DOGE's Twitter Firestorm

[00:00:00] Hi, I'm Eric Newcomer. And I am Madeline Rennbarger. And this is the Newcomer Podcast. Each week, Eric and I discuss the VC deals and the drama that went down. Let's do it. Here we go. Welcome back to the show. Our co-host Eric over here has a little bit of a cold, but you're a trooper.

[00:00:26] I'm sick, so I will not be held accountable for any of my takes. It's sort of the ideal, you know, it's like I was loopy, you know. Who knew I can't be held accountable for what I say on this episode? Lots happened this week in the world of DOGE that we definitely want to get into. I feel like this week it was just DOGE 24-7, 365. They kicked off the week with the Wired story about the young engineers that are working behind the scenes in the different departments.

[00:00:55] I do think the hostility to them being young. Yes. I do agree with some of the like, our founding fathers were young. I don't know. Okay. Youth isn't the biggest critique, but I don't know. That Wired story to me was great journalism. Like I – sure, there was a little spin on the ball in terms of being somewhat negative about them. But I feel like all these conservatives will be like, oh my god, that Wired piece ends up being great for the cause, you know, our cause.

[00:01:23] And they never see it the other way, which is like I guess the piece was fairly neutral if you're able to read it and make it around. If you read the piece, there really wasn't much – I mean obviously people online took to the youth debate. But the piece itself was really just outlining who these people are. There was a little like – there were some turns of phrase that were clearly like you knew what their point of view was. But – Okay. Fair. Fair.

[00:01:49] Within the cast of characters in the story, obviously Luke Ferretor, famous in our world for helping to decipher Vesuvius Scrolls. Very, very impressive. But does that qualify you to run the federal government? What do you think, Eric? Yeah, that's a big question. No. I mean what's – the real question is what is my view on Doge overall?

[00:02:15] I mean certainly ingenious that the way you're going to cut government spending is to go straight to the payments rails, which I think is Elon's observation and a very tech person way of going about it. But my take is one that I believe in the balance of powers and that they're literally ignoring Congress as the first branch of government is supposed to decide where money is going and that this is sort of against the constitutional system in any normal way.

[00:02:45] So I think it's bad for that reason. I also think the government and all of us should be good for our word and that a lot of the money they're canceling is like, oh, we told you you were going to be involved in a clinical trial and now we're going to like end it with no plan. Oh, is this around the USAID cancellation? Yeah. Well, there's lots of them where it's like they're clinical trials. There's like you're depending on us for HIV medication. It's just like there's an implicit – some of these there's probably like an explicit contract.

[00:03:11] But some of it there's an implicit contract, which is we're in the middle of something, see it through to the end. Like it would be one thing if they're like we're going to wind these things down. But yeah, I mean I've thought in Elon's private dealings, he's too willing to not pay rent and to be sort of a bad dealer with people. And the government should be even more ethical. So I don't agree with their way of doing business.

[00:03:38] But the larger issue is just the idea that the president should be a CEO when we have a constitutional democracy. Right. I mean I feel like it's really an ideological clash happening right now, right? Like this sort of mindset of running the government like a business and looking for efficiencies and flashbacks of the Twitter X purchase are coming back in massive scale with the federal government.

[00:04:06] But does that make sense for the federal government within the rule of law like contracts? How we honor them. We honor the balance of powers. It's interesting to say the least. I don't think this is that thoughtful. Like if they were really worried about balancing the budget, you know, Social Security and Medicare and Medicaid and defense spending. I was going to say defense spending is the biggest one right there.

[00:04:33] And obviously that also involves SpaceX contracts. So those are staying safe, I assume. They're clearly – I mean I think they've said in some places, you know, they're going after, you know, the deep state and the liberal elites or whatever, whatever they think they are. This is sort of culture war as much as cutting spending because, you know, Trump just proposed huge tax cuts that would definitely swamp any cuts that they've done.

[00:05:01] The debate around also who's doing the cuts, as we touched on before, the Wall Street Journal had a really big piece come out that now is just earning the ire of the entire Doge sector, including Elon Musk himself, about Marco Ales, the 25-year-old who was, you know, hired by Department of Government Efficiency. But his, you know, alt accounts got found and he'd been posting a lot of racist memes and conspiracy theories allegedly.

[00:05:27] And of course that led to his resignation, which now we're always saying is doxing and a witch hunt. A lot of times you have to put racist in quotes, but here's one of his lines. Just for the record, I was racist before it was cool. Another one. You cannot pay me to marry outside my ethnicity. Normalize Indian hate. You know, it's just like – That's pretty explicit. I don't really know what else you would call that.

[00:05:53] I mean you could call it ironic, but it's pretty straightforward. Well, that's always their game, that it's like, oh, it's a troll sort of, you know. Well, of course. You fell for the bait why you take me seriously. Yeah. And Elon is running a poll now. Bring back Doge staffer who made inappropriate statements via a now-deleted pseudonym. And Elon, of course, is calling the Wall Street Journal reporter – I think he called her disgusting at one point.

[00:06:24] To be in the ire of Elon Twitter is something I would never wish upon anyone at this point. But the story is solid. The reporting is solid. Oh, definitely. I think, again, when it comes back to this debate around is this doxing. When you sign up to work for the government, you're a public figure. Like that's the tradeoff you make right there. Your information is accessible. And your history will probably be combed through because it's in the public interest now.

[00:06:52] I think this might be Mark Andreessen-ism. You know, it's just like doxing has become such a like – it's like when you're doing it against my ends, it's doxing. And when it's the other side, it's, you know, something else. I feel like doxing has become a useless word. It's become totally meaningless. Yeah. It's – what does doxing really entail? Lots of times people accuse doing the work of journalism as doxing at this point.

[00:07:17] And I mean the left certainly, I mean, deserves a lot of blame for elevating the word doxing. Oh, no question. Absolutely. I mean, again, this goes both ways. It's just in this case right now, it's going this way. I find Elon Musk and his network of supporters on X and his platforms kind of sticking all of the attention on Catherine Long's reporting at this point and her personally with all of these attacks. Beyond just my personal connection to her, we work together at Business Insider. She's a fantastic reporter. This is a really, really good story.

[00:07:46] I think the implication that is maybe getting lost in this conversation is that it's one thing when he did this as a private citizen, but now he's working for the government. And when you have an army of trolls that are now in some way sanctioned by the leader of the free world and the entire apparatus of the state behind you, the implications of this are a lot more serious than maybe it was just a few months ago. Elon is constantly saying he believes in transparency and we're going to have great disclosure.

[00:08:14] And then they're upset when there's reporting about what's going on and they're angry about naming the people who are doing the work of government and that they're not very transparent and they're bullying. So, yeah, I think he's pretty reprehensible. My only minor thing is that I do think reporters are just we're in the arena. People want to scream at us like it's part of it.

[00:08:38] Certainly, I don't think, you know, Elon and Trump run a government that's, you know, sufficiently appreciative of journalism and that they're often trying to make journalism less pleasant to do when I believe in journalism. So I think good institutionalists would be making journalism more pleasant to do. But yeah, they are trying to make it as unpleasant to do journalism as possible. I think that's bad and reprehensible.

[00:09:02] But the reality is, as journalists, if we want to succeed, we sort of have to tough it out and people are going to boo at us on Twitter. And most of the time, that's basically it. But but obviously, you know, if it starts getting into the real world, that that becomes more serious. Moving on to our next topic feels like a lateral move rather than a full recircling this whole issue. Daniel Penny, newest employee and investor at A16Z.

[00:09:30] He's notable within the New York circles, at least of news for being involved in an incident on a subway. Yes, for restraining and in a chokehold, unhoused man, Jordan Neely on the subway, who ended up dying from the incident. He was acquitted from all charges regarding that incident. Now he's investing at A16Z. An investing partner.

[00:09:51] On the American Dynamism team, which focuses, yes, on defense, but also government tech, education, anything that really touches the national interest, if you will. So DEI for vigilantes, isn't the best subway vigilante. Now, maybe this is the lib speaking. Isn't the best one somebody who doesn't kill the person they're intervening on?

[00:10:15] Like, I feel like the most successful subway interveners, like, deescalate or at least like stop restraining person to the point of death. So I don't know if they're looking for a subway vigilante. I'm sure there are many unsung heroes. I don't really know if that necessarily makes people feel safer if we're, you know, thinking about investing in concepts of public safety. Although obviously many people disagree. He's been lauded by many people online as a hero of sorts, depending on where your political affiliations lie.

[00:10:44] And my main thing about all of this is I'm a little unsure of his investing qualifications to be on this team. I think he certainly has military experience and that is useful for the American Dynamism Fund and focus. But that doesn't necessarily make one a great VC. I could be wrong. Lots of VCs don't know what they're doing. I don't know. I feel like that's the sort of like savvy way to I don't know.

[00:11:11] I get the strategy is this guy's, you know, meeting with Donald Trump and like American Dynamism certainly could do with boosting its right wing credentials in the world where the defense secretary is hardcore MAGA. So I get the tactical position. It also feels like, you know, what during the Democratic, you know, Obama Biden period, it's like, OK, we're going to hire diverse people like they want and show that we're proactive.

[00:11:40] We're going to have a diverse fund. And now in the Trump era where, you know, white men think, oh, we should get our due. We're going to hire the most disaffected of disaffected white guys and give them a job. So in some ways, it is exactly the same sort of diversity style that we saw in the last term, which is like, all right, we'll give a handout to these guys now.

[00:12:00] You know, I what troubles me the most is like the violence, the violence in this, like, you know, the right wing trolley culture, you know, with the guy. We were just talking about in Doge, you know, the real danger is if it gets sort of violent and it shows an interest in violence. I just think, you know, hiring somebody who even if they're acquitted was clearly involved in violence.

[00:12:26] It's hard not to think of the sort of celebrity that a lot of right wing media made Kyle Rittenhouse to be. It's obviously that is a completely different scale. That is a much more that multiple people were killed that he was armed. It was a completely different situation. However, there are flashes of this where when a high profile trial comes around and gets very politicized in this way, there is a tendency among those in right wing media circles to make, you know, cause celeb out of people who are charged in this case.

[00:12:56] And I think that that is maybe overshadowing whatever his potential investing prowess could be right now. So it's one thing to make some sort of, you know, he shouldn't be found guilty, you know, as a muddy situation. But to celebrate somebody like is insane. Moving on to the next Twitter X controversy of the week. Eric, you got a little involved in the heat map discourse. Yeah, I've been very involved. So a little involved is a little, you know, okay.

[00:13:23] I was, I was playing a dad, but I've emailed the authors of the paper underpinning this whole controversy level involved. Okay. You know, on right wing Twitter, there has been this heat map that shows the moral sentiments of liberals and right wingers, which seems to show that right wingers care a lot about their family and less about animals and less about rocks. It's like, how far does your moral lane extend out?

[00:13:53] And liberals from the heat map, it seems like, wow, they care a lot about like rocks and animals and not very much about their family. Okay. And so I've never been in the allegations before I became a journalist. I don't know if you know this, Eric. I at one point wanted to be a geologist and almost considered that as a focus before switching gears to media. So, and I feel like based on, you know, I don't know, as part of the, we have our opinions note on this show. So maybe that's true. I don't know. Maybe I care about rocks.

[00:14:24] My sister is a marine biologist who studies coral reefs and she loves those coral reefs. Coral, you know, intertidal benthic zones. I think she studies even less romantic things than corals with that type of creature. So in some ways she loves rocks, but anyway, the study was really about how far does your moral lens extend out? You know, you're saying you care about anything this and below.

[00:14:51] Well, the heat map really makes it look like you're insane and you don't care about your own wife, you know? And so, you know, it's one of these things where the right you hope is intentionally just committing propaganda, though they want to other us to such an extent that they're like, see, these people don't even love their own kids, you know, which it just doesn't doesn't make any sense. And obviously, as a liberal, I'm like, I'm getting criticized for caring about more people.

[00:15:18] And, you know, as someone who studied philosophy, you know, to me, you know, protecting my wife is in my self-interest is basically protecting myself. Like doing something moral for someone disconnected from me is the only is much more moral. It's like what I'm protecting my wife for my own interest, you know? So their view of morality is like insane. But but anyway, just as an empirical thing, liberals should be getting credit. We care about more people, not less.

[00:15:44] Like and anyway, Mark Andreessen is tweeting this out and the conservatives have been using as a reason to get angry. And I think finally, Scott Alexander, you know, a Slate Star Codex or whatever his new Astral Codex who hysterically, right, was the foe of the New York Times for a while is now like, I think, sort of not on the Andreessen side of the universe, I think articulated an explanation of this. And it says a lot of things.

[00:16:09] But one is just the ongoing efforts of Republicans to other liberals to be dumb and not worry about the facts, to get angry so that they can be like, oh, liberals are barely people. I mean, you know, Richard Haney is constantly saying that there's no elite human capital among conservatives and sort of agree. But it's really sad that Mark Andreessen is doing this because obviously Mark Andreessen is extremely smart.

[00:16:38] And so it's either he cares so little about the facts. And the final irony is this is a set of people who doesn't believe in social science holding up a social science report that they haven't even scrutinized. So it's just like clear. It's just like the most obvious propaganda thing in the world.

[00:16:56] And yeah, it's just like infuriating, like to me, a good social network, like what I want social networks to get is I want to be able to be like anybody who uses this image is like so disqualifying to me that I want to write them out of my intellectual debate and sort of move forward in a world without them. And I'd love somebody to create the social network that says, I don't know, you've you three strikes. You're out too many like egregious intellectual sins and not a centralized thing.

[00:17:22] But I want to be able to spend the time and be like, no, you're in this post was obviously fake and dumb, like cut these people out of my life if they do this three times or whatever. So someone please build that for me. I'd start up idea right here on the pod. You're welcome. Free startup ideas. If we're going to live in this world of anonymity.

[00:17:41] I mean, it's not just an anonymity problem if Mark Andreessen is tweeting it out, but it anonymity is part of the problem, which is we have to be able to assess people's reputations by what they're posting versus who they are. OK, enough politics. We restrained ourselves in print. So we said on air we can opine. But we did. We have talked about the business of Silicon Valley this week. You looked at the metaverse world, which is sort of out of favor at the moment. What's going on? I did. Yes.

[00:18:09] So jumping into the metaverse was fun. I hadn't been there in a couple of years. So great to be back. Let's see who's still hanging out there. No, but the big story really came from the Financial Times had a good piece about Meta's annual report and that they've spent, I think, in the last year, close to $20 billion on their AR glasses. And that those have really honestly been a growth area for them. They've been losing money overall. It's looking promising and it's picking up. And so they're willing to invest even more money into this space.

[00:18:39] What's going on with Apple's AR, VR efforts? Right. So at the end of the year, the information reported news that they were winding down some of their scaled production of the Vision Pro headset. They're not fully shutting it down, but it's not looking like it's going to be a huge investment space for them going forward. Sales weren't really great. It does seem like, you know, in my reporting around the metaverse, the issue sometimes just comes down to the headset itself. People buy a headset. It's fun. They enjoy it.

[00:19:06] But there's an issue of people picking it back up, you know, and it's a fun novelty for a bit, but it is bulky and heavy on your head. And there's something to be said for wearable tech like Meta's Ray-Ban glasses to where you can get them to your prescription and they only fit, you know, they're the size of normal glasses. But while Meta is still doubling down on AR tech with these glasses and spending in reality labs, nobody else is basically.

[00:19:32] And even the VCs who I've talked to who definitely see use cases, they're seeing them more in gaming where this kind of already was, right? Like this is what this tech was sort of optimized for in the beginning. And they're also seeing it in education and training, which are really important use cases. But I don't see that scaling to be the next, you know, trillion dollar company. Well, I had this, you know, the AI thesis that, you know, AI is generative, like will create generative VR worlds.

[00:20:01] Did you see any hints at that? I mean, that's certainly a Minecraft company. Yeah, Descartes. They are partnering with Etch, the edge case chip maker, to build a playable AI model that is kind of based off of Minecraft, but it's generative. So as you play it, the model is generating new worlds that you can explore, which is really cool. I mean, Minecraft, especially in these social games, you want more worlds to build and explore in mine. And that's certainly without the game engine, right?

[00:20:31] Like it just sort of general. It's the same sort of predictive model that you'd use for text, right? So it's there is an underlying logic, I think, is what's part of what's interesting about it. Yeah, not necessarily. That's right. Right. So there's companies doing this. This company, Saga, is building the infrastructure on blockchain for game developers to build agents off of using generative AI. So we combined, you know, agents and blockchain in one pitch.

[00:20:59] Seems like what they're doing is taking off well. They've got a new investor interest from M13. So certainly there are places in this space that are still attracting interest from investors who know the space and they've kind of pinned it as a category they want to invest in. It's just not the wave that it was, you know, before. And in some ways, the hardware part of the tech is something that is better suited to a meta or someone with, you know, gobs of cash than maybe a venture model right now.

[00:21:27] And perhaps the apps and the software will come further down the line if they nail the hardware. But it's always five years out. That's what everyone tells me. In five years, we'll all adopt this, you know, and every year it's five years later, right? I don't. Eric, you've been covering this space longer than I have, but it seems like it just keeps getting pushed farther and farther back. Yeah. And yet I believe, you know, I don't know. I do think device quality or, you know, iPhone really took off at the app store or some, you know, it's hard to know sometimes what.

[00:21:56] What really triggers something. So AR worlds and VR worlds, we're rooting for you. Moving on to our final story of the week. Eric, you got the scoop on General Catalyst fundraising docs. What did you find? Yeah, I mean, we're super interested in these mega funds, you know, General Catalyst, which had raised, you know, an $8 billion suite of funds. There's Lightspeed. There's Andreessen, obviously. Sequoia, I think, fits the bill, but I don't know that they want to use that word, mega fund.

[00:22:24] But anyway, so, I mean, General Catalyst, I think, is the most express in that. Hey, Montanaja, the CEO, is calling himself the CEO these days. He's referring to it as a company. They announced a wealth, we call them a firm still. But they announced that they're becoming a wealth manager. They have a debt fund. They bought a hospital. So echoing a lot of the stuff you see in the private equity industry. And so, yeah, I got somewhat dated, but still telling fund return information.

[00:22:53] I mean, it's very wonky in particular. So you should subscribe and become a paid subscriber to read it. We have a bunch of slides. I mean, basically, the first one is only 0.7% IRR. So I guess good news for new venture funds that you can survive a pretty middling first fund. Then it's 11.9%, 9.9%.

[00:23:17] They really have their first, like, great fund, their 2011 vintage fund. I think it was mostly driven by Stripe, but I'm sure there were other companies. This presentation doesn't get into the particular portfolio. And, you know, the numbers I'm citing are dated December 31st, 2020. So that fund had a 7.16x NVPI, which is like net TVPI.

[00:23:44] So presumably there was a lot of money potentially still to come. You know, I thought the other thing is, like, while investors were considering whether to invest in this latest 8 billion group of funds, you know, they didn't have a lot of evidence that general catalysts, like, billion plus funds have done well. You know, it's just like they're not that old. They've barely returned any money as of the fundraising documents. And so I think that's going to be a big question with all these mega funds.

[00:24:14] You know, you're investing in the funds on the basis of their performance as more traditional venture capital firms. But now they're asking you to bet on these sort of multi-strategy, private equity styled funds. And will their old performance match their future performance? And that's what we don't know yet. Yeah, we'll have to wait and see on that one. But it's a big gamble. Yeah. I mean, GC is ambitious. Andreessen's ambitious.

[00:24:42] And like a lot of these things rise and fall with the tech industry overall. You know, if they're huge funds and they get in a lot of the key stuff in Silicon Valley and Silicon Valley has some big hitters, then they can do well. But you have to get in them. You know, you have to be in strike Andreessen's and Databricks. You know, it does end up being these the big companies really matter. That's our show. Everyone say feel better, Eric. We'll be back next week with more news in startups and venture capital.

[00:25:11] Healthier team, newcomer team, health, restful weekend. Yeah, exactly. All right. Thanks. Thanks.