just sell immediately? You basically have one structure.

It manages everything, and then you get a 1099 instead of a bunch of K1s. So do you think like Sequoia and Drees and KOSLA founders fund, how do they respond? That's question one. And then two, does it change the behavior of the fundraising cycle or process for you and your partners when you're evaluating companies, or for the entrepreneurs? Like does any of that change? So how does competition react and then how do companies and CEOs react? Listen, when you start worrying about your competitors, in my mind, it's a bit of a version of the grass is greener elsewhere and you have to focus on ourselves. It's such a hard business. There's so many smart people and this and that. We

tried to design something that plays to our strength and our strength was we got the public markets, we got the private markets, and then we've got risk management with the cash and knowing when to be in and out. I would suspect that other people will do the same. Hopefully, it'll be different because they have different strength and stuff like that. And I thought that what was nice for us is to sort of do this a bit of a hybrid public private. And frankly, in private, you guys think there's venture, there's the growth capital, there's private equity.

This vehicle could own 100% of a company. You could do debt, you could go up and down the cap structure. So what is your plan then to do with private companies specifically? Do you see yourself leading a Series A or participating in one of those or buying secondary and SpaceX on the open market from former employees, maybe buying out strips of other venture firms that are looking to wind down or get early liquidity and you come into some, you know, mid-sized $300 million fund and buy out 20% of it. What's the strategy here with private specifically?

This is a good point. It's a bit like, hey, so what's your North Star? Don't tell me you can do everything. Like, what are you gonna really do, right? And to me, the North Star is, Jason, I got a build for you in 10 years. The new mag seven. That's my job.

So we know who are the 10 largest companies in the S and P or the NASDAQ today. What are they going to be in 10 years? Some are already public. They're just going to get bigger. And some are private. So to that extent, I don't believe that necessarily venture is the right model for this particular because it's like, it's a thousand to one to go from a zero to 1 million in revenue, then it's a hundred to one to go to 10 million.

That's the insight that, and you mentioned this on our call earlier today, that, and you mentioned this on our call earlier today, that I actually think is really, really, really powerful. The MAG-7 was this set of correlated seven companies that sucked up all the attention, all the money, they moved in unison dollar for dollar. Now that that correlation has broken down, it allows you to ask this question, which is what is the real mag X companies? And to your point,

if it's a 25 company basket, you're absolutely right. Like SpaceX would be in the basket. It's private. So Stripe would be in the basket. Like, so to be long, some rando public company, because it's public and ignore SpaceX and Stripe would just be stupid. So to your point, that's really powerful. The optimal basket of the companies you'd want to own for the future because of these rules and regulatory burdens are partially public, partially private. And so you need a vehicle that can straddle both

if you want to own it. Yes, you're right. I think that that makes a ton of sense. To me, that's the idea. And also, like the people who choose with the MAX 7R, it's like some employee at MSCI World or something like that. Will you actually go out on a limb and try to publish what you think the version of that index is as you construct it inside of that fund or? We have some public requirements, which will force us to do that. The private markets are overheated.

There's a lot of secondary offerings. So if you try to get into Stripe, SpaceX, Andro, or like there was recently one of these robotic companies that has zero revenue and wanted a $40 billion valuation, and there's all these civilians, retail investors who are investing in your fund, but also have direct access to the secondary markets. I mean, you also have to buy at the right price. And these I know firsthand for the for those top

companies are massively inflated, you have 30 $40 billion valuations on companies that are pre revenue sometimes. How do you think about that? I have no idea of the company you just referred to. I have no idea which one it is. I don't want to say but yes, maybe they did. Maybe they did a trial with BMW that was in the factory or not in the factory. I don't know. Listen, human noise is a pretty exciting area. I don't know what companies are but there is like let me in my top 25. I don't think I think it's but there is going like, let me in, in my top 25. I don't think, I think it's a bit early.

I would have a humanoid company. I'd have a robot taxi company. You know, I try to find some, whoever is the leader. And I think the point that you make, that's really good, Jason, is we also have to wait. To me, there's two key things. Can I establish with 75% chance that this is the leader? I don't want to do it if it's like a 1% chance that it's the leader. I got to pay more later.

That's one. But two, there's one advantage that the public markets have over the privates, that we know how to value things because we have comps and we know about revenues and profits and earnings and P multiples and stuff like that. Sometimes private investors, they just value a private company like, hey, if the last round was 100, well, this round's 200.

And I'm like, but why? You know, why is next round? Where the CEO is really good on camera and funny on Twitter. Correct, it's like doubles, right? And so I think that in the growth business, like being a public investor is important because it lets you at least say, if this company were already public, what it'd be worth. And then when you own public company, the one thing that the private company gives you, if you want the public company, the public business, it gives you

discipline. But what the private business gives you, which is really cool, it gives you the telescope into the future. And I think that to be a good investor, you need to have one side of your brain, which is imagination, creation, believing in the future. And you need to have another side that says a slow down chemo. This is like 80 times earnings and it's twice as expensive and be patient. And for me, the best investors are the ones where you sort of have the telescope in the future, but you also have the day to day discipline of the public markets.

And as I said before today, man, you get beat up in the public markets so bad all the time because you buy something, it goes down by half. You're in the private markets, it goes up, goes up, goes up. And then one day it just goes to zero. Yeah. It's like we're out of business. Take the loss. Exactly. Hey, guys, some breaking news, breaking news. The pope has been selected. And I thought, you know, since you guys haven't been here, let's go through it. Here it is. The smoke has come out and Phil Helmuth is how much help. But a little work to be done on these language models. Oh, look, here's another

one coming out. Chumas. Congratulations. The first no that was a black smoke. That's black smoke. That's black smoke. Oh, no, maybe tomorrow didn't win it. Oh, no. Who do we got next? Oh, she was trading. She did better than you. Philippe. You didn't beat the Pelosi index. So you don't become divine intervention, divine intervention on her portfolio, maybe a little insider information. Okay, wonderful episode. Philippe, you're amazing. Yeah, that was great. Thomas, you got competition, your big brother, he did pretty well. So now you know, we don't have

to we have one or the other. So we'll let the audience decide. For Chamath Pali, hapitya, your chairman dictator for our czar who couldn't make it today. And you're Sultan of Science. I am You're Sultan of science. I am the world of kin, why? I'm going all in. What, what, your winner's right? What, your winner's right? Besties are gone. Go 13. That is my dog taking a notice in your driveway.

Sex. Oh, man. Oh, man. My appetizer will meet me at the end. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension

but they just need to release them out. What? You're the B. What? You're the B. B? We need to get merch. Bitches are back.